As filed with the Securities and Exchange Commission on November 30, 2001
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------
TEPPCO PARTNERS, L.P. DELAWARE 76-0291058
TE PRODUCTS PIPELINE COMPANY, DELAWARE 76-0329620
LIMITED PARTNERSHIP
TCTM, L.P. DELAWARE 76-0595522
TEPPCO MIDSTREAM COMPANIES, L.P. DELAWARE 76-0692243
JONAH GAS GATHERING COMPANY WYOMING 83-0317360
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
CHARTER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(713) 759-3636
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
----------
JAMES C. RUTH
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(713) 759-3636
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------
COPIES TO:
VINSON & ELKINS L.L.P.
1001 FANNIN STREET, SUITE 3600
HOUSTON, TEXAS 77002
(713) 758-2222
ATTENTION: JAMES M. PRINCE
----------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this registration statement becomes effective, as determined
by market conditions.
----------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
----------
CALCULATION OF REGISTRATION FEE
Proposed Maximum Aggregate Offering
Price(2) Amount of registration fee(3)
Title of each class of securities to be registered
Limited Partnership Units(1)
Debt Securities(1)(4)
Guarantees of Debt Securities(1)(5)
Total $450,000,000 $9,172
(1) An indeterminate principal amount or number of limited partner units, debt
securities and guarantees of debt securities may be issued from time to
time at indeterminate prices, with an aggregate offering price not to
exceed $450,000,000.
(2) Rule 457(o) permits the registration fee to be calculated on the basis of
the maximum offering price of all of the securities listed and, therefore,
the table does not specify by each class information as to the amount to be
registered or the proposed maximum offering price per security.
(3) Pursuant to Rule 429 under the Securities Act of 1933, as amended, this
registration statement contains a combined prospectus that also relates to
$600,000,000 of securities of TEPPCO Partners, L.P. previously registered
on Form S-3, Registration No. 333-66102, originally filed on July 27, 2001,
of which $411,625,000 remains unissued and unsold and for which a
registration fee in the amount of $98,378 is being carried forward. The
maximum aggregate offering price of securities covered by this combined
prospectus is $450,000,000. Without limitation as to the class of
securities, securities of the classes listed in the above table may be
offered pursuant to this combined prospectus at a maximum aggregate
offering price of $450,000,000. The amount of the fee paid herewith has
been calculated after giving effect to the amount of securities being
carried forward from the prior registration statement.
(4) If any debt securities are issued at an original issue discount, then the
offering price of those debt securities shall be in an amount that will
result in an aggregate initial offering price not to exceed $450,000,000,
less the dollar amount of any registered securities previously issued.
(5) TE Products Pipeline Company, Limited Partnership, TCTM, L.P., TEPPCO
Midstream Companies, L.P. and Jonah Gas Gathering Company will fully,
irrevocably and unconditionally guarantee on an unsecured basis the debt
securities of TEPPCO Partners, L.P. Pursuant to Rule 457(n) under the
Securities Act of 1933, as amended, no separate fee is payable with respect
to the guarantees of the debt securities being registered.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO
$600,000,000 OF TEPPCO PARTNERS, L.P. SECURITIES PREVIOUSLY REGISTERED ON
REGISTRATION STATEMENT NO. 333-66102 WHICH WAS DECLARED EFFECTIVE ON AUGUST 9,
2001 (THE "PREVIOUSLY REGISTERED SECURITIES"). UPON EFFECTIVENESS, THIS
REGISTRATION STATEMENT WILL CONSTITUTE POST-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT NO. 333-66102 PURSUANT TO WHICH THE TOTAL AMOUNT OF
UNSOLD PREVIOUSLY REGISTERED SECURITIES REGISTERED ON REGISTRATION STATEMENT NO.
333-66102 MAY BE OFFERED AND SOLD TOGETHER WITH THE SECURITIES REGISTERED
HEREUNDER THROUGH THE USE OF THE COMBINED PROSPECTUS INCLUDED HEREIN. IN THE
EVENT SUCH PREVIOUSLY REGISTERED SECURITIES ARE OFFERED AND SOLD PRIOR TO THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THE AMOUNT OF SUCH PREVIOUSLY
REGISTERED SECURITIES SO SOLD WILL NOT BE INCLUDED IN THE PROSPECTUS HEREUNDER.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT THAT CONTAINS THIS
PROSPECTUS AND THAT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THOSE SECURITIES AND IT
IS NOT SOLICITING AN OFFER TO BUY THOSE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 30, 2001
PROSPECTUS
TEPPCO PARTNERS, L.P.
LIMITED PARTNERSHIP UNITS
DEBT SECURITIES
----------
GUARANTEES OF DEBT SECURITIES OF TEPPCO PARTNERS, L.P. BY:
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
TCTM, L.P.
TEPPCO MIDSTREAM COMPANIES, L.P.
JONAH GAS GATHERING COMPANY
------------
We, TEPPCO Partners, L.P., may from time to time offer and sell limited
partnership units and debt securities which may be fully and unconditionally
guaranteed by our subsidiaries, TE Products Pipeline Company, Limited
Partnership, TCTM, L.P., TEPPCO Midstream Companies, L.P. and Jonah Gas
Gathering Company. This prospectus describes the general terms of these
securities and the general manner in which we will offer the securities. The
specific terms of any securities we offer will be included in a supplement to
this prospectus. The prospectus supplement will also describe the specific
manner in which we will offer the securities.
The New York Stock Exchange has listed our limited partnership units
under the symbol "TPP."
Our address is 2929 Allen Parkway, P.O. Box 2521, Houston, Texas
77252-2521, and our telephone number is (713) 759-3636.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF
THIS PROSPECTUS BEFORE YOU MAKE AN INVESTMENT IN OUR SECURITIES.
------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _______ 2001
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS.............................................................................................1
WHERE YOU CAN FIND MORE INFORMATION...............................................................................1
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS...................................................................2
ABOUT TEPPCO PARTNERS.............................................................................................3
THE SUBSIDIARY GUARANTORS.........................................................................................3
RISK FACTORS......................................................................................................4
Risks Inherent in our Business.................................................................................4
Risks Relating to our Partnership Structure....................................................................7
Tax Risks to Unitholders.......................................................................................9
TEPPCO PARTNERS..................................................................................................12
USE OF PROCEEDS..................................................................................................13
RATIO OF EARNINGS TO FIXED CHARGES...............................................................................13
DESCRIPTION OF DEBT SECURITIES...................................................................................13
General.......................................................................................................13
Subsidiary Guarantees.........................................................................................15
Covenants.....................................................................................................15
Events of Default.............................................................................................16
Amendments and Waivers........................................................................................17
Defeasance....................................................................................................18
No Personal Liability of General Partner......................................................................19
Subordination.................................................................................................19
Book Entry, Delivery and Form.................................................................................20
The Trustee...................................................................................................21
Governing Law.................................................................................................22
CASH DISTRIBUTIONS...............................................................................................22
General.......................................................................................................22
Quarterly Distributions of Available Cash.....................................................................23
Adjustment of the Target Distributions........................................................................24
Distributions of Cash Upon Liquidation........................................................................24
Defined Terms.................................................................................................26
TAX CONSIDERATIONS...............................................................................................29
Partnership Status............................................................................................29
Limited Partner Status........................................................................................31
Tax Consequences of Unit Ownership............................................................................32
Treatment of Operations.......................................................................................36
Disposition of Limited Partnership Units......................................................................37
Uniformity of Units...........................................................................................38
Tax-Exempt Organizations and Other Investors..................................................................39
Administrative Matters........................................................................................40
State, Local and Other Tax Considerations.....................................................................42
Tax Consequences of Ownership of Debt Securities..............................................................42
INVESTMENT IN US BY EMPLOYEE BENEFIT PLANS.......................................................................42
PLAN OF DISTRIBUTION.............................................................................................43
LEGAL............................................................................................................44
EXPERTS..........................................................................................................44
----------
You should rely only on the information contained in this prospectus,
any prospectus supplement and the documents we have incorporated by reference.
We have not authorized anyone else to give you different information. We are not
offering these securities in any state where they do not permit the offer. We
will disclose any material changes in our affairs in an amendment to this
prospectus, a prospectus supplement or a future filing with the SEC incorporated
by reference in this prospectus.
(i)
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed
with the Securities and Exchange Commission using a "shelf" registration
process. Under this shelf registration process, we may sell up to $450 million
in principal amount of the limited partnership units or debt securities
described in this prospectus in one or more offerings. This prospectus generally
describes us and the limited partnership units and debt securities. Each time we
sell limited partnership units or debt securities with this prospectus, we will
provide a prospectus supplement that will contain specific information about the
terms of that offering. The prospectus supplement may also add to, update or
change information in this prospectus. The information in this prospectus is
accurate as of November 30, 2001. You should carefully read both this prospectus
and any prospectus supplement and the additional information described under the
heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
TEPPCO Partners, L.P. and TE Products Pipeline Company, Limited
Partnership file annual, quarterly and other reports and other information with
the SEC. You may read and copy any document we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-732-0330 for further information on their public reference
room. Our SEC filings are also available at the SEC's web site at
http://www.sec.gov. You can also obtain information about us at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows TEPPCO Partners and TE Products to "incorporate by
reference" the information they have filed with the SEC. This means that TEPPCO
Partners and TE Products can disclose important information to you without
actually including the specific information in this prospectus by referring you
to those documents. The information incorporated by reference is an important
part of this prospectus. Information that TEPPCO Partners and TE Products file
later with the SEC will automatically update and may replace information in this
prospectus and information previously filed with the SEC. The documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 are incorporated by reference in
this prospectus until the termination of this offering.
TEPPCO Partners, L.P.
o Annual Report on Form 10-K for the fiscal year ended December
31, 2000.
o Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2001.
o Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2001.
o Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2001.
o Current Report on Form 8-K filed January 24, 2001.
o Current Report on Form 8-K filed February 5, 2001.
o Current Report on Form 8-K filed April 23, 2001.
o Current Report on Form 8-K filed May 9, 2001.
o Current Report on Form 8-K filed July 27, 2001.
o Current Report on Form 8-K filed October 15, 2001.
o Amended Current Report on Form 8-K/A filed November 9, 2001.
1
o Amended Current Report on Form 8-K/A filed November 13, 2001.
o Current Report on Form 8-K filed November 19, 2001.
o Current Report on Form 8-K filed November 30, 2001.
o The description of the limited partnership units contained in
the Registration Statement on Form 8-A (Registration No. 001
10403), initially filed December 6, 1989, and any subsequent
amendment thereto filed for the purpose of updating such
description.
o The combined financial statements of ARCO Pipe Line Company's
APL Business and the financial statements of Seaway Crude
Pipeline Company included in TEPPCO Partners, L.P.'s Amended
Current Report on Form 8-K/A filed on October 3, 2000.
TE Products Pipeline Company, Limited Partnership
o Annual Report on Form 10-K for the fiscal year ended December
31, 2000.
o Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2001.
o Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2001.
o Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2001.
o Current Report on Form 8-K filed July 27, 2001.
You may request a copy of this filing, at no cost, by writing or
calling us at the following address:
Investor Relations Department
TEPPCO Partners, L.P.
TE Products Pipeline Company, Limited Partnership
2929 Allen Parkway
P.O. Box 2521
Houston, Texas 77252-2521
(713) 759-3636
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This prospectus, any accompanying prospectus supplement and the
documents we have incorporated by reference contain forward-looking statements.
The words "believe," "expect," "estimate" and "anticipate" and similar
expressions identify forward-looking statements. Forward-looking statements
include those that address activities, events or developments that we expect or
anticipate will or may occur in the future. These include the following:
o the amount and nature of future capital expenditures,
o business strategy and measures to carry out strategy,
o competitive strengths,
o goals and plans,
o expansion and growth of our business and operations,
2
o references to intentions as to future matters and
o other similar matters.
A forward-looking statement may include a statement of the assumptions
or bases underlying the forward-looking statement. We believe we have chosen
these assumptions or bases in good faith and that they are reasonable. However,
we caution you that assumed facts or bases almost always vary from actual
results, and the differences between assumed facts or bases and actual results
can be material, depending on the circumstances. When considering
forward-looking statements, you should keep in mind the risk factors set forth
under the caption "Risk Factors" and other cautionary statements in this
prospectus, any prospectus supplement and the documents we have incorporated by
reference. We will not update these statements unless the securities laws
require us to do so.
ABOUT TEPPCO PARTNERS
We are one of the largest publicly traded limited partnerships engaged
in the transportation of refined products, liquefied petroleum gases and
petrochemicals, the transportation and marketing of crude oil and natural gas
liquids and the gathering of natural gas. Texas Eastern Products Pipeline
Company, LLC (formerly Texas Eastern Products Pipeline Company and referred to
in this prospectus as TEPPCO LLC) serves as our general partner and is an
indirect wholly owned subsidiary of Duke Energy Field Services, LLC, which is
owned 70% by Duke Energy Corporation and 30% by Phillips Petroleum Company.
As used in this prospectus, "we," "us," "our" and "TEPPCO Partners"
mean TEPPCO Partners, L.P. and, where the context requires, include our
subsidiary operating partnerships.
THE SUBSIDIARY GUARANTORS
TE Products Pipeline Company, Limited Partnership, TCTM L.P., TEPPCO
Midstream Companies, L.P. and Jonah Gas Gathering Company are our only
"significant subsidiaries" as defined by the rules and regulations of the SEC,
as of the date of this prospectus. The general partner of TE Products, TCTM and
TEPPCO Midstream is TEPPCO GP, Inc., which is wholly owned by us. TEPPCO GP owns
a .001% general partner interest in each of TE Products, TCTM and TEPPCO
Midstream. Jonah is a Wyoming general partnership. TEPPCO Midstream owns a
99.999% general partner interest in Jonah and TEPPCO GP owns a 0.001% general
partner interest and serves as its managing general partner. We sometimes refer
to TE Products, TCTM, TEPPCO Midstream and Jonah in this prospectus as the
"Subsidiary Guarantors." The Subsidiary Guarantors may jointly and severally and
unconditionally guarantee our payment obligations under any series of debt
securities offered by this prospectus, as set forth in a related prospectus
supplement.
3
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors together with all of the other information included in this
prospectus, any prospectus supplement and the documents we have incorporated by
reference into this document before purchasing our securities.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
that event, we may be unable to make distributions to our unitholders or pay
interest on, or the principal of, any debt securities, the trading price of our
limited partnership units could decline, or you may lose all of your investment.
RISKS INHERENT IN OUR BUSINESS
Potential future acquisitions and expansions, if any, may affect our business by
substantially increasing the level of our indebtedness and contingent
liabilities and increasing our risks of being unable to effectively integrate
these new operations.
From time to time, we evaluate and acquire assets and businesses that
we believe complement our existing assets and businesses. Acquisitions may
require substantial capital or the incurrence of substantial indebtedness. If we
consummate any future acquisitions, our capitalization and results of operations
may change significantly, and you will not have the opportunity to evaluate the
economic, financial and other relevant information that we will consider in
determining the application of these funds and other resources.
Acquisitions and business expansions involve numerous risks, including
difficulties in the assimilation of the assets and operations of the acquired
businesses, inefficiencies and difficulties that arise because of unfamiliarity
with new assets and the businesses associated with them and new geographic areas
and the diversion of management's attention from other business concerns.
Further, unexpected costs and challenges may arise whenever businesses with
different operations or management are combined, and we may experience
unanticipated delays in realizing the benefits of an acquisition. Following an
acquisition, we may discover previously unknown liabilities associated with the
acquired business for which we have no recourse under applicable indemnification
provisions.
Expanding our natural gas gathering business by constructing new pipelines and
compression facilities subjects us to construction risks and risks that natural
gas supplies will not be available upon completion of the new pipelines.
We may expand the capacity of our existing natural gas gathering system
through the construction of additional facilities. The construction of gathering
facilities requires the expenditure of significant amounts of capital, which may
exceed our estimates. Generally, we may have only limited natural gas supplies
committed to these facilities prior to their construction. Moreover, we may
construct facilities to capture anticipated future growth in production in a
region in which anticipated production growth does not materialize. As a result,
there is the risk that new facilities may not be able to attract enough natural
gas to achieve our expected investment return, which could adversely affect our
financial position or results of operations.
Our tariff rates are subject to review and possible adjustment by federal
regulators.
The Federal Energy Regulatory Commission, pursuant to the Interstate
Commerce Act, regulates the tariff rates for our interstate common carrier
pipeline operations. To be lawful under that Act, tariff rates must be just and
reasonable and not unduly discriminatory. Shippers may protest, and the FERC may
investigate, the lawfulness of new or changed tariff rates. The FERC can suspend
those tariff rates for up to seven months. It can also require refunds of
amounts collected under rates ultimately found unlawful. The FERC may also
challenge tariff rates that have become final and effective. Because of the
complexity of rate making, the lawfulness of any rate is never assured.
While the FERC does not directly regulate our natural gas gathering
operations, federal regulation, directly or indirectly, influences the parties
that gather natural gas on our recently acquired Jonah gas gathering system. As
an intrastate natural gas gathering system and not an interstate transmission
pipeline, the Jonah system generally is
4
exempt from FERC regulation under the Natural Gas Act of 1938, but FERC
regulation still significantly affects our natural gas gathering business. In
recent years, FERC has pursued pro- competition policies in its regulation of
interstate natural gas pipelines. However, we cannot assure you that FERC will
continue this approach as it considers proposals by natural gas pipelines to
allow negotiated rates not limited by rate ceilings, pipeline rate case
proposals and revisions to rules and policies that may affect our shippers'
rights of access to interstate natural gas transportation capacity.
We face uncertainties in calculating cost of service for rate-making purposes.
In a 1995 decision involving an unrelated oil pipeline limited
partnership, the FERC partially disallowed the inclusion of income taxes in that
partnership's cost of service. In another FERC proceeding involving a different
oil pipeline limited partnership, the FERC held that the oil pipeline limited
partnership may not claim an income tax allowance for income attributable to
non-corporate limited partners, both individuals and other entities. This issue
does not currently affect us because we do not use the cost-of-service
methodology to support our rates. However, these decisions might affect us
should we elect in the future to use the cost-of-service methodology or be
required to use that methodology to defend our rates. If those circumstances
arise, there can be no assurance with respect to the effect of these precedents
on our rates.
Competition could adversely affect our operating results.
Our refined products and LPGs transportation business competes with
other pipelines in the areas where we deliver products. We also compete with
trucks, barges and railroads in some of the areas we serve. Competitive
pressures may adversely affect our tariff rates or volumes shipped. The crude
oil gathering and marketing business is characterized by thin margins and
intense competition for supplies of lease crude oil. A decline in domestic crude
oil production has intensified competition among gatherers and marketers. Our
crude oil transportation business competes with common carriers and proprietary
pipelines owned and operated by major oil companies, large independent pipeline
companies and other companies in the areas where our pipeline systems deliver
crude oil and natural gas liquids.
New supplies of natural gas are necessary to offset natural declines in
production from wells connected to our gathering system and to increase
throughput volume, and we encounter competition in obtaining contracts to gather
natural gas supplies. Competition in natural gas gathering is based in large
part on reputation, efficiency, reliability, gathering system capacity and price
arrangements. Our key competitors in the gas gathering segment include
independent gas gatherers and major integrated energy companies. Alternate
gathering facilities are available to producers we serve, and those producers
may also elect to construct proprietary gas gathering systems. If the production
delivered to our gathering system declines, our revenues from such operations
will decline.
We face credit risks in our crude oil marketing business.
Risks of nonpayment and nonperformance by customers are a major
consideration in our crude oil marketing business. We attempt to manage our
exposure to credit risks through credit analysis, credit approvals, credit
limits and monitoring procedures. We also use letters of credit, prepayments and
guarantees for some of our receivables. We are nevertheless subject to risks of
loss resulting from nonpayment or nonperformance by our customers.
Our crude oil marketing business involves risks relating to product prices.
Generally, as we purchase crude oil we simultaneously establish a
margin by selling crude oil for physical delivery to third-party users or by
entering into a future delivery obligation with respect to futures contracts on
the New York Mercantile Exchange. We seek to maintain a balanced position until
we make physical delivery of the crude oil, thereby minimizing or eliminating
exposure to price fluctuations occurring after the initial purchase. It is our
policy not to acquire crude oil, future contracts or other derivative products
for the purpose of speculating on price changes. Even so, certain basis risks
cannot be completely hedged or eliminated. These are the risks that price
relationships between delivery points, classes of products or delivery periods
will change from time to time.
5
Reduced demand could affect shipments on the pipelines.
Our products pipeline business depends in large part on the demand for
refined petroleum products in the markets served by our pipelines. Reductions in
that demand adversely affect our pipeline business. Market demand varies based
upon the different end uses of the refined products we ship. Demand for
gasoline, which accounts for a substantial portion of our shipments, depends
upon price, prevailing economic conditions and demographic changes in the
markets we serve. Weather conditions, government policy and crop prices affect
the demand for refined products used in agricultural operations. Demand for jet
fuel depends on prevailing economic conditions and military usage. Propane
deliveries are generally sensitive to the weather and meaningful year-to-year
variances have occurred and will likely continue to occur.
Our gathering system profits and cash flow depend on the volumes of natural gas
produced from the fields served by our gathering systems and are subject to
factors beyond our control.
Regional production levels drive the volume of natural gas gathered on
our system. We cannot influence or control the operation or development of the
gas fields we serve. Production levels may be affected by:
o the absolute price of, volatility in the price of, and market
demand for natural gas;
o changes in laws and regulations, particularly with regard to
taxes, denial of reduced well density spacing, safety and
protection of the environment;
o the depletion rates of existing wells;
o adverse weather and other natural phenomena;
o the availability of drilling and service rigs; and
o industry changes, including the effect of consolidations or
divestitures.
Any declines in the volumes of natural gas delivered for gathering on our system
will adversely affect our revenues and could, if sustained or pronounced,
materially adversely affect our financial position or results of operation.
Federal, state or local regulatory measures could adversely affect our gas
gathering business.
The Jonah system gathers natural gas within Wyoming only. The Wyoming
Public Utility Commission administers U.S. Department of Transportation
regulations under the Natural Gas Pipeline Safety Act of 1968. The Jonah system
is not currently subject to federal or state pipeline safety regulations based
upon its qualification for the "rural gathering exemption" under the Natural Gas
Pipeline Safety Act of 1968. In the future, the rural gathering exemption status
of some or all of the system may no longer apply if certain changes occur,
including changes to delivery or sale points, and non-exempt facilities would
then become subject to U.S. Department of Transportation regulations with
respect to pipeline design, installation, testing, construction, replacement and
management. These regulations provide for safe pipeline operations and include
potential fines and penalties for violations. If these regulations were applied
to the Jonah system, such application could result in material costs to our
Midstream Segment.
Our operations are subject to governmental laws and regulations relating to the
protection of the environment which may expose us to significant costs and
liabilities.
We face risks of environmental costs and liabilities. Our operations
are subject to federal, state and local laws and regulations relating to
protection of the environment. Although we believe that our operations comply
with applicable environmental regulations, risks of substantial costs and
liabilities are inherent in pipeline operations and terminaling operations. We
cannot assure you that we will not incur substantial costs and liabilities. We
currently own or lease, and have owned or leased, many properties that have been
used for many years to terminal or store crude oil, petroleum products or other
chemicals. Owners, tenants or users of these properties have disposed of or
released hydrocarbons or solid wastes on or under them. Additionally, some sites
we operate are located near current
6
or former refining and terminaling operations. There is a risk that
contamination has migrated from those sites to ours. Increasingly strict
environmental laws, regulations and enforcement policies and claims for damages
and other similar developments could result in substantial costs and
liabilities.
Many of our operations and activities are subject to significant
federal and state environmental laws and regulations. These include, for
example, laws and regulations that impose obligations related to air emissions
and discharge of wastes from our facilities and the cleanup of hazardous
substances that may have been released at properties currently or previously
owned or operated by us or locations to which we have sent wastes for disposal.
Various governmental authorities have the power to enforce compliance with these
regulations and the permits issued under them, and violators are subject to
administrative, civil and criminal penalties, including civil fines, injunctions
or both. Liability may be incurred without regard to fault for the remediation
of contaminated areas. Private parties, including the owners of properties
through which our pipeline systems pass, may also have the right to pursue legal
actions to enforce compliance as well as to seek damages for non-compliance with
environmental laws and regulations or for personal injury or property damage.
There is inherent risk of the incurrence of environmental costs and liabilities
in our business due to our handling of the products we gather or transport, air
emissions related to our operations, historical industry operations, waste
disposal practices and the prior use of flow meters containing mercury. In
addition, the possibility exists that stricter laws, regulations or enforcement
policies could significantly increase our compliance costs and the cost of any
remediation that may become necessary. We cannot assure you that we will not
incur material environmental costs and liabilities. Furthermore, we cannot
assure you that our insurance will provide sufficient coverage in the event an
environmental claim is made against us. Our business may be adversely affected
by increased costs due to stricter pollution control requirements or liabilities
resulting from non-compliance with required operating or other regulatory
permits. New environmental regulations might adversely affect our products and
activities, including processing, storage and transportation, as well as waste
management and air emissions. Federal and state agencies also could impose
additional safety requirements, any of which could affect our profitability.
Our business involves many hazards and operational risks, some of which may not
be covered by insurance.
Our operations are subject to the many hazards inherent in the
transportation of refined petroleum products, liquefied petroleum gases and
petrochemicals, the transportation of crude oil and the gathering, compressing,
treating and processing of natural gas and natural gas liquids and in the
storage of residue gas, including ruptures, leaks and fires. These risks could
result in substantial losses due to personal injury or loss of life, severe
damage to and destruction of property and equipment and pollution or other
environmental damage and may result in curtailment or suspension of our related
operations. We are not fully insured against all risks incident to our business.
If a significant accident or event occurs that is not fully insured, it could
adversely affect our financial position or results of operations.
RISKS RELATING TO OUR PARTNERSHIP STRUCTURE
We are a holding company and depend entirely on our operating subsidiaries'
distributions to service our debt obligations.
We are a holding company with no material operations. If we cannot
receive cash distributions from our operating subsidiaries, we will not be able
to meet our debt service obligations. Our operating subsidiaries may from time
to time incur additional indebtedness under agreements that contain restrictions
which could further limit each operating subsidiary's ability to make
distributions to us.
The debt securities will be issued by the parent partnership and will
be structurally subordinated to the claims of our operating subsidiaries'
creditors. Holders of the debt securities will not be creditors of our operating
partnerships. The claims to the assets of our operating subsidiaries derive from
our own partnership interests in those operating subsidiaries. Claims of our
operating subsidiaries' creditors will generally have priority as to the assets
of our operating subsidiaries over our own partnership interest claims and will
therefore have priority over the holders of our debt, including the debt
securities. Our operating subsidiaries' creditors may include:
o general creditors,
7
o trade creditors,
o secured creditors,
o taxing authorities, and
o creditors holding guarantees.
On July 14, 2000, we entered into a $75 million term loan and a $475
million revolving credit facility. On July 21, 2000, we borrowed $75 million
under the term loan and $340 million under the revolving credit facility. The
funds were used to finance the acquisition of ARCO Pipe Line Company and to
refinance our existing credit facilities, other than the senior notes of TE
Products. On April 6, 2001, we amended our revolving credit facility to permit
borrowings up to $500 million and to allow for letters of credit up to $20
million. The term of the revised credit agreement was extended to April 6, 2004.
Additionally, on April 6, 2001, we entered into a 364-day, $200 million
revolving credit agreement. On September 28, 2001, the Partnership entered into
a $400 million credit facility with SunTrust Bank. The Partnership borrowed $360
million under the facility for the acquisition of the Jonah Gas Gathering
Company, of which $160 million will be repaid with proceeds from our November
2001 common unit offering. The credit facility matures in June 2002.
We may sell additional limited partnership interests, diluting existing
interests of unitholders.
Our partnership agreement allows us to issue additional limited
partnership units and other equity securities without unitholder approval. These
may be issued to raise cash or acquire additional assets or for other
partnership purposes. There is no limit on the total number of limited
partnership units and other equity securities we may issue. When we issue
additional limited partnership units or other equity securities, the
proportionate partnership interest of our existing unitholders will decrease.
The issuance could negatively affect the amount of cash distributed to
unitholders and the market price of limited partnership units. Issuance of
additional limited partnership units will also diminish the relative voting
strength of the previously outstanding limited partnership units.
Our general partner and its affiliates may have conflicts with our partnership.
The directors and officers of our general partner and its affiliates
have duties to manage the general partner in a manner that is beneficial to its
stockholders. At the same time, the general partner has duties to manage us in a
manner that is beneficial to us. Therefore, the general partner's duties to us
may conflict with the duties of its officers and directors to its stockholders.
Such conflicts may include, among others, the following:
o decisions of our general partner regarding the amount and
timing of cash expenditures, borrowings and issuances of
additional limited partnership units or other securities can
affect the amount of incentive compensation payments we make
to our general partner;
o under our partnership agreement we reimburse the general
partner for the costs of managing and operating us; and
o under our partnership agreement, it is not a breach of our
general partner's fiduciary duties for affiliates of our
general partner to engage in activities that compete with us.
We may acquire additional businesses or properties directly or
indirectly for the issuance of additional units. At our current level of cash
distributions, our general partner receives as incentive distributions
approximately 50% of any incremental increase in our distributions. As a result,
acquisitions funded though the issuance of units have in the past and may in the
future benefit our general partner more than our unitholders. We would not
expect to make an acquisition unless our general partner believes that the
transaction is likely to increase our cash distributions per unit to our
unitholders.
8
Unitholders have limited voting rights and control of management.
Our general partner manages and controls our activities and the
activities of our operating partnerships. Unitholders have no right to elect the
general partner or the directors of the general partner on an annual or other
ongoing basis. However, if the general partner resigns or is removed, its
successor may be elected by holders of a majority of the limited partnership
units. Unitholders may remove the general partner only by a vote of the holders
of at least 80% of the limited partnership units and only after receiving state
regulatory approvals required for the transfer of control of a public utility.
As a result, unitholders will have limited influence on matters affecting our
operations, and third parties may find it difficult to gain control of us or
influence our actions.
Our partnership agreement limits the liability of our general partner.
Our general partner owes duties of loyalty and care to the unitholders.
Provisions of our partnership agreement and the partnership agreements for each
of the operating partnerships, however, contain language limiting the liability
of the general partner to the unitholders for actions or omissions taken in good
faith. In addition, the partnership agreements grant broad rights of
indemnification to the general partner and its directors, officers, employees
and affiliates for acts taken in good faith in a manner believed to be in or not
opposed to our best interests.
Unitholders may not have limited liability in some circumstances.
The limitations on the liability of holders of limited partnership
interests for the obligations of a limited partnership have not been clearly
established in some states. If it were determined that we had been conducting
business in any state without compliance with the applicable limited partnership
statute, or that the unitholders as a group took any action pursuant to our
partnership agreement that constituted participation in the "control" of our
business, then the unitholders could be held liable under some circumstances for
our obligations to the same extent as a general partner.
TAX RISKS TO UNITHOLDERS
You should read "Tax Considerations" for a more complete discussion of
the following federal income tax risks related to owning and disposing of
limited partnership units.
The IRS could treat us as a corporation for tax purposes, which would
substantially reduce the cash available for distribution to you.
The anticipated after-tax benefit of an investment in the limited
partnership units depends largely on our being treated as a partnership for
federal income tax purposes. We have not requested, and do not plan to request,
a ruling from the IRS on this or any other matter affecting us.
If we were classified as a corporation for federal income tax purposes,
we would pay federal income tax on our income at the corporate tax rate, which
is currently a maximum of 35%. Distributions to you would generally be taxed
again to you as corporate distributions, and no income, gains, losses or
deductions would flow through to you. Because a tax would be imposed upon us as
a corporation, the cash available for distribution to you would be substantially
reduced. Treatment of us as a corporation would result in a material reduction
in the after-tax return to the unitholders, likely causing a substantial
reduction in the value of the limited partnership units.
Current law may change so as to cause us to be taxed as a corporation
for federal income tax purposes or otherwise subject us to entity-level
taxation. The partnership agreement provides that, if a law is enacted or
existing law is modified or interpreted in a manner that subjects us to taxation
as a corporation or otherwise subjects us to entity-level taxation for federal,
state or local income tax purposes, then the minimum quarterly distribution and
the target distribution levels will be decreased to reflect that impact on us.
A successful IRS contest of the federal income tax positions we take may
adversely impact the market for limited partnership units.
9
We have not requested a ruling from the IRS with respect to any matter
affecting us. The IRS may adopt positions that differ from the conclusions of
our counsel expressed in this prospectus or from the positions we take. It may
be necessary to resort to administrative or court proceedings to sustain our
counsel's conclusions or the positions we take. A court may not concur with our
counsel's conclusions or the positions we take. Any contest with the IRS may
materially and adversely impact the market for limited partnership units and the
price at which they trade. In addition, the costs of any contest with the IRS,
principally legal, accounting and related fees, will be borne by us and directly
or indirectly by the unitholders and the general partner.
You may be required to pay taxes even if you do not receive any cash
distributions.
You will be required to pay federal income taxes and, in some cases,
state and local income taxes on your share of our taxable income even if you do
not receive any cash distributions from us. You may not receive cash
distributions from us equal to your share of our taxable income or even equal to
the actual tax liability that results from your share of our taxable income.
Tax gain or loss on disposition of limited partnership units could be different
than expected.
If you sell your limited partnership units, you will recognize gain or
loss equal to the difference between the amount realized and your tax basis in
those limited partnership units. Prior distributions in excess of the total net
taxable income you were allocated for a limited partnership unit, which
decreased your tax basis in that limited partnership unit, will, in effect,
become taxable income to you if the limited partnership unit is sold at a price
greater than your tax basis in that limited partnership unit, even if the price
you receive is less than your original cost. A substantial portion of the amount
realized, whether or not representing gain, may be ordinary income to you.
Should the IRS successfully contest some positions we take, you could recognize
more gain on the sale of units than would be the case under those positions,
without the benefit of decreased income in prior years. Also, if you sell your
units, you may incur a tax liability in excess of the amount of cash you receive
from the sale.
If you are a tax-exempt entity, regulated investment company or mutual fund or
you are not an individual residing in the United States, you may have adverse
tax consequences from owning limited partnership units.
Investment in limited partnership units by tax-exempt entities,
regulated investment companies or mutual funds and foreign persons raises issues
unique to them. For example, virtually all of our income allocated to
organizations exempt from federal income tax, including individual retirement
accounts and other retirement plans, will be unrelated business taxable income
and will be taxable to them. Very little of our income will be qualifying income
to a regulated investment company or mutual fund. Distributions to foreign
persons will be reduced by withholding taxes, currently at the rate of 38.6%,
and foreign persons will be required to file federal income tax returns and pay
tax on their share of our taxable income.
We have registered as a tax shelter. This may increase the risk of an IRS audit
of us or a unitholder.
We have registered with the IRS as a "tax shelter." The IRS requires
that some types of entities, including some partnerships, register as "tax
shelters" in response to the perception that they claim tax benefits that the
IRS may believe to be unwarranted. As a result, we may be audited by the IRS and
tax adjustments could be made. Any unitholder owning less than a 1% profits
interest in us has very limited rights to participate in the income tax audit
process. Further, any adjustments in our tax returns will lead to adjustments in
our unitholders' tax returns and may lead to audits of unitholders' tax returns
and adjustments of items unrelated to us. You will bear the cost of any expense
incurred in connection with an examination of your personal tax return.
We will treat each purchaser of units as having the same tax benefits without
regard to the units purchased. The IRS may challenge this treatment, which could
adversely affect the value of the units.
Because we cannot match transferors and transferees of limited
partnership units, we will adopt depreciation and amortization positions that do
not conform with all aspects of final Treasury regulations. A successful IRS
challenge to those positions could adversely affect the amount of tax benefits
available to you. It also could affect the timing of these tax benefits or the
amount of gain from your sale of limited partnership units
10
and could have a negative impact on the value of the limited partnership units
or result in audit adjustments to your tax returns. Please read "Tax
Considerations -- Uniformity of Units" for a further discussion of the effect of
the depreciation and amortization positions we adopt.
You will likely be subject to state and local taxes in states where you do not
live as a result of an investment in the units.
In addition to federal income taxes, you will likely be subject to
other taxes, including state and local taxes, unincorporated business taxes and
estate, inheritance or intangible taxes that are imposed by the various
jurisdictions in which we do business or own property and in which you do not
reside. You may be required to file state and local income tax returns and pay
state and local income taxes in many or all of the jurisdictions in which we do
business. Further, you may be subject to penalties for failure to comply with
those requirements. It is your responsibility to file all United States federal,
state and local tax returns. Our counsel has not rendered an opinion on the
state or local tax consequences of an investment in the limited partnership
units.
11
TEPPCO PARTNERS
We are a publicly traded Delaware limited partnership engaged in the
transportation of refined products, liquefied petroleum gases and
petrochemicals, the transportation and marketing of crude oil and natural gas
liquids and the gathering of natural gas. The following chart shows our
organization and ownership structure as of the date of this prospectus before
giving effect to this offering. Except in the following chart, the ownership
percentages referred to in this prospectus reflect the approximate effective
ownership interest in us and our subsidiary companies on a combined basis.
[Chart showing that Texas Eastern Products Pipeline Company, LLC owns a 2.0%
general partner interest in TEPPCO Partners, L.P. Duke Energy Corporation owns
a 14.2% limited partner interest in TEPPCO Partners, L.P. Public unit holders
own 83.8% of the limited partner interests in TEPPCO Partners, L.P. Texas
Eastern Products Pipeline Company, LLC is wholly owned by Duke Energy Field
Services, LLC. Duke Energy owns 69.7% of Duke Energy Field Services, LLC and
Phillips Petroleum Corporation owns 30.3% of Duke Energy Field Services, LLC.
TEPPCO Partners, L.P. owns all of the capital stock of TEPPCO GP, Inc. TEPPCO
Partners, L.P. owns a 99.999% limited partner interest in the Operating
Partnerships. TEPPCO GP, Inc. owns a 0.001% general partnership interest in the
Operating Partnerships.]
12
USE OF PROCEEDS
Except as otherwise provided in the applicable prospectus supplement,
we will use the net proceeds we receive from the sale of the securities to pay
all or a portion of indebtedness outstanding at the time and to acquire
properties as suitable opportunities arise.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods
indicated is as follows:
NINE
MONTHS
ENDED
TWELVE MONTHS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- -------------
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- -------------
Ratio of Earnings to Fixed Charges..... 2.59x 2.70x 2.72x 3.06x 2.10x 3.27x
For purposes of calculating the ratio of earnings to fixed charges:
o "fixed charges" represent interest expense (including amounts
capitalized), amortization of debt costs and the portion of
rental expense representing the interest factor; and
o "earnings" represent the aggregate of income from continuing
operations (before adjustment for minority interest,
extraordinary loss and equity earnings), fixed charges and
distributions from equity investment, less capitalized
interest.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be issued under an Indenture, among TEPPCO
Partners, as issuer, First Union National Bank, as trustee, and TE Products,
TCTM, TEPPCO Midstream and Jonah, as subsidiary guarantors, and any supplements
to the Indenture that may be entered into from time to time. The terms of the
debt securities will include those expressly set forth in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended. If we issue one or more series of debt securities subordinated
to our Senior Indebtedness (as defined below), then these series will be issued
under a separate Indenture containing subordination provisions. This description
of debt securities is intended to be a useful overview of the material
provisions of the debt securities and the Indentures. The forms of the Senior
Indenture and the Subordinated Indenture have been filed as exhibits to this
registration statement. You should read the Indentures for provisions that may
be important to you because the Indentures, and not this description, govern
your rights as a holder of debt securities. References in this prospectus to an
"Indenture" refer to the particular Indenture under which a series of debt
securities is issued.
GENERAL
The Indenture does not limit the amount of debt securities that may be
issued thereunder. Debt securities may be issued under the Indenture from time
to time in separate series, each up to the aggregate amount authorized for such
series. Any series of debt securities may be fully and unconditionally
guaranteed by the TE Products, TCTM, TEPPCO Midstream and Jonah. TE Products,
TCTM, TEPPCO Midstream and Jonah are sometimes referred to in this description
of debt securities as the "Subsidiary Guarantors." The debt securities will be
our general obligations and those of the Subsidiary Guarantors (if they are
guaranteed by the Subsidiary Guarantors) and may be subordinated to our Senior
Indebtedness and that of the Subsidiary Guarantors. Please read "Description of
Debt Securities - Subordination."
A prospectus supplement and a supplemental indenture (or a resolution
of our Board of Directors and accompanying officers' certificate) relating to
any series of debt securities being offered will include specific terms relating
to the offering. These terms will include some or all of the following:
13
o the form and title of the debt securities;
o the total principal amount of the debt securities;
o the date or dates on which the debt securities may be issued;
o the portion of the principal amount which will be payable if
the maturity of the debt securities is accelerated;
o any right we may have to defer payments of interest by
extending the dates payments are due and whether interest on
those deferred amounts will be payable as well;
o the dates on which the principal and premium, if any, of the
debt securities will be payable;
o the interest rate which the debt securities will bear and the
interest payment dates for the debt securities;
o any optional redemption provisions;
o any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the debt securities;
o whether the debt securities are entitled to the benefits of
any guarantees by the Subsidiary Guarantors;
o whether the debt securities may be issued in amounts other
than $1,000 each or multiples thereof;
o any changes to or additional Events of Default or covenants;
o the subordination, if any, of the debt securities and any
changes to the subordination provisions of the Indenture; and
o any other terms of the debt securities.
This description of debt securities will be deemed modified, amended or
supplemented by any description of any series of debt securities set forth in a
prospectus supplement related to that series.
The prospectus supplement will also describe any material United States
federal income tax consequences or other special considerations regarding the
applicable series of debt securities, including those relating to:
o debt securities with respect to which payments of principal,
premium or interest are determined with reference to an index
or formula, including changes in prices of particular
securities, currencies or commodities;
o debt securities with respect to which principal, premium or
interest is payable in a foreign or composite currency;
o debt securities that are issued at a discount below their
stated principal amount, bearing no interest or interest at a
rate that at the time of issuance is below market rates; and
o variable rate debt securities that are exchangeable for fixed
rate debt securities.
14
At our option, we may make interest payments, by check mailed to the
registered holders of debt securities or, if so stated in the applicable
prospectus supplement, at the option of a holder by wire transfer to an account
designated by the holder.
Unless otherwise provided in the applicable prospectus supplement,
fully registered securities may be transferred or exchanged at the office of the
Trustee at which its corporate trust business is principally administered in the
United States or at the office of the Trustee or the Trustee's agent in New York
City, subject to the limitations provided in the Indenture, without the payment
of any service charge, other than any applicable tax or governmental charge.
Any funds we pay to a paying agent for the payment of amounts due on
any debt securities that remain unclaimed for two years will be returned to us,
and the holders of the debt securities must thereafter look only to us for
payment thereof.
SUBSIDIARY GUARANTEES
Our payment obligations under any series of the debt securities may be
jointly and severally unconditionally guaranteed by the Subsidiary Guarantors.
If a series of debt securities are so guaranteed, the Indenture, or a
supplemental indenture thereto, will be executed by the Subsidiary Guarantors.
The terms of any subsidiary guarantee will be set forth in the applicable
prospectus supplement. The obligations of each Subsidiary Guarantor under its
Guarantee will be limited to the maximum amount that will, after giving effect
to all other contingent and fixed liabilities of the Subsidiary Guarantor and to
any collections from or payments made by or on behalf of any other Subsidiary
Guarantors in respect of the obligations of the other Subsidiary Guarantor under
its Guarantee, result in the obligations of the Subsidiary Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
Federal or state law.
The Indenture will provide that the Guarantee of any Subsidiary
Guarantor may be released under certain circumstances. Provided that no default
shall have occurred and shall be continuing under the Indenture, a Subsidiary
Guarantor will be unconditionally released and discharged from the Guarantee:
o automatically upon any sale, exchange or transfer, to any
person that is not our affiliate, of all of our direct or
indirect limited partnership or other equity interests in, or
all or substantially all the assets of, the Subsidiary
Guarantor (provided such sale, exchange or transfer is not
prohibited by the Indenture);
o automatically upon the merger of the Subsidiary Guarantor into
us or any other Subsidiary Guarantor or the liquidation and
dissolution of the Subsidiary Guarantor (in each case to the
extent not prohibited by this Indenture); or
o following delivery of a written notice of the release from the
Guarantee by us to the Trustee, upon the release of all
guarantees by the Subsidiary Guarantor of any debt for
borrowed money of us (or a guarantee of such debt) and, after
giving effect to the proposed release, the aggregate total
consolidated assets of all our subsidiaries that are not
Subsidiary Guarantors will not exceed 2% of our consolidated
assets.
If a series of debt securities is guaranteed by the Subsidiary
Guarantors and is designated as subordinate to our Senior Indebtedness, then the
guarantees by the Subsidiary Guarantors will be subordinated to the Senior
Indebtedness of the Subsidiary Guarantors to substantially the same extent as
the series is subordinated to our Senior Indebtedness, as described in
"--Subordination."
COVENANTS
A series of debt securities may contain certain financial and other
covenants applicable to us and our subsidiaries. A description of any such
affirmative and negative covenants will be contained in the prospectus
supplement applicable to such series.
15
EVENTS OF DEFAULT
Each of the following will be an "Event of Default" under the Indenture
with respect to a series of debt securities:
o default in any payment of interest on any debt securities of
that series when due, continued for 30 days;
o default in the payment of principal of or premium, if any, on
any debt securities of that series when due at its stated
maturity, upon redemption, upon required repurchase or
otherwise;
o default in the payment of any sinking fund payment on any debt
securities of that series when due;
o failure by us or, if the series of debt securities is
guaranteed by the Subsidiary Guarantors, a Subsidiary
Guarantor to comply for 60 days after notice with the other
agreements contained in the Indenture, any supplement to the
Indenture or any board resolution authorizing the issuance of
that series;
o certain events of bankruptcy, insolvency or reorganization of
us or, if the series of debt securities is guaranteed by the
Subsidiary Guarantors, of the Subsidiary Guarantors; or
o if the series of debt securities is guaranteed by the
Subsidiary Guarantors, any of the guarantees by the Subsidiary
Guarantors ceases to be in full force and effect or is
declared null and void in a judicial proceeding, or any of the
Subsidiary Guarantors denies or disaffirms its obligations
under the Indenture or its guarantee.
However, a default under the fourth bullet point above will not constitute an
Event of Default until the Trustee or the holders of 25% in principal amount of
the outstanding debt securities of that series notify us and, if the series of
debt securities is guaranteed by the Subsidiary Guarantors, the Subsidiary
Guarantors of the default and such default is not cured within 60 days after
receipt of notice.
If an Event of Default (other than an Event of Default described in the
fourth bullet point above) occurs and is continuing, the Trustee by notice to
us, or the holders of at least 25% in principal amount of the outstanding debt
securities of that series by notice to us and the Trustee, may, and the Trustee
at the request of such holders shall, declare the principal of, premium, if any,
and accrued and unpaid interest, if any, on all the debt securities of that
series to be due and payable. Upon such a declaration, the principal, premium
and accrued and unpaid interest will be due and payable immediately. If an Event
of Default described in the fifth bullet point above occurs and is continuing,
the principal of, premium, if any, and accrued and unpaid interest on all
outstanding debt securities of all series will become immediately due and
payable without any declaration or other act on the part of the Trustee or any
holders. The holders of a majority in principal amount of the outstanding debt
securities of a series may waive all past defaults (except with respect to
nonpayment of principal, premium or interest) and rescind any such acceleration
with respect to the debt securities of that series and its consequences if
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, and interest on the debt
securities of that series that have become due solely by such declaration of
acceleration, have been cured or waived.
Subject to the provisions of the Indenture relating to the duties of
the Trustee, if an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders unless such holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium, if any, or interest when due, no holder may pursue any
remedy with respect to the Indenture or the debt securities unless:
o such holder has previously given the Trustee notice that an
Event of Default is continuing;
16
o holders of at least 25% in principal amount of the outstanding
debt securities of that series have requested the Trustee to
pursue the remedy;
o such holders have offered the Trustee reasonable indemnity
against any loss, liability or expense;
o the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of indemnity;
and
o the holders of a majority in principal amount of the
outstanding debt securities of that series have not given the
Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period.
Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding debt securities of a series are given the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee with respect to that series of debt securities. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee will be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
The Indenture provides that if an Event of Default occurs and is
continuing and is known to the Trustee, the Trustee must mail to each holder
notice of the Event of Default within 90 days after it occurs. Except in the
case of a default in the payment of principal of, premium, if any, or interest
on any debt securities, the Trustee may withhold notice if and so long as the
board of directors, the executive committee or a committee of directors or
responsible officers of the Trustee in good faith determines that withholding
notice is in the interests of the holders. In addition, we are required to
deliver to the Trustee, within 120 days after the end of each fiscal year, a
compliance certificate indicating we have complied with all covenants contained
in the Indenture or whether any default or Event of Default has occurred during
the previous year. We are also required to deliver to the Trustee, within 30
days after the occurrence thereof, written notice of any Event of Default, its
status and what action we are taking or propose to take with respect to the
default.
AMENDMENTS AND WAIVERS
Modifications and amendments of the Indenture may be made by us, the
Subsidiary Guarantors (if any) and the Trustee with the consent of the holders
of a majority in principal amount of all debt securities then outstanding under
the Indenture (including consents obtained in connection with a tender offer or
exchange offer for the debt securities). However, without the consent of each
holder of outstanding debt securities of each series affected thereby, no
amendment may, among other things:
o reduce the percentage in principal amount of debt securities
whose holders must consent to an amendment;
o reduce the rate of or extend the time for payment of interest
on any debt securities;
o reduce the principal of or extend the stated maturity of any
debt securities;
o reduce the premium payable upon the redemption of any debt
securities or change the time at which any debt securities may
be redeemed under an optional redemption or any similar
provision;
o make any debt securities payable in other than U.S. dollars;
o impair the right of any holder to receive payment of, premium,
if any, principal of and interest on such holder's debt
securities on or after the due dates therefor or to institute
suit for the enforcement of any payment on or with respect to
such holder's debt securities;
17
o release any security that has been granted in respect of the
debt securities;
o make any change in the amendment provisions which require each
holder's consent or in the waiver provisions; or
o release a Subsidiary Guarantor or modify such Subsidiary
Guarantor's guarantee in any manner adverse to the holders.
The holders of a majority in aggregate principal amount of the
outstanding debt securities of each series affected thereby, on behalf of all
such holders, may waive compliance by us or a Subsidiary Guarantor with certain
restrictive provisions of the Indenture. Subject to certain rights of the
Trustee as provided in the Indenture, the holders of a majority in aggregate
principal amount of the debt securities of each series affected thereby, on
behalf of all such holders, may waive any past default under the Indenture
(including any such waiver obtained in connection with a tender offer or
exchange offer for the debt securities), except a default in the payment of
principal, premium or interest or a default in respect of a provision that under
the Indenture cannot be modified or amended without the consent of all holders
of the series of debt securities that is affected.
Without the consent of any holder, we, the Subsidiary Guarantors (if
any) and the Trustee may amend the Indenture to:
o cure any ambiguity, omission, defect or inconsistency;
o convey, transfer, assign, mortgage or pledge any property to
or with the Trustee;
o provide for the assumption by a successor corporation,
partnership, trust or limited liability company of our
obligations or those of a Subsidiary Guarantor under the
Indenture;
o add guarantees with respect to the debt securities;
o change or eliminate any restriction on the payment of
principal of, or premium, if any, on, any debt securities;
o secure the debt securities;
o add covenants for the benefit of the holders or surrender any
right or power conferred upon us or any Subsidiary Guarantor;
o make any change that does not adversely affect the rights of
any holder;
o add or appoint a successor or separate Trustee; or
o comply with any requirement of the Securities and Exchange
Commission in connection with the qualification of the
Indenture under the Trust Indenture Act.
The consent of the holders is not necessary under the Indenture to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment. After an amendment
under the Indenture becomes effective, we are required to mail to the holders a
notice briefly describing such amendment. However, the failure to give such
notice to all the holders, or any defect therein, will not impair or affect the
validity of the amendment.
DEFEASANCE
At any time we may terminate all our obligations under a series of debt
securities and the Indenture, a "legal defeasance," except for certain
obligations, including those respecting the defeasance trust and obligations to
18
register the transfer or exchange of the debt securities, to replace mutilated,
destroyed, lost or stolen debt securities and to maintain a registrar and paying
agent in respect of the debt securities. If we exercise our legal defeasance
option, any subsidiary guarantee will terminate with respect to that series of
debt securities.
At any time we may terminate our obligations under covenants applicable
to a series of debt securities and described in the prospectus supplement
applicable to such series (other than as described in such prospectus
supplement), the bankruptcy provisions with respect to the Subsidiary Guarantors
(if any) and the guarantee provision described under "Events of Default" above
with respect to a series of debt securities, a "covenant defeasance".
We may exercise our legal defeasance option notwithstanding our prior
exercise of our covenant defeasance option. If we exercise our legal defeasance
option, payment of the affected series of debt securities may not be accelerated
because of an Event of Default with respect thereto. If we exercise our covenant
defeasance option, payment of the affected series of debt securities may not be
accelerated because of an Event of Default specified in the fourth, fifth (with
respect only to a Subsidiary Guarantor (if any)) or sixth bullet points under
"Events of Default" above.
In order to exercise either defeasance option, we must irrevocably
deposit in trust with the Trustee money or certain U.S. government obligations
for the payment of principal, premium, if any, and interest on the series of
debt securities to redemption or maturity, as the case may be, and must comply
with certain other conditions, including that no default has occurred and is
continuing after the deposit in trust and the delivery to the Trustee of an
opinion of counsel to the effect that holders of the series of debt securities
will not recognize income, gain or loss for Federal income tax purposes as a
result of such defeasance and will be subject to Federal income tax on the same
amount and in the same manner and at the same times as would have been the case
if such deposit and defeasance had not occurred. In the case of legal defeasance
only, such opinion of counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law.
NO PERSONAL LIABILITY OF GENERAL PARTNER
Texas Eastern Products Pipeline Company, LLC, our general partner, and
its directors, officers, employees, incorporators and stockholders, as such,
shall have no liability for any of our obligations or the obligations of the
Subsidiary Guarantors (if any) under the debt securities, the Indentures or the
guarantees (if any) or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each holder by accepting a debt security
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the debt securities. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Securities and Exchange Commission that such a waiver is against
public policy.
SUBORDINATION
Debt securities of a series may be subordinated to Senior Indebtedness
(as defined below) to the extent set forth in the prospectus supplement relating
to such series. Subordinated debt securities will be subordinate in right of
payment, to the extent and in the manner set forth in the Indenture and the
prospectus supplement relating to such series, to the prior payment of all of
our indebtedness and that of any Subsidiary Guarantor that is designated as
"Senior Indebtedness" with respect to the series. "Senior Indebtedness" is
defined generally to include all notes or other evidences of indebtedness for
money, including guarantees, borrowed by us or, if applicable to any series of
outstanding debt securities, the Subsidiary Guarantors, provided that these
obligations are not expressed to be subordinate or junior in right of payment to
any of our other indebtedness.
Upon any payment or distribution of our assets or, if applicable to any
series of outstanding debt securities, the Subsidiary Guarantors' assets to
creditors or upon a total or partial liquidation or dissolution of us or, if
applicable to any series of outstanding debt securities, the Subsidiary
Guarantors, or in a bankruptcy, receivership or similar proceeding relating to
us or, if applicable to any series of outstanding debt securities, to the
Subsidiary Guarantors, the holders of Senior Indebtedness of us or, if
applicable, a Subsidiary Guarantor shall be entitled to receive payment in full
in cash of the Senior Indebtedness before holders of subordinated debt
securities shall be entitled to receive any payment of principal, premium or
interest with respect to the subordinated debt securities, and until the Senior
Indebtedness is paid in full, any distribution to which holders of subordinated
debt securities would
19
otherwise be entitled shall be made to the holders of Senior Indebtedness except
that such holders may receive units representing limited partner interests and
any debt securities that are subordinated to Senior Indebtedness to at least the
same extent as the subordinated debt securities.
We may not make any payments of principal, premium, if any, or interest
with respect to subordinated debt securities, make any deposit for the purpose
of defeasance of the subordinated debt securities, or repurchase, redeem or
otherwise retire (except, in the case of subordinated debt securities that
provide for a mandatory sinking fund, by our delivery of subordinated debt
securities to the Trustee in satisfaction of our sinking fund obligation) any
subordinated debt securities if (a) any principal, premium or interest with
respect to Senior Indebtedness is not paid within any applicable grace period
(including at maturity), or (b) any other default on Senior Indebtedness occurs
and the maturity of the Senior Indebtedness is accelerated in accordance with
its terms, unless, in either case, the default has been cured or waived and the
acceleration has been rescinded, the Senior Indebtedness has been paid in full
in cash, or we and the Trustee receive written notice approving the payment from
the representatives of each issue of "Designated Senior Indebtedness" (which,
unless otherwise provided in the prospectus supplement relating to the series of
subordinated debt securities, will include indebtedness for borrowed money under
a bank credit agreement ("Bank Debt") and any other specified issue of Senior
Indebtedness of at least $100 million or other indebtedness for borrowed money
that we may designate). During the continuance of any default (other than a
default described in clause (a) or (b) above), with respect to any Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect the acceleration) or the expiration of any applicable grace periods, we
and, if applicable to any series of outstanding debt securities, the Subsidiary
Guarantors may not pay the subordinated debt securities for a period, the
"Payment Blockage Period", commencing on the receipt by us and the Trustee of
written notice of the default from the representative of any Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period, a
"Blockage Notice". The Payment Blockage Period may be terminated before its
expiration by written notice to the Trustee, to us and, if applicable to any
series of outstanding debt securities, to the Subsidiary Guarantors from the
person or persons who gave the Blockage Notice, by repayment in full in cash of
the Senior Indebtedness with respect to which the Blockage Notice was given, or
because the default giving rise to the Payment Blockage Period is no longer
continuing. Unless the holders of Senior Indebtedness shall have accelerated the
maturity thereof, we and, if applicable to any series of outstanding debt
securities, the Subsidiary Guarantors may resume payments on the subordinated
debt securities after the expiration of the Payment Blockage Period. Unless
otherwise provided in the prospectus supplement relating to the series of
subordinated debt securities, not more than one Blockage Notice may be given in
any period of 360 consecutive days unless the first Blockage Notice within the
360-day period is given by or on behalf of holders of Designated Senior
Indebtedness other than the Bank Indebtedness, in which case, the representative
of the Bank Indebtedness may give another Blockage Notice within the period. In
no event, however, may the total number of days during which any Payment
Blockage Period or Periods is in effect exceed 179 days in the aggregate during
any period of 360 consecutive days. After all Senior Indebtedness is paid in
full and until the subordinated debt securities are paid in full, holders of the
subordinated debt securities shall be subrogated to the rights of holders of
Senior Indebtedness to receive distributions applicable to Senior Indebtedness.
By reason of the subordination, in the event of insolvency, our
creditors who are holders of Senior Indebtedness, as well as certain of our
general creditors, may recover more, ratably, than the holders of the
subordinated debt securities.
BOOK ENTRY, DELIVERY AND FORM
The debt securities of a series may be issued in whole or in part in
the form of one or more global certificates that will be deposited with a
depositary identified in a prospectus supplement.
Unless otherwise stated in any prospectus supplement, The Depository
Trust Company, New York, New York, or "DTC," will act as depositary. Book-entry
debt securities of a series will be issued in the form of a global security that
will be deposited with DTC. This means that we will not issue certificates to
each holder. One global security will be issued to DTC who will keep a
computerized record of its participants (for example, your broker) whose clients
have purchased the debt securities. The participant will then keep a record of
its clients who purchased the debt securities. Unless it is exchanged in whole
or in part for a certificated security, a global security may not be
transferred; except that DTC, its nominees and their successors may transfer a
global security as a whole to one another.
20
Beneficial interests in global securities will be shown on, and
transfers of global securities will be made only through, records maintained by
DTC and its participants.
DTC has provided us the following information: DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants deposit with DTC. DTC also records the
settlement among participants of securities transactions, such as transfers and
pledges, in deposited securities through computerized records for participants'
accounts. This eliminates the need to exchange certificates. Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
participant. The rules that apply to DTC and its participants are on file with
the Securities and Exchange Commission.
DTC is owned by a number of its participants and by the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
We will wire principal and interest payments to DTC's nominee. We and
the Trustee will treat DTC's nominee as the owner of the global securities for
all purposes. Accordingly, we, the Trustee and any paying agent will have no
direct responsibility or liability to pay amounts due on the global securities
to owners of beneficial interests in the global securities.
It is DTC's current practice, upon receipt of any payment of principal
or interest, to credit participants' accounts on the payment date according to
their respective holdings of beneficial interests in the global securities as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to participants whose accounts are credited with
debt securities on a record date, by using an omnibus proxy. Payments by
participants to owners of beneficial interests in the global securities, and
voting by participants, will be governed by the customary practices between the
participants and owners of beneficial interests, as is the case with debt
securities held for the account of customers registered in "street name."
However, payments will be the responsibility of the participants and not of DTC,
the Trustee or us.
Debt securities represented by a global security will be exchangeable
for certificated securities with the same terms in authorized denominations only
if:
o DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered
under applicable law and a successor depositary is not
appointed by us within 90 days; or
o we determine not to require all of the debt securities of a
series to be represented by a global security and notify the
Trustee of our decision.
THE TRUSTEE
We may appoint a separate Trustee for any series of debt securities. As
used herein in the description of a series of debt securities, the term
"Trustee" refers to the Trustee appointed with respect to any such series of
debt securities.
We may maintain banking and other commercial relationships with the
Trustee and its affiliates in the ordinary course of business, and the Trustee
may own debt securities.
21
GOVERNING LAW
The Indenture provides that it and the debt securities will be governed
by, and construed in accordance with, the laws of the State of New York.
CASH DISTRIBUTIONS
GENERAL
We hold all of our assets and conduct all of our operations through our
subsidiaries. Our subsidiaries will generate all of our Cash from Operations.
The distribution of that cash from our subsidiaries to us is expected to be our
principal source of Available Cash, as described below, from which we will make
distributions. Available Cash means generally, with respect to any calendar
quarter, the sum of all of our cash receipts plus net reductions to cash
reserves less the sum of all of our cash disbursements and net additions to cash
reserves. Cash from Operations, which is determined on a cumulative basis,
generally means all cash generated by our operations, after deducting related
cash expenditures, reserves and other items specified in our partnership
agreement. It also includes the $20 million cash balance we had on the date of
our initial public offering in 1990. The full definitions of Available Cash and
Cash from Operations are set forth in "--Defined Terms."
Our subsidiary partnerships must, under their partnership agreements,
distribute 100% of their available cash. Available cash is defined in the
subsidiary partnership agreements in substantially the same manner as it is in
our partnership agreement. Our limited liability company subsidiaries have
adopted a dividend policy under which all available cash is to be distributed.
Accordingly, the following paragraphs describing distributions to unitholders
and the general partner, and the percentage interests in our distributions, are
stated on the basis of cash available for distribution by us and our
subsidiaries on a combined basis.
We will make distributions to unitholders and the general partner with
respect to each calendar quarter in an amount equal to 100% of our Available
Cash for the quarter, except in connection with our dissolution and liquidation.
Distributions of our Available Cash will be made 98% to unitholders and 2% to
the general partner, subject to the payment of incentive distributions to the
general partner, if specified target levels of cash distributions to the
unitholders are achieved. The general partner's incentive distributions are
described below under "--Quarterly Distributions of Available
Cash--Distributions of Cash from Operations."
The following table sets forth the amount of distributions of Available
Cash constituting Cash from Operations effected with respect to the units for
the quarters in the periods shown.
AMOUNT
RECORD DATE PAYMENT DATE PER UNIT
----------- ------------ --------
October 30, 1998 November 6, 1998 $ 0.450
January 29, 1999 February 5, 1999 0.450
April 30, 1999 May 7, 1999 0.450
July 30, 1999 August 6, 1999 0.475
October 29, 1999 November 5, 1999 0.475
January 31, 2000 February 4, 2000 0.475
April 28, 2000 May 5, 2000 0.500
July 31, 2000 August 4, 2000 0.500
October 31, 2000 November 3, 2000 0.525
January 31, 2001 February 2, 2001 0.525
April 30, 2001 May 4, 2001 0.525
July 31, 2001 August 6, 2001 0.525
October 31, 2001 November 5, 2001 0.575
22
Cash distributions are characterized as either distributions of Cash
from Operations or Cash from Interim Capital Transactions. This distinction is
important because it affects the amount of cash that is distributed to the
unitholders relative to the general partner. See "--Quarterly Distributions of
Available Cash--Distributions of Cash from Operations" and "--Quarterly
Distributions of Available Cash--Distributions of Cash from Interim Capital
Transactions" below. We will ordinarily generate Cash from Interim Capital
Transactions from:
o borrowings and sales of debt securities other than for working
capital purposes;
o sales of equity interests; and
o sales or other dispositions of our assets.
All Available Cash that we distribute on any date from any source will
be treated as if it were a distribution of Cash from Operations until the sum of
all Available Cash distributed as Cash from Operations to the unitholders and to
the general partner equals the aggregate amount of all Cash from Operations that
we generated since we commenced operations through the end of the prior calendar
quarter.
Any remaining Available Cash distributed on that date will be treated
as if it were a distribution of Cash from Interim Capital Transactions, except
as otherwise set forth below under the caption "--Quarterly Distributions of
Available Cash--Distributions of Cash from Interim Capital Transactions."
A more complete description of how we will distribute cash before we
commence to dissolve or liquidate is set forth below under "--Quarterly
Distributions of Available Cash." Distributions of cash in connection with our
dissolution and liquidation will be made as described below under
"--Distributions of Cash Upon Liquidation."
QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH
Distributions of Cash from Operations
Our distributions of Available Cash that constitutes Cash from
Operations in respect of any calendar quarter will be made in the following
priorities:
first, 98% to all unitholders pro rata and 2% to the general
partner until all unitholders have received distributions of $0.275 per
unit for such calendar quarter (the "First Target Distribution");
second, 85% to all unitholders pro rata and 15% to the general
partner until all unitholders have received distributions of $0.325 per
unit for such calendar quarter (the "Second Target Distribution");
third, 75% to all unitholders pro rata and 25% to the general
partner until all unitholders have received distributions of $0.450 per
unit for such calendar quarter (the "Third Target Distribution" and,
together with the First Target Distribution and Second Target
Distribution, the "Target Distributions"); and
thereafter, 50% to all unitholders pro rata and 50% to the
general partner.
The following table illustrates the percentage allocation of
distributions of Available Cash that constitute Cash from Operations among the
unitholders and the general partner up to the various target distribution
levels.
23
MARGINAL PERCENTAGE INTEREST IN DISTRIBUTIONS
---------------------------------------------
GENERAL
QUARTERLY AMOUNT: UNITHOLDERS PARTNER
----------------- ----------- -------
up to $0.275 98% 2%
$0.276 to $0.325 85% 15%
$0.326 to $0.450 75% 25%
Thereafter 50% 50%
The Target Distributions are each subject to adjustment as described
below under "--Adjustment of the Target Distributions."
Distributions of Cash from Interim Capital Transactions
Distributions of Available Cash that constitutes Cash from Interim
Capital Transactions will be distributed 99% to all unitholders pro rata and 1%
to the general partner until a hypothetical holder of a unit acquired in our
initial public offering has received, with respect to that unit, distributions
of Available Cash constituting Cash from Interim Capital Transactions in an
amount per unit equal to $20.00. Thereafter, all Available Cash will be
distributed as if it were Cash from Operations. We have not distributed any
Available Cash that constitutes Cash from Interim Capital Transactions.
ADJUSTMENT OF THE TARGET DISTRIBUTIONS
The Target Distributions will be proportionately adjusted in the event
of any combination or subdivision of units. In addition, if a distribution is
made of Available Cash constituting Cash from Interim Capital Transactions, the
Target Distributions will also be adjusted proportionately downward to equal the
product resulting from multiplying each of them by a fraction, of which the
numerator shall be the Unrecovered Capital immediately after giving effect to
such distribution and the denominator shall be the Unrecovered Capital
immediately before such distribution. For these purposes, "Unrecovered Capital"
means, at any time, an amount equal to the excess of (1) $10.00 over (2) the sum
of all distributions theretofore made in respect of a hypothetical unit offered
in our initial public offering out of Available Cash constituting Cash from
Interim Capital Transactions and all distributions in connection with our
liquidation.
The Target Distributions also may be adjusted if legislation is enacted
that causes us to be taxable as a corporation or to be treated as an association
taxable as a corporation for federal income tax purposes. In that event, the
Target Distributions for each quarter thereafter would be reduced to an amount
equal to the product of each of the Target Distributions multiplied by 1 minus
the sum of:
o the maximum marginal federal corporate income tax rate, plus
o any increase that results from such legislation in the
effective overall state and local income tax rate applicable
to us for the taxable year in which such quarter occurs after
taking into account the benefit of any deduction allowable for
federal income tax purposes with respect to the payment of
state and local income taxes.
DISTRIBUTIONS OF CASH UPON LIQUIDATION
We will dissolve on December 31, 2084, unless we are dissolved at an
earlier date pursuant to the terms of our partnership agreement. The proceeds of
our liquidation shall be applied first in accordance with the provisions of our
partnership agreement and applicable law to pay our creditors in the order of
priority provided by law. Thereafter, any remaining proceeds will be distributed
to unitholders and the general partner as set forth below. Upon our liquidation,
unitholders are entitled to share with the general partner in the remainder of
our assets. Their sharing will be in proportion to their capital account
balances, after giving effect to the following allocations of any gain or loss
realized from sales or other dispositions of assets following commencement of
our liquidation. Gain or loss will include any unrealized gain or loss
attributable to assets distributed in kind. Any such gain will be allocated as
follows:
24
first, to each partner having a deficit balance in his capital
account in the proportion that the deficit balance bears to the total
deficit balances in the capital accounts of all partners until each
partner has been allocated gain equal to that deficit balance;
second, 100% to the partners in accordance with their
percentage interests until the capital account in respect of each unit
then outstanding is equal to the Unrecovered Capital attributable to
that unit.
third, 100% to the partners in accordance with their
percentage interests until the per-unit capital account in respect of
each unit is equal to the sum of
o the Unrecovered Capital attributable to that unit,
plus
o any cumulative arrearages in the payment of the
Minimum Quarterly Distribution in respect of that
unit for any quarter after December 31, 1994;
fourth, 85% to all unitholders pro rata and 15% to the general
partner until the capital account of each outstanding unit is equal to
the sum of
o the Unrecovered Capital with respect to that unit,
plus
o any cumulative arrearages in the payment of the
Minimum Quarterly Distribution in respect of that
unit for any quarter after December 31, 1994, plus
o the excess of:
(a) the First Target Distribution over the
Minimum Quarterly Distribution for each
quarter of our existence, less
(b) the amount of any distributions of Cash from
Operations in excess of the Minimum
Quarterly Distribution which were
distributed 85% to the unitholders pro rata
and 15% to the general partner for each
quarter of our existence ((a) less (b) being
the "Target Amount");
fifth, 75% to all unitholders pro rata and 25% to the general
partner, until the capital account of each outstanding unit is equal to
the sum of
o the Unrecovered Capital with respect to that unit,
plus
o the Target Amount, plus
o the excess of:
(a) the Second Target Distribution over the
First Target Distribution for each quarter
of our existence, less
(b) the amount of any distributions of Cash from
Operations in excess of the First Target
Distribution which were distributed 75% to
the unitholders pro rata and 25% to the
general partner for each quarter of our
existence ((a) less (b) being the "Second
Target Amount");
thereafter, any then-remaining gain would be allocated 50% to
all unitholders pro rata and 50% to the general partner.
For these purposes, "Unrecovered Capital" means, at any time with
respect to any units,
25
o $10, less
o the sum of:
(a) any distributions of Available Cash constituting Cash
from Interim Capital Transactions, and
(b) any distributions of cash and the fair value of any
assets distributed in kind in connection with our
dissolution and liquidation theretofore made in
respect of a unit that was sold in the initial
offering of the units.
Any loss realized from sales or other dispositions of assets following
commencement of our dissolution and liquidation, including any unrealized gain
or loss attributable to assets distributed in kind, will be allocated to the
general partner and the unitholders: first, in proportion to the positive
balances in the partners' capital accounts until all balances are reduced to
zero; and second, to the general partner.
DEFINED TERMS
"Available Cash" means, with respect to any calendar quarter, the sum
of:
o all our cash receipts during that quarter from all sources,
including distributions of cash received from subsidiaries,
plus
o any reduction in reserves established in prior quarters,
o less the sum of:
o all our cash disbursements during that quarter,
including, disbursements for taxes on us as an
entity, debt service and capital expenditures,
o any reserves established in that quarter in such
amounts as the general partner shall determine to be
necessary or appropriate in its reasonable discretion
o to provide for the proper conduct of our
business, including reserves for future rate
refunds or capital expenditures, or
o to provide funds for distributions with
respect to any of the next four calendar
quarters, and
o any other reserves established in that quarter in
such amounts as the general partner determines in its
reasonable discretion to be necessary because the
distribution of such amounts would be prohibited by
applicable law or by any loan agreement, security
agreement, mortgage, debt instrument or other
agreement or obligation to which we are a party or by
which we are bound or our assets are subject.
Taxes that we pay on behalf of, or amounts withheld with respect to,
less than all of the unitholders shall not be considered cash disbursements by
us that reduce "Available Cash" but will be deemed a distribution of Available
Cash to those partners. Alternatively, in the discretion of our general partner,
those taxes that pertain to all partners may be considered to be cash
disbursements which reduce Available Cash and which will not be deemed to be a
distribution of Available Cash to the partners. Notwithstanding the foregoing,
"Available Cash" will not include any cash receipts or reductions in reserves or
take into account any disbursements made or reserves established after
commencement of our dissolution and liquidation.
"Cash from Interim Capital Transactions" means all cash distributed
other than Cash from Operations.
26
"Cash from Operations" means, at any date but before the commencement
of our dissolution and liquidation, on a cumulative basis,
o $20 million plus
o all our cash receipts during the period since the commencement
of our operations through that date, excluding any cash
proceeds from any Interim Capital Transactions or Termination
Capital Transactions,
less the sum of:
(a) all our cash operating expenditures during that period
including, without limitation, taxes imposed on us as an
entity,
(b) all our cash debt service payments during that period other
than:
o payments or prepayments of principal and premium
required by reason of loan agreements or by lenders
in connection with sales or other dispositions of
assets all cash distributed other than Cash from
Operations, and
o payments or prepayments of principal and premium made
in connection with refinancings or refundings of
indebtedness, provided that any payment or prepayment
or principal, whether or not then due, shall be
determined at the election and in the discretion of
the general partner, to be refunded or refinanced by
any indebtedness incurred or to be incurred by us
simultaneously with or within 180 days before or
after that payment or prepayment to the extent of the
principal amount of such indebtedness so incurred,
(c) all our cash capital expenditures during that period other
than:
o cash capital expenditures made to increase the
throughput or deliverable capacity or terminaling
capacity of our assets, taken as a whole, from the
throughput or deliverable capacity or terminaling
capacity existing immediately before those capital
expenditures and
o cash expenditures made in payment of transaction
expenses relating to Interim Capital Transactions,
(d) an amount equal to the incremental revenues collected pursuant
to a rate increase that are subject to possible refund,
(e) any reserves outstanding as of that date that the general
partner determines in its reasonable discretion to be
necessary or appropriate to provide for the future cash
payment of items of the type referred to in (a) through (c)
above, and
(f) any reserves that the general partner determines to be
necessary or appropriate in its reasonable discretion to
provide funds for distributions with respect to any one or
more of the next four calendar quarters, all as determined on
a consolidated basis and after elimination of intercompany
items and the general partner's interest in our subsidiaries.
"Interim Capital Transactions" means our
o borrowings and sales of debt securities other than for working
capital purposes and other than for items purchased on open
account in the ordinary course of business,
27
o sales of partnership interests, and
o sales or other voluntary or involuntary dispositions of any
assets other than:
o sales or other dispositions of inventory in the
ordinary course of business,
o sales or other dispositions of other current assets
including receivables and accounts or
o sales or other dispositions of assets as a part of
normal retirements or replacements,
in each case before the commencement of our dissolution and
liquidation.
28
TAX CONSIDERATIONS
This section is a summary of all the material tax considerations that
may be relevant to prospective unitholders who are individual citizens or
residents of the United States and, unless otherwise noted in the following
discussion, expresses the opinion of Vinson & Elkins L.L.P., special counsel to
the general partner and us, insofar as it relates to matters of United States
federal income tax law and legal conclusions with respect to those matters. This
section is based upon current provisions of the Internal Revenue Code, existing
and proposed regulations and current administrative rulings and court decisions,
all of which are subject to change. Later changes in these authorities may cause
the tax consequences to vary substantially from the consequences described
below. Unless the context otherwise requires, references in this section to "us"
or "we" are references to TEPPCO Partners, L.P. and our operating partnerships.
No attempt has been made in the following discussion to comment on all
federal income tax matters affecting us or the unitholders. Moreover, the
discussion focuses on unitholders who are individual citizens or residents of
the United States and has only limited application to corporations, estates,
trusts, nonresident aliens or other unitholders subject to specialized tax
treatment, such as tax-exempt institutions, foreign persons, individual
retirement accounts (IRAs), real estate investment trusts (REITs) or mutual
funds. Accordingly, we recommend that each prospective unitholder consult, and
depend on, his own tax advisor in analyzing the federal, state, local and
foreign tax consequences particular to him of the ownership or disposition of
limited partnership units.
All statements as to matters of law and legal conclusions, but not as
to factual matters, contained in this section, unless otherwise noted, are the
opinion of counsel and are based on the accuracy of the representations made by
us.
No ruling has been or will be requested from the IRS regarding any
matter affecting us or prospective unitholders. An opinion of counsel represents
only that counsel's best legal judgment and does not bind the IRS or the courts.
Accordingly, the opinions and statements made here may not be sustained by a
court if contested by the IRS. Any contest of this sort with the IRS may
materially and adversely impact the market for the limited partnership units and
the prices at which limited partnership units trade. In addition, the costs of
any contest with the IRS will be borne directly or indirectly by the unitholders
and the general partner. Furthermore, the tax treatment of us, or of an
investment in us, may be significantly modified by future legislative or
administrative changes or court decisions. Any modifications may or may not be
retroactively applied.
For the reasons described below, counsel has not rendered an opinion
with respect to the following specific federal income tax issues:
(1) the treatment of a unitholder whose limited partnership units are
loaned to a short seller to cover a short sale of limited partnership units
(please read "-- Tax Consequences of Unit Ownership -- Treatment of Short
Sales");
(2) whether our monthly convention for allocating taxable income and
losses is permitted by existing Treasury Regulations (please read "--
Disposition of Limited Partnership Units -- Allocations Between Transferors and
Transferees"); and
(3) whether our method for depreciating Section 743 adjustments is
sustainable (please read "-- Tax Consequences of Unit Ownership -- Section 754
Election").
PARTNERSHIP STATUS
A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner of a partnership is required to take into
account his share of items of income, gain, loss and deduction of the
partnership in computing his federal income tax liability, regardless of whether
cash distributions are made to him by the partnership. Distributions by a
partnership to a partner generally are not taxable unless the amount of cash
distributed is in excess of the partner's adjusted basis in his partnership
interest.
29
No ruling has been or will be sought from the IRS and the IRS has made
no determination as to our status or the status of our operating subsidiaries as
partnerships for federal income tax purposes or whether our operations generate
"qualifying income" under Section 7704 of the Internal Revenue Code. Instead, we
will rely on the opinion of counsel that, based upon the Internal Revenue Code,
its regulations, published revenue rulings and court decisions and the
representations described below, we and our operating subsidiaries have been and
will be classified as partnerships for federal income tax purposes.
Treasury Regulations pertaining to the classification of entities such
as us as partnerships or corporations for federal income tax purposes were
significantly revised effective January 1, 1997. Pursuant to these revised
Treasury Regulations, known as the "check-the-box" regulations, entities
organized as limited partnerships under domestic partnership statutes are
treated as partnerships for federal income tax purposes unless they elect to be
treated as corporations. Domestic limited partnerships in existence prior to
1997 and classified as partnerships as of December 31, 1996, under the prior
Treasury Regulations would continue to be classified as partnerships after 1996
unless they formally elected another form of classification under the check the
box regulations. Neither we nor our operating partnerships have filed an
election to be treated as a corporation under the check-the-box regulations, and
counsel has rendered its opinion that we and our operating partnerships were
treated as partnerships on December 31, 1996, under the prior Treasury
Regulations and continue to be so treated.
Section 7704 of the Internal Revenue Code provides that publicly traded
partnerships will, as a general rule, be taxed as corporations. However, an
exception, referred to as the "qualifying income exception," exists with respect
to publicly traded partnerships of which 90% or more of the gross income for
every taxable year consists of "qualifying income." Qualifying income includes
income and gains derived from the exploration, development, mining or
production, processing, refining, transportation and marketing of any mineral or
natural resource. Other types of qualifying income include interest other than
from a financial business, dividends, gains from the sale of real property and
gains from the sale or other disposition of assets held for the production of
income that otherwise constitutes qualifying income. We estimate that less than
5% of our current gross income is not qualifying income; however, this estimate
could change from time to time. Based upon and subject to this estimate, the
factual representations made by us and the general partner and a review of the
applicable legal authorities, counsel is of the opinion that at least 90% of our
current gross income constitutes qualifying income.
In rendering its opinion that we and our operating partnerships were
treated as partnerships for federal income tax purposes as of December 31, 1996,
our tax counsel has relied on the following factual representations that the
general partner made about us and our operating partnerships with respect to
periods prior to 1997:
o As to us and each of our operating partnerships, the general
partner at all times while acting as general partner had a net
worth of at least $5.0 million computed by excluding any net
worth attributable to its interest in, and accounts and notes
receivable from, or payable to, us or any limited partnership
in which it is a general partner.
o Each such partnership operated and will continue to operate in
accordance with applicable state partnership statutes, the
partnership agreements and the statements and representations
made in this prospectus.
o Except as otherwise required by Section 704(c) of the Internal
Revenue Code, the general partner of each partnership had at
least a 1% interest in each material item of income, gain,
loss, deduction and credit of its respective partnership.
o For each taxable year, more than 90% our gross income was from
sources that, in our counsel's opinion, generated "qualifying
income" within the meaning of Section 7704 of the Internal
Revenue Code.
o Our general partner and the general partner of each of our
operating partnerships acted independently of the limited
partners of such partnerships.
30
In rendering its opinion that we and our operating partnerships have
been and will continue to be treated as partnerships for federal income tax
purposes after 1996, our tax counsel has relied on the following factual
representations that the general partner made about us and our operating
partnerships with respect to periods after 1996:
o Neither we nor our operating subsidiaries will elect to be
treated as a corporation; and
o For each taxable year, more than 90% of our gross income will
be income that, in our counsel's opinion, is "qualifying
income" within the meaning of Section 7704(d) of the Internal
Revenue Code.
If we fail to meet the qualifying income exception, other than a
failure which is determined by the IRS to be inadvertent and which is cured
within a reasonable time after discovery, we will be treated as if we had
transferred all of our assets, subject to liabilities, to a newly formed
corporation, on the first day of the year in which we fail to meet the
qualifying income exception, in return for stock in that corporation, and then
distributed that stock to the unitholders in liquidation of their interests in
us. This contribution and liquidation should be tax-free to unitholders and us
so long as we, at that time, do not have liabilities in excess of the tax basis
of our assets. Thereafter, we would be treated as a corporation for federal
income tax purposes.
If we were taxable as a corporation in any taxable year, either as a
result of a failure to meet the qualifying income exception or otherwise, our
items of income, gain, loss and deduction would be reflected only on our tax
return rather than being passed through to the unitholders, and our net income
would be taxed to us at corporate rates. In addition, any distribution made to a
unitholder would be treated as either taxable dividend income, to the extent of
our current or accumulated earnings and profits, or, in the absence of earnings
and profits, a nontaxable return of capital, to the extent of the unitholder's
tax basis in his limited partnership units, or taxable capital gain, after the
unitholder's tax basis in his limited partnership units is reduced to zero.
Accordingly, taxation as a corporation would result in a material reduction in a
unitholder's cash flow and after-tax return and thus would likely result in a
substantial reduction of the value of the units.
The discussion below is based on the conclusion that we will be
classified as a partnership for federal income tax purposes.
LIMITED PARTNER STATUS
Unitholders who have become limited partners of TEPPCO Partners will be
treated as partners of TEPPCO Partners for federal income tax purposes. Also:
o assignees who have executed and delivered transfer
applications, and are awaiting admission as limited partners,
and
o unitholders whose limited partnership units are held in street
name or by a nominee and who have the right to direct the
nominee in the exercise of all substantive rights attendant to
the ownership of their limited partnership units,
will be treated as partners of TEPPCO Partners for federal income tax
purposes. As there is no direct authority addressing assignees of limited
partnership units who are entitled to execute and deliver transfer applications
and become entitled to direct the exercise of attendant rights, but who fail to
execute and deliver transfer applications, counsel's opinion does not extend to
these persons. Furthermore, a purchaser or other transferee of limited
partnership units who does not execute and deliver a transfer application may
not receive some federal income tax information or reports furnished to record
holders of limited partnership units unless the limited partnership units are
held in a nominee or street name account and the nominee or broker has executed
and delivered a transfer application for those limited partnership units.
31
A beneficial owner of limited partnership units whose units have been
transferred to a short seller to complete a short sale would appear to lose his
status as a partner with respect to those units for federal income tax purposes.
Please read "-- Tax Consequences of Unit Ownership -- Treatment of Short Sales."
Income, gain, deductions or losses would not appear to be reportable by
a unitholder who is not a partner for federal income tax purposes, and any cash
distributions received by a unitholder who is not a partner for federal income
tax purposes would therefore be fully taxable as ordinary income. These holders
should consult their own tax advisors with respect to their status as partners
in TEPPCO Partners for federal income tax purposes.
TAX CONSEQUENCES OF UNIT OWNERSHIP
Flow-through of Taxable Income. We do not pay any federal income tax.
Instead, each unitholder is required to report on his income tax return his
share of our income, gains, losses and deductions without regard to whether
corresponding cash distributions are received by him. Consequently, we may
allocate income to a unitholder even if he has not received a cash distribution.
Each unitholder will be required to include in income his allocable share of our
income, gains, losses and deductions for our taxable year ending with or within
his taxable year.
Treatment of Distributions. Distributions by us to a unitholder
generally will not be taxable to the unitholder for federal income tax purposes
to the extent of his tax basis in his limited partnership units immediately
before the distribution. Our cash distributions in excess of a unitholder's tax
basis generally will be considered to be gain from the sale or exchange of the
limited partnership units, taxable in accordance with the rules described under
"-- Disposition of Limited Partnership Units" below. To the extent our
distributions cause a unitholder's "at risk" amount to be less than zero at the
end of any taxable year, he must recapture any losses deducted in previous
years. Please read "-- Limitations on Deductibility of Losses."
Any reduction in a unitholder's share of our liabilities for which no
partner, including the general partner, bears the economic risk of loss, known
as "nonrecourse liabilities," will be treated as a distribution of cash to that
unitholder. A decrease in a unitholder's percentage interest in us because of
our issuance of additional limited partnership units will decrease his share of
our nonrecourse liabilities, and thus will result in a corresponding deemed
distribution of cash. A non-pro rata distribution of money or property may
result in ordinary income to a unitholder, regardless of his tax basis in his
limited partnership units, if the distribution reduces the unitholder's share of
our "unrealized receivables," including depreciation recapture, and/or
substantially appreciated "inventory items," both as defined in the Internal
Revenue Code, and collectively, "Section 751 assets." To that extent, he will be
treated as having been distributed his proportionate share of the Section 751
assets and having exchanged those assets with us in return for the non-pro rata
portion of the actual distribution made to him. This latter deemed exchange will
generally result in the unitholder's realization of ordinary income. That income
will equal the excess of (1) the non-pro rata portion of that distribution over
(2) the unitholder's tax basis for the share of Section 751 assets deemed
relinquished in the exchange.
Basis of Limited Partnership Units. A unitholder's initial tax basis
for his limited partnership units will be the amount he paid for the limited
partnership units plus his share of our nonrecourse liabilities. That basis will
be increased by his share of our income and by any increases in his share of our
nonrecourse liabilities. That basis will be decreased, but not below zero, by
distributions from us, by the unitholder's share of our losses, by any decreases
in his share of our nonrecourse liabilities and by his share of our expenditures
that are not deductible in computing taxable income and are not required to be
capitalized. A limited partner will have no share of our debt which is recourse
to the general partner, but will have a share, generally based on his share of
profits, of our nonrecourse liabilities. Please read "-- Disposition of Limited
Partnership Units -- Recognition of Gain or Loss."
Limitations on Deductibility of Losses. The deduction by a unitholder
of his share of our losses will be limited to the tax basis in his units and, in
the case of an individual unitholder or a corporate unitholder, if more than 50%
of the value of the corporate unitholder's stock is owned directly or indirectly
by five or fewer individuals or some tax-exempt organizations, to the amount for
which the unitholder is considered to be "at risk" with respect to our
activities, if that is less than his tax basis. A unitholder must recapture
losses deducted in previous years to the extent that distributions cause his at
risk amount to be less than zero at the end of any taxable year. Losses
disallowed to a unitholder or recaptured as a result of these limitations will
carry forward and will be allowable to
32
the extent that his tax basis or at risk amount, whichever is the limiting
factor, is subsequently increased. Upon the taxable disposition of a unit, any
gain recognized by a unitholder can be offset by losses that were previously
suspended by the at risk limitation but may not be offset by losses suspended by
the basis limitation. Any excess loss above that gain previously suspended by
the at risk or basis limitations is no longer utilizable.
In general, a unitholder will be at risk to the extent of the tax basis
of his units, excluding any portion of that basis attributable to his share of
our nonrecourse liabilities, reduced by any amount of money he borrows to
acquire or hold his units, if the lender of those borrowed funds owns an
interest in us, is related to the unitholder or can look only to the units for
repayment. A unitholder's at risk amount will increase or decrease as the tax
basis of the unitholder's units increases or decreases, other than tax basis
increases or decreases attributable to increases or decreases in his share of
our nonrecourse liabilities.
The passive loss limitations generally provide that individuals,
estates, trusts and some closely held corporations and personal service
corporations can deduct losses from passive activities, which are generally
activities in which the taxpayer does not materially participate, only to the
extent of the taxpayer's income from those passive activities. The passive loss
limitations are applied separately with respect to each publicly traded
partnership. Consequently, any passive losses we generate will only be available
to offset our passive income generated in the future and will not be available
to offset income from other passive activities or investments, including our
investments or investments in other publicly traded partnerships, or salary or
active business income. Passive losses that are not deductible because they
exceed a unitholder's share of income we generate may be deducted in full when
he disposes of his entire investment in us in a fully taxable transaction with
an unrelated party. The passive activity loss rules are applied after other
applicable limitations on deductions, including the at risk rules and the basis
limitation.
A unitholder's share of our net income may be offset by any suspended
passive losses, but it may not be offset by any other current or carryover
losses from other passive activities, including those attributable to other
publicly traded partnerships.
Limitations on Interest Deductions. The deductibility of a
non-corporate taxpayer's "investment interest expense" is generally limited to
the amount of that taxpayer's "net investment income." The IRS has indicated
that net passive income earned by a publicly traded partnership will be treated
as investment income for purposes of the limitations on the deductibility of
investment interest. In addition, the unitholder's share of our portfolio income
will be treated as investment income. Investment interest expense includes:
o interest on indebtedness properly allocable to property held
for investment;
o our interest expense attributed to portfolio income; and
o the portion of interest expense incurred to purchase or carry
an interest in a passive activity to the extent attributable
to portfolio income.
The computation of a unitholder's investment interest expense will take
into account interest on any margin account borrowing or other loan incurred to
purchase or carry a unit.
Net investment income includes gross income from property held for
investment and amounts treated as portfolio income under the passive loss rules,
less deductible expenses, other than interest, directly connected with the
production of investment income, but generally does not include gains
attributable to the disposition of property held for investment.
Entity-Level Collections. If we are required or elect under applicable
law to pay any federal, state or local income tax on behalf of any unitholder or
the general partner or any former unitholder, we are authorized to pay those
taxes from our funds. That payment, if made, will be treated as a distribution
of cash to the partner on whose behalf the payment was made. If the payment is
made on behalf of a person whose identity cannot be determined, we are
authorized to treat the payment as a distribution to all current unitholders. We
are authorized to amend the partnership agreement in the manner necessary to
maintain uniformity of intrinsic tax characteristics of units and to
33
adjust later distributions, so that after giving effect to these distributions,
the priority and characterization of distributions otherwise applicable under
the partnership agreement is maintained as nearly as is practicable. Payments by
us as described above could give rise to an overpayment of tax on behalf of an
individual partner in which event the partner would be required to file a claim
in order to obtain a credit or refund.
Allocation of Income, Gain, Loss and Deduction. In general, if we have
a net profit, our items of income, gain, loss and deduction will be allocated
among the general partner and the unitholders in accordance with their
percentage interests in us. If we have a net loss for the entire year, that loss
will be allocated first to the general partner and the unitholders in accordance
with their percentage interests in us to the extent of their positive capital
accounts and, second, to the general partner.
Specified items of our income, gain, loss and deduction will be
allocated to account for the difference between the tax basis and fair market
value of property contributed to us by our partners, referred to in this
discussion as "contributed property." The effect of these allocations to a
unitholder purchasing limited partnership units in any offering will be
essentially the same as if the tax basis of our assets were equal to their fair
market value at the time of the offering. In addition, items of recapture income
will be allocated to the extent possible to the partner who was allocated the
deduction giving rise to the treatment of that gain as recapture income in order
to minimize the recognition of ordinary income by some unitholders. Finally,
although we do not expect that our operations will result in the creation of
negative capital accounts, if negative capital accounts nevertheless result,
items of our income and gain will be allocated in an amount and manner to
eliminate the negative balance as quickly as possible.
An allocation of items of our income, gain, loss or deduction, other
than an allocation required by Section 704(c) of the Internal Revenue Code to
eliminate the difference between a partner's "book" capital account, credited
with the fair market value of contributed property, and "tax" capital account,
credited with the tax basis of contributed property, referred to in this
discussion as the "book-tax disparity," generally will be given effect for
federal income tax purposes in determining a partner's share of an item of
income, gain, loss or deduction only if the allocation has substantial economic
effect. In any other case, a partner's share of an item will be determined on
the basis of his interest in us, which will be determined by taking into account
all the facts and circumstances, including his relative contributions to us, the
interests of all the partners in profits and losses, the interest of all the
partners in cash flow and other nonliquidating distributions and rights of all
the partners to distributions of capital upon liquidation.
Under our method of making Section 704(c) allocations, unitholders
cannot be allocated more depreciation, gain or loss than the total amount of any
such item recognized by us in a particular taxable period (the "ceiling
limitation"). To the extent the ceiling limitation is or becomes applicable, our
partnership agreement will require that items of income and deduction be
allocated in a way designed to effectively "cure" this problem and eliminate the
impact of the ceiling limitation. Treasury Regulations under Section 704(c) of
the Internal Revenue Code permit a partnership to make reasonable curative
allocations to reduce or eliminate disparities between the tax basis and value
attributable to property contributed to us.
Counsel is of the opinion that, with the exception of the issues
described in "-- Tax Consequences of Unit Ownership -- Section 754 Election" and
"-- Disposition of Limited Partnership Units -- Allocations Between Transferors
and Transferees," allocations under our partnership agreement will be given
effect for federal income tax purposes in determining a partner's share of an
item of income, gain, loss or deduction.
Treatment of Short Sales. A unitholder whose units are loaned to a
"short seller" to cover a short sale of units may be considered as having
disposed of those units. If so, he would no longer be a partner for those units
during the period of the loan and may recognize gain or loss from the
disposition. As a result, during this period:
o any of our income, gain, loss or deduction with respect to
those units would not be reportable by the unitholder;
o any cash distributions received by the unitholder as to those
units would be fully taxable; and
34
o all of these distributions would appear to be ordinary income.
Counsel has not rendered an opinion regarding the treatment of a
unitholder where limited partnership units are loaned to a short seller to cover
a short sale of limited partnership units; therefore, unitholders desiring to
assure their status as partners and avoid the risk of gain recognition from a
loan to a short seller should modify any applicable brokerage account agreements
to prohibit their brokers from borrowing their units. The IRS has announced that
it is actively studying issues relating to the tax treatment of short sales of
partnership interests. Please also read "-- Disposition of Limited Partnership
Units -- Recognition of Gain or Loss."
Alternative Minimum Tax. Each unitholder will be required to take into
account his distributive share of any items of our income, gain, loss or
deduction for purposes of the alternative minimum tax. The current minimum tax
rate for noncorporate taxpayers is 26% on the first $175,000 of alternative
minimum taxable income in excess of the exemption amount and 28% on any
additional alternative minimum taxable income. Prospective unitholders should
consult with their tax advisors as to the impact of an investment in units on
their liability for the alternative minimum tax.
Tax Rates. In general the highest effective United States federal
income tax rate for individuals for 2001 is 38.6% and the maximum United States
federal income tax rate for net capital gains of an individual for 2001 is 20%
if the asset disposed of was held for more than one year at the time of
disposition.
Section 754 Election. We and our operating partnerships have made the
election permitted by Section 754 of the Internal Revenue Code. That election is
irrevocable without the consent of the IRS. The election will generally permit
us to adjust a limited partnership unit purchaser's tax basis in our assets
("inside basis") under Section 743(b) of the Internal Revenue Code to reflect
his purchase price. This election does not apply to a person who purchases
limited partnership units directly from us. The Section 743(b) adjustment
belongs to the purchaser and not to other partners. For purposes of this
discussion, a partner's inside basis in our assets will be considered to have
two components: (1) his share of our tax basis in our assets ("common basis")
and (2) his Section 743(b) adjustment to that basis.
Treasury Regulations under Sections 743 and 197 of the Internal Revenue
Code generally require, unless the remedial allocation method is adopted, the
Section 743(b) adjustment attributable to recovery property to be depreciated as
if the total amount of such adjustment were attributable to newly-purchased
recovery property placed in service when the unit transfer occurs. The remedial
allocation method can be adopted only with respect to property contributed to a
partnership on or after December 21, 1993, and a significant part of our assets
were acquired by contribution to us before that date. Under Treasury Regulation
Section 1.167(c)-1(a)(6), a Section 743(b) adjustment attributable to property
subject to depreciation under Section 167 of the Internal Revenue Code rather
than cost-recovery deductions under Section 168 generally is required to be
depreciated using either the straight-line method or the 150 percent
declining-balance method. We utilize the 150 percent declining method on such
property. The depreciation and amortization methods and useful lives associated
with the Section 743(b) adjustment, therefore, may differ from the methods and
useful lives generally used to depreciate the common basis in such properties.
This difference could adversely affect the continued uniformity of the tax
characteristics of our units. To avoid such a lack of uniformity, the general
partner has adopted an accounting convention under Section 743(b) to preserve
the uniformity of units despite its inconsistency with these Treasury
Regulations.
Please read "--Tax Treatment of Operations--Uniformity of Units."
Although counsel is unable to opine as to the validity of such an
approach because there is no clear authority on this issue, we depreciate the
portion of a Section 743(b) adjustment attributable to unrealized appreciation
in the value of contributed recovery property, to the extent of any unamortized
book-tax disparity, using a rate of depreciation or amortization derived from
the depreciation or amortization method and useful life applied to the common
basis of such property, despite its inconsistency with the Treasury Regulations
described above. To the extent a Section 743(b) adjustment is attributable to
appreciation in value in excess of the unamortized book-tax disparity, we will
apply the rules described in the Treasury Regulations. If we determine that this
position cannot reasonably be taken, we may take a depreciation or amortization
position under which all purchasers acquiring units in the same month would
receive depreciation or amortization, whether attributable to common basis or a
Section 743(b) adjustment, based upon the same applicable rate as if they had
purchased a direct interest in our assets. This kind of aggregate approach may
result in lower annual depreciation or amortization
35
deductions than would otherwise be allowable to some unitholders. Please read
"-- Tax Treatment of Operations -- Uniformity of Units."
A Section 754 election is advantageous if the transferee's tax basis in
his units is higher than the units' share of the aggregate tax basis of our
assets immediately prior to the transfer. In that case, as a result of the
election, the transferee would have, among other items, a greater amount of
depreciation and depletion deductions and his share of any gain or loss on a
sale of our assets would be less. Conversely, a Section 754 election is
disadvantageous if the transferee's tax basis in his units is lower than those
units' share of the aggregate tax basis of our assets immediately prior to the
transfer. Thus, the fair market value of the units may be affected either
favorably or unfavorably by the election.
The calculations involved in the Section 754 election are complex and
will be made on the basis of assumptions as to the value of our assets and other
matters. For example, the allocation of the Section 743(b) adjustment among our
assets must be made in accordance with the Internal Revenue Code. The IRS could
seek to reallocate some or all of any Section 743(b) adjustment allocated by us
to our tangible assets to goodwill instead. Goodwill, as an intangible asset, is
generally amortizable over a longer period of time or under a less accelerated
method than our tangible assets. We cannot assure you that the determinations we
make will not be successfully challenged by the IRS and that the deductions
resulting from them will not be reduced or disallowed altogether. Should the IRS
require a different basis adjustment to be made, and should, in our opinion, the
expense of compliance exceed the benefit of the election, we may seek permission
from the IRS to revoke our Section 754 election. If permission is granted, a
subsequent purchaser of units may be allocated more income than he would have
been allocated had the election not been revoked.
TREATMENT OF OPERATIONS
Accounting Method and Taxable Year. We use the year ending December 31
as our taxable year and the accrual method of accounting for federal income tax
purposes. Each unitholder will be required to include in income his share of our
income, gain, loss and deduction for our taxable year ending within or with his
taxable year. In addition, a unitholder who has a taxable year ending on a date
other than December 31 and who disposes of all of his units following the close
of our taxable year but before the close of his taxable year must include his
share of our income, gain, loss and deduction in income for his taxable year,
with the result that he will be required to include in income for his taxable
year his share of more than one year of our income, gain, loss and deduction.
Please read "-- Disposition of Limited Partnership Units -- Allocations Between
Transferors and Transferees."
Initial Tax Basis, Depreciation and Amortization. The tax basis of our
assets will be used for purposes of computing depreciation and cost recovery
deductions and, ultimately, gain or loss on the disposition of these assets. The
federal income tax burden associated with the difference between the fair market
value of our assets and their tax basis immediately prior to an offering of
units will be borne by the general partner, its affiliates and our other
unitholders as of that time. Please read "-- Allocation of Income, Gain, Loss
and Deduction."
To the extent allowable, we may elect to use the depreciation and cost
recovery methods that will result in the largest deductions being taken in the
early years after assets are placed in service. We are not entitled to any
amortization deductions with respect to any goodwill conveyed to us on
formation. Property we subsequently acquire or construct may be depreciated
using accelerated methods permitted by the Internal Revenue Code.
If we dispose of depreciable property by sale, foreclosure, or
otherwise, all or a portion of any gain, determined by reference to the amount
of depreciation previously deducted and the nature of the property, may be
subject to the recapture rules and taxed as ordinary income rather than capital
gain. Similarly, a partner who has taken cost recovery or depreciation
deductions with respect to property we own will likely be required to recapture
some or all, of those deductions as ordinary income upon a sale of his interest
in us. Please read "-- Tax Consequences of Unit Ownership -- Allocation of
Income, Gain, Loss and Deduction" and "-- Disposition of Limited Partnership
Units -- Recognition of Gain or Loss."
The costs incurred in selling our units (called "syndication expenses")
must be capitalized and cannot be deducted currently, ratably or upon our
termination. There are uncertainties regarding the classification of costs as
36
organization expenses, which may be amortized by us, and as syndication
expenses, which may not be amortized by us. The underwriting discounts and
commissions we incur will be treated as a syndication cost.
Valuation and Tax Basis of Our Properties. The federal income tax
consequences of the ownership and disposition of units will depend in part on
our estimates of the relative fair market values, and the initial tax bases, of
our assets. Although we may from time to time consult with professional
appraisers regarding valuation matters, we will make many of the relative fair
market value estimates ourselves. These estimates of basis are subject to
challenge and will not be binding on the IRS or the courts. If the estimates of
fair market value or basis are later found to be incorrect, the character and
amount of items of income, gain, loss or deductions previously reported by
unitholders might change, and unitholders might be required to adjust their tax
liability for prior years and incur interest and penalties with respect to those
adjustments.
DISPOSITION OF LIMITED PARTNERSHIP UNITS
Recognition of Gain or Loss. Gain or loss will be recognized on a sale
of units equal to the difference between the amount realized and the
unitholder's tax basis for the units sold. A unitholder's amount realized will
be measured by the sum of the cash or the fair market value of other property
received by him plus his share of our nonrecourse liabilities. Because the
amount realized includes a unitholder's share of our nonrecourse liabilities,
the gain recognized on the sale of units could result in a tax liability in
excess of any cash received from the sale.
Prior distributions from us in excess of cumulative net taxable income
for a limited partnership unit that decreased a unitholder's tax basis in that
limited partnership unit will, in effect, become taxable income if the limited
partnership unit is sold at a price greater than the unitholder's tax basis in
that limited partnership unit, even if the price received is less than his
original cost.
Except as noted below, gain or loss recognized by a unitholder, other
than a "dealer" in units, on the sale or exchange of a unit held for more than
one year will generally be taxable as capital gain or loss. Capital gain
recognized by an individual on the sale of units held more than 12 months will
generally be taxed at a maximum rate of 20%. A portion of this gain or loss,
which will likely be substantial, however, will be separately computed and taxed
as ordinary income or loss under Section 751 of the Internal Revenue Code to the
extent attributable to assets giving rise to depreciation recapture or other
"unrealized receivables" or to "inventory items" we own. The term "unrealized
receivables" includes potential recapture items, including depreciation
recapture. Ordinary income attributable to unrealized receivables, inventory
items and depreciation recapture may exceed net taxable gain realized upon the
sale of a unit and may be recognized even if there is a net taxable loss
realized on the sale of a unit. Thus, a unitholder may recognize both ordinary
income and a capital loss upon a sale of units. Net capital loss may offset
capital gains and no more than $3,000 of ordinary income, in the case of
individuals, and may only be used to offset capital gain in the case of
corporations.
The IRS has ruled that a partner who acquires interests in a
partnership in separate transactions must combine those interests and maintain a
single adjusted tax basis for all those interests. Upon a sale or other
disposition of less than all of those interests, a portion of that tax basis
must be allocated to the interests sold using an "equitable apportionment"
method. Treasury regulations allow a selling unitholder who can identify limited
partnership units transferred with an ascertainable holding period to elect to
use the actual holding period of the limited partnership units transferred.
Thus, according to the ruling, a limited partnership unitholder will be unable
to select high or low basis limited partnership units to sell as would be the
case with corporate stock, but, according to the regulations, may designate
specific limited partnership units sold for purposes of determining the holding
period of units transferred. A unitholder electing to use the actual holding
period of limited partnership units transferred must consistently use that
identification method for all subsequent sales or exchanges of limited
partnership units. A unitholder considering the purchase of additional units or
a sale of limited partnership units purchased in separate transactions should
consult his tax advisor as to the possible consequences of this ruling and
application of the final regulations.
Specific provisions of the Internal Revenue Code affect the taxation of
some financial products and securities, including partnership interests, by
treating a taxpayer as having sold an "appreciated" partnership interest, one in
which gain would be recognized if it were sold, assigned or terminated at its
fair market value, if the taxpayer or related persons enter(s) into:
37
o a short sale;
o an offsetting notional principal contract; or
o a futures or forward contract with respect to the partnership
interest or substantially identical property.
Moreover, if a taxpayer has previously entered into a short sale, an
offsetting notional principal contract or a futures or forward contract with
respect to the partnership interest, the taxpayer will be treated as having sold
that position if the taxpayer or a related person then acquires the partnership
interest or substantially identical property. The Secretary of Treasury is also
authorized to issue regulations that treat a taxpayer that enters into
transactions or positions that have substantially the same effect as the
preceding transactions as having constructively sold the financial position.
Allocations Between Transferors and Transferees. In general, our
taxable income and losses will be determined annually, will be prorated on a
monthly basis and will be subsequently apportioned among the unitholders in
proportion to the number of units owned by each of them as of the opening of the
applicable exchange on the first business day of the month (the "Allocation
Date"). However, gain or loss realized on a sale or other disposition of our
assets other than in the ordinary course of business will be allocated among the
unitholders on the Allocation Date in the month in which that gain or loss is
recognized. As a result, a unitholder transferring units may be allocated
income, gain, loss and deduction realized after the date of transfer.
The use of this method may not be permitted under existing Treasury
Regulations. Accordingly, counsel is unable to opine on the validity of this
method of allocating income and deductions between unitholders. If this method
is not allowed under the Treasury Regulations, or only applies to transfers of
less than all of the unitholder's interest, our taxable income or losses might
be reallocated among the unitholders. We are authorized to revise our method of
allocation between unitholders to conform to a method permitted under future
Treasury Regulations.
A unitholder who owns units at any time during a quarter and who
disposes of them prior to the record date set for a cash distribution for that
quarter will be allocated items of our income, gain, loss and deductions
attributable to that quarter but will not be entitled to receive that cash
distribution.
Notification Requirements. A unitholder who purchases units from
another unitholder is required to notify us in writing of that sale or exchange
within 30 days after the sale or exchange. We are required to notify the IRS of
that transaction and to furnish specified information to the transferor and
transferee. However, these reporting requirements do not apply to a sale by an
individual who is a citizen of the United States and who effects the sale or
exchange through a broker. Failure to satisfy these reporting obligations may
lead to the imposition of substantial penalties.
Constructive Termination. We will be considered to have been terminated
for tax purposes if there is a sale or exchange of 50% or more of the total
interests in our capital and profits within a 12-month period. A constructive
termination results in the closing of our taxable year for all unitholders. In
the case of a unitholder reporting on a taxable year other than a fiscal year
ending December 31, the closing of our taxable year may result in more than 12
months of our taxable income or loss being includable in his taxable income for
the year of termination. We would be required to make new tax elections after a
termination, including a new election under Section 754 of the Internal Revenue
Code, and a termination would result in a deferral of our deductions for
depreciation. A termination could also result in penalties if we were unable to
determine that the termination had occurred. Moreover, a termination might
either accelerate the application of, or subject us to, any tax legislation
enacted before the termination.
UNIFORMITY OF UNITS
Because we cannot match transferors and transferees of units, we must
maintain uniformity of the economic and tax characteristics of the units to a
purchaser of these units. In the absence of uniformity, we may be unable to
completely comply with a number of federal income tax requirements, both
statutory and regulatory. A lack of uniformity can result from the application
of Treasury Regulations under Sections 167, 197 and 743 to our
38
Section 743(b) adjustments or the determination that our Section 704(c) curative
allocations to prevent the application of "ceiling" limitations on our ability
to make allocations to eliminate book-tax disparities are unreasonable.
We depreciate the portion of a Section 743(b) adjustment attributable
to unrealized appreciation in the value of contributed recovery property, to the
extent of any unamortized book-tax disparity, using a rate of depreciation or
amortization derived from the depreciation or amortization method and useful
life applied to the common basis of such property, despite its inconsistency
with Treasury Regulations. To the extent a Section 743(b) adjustment is
attributable to appreciation in value in excess of the unamortized book-tax
disparity, we will apply the rules described in the Treasury Regulations. Please
read "--Tax Consequences of Unit Ownership - Section 754 Election." If we
determine that this position cannot reasonably be taken, we may adopt a
depreciation and amortization position under which all purchasers acquiring
units in the same month would receive depreciation and amortization deductions,
whether attributable to a common basis or Section 743(b) adjustment, based upon
the same applicable rate as if they had purchased a direct interest in our
property. If this position is adopted, it may result in lower annual
depreciation and amortization deductions than would otherwise be allowable to
some unitholders and risk the loss of depreciation and amortization deductions
not taken in the year that these deductions are otherwise allowable. This
position will not be adopted if we determine that the loss of depreciation and
amortization deductions will have a material adverse effect on the unitholders.
If we choose not to utilize this aggregate method, we may use any other
reasonable depreciation and amortization method to preserve the uniformity of
the intrinsic tax characteristics of any units that would not have a material
adverse effect on the unitholders. The IRS may challenge any method of
depreciating the Section 743(b) adjustment described in this paragraph. If this
challenge were sustained, the uniformity of units might be affected, and the
gain from the sale of units might be increased without the benefit of additional
deductions. Please read "-- Disposition of Limited Partnership Units --
Recognition of Gain or Loss."
In the event our method of making Section 704(c) allocations is
disallowed, some or all of the adverse consequences described in the preceding
paragraph could result. See "-- Allocation of Partnership Income, Gain, Loss and
Deduction."
TAX-EXEMPT ORGANIZATIONS AND OTHER INVESTORS
Ownership of units by employee benefit plans, other tax-exempt
organizations, non-resident aliens, foreign corporations, other foreign persons
and regulated investment companies raises issues unique to those investors and,
as described below, may have substantially adverse tax consequences to them.
Employee benefit plans and most other organizations exempt from federal
income tax, including individual retirement accounts and other retirement plans,
are subject to federal income tax on unrelated business taxable income.
Virtually all of our income allocated to a unitholder which is a tax-exempt
organization will be unrelated business taxable income and will be taxable to
them.
A regulated investment company or "mutual fund" is required to derive
90% or more of its gross income from interest, dividends and gains from the sale
of stocks or securities or foreign currency or specified related sources. It is
not anticipated that any significant amount of our gross income will include
that type of income.
Non-resident aliens and foreign corporations, trusts or estates that
own units will be considered to be engaged in business in the United States
because of the ownership of units. As a consequence they will be required to
file federal tax returns to report their share of our income, gain, loss or
deduction and pay federal income tax at regular rates on their share of our net
income or gain. And, under rules applicable to publicly traded partnerships, we
will withhold tax at the highest effective federal income tax rate applicable to
individuals from cash distributions made quarterly to foreign unitholders. Each
foreign unitholder must obtain a taxpayer identification number from the IRS and
submit that number to our transfer agent on a Form W-8 or applicable substitute
form in order to obtain credit for these withholding taxes.
In addition, because a foreign corporation that owns units will be
treated as engaged in a United States trade or business, that corporation may be
subject to the United States branch profits tax at a rate of 30%, in addition to
regular federal income tax, on its share of our income and gain, as adjusted for
changes in the foreign
39
corporation's "U.S. net equity," which are effectively connected with the
conduct of a United States trade or business. That tax may be reduced or
eliminated by an income tax treaty between the United States and the country in
which the foreign corporate unitholder is a "qualified resident." In addition,
this type of unitholder is subject to special information reporting requirements
under Section 6038C of the Internal Revenue Code.
Under a ruling of the IRS, a foreign unitholder who sells or otherwise
disposes of a unit will be subject to federal income tax on gain realized on the
sale or disposition of that unit to the extent that this gain is effectively
connected with a United States trade or business of the foreign unitholder.
Apart from the ruling, a foreign unitholder will not be taxed or subject to
withholding upon the sale or disposition of a unit if he has owned less than 5%
in value of the units during the five-year period ending on the date of the
disposition and if the units are regularly traded on an established securities
market at the time of the sale or disposition.
ADMINISTRATIVE MATTERS
Information Returns and Audit Procedures. We intend to furnish to each
unitholder, within 75 days after the close of each calendar year, specific tax
information, including a Schedule K-1, which describes his share of our income,
gain, loss and deduction for our preceding taxable year. In preparing this
information, which will not be reviewed by counsel, we will take various
accounting and reporting positions, some of which have been mentioned earlier,
to determine his share of income, gain, loss and deduction. We cannot assure you
that those positions will yield a result that conforms to the requirements of
the Internal Revenue Code, regulations or administrative interpretations of the
IRS. Neither we nor counsel can assure prospective unitholders that the IRS will
not successfully contend in court that those positions are impermissible. Any
challenge by the IRS could negatively affect the value of the units.
The IRS may audit our federal income tax information returns.
Adjustments resulting from an IRS audit may require each unitholder to adjust a
prior year's tax liability, and possibly may result in an audit of his own
return. Any audit of a unitholder's return could result in adjustments not
related to our returns as well as those related to our returns.
Partnerships generally are treated as separate entities for purposes of
federal tax audits, judicial review of administrative adjustments by the IRS and
tax settlement proceedings. The tax treatment of partnership items of income,
gain, loss and deduction are determined in a partnership proceeding rather than
in separate proceedings with the partners. The Internal Revenue Code requires
that one partner be designated as the "Tax Matters Partner" for these purposes.
The partnership agreement names the general partner as our Tax Matters Partner.
The Tax Matters Partner is entitled to make elections on our behalf and
on behalf of unitholders. In addition, the Tax Matters Partner can extend the
statute of limitations for assessment of tax deficiencies against unitholders
for items in our returns. The Tax Matters Partner may bind a unitholder with
less than a 1% profits interest in us to a settlement with the IRS unless that
unitholder elects, by filing a statement with the IRS, not to give that
authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial
review, by which all the unitholders are bound, of a final partnership
administrative adjustment and, if the Tax Matters Partner fails to seek judicial
review, judicial review may be sought by any unitholder having at least a 1%
interest in profits or by any group of unitholders having in the aggregate at
least a 5% interest in profits. However, only one action for judicial review
will go forward, and each unitholder with an interest in the outcome may
participate.
A unitholder must file a statement with the IRS identifying the
treatment of any item on his federal income tax return that is not consistent
with the treatment of the item on our return. Intentional or negligent disregard
of this consistency requirement may subject a unitholder to substantial
penalties.
Nominee Reporting. Persons who hold an interest in us as a nominee for
another person are required to furnish to us:
(a) the name, address and taxpayer identification number of the
beneficial owner and the nominee;
(b) whether the beneficial owner is
40
(1) a person that is not a United States person,
(2) a foreign government, an international organization or any
wholly owned agency or instrumentality of either of the foregoing, or
(3) a tax-exempt entity;
(c) the amount and description of units held, acquired or transferred
for the beneficial owner; and
(d) specific information including the dates of acquisitions and
transfers, means of acquisitions and transfers, and acquisition cost for
purchases, as well as the amount of net proceeds from sales.
Brokers and financial institutions are required to furnish additional
information, including whether they are United States persons and specific
information on units they acquire, hold or transfer for their own account. A
penalty of $50 per failure, up to a maximum of $100,000 per calendar year, is
imposed by the Internal Revenue Code for failure to report that information to
us. The nominee is required to supply the beneficial owner of the units with the
information furnished to us.
Registration as a Tax Shelter. The Internal Revenue Code requires that
"tax shelters" be registered with the Secretary of the Treasury. The temporary
Treasury Regulations interpreting the tax shelter registration provisions of the
Internal Revenue Code are extremely broad. It is arguable that we are not
subject to the registration requirement on the basis that we will not constitute
a tax shelter. However, the general partner, as our principal organizer, has
registered us as a tax shelter with the Secretary of Treasury because of the
absence of assurance that we will not be subject to tax shelter registration and
in light of the substantial penalties which might be imposed if registration is
required and not undertaken.
The IRS has issued to us the following tax-shelter registration number:
90036000017. A unitholder who sells or otherwise transfers a unit in a later
transaction must furnish the registration number to the transferee. The penalty
for failure of the transferor of a unit to furnish the registration number to
the transferee is $100 for each failure. In addition, the unitholders must
disclose our tax shelter registration number on Form 8271 to be attached to the
tax return on which any deduction, loss or other benefit we generate is claimed
or on which any of our income is included. A unitholder who fails to disclose
the tax shelter registration number on his return, without reasonable cause for
that failure, will be subject to a $250 penalty for each failure. Any penalties
discussed are not deductible for federal income tax purposes.
ISSUANCE OF THIS REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN US
OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS.
Accuracy-related Penalties. An additional tax equal to 20% of the
amount of any portion of an underpayment of tax that is attributable to one or
more specified causes, including negligence or disregard of rules or
regulations, substantial understatements of income tax and substantial valuation
misstatements, is imposed by the Internal Revenue Code. No penalty will be
imposed, however, for any portion of an underpayment if it is shown that there
was a reasonable cause for that portion and that the taxpayer acted in good
faith regarding that portion.
A substantial understatement of income tax in any taxable year exists
if the amount of the understatement exceeds the greater of 10% of the tax
required to be shown on the return for the taxable year or $5,000 ($10,000 for
most corporations). The amount of any understatement subject to penalty
generally is reduced if any portion is attributable to a position adopted on the
return:
(1) for which there is, or was, "substantial authority," or
(2) as to which there is a reasonable basis and the pertinent facts of
that position are disclosed on the return.
More stringent rules apply to "tax shelters," a term that in this
context does not appear to include us. If any item of income, gain, loss or
deduction included in the distributive shares of unitholders might result in
that kind of
41
an "understatement" of income for which no "substantial authority" exists, we
must disclose the pertinent facts on our return. In addition, we will make a
reasonable effort to furnish sufficient information for unitholders to make
adequate disclosure on their returns to avoid liability for this penalty.
A substantial valuation misstatement exists if the value of any
property, or the adjusted basis of any property, claimed on a tax return is 200%
or more of the amount determined to be the correct amount of the valuation or
adjusted basis. No penalty is imposed unless the portion of the underpayment
attributable to a substantial valuation misstatement exceeds $5,000 ($10,000 for
most corporations). If the valuation claimed on a return is 400% or more than
the correct valuation, the penalty imposed increases to 40%.
STATE, LOCAL AND OTHER TAX CONSIDERATIONS
In addition to federal income taxes, you will be subject to other
taxes, including state and local income taxes, unincorporated business taxes,
and estate, inheritance or intangible taxes that may be imposed by the various
jurisdictions in which we do business or own property or in which you are a
resident. Although an analysis of those various taxes is not presented here,
each prospective unitholder should consider their potential impact on his
investment in us. You will be required to file state income tax returns and to
pay state income taxes in some or all of the states in which we do business or
own property and may be subject to penalties for failure to comply with those
requirements. In some states, tax losses may not produce a tax benefit in the
year incurred and also may not be available to offset income in subsequent
taxable years. Some of the states may require us, or we may elect, to withhold a
percentage of income from amounts to be distributed to a unitholder who is not a
resident of the state. Withholding, the amount of which may be greater or less
than a particular unitholder's income tax liability to the state, generally does
not relieve a nonresident unitholder from the obligation to file an income tax
return. Amounts withheld may be treated as if distributed to unitholders for
purposes of determining the amounts distributed by us. Please read "-- Tax
Consequences of Unit Ownership -- Entity-Level Collections." We may also own
property or do business in other states in the future.
It is the responsibility of each unitholder to investigate the legal
and tax consequences, under the laws of pertinent states and localities, of his
investment in us. Accordingly, each prospective unitholder should consult, and
must depend upon, his own tax counsel or other advisor with regard to those
matters. Further, it is the responsibility of each unitholder to file all state
and local, as well as United States federal tax returns, that may be required of
him. Counsel has not rendered an opinion on the state or local tax consequences
of an investment in us.
TAX CONSEQUENCES OF OWNERSHIP OF DEBT SECURITIES
A description of the material federal income tax consequences of the
acquisition, ownership and disposition of debt securities will be set forth in
the prospectus supplement relating to the offering of debt securities.
INVESTMENT IN US BY EMPLOYEE BENEFIT PLANS
An investment in us by an employee benefit plan is subject to certain
additional considerations because the investments of such plans are subject to
the fiduciary responsibility and prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
restrictions imposed by Section 4975 of the Internal Revenue Code. As used
herein, the term "employee benefit plan" includes, but is not limited to,
qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified
employee pension plans and tax deferred annuities or IRAs established or
maintained by an employer or employee organization. Among other things,
consideration should be given to (a) whether such investment is prudent under
Section 404(a)(1)(B) of ERISA; (b) whether in making such investment, such plan
will satisfy the diversification requirement of Section 404(a)(1)(C) of ERISA;
and (c) whether such investment will result in recognition of unrelated business
taxable income by such plan and, if so, the potential after-tax investment
return. Please read "Tax Considerations--Tax-Exempt Organizations and Other
Investors." The person with investment discretion with respect to the assets of
an employee benefit plan (a "fiduciary") should determine whether an investment
in us is authorized by the appropriate governing instrument and is a proper
investment for such plan.
42
Section 406 of ERISA and Section 4975 of the Internal Revenue Code
(which also applies to IRAs that are not considered part of an employee benefit
plan) prohibit an employee benefit plan from engaging in certain transactions
involving "plan assets" with parties that are "parties in interest" under ERISA
or "disqualified persons" under the Internal Revenue Code with respect to the
plan.
In addition to considering whether the purchase of limited partnership
units is a prohibited transaction, a fiduciary of an employee benefit plan
should consider whether such plan will, by investing in us, be deemed to own an
undivided interest in our assets, with the result that the General Partner also
would be a fiduciary of such plan and our operations would be subject to the
regulatory restrictions of ERISA, including its prohibited transaction rules, as
well as the prohibited transaction rules of the Internal Revenue Code.
The Department of Labor regulations provide guidance with respect to
whether the assets of an entity in which employee benefit plans acquire equity
interests would be deemed "plan assets" under certain circumstances. Pursuant to
these regulations, an entity's assets would not be considered to be "plan
assets" if, among other things, (a) the equity interest acquired by employee
benefit plans are publicly offered securities--i.e., the equity interests are
widely held by 100 or more investors independent of the issuer and each other,
freely transferable and registered pursuant to certain provisions of the federal
securities laws, (b) the entity is an "Operating Partnership"-- i.e., it is
primarily engaged in the production or sale of a product or service other than
the investment of capital either directly or through a majority owned subsidiary
or subsidiaries, or (c) there is no significant investment by benefit plan
investors, which is defined to mean that less than 25% of the value of each
class of equity interest (disregarding certain interests held by the General
Partner, its affiliates, and certain other persons) is held by the employee
benefit plans referred to above, IRAs and other employee benefit plans not
subject to ERISA (such as governmental plans). Our assets should not be
considered "plan assets" under these regulations because it is expected that the
investment will satisfy the requirements in (a) and (b) above and may also
satisfy the requirements in (c).
Plan fiduciaries contemplating a purchase of limited partnership units
should consult with their own counsel regarding the consequences under ERISA and
the Internal Revenue Code in light of the serious penalties imposed on persons
who engage in prohibited transactions or other violations.
PLAN OF DISTRIBUTION
We may sell the securities being offered hereby:
o directly to purchasers,
o through agents,
o through underwriters, and
o through dealers.
We, or agents designated by us, may directly solicit, from time to
time, offers to purchase the securities. Any such agent may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933, as amended.
We will name the agents involved in the offer or sale of the securities and
describe any commissions payable by us to these agents in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, these
agents will be acting on a best efforts basis for the period of their
appointment. The agents may be entitled under agreements which may be entered
into with us to indemnification by us against specific civil liabilities,
including liabilities under the Securities Act of 1933, as amended. The agents
may also be our customers or may engage in transactions with or perform services
for us in the ordinary course of business.
If any underwriters are utilized in the sale of the securities in
respect of which this prospectus is delivered, we will enter into an
underwriting agreement with those underwriters at the time of sale to them. The
names of these underwriters and the terms of the transaction will be set forth
in the prospectus supplement, which will be used by the underwriters to make
resales of the securities in respect of which this prospectus is delivered to
the public. The underwriters may be entitled, under the relevant underwriting
agreement, to indemnification by us against specific
43
liabilities, including liabilities under the Securities Act. The underwriters
may also be our customers or may engage in transactions with or perform services
for us in the ordinary course of business.
If a dealer is utilized in the sale of the securities in respect of
which this prospectus is delivered, we will sell those securities to the dealer,
as principal. The dealer may then resell those securities to the public at
varying prices to be determined by the dealer at the time of resale. Dealers may
be entitled to indemnification by us against specific liabilities, including
liabilities under the Securities Act. The dealers may also be our customers or
may engage in transactions with, or perform services for us in the ordinary
course of business.
The place and time of delivery for the securities in respect of which
this prospectus is delivered are set forth in the accompanying prospectus
supplement.
LEGAL
Certain legal matters in connection with the securities will be passed
upon by Vinson & Elkins L.L.P., Houston, Texas, as our counsel. Any underwriter
will be advised about other issues relating to any offering by their own legal
counsel.
EXPERTS
The consolidated financial statements of TEPPCO Partners, L.P. and
subsidiaries as of December 31, 2000 and 1999 and for each of the years in the
three-year period ended December 31, 2000, incorporated by reference herein
(included in TEPPCO Partners, L.P.'s Annual Report on Form 10-K for the year
ended December 31, 2000 and as amended and included in TEPPCO Partners, L.P.'s
Current Report on Form 8-K filed on July 27, 2001), the consolidated financial
statements of TE Products Pipeline Company, Limited Partnership and subsidiaries
as of December 31, 2000 and 1999 and for each of the years in the three-year
period ended December 31, 2000, and the consolidated balance sheet of Texas
Eastern Products Pipeline Company, LLC and subsidiary as of December 31, 2000,
incorporated by reference herein (included in TEPPCO Partners L.P.'s Current
Report on Form 8-K filed on November 30, 2001), have been incorporated by
reference herein in reliance upon the reports of KPMG LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
The combined financial statements of ARCO Pipe Line Company's APL
Business (as defined in the Amended and Restated Purchase Agreement with Texas
Eastern Products Pipeline Company, LLC) at December 31, 1999 and 1998 and for
the years then ended incorporated in this prospectus by reference to the audited
historical financial statements included on pages 4 through 17 of TEPPCO
Partners, L.P's Report 8-K/A filed October 3, 2000, the financial statements of
Seaway Crude Pipeline Company at December 31, 1999 and 1998 and for the years
then ended incorporated in this prospectus by reference to the audited
historical financial statements included on pages 18 through 29 of TEPPCO
Partners, L.P's Report 8-K/A filed October 3, 2000 and the financial statements
of Jonah Gas Gathering Company as of December 31, 2000 and for the periods June
1, 2000 to December 31, 2000 and January 1, 2000 to May 31, 2000 (Predecessor)
incorporated in this prospectus by reference to the audited historical financial
statements included in pages 5 through 14 of TEPPCO Partners, L.P.'s Current
Report 8-K/A filed November 9, 2001 have been so incorporated in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered hereby:
Securities and Exchange Commission registration fee........................... $ 9,172
Printing and engraving costs.................................................. 40,000
Legal fees and expenses....................................................... 100,000
Accounting fees and expenses.................................................. 50,000
Miscellaneous................................................................. 10,000
----------
Total......................................................................... $ 209,172
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The partnership agreements of the Registrant and its subsidiary
partnerships provide that they will, to the fullest extent permitted by law,
indemnify and advance expenses to the general partner, any Departing Partner (as
defined therein), any person who is or was an affiliate of the general partner
or any Departing Partner, any person who is or was an officer, director,
employee, partner, agent or trustee of the general partner or any Departing
Partner or any affiliate of the general partner or any Departing Partner, or any
person who is or was serving at the request of the general partner or any
affiliate of the general partner or any Departing Partner or any affiliate of
any Departing Partner as an officer, director, employee, partner, agent or
trustee of another person ("Indemnitees") from and against any and all losses,
claims, damages, liabilities (joint or several), expenses (including legal fees
and expenses), judgments, fines, settlements and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as
the general partner, Departing Partner or an affiliate of either, an officer,
director, employee, partner, agent or trustee of the general partner, any
Departing Partner or affiliate of either or a person serving at the request of
the Registrant in another entity in a similar capacity, provided that in each
case the Indemnitee acted in good faith and in a manner which such Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Registrant. This indemnification would under certain circumstances include
indemnification for liabilities under the Securities Act. In addition, each
Indemnitee would automatically be entitled to the advancement of expenses in
connection with the foregoing indemnification. Any indemnification under these
provisions will be only out of the assets of the Registrant. The Registrant is
authorized to purchase insurance against liabilities asserted against and
expenses incurred by such persons in connection with the Registrant's
activities, whether or not the Registrant would have the power to indemnify such
person against such liabilities under the provisions described above.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits*
*1.1 -- Form of Underwriting Agreement.
4.1 -- Third Amended and Restated Agreement of
Limited Partnership of TEPPCO Partners,
L.P., dated September 21, 2001 (Incorporated
by reference to Exhibit 3.7 of TEPPCO
Partners L.P.'s Quarterly Report on Form
10-Q for the fiscal quarter ended September
30, 2001).
4.2 -- Form of Senior Indenture.
4.3 -- Form of Subordinated Indenture.
5.1 -- Opinion of Vinson & Elkins L.L.P.
8.1 -- Opinion of Vinson & Elkins L.L.P. regarding
tax matters.
II-1
12.1 -- Statement of Computation of Ratio of
Earnings to Fixed Charges (Incorporated by
reference to Exhibit 12.1 of TEPPCO Partners
L.P.'s Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2001).
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP
(Houston).
23.3 -- Consent of PricewaterhouseCoopers LLP
(Denver).
23.4 -- Consent of Counsel (the consent of Vinson &
Elkins L.L.P. to the use of their opinion
filed as Exhibit 5.1 to the Registration
Statement and the reference to their firm in
this Registration Statement is contained in
such opinion)
23.5 -- Consent of Counsel (the consent of Vinson &
Elkins L.L.P. to the use of their opinion
filed as Exhibit 8.1 to the Registration
Statement and the reference to their firm in
this Registration Statement is contained in
such opinion).
24.1 -- Powers of Attorney (included on page II-4 of
this Registration Statement).
25.1 -- Form T-1 Statement of Eligibility and
Qualification.
- ----------
* To be filed by amendment or as an exhibit to a current report on Form
8-K of the registrant.
(b) Financial Statement Schedules
Not applicable.
ITEM 17. UNDERTAKINGS
I. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
i. To include any prospectus required by Section
10(a)(3) of the Securities Act;
ii. To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
iii. To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that paragraphs i and ii above do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
II. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
III. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, each of the
Registrants certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 30th day of
November, 2001.
TEPPCO PARTNERS, L.P.
By: TEXAS EASTERN PRODUCTS PIPELINE
COMPANY, LLC, as General Partner
By: /s/ Charles H. Leonard
--------------------------------------
Charles H. Leonard,
Senior Vice President, Chief Financial
Officer and Treasurer
II-4
GUARANTOR REGISTRANTS
(majority owned
subsidiaries of the
above Registrant):
TE PRODUCTS PIPELINE COMPANY, LIMITED
PARTNERSHIP
By: TEPPCO GP, Inc.
as General Partner
By: /s/ Charles H. Leonard
--------------------------------------
Charles H. Leonard,
Senior Vice President, Chief Financial
Officer and Treasurer
TCTM, L.P.
By: TEPPCO GP, Inc.
as General Partner
By: /s/ Charles H. Leonard
--------------------------------------
Charles H. Leonard,
Senior Vice President, Chief Financial
Officer and Treasurer
TEPPCO MIDSTREAM COMPANIES, L.P.
By: TEPPCO GP, Inc.
as General Partner
By: /s/ Charles H. Leonard
--------------------------------------
Charles H. Leonard,
Senior Vice President, Chief Financial
Officer and Treasurer
JONAH GAS GATHERING COMPANY
By: TEPPCO GP, Inc.
as Managing General Partner
By: /s/ Charles H. Leonard
--------------------------------------
Charles H. Leonard,
Senior Vice President, Chief Financial
Officer and Treasurer
II-5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Charles H. Leonard and James C. Ruth, and
each of them, either one of whom may act without joinder of the other, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all pre- and post- effective amendments to this
Registration Statement (including any Registration Statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) promulgated
under the Securities Act of 1933), and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or the
substitute or substitutes of any or all of them, may lawfully do or cause to be
done by virtue hereof. Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the following persons, in
the capacities and on the date indicated.
SIGNATURE POSITION DATE
--------- -------- ----
/s/ William L. Thacker Chairman of the Board and Chief Executive November 30, 2001
- --------------------------------------------- Officer of Texas Eastern Products Pipeline
William L. Thacker Company, LLC and of TEPPCO GP, Inc.*
/s/ Barry R. Pearl President and Chief Operating Officer of November 30, 2001
- --------------------------------------------- Texas Eastern Products Pipeline Company, LLC
Barry R. Pearl and of TEPPCO GP, Inc.*
/s/ Charles H. Leonard Senior Vice President, Chief Financial November 30, 2001
- --------------------------------------------- Officer and Treasurer of Texas Eastern
Charles H. Leonard Products Pipeline Company, LLC and of TEPPCO
GP, Inc.* (Principal Accounting and Financial
Officer)
/s/ Jim W. Mogg Vice Chairman of the Board and Director of November 30, 2001
- --------------------------------------------- Texas Eastern Products Pipeline Company, LLC
Jim W. Mogg
/s/ Milton Carroll Director of Texas Eastern November 30, 2001
- --------------------------------------------- Products Pipeline Company, LLC
Milton Carroll
/s/ Carl D. Clay Director of Texas Eastern November 30, 2001
- --------------------------------------------- Products Pipeline Company, LLC
Carl D. Clay
/s/ Derrill Cody Director of Texas Eastern November 30, 2001
- --------------------------------------------- Products Pipeline Company, LLC
Derrill Cody
/s/ John P. DesBarres Director of Texas Eastern November 30, 2001
- --------------------------------------------- Products Pipeline Company, LLC
John P. DesBarres
/s/ Fred J. Fowler Director of Texas Eastern November 30, 2001
- --------------------------------------------- Products Pipeline Company, LLC
Fred J. Fowler
/s/ Mark A. Borer Director of Texas Eastern November 30, 2001
- --------------------------------------------- Products Pipeline Company, LLC
Mark A. Borer
/s/ William W. Slaughter Director of Texas Eastern November 30, 2001
- --------------------------------------------- Products Pipeline Company, LLC
William W. Slaughter
*Also a director of TEPPCO GP, Inc., the general partner of each of TE Products
Pipeline Company, Limited Partnership, TCTM, L.P. and TEPPCO Midstream
Companies, L.P. and the managing general partner of Jonah Gas Gathering Company.
II-6
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*1.1 -- Form of Underwriting Agreement.
4.1 -- Third Amended and Restated Agreement of Limited Partnership
of TEPPCO Partners, L.P., dated September 21, 2001
(Incorporated by reference to Exhibit 3.7 of TEPPCO Partners
L.P.'s Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2001).
4.2 -- Form of Senior Indenture.
4.3 -- Form of Subordinated Indenture.
5.1 -- Opinion of Vinson & Elkins L.L.P.
8.1 -- Opinion of Vinson & Elkins L.L.P. regarding tax matters.
12.1 -- Statement of Computation of Ratio of Earnings to Fixed
Charges (Incorporated by reference to Exhibit 12.1 of TEPPCO
Partners L.P.'s Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2001).
23.1 -- Consent of KPMG LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP (Houston).
23.3 -- Consent of PricewaterhouseCoopers LLP (Denver).
23.4 -- Consent of Counsel (the consent of Vinson & Elkins L.L.P. to
the use of their opinion filed as Exhibit 5.1 to the
Registration Statement and the reference to their firm in
this Registration Statement is contained in such opinion)
23.5 -- Consent of Counsel (the consent of Vinson & Elkins L.L.P. to
the use of their opinion filed as Exhibit 8.1 to the
Registration Statement and the reference to their firm in
this Registration Statement is contained in such opinion).
24.1 -- Powers of Attorney (included on page II-4 of this
Registration Statement).
25.1 -- Form T-1 Statement of Eligibility and Qualification.
- ----------
* To be filed by amendment or as an exhibit to a current report on Form 8-K of
the registrant.
EXHIBIT 4.2
[FORM OF SENIOR INDENTURE]
================================================================================
TEPPCO PARTNERS, L.P.
AS ISSUER,
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP,
TCTM, L.P.,
TEPPCO MIDSTREAM COMPANIES, L.P.
AND
JONAH GAS GATHERING COMPANY
AS SUBSIDIARY GUARANTORS,
AND
FIRST UNION NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION
AS TRUSTEE
INDENTURE
DATED AS OF ____________
DEBT SECURITIES
================================================================================
CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
310 (a)............................................................................ 7.10
(b)............................................................................ 7.10
(c)............................................................................ N.A.
311 (a)............................................................................ 7.11
(b)............................................................................ 7.11
(c)............................................................................ N.A.
312 (a)............................................................................ 5.01
(b)............................................................................ 5.02
(c)............................................................................ 5.02
313 (a)............................................................................ 5.03
(b)............................................................................ 5.03
(c)............................................................................ 13.03
(d)............................................................................ 5.03
314 (a)............................................................................ 4.05
(b)............................................................................ N.A.
(c)(1)......................................................................... 13.05
(c)(2)......................................................................... 13.05
(c)(3)......................................................................... N.A.
(d)............................................................................ N.A.
(e)............................................................................ 13.05
(f)............................................................................ N.A.
315 (a)............................................................................ 7.01
(b)............................................................................ 6.07 & 13.03
(c)............................................................................ 7.01
(d)............................................................................ 7.01
(e)............................................................................ 6.08
316 (a) (last sentence)............................................................ 1.01
(a)(1)(A)...................................................................... 6.06
(a)(1)(B)...................................................................... 6.06
(a)(2)......................................................................... 9.01(d)
(b)............................................................................ 6.04
(c)............................................................................ 5.04
317 (a)(1)......................................................................... 6.02
(a)(2)......................................................................... 6.02
(b)............................................................................ 4.04
318 (a)............................................................................ 13.07
N.A. means Not Applicable
NOTE: This Cross-Reference table shall not, for any purpose, be deemed part of
this Indenture.
i
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.................................................................................1
Section 1.02. Other Definitions...........................................................................7
Section 1.03. Incorporation by Reference of Trust Indenture Act...........................................7
Section 1.04. Rules of Construction.......................................................................7
ARTICLE II
DEBT SECURITIES
Section 2.01. Forms Generally.............................................................................7
Section 2.02. Form of Trustee's Certificate of Authentication.............................................8
Section 2.03. Principal Amount; Issuable in Series........................................................8
Section 2.04. Execution of Debt Securities...............................................................10
Section 2.05. Authentication and Delivery of Debt Securities.............................................11
Section 2.06. Denomination of Debt Securities............................................................12
Section 2.07. Registration of Transfer and Exchange......................................................12
Section 2.08. Temporary Debt Securities..................................................................14
Section 2.09. Mutilated, Destroyed, Lost or Stolen Debt Securities.......................................14
Section 2.10. Cancellation of Surrendered Debt Securities................................................15
Section 2.11. Provisions of the Indenture and Debt Securities for the Sole Benefit of the
Parties and the Holders....................................................................15
Section 2.12. Payment of Interest; Interest Rights Preserved.............................................16
Section 2.13. Securities Denominated in Dollars..........................................................16
Section 2.14. Wire Transfers.............................................................................16
Section 2.15. Securities Issuable in the Form of a Global Security.......................................16
Section 2.16. Medium Term Securities.....................................................................19
Section 2.17. Defaulted Interest.........................................................................19
Section 2.18. CUSIP Numbers..............................................................................20
ARTICLE III
REDEMPTION OF DEBT SECURITIES
Section 3.01. Applicability of Article...................................................................20
Section 3.02. Notice of Redemption; Selection of Debt Securities.........................................20
Section 3.03. Payment of Debt Securities Called for Redemption...........................................22
Section 3.04. Mandatory and Optional Sinking Funds.......................................................23
Section 3.05. Redemption of Debt Securities for Sinking Fund.............................................23
ARTICLE IV
PARTICULAR COVENANTS OF THE PARTNERSHIP
Section 4.01. Payment of Principal of, and Premium, If Any, and Interest on, Debt Securities.............25
ii
Section 4.02. Maintenance of Offices or Agencies for Registration of Transfer, Exchange and
Payment of Debt Securities.................................................................25
Section 4.03. Appointment to Fill a Vacancy in the Office of Trustee.....................................25
Section 4.04. Duties of Paying Agents, etc...............................................................26
Section 4.05. SEC Reports; Financial Statements..........................................................26
Section 4.06. Compliance Certificate.....................................................................27
Section 4.07. Further Instruments and Acts...............................................................28
Section 4.08. Existence..................................................................................28
Section 4.09. Maintenance of Properties..................................................................28
Section 4.10. Payment of Taxes and Other Claims..........................................................28
ARTICLE V
HOLDERS' LISTS AND REPORTS BY THE TRUSTEE
Section 5.01. Partnership to Furnish Trustee Information as to Names and Addresses of Holders;
Preservation of Information................................................................28
Section 5.02. Communications to Holders..................................................................29
Section 5.03. Reports by Trustee.........................................................................29
Section 5.04. Record Dates for Action by Holders.........................................................29
ARTICLE VI
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT
Section 6.01. Events of Default..........................................................................30
Section 6.02. Collection of Debt by Trustee, etc.........................................................32
Section 6.03. Application of Moneys Collected by Trustee.................................................33
Section 6.04. Limitation on Suits by Holders.............................................................34
Section 6.05. Remedies Cumulative; Delay or Omission in Exercise of Rights Not a Waiver of
Default....................................................................................35
Section 6.06. Rights of Holders of Majority in Principal Amount of Debt Securities to Direct
Trustee and to Waive Default...............................................................35
Section 6.07. Trustee to Give Notice of Defaults Known to It, but May Withhold Such Notice in
Certain Circumstances......................................................................35
Section 6.08. Requirement of an Undertaking To Pay Costs in Certain Suits under the Indenture or
Against the Trustee........................................................................36
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities........................................................36
Section 7.02. Certain Rights of Trustee..................................................................37
Section 7.03. Trustee Not Liable for Recitals in Indenture or in Debt Securities.........................38
Section 7.04. Trustee, Paying Agent or Registrar May Own Debt Securities.................................39
Section 7.05. Moneys Received by Trustee to Be Held in Trust.............................................39
Section 7.06. Compensation and Reimbursement.............................................................39
Section 7.07. Right of Trustee to Rely on an Officers' Certificate Where No Other Evidence
Specifically Prescribed....................................................................40
Section 7.08. Separate Trustee; Replacement of Trustee...................................................40
Section 7.09. Successor Trustee by Merger................................................................41
iii
Section 7.10. Eligibility; Disqualification..............................................................41
Section 7.11. Preferential Collection of Claims Against Partnership......................................42
Section 7.12. Compliance with Tax Laws...................................................................42
ARTICLE VIII
CONCERNING THE HOLDERS
Section 8.01. Evidence of Action by Holders..............................................................42
Section 8.02. Proof of Execution of Instruments and of Holding of Debt Securities........................42
Section 8.03. Who May Be Deemed Owner of Debt Securities.................................................42
Section 8.04. Instruments Executed by Holders Bind Future Holders........................................43
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Purposes for Which Supplemental Indenture May Be Entered into Without Consent of
Holders....................................................................................43
Section 9.02. Modification of Indenture with Consent of Holders of Debt Securities.......................45
Section 9.03. Effect of Supplemental Indentures..........................................................46
Section 9.04. Debt Securities May Bear Notation of Changes by Supplemental Indentures....................46
ARTICLE X
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 10.01. Consolidations and Mergers of the Partnership and the Subsidiary Guarantors................47
Section 10.02. Rights and Duties of Successor Partnership or Successor Subsidiary Guarantor...............47
ARTICLE XI
SATISFACTION AND DISCHARGE OF
INDENTURE; DEFEASANCE; UNCLAIMED MONEYS
Section 11.01. Applicability of Article...................................................................48
Section 11.02. Satisfaction and Discharge of Indenture; Defeasance........................................48
Section 11.03. Conditions of Defeasance...................................................................49
Section 11.04. Application of Trust Money.................................................................50
Section 11.05. Repayment to Partnership...................................................................50
Section 11.06. Indemnity for U.S. Government Obligations..................................................50
Section 11.07. Reinstatement..............................................................................50
ARTICLE XII
[RESERVED]
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Successors and Assigns of Partnership Bound by Indenture...................................51
Section 13.02. Acts of Board, Committee or Officer of Successor Partnership Valid.........................51
iv
Section 13.03. Required Notices or Demands................................................................51
Section 13.04. Indenture and Debt Securities to Be Construed in Accordance with the Laws of the
State of New York..........................................................................52
Section 13.05. Officers' Certificate and Opinion of Counsel to Be Furnished upon Application or
Demand by the Partnership..................................................................52
Section 13.06. Payments Due on Legal Holidays.............................................................53
Section 13.07. Provisions Required by TIA to Control......................................................53
Section 13.08. Computation of Interest on Debt Securities.................................................53
Section 13.09. Rules by Trustee, Paying Agent and Registrar...............................................53
Section 13.10. No Recourse Against Others.................................................................53
Section 13.11. Severability...............................................................................53
Section 13.12. Effect of Headings.........................................................................54
Section 13.13. Indenture May Be Executed in Counterparts..................................................54
ARTICLE XIV
GUARANTEE
Section 14.01. Unconditional Guarantee....................................................................54
Section 14.02. Execution and Delivery of Guarantee........................................................56
Section 14.03. Limitation on Subsidiary Guarantors' Liability.............................................56
Section 14.04. Release of Subsidiary Guarantors from Guarantee............................................56
Section 14.05. Subsidiary Guarantor Contribution..........................................................57
Notation of Guarantee Annex A
v
INDENTURE dated as of ___________ among TEPPCO Partners, L.P., a
Delaware limited partnership (the "Partnership"), TE Products Pipeline Company,
Limited Partnership ("TE Products"), a Delaware limited partnership, TCTM, L.P.,
a Delaware limited partnership ("TCTM"), TEPPCO Midstream Companies, L.P., a
Delaware limited partnership ("TEPPCO Midstream"), Jonah Gas Gathering Company,
a Wyoming general partnership ("Jonah" and together with TE Products, TCTM and
TEPPCO Midstream, the "Subsidiary Guarantors"), and First Union National Bank, a
national banking association, as trustee (the "Trustee").
RECITALS OF THE PARTNERSHIP AND THE SUBSIDIARY GUARANTORS
The Partnership and Subsidiary Guarantors have duly authorized the
execution and delivery of this Indenture to provide for the issuance from time
to time of the Partnership's debentures, notes, bonds or other evidences of
indebtedness to be issued in one or more series unlimited as to principal amount
(herein called the "Debt Securities"), and the Guarantee by each of the
Subsidiary Guarantors of the Debt Securities, as in this Indenture provided.
The Partnership and the Subsidiary Guarantors are members of the same
consolidated group of companies. The Subsidiary Guarantors will derive direct
and indirect economic benefit from the issuance of the Debt Securities.
Accordingly, each Subsidiary Guarantor has duly authorized the execution and
delivery of this Indenture to provide for its full, unconditional and joint and
several guarantee of the Debt Securities to the extent provided in or pursuant
to this Indenture.
All things necessary to make this Indenture a valid agreement of the
Partnership, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH
That in order to declare the terms and conditions upon which the Debt
Securities are authenticated, issued and delivered, and in consideration of the
premises, and of the purchase and acceptance of the Debt Securities by the
holders thereof, the Partnership and the Trustee covenant and agree with each
other, for the benefit of the respective Holders from time to time of the Debt
Securities or any series thereof, as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. The Trustee may request and may conclusively rely upon an Officers'
Certificate to determine whether any Person is an Affiliate of any specified
Person.
"Agent" means any Registrar or paying agent.
"Bankruptcy Law" means title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the General
Partner or any authorized committee of the Board of Directors of the General
Partner or any directors and/or officers of the General Partner to whom such
Board of Directors or such committee shall have duly delegated its authority to
act hereunder. If the Partnership shall change its form of entity to other than
a limited partnership, the references to the Board of Directors of the General
Partner shall mean the Board of Directors (or other comparable governing body)
of the Partnership.
"Business Day" means any day other than a Legal Holiday.
"capital stock" of any Person means and includes any and all shares,
rights to purchase, warrants or options (whether or not currently exercisable),
participation or other equivalents of or interests in (however designated) the
equity (which includes, but is not limited to, common stock, preferred stock and
partnership and joint venture interests) of such Person (excluding any debt
securities that are convertible into, or exchangeable for, such equity).
"Custodian" means any receiver, trustee, assignee, liquidation or
similar official under any Bankruptcy Law.
"Debt" of any Person at any date means any obligation created or
assumed by such Person for the repayment of borrowed money and any guarantee
therefor.
"Debt Security" or "Debt Securities" has the meaning stated in the
first recital of this Indenture and more particularly means any debt security or
debt securities, as the case may be of any series authenticated and delivered
under this Indenture.
"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Depositary" means, unless otherwise specified by the Partnership
pursuant to either Section 2.03 or 2.15, with respect to Debt Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, The Depository Trust Company, New York, New York, or any successor
thereto registered as a clearing agency under the Exchange Act or other
applicable statute or regulations.
"Dollar" or "$" means such currency of the United States as at the time
of payment is legal tender for the payment of public and private debts.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute.
"Floating Rate Security" means a Debt Security that provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index specified pursuant to Section 2.03.
2
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the date on which the Debt
Securities of the applicable series are issued.
"General Partner" means Texas Eastern Products Pipeline Company, LLC, a
Delaware limited liability company, and its successors as general partner of the
Partnership.
"Global Security" means with respect to any series of Debt Securities
issued hereunder, a Debt Security which is executed by the Partnership and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with this Indenture and any
Indentures supplemental hereto, or resolution of the Board of Directors and set
forth in an Officers' Certificate, which shall be registered in the name of the
Depositary or its nominee and which shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, all the Outstanding Debt
Securities of such series or any portion thereof, in either case having the same
terms, including, without limitation, the same original issue date, date or
dates on which principal is due and interest rate or method of determining
interest.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered into for purposes of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb has a corresponding meaning.
"Holder," "Holder of Debt Securities" or other similar terms means, a
Person in whose name a Debt Security is registered in the Debt Security Register
(as defined in Section 2.07(a)).
"Indenture" means this instrument as originally executed, or, if
amended or supplemented as herein provided, as so amended or supplemented and
shall include the form and terms of particular series of Debt Securities as
contemplated hereunder, whether or not a supplemental Indenture is entered into
with respect thereto.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of Houston, Texas, City of New York, New York or at a
place of payment are authorized by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
3
"Lien" means, with respect to any asset, any mortgage, lien, security
interest, pledge, charge or other encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law.
"Officer" means, with respect to a Person, the Chairman of the Board,
the President, any Vice President, the Treasurer, any Assistant Treasurer,
Controller, Secretary, Assistant Secretary or any Assistant Vice President of
such Person.
"Officers' Certificate" means a certificate signed by two Officers of
the General Partner, one of whom must be the General Partner's chief executive
officer, chief financial officer or chief accounting officer (or if the
Partnership shall change its form of entity to other than a limited partnership,
by Persons, officers, members, agents and others holding positions comparable to
those of the foregoing nature, as applicable).
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Partnership or the Trustee.
"Original Issue Discount Debt Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
Section 6.01.
"Outstanding," when used with respect to any series of Debt Securities,
means, as of the date of determination, all Debt Securities of that series
theretofore authenticated and delivered under this Indenture, except:
(a) Debt Securities of that series theretofore canceled by the
Trustee or delivered to the Trustee for cancellation;
(b) Debt Securities of that series for whose payment or redemption
money in the necessary amount has been theretofore deposited
with the Trustee or any paying agent (other than the
Partnership) in trust or set aside and segregated in trust by
the Partnership (if the Partnership shall act as its own
paying agent) for the Holders of such Debt Securities;
provided, that, if such Debt Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee
has been made; and
(c) Debt Securities of that series which have been paid pursuant
to Section 2.09 or in exchange for or in lieu of which other
Debt Securities have been authenticated and delivered pursuant
to this Indenture, other than any such Debt Securities in
respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debt Securities are
held by a bona fide purchaser in whose hands such Debt
Securities are valid obligations of the Partnership;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Debt Securities owned by the Partnership or any other obligor upon the Debt
Securities or any Affiliate of the Partnership or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the
4
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
an officer of the Trustee actually knows to be so owned shall be so disregarded.
Debt Securities so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Debt Securities and that the
pledgee is not the Partnership or any other obligor upon the Debt Securities or
an Affiliate of the Partnership or of such other obligor. In determining whether
the Holders of the requisite principal amount of Outstanding Debt Securities
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the principal amount of an Original Issue Discount Debt
Security that shall be deemed to be Outstanding for such purposes shall be the
amount of the principal thereof that would be due and payable as of the date of
such determination upon a declaration of acceleration of the maturity thereof
pursuant to Section 6.01.
"Partnership" means the Person named as the "Partnership" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Partnership" shall mean such successor Person.
"Partnership Request" and "Partnership Order" means, respectively, a
written request or order signed in the name of the Partnership by the Chairman
of the Board, the President or a Vice President of the General Partner, and by
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the Secretary or an Assistant Secretary of the General Partner, and delivered to
the Trustee, or if the Partnership shall change its form of entity to other than
a limited partnership, by Persons or officers, members, agents and others
holding positions comparable to those of the foregoing nature, as applicable.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, incorporated or unincorporated association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.
"Redemption Date," when used with respect to any Debt Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
5
"Subsidiary" means:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of equity
interests entitled, without regard to the occurrence of any
contingency, to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or combination thereof; or
(2) in the case of a partnership, more than 50% of the partners'
equity interests, considering all partners' equity interests
as a single class is at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or combination thereof.
"Subsidiary Guarantors" means the Person or Persons named as the
"Subsidiary Guarantors" in the first paragraph of this instrument until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Subsidiary Guarantors" shall mean
such successor Person or Persons, and any other Subsidiary of the Partnership
who may execute this Indenture, or a supplement thereto, for the purpose of
providing a Guarantee of Debt Securities pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. "
77aaa-77bbbb), as in effect on the date of this Indenture as originally executed
and, to the extent required by law, as amended.
"Trustee" initially means First Union National Bank and any other
Person or Persons appointed as such from time to time pursuant to Section 7.08,
and, subject to the provisions of Article VII, includes its or their successors
and assigns. If at any time there is more than one such Person, "Trustee" as
used with respect to the Debt Securities of any series shall mean the Trustee
with respect to the Debt Securities of that series.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"U.S. Government Obligations" means direct obligations of the United
States of America, obligations on which the payment of principal and interest is
fully guaranteed by the United States of America or obligations or guarantees
for the payment of which the full faith and credit of the United States of
America is pledged.
"Yield to Maturity" means the yield to maturity, calculated at the time
of issuance of a series of Debt Securities, or, if applicable, at the most
recent redetermination of interest on such series and calculated in accordance
with accepted financial practice.
6
Section 1.02. Other Definitions.
TERM DEFINED IN SECTION
---- ------------------
"Debt Security Register"......................................... 2.07
"Defaulted Interest"............................................. 2.17
"Designated Currency"............................................ 2.18
"Determination Notice"........................................... 3.02
"Event of Default"............................................... 6.01
"Guarantee"...................................................... 14.01
"Registrar"...................................................... 2.07
"Successor Partnership".......................................... 10.01
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
All terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.04. Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the issuer dated such date prepared in accordance with
GAAP.
ARTICLE II
DEBT SECURITIES
Section 2.01. Forms Generally. The Debt Securities of each series shall
be in substantially the form established without the approval of any Holder by
or pursuant to a resolution of the Board of Directors or in one or more
Indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as the
Partnership may deem appropriate (and, if not contained in a supplemental
Indenture entered into in accordance with Article IX, as are not prohibited by
the provisions of this Indenture) or as may be required or appropriate to comply
with any law or with any rules made pursuant thereto or with any rules of any
securities exchange on which such series of Debt Securities may be listed, or to
conform to general usage, or as may, consistently herewith, be determined by the
officers executing such Debt Securities as evidenced by their execution of the
Debt Securities.
7
The definitive Debt Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by their execution of such Debt.
Section 2.02. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Debt Securities authenticated by
the Trustee shall be in substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
,
---------------------------------------
As Trustee
By:
-----------------------------------
Authorized Signature
Section 2.03. Principal Amount; Issuable in Series. The aggregate
principal amount of Debt Securities which may be issued, executed,
authenticated, delivered and outstanding under this Indenture is unlimited.
The Debt Securities may be issued in one or more series in fully
registered form. There shall be established, without the approval of any
Holders, in or pursuant to a resolution of the Board of Directors and set forth
in an Officers' Certificate, or established in one or more Indentures
supplemental hereto, prior to the issuance of Debt Securities of any series any
or all of the following:
(a) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of the series from all other Debt Securities);
(b) any limit upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under this
Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of the series pursuant to this Article II);
(c) the date or dates on which the principal and premium, if any, of
the Debt Securities of the series are payable;
(d) the rate or rates (which may be fixed or variable) at which the
Debt Securities of the series shall bear interest, if any, or the method of
determining such rate or rates, the date or dates from which such interest shall
accrue, the interest payment dates on which such interest shall be payable, or
the method by which such date will be determined, in the case of Registered
Securities, the record dates for the determination of Holders thereof to whom
such interest is payable; and the basis upon which interest will be calculated
if other than that of a 360-day year of twelve thirty-day months;
8
(e) the place or places, if any, in addition to or instead of the
corporate trust office of the Trustee, where the principal of, and premium, if
any, and interest on, Debt Securities of the series shall be payable ("Place of
Payment");
(f) the price or prices at which, the period or periods within which
and the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership or otherwise;
(g) whether Debt Securities of the series are entitled to the benefits
of any Guarantee of any Subsidiary Guarantors pursuant to this Indenture;
(h) the obligation, if any, of the Partnership to redeem, purchase or
repay Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, and the price or prices at
which and the period or periods within which and the terms and conditions upon
which Debt Securities of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligations;
(i) the terms, if any, upon which the Debt Securities of the series may
be convertible into or exchanged for capital stock (which may be represented by
depositary shares), other Debt Securities or warrants for capital stock or Debt
or other securities of any kind of the Partnership or any other obligor and the
terms and conditions upon which such conversion or exchange shall be effected,
including the initial conversion or exchange price or rate, the conversion or
exchange period and any other provision in addition to or in lieu of those
described herein;
(j) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;
(k) if the amount of principal of or any premium or interest on Debt
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;
(l) if the principal amount payable at the Stated Maturity of Debt
Securities of the series will not be determinable as of any one or more dates
prior to such Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined);
(m) any changes or additions to Article XI, including the addition of
additional covenants that may be subject to the covenant defeasance option
pursuant to Section 11.02(b);
(n) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.01 or
provable in bankruptcy pursuant to Section 6.02;
(o) the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the Debt Securities of the series of any properties, assets,
moneys, proceeds, securities or other
9
collateral, including whether certain provisions of the TIA are applicable and
any corresponding changes to provisions of this Indenture as currently in
effect;
(p) any addition to or change in the Events of Default with respect to
the Debt Securities of the series and any change in the right of the Trustee or
the Holders to declare the principal of, and premium and interest on, such Debt
Securities due and payable;
(q) if the Debt Securities of the series shall be issued in whole or in
part in the form of a Global Security or Securities, the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged in whole
or in part for other individual Debt Securities in definitive registered form;
and the Depositary for such Global Security or Securities and the form of any
legend or legends to be borne by any such Global Security or Securities in
addition to or in lieu of the legend referred to in Section 2.15(a);
(r) any trustees, authenticating or paying agents, transfer agents or
registrars;
(s) the applicability of, and any addition to or change in the
covenants and definitions currently set forth in this Indenture or in the terms
currently set forth in Article X, including conditioning any merger, conveyance,
transfer or lease permitted by Article X upon the satisfaction of an Debt
coverage standard by the Partnership and Successor Partnership (as defined in
Article X);
(t) with regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee; and
(u) any other terms of the Debt Securities of the series (which terms
shall not be prohibited by the provisions of this Indenture).
All Debt Securities of any one series appertaining thereto shall be
substantially identical except as to denomination and except as may otherwise be
provided in or pursuant to such resolution of the Board of Directors and as set
forth in such Officers' Certificate or in any such Indenture supplemental
hereto.
Section 2.04. Execution of Debt Securities. The Debt Securities shall
be signed on behalf of the Partnership by the Chairman of the Board, the
President or a Vice President of the General Partner and, if the seal of the
General Partner is reproduced thereon, it shall be attested by its Secretary, an
Assistant Secretary, a Treasurer or an Assistant Treasurer. Such signatures upon
the Debt Securities may be the manual or facsimile signatures of the present or
any future such authorized officers and may be imprinted or otherwise reproduced
on the Debt Securities. The seal of the General Partner, if any, may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Debt Securities.
Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, signed manually
by the Trustee, shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee upon any Debt
Security executed by the General Partner on behalf of the Partnership shall be
conclusive evidence that the Debt Security so authenticated has been duly
authenticated and delivered hereunder.
10
In case any officer of the General Partner who shall have signed any of
the Debt Securities shall cease to be such officer before the Debt Securities so
signed shall have been authenticated and delivered by the Trustee, or disposed
of by the Partnership, such Debt Securities nevertheless may be authenticated
and delivered or disposed of as though the Person who signed such Debt
Securities had not ceased to be such officer of the General Partner; and any
Debt Security may be signed on behalf of the General Partner by such Persons as,
at the actual date of the execution of such Debt Security, shall be the proper
officers of the General Partner, although at the date of such Debt Security or
of the execution of this Indenture any such Person was not such officer.
Section 2.05. Authentication and Delivery of Debt Securities. At any
time and from time to time after the execution and delivery of this Indenture,
the Partnership may deliver Debt Securities of any series executed by the
Partnership to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Debt Securities to or upon a Partnership Order. In
authenticating such Debt Securities, and accepting the additional
responsibilities under this Indenture in relation to such Debt Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon:
(a) a copy of any resolution or resolutions of the Board of Directors,
certified by the Secretary or Assistant Secretary of the Partnership,
authorizing the terms of issuance of any series of Debt Securities;
(b) an executed supplemental Indenture, if any;
(c) an Officers' Certificate; and
(d) an Opinion of Counsel prepared in accordance with Section 13.05
which shall also state:
(i) that the form of such Debt Securities has been established
by or pursuant to a resolution of the Board of Directors or by a
supplemental Indenture as permitted by Section 2.01 in conformity with
the provisions of this Indenture;
(ii) that the terms of such Debt Securities have been
established by or pursuant to a resolution of the Board of Directors or
by a supplemental Indenture as permitted by Section 2.03 in conformity
with the provisions of this Indenture;
(iii) that such Debt Securities, when authenticated and
delivered by the Trustee and issued by the Partnership in the manner
and subject to any conditions specified in such Opinion of Counsel,
will constitute valid and legally binding obligations of the
Partnership, enforceable in accordance with their terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability;
11
(iv) that the Partnership has the partnership power to issue
such Debt Securities and has duly taken all necessary partnership
action with respect to such issuance;
(v) that the issuance of such Debt Securities will not
contravene the organizational documents of the Partnership or result in
any material violation of any of the terms or provisions of any law or
regulation or of any material indenture, mortgage or other agreement
known to such counsel by which the Partnership is bound;
(vi) that authentication and delivery of such Debt Securities
and the execution and delivery of any supplemental Indenture will not
violate the terms of this Indenture; and
(vii) such other matters as the Trustee may reasonably
request.
Such Opinion of Counsel need express no opinion as to whether a court
in the United States would render a money judgment in a currency other than that
of the United States.
The Trustee shall have the right to decline to authenticate and deliver
any Debt Securities under this Section 2.05 if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith by its board of directors or trustees, executive committee or a
trust committee of directors, trustees or vice presidents (or any combination
thereof) shall determine that such action would expose the Trustee to personal
liability to existing Holders.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Partnership to authenticate Debt Securities of any series. Unless limited
by the terms of such appointment, an authenticating agent may authenticate Debt
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, paying agent or agent
for service of notices and demands.
Unless otherwise provided in the form of Debt Security for any series,
each Debt Security shall be dated the date of its authentication.
Section 2.06. Denomination of Debt Securities. Unless otherwise
provided in the form of Debt Security for any series, the Debt Securities of
each series shall be issuable only as fully registered Debt Securities in such
Dollar denominations as shall be specified or contemplated by Section 2.03. In
the absence of any such specification with respect to the Debt Securities of any
series, the Debt Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
Section 2.07. Registration of Transfer and Exchange.
(a) The Partnership shall keep or cause to be kept a register for each
series of Debt Securities issued hereunder (hereinafter collectively referred to
as the "Debt Security Register"), in which, subject to such reasonable
regulations as it may prescribe, the Partnership shall provide for the
registration of all Debt Securities and the transfer of Debt Securities as in
this Article II
12
provided. At all reasonable times the Debt Security Register shall be open for
inspection by the Trustee. Subject to Section 2.15, upon due presentment for
registration of transfer of any Debt Security at any office or agency to be
maintained by the Partnership in accordance with the provisions of Section 4.02,
the Partnership shall execute and the Trustee shall authenticate and deliver in
the name of the transferee or transferees a new Debt Security or Debt Securities
of authorized denominations for a like aggregate principal amount. In no event
may Debt Securities be issued as, exchanged for, bearer securities.
Unless and until otherwise determined by the Partnership by resolution
of the Board of Directors, the register of the Partnership for the purpose of
registration, exchange or registration of transfer of the Debt Securities shall
be kept at the principal corporate trust office of the Trustee and, for this
purpose, the Trustee shall be designated "Registrar."
Debt Securities of any series (other than a Global Security, except as
set forth below) may be exchanged for a like aggregate principal amount of Debt
Securities of the same series of other authorized denominations. Subject to
Section 2.15, Debt Securities to be exchanged shall be surrendered at the office
or agency to be maintained by the Partnership as provided in Section 4.02, and
the Partnership shall execute and the Trustee shall authenticate and deliver in
exchange therefor the Debt Security or Debt Securities which the Holder making
the exchange shall be entitled to receive.
(b) All Debt Securities presented or surrendered for registration of
transfer, exchange or payment shall (if so required by the Partnership, the
Trustee or the Registrar) be duly endorsed or be accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Partnership,
the Trustee and the Registrar, duly executed by the Holder or his attorney duly
authorized in writing.
All Debt Securities issued in exchange for or upon transfer of Debt
Securities shall be the valid obligations of the Partnership, evidencing the
same debt, and entitled to the same benefits under this Indenture as the Debt
Securities surrendered for such exchange or transfer.
No service charge shall be made for any exchange or registration of
transfer of Debt Securities (except as provided by Section 2.09), but the
Partnership may require payment of a sum sufficient to cover any tax, fee,
assessment or other governmental charge that may be imposed in relation thereto,
other than those expressly provided in this Indenture to be made at the
Partnership's own expense or without expense or without charge to the Holders.
The Partnership shall not be required (i) to issue, register the
transfer of or exchange any Debt Securities for a period of 15 days next
preceding any mailing of notice of redemption of Debt Securities of such series
or (ii) to register the transfer of or exchange any Debt Securities selected,
called or being called for redemption.
Prior to the due presentation for registration of transfer of any Debt
Security, the Partnership, the Trustee, any paying agent or any Registrar may
deem and treat the Person in whose name a Debt Security is registered as the
absolute owner of such Debt Security for the purpose of receiving payment of
principal of, and premium, if any, and interest on, such Debt Security and for
all other purposes whatsoever, whether or not such Debt Security is overdue,
13
and none of the Partnership, the Subsidiary Guarantors, the Trustee, any paying
agent or Registrar shall be affected by notice to the contrary.
None of the Partnership, the Subsidiary Guarantors, the Trustee, any
agent of the Trustee, any paying agent or any Registrar will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 2.08. Temporary Debt Securities. Pending the preparation of
definitive Debt Securities of any series, the Partnership may execute and the
Trustee shall authenticate and deliver temporary Debt Securities (printed,
lithographed, photocopied, typewritten or otherwise produced) of any authorized
denomination, and substantially in the form of the definitive Debt Securities in
lieu of which they are issued, in registered form with such omissions,
insertions and variations as may be appropriate for temporary Debt Securities,
all as may be determined by the Partnership with the concurrence of the Trustee.
Temporary Debt Securities may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Debt Security shall be executed
by the Partnership and be authenticated by the Trustee upon the same conditions
and in substantially the same manner, and with like effect, as the definitive
Debt Securities.
If temporary Debt Securities of any series are issued, the Partnership
will cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series upon surrender of the temporary Debt
Securities of such series at the office or agency of the Partnership at a Place
of Payment for such series, without charge to the Holder thereof, except as
provided in Section 2.07 in connection with a transfer. Upon surrender for
cancellation of any one or more temporary Debt Securities of any series, the
Partnership shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debt Securities of the
same series of authorized denominations and of like tenor. Until so exchanged,
temporary Debt Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Debt Securities of such series.
Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Debt Securities represented
thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global
Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount to be
exchanged and endorsed.
Section 2.09. Mutilated, Destroyed, Lost or Stolen Debt Securities. If
(a) any mutilated Debt Security is surrendered to the Trustee at its corporate
trust office or (b) the Partnership and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debt Security, and there
is delivered to the Partnership and the Trustee such security or indemnity as
may be required by them to save each of them and any paying agent harmless, and
neither the Partnership nor the Trustee receives notice that such Debt Security
has been acquired
14
by a bona fide purchaser, then the Partnership shall execute and, upon a
Partnership Order, the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Debt Security, a new
Debt Security of the same series of like tenor, form, terms and principal
amount, bearing a number not contemporaneously Outstanding. Upon the issuance of
any substituted Debt Security, the Partnership may require the payment of a sum
sufficient to cover any tax, fee, assessment or other governmental charge that
may be imposed in relation thereto and any other expenses connected therewith.
In case any Debt which has matured or is about to mature or which has been
called for redemption shall become mutilated or be destroyed, lost or stolen,
the Partnership may, instead of issuing a substituted Debt Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Debt Security) if the applicant for such payment shall furnish
the Partnership and the Trustee with such security or indemnity as either may
require to save it harmless from all risk, however remote, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Partnership and
the Trustee of the destruction, loss or theft of such Debt Security and of the
ownership thereof.
Every substituted Debt Security of any series issued pursuant to the
provisions of this Section 2.09 by virtue of the fact that any Debt Security is
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Partnership, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Debt
Securities of that series duly issued hereunder. All Debt Securities shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Debt Securities, and shall preclude any and all other rights or
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
Section 2.10. Cancellation of Surrendered Debt Securities. All Debt
Securities surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to the Partnership or any paying agent or a
Registrar, be delivered to the Trustee for cancellation by it, or if surrendered
to the Trustee, shall be canceled by it, and no Debt Securities shall be issued
in lieu thereof except as expressly permitted by any of the provisions of this
Indenture. All canceled Debt Securities held by the Trustee shall be destroyed
(subject to the record retention requirements of the Exchange Act) and
certification of their destruction delivered to the Partnership, unless
otherwise directed. On request of the Partnership, the Trustee shall deliver to
the Partnership canceled Debt Securities held by the Trustee. If the Partnership
shall acquire any of the Debt Securities, however, such acquisition shall not
operate as a redemption or satisfaction of the Debt represented thereby unless
and until the same are delivered or surrendered to the Trustee for cancellation.
The Partnership may not issue new Debt Securities to replace Debt Securities it
has redeemed, paid or delivered to the Trustee for cancellation.
Section 2.11. Provisions of the Indenture and Debt Securities for the
Sole Benefit of the Parties and the Holders. Nothing in this Indenture or in the
Debt, expressed or implied, shall give or be construed to give to any Person,
other than the parties hereto, the Holders or any Registrar or paying agent, any
legal or equitable right, remedy or claim under or in respect of this Indenture,
or under any covenant, condition or provision herein contained; all its
covenants,
15
conditions and provisions being for the sole benefit of the parties hereto, the
Holders and any Registrar and paying agents.
Section 2.12. Payment of Interest; Interest Rights Preserved.
(a) Interest on any Debt Security that is payable and is punctually
paid or duly provided for on any interest payment date shall be paid to the
Person in whose name such Debt Security is registered at the close of business
on the regular record date for such interest notwithstanding the cancellation of
such Debt Security upon any transfer or exchange subsequent to the regular
record date. Payment of interest on Debt Securities shall be made at the
corporate trust office of the Trustee (except as otherwise specified pursuant to
Section 2.03), or at the option of the Partnership, by check mailed to the
address of the Person entitled thereto as such address shall appear in the Debt
Security Register or, if provided pursuant to Section 2.03 and in accordance
with arrangements satisfactory to the Trustee, at the option of the Registered
Holder by wire transfer to an account designated by the Registered Holder.
(b) Subject to the foregoing provisions of this Section 2.12 and
Section 2.17, each Debt Security of a particular series delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Debt Security of the same series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debt
Security.
Section 2.13. Securities Denominated in Dollars. Except as otherwise
specified pursuant to Section 2.03 for Debt Securities of any series, payment of
the principal of, and premium, if any, and interest on, Debt Securities of such
series will be made in Dollars.
Section 2.14. Wire Transfers. Notwithstanding any other provision to
the contrary in this Indenture, the Partnership may make any payment of monies
required to be deposited with the Trustee on account of principal of, or
premium, if any, or interest on, the Debt Securities (whether pursuant to
optional or mandatory redemption payments, interest payments or otherwise) by
wire transfer in immediately available funds to an account designated by the
Trustee before 11:00 a.m., New York City time, on the date such moneys are to be
paid to the Holders of the Debt Securities in accordance with the terms hereof.
Section 2.15. Securities Issuable in the Form of a Global Security.
(a) If the Partnership shall establish pursuant to Sections 2.01 and
2.03 that the Debt Securities of a particular series are to be issued in whole
or in part in the form of one or more Global Securities, then the Partnership
shall execute and the Trustee or its agent shall, in accordance with Section
2.05, authenticate and deliver, such Global Security or Securities, which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, the Outstanding Debt Securities of such series to be
represented by such Global Security or Securities, or such portion thereof as
the Partnership shall specify in an Officers' Certificate, shall be registered
in the name of the Depositary for such Global Security or Securities or its
nominee, shall be delivered by the Trustee or its agent to the Depositary or
pursuant to the Depositary's instruction and shall bear a legend substantially
to the following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TRUST COMPANY, A NEW YORK
16
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE PARTNERSHIP OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO HEREIN,"
or such other legend as may then be required by the Depositary for such Global
Security or Securities.
(b) Notwithstanding any other provision of this Section 2.15 or of
Section 2.07 to the contrary, and subject to the provisions of paragraph (c)
below, unless the terms of a Global Security expressly permit such Global
Security to be exchanged in whole or in part for definitive Debt Securities in
registered form, a Global Security may be transferred, in whole but not in part
and in the manner provided in Section 2.07, only by the Depositary to a nominee
of the Depositary for such Global Security, or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary, or by the Depositary or a
nominee of the Depositary to a successor Depositary or a nominee of such
successor for such Global Security selected or approved by the Partnership, or
to a nominee of such successor Depositary.
(c) (i) If at any time the Depositary for a Global Security or
Securities notifies the Partnership that it is unwilling or unable to
continue as Depositary for such Global Security or Securities or if at
any time the Depositary for the Debt Securities for such series shall
no longer be eligible or in good standing under the Exchange Act or
other applicable statute, rule or regulation, the Partnership shall
appoint a successor Depositary with respect to such Global Security or
Securities. If a successor Depositary for such Global Security or
Securities is not appointed by the Partnership within 90 days after the
Partnership receives such notice or becomes aware of such
ineligibility, the Partnership shall execute, and the Trustee or its
agent, upon receipt of a Partnership Order for the authentication and
delivery of such individual Debt Securities of such series in exchange
for such Global Security, will authenticate and deliver, individual
Debt Securities of such series of like tenor and terms in definitive
form in an aggregate principal amount equal to the principal amount of
the Global Security in exchange for such Global Security or Securities.
(ii) The Partnership may at any time and in its sole discretion
determine that the Debt Securities of any series or portion thereof
issued or issuable in the form of one or more
17
Global Securities shall no longer be represented by such Global
Security or Securities. In such event the Partnership will execute, and
the Trustee, upon receipt of a Partnership Order for the authentication
and delivery of individual Debt Securities of such series in exchange
in whole or in part for such Global Security, will authenticate and
deliver individual Debt Securities of such series of like tenor and
terms in definitive form in an aggregate principal amount equal to the
principal amount of such series or portion thereof in exchange for such
Global Security or Securities.
(iii) If specified by the Partnership pursuant to Sections 2.01 and
2.03 with respect to Debt Securities issued or issuable in the form of
a Global Security, the Depositary for such Global Security may
surrender such Global Security in exchange in whole or in part for
individual Debt Securities of such series of like tenor and terms in
definitive form on such terms as are acceptable to the Partnership, the
Trustee and such Depositary. Thereupon the Partnership shall execute,
and the Trustee or its agent upon receipt of a Partnership Order for
the authentication and delivery of definitive Debt Securities of such
series shall authenticate and deliver, without service charge, to each
Person specified by such Depositary a new Debt Security or Securities
of the same series of like tenor and terms and of any authorized
denomination as requested by such Person in aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
Global Security; and to such Depositary a new Global Security of like
tenor and terms and in an authorized denomination equal to the
difference, if any, between the principal amount of the surrendered
Global Security and the aggregate principal amount of Debt Securities
delivered to Holders thereof.
(iv) In any exchange provided for in any of the preceding three
paragraphs, the Partnership will execute and the Trustee or its agent
will authenticate and deliver individual Debt Securities. Upon the
exchange of the entire principal amount of a Global Security for
individual Debt Securities, such Global Security shall be canceled by
the Trustee or its agent. Except as provided in the preceding
paragraph, Debt Securities issued in exchange for a Global Security
pursuant to this Section 2.15 shall be registered in such names and in
such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or the Registrar.
The Trustee or the Registrar shall deliver such Debt Securities to the
Persons in whose names such Debt Securities are so registered.
(v) Payments in respect of the principal of and interest on any Debt
Securities registered in the name of the Depositary or its nominee will
be payable to the Depositary or such nominee in its capacity as the
registered owner of such Global Security. The Partnership and the
Trustee may treat the Person in whose name the Debt Securities,
including the Global Security, are registered as the owner thereof for
the purpose of receiving such payments and for any and all other
purposes whatsoever. None of the Partnership, the Trustee, any
Registrar, the paying agent or any agent of the Partnership or the
Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of the beneficial
ownership interests of the Global Security by the Depositary or its
nominee or any of the Depositary's direct or indirect participants, or
for maintaining, supervising or reviewing any records of the
Depositary, its nominee or any of its direct or indirect participants
relating to the
18
beneficial ownership interests of the Global Security, the payments to
the beneficial owners of the Global Security of amounts paid to the
Depositary or its nominee, or any other matter relating to the actions
and practices of the Depositary, its nominee or any of its direct or
indirect participants. None of the Partnership, the Trustee or any such
agent will be liable for any delay by the Depositary, its nominee, or
any of its direct or indirect participants in identifying the
beneficial owners of the Debt Securities, and the Partnership and the
Trustee may conclusively rely on, and will be protected in relying on,
instructions from the Depositary or its nominee for all purposes
(including with respect to the registration and delivery, and the
respective principal amounts, of the Debt Securities to be issued).
Section 2.16. Medium Term Securities. Notwithstanding any contrary
provision herein, if all Debt Securities of a series are not to be originally
issued at one time, it shall not be necessary for the Partnership to deliver to
the Trustee an Officers' Certificate, resolutions of the Board of Directors,
supplemental Indenture, Opinion of Counsel or written order or any other
document otherwise required pursuant to Section 2.01, 2.03, 2.05 or 13.05 at or
prior to the time of authentication of each Debt Security of such series if such
documents are delivered to the Trustee or its agent at or prior to the
authentication upon original issuance of the first such Debt Security of such
series to be issued; provided, that any subsequent request by the Partnership to
the Trustee to authenticate Debt Securities of such series upon original
issuance shall constitute a representation and warranty by the Partnership that,
as of the date of such request, the statements made in the Officers' Certificate
delivered pursuant to Section 2.05 or 13.05 shall be true and correct as if made
on such date and that the Opinion of Counsel delivered at or prior to such time
of authentication of an original issuance of Debt Securities shall specifically
state that it shall relate to all subsequent issuances of Debt Securities of
such series that are identical to the Debt Securities issued in the first
issuance of Debt Securities of such series.
A Partnership Order delivered by the Partnership to the Trustee in the
circumstances set forth in the preceding paragraph, may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the telephonic
or written order of Persons designated in such written order (any such
telephonic instructions to be promptly confirmed in writing by such Person) and
that such Persons are authorized to determine, consistent with the Officers'
Certificate, supplemental Indenture or resolution of the Board of Directors
relating to such written order, such terms and conditions of such Debt
Securities as are specified in such Officers' Certificate, supplemental
Indenture or such resolution.
Section 2.17. Defaulted Interest. Any interest on any Debt Security of
a particular series which is payable, but is not punctually paid or duly
provided for, on the dates and in the manner provided in the Debt Securities of
such series and in this Indenture (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Registered Holder thereof on the relevant
record date by virtue of having been such Registered Holder, and such Defaulted
Interest may be paid by the Partnership, at its election in each case, as
provided in clause (i) or (ii) below:
(i) The Partnership may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series are registered at
19
the close of business on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Partnership shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Registered Security
of such series and the date of the proposed payment, and at the same
time the Partnership shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Partnership of
such special record date and, in the name and at the expense of the
Partnership, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed,
first class postage pre-paid, to each Holder thereof at its address as
it appears in the Security Register, not less than 10 days prior to
such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Registered Securities of such series are registered at the
close of business on such special record date.
(ii) The Partnership may make payment of any Defaulted
Interest on the Debt Securities of such series in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Debt Securities of such series may be listed, and
upon such notice as may be required by such exchange, if, after notice
given by the Partnership to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.18. CUSIP Numbers. The Partnership in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
accuracy of such numbers either as printed on the Securities or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Partnership
will promptly notify the Trustee in writing of any change in the "CUSIP"
numbers.
ARTICLE III
REDEMPTION OF DEBT SECURITIES
Section 3.01. Applicability of Article. The provisions of this Article
shall be applicable to the Debt Securities of any series which are redeemable
before their Stated Maturity except as otherwise specified as contemplated by
Section 2.03 for Debt Securities of such series.
Section 3.02. Notice of Redemption; Selection of Debt Securities. In
case the Partnership shall desire to exercise the right to redeem all or, as the
case may be, any part of the
20
Debt Securities of any series in accordance with their terms, by resolution of
the Board of Directors or a supplemental Indenture, the Partnership shall fix a
date for redemption and shall give notice of such redemption at least 30 and not
more than 60 days prior to the date fixed for redemption to the Holders of Debt
Securities of such series so to be redeemed as a whole or in part, in the manner
provided in Section 13.03. The notice if given in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
Holder receives such notice. In any case, failure to give such notice or any
defect in the notice to the Holder of any Debt Security of a series designated
for redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Debt Security of such series.
Each such notice of redemption shall specify the date fixed for
redemption, the redemption price at which Debt Securities of such series are to
be redeemed, the Place or Places of Payment that payment will be made upon
presentation and surrender of such Debt Securities, that any interest accrued to
the date fixed for redemption will be paid as specified in said notice, that the
redemption is for a sinking fund payment (if applicable), that, unless otherwise
specified in such notice, that, if the Partnership defaults in making such
redemption payment, the paying agent is prohibited from making such payment
pursuant to the terms of this Indenture, that on and after said date any
interest thereon or on the portions thereof to be redeemed will cease to accrue,
that in the case of Original Issue Discount Securities original issue discount
accrued after the date fixed for redemption will cease to accrue, the terms of
the Debt Securities of that series pursuant to which the Debt Securities of that
series are being redeemed and that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Debt Securities of that series. If less than all the Debt
Securities of a series are to be redeemed the notice of redemption shall specify
the CUSIP numbers of the Debt Securities of that series to be redeemed. In case
any Debt Security of a series is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Debt Security, a new Debt Security or Debt Securities of that
series in principal amount equal to the unredeemed portion thereof, will be
issued.
At least 45 days but not more than 60 days before the redemption date
unless the Trustee consents to a shorter period, the Partnership shall give
written notice to the Trustee of the redemption date, the principal amount of
Debt Securities to be redeemed and the series and terms of the Debt Securities
pursuant to which such redemption will occur. Such notice shall be accompanied
by an Officers' Certificate and an Opinion of Counsel from the Partnership to
the effect that such redemption will comply with the conditions herein. If fewer
than all the Debt Securities of a series are to be redeemed, the record date
relating to such redemption shall be selected by the Partnership and given in
writing to the Trustee, which record date shall be not less than 15 days after
the date of notice to the Trustee.
By 11 a.m., New York City time, on the redemption date for any Debt
Securities, the Partnership shall deposit with the Trustee or with a paying
agent (or, if the Partnership is acting as its own paying agent, segregate and
hold in trust) an amount of money in Dollars (except as provided pursuant to
Section 2.03) sufficient to pay the redemption price of such Debt Securities or
any portions thereof that are to be redeemed on that date.
21
If less than all the Debt Securities of like tenor and terms of a
series are to be redeemed (other than pursuant to mandatory sinking fund
redemptions) the Trustee shall select, on a pro rata basis, by lot or by such
other method as in its sole discretion it shall deem appropriate and fair, the
Debt Securities of that series or portions thereof (in multiples of $1,000) to
be redeemed. In any case where more than one Debt Security of such series is
registered in the same name, the Trustee in its discretion may treat the
aggregate principal amount so registered as if it were represented by one Debt
Security of such series. The Trustee shall promptly notify the Partnership in
writing of the Debt Securities selected for redemption and, in the case of any
Debt Securities selected for partial redemption, the principal amount thereof to
be redeemed. If any Debt Security called for redemption shall not be so paid
upon surrender thereof on such redemption date, the principal, premium, if any,
and interest shall bear interest until paid from the redemption date at the rate
borne by the Debt Securities of that series. If less than all the Debt
Securities of unlike tenor and terms of a series are to be redeemed, the
particular Debt Securities to be redeemed shall be selected by the Partnership.
Provisions of this Indenture that apply to Debt Securities called for redemption
also apply to portions of Debt Securities called for redemption.
Section 3.03. Payment of Debt Securities Called for Redemption. If
notice of redemption has been given as provided in Section 3.03, the Debt
Securities or portions of Debt Securities of the series with respect to which
such notice has been given shall become due and payable on the date and at the
Place or Places of Payment stated in such notice at the applicable redemption
price, together with any interest accrued to the date fixed for redemption, and
on and after said date (unless the Partnership shall default in the payment of
such Debt Securities at the applicable redemption price, together with any
interest accrued to said date) any interest on the Debt Securities or portions
of Debt Securities of any series so called for redemption shall cease to accrue,
any original issue discount in the case of Original Issue Discount Securities
shall cease to accrue. On presentation and surrender of such Debt Securities at
the Place or Places of Payment in said notice specified, the said Debt
Securities or the specified portions thereof shall be paid and redeemed by the
Partnership at the applicable redemption price, together with any interest
accrued thereon to the date fixed for redemption.
Any Debt Security that is to be redeemed only in part shall be
surrendered at the corporate trust office or such other office or agency of the
Partnership as is specified pursuant to Section 2.03 with, if the Partnership,
the Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Partnership, the Registrar
and the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing, and the Partnership shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Debt Security without service
charge, a new Debt Security or Debt Securities of the same series, of like tenor
and form, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Debt Security so surrendered; except that if a Global
Security is so surrendered, the Partnership shall execute, and the Trustee shall
authenticate and deliver to the Depositary for such Global Security, without
service charge, a new Global Security in a denomination equal to and in exchange
for the unredeemed portion of the principal of the Global Security so
surrendered. In the case of a Debt Security providing appropriate space for such
notation, at the option of the Holder thereof, the Trustee, in lieu of
delivering a new Debt Security or Debt Securities as
22
aforesaid, may make a notation on such Debt Security of the payment of the
redeemed portion thereof.
Section 3.04. Mandatory and Optional Sinking Funds. The minimum amount
of any sinking fund payment provided for by the terms of Debt Securities of any
series, resolution of the Board of Directors or a supplemental Indenture is
herein referred to as a "mandatory sinking fund payment," and any payment in
excess of such minimum amount provided for by the terms of Debt Securities of
any series, resolution of the Board of Directors or a supplemental Indenture is
herein referred to as an "optional sinking fund payment."
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Partnership may at
its option (a) deliver to the Trustee Debt Securities of that series theretofore
purchased or otherwise acquired by the Partnership or (b) receive credit for the
principal amount of Debt Securities of that series which have been redeemed
either at the election of the Partnership pursuant to the terms of such Debt
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, resolution or
supplemental Indenture; provided, that such Debt Securities have not been
previously so credited. Such Debt Securities shall be received and credited for
such purpose by the Trustee at the redemption price specified in such Debt
Securities, resolution or supplemental Indenture for redemption through
operation of the sinking fund and the amount of such mandatory sinking fund
payment shall be reduced accordingly.
Section 3.05. Redemption of Debt Securities for Sinking Fund. Not less
than 60 days prior to each sinking fund payment date for any series of Debt
Securities, the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, any resolution or supplemental Indenture,
the portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Debt Securities of that series pursuant to this Section 3.05 (which Debt
Securities, if not previously redeemed, will accompany such certificate) and
whether the Partnership intends to exercise its right to make any permitted
optional sinking fund payment with respect to such series. Such certificate
shall also state that no Event of Default has occurred and is continuing with
respect to such series. Such certificate shall be irrevocable and upon its
delivery the Partnership shall be obligated to make the cash payment or payments
therein referred to, if any, by 11 a.m., New York City time, on the next
succeeding sinking fund payment date. Failure of the Partnership to deliver such
certificate (or to deliver the Debt Securities specified in this paragraph)
shall not constitute a Default, but such failure shall require that the sinking
fund payment due on the next succeeding sinking fund payment date for that
series shall be paid entirely in cash and shall be sufficient to redeem the
principal amount of such Debt Securities subject to a mandatory sinking fund
payment without the option to deliver or credit Debt Securities as provided in
this Section 3.05 and without the right to make any optional sinking fund
payment, if any, with respect to such series.
Any sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made in cash
which shall equal or exceed $100,000 (or a lesser sum if the Partnership shall
so request) with respect to the Debt Securities of any particular series shall
be applied by the Trustee on the sinking fund payment
23
date on which such payment is made (or, if such payment is made before a sinking
fund payment date, on the sinking fund payment date following the date of such
payment) to the redemption of such Debt Securities at the Redemption Price
specified in such Debt Securities, resolution or supplemental Indenture for
operation of the sinking fund together with any accrued interest to the date
fixed for redemption. Any sinking fund moneys not so applied or allocated by the
Trustee to the redemption of Debt Securities shall be added to the next cash
sinking fund payment received by the Trustee for such series and, together with
such payment, shall be applied in accordance with the provisions of this Section
3.05. Any and all sinking fund moneys with respect to the Debt Securities of any
particular series held by the Trustee on the last sinking fund payment date with
respect to Debt Securities of such series and not held for the payment or
redemption of particular Debt Securities shall be applied by the Trustee,
together with other moneys, if necessary, to be deposited sufficient for the
purpose, to the payment of the principal of the Debt Securities of that series
at its Stated Maturity.
The Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in the last paragraph of
Section 3.02 and the Partnership shall cause notice of the redemption thereof to
be given in the manner provided in Section 3.02 except that the notice of
redemption shall also state that the Debt Securities are being redeemed by
operation of the sinking fund. Such notice having been duly given, the
redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 3.03.
At least one business day before each sinking fund payment date, the
Partnership shall pay to the Trustee (or, if the Partnership is acting as its
own paying agent, the Partnership shall segregate and hold in trust) in cash a
sum equal to any interest accrued to the date fixed for redemption of Debt
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section 3.05.
The Trustee shall not redeem any Debt Securities of a series with
sinking fund moneys or mail any notice of redemption of such Debt Securities by
operation of the sinking fund for such series during the continuance of a
Default in payment of interest on such Debt Securities or of any Event of
Default (other than an Event of Default occurring as a consequence of this
paragraph) with respect to such Debt Securities, except that if the notice of
redemption of any such Debt Securities shall theretofore have been mailed in
accordance with the provisions hereof, the Trustee shall redeem such Debt
Securities if cash sufficient for that purpose shall be deposited with the
Trustee for that purpose in accordance with the terms of this Article III.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such Default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such Default or
Event of Default, be held as security for the payment of such Debt Securities;
provided, however, that in case such Event of Default or Default shall have been
cured or waived as provided herein, such moneys shall thereafter be applied on
the next sinking fund payment date for such Debt Securities on which such moneys
may be applied pursuant to the provisions of this Section 3.05.
24
ARTICLE IV
PARTICULAR COVENANTS OF THE PARTNERSHIP
Section 4.01. Payment of Principal of, and Premium, If Any, and
Interest on, Debt Securities. The Partnership, for the benefit of each series of
Debt Securities, will duly and punctually pay or cause to be paid the principal
of, and premium, if any, and interest on, each of the Debt Securities at the
place, at the respective times and in the manner provided herein, in the Debt
Securities. Each installment of interest on the Debt Securities may at the
Partnership's option be paid by mailing checks for such interest payable to the
Person entitled thereto pursuant to Section 2.07(a) to the address of such
Person as it appears on the Debt Security Register.
Principal, premium and interest of Debt Securities of any series shall
be considered paid on the date due if, by 11 a.m., New York City time, on such
date the Trustee or any paying agent holds in accordance with this Indenture
money sufficient to pay in Dollars all principal, premium and interest then due.
The Partnership shall pay interest on overdue principal at the rate
specified therefor in the Debt Securities and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Section 4.02. Maintenance of Offices or Agencies for Registration of
Transfer, Exchange and Payment of Debt Securities. The Partnership will maintain
in each Place of Payment for any series of Debt Securities an office or agency
where Debt Securities of such series may be presented or surrendered for
payment, where Debt Securities of such series may be surrendered for transfer or
exchange and where notices and demands to or upon the Partnership in respect of
the Debt Securities of such series and this Indenture may be served. The
Partnership will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Partnership shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the corporate trust
office of the Trustee, and the Partnership hereby appoints the Trustee as its
agent to receive all presentations, surrenders, notices and demands.
The Partnership may also from time to time designate different or
additional offices or agencies to be maintained for such purposes (in or outside
of such Place of Payment), and may from time to time rescind any such
designation; provided, however, that no such designation or rescission shall in
any manner relieve the Partnership of its obligations described in the preceding
paragraph. The Partnership will give prompt written notice to the Trustee of any
such additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.
Section 4.03. Appointment to Fill a Vacancy in the Office of Trustee.
The Partnership, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so
that there shall at all times be a Trustee hereunder with respect to each series
of Debt Securities.
25
Section 4.04. Duties of Paying Agents, etc. The Partnership shall cause
each paying agent, if any, other than the Trustee, to execute and deliver to the
Trustee an instrument in which such agent shall agree with the Trustee, subject
to the provisions of this Section 4.04,
(i) that it will hold all sums held by it as such agent for
the payment of the principal of, and premium, if any, or interest on,
the Debt Securities of any series (whether such sums have been paid to
it by the Partnership or by any other obligor on the Debt Securities of
such series) in trust for the benefit of the Holders of the Debt
Securities of such series;
(ii) that it will give the Trustee notice of any failure by
the Partnership (or by any other obligor on the Debt Securities of such
series) to make any payment of the principal of, and premium, if any,
or interest on, the Debt Securities of such series when the same shall
be due and payable; and
(iii) that it will at any time during the continuance of an
Event of Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held by it as such agent.
(b) If the Partnership shall act as its own paying agent, it will, on
or before each due date of the principal of, and premium, if any, or interest
on, the Debt Securities of any series, set aside, segregate and hold in trust
for the benefit of the Holders of the Debt Securities of such series a sum
sufficient to pay such principal, premium, if any, or interest so becoming due.
The Partnership will promptly notify the Trustee of any failure by the
Partnership to take such action or the failure by any other obligor on such Debt
Securities to make any payment of the principal of, and premium, if any, or
interest on, such Debt Securities when the same shall be due and payable.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the
Partnership may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent, as required by
this Section 4.04, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Partnership or such paying agent.
(d) Whenever the Partnership shall have one or more paying agents with
respect to any series of Debt Securities, it will, prior to each due date of the
principal of, and premium, if any, or interest on, any Debt Securities of such
series, deposit with any such paying agent a sum sufficient to pay the
principal, premium or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled thereto, and (unless any such paying agent
is the Trustee) the Partnership will promptly notify the Trustee of its action
or failure so to act.
(e) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 11.05.
Section 4.05. SEC Reports; Financial Statements.
(a) The Partnership shall, so long as any of the Debt Securities are
outstanding, file with the Trustee, within 15 days after it files the same with
the SEC, copies of the annual reports
26
and the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) that the
Partnership is required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act. If the Partnership is not subject to the requirements of such
Section 13 or 15(d), the Partnership shall file with the Trustee, within 15 days
after it would have been required to file the same with the SEC, financial
statements, including any notes thereto (and with respect to annual reports, an
auditors' report by a firm of established national reputation), and a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," both comparable to that which the Partnership would have been
required to include in such annual reports, information, documents or other
reports if the Partnership had been subject to the requirements of such Section
13 or 15(d). The Partnership shall also comply with the provisions of TIA
Section 314(a).
(b) If the Partnership is required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Partnership shall,
so long as any of the Debt Securities are outstanding, cause any annual report
furnished to its stockholders generally and any quarterly or other financial
reports furnished by it to its stockholders generally to be filed with the
Trustee and mailed to the Holders in the manner and to the extent provided in
Section 5.03.
(c) The Partnership shall provide the Trustee with a sufficient number
of copies of all reports and other documents and information that the Trustee
may be required to deliver to Holders under this Section.
Section 4.06. Compliance Certificate.
(a) The Partnership shall, so long as any of the Debt Securities are
outstanding, deliver to the Trustee, within 120 days after the end of each
fiscal year of the Partnership, an Officers' Certificate stating that a review
of the activities of the Partnership and its Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers of the
Partnership with a view to determining whether the Partnership has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his knowledge the Partnership has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof, without regard to any grace period or requirement of notice
required by this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which such
Officer may have knowledge and what action the Partnership, is taking or
proposes to take with respect thereto) and that to the best of his knowledge no
event has occurred and remains in existence by reason of which payments on
account of the principal of, or premium, if any, or interest, if any, on the
Debt Securities are prohibited or, if such event has occurred, a description of
the event and what action the Partnership is taking or proposes to take with
respect thereto.
(b) The Partnership shall, so long as any of the Debt Securities are
outstanding, deliver to the Trustee within 30 days after the occurrence of any
Default or Event of Default under this Indenture, an Officers' Certificate
specifying such Default or Event of Default, the status thereof and what action
the Partnership is taking or proposes to take with respect thereto.
27
Section 4.07. Further Instruments and Acts. The Partnership will, upon
request of the Trustee, execute and deliver such further instruments and do such
further acts as may reasonably be necessary or proper to carry out more
effectually the purposes of this Indenture.
Section 4.08. Existence. The Partnership shall do or cause to be done
all things necessary to preserve and keep in full force and effect its
partnership existence and the partnership and other existence of each of its
Subsidiaries and all rights (charter and statutory) and franchises of the
Partnership and its Subsidiaries, provided that the Partnership shall not be
required to preserve its existence as a limited partnership, or the partnership
existence of any Subsidiary of the Partnership or any such right or franchise,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Partnership and the
Subsidiaries and that the loss thereof would not have a material adverse effect
on the business, prospects, assets or financial condition of the Partnership and
its Subsidiaries taken as a whole and would not have any material adverse effect
on the payment and performance of the obligations of the Partnership under the
Debt Securities and this Indenture.
Section 4.09. Maintenance of Properties. The Partnership shall cause
all properties owned by the Partnership or any of its Subsidiaries or used or
held for use in the conduct of its business or the business of any such
Subsidiary to be maintained and kept in good condition, repair and working order
(reasonable wear and tear excepted) and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Partnership
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided that nothing in
this Section shall prevent the Partnership from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Partnership, desirable in the conduct of its business or the business of
any such Subsidiary and not disadvantageous in any material respect to the
Holders.
Section 4.10. Payment of Taxes and Other Claims. The Partnership shall
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Partnership or any of its Subsidiaries or upon the income,
profits or property of the Partnership or any of its Subsidiaries, and (ii) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon the property of the Partnership or any of its Subsidiaries;
provided that the Partnership shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
ARTICLE V
HOLDERS' LISTS AND REPORTS BY THE TRUSTEE
Section 5.01. Partnership to Furnish Trustee Information as to Names
and Addresses of Holders; Preservation of Information. The Partnership covenants
and agrees that it will furnish or cause to be furnished to the Trustee with
respect to the Debt Securities of each series:
28
(a) not more than 10 days after each record date with respect to the
payment of interest, if any, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such record date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Partnership of any such request, a list of
similar form and contents as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that so long as the Trustee shall be the Registrar, such
lists shall not be required to be furnished.
The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders (i)
contained in the most recent list furnished to it as provided in this Section
5.01 or (ii) received by it in the capacity of paying agent or Registrar (if so
acting) hereunder.
The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.
Section 5.02. Communications to Holders. Holders may communicate
pursuant to Section 312(b) of the TIA with other Holders with respect to their
rights under this Indenture or the Debt Securities. The Partnership, the
Trustee, the Registrar and anyone else shall have the protection of Section
312(c) of the TIA.
Section 5.03. Reports by Trustee. Within 60 days after each January 31,
beginning with the first January 31 following the date of this Indenture, and in
any event on or before April 1 in each year, the Trustee shall mail to Holders a
brief report dated as of such January 31 that complies with TIA Section 313(a);
provided, however, that if no event described in TIA Section 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted. The Trustee also shall comply with TIA Section 313(b).
Reports pursuant to this Section 5.03 shall be transmitted by mail:
(a) to all Holders, as the names and addresses of such Holders appear
in the Debt Security Register; and
(b) except in the cases of reports under Section 313(b)(2) of the TIA,
to each Holder of a Debt Security of any series whose name and address appear in
the information preserved at the time by the Trustee in accordance with Section
5.01.
A copy of each report at the time of its mailing to Holders shall be
filed with the Securities and Exchange Commission and each stock exchange (if
any) on which the Debt Securities of any series are listed. The Partnership
agrees to notify promptly the Trustee whenever the Debt Securities of any series
become listed on any stock exchange and of any delisting thereof.
Section 5.04. Record Dates for Action by Holders. If the Partnership
shall solicit from the holders of Debt Securities of any series any action
(including the making of any
29
demand or request, the giving of any direction, notice, consent or waiver or the
taking of any other action), the Partnership may, at its option, by resolution
of the Board of Directors, fix in advance a record date for the determination of
Holders of Debt Securities entitled to take such action, but the Partnership
shall have no obligation to do so. Any such record date shall be fixed at the
Partnership's discretion. If such a record date is fixed, such action may be
sought or given before or after the record date, but only the Holders of Debt
Securities of record at the close of business on such record date shall be
deemed to be Holders of Debt Securities for the purpose of determining whether
Holders of the requisite proportion of Debt Securities of such series
Outstanding have authorized or agreed or consented to such action, and for that
purpose the Debt Securities of such series Outstanding shall be computed as of
such record date.
ARTICLE VI
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT
Section 6.01. Events of Default. If any one or more of the following
shall have occurred and be continuing with respect to Debt Securities of any
series (each of the following, an "Event of Default"):
(a) default in the payment of any installment of interest upon any Debt
Securities of that series as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of or premium, if any, on
any Debt Securities of that series as and when the same shall become due and
payable, whether at maturity, upon redemption, by declaration, upon required
repurchase or otherwise; or
(c) default in the payment of any sinking fund payment with respect to
any Debt Securities of that series as and when the same shall become due and
payable; or
(d) failure on the part of the Partnership, or if any series of Debt
Securities Outstanding under this Indenture is entitled to the benefits of a
Guarantee, any of the Subsidiary Guarantors, duly to observe or perform any
other of the covenants or agreements on the part of the Partnership, or if
applicable, any of the Subsidiary Guarantors, in the Debt Securities of that
series, in any resolution of the Board of Directors authorizing the issuance of
that series of Debt Securities, in this Indenture with respect to such series or
in any supplemental Indenture with respect to such series (other than a covenant
a default in the performance of which is elsewhere in this Section specifically
dealt with), continuing for a period of 60 days after the date on which written
notice specifying such failure and requiring the Partnership, or if applicable,
the Subsidiary Guarantor, to remedy the same shall have been given, by
registered or certified mail, to the Partnership, or if applicable, the
Subsidiary Guarantor, by the Trustee or to the Partnership, or if applicable,
the Subsidiary Guarantor, and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Debt Securities of that series at the time
Outstanding; or
(e) the Partnership, or if any series of Debt Securities Outstanding
under this Indenture is entitled to the benefits of a Guarantee, any of the
Subsidiary Guarantors, pursuant to or within the meaning of any Bankruptcy Law,
30
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property; or
makes a general assignment for the benefit of its creditors;
(f) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Partnership, or if any series of
Debt Securities Outstanding under this Indenture is entitled to the
benefits of a Guarantee, any of the Subsidiary Guarantors, as debtor in
an involuntary case,
(ii) appoints a Custodian of the Partnership, or if any series
of Debt Securities Outstanding under this Indenture is entitled to the
benefits of a Guarantee, any of the Subsidiary Guarantors, or a
Custodian for all or substantially all of the property of the
Partnership, or if applicable, any of the Subsidiary Guarantors, or
orders the liquidation of the Partnership, or if any series of Debt
Securities Outstanding under this Indenture is entitled to the benefits
of a Guarantee, any of the Subsidiary Guarantors,
and the order or decree remains unstayed and in effect for 60 days;
(g) if any series of Debt Securities Outstanding under this Indenture
is entitled to the benefits of a Guarantee, the Guarantee of any of the
Subsidiary Guarantors ceases to be in full force and effect with respect to Debt
Securities of that series or is declared null and void in a judicial proceeding
or the Subsidiary Guarantors deny or disaffirm their obligations under the
Indenture or such Guarantee; or
(h) any other Event of Default provided with respect to Debt Securities
of that series;
then and in each and every case that an Event of Default described in clause
(a), (b), (c), (d), (g), or (h) with respect to Debt Securities of that series
at the time Outstanding occurs and is continuing, unless the principal of and
interest on all the Debt Securities of that series shall have already become due
and payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Debt Securities of that series then Outstanding
hereunder, by notice in writing to the Partnership (and to the Trustee if given
by Holders), may declare the principal of (or, if the Debt Securities of that
series are Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of that series) and interest
on all the Debt Securities of that series to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due and
payable, anything in this Indenture or in the Debt Securities of that series
contained to the contrary notwithstanding. If an Event of Default described in
clause (e) or (f) occurs, then and in each and every such case,
31
unless the principal of and interest on all the Debt Securities shall have
become due and payable, the principal of (or, if any Debt Securities are
Original Issue Discount Debt Securities, such portion of the principal amount as
may be specified in the terms thereto) and interest on all the Debt Securities
then Outstanding hereunder shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holders, anything in this Indenture or in the Debt Securities contained to the
contrary notwithstanding.
The Holders of a majority in aggregate principal amount of the Debt
Securities of a particular series by written notice to the Trustee may waive all
past Defaults (except with respect to the nonpayment of principal, premium or
interest) and rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree already rendered and if all
existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of acceleration. Upon
any such rescission, the parties hereto shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the parties hereto shall continue as though no such proceeding had been taken.
Section 6.02. Collection of Debt by Trustee, etc. If an Event of
Default occurs and is continuing, the Trustee, in its own name and as trustee of
an express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and unpaid
or enforce the performance of any provision of the Debt Securities of the
affected series or this Indenture, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Subsidiary Guarantors or the Partnership or any other
obligor upon the Debt Securities of such series (and collect in the manner
provided by law out of the property of the Subsidiary Guarantors or the
Partnership or any other obligor upon the Debt Securities of such series
wherever situated the moneys adjudged or decreed to be payable).
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Subsidiary Guarantors or the Partnership or any other
obligor upon the Debt Securities of any series under Title 11 of the United
States Code or any other Federal or State bankruptcy, insolvency or similar law,
or in case a receiver, trustee or other similar official shall have been
appointed for its property, or in case of any other similar judicial proceedings
relative to the Subsidiary Guarantors or the Partnership or any other obligor
upon the Debt Securities of any series, its creditors or its property, the
Trustee, irrespective of whether the principal of Debt Securities of any series
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 6.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
(or, if the Debt Securities of such series are Original Issue Discount Debt
Securities, such portion of the principal amount as may be specified in the
terms of such series) owing and unpaid in respect of the Debt Securities of such
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all advances
made, by the Trustee except as a result of its negligence or bad faith) and of
the Holders thereof allowed in any such judicial proceedings relative to the
Subsidiary Guarantors or the Partnership,
32
or any other obligor upon the Debt Securities of such series, its creditors or
its property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of such Holders and of the Trustee on their behalf, and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of such Holders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to such
Holders, to pay to the Trustee such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other reasonable expenses and liabilities incurred, and all advances made,
by the Trustee except as a result of its negligence or bad faith.
All rights of action and of asserting claims under this Indenture, or
under any of the Debt Securities of any series, may be enforced by the Trustee
without the possession of any such Debt Securities, or the production thereof in
any trial or other proceedings relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment (except for any
amounts payable to the Trustee pursuant to Section 7.06) shall be for the
ratable benefit of the Holders of all the Debt Securities in respect of which
such action was taken.
In case of an Event of Default hereunder the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Section 6.03. Application of Moneys Collected by Trustee. Any moneys or
other property collected by the Trustee pursuant to Section 6.02 with respect to
Debt Securities of any series shall be applied, in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys or other
property, upon presentation of the several Debt Securities of such series in
respect of which moneys or other property have been collected, and the notation
thereon of the payment, if only partially paid, and upon surrender thereof if
fully paid:
FIRST: To the payment of all money due the Trustee pursuant to Section
7.06;
SECOND: In case the principal of the Outstanding Debt Securities in
respect of which such moneys have been collected shall not have become due, to
the payment of interest on the Debt Securities of such series in the order of
the maturity of the installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee) upon the overdue
installments of interest at the rate or Yield to Maturity (in the case of
Original Issue Discount Debt Securities) borne by the Debt Securities of such
series, such payments to be made ratably to the Persons entitled thereto,
without discrimination or preference;
THIRD: In case the principal of the Outstanding Debt Securities in
respect of which such moneys have been collected shall have become due, by
declaration or otherwise, to the payment of the whole amount then owing and
unpaid upon the Debt Securities of such series for principal and premium, if
any, and interest, with interest on the overdue principal and premium, if any,
33
and (to the extent that such interest has been collected by the Trustee) upon
overdue installments of interest at the rate or Yield to Maturity (in the case
of Original Issue Discount Debt Securities) borne by the Debt Securities of such
series; and, in case such moneys shall be insufficient to pay in full the whole
amount so due and unpaid upon the Debt Securities of such series, then to the
payment of such principal and premium, if any, and interest, without preference
or priority of principal and premium, if any, over interest, or of interest over
principal and premium, if any, or of any installment of interest over any other
installment of interest, or of any Debt Security of such series over any Debt
Security of such series, ratably to the aggregate of such principal and premium,
if any, and interest; and
FOURTH: The remainder, if any, shall be paid to the Subsidiary
Guarantors or the Partnership, as applicable, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.03. At least 15 days before such record date,
the Partnership shall mail to each Holder and the Trustee a notice that states
the record date, the payment date and amount to be paid.
Section 6.04. Limitation on Suits by Holders. No Holder of any Debt
Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise, upon or under or with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such Holder previously shall have given to the Trustee
written notice of an Event of Default with respect to Debt Securities of that
same series and of the continuance thereof and unless the Holders of not less
than 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request upon the Trustee to institute such
action or proceedings in respect of such Event of Default in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action or proceedings and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 6.06; it being
understood and intended, and being expressly covenanted by the Holder of every
Debt Security with every other Holder and the Trustee, that no one or more
Holders shall have any right in any manner whatever by virtue or by availing of
any provision of this Indenture to affect, disturb or prejudice the rights of
any Holders, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all such
Holders. For the protection and enforcement of the provisions of this Section
6.04, each and every Holder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Notwithstanding any other provision in this Indenture, however, the
right of any Holder of any Debt Security to receive payment of the principal of,
and premium, if any, and (subject to Section 2.12) interest on, such Debt
Security, on or after the respective due dates expressed in such Debt Security,
and to institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
34
Section 6.05. Remedies Cumulative; Delay or Omission in Exercise of
Rights Not a Waiver of Default. All powers and remedies given by this Article VI
to the Trustee or to the Holders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the Holders, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any Holder to exercise any right or power accruing upon any Default
occurring and continuing as aforesaid, shall impair any such right or power, or
shall be construed to be a waiver of any such Default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article VI or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders.
Section 6.06. Rights of Holders of Majority in Principal Amount of Debt
Securities to Direct Trustee and to Waive Default. The Holders of a majority in
aggregate principal amount of the Debt Securities of any series at the time
Outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of such series; provided, however, that such direction shall not be otherwise
than in accordance with law and the provisions of this Indenture, and that
subject to the provisions of Section 7.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee being advised by counsel
shall determine that the action so directed may not lawfully be taken, or if the
Trustee shall by a responsible officer or officers determine that the action so
directed would involve it in personal liability or would be unjustly prejudicial
to Holders of Debt Securities of such series not taking part in such direction;
and provided, further, however, that nothing in this Indenture contained shall
impair the right of the Trustee to take any action deemed proper by the Trustee
and which is not inconsistent with such direction by such Holders. Prior to the
acceleration of the maturity of the Debt Securities of any series, as provided
in Section 6.01, the Holders of a majority in aggregate principal amount of the
Debt Securities of that series at the time Outstanding may on behalf of the
Holders of all the Debt Securities of that series waive any past Default or
Event of Default and its consequences for that series specified in the terms
thereof as contemplated by Section 2.03, except a Default in the payment of the
principal of, and premium, if any, or interest on, any of the Debt Securities
and a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Holder affected thereby. In case of any such
waiver, such Default shall cease to exist, any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture, and the Subsidiary Guarantors, the Partnership, the Trustee and the
Holders of the Debt Securities of that series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
Section 6.07. Trustee to Give Notice of Defaults Known to It, but May
Withhold Such Notice in Certain Circumstances. The Trustee shall, within 90 days
after the occurrence of a Default known to it, or if later, within 30 days after
the Trustee obtains actual knowledge of the Default, with respect to a series of
Debt Securities give to the Holders thereof, in the manner provided in Section
13.03, notice of all Defaults with respect to such series known to the Trustee,
unless such Defaults shall have been cured or waived before the giving of such
notice; provided, that, except in the case of Default in the payment of the
principal of, or premium, if any, or interest on, any of the Debt Securities of
such series or in the making of any sinking fund
35
payment with respect to the Debt Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a committee of directors or responsible officers of
the Trustee in good faith determine that the withholding of such notice is in
the interests of the Holders thereof.
Section 6.08. Requirement of an Undertaking To Pay Costs in Certain
Suits under the Indenture or Against the Trustee. All parties to this Indenture
agree, and each Holder of any Debt Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit in the manner and to the extent provided in the TIA, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 6.08 shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 25 percent in principal amount of the
Outstanding Debt Securities of that series or to any suit instituted by any
Holder for the enforcement of the payment of the principal of, or premium, if
any, or interest on, any Debt Security on or after the due date for such payment
expressed in such Debt Security.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(a) this paragraph shall not be construed to limit the effect of the
first paragraph of this Section 7.01;
(b) prior to the occurrence of an Event of Default with respect to the
Debt Securities of a series and after the curing or waiving of all Events of
Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to
Debt Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with respect
to such series as are specifically set forth in this Indenture,
36
and no implied covenants or obligations with respect to such series
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Indenture; but the Trustee shall examine the
evidence furnished to it pursuant to Sections 4.05 and 4.06 to
determine whether or not such evidence conforms to the requirement of
this Indenture;
(iii) the Trustee shall not be liable for an error of judgment
made in good faith by a responsible officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iv) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it with respect to Debt
Securities of any series in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal
amount of the Outstanding Debt Securities of that series relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to Debt Securities
of such series.
None of the provisions of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any personal financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 7.02. Certain Rights of Trustee. Except as otherwise provided
in Section 7.01:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note or
other paper or document (whether in its original or facsimile form) believed by
it to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Partnership
mentioned herein shall be sufficiently evidenced by a Partnership Order (unless
other evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to
37
the Trustee by a copy thereof certified by the Secretary or an Assistant
Secretary of the Partnership;
(c) the Trustee may consult with counsel, and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders of Debt Securities of any series pursuant to the
provisions of this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default and after the curing
of all Events of Default which may have occurred, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, approval or other paper or document, unless requested in writing
to do so by the Holders of a majority in aggregate principal amount of the then
Outstanding Debt Securities of a series affected by such matter; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. The reasonable expense of every
such investigation shall be paid by the Partnership or, if paid by the Trustee,
shall be repaid by the Partnership upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder; and
(h) if any property other than cash shall at any time be subject to a
Lien in favor of the Holders, the Trustee, if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by the
supplemental instrument subjecting such property to such lien, shall be entitled
to make advances for the purpose of preserving such property or of discharging
tax Liens or other prior Liens or encumbrances thereon.
Section 7.03. Trustee Not Liable for Recitals in Indenture or in Debt
Securities. The recitals contained herein, in the Debt Securities (except the
Trustee's certificate of authentication) shall be taken as the statements of the
Partnership, and the Trustee assumes no responsibility for the correctness of
the same. The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Debt Securities of any series, except that the
38
Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Debt Securities and perform its obligations
hereunder, and that the statements made by it or to be made by it in a Statement
of Eligibility and Qualification on Form T-1 supplied to the Partnership are
true and accurate. The Trustee shall not be accountable for the use or
application by the Partnership of any of the Debt Securities or of the proceeds
thereof.
Section 7.04. Trustee, Paying Agent or Registrar May Own Debt
Securities. The Trustee or any paying agent or Registrar, in its individual or
any other capacity, may become the owner or pledgee of Debt Securities and
subject to the provisions of the TIA relating to conflicts of interest and
preferential claims may otherwise deal with the Partnership with the same rights
it would have if it were not Trustee, paying agent or Registrar.
Section 7.05. Moneys Received by Trustee to Be Held in Trust. Subject
to the provisions of Section 11.05, all moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for interest
on any moneys received by it hereunder. So long as no Event of Default shall
have occurred and be continuing, all interest allowed on any such moneys shall
be paid from time to time to the Partnership upon a Partnership Order.
Section 7.06. Compensation and Reimbursement. The Partnership covenants
and agrees to pay in Dollars to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and, except as otherwise
expressly provided herein, the Partnership will pay or reimburse in Dollars the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents, attorneys and counsel and of all Persons not
regularly in its employ), including without limitation, Section 6.02, except any
such expense, disbursement or advances as may arise from its negligence or bad
faith. The Partnership also covenants to indemnify in Dollars the Trustee for,
and to hold it harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on the part of the Trustee, arising
out of or in connection with the acceptance or administration of this trust or
trusts hereunder, including the reasonable costs and expenses of defending
itself against any claim of liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligations of the
Partnership under this Section 7.06 to compensate and indemnify the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional Debt hereunder and shall survive the satisfaction and
discharge of this Indenture. The Partnership and the Holders agree that such
additional Debt shall be secured by a Lien prior to that of the Debt Securities
upon all property and funds held or collected by the Trustee, as such, except
funds held in trust for the payment of principal of, and premium, if any, or
interest on, particular Debt Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency, reorganization or other similar
law.
39
Section 7.07. Right of Trustee to Rely on an Officers' Certificate
Where No Other Evidence Specifically Prescribed. Except as otherwise provided in
Section 7.01, whenever in the administration of the provisions of this Indenture
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee and such certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant to the
Trustee for any action taken, suffered or omitted by it under the provisions of
this Indenture upon the faith thereof.
Section 7.08. Separate Trustee; Replacement of Trustee. The Partnership
may, but need not, appoint a separate Trustee for any one or more series of Debt
Securities. The Trustee may resign with respect to one or more or all series of
Debt Securities at any time by giving notice to the Partnership. The Holders of
a majority in principal amount of the Debt Securities of a particular series may
remove the Trustee for such series and only such series by so notifying the
Trustee and may appoint a successor Trustee. The Partnership shall remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Partnership or by the Holders of a
majority in principal amount of the Debt Securities of a particular series and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Partnership shall
promptly appoint a successor Trustee. No resignation or removal of the Trustee
and no appointment of a successor Trustee shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.08.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Partnership. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of Debt Securities of each applicable series. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the Lien provided for in Section 7.06.
If a successor Trustee does not take office within 60 days after the
retiring Trustee gives notice of resignation or is removed, the retiring Trustee
or the Holders of 25% in principal amount of the Debt Securities of any
applicable series may petition any court of competent jurisdiction for the
appointment of a successor Trustee for the Debt Securities of such series.
40
If the Trustee fails to comply with Section 7.10, any Holder of Debt
Securities of any applicable series may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee for the Debt Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to this Section
7.08, the Partnership's obligations under Section 7.06 shall continue for the
benefit of the retiring Trustee.
In the case of the appointment hereunder of a separate or successor
trustee with respect to the Debt Securities of one or more series, the
Partnership, any retiring Trustee and each successor or separate Trustee with
respect to the Debt Securities of any applicable series shall execute and
deliver an Indenture supplemental hereto (i) which shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of any retiring Trustee with respect to the Debt
Securities of any series as to which any such retiring Trustee is not retiring
shall continue to be vested in such retiring Trustee and (ii) that shall add to
or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental Indenture shall constitute such Trustees co-trustees of the same
trust and that each such separate, retiring or successor Trustee shall be
Trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Trustee.
Section 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been authenticated, any successor to the Trustee may authenticate such Debt
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in this Indenture
provided that the certificate of the Trustee shall have.
Section 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of Section 310(a) of the TIA. The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. No obligor upon the Debt
Securities of a particular series or Person directly or indirectly controlling,
controlled by or under common control with such obligor shall serve as Trustee
upon the Debt Securities of such series. The Trustee shall comply with Section
310(b) of the TIA; provided, however, that there shall be excluded from the
operation of Section 310(b)(1) of the TIA this Indenture or any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Partnership are outstanding if the
requirements for such exclusion set forth in Section 310(b)(1) of the TIA are
met.
41
Section 7.11. Preferential Collection of Claims Against Partnership.
The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor
relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or
been removed shall be subject to Section 311(a) of the TIA to the extent
indicated therein.
Section 7.12. Compliance with Tax Laws. The Trustee hereby agrees to
comply with all U.S. Federal income tax information reporting and withholding
requirements applicable to it with respect to payments of premium (if any) and
interest on the Debt Securities, whether acting as Trustee, Security Registrar,
paying agent or otherwise with respect to the Debt Securities.
ARTICLE VIII
CONCERNING THE HOLDERS
Section 8.01. Evidence of Action by Holders. Whenever in this Indenture
it is provided that the Holders of a specified percentage in aggregate principal
amount of the Debt Securities of any or all series may take action (including
the making of any demand or request, the giving of any direction, notice,
consent or waiver or the taking of any other action) the fact that at the time
of taking any such action the Holders of such specified percentage have joined
therein may be evidenced by any instrument or any number of instruments of
similar tenor executed by Holders in Person or by agent or proxy appointed in
writing, by the record of the Holders voting in favor thereof at any meeting of
Holders duly called and held in accordance with the provisions of Section 5.02
or by a combination of such instrument or instruments and any such record of
such a meeting of Holders.
Section 8.02. Proof of Execution of Instruments and of Holding of Debt
Securities. Subject to the provisions of Sections 7.01, 7.02 and 13.11, proof of
the execution of any instrument by a Holder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Debt Securities of any series shall be proved by
the Debt Security Register or by a certificate of the Registrar for such series.
The Trustee may require such additional proof of any matter referred to in this
Section 8.02 as it shall deem necessary.
Section 8.03. Who May Be Deemed Owner of Debt Securities. Prior to due
presentment for registration of transfer of any Debt Security, the Partnership,
the Trustee, any paying agent and any Registrar may deem and treat the Person in
whose name any Debt Security shall be registered upon the books of the
Partnership as the absolute owner of such Debt Security (whether or not such
Debt Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of and premium, if any, and (subject to Section 2.03) interest on
such Debt Security and for all other purposes, and neither the Partnership nor
the Trustee nor any paying agent nor any Registrar shall be affected by any
notice to the contrary; and all such payments so made to any such Holder for the
time being, or upon his order, shall be valid and, to the extent of the sum or
sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Debt Security.
42
None of the Partnership, the Trustee, any paying agent or the Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Section 8.04. Instruments Executed by Holders Bind Future Holders. At
any time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Debt Securities of any series specified in
this Indenture in connection with such action and subject to the following
paragraph, any Holder of a Debt Security which is shown by the evidence to be
included in the Debt Securities the Holders of which have consented to such
action may, by filing written notice with the Trustee at its corporate trust
office and upon proof of holding as provided in Section 8.02, revoke such action
so far as concerns such Debt Security. Except as aforesaid any such action taken
by the Holder of any Debt Security shall be conclusive and binding upon such
Holder and upon all future Holders and owners of such Debt Security and of any
Debt Security issued upon transfer thereof or in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Debt Security or such other Debt Securities. Any action taken by the
Holders of the percentage in aggregate principal amount of the Debt Securities
of any series specified in this Indenture in connection with such action shall
be conclusively binding upon the Partnership, the Trustee and the Holders of all
the Debt Securities of such series.
The Partnership may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders of Debt Securities entitled to give
their consent or take any other action required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders of Debt
Securities at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders of Debt Securities after such record date. No such
consent shall be valid or effective for more than 120 days after such record
date unless the consent of the Holders of the percentage in aggregate principal
amount of the Debt Securities of such series specified in this Indenture shall
have been received within such 120-day period.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Purposes for Which Supplemental Indenture May Be Entered
into Without Consent of Holders. The Partnership and the Subsidiary Guarantors,
when authorized by resolutions of the Board of Directors, and the Trustee may
from time to time and at any time, without the consent of Holders, enter into an
Indenture or Indentures supplemental hereto (which shall conform to the
provisions of the TIA as in force at the date of the execution thereof) for one
or more of the following purposes:
(a) to evidence the succession pursuant to Article X of another Person
to the Partnership or any of the Subsidiary Guarantors, or successive
successions, and the assumption by the Successor Partnership (as defined in
Section 10.01) of the covenants, agreements and
43
obligations of the Partnership or the Subsidiary Guarantors in this Indenture
and in the Debt Securities;
(b) to surrender any right or power herein conferred upon the
Partnership or the Subsidiary Guarantors, to add to the covenants of the
Partnership or the Subsidiary Guarantors such further covenants, restrictions,
conditions or provisions for the protection of the Holders of all or any series
of Debt Securities (and if such covenants are to be for the benefit of less than
all series of Debt Securities, stating that such covenants are expressly being
included solely for the benefit of such series) as the Board of Directors shall
consider to be for the protection of the Holders of such Debt Securities, and to
make the occurrence, or the occurrence and continuance, of a Default in any of
such additional covenants, restrictions, conditions or provisions a Default or
an Event of Default permitting the enforcement of all or any of the several
remedies provided in this Indenture; provided, that in respect of any such
additional covenant, restriction, condition or provision such supplemental
Indenture may provide for a particular period of grace after Default (which
period may be shorter or longer than that allowed in the case of other Defaults)
or may provide for an immediate enforcement upon such Default or may limit the
remedies available to the Trustee upon such Default or may limit the right of
the Holders of a majority in aggregate principal amount of any or all series of
Debt Securities to waive such default;
(c) to cure any ambiguity or omission or to correct or supplement any
provision contained herein, in any supplemental Indenture or in any Debt
Securities of any series that may be defective or inconsistent with any other
provision contained herein, in any supplemental Indenture or in the Debt
Securities of such series; to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee, or to make such other provisions in regard to
matters or questions arising under this Indenture as shall not adversely affect
the interests of any Holders of Debt Securities of any series;
(d) to modify or amend this Indenture in such a manner as to permit the
qualification of this Indenture or any Indenture supplemental hereto under the
TIA as then in effect, except that nothing herein contained shall permit or
authorize the inclusion in any Indenture supplemental hereto of the provisions
referred to in Section 316(a)(2) of the TIA;
(e) to add to or change any of the provisions of this Indenture to
change or eliminate any restrictions on the payment of principal of, or premium,
if any, on, Debt Securities; provided, that any such action shall not adversely
affect the interests of the Holders of Debt Securities of any series in any
material respect or permit or facilitate the issuance of Debt Securities of any
series in uncertificated form;
(f) to comply with Article X;
(g) to add guarantees with respect to any or all of the Debt Securities
or to secure any or all of the Debt Securities;
(h) to make any change that does not adversely affect the rights of any
Holder;
(i) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Debt Securities; provided,
however, that any such addition, change or elimination not otherwise permitted
under this Section 9.01 shall neither apply to any Debt
44
Security of any series created prior to the execution of such supplemental
Indenture and entitled to the benefit of such provision nor modify the rights of
the Holder of any such Debt Security with respect to such provision or shall
become effective only when there is no such Debt Security Outstanding;
(j) to evidence and provide for the acceptance of appointment hereunder
by a successor or separate Trustee with respect to the Debt Securities of one or
more series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee;
(k) to establish the form or terms of Debt Securities of any series as
permitted by Sections 2.01 and 2.03.
The Trustee is hereby authorized to join with the Partnership and the
Subsidiary Guarantors in the execution of any such supplemental Indenture, to
make any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer, assignment, mortgage or pledge
of any property thereunder, but the Trustee shall not be obligated to enter into
any such supplemental Indenture which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental Indenture authorized by the provisions of this Section
9.01 may be executed by the Partnership, the Subsidiary Guarantors and the
Trustee without the consent of the Holders of any of the Debt Securities at the
time Outstanding, notwithstanding any of the provisions of Section 9.02.
Section 9.02. Modification of Indenture with Consent of Holders of Debt
Securities. Without notice to any Holder but with the consent (evidenced as
provided in Section 8.01) of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such supplemental Indenture (including consents obtained in
connection with a tender offer or exchange offer for any such series of Debt
Securities), the Partnership and the Subsidiary Guarantors, when authorized by
resolutions of the Board of Directors, and the Trustee may from time to time and
at any time enter into an Indenture or Indentures supplemental hereto (which
shall conform to the provisions of the TIA as in force at the date of execution
thereof) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of any supplemental
Indenture or of modifying in any manner the rights of the Holders of the Debt
Securities of such series; provided, that no such supplemental Indenture,
without the consent of the Holders of each Debt Security so affected, shall:
reduce the percentage in principal amount of Debt Securities of any series whose
Holders must consent to an amendment; reduce the rate of or extend the time for
payment of interest on any Debt Security; reduce the principal of or extend the
Stated Maturity of any Debt Security; reduce the premium payable upon the
redemption of any Debt Security or change the time at which any Debt Security
may or shall be redeemed in accordance with Article III; make any Debt Security
payable in currency other than the Dollar; impair the right of any Holder to
receive payment of, premium, if any, principal of and interest on such Holder's
Debt Securities on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Debt Securities;
release any security that may have been granted in respect of the Debt
Securities; make any change in Section 6.06 or this
45
Section 9.02; or release the Subsidiary Guarantors or modify the Guarantee in
any manner adverse to the Holders.
A supplemental Indenture which changes or eliminates any covenant or
other provision of this Indenture which has been expressly included solely for
the benefit of one or more particular series of Debt Securities or which
modifies the rights of the Holders of Debt Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Debt Securities of any other
series.
Upon the request of the Partnership and the Subsidiary Guarantors,
accompanied by a copy of resolutions of the Board of Directors authorizing the
execution of any such supplemental Indenture, and upon the filing with the
Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall
join with the Partnership in the execution of such supplemental Indenture unless
such supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion but shall not be obligated to enter into such supplemental
Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
Indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
After an amendment under this Section 9.02 becomes effective, the
Partnership shall mail to Holders of Debt Securities of each series affected
thereby a notice briefly describing such amendment. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section 9.02.
Section 9.03. Effect of Supplemental Indentures. Upon the execution of
any supplemental Indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Partnership, the
Subsidiary Guarantors and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental Indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental Indenture complies with the provisions of
this Article IX.
Section 9.04. Debt Securities May Bear Notation of Changes by
Supplemental Indentures. Debt Securities of any series authenticated and
delivered after the execution of any supplemental Indenture pursuant to the
provisions of this Article IX may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental Indenture. New Debt Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental Indenture may
be prepared and executed by the Partnership,
46
authenticated by the Trustee and delivered in exchange for the Debt Securities
of such series then Outstanding. Failure to make the appropriate notation or to
issue a new Debt Security of such series shall not affect the validity of such
amendment.
ARTICLE X
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 10.01. Consolidations and Mergers of the Partnership and the
Subsidiary Guarantors. Neither the Partnership nor any Subsidiary Guarantor
shall consolidate with or merge with or into any Person, or convey, transfer or
lease all or substantially all its assets to any Person, unless: (a) either (i)
the Partnership or such Subsidiary Guarantor shall be the continuing Person in
the case of a merger or (ii) in the case of the Partnership, the resulting,
surviving or transferee Person if other than the Partnership (the "Successor
Partnership"), or in the case of such Subsidiary Guarantor, the resulting,
surviving or transferee Person if other than such Subsidiary Guarantor, shall be
a Person organized and existing under the laws of the United States, any State
thereof or the District of Columbia and the Successor Partnership shall
expressly assume, by an Indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations of the
Partnership or such Subsidiary Guarantor, as the case may be, under the
Indenture and the Debt Securities according to their tenor (in the case of the
Partnership) and the Guarantee (in the case of such Subsidiary Guarantor); (b)
immediately after giving effect to such transaction (and treating any Debt which
becomes an obligation of the Successor Partnership or any Subsidiary of the
Partnership as a result of such transaction as having been incurred by the
Successor Partnership or such Subsidiary at the time of such transaction), no
Default or Event of Default would occur or be continuing; and (c) the
Partnership or such Subsidiary Guarantor, as the case may be, shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
Indenture (if any) complies with this Indenture; provided that nothing in this
Section 10.01 shall restrict or prohibit the consolidation or merger of any
Subsidiary Guarantor into, or the conveyance, transfer or lease of all or
substantially all of the assets of any Subsidiary Guarantor to, the Partnership
or any other Subsidiary Guarantor.
Section 10.02. Rights and Duties of Successor Partnership or Successor
Subsidiary Guarantor. In case of any consolidation or merger, or conveyance or
transfer of the assets of the Partnership or any Subsidiary Guarantor as an
entirety or substantially as an entirety in accordance with Section 10.01, the
Successor Partnership shall succeed to and be substituted for the Partnership or
the successor Subsidiary Guarantor shall succeed to and be substituted for such
Subsidiary Guarantor, as the case may be, with the same effect as if it had been
named herein as the respective party to this Indenture, and the predecessor
entity shall be released from all liabilities and obligations under the
Indenture and the Debt Securities (in the case of the Partnership) or the
Guarantee (in the case of any Subsidiary Guarantor), except that no such release
will occur in the case of a lease of all or substantially all of its assets. The
Successor Partnership thereupon may cause to be signed, and may issue either in
its own name or in the name of the Partnership, any or all the Debt Securities
issuable hereunder which theretofore shall not have been signed by the
Partnership and delivered to the Trustee; and, upon the order of the Successor
Partnership, instead of the Partnership, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Debt
47
Securities which previously shall have been signed and delivered by the officers
of the Partnership to the Trustee for authentication, and any Debt Securities
which the Successor Partnership thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Debt Securities so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Debt Securities theretofore or thereafter issued in accordance with the
terms of this Indenture as though all such Debt Securities had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the Debt
Securities thereafter to be issued as may be appropriate.
ARTICLE XI
SATISFACTION AND DISCHARGE OF
INDENTURE; DEFEASANCE; UNCLAIMED MONEYS
Section 11.01. Applicability of Article. The provisions of this Article
XI relating to defeasance of Debt Securities shall be applicable to each series
of Debt Securities except as otherwise specified pursuant to Section 2.03 for
Debt Securities of such series.
Section 11.02. Satisfaction and Discharge of Indenture; Defeasance.
(a) If at any time the Partnership shall have delivered to the Trustee
for cancellation all Debt Securities of any series theretofore authenticated and
delivered (other than any Debt Securities of such series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.09 and Debt Securities for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Partnership as provided in
Section 11.05) or all Debt Securities of such series not theretofore delivered
to the Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Partnership shall deposit with the
Trustee as trust funds the entire amount in cash sufficient to pay at maturity
or upon redemption all Debt Securities of such series not theretofore delivered
to the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due on such date of maturity or redemption date, as
the case may be, and if in either case the Partnership shall also pay or cause
to be paid all other sums payable hereunder by the Partnership, then this
Indenture shall cease to be of further effect (except as to any surviving rights
of registration of transfer or exchange of such Debt Securities herein expressly
provided for) with respect to the Debt Securities of such series, and the
Trustee, on demand of the Partnership accompanied by an Officers' Certificate
and an Opinion of Counsel and at the cost and expense of the Partnership, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture.
(b) Subject to Sections 11.02(c), 11.03 and 11.07, the Partnership at
any time may terminate, with respect to Debt Securities of a particular series,
all its obligations under the Debt Securities of such series and this Indenture
with respect to the Debt Securities of such series ("legal defeasance option")
or the operation of Sections 6.01(d), (g) and (h) and, as they relate to the
Subsidiary Guarantors only, Sections 6.01(e) and (f) ("covenant defeasance
option"). If the
48
Partnership exercises its legal defeasance option, the Guarantee will terminate
with respect to that series of Debt Securities. The Partnership may exercise its
legal defeasance option notwithstanding its prior exercise of its covenant
defeasance option.
If the Partnership exercises its legal defeasance option, payment of
the Debt Securities of the defeased series may not be accelerated because of an
Event of Default. If the Partnership exercises its covenant defeasance option,
payment of the Debt Securities of the defeased series may not be accelerated
because of an Event of Default specified in Sections 6.01(d), (g) and (h) and,
with respect to the Subsidiary Guarantors only, Sections 6.01(e) and (f) (except
to the extent covenants or agreements referenced in such Sections remain
applicable).
Upon satisfaction of the conditions set forth herein and upon request
of the Partnership, the Trustee shall acknowledge in writing the discharge of
those obligations that the Partnership terminates.
(c) Notwithstanding clauses (a) and (b) above, the Partnership's
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.10, 11.05, 11.06
and 11.07 shall survive until the Debt Securities of the defeased series have
been paid in full. Thereafter, the Partnership's obligations in Sections 7.06,
11.05 and 11.06 shall survive.
Section 11.03. Conditions of Defeasance. The Partnership may exercise
its legal defeasance option or its covenant defeasance option with respect to
Debt Securities of a particular series only if:
(a) the Partnership irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of, and
premium, if any, and interest on, the Debt Securities of such series to maturity
or redemption, as the case may be;
(b) the Partnership delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their opinion
that the payments of principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay the principal, premium and interest when due on all the Debt
Securities of such series to maturity or redemption, as the case may be;
(c) 91 days pass after the deposit is made and during the 91-day period
no Default specified in Section 6.01(e) or (f) with respect to the Partnership
occurs which is continuing at the end of the period;
(d) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
(e) the deposit does not constitute a default under any other agreement
binding on the Partnership;
(f) the Partnership delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940;
49
(g) in the event of the legal defeasance option, the Partnership shall
have delivered to the Trustee an Opinion of Counsel stating that the Partnership
has received from the Internal Revenue Service a ruling, or since the date of
this Indenture there has been a change in the applicable Federal income tax law,
in either case of the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of Debt Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred;
(h) in the event of the covenant defeasance option, the Partnership
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of Debt Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred; and
(i) the Partnership delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Debt Securities of such series as contemplated
by this Article XI have been complied with.
Before or after a deposit, the Partnership may make arrangements
satisfactory to the Trustee for the redemption of Debt Securities of such series
at a future date in accordance with Article III.
Section 11.04. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article XI. It shall apply the deposited money and the money from U.S.
Government Obligations through any paying agent and in accordance with this
Indenture to the payment of principal of, and premium, if any, and interest on,
the Debt Securities of the defeased series.
Section 11.05. Repayment to Partnership. The Trustee and any paying
agent shall promptly turn over to the Partnership upon request any excess money
or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and any
paying agent shall pay to the Partnership upon request any money held by them
for the payment of principal, premium or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to such money must look to the
Partnership for payment as general creditors.
Section 11.06. Indemnity for U.S. Government Obligations. The
Partnership shall pay and shall indemnify the Trustee and the Holders against
any tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
Section 11.07. Reinstatement. If the Trustee or any paying agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article XI by reason of any legal proceeding or by reason of any order or
judgment of any court or government authority enjoining, restraining or
otherwise prohibiting such application, the Partnership's obligations
50
under this Indenture and the Debt Securities of the defeased series shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article XI until such time as the Trustee or any paying agent is permitted to
apply all such money or U.S. Government Obligations in accordance with this
Article XI.
ARTICLE XII
[RESERVED]
This Article XII has been intentionally omitted.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Successors and Assigns of Partnership Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of the Partnership, the Subsidiary
Guarantors or the Trustee shall bind their respective successors and assigns,
whether so expressed or not.
Section 13.02. Acts of Board, Committee or Officer of Successor
Partnership Valid. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Partnership or the Subsidiary Guarantors shall and may be done
and performed with like force and effect by the like board, committee or officer
of any Successor Partnership.
Section 13.03. Required Notices or Demands. Any notice or communication
by the Partnership, the Subsidiary Guarantors or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by registered or
certified mail (return receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, to the other's address:
If to the Partnership or the Subsidiary Guarantors:
TEPPCO Partners, L.P.
TE Products Pipeline Company, Limited Partnership
TCTM, L.P.
TEPPCO Midstream Companies, L.P.
Jonah Gas Gathering Company
2929 Allen Parkway
Houston, Texas 77252
Attention: Chief Financial Officer
Telecopy No. 713-759-3636
If to the Trustee:
First Union National Bank
5847 San Felipe, Suite 1050
Houston, Texas 77057
Attn: Corporate Trust Department
Telecopy: 713-278-4329
51
The Partnership, the Subsidiary Guarantors or the Trustee by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; on the first Business
Day on or after being sent, if telecopied and the sender receives confirmation
of successful transmission; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice required or permitted to a Holder by the Partnership, the
Subsidiary Guarantors or the Trustee pursuant to the provisions of this
Indenture shall be deemed to be properly mailed by being deposited postage
prepaid in a post office letter box in the United States addressed to such
Holder at the address of such Holder as shown on the Debt Security Register. Any
report pursuant to Section 313 of the TIA shall be transmitted in compliance
with subsection (c) therein.
Notwithstanding the foregoing, any notice to Holders of Floating Rate
Debt Securities regarding the determination of a periodic rate of interest, if
such notice is required pursuant to Section 2.03, shall be sufficiently given if
given in the manner specified pursuant to Section 2.03.
In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, then such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose hereunder.
In the event it shall be impracticable to give notice by publication,
then such notification as shall be given with the approval of the Trustee shall
constitute sufficient notice for every purpose hereunder.
Failure to mail a notice or communication to a Holder or any defect in
it or any defect in any notice by publication as to a Holder shall not affect
the sufficiency of such notice with respect to other Holders. If a notice or
communication is mailed or published in the manner provided above, it is
conclusively presumed duly given.
Section 13.04. Indenture and Debt Securities to Be Construed in
Accordance with the Laws of the State of New York. THIS INDENTURE, EACH DEBT
SECURITY AND THE GUARANTEE SHALL BE DEEMED TO BE NEW YORK CONTRACTS, AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID
STATE.
Section 13.05. Officers' Certificate and Opinion of Counsel to Be
Furnished upon Application or Demand by the Partnership. Upon any application or
demand by the Partnership to the Trustee to take any action under any of the
provisions of this Indenture, the Partnership shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the
52
furnishing of such document is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the Person
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Section 13.06. Payments Due on Legal Holidays. In any case where the
date of maturity of interest on or principal of and premium, if any, on the Debt
Securities of a series or the date fixed for redemption or repayment of any Debt
Security or the making of any sinking fund payment shall not be a business day
at any Place of Payment for the Debt Securities of such series, then payment of
interest or principal and premium, if any, or the making of such sinking fund
payment need not be made on such date at such Place of Payment, but may be made
on the next succeeding business day at such Place of Payment with the same force
and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date. If a record date is
not a business day, the record date shall not be affected.
Section 13.07. Provisions Required by TIA to Control. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
another provision included in this Indenture which is required to be included in
this Indenture by any of Sections 310 to 318, inclusive, of the TIA, such
required provision shall control.
Section 13.08. Computation of Interest on Debt Securities. Interest, if
any, on the Debt Securities shall be computed on the basis of a 360-day year of
twelve 30-day months, except as may otherwise be provided pursuant to Section
2.03.
Section 13.09. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and any paying agent may make reasonable rules for their functions.
Section 13.10. No Recourse Against Others. The General Partner and its
directors, officers, employees, incorporators and stockholders, as such, shall
have no liability for any obligations of the Subsidiary Guarantors or the
Partnership under the Debt Securities, the Indenture or the Guarantee or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. By accepting a Debt Security, each Holder shall waive and release all
such liability. The waiver and release shall be part of the consideration for
the issue of the Debt Securities.
Section 13.11. Severability. In case any provision in this Indenture or
the Debt Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
53
Section 13.12. Effect of Headings. The article and section headings
herein and in the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 13.13. Indenture May Be Executed in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
ARTICLE XIV
GUARANTEE
Section 14.01. Unconditional Guarantee.
(a) Notwithstanding any provision of this Article XIV to the contrary,
the provisions of this Article XIV shall be applicable only to, and inure solely
to the benefit of, the Debt Securities of any series designated, pursuant to
Section 2.03, as entitled to the benefits of the Guarantee of each of the
Subsidiary Guarantors.
(b) For value received, each of the Subsidiary Guarantors hereby fully,
unconditionally and absolutely guarantees (the "Guarantee") to the Holders and
to the Trustee the due and punctual payment of the principal of, and premium, if
any, and interest on the Debt Securities and all other amounts due and payable
under this Indenture and the Debt Securities by the Partnership, when and as
such principal, premium, if any, and interest shall become due and payable,
whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise, according to the terms of the Debt Securities and this
Indenture, subject to the limitations set forth in Section 14.03.
(c) Failing payment when due of any amount guaranteed pursuant to the
Guarantee, for whatever reason, each of the Subsidiary Guarantors will be
jointly and severally obligated to pay the same immediately. The Guarantee
hereunder is intended to be a general, unsecured, senior obligation of each of
the Subsidiary Guarantors and will rank pari passu in right of payment with all
Debt of such Subsidiary Guarantor that is not, by its terms, expressly
subordinated in right of payment to the Guarantee. Each of the Subsidiary
Guarantors hereby agrees that its obligations hereunder, shall be full,
unconditional and absolute, irrespective of the validity, regularity or
enforceability of the Debt Securities, the Guarantee (including the Guarantee of
any other Subsidiary Guarantor) or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Debt Securities
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Partnership or any other Subsidiary Guarantor, or any action to
enforce the same or any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of the Subsidiary Guarantors. Each of
the Subsidiary Guarantors hereby agrees that in the event of a default in
payment of the principal of, or premium, if any, or interest on the Debt
Securities, whether at the stated maturity or by declaration of acceleration,
call for redemption or otherwise, legal proceedings may be instituted by the
Trustee on behalf of the Holders or, subject to Section 6.04, by the Holders, on
the terms and conditions set forth in this Indenture, directly against such
Subsidiary Guarantor to enforce the Guarantee without first proceeding against
the Partnership or any other Subsidiary Guarantor.
54
(d) The obligations of each of the Subsidiary Guarantors under this
Article XIV shall be as aforesaid full, unconditional and absolute and shall not
be impaired, modified, released or limited by any occurrence or condition
whatsoever, including, without limitation, (A) any compromise, settlement,
release, waiver, renewal, extension, indulgence or modification of, or any
change in, any of the obligations and liabilities of the Partnership or any of
the Subsidiary Guarantors contained in the Debt Securities or this Indenture,
(B) any impairment, modification, release or limitation of the liability of the
Partnership, any of the Subsidiary Guarantors or either of their estates in
bankruptcy, or any remedy for the enforcement thereof, resulting from the
operation of any present or future provision of any applicable Bankruptcy Law,
as amended, or other statute or from the decision of any court, (C) the
assertion or exercise by the Partnership, any of the Subsidiary Guarantors or
the Trustee of any rights or remedies under the Debt Securities or this
Indenture or their delay in or failure to assert or exercise any such rights or
remedies, (D) the assignment or the purported assignment of any property as
security for the Debt Securities, including all or any part of the rights of the
Partnership or any of the Subsidiary Guarantors under this Indenture, (E) the
extension of the time for payment by the Partnership or any of the Subsidiary
Guarantors of any payments or other sums or any part thereof owing or payable
under any of the terms and provisions of the Debt Securities or this Indenture
or of the time for performance by the Partnership or any of the Subsidiary
Guarantors of any other obligations under or arising out of any such terms and
provisions or the extension or the renewal of any thereof, (F) the modification
or amendment (whether material or otherwise) of any duty, agreement or
obligation of the Partnership or any of the Subsidiary Guarantors set forth in
this Indenture, (G) the voluntary or involuntary liquidation, dissolution, sale
or other disposition of all or substantially all of the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of, or other similar proceeding affecting, the Partnership or any of the
Subsidiary Guarantors or any of their respective assets, or the disaffirmance of
the Debt Securities, the Guarantee or this Indenture in any such proceeding, (H)
the release or discharge of the Partnership or any of the Subsidiary Guarantors
from the performance or observance of any agreement, covenant, term or condition
contained in any of such instruments by operation of law, (I) the
unenforceability of the Debt Securities, the Guarantee or this Indenture or (J)
any other circumstances which might otherwise constitute a legal or equitable
discharge of a surety or guarantor.
(e) Each of the Subsidiary Guarantors hereby (A) waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
the merger, insolvency or bankruptcy of the Partnership or any of the Subsidiary
Guarantors, and all demands whatsoever, (B) acknowledges that any agreement,
instrument or document evidencing the Guarantee may be transferred and that the
benefit of its obligations hereunder shall extend to each holder of any
agreement, instrument or document evidencing the Guarantee without notice to it
and (C) covenants that the Guarantee will not be discharged except by complete
performance of the Guarantee. Each of the Subsidiary Guarantors further agrees
that if at any time all or any part of any payment theretofore applied by any
Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including without limitation, the insolvency, bankruptcy or
reorganization of the Partnership or any of the Subsidiary Guarantors, the
Guarantee shall, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence notwithstanding such
application, and the Guarantee shall continue to be effective or be reinstated,
as the case may be, as though such application had not been made.
55
(f) Each of the Subsidiary Guarantors shall be subrogated to all rights
of the Holders and the Trustee against the Partnership in respect of any amounts
paid by such Subsidiary Guarantor pursuant to the provisions of this Indenture,
provided, however, that such Subsidiary Guarantor, shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation until all of the Debt Securities and the Guarantee shall have been
paid in full or discharged.
Section 14.02. Execution and Delivery of Guarantee. To further evidence
the Guarantee set forth in Section 14.01, each of the Subsidiary Guarantors
hereby agree that a notation relating to such Guarantee, substantially in the
form attached hereto as Annex A, shall be endorsed on each Debt Security
entitled to the benefits of the Guarantee authenticated and delivered by the
Trustee and executed by either manual or facsimile signature of an officer of
Subsidiary Guarantor, or in the case of a Subsidiary Guarantor that is a limited
partnership, an officer of the general partner of each Subsidiary Guarantor.
Each of the Subsidiary Guarantors hereby agree that the Guarantee set forth in
Section 14.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Debt Security a notation relating to the Guarantee. If any
officer of the Subsidiary Guarantor, or in the case of a Subsidiary Guarantor
that is a limited partnership, any officer of the general partner of the
Subsidiary Guarantor, whose signature is on this Indenture or a Debt Security no
longer holds that office at the time the Trustee authenticates such Debt
Security or at any time thereafter, the Guarantee of such Debt Security shall be
valid nevertheless. The delivery of any Debt Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Subsidiary Guarantors.
The Trustee hereby accepts the trusts in this Indenture upon the terms
and conditions herein set forth.
Section 14.03. Limitation on Subsidiary Guarantors' Liability. Each
Subsidiary Guarantor and by its acceptance hereof each Holder of a Debt Security
entitled to the benefits of the Guarantee hereby confirms that it is the
intention of all such parties that the guarantee by such Subsidiary Guarantor
pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for
purposes of any Federal or state law. To effectuate the foregoing intention, the
Holders of a Debt Security entitled to the benefits of the Guarantee and the
Subsidiary Guarantors hereby irrevocably agree that the obligations of each
Subsidiary Guarantor under its Guarantee shall be limited to the maximum amount
as will, after giving effect to all other contingent and fixed liabilities of
such Subsidiary Guarantor and to any collections from or payments made by or on
behalf of any other Subsidiary Guarantor in respect of the obligations of such
other Subsidiary Guarantor under its Guarantee, result in the obligations of
such Subsidiary Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under Federal or state law.
Section 14.04. Release of Subsidiary Guarantors from Guarantee.
(a) Notwithstanding any other provisions of this Indenture, the
Guarantee of any Subsidiary Guarantor may be released upon the terms and subject
to the conditions set forth in this Section 14.04. Provided that no Default
shall have occurred and shall be continuing under this Indenture, any Guarantee
incurred by a Subsidiary Guarantor pursuant to this Article XIV
56
shall be unconditionally released and discharged (i) automatically upon (A) any
sale, exchange or transfer, to any Person that is not an Affiliate of the
Partnership, of all of the Partnership's direct or indirect limited partnership
or other equity interests in, or all or substantially all the assets of, such
Subsidiary Guarantor (provided such sale, exchange or transfer is not prohibited
by this Indenture) or (B) the merger of such Subsidiary Guarantor into the
Partnership or any other Subsidiary Guarantor or the liquidation and dissolution
of such Subsidiary Guarantor (in each case to the extent not prohibited by this
Indenture) or (ii) following delivery of a written notice of such release or
discharge by the Partnership to the Trustee, upon (x) the release or discharge
of all guarantees by such Subsidiary Guarantor of any Debt of the Partnership
other than obligations arising under this Indenture and any Debt Securities
issued hereunder, except a discharge or release by or as a result of payment
under such guarantees and (y) after giving effect to the proposed release and
discharge, the aggregate total combined assets of all Subsidiaries of the
Partnership that are not Subsidiary Guarantors do not exceed 2% of consolidated
assets of the Partnership.
(b) The Trustee shall deliver an appropriate instrument evidencing any
release of a Subsidiary Guarantor from the Guarantee upon receipt of a written
request of the Partnership accompanied by an Officers' Certificate and an
Opinion of Counsel the Subsidiary Guarantor is entitled to such release in
accordance with the provisions of this Indenture. Any Subsidiary Guarantor not
so released remains liable for the full amount of principal of (and premium, if
any, on) and interest on the Debt Securities entitled to the benefits of such
Guarantee as provided in this Indenture, subject to the limitations of Section
14.03.
Section 14.05. Subsidiary Guarantor Contribution. In order to provide
for just and equitable contribution among the Subsidiary Guarantors, the
Subsidiary Guarantors shall agree, inter se, that in the event any payment or
distribution is made by any Subsidiary Guarantor (a "Funding Guarantor") under
its Guarantee, such Funding Guarantor shall be entitled to a contribution from
each other Subsidiary Guarantor (if any) in a pro rata amount based on the net
assets of each Subsidiary Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Partnership's obligations with respect to the Debt Securities or any other
Subsidiary Guarantor's obligations with respect to its Guarantee.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
57
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
TEPPCO PARTNERS, L.P.
By: Texas Eastern Products Pipeline Company, LLC
Its General Partner
By:
----------------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
By: TEPPCO GP, Inc.
Its General Partner
By:
----------------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
TCTM, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
----------------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
TEPPCO MIDSTREAM COMPANIES, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
----------------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
58
JONAH GAS GATHERING COMPANY
By: TEPPCO GP, Inc.
Its Managing General Partner
By:
----------------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
FIRST UNION NATIONAL BANK, as Trustee
By:
----------------------------------------------
Name:
----------------------------------------------
Title:
----------------------------------------------
59
ANNEX A
NOTATION OF GUARANTEE
Each of the Subsidiary Guarantors (which term includes any successor
Person under the Indenture), has fully, unconditionally and absolutely
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture, the due and punctual payment of the principal of,
and premium, if any, and interest on the Debt Securities and all other amounts
due and payable under the Indenture and the Debt Securities by the Partnership.
The obligations of the Subsidiary Guarantors to the Holders of Debt
Securities and to the Trustee pursuant to the Guarantee and the Indenture are
expressly set forth in Article XIV of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Guarantee.
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP
By: TEPPCO GP, Inc.
Its General Partner
By:
--------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
TCTM, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
--------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
TEPPCO MIDSTREAM COMPANIES, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
--------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
A-1
Jonah Gas Gathering Company
By: TEPPCO GP, Inc.
Its Managing General Partner
By:
--------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
A-2
EXHIBIT 4.3
[FORM OF SUBORDINATED INDENTURE]
================================================================================
TEPPCO PARTNERS, L.P.
AS ISSUER,
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP,
TCTM, L.P.,
TEPPCO MIDSTREAM COMPANIES, L.P.
AND
JONAH GAS GATHERING COMPANY
AS SUBSIDIARY GUARANTORS,
AND
FIRST UNION NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION,
AS TRUSTEE
INDENTURE
DATED AS OF ____________
DEBT SECURITIES
================================================================================
CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
310 (a)......................................................................... 7.10
(b)......................................................................... 7.10
(c)......................................................................... N.A.
311 (a)......................................................................... 7.11
(b)......................................................................... 7.11
(c)......................................................................... N.A.
312 (a)......................................................................... 5.01
(b)......................................................................... 5.02
(c)......................................................................... 5.02
313 (a)......................................................................... 5.03
(b)......................................................................... 5.03
(c)......................................................................... 13.03
(d)......................................................................... 5.03
314 (a)......................................................................... 4.05
(b)......................................................................... N.A.
(c)(1)...................................................................... 13.05
(c)(2)...................................................................... 13.05
(c)(3)...................................................................... N.A.
(d)......................................................................... N.A.
(e)......................................................................... 13.05
(f)......................................................................... N.A.
315 (a)......................................................................... 7.01
(b)......................................................................... 6.07 & 13.03
(c)......................................................................... 7.01
(d)......................................................................... 7.01
(e)......................................................................... 6.08
316 (a) (last sentence)......................................................... 1.01
(a)(1)(A)................................................................... 6.06
(a)(1)(B)................................................................... 6.06
(a)(2)...................................................................... 9.01(d)
(b)......................................................................... 6.04
(c)......................................................................... 5.04
317 (a)(1)...................................................................... 6.02
(a)(2)...................................................................... 6.02
(b)......................................................................... 4.04
318 (a)......................................................................... 13.07
N.A. means Not Applicable
NOTE: This Cross-Reference table shall not, for any purpose, be deemed part of
this Indenture.
i
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.................................................................................1
Section 1.02. Other Definitions...........................................................................7
Section 1.03. Incorporation by Reference of Trust Indenture Act...........................................7
Section 1.04. Rules of Construction.......................................................................7
ARTICLE II
DEBT SECURITIES
Section 2.01. Forms Generally.............................................................................8
Section 2.02. Form of Trustee's Certificate of Authentication.............................................8
Section 2.03. Principal Amount; Issuable in Series........................................................9
Section 2.04. Execution of Debt Securities...............................................................11
Section 2.05. Authentication and Delivery of Debt Securities.............................................11
Section 2.06. Denomination of Debt Securities............................................................13
Section 2.07. Registration of Transfer and Exchange......................................................13
Section 2.08. Temporary Debt Securities..................................................................14
Section 2.09. Mutilated, Destroyed, Lost or Stolen Debt Securities.......................................15
Section 2.10. Cancellation of Surrendered Debt Securities................................................16
Section 2.11. Provisions of the Indenture and Debt Securities for the Sole Benefit of the Parties and
the Holders................................................................................16
Section 2.12. Payment of Interest; Interest Rights Preserved.............................................16
Section 2.13. Securities Denominated in Dollars..........................................................17
Section 2.14. Wire Transfers.............................................................................17
Section 2.15. Securities Issuable in the Form of a Global Security.......................................17
Section 2.16. Medium Term Securities.....................................................................19
Section 2.17. Defaulted Interest.........................................................................20
Section 2.18. CUSIP Numbers..............................................................................21
ARTICLE III
REDEMPTION OF DEBT SECURITIES
Section 3.01. Applicability of Article...................................................................21
Section 3.02. Notice of Redemption; Selection of Debt Securities.........................................21
Section 3.03. Payment of Debt Securities Called for Redemption...........................................23
Section 3.04. Mandatory and Optional Sinking Funds.......................................................23
Section 3.05. Redemption of Debt Securities for Sinking Fund.............................................24
ARTICLE IV
PARTICULAR COVENANTS OF THE PARTNERSHIP
Section 4.01. Payment of Principal of, and Premium, If Any, and Interest on, Debt Securities.............25
ii
Section 4.02. Maintenance of Offices or Agencies for Registration of Transfer, Exchange and Payment
of Debt Securities.........................................................................26
Section 4.03. Appointment to Fill a Vacancy in the Office of Trustee.....................................26
Section 4.04. Duties of Paying Agents, etc...............................................................26
Section 4.05. SEC Reports; Financial Statements..........................................................27
Section 4.06. Compliance Certificate.....................................................................28
Section 4.07. Further Instruments and Acts...............................................................28
Section 4.08. Existence..................................................................................28
Section 4.09. Maintenance of Properties..................................................................29
Section 4.10. Payment of Taxes and Other Claims..........................................................29
ARTICLE V
HOLDERS' LISTS AND REPORTS BY THE TRUSTEE
Section 5.01. Partnership to Furnish Trustee Information as to Names and Addresses of Holders;
Preservation of Information................................................................29
Section 5.02. Communications to Holders..................................................................30
Section 5.03. Reports by Trustee.........................................................................30
Section 5.04. Record Dates for Action by Holders.........................................................30
ARTICLE VI
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT
Section 6.01. Events of Default..........................................................................31
Section 6.02. Collection of Debt by Trustee, etc.........................................................33
Section 6.03. Application of Moneys Collected by Trustee.................................................34
Section 6.04. Limitation on Suits by Holders.............................................................35
Section 6.05. Remedies Cumulative; Delay or Omission in Exercise of Rights Not a Waiver of Default.......35
Section 6.06. Rights of Holders of Majority in Principal Amount of Debt Securities to Direct Trustee
and to Waive Default.......................................................................36
Section 6.07. Trustee to Give Notice of Defaults Known to It, but May Withhold Such Notice in Certain
Circumstances..............................................................................36
Section 6.08. Requirement of an Undertaking To Pay Costs in Certain Suits under the Indenture or
Against the Trustee........................................................................36
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities........................................................37
Section 7.02. Certain Rights of Trustee..................................................................38
Section 7.03. Trustee Not Liable for Recitals in Indenture or in Debt Securities.........................39
Section 7.04. Trustee, Paying Agent or Registrar May Own Debt Securities.................................39
Section 7.05. Moneys Received by Trustee to Be Held in Trust.............................................40
Section 7.06. Compensation and Reimbursement.............................................................40
Section 7.07. Right of Trustee to Rely on an Officers' Certificate Where No Other Evidence Specifically
Prescribed.................................................................................40
Section 7.08. Separate Trustee; Replacement of Trustee...................................................41
Section 7.09. Successor Trustee by Merger................................................................42
iii
Section 7.10. Eligibility; Disqualification..............................................................42
Section 7.11. Preferential Collection of Claims Against Partnership......................................42
Section 7.12. Compliance with Tax Laws...................................................................42
ARTICLE VIII
CONCERNING THE HOLDERS
Section 8.01. Evidence of Action by Holders..............................................................43
Section 8.02. Proof of Execution of Instruments and of Holding of Debt Securities........................43
Section 8.03. Who May Be Deemed Owner of Debt Securities.................................................43
Section 8.04. Instruments Executed by Holders Bind Future Holders........................................43
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Purposes for Which Supplemental Indenture May Be Entered into Without Consent of Holders...44
Section 9.02. Modification of Indenture with Consent of Holders of Debt Securities.......................46
Section 9.03. Effect of Supplemental Indentures..........................................................47
Section 9.04. Debt Securities May Bear Notation of Changes by Supplemental Indentures....................47
ARTICLE X
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 10.01. Consolidations and Mergers of the Partnership and the Subsidiary Guarantors................48
Section 10.02. Rights and Duties of Successor Partnership or Successor Subsidiary Guarantor...............48
ARTICLE XI
SATISFACTION AND DISCHARGE OF
INDENTURE; DEFEASANCE; UNCLAIMED MONEYS
Section 11.01. Applicability of Article...................................................................49
Section 11.02. Satisfaction and Discharge of Indenture; Defeasance........................................49
Section 11.03. Conditions of Defeasance...................................................................50
Section 11.04. Application of Trust Money.................................................................51
Section 11.05. Repayment to Partnership...................................................................51
Section 11.06. Indemnity for U.S. Government Obligations..................................................52
Section 11.07. Reinstatement..............................................................................52
ARTICLE XII
SUBORDINATION OF DEBT SECURITIES AND GUARANTEE
Section 12.01. Applicability of Article; Agreement To Subordinate.........................................52
Section 12.02. Liquidation, Dissolution, Bankruptcy.......................................................52
Section 12.03. Default on Senior Indebtedness.............................................................53
Section 12.04. Acceleration of Payment of Debt Securities.................................................54
Section 12.05. When Distribution Must Be Paid Over........................................................54
iv
Section 12.06. Subrogation................................................................................54
Section 12.07. Relative Rights............................................................................54
Section 12.08. Subordination May Not Be Impaired by Partnership...........................................54
Section 12.09. Rights of Trustee and Paying Agent.........................................................54
Section 12.10. Distribution or Notice to Representative...................................................55
Section 12.11. Article XII Not to Prevent Defaults or Limit Right to Accelerate...........................55
Section 12.12. Trust Moneys Not Subordinated..............................................................55
Section 12.13. Trustee Entitled to Rely...................................................................55
Section 12.14. Trustee to Effectuate Subordination........................................................56
Section 12.15. Trustee Not Fiduciary for Holders of Senior Indebtedness...................................56
Section 12.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions.....................56
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Successors and Assigns of Partnership Bound by Indenture...................................56
Section 13.02. Acts of Board, Committee or Officer of Successor Partnership Valid.........................56
Section 13.03. Required Notices or Demands................................................................57
Section 13.04. Indenture and Debt Securities to Be Construed in Accordance with the Laws of the State
of New York................................................................................58
Section 13.05. Officers' Certificate and Opinion of Counsel to Be Furnished upon Application or Demand
by the Partnership.........................................................................58
Section 13.06. Payments Due on Legal Holidays.............................................................58
Section 13.07. Provisions Required by TIA to Control......................................................58
Section 13.08. Computation of Interest on Debt Securities.................................................59
Section 13.09. Rules by Trustee, Paying Agent and Registrar...............................................59
Section 13.10. No Recourse Against Others.................................................................59
Section 13.11. Severability...............................................................................59
Section 13.12. Effect of Headings.........................................................................59
Section 13.13. Indenture May Be Executed in Counterparts..................................................59
ARTICLE XIV
GUARANTEE
Section 14.01. Unconditional Guarantee....................................................................59
Section 14.02. Execution and Delivery of Guarantee........................................................61
Section 14.03. Limitation on Subsidiary Guarantors' Liability.............................................62
Section 14.04. Release of Subsidiary Guarantors from Guarantee............................................62
Section 14.05. Subsidiary Guarantor Contribution..........................................................63
Notation of Guarantee Annex A
v
INDENTURE dated as of ___________, among TEPPCO Partners, L.P., a
Delaware limited partnership (the "Partnership"), TE Products Pipeline Company,
Limited Partnership ("TE Products"), a Delaware limited partnership, TCTM, L.P.,
a Delaware limited partnership ("TCTM"), TEPPCO Midstream Companies, L.P., a
Delaware limited partnership ("TEPPCO Midstream"), Jonah Gas Gathering Company,
a Wyoming general partnership ("Jonah" and together with TE Products, TCTM and
TEPPCO Midstream, the "Subsidiary Guarantors"), and First Union National Bank, a
national banking association, as trustee (the "Trustee").
RECITALS OF THE PARTNERSHIP AND THE SUBSIDIARY GUARANTORS
The Partnership and Subsidiary Guarantors have duly authorized the
execution and delivery of this Indenture to provide for the issuance from time
to time of the Partnership's debentures, notes, bonds or other evidences of
indebtedness to be issued in one or more series unlimited as to principal amount
(herein called the "Debt Securities"), and the Guarantee by each of the
Subsidiary Guarantors of the Debt Securities, as in this Indenture provided.
The Partnership and the Subsidiary Guarantors are members of the same
consolidated group of companies. The Subsidiary Guarantors will derive direct
and indirect economic benefit from the issuance of the Debt Securities.
Accordingly, each Subsidiary Guarantor has duly authorized the execution and
delivery of this Indenture to provide for its full, unconditional and joint and
several guarantee of the Debt Securities to the extent provided in or pursuant
to this Indenture.
All things necessary to make this Indenture a valid agreement of the
Partnership, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH
That in order to declare the terms and conditions upon which the Debt
Securities are authenticated, issued and delivered, and in consideration of the
premises, and of the purchase and acceptance of the Debt Securities by the
holders thereof, the Partnership and the Trustee covenant and agree with each
other, for the benefit of the respective Holders from time to time of the Debt
Securities or any series thereof, as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. The Trustee may request and may conclusively rely upon an Officers'
Certificate to determine whether any Person is an Affiliate of any specified
Person.
"Agent" means any Registrar or paying agent.
"Bankruptcy Law" means title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the General
Partner or any authorized committee of the Board of Directors of the General
Partner or any directors and/or officers of the General Partner to whom such
Board of Directors or such committee shall have duly delegated its authority to
act hereunder. If the Partnership shall change its form of entity to other than
a limited partnership, the references to the Board of Directors of the General
Partner shall mean the Board of Directors (or other comparable governing body)
of the Partnership.
"Business Day" means any day other than a Legal Holiday.
"capital stock" of any Person means and includes any and all shares,
rights to purchase, warrants or options (whether or not currently exercisable),
participation or other equivalents of or interests in (however designated) the
equity (which includes, but is not limited to, common stock, preferred stock and
partnership and joint venture interests) of such Person (excluding any debt
securities that are convertible into, or exchangeable for, such equity).
"Custodian" means any receiver, trustee, assignee, liquidation or
similar official under any Bankruptcy Law.
"Debt" of any Person at any date means any obligation created or
assumed by such Person for the repayment of borrowed money and any guarantee
therefor.
"Debt Security" or "Debt Securities" has the meaning stated in the
first recital of this Indenture and more particularly means any debt security or
debt securities, as the case may be of any series authenticated and delivered
under this Indenture.
"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Depositary" means, unless otherwise specified by the Partnership
pursuant to either Section 2.03 or 2.15, with respect to Debt Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, The Depository Trust Company, New York, New York, or any successor
thereto registered as a clearing agency under the Exchange Act or other
applicable statute or regulations.
"Designated Senior Indebtedness" means (i) any Senior Indebtedness of
the Partnership which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $100 million and (ii) any other
Senior Indebtedness designated, as provided in Section 2.03, in respect of any
series of Debt Securities.
"Dollar" or "$" means such currency of the United States as at the time
of payment is legal tender for the payment of public and private debts.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute.
2
"Floating Rate Security" means a Debt Security that provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index specified pursuant to Section 2.03.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the date on which the Debt
Securities of the applicable series are issued.
"General Partner" means Texas Eastern Products Pipeline Company, LLC, a
Delaware limited liability company, and its successors as general partner of the
Partnership.
"Global Security" means with respect to any series of Debt Securities
issued hereunder, a Debt Security which is executed by the Partnership and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with this Indenture and any
Indentures supplemental hereto, or resolution of the Board of Directors and set
forth in an Officers' Certificate, which shall be registered in the name of the
Depositary or its nominee and which shall represent, and shall be denominated in
an amount equal to the aggregate principal amount of, all the Outstanding Debt
Securities of such series or any portion thereof, in either case having the same
terms, including, without limitation, the same original issue date, date or
dates on which principal is due and interest rate or method of determining
interest.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered into for purposes of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb has a corresponding meaning.
"Holder," "Holder of Debt Securities" or other similar terms means, a
Person in whose name a Debt Security is registered in the Debt Security Register
(as defined in Section 2.07(a)).
"Indenture" means this instrument as originally executed, or, if
amended or supplemented as herein provided, as so amended or supplemented and
shall include the form and terms of particular series of Debt Securities as
contemplated hereunder, whether or not a supplemental Indenture is entered into
with respect thereto.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of Houston, Texas, City of New York, New York or at a
place of payment are
3
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, security
interest, pledge, charge or other encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law.
"Officer" means, with respect to a Person, the Chairman of the Board,
the President, any Vice President, the Treasurer, any Assistant Treasurer,
Controller, Secretary, Assistant Secretary or any Assistant Vice President of
such Person.
"Officers' Certificate" means a certificate signed by two Officers of
the General Partner, one of whom must be the General Partner's chief executive
officer, chief financial officer or chief accounting officer (or if the
Partnership shall change its form of entity to other than a limited partnership,
by Persons, officers, members, agents and others holding positions comparable to
those of the foregoing nature, as applicable).
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Partnership or the Trustee.
"Original Issue Discount Debt Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
Section 6.01.
"Outstanding," when used with respect to any series of Debt Securities,
means, as of the date of determination, all Debt Securities of that series
theretofore authenticated and delivered under this Indenture, except:
(a) Debt Securities of that series theretofore canceled by the
Trustee or delivered to the Trustee for cancellation;
(b) Debt Securities of that series for whose payment or redemption
money in the necessary amount has been theretofore deposited
with the Trustee or any paying agent (other than the
Partnership) in trust or set aside and segregated in trust by
the Partnership (if the Partnership shall act as its own
paying agent) for the Holders of such Debt Securities;
provided, that, if such Debt Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee
has been made; and
(c) Debt Securities of that series which have been paid pursuant
to Section 2.09 or in exchange for or in lieu of which other
Debt Securities have been authenticated and delivered pursuant
to this Indenture, other than any such Debt Securities in
respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debt Securities are
held by a bona fide purchaser in whose hands such Debt
Securities are valid obligations of the Partnership;
4
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Debt Securities owned by the Partnership or any other obligor upon the Debt
Securities or any Affiliate of the Partnership or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
an officer of the Trustee actually knows to be so owned shall be so disregarded.
Debt Securities so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Debt Securities and that the
pledgee is not the Partnership or any other obligor upon the Debt Securities or
an Affiliate of the Partnership or of such other obligor. In determining whether
the Holders of the requisite principal amount of Outstanding Debt Securities
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the principal amount of an Original Issue Discount Debt
Security that shall be deemed to be Outstanding for such purposes shall be the
amount of the principal thereof that would be due and payable as of the date of
such determination upon a declaration of acceleration of the maturity thereof
pursuant to Section 6.01.
"Partnership" means the Person named as the "Partnership" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Partnership" shall mean such successor Person.
"Partnership Request" and "Partnership Order" means, respectively, a
written request or order signed in the name of the Partnership by the Chairman
of the Board, the President or a Vice President of the General Partner, and by
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the Secretary or an Assistant Secretary of the General Partner, and delivered to
the Trustee, or if the Partnership shall change its form of entity to other than
a limited partnership, by Persons or officers, members, agents and others
holding positions comparable to those of the foregoing nature, as applicable.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, incorporated or unincorporated association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof or other entity of any kind.
"Redemption Date," when used with respect to any Debt Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Debt.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.
"Senior Indebtedness," unless otherwise provided with respect to the
Debt Securities of a series as contemplated by Section 2.03, means (1) all Debt
of the Subsidiary Guarantors or the
5
Partnership, whether currently outstanding or hereafter issued, unless, by the
terms of the instrument creating or evidencing such Debt, it is provided that
such Debt is not superior in right of payment to the Debt Securities, in the
case of the Partnership, or the Guarantee, in the case of the Subsidiary
Guarantors, or to other Debt which is pari passu with or subordinated to the
Debt Securities, in the case of the Partnership, or the Guarantee, in the case
of the Subsidiary Guarantors, and (2) any modifications, refunding, deferrals,
renewals, or extensions of any such Debt or securities, notes or other evidence
of Debt issued in exchange for such Debt; provided that in no event shall
"Senior Indebtedness" include (a) Debt evidenced by the Debt Securities or any
Guarantee, (b) Debt of any of the Subsidiary Guarantors or the Partnership owed
or owing to any Subsidiary of the Partnership, (c) Debt of any of the Subsidiary
Guarantors owed or owing to the Partnership, (d) Debt to trade creditors, (e)
any liability for taxes owed or owing by the Subsidiary Guarantors or the
Partnership or (f) Debt of any Subsidiary Guarantor in the event there is no
series of Debt Securities Outstanding that is entitled to the benefits of a
Guarantee.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subsidiary" means:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of equity
interests entitled, without regard to the occurrence of any
contingency, to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or combination thereof; or
(2) in the case of a partnership, more than 50% of the partners'
equity interests, considering all partners' equity interests
as a single class is at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or combination thereof.
"Subsidiary Guarantors" means the Person or Persons named as the
"Subsidiary Guarantors" in the first paragraph of this instrument until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Subsidiary Guarantors" shall mean
such successor Person or Persons, and any other Subsidiary of the Partnership
who may execute this Indenture, or a supplement thereto, for the purpose of
providing a Guarantee of Debt Securities pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. "
77aaa-77bbbb), as in effect on the date of this Indenture as originally executed
and, to the extent required by law, as amended.
6
"Trustee" initially means First Union National Bank and any other
Person or Persons appointed as such from time to time pursuant to Section 7.08,
and, subject to the provisions of Article VII, includes its or their successors
and assigns. If at any time there is more than one such Person, "Trustee" as
used with respect to the Debt Securities of any series shall mean the Trustee
with respect to the Debt Securities of that series.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"U.S. Government Obligations" means direct obligations of the United
States of America, obligations on which the payment of principal and interest is
fully guaranteed by the United States of America or obligations or guarantees
for the payment of which the full faith and credit of the United States of
America is pledged.
"Yield to Maturity" means the yield to maturity, calculated at the time
of issuance of a series of Debt Securities, or, if applicable, at the most
recent redetermination of interest on such series and calculated in accordance
with accepted financial practice.
Section 1.02. Other Definitions.
TERM DEFINED IN SECTION
---- ------------------
"Debt Security Register"......................................... 2.07
"Defaulted Interest"............................................. 2.17
"Designated Currency"............................................ 2.18
"Determination Notice"........................................... 3.02
"Event of Default"............................................... 6.01
"Guarantee"...................................................... 14.01
"Registrar"...................................................... 2.07
"Subordinated Debt Securities"................................... 12.01
"Successor Partnership".......................................... 10.01
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
All terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.04. Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
7
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions;
(f) if the applicable series of Debt Securities are subordinated
pursuant to Article XII, unsecured Debt shall not be deemed to be subordinate or
junior to secured Debt merely by virtue of its nature as unsecured Debt; and
(g) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the issuer dated such date prepared in accordance with
GAAP.
ARTICLE II
DEBT SECURITIES
Section 2.01. Forms Generally. The Debt Securities of each series shall
be in substantially the form established without the approval of any Holder by
or pursuant to a resolution of the Board of Directors or in one or more
Indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as the
Partnership may deem appropriate (and, if not contained in a supplemental
Indenture entered into in accordance with Article IX, as are not prohibited by
the provisions of this Indenture) or as may be required or appropriate to comply
with any law or with any rules made pursuant thereto or with any rules of any
securities exchange on which such series of Debt Securities may be listed, or to
conform to general usage, or as may, consistently herewith, be determined by the
officers executing such Debt Securities as evidenced by their execution of the
Debt Securities.
The definitive Debt Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by their execution of such Debt.
Section 2.02. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Debt Securities authenticated by
the Trustee shall be in substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
,
---------------------------------------
As Trustee
By:
--------------------------------------
Authorized Signature
8
Section 2.03. Principal Amount; Issuable in Series. The aggregate
principal amount of Debt Securities which may be issued, executed,
authenticated, delivered and outstanding under this Indenture is unlimited.
The Debt Securities may be issued in one or more series in fully
registered form. There shall be established, without the approval of any
Holders, in or pursuant to a resolution of the Board of Directors and set forth
in an Officers' Certificate, or established in one or more Indentures
supplemental hereto, prior to the issuance of Debt Securities of any series any
or all of the following:
(a) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of the series from all other Debt Securities);
(b) any limit upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under this
Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of the series pursuant to this Article II);
(c) the date or dates on which the principal and premium, if any, of
the Debt Securities of the series are payable;
(d) the rate or rates (which may be fixed or variable) at which the
Debt Securities of the series shall bear interest, if any, or the method of
determining such rate or rates, the date or dates from which such interest shall
accrue, the interest payment dates on which such interest shall be payable, or
the method by which such date will be determined, in the case of Registered
Securities, the record dates for the determination of Holders thereof to whom
such interest is payable; and the basis upon which interest will be calculated
if other than that of a 360-day year of twelve thirty-day months;
(e) the place or places, if any, in addition to or instead of the
corporate trust office of the Trustee, where the principal of, and premium, if
any, and interest on, Debt Securities of the series shall be payable ("Place of
Payment");
(f) the price or prices at which, the period or periods within which
and the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership or otherwise;
(g) whether Debt Securities of the series are entitled to the benefits
of any Guarantee of any Subsidiary Guarantors pursuant to this Indenture;
(h) the obligation, if any, of the Partnership to redeem, purchase or
repay Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, and the price or prices at
which and the period or periods within which and the terms and conditions upon
which Debt Securities of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligations;
9
(i) the terms, if any, upon which the Debt Securities of the series may
be convertible into or exchanged for capital stock (which may be represented by
depositary shares), other Debt Securities or warrants for capital stock or Debt
or other securities of any kind of the Partnership or any other obligor and the
terms and conditions upon which such conversion or exchange shall be effected,
including the initial conversion or exchange price or rate, the conversion or
exchange period and any other provision in addition to or in lieu of those
described herein;
(j) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;
(k) if the amount of principal of or any premium or interest on Debt
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;
(l) if the principal amount payable at the Stated Maturity of Debt
Securities of the series will not be determinable as of any one or more dates
prior to such Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined);
(m) any changes or additions to Article XI, including the addition of
additional covenants that may be subject to the covenant defeasance option
pursuant to Section 11.02(b);
(n) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.01 or
provable in bankruptcy pursuant to Section 6.02;
(o) the terms, if any, of the transfer, mortgage, pledge or assignment
as security for the Debt Securities of the series of any properties, assets,
moneys, proceeds, securities or other collateral, including whether certain
provisions of the TIA are applicable and any corresponding changes to provisions
of this Indenture as currently in effect;
(p) any addition to or change in the Events of Default with respect to
the Debt Securities of the series and any change in the right of the Trustee or
the Holders to declare the principal of, and premium and interest on, such Debt
Securities due and payable;
(q) if the Debt Securities of the series shall be issued in whole or in
part in the form of a Global Security or Securities, the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged in whole
or in part for other individual Debt Securities in definitive registered form;
and the Depositary for such Global Security or Securities and the form of any
legend or legends to be borne by any such Global Security or Securities in
addition to or in lieu of the legend referred to in Section 2.15(a);
(r) any trustees, authenticating or paying agents, transfer agents or
registrars;
(s) the applicability of, and any addition to or change in the
covenants and definitions currently set forth in this Indenture or in the terms
currently set forth in Article X, including
10
conditioning any merger, conveyance, transfer or lease permitted by Article X
upon the satisfaction of an Debt coverage standard by the Partnership and
Successor Partnership (as defined in Article X);
(t) the subordination, if any, of the Debt Securities of the series
pursuant to Article XII and any changes or additions to Article XII or
designation of any Designated Senior Indebtedness;
(u) with regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee; and
(v) any other terms of the Debt Securities of the series (which terms
shall not be prohibited by the provisions of this Indenture).
All Debt Securities of any one series appertaining thereto shall be
substantially identical except as to denomination and except as may otherwise be
provided in or pursuant to such resolution of the Board of Directors and as set
forth in such Officers' Certificate or in any such Indenture supplemental
hereto.
Section 2.04. Execution of Debt Securities. The Debt Securities shall
be signed on behalf of the Partnership by the Chairman of the Board, the
President or a Vice President of the General Partner and, if the seal of the
General Partner is reproduced thereon, it shall be attested by its Secretary, an
Assistant Secretary, a Treasurer or an Assistant Treasurer. Such signatures upon
the Debt Securities may be the manual or facsimile signatures of the present or
any future such authorized officers and may be imprinted or otherwise reproduced
on the Debt Securities. The seal of the General Partner, if any, may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Debt Securities.
Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, signed manually
by the Trustee, shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee upon any Debt
Security executed by the General Partner on behalf of the Partnership shall be
conclusive evidence that the Debt Security so authenticated has been duly
authenticated and delivered hereunder.
In case any officer of the General Partner who shall have signed any of
the Debt Securities shall cease to be such officer before the Debt Securities so
signed shall have been authenticated and delivered by the Trustee, or disposed
of by the Partnership, such Debt Securities nevertheless may be authenticated
and delivered or disposed of as though the Person who signed such Debt
Securities had not ceased to be such officer of the General Partner; and any
Debt Security may be signed on behalf of the General Partner by such Persons as,
at the actual date of the execution of such Debt Security, shall be the proper
officers of the General Partner, although at the date of such Debt Security or
of the execution of this Indenture any such Person was not such officer.
Section 2.05. Authentication and Delivery of Debt Securities. At any
time and from time to time after the execution and delivery of this Indenture,
the Partnership may deliver Debt Securities of any series executed by the
Partnership to the Trustee for authentication, and the
11
Trustee shall thereupon authenticate and deliver said Debt Securities to or upon
a Partnership Order. In authenticating such Debt Securities, and accepting the
additional responsibilities under this Indenture in relation to such Debt
Securities, the Trustee shall be entitled to receive, and (subject to Section
7.01) shall be fully protected in relying upon:
(a) a copy of any resolution or resolutions of the Board of Directors,
certified by the Secretary or Assistant Secretary of the Partnership,
authorizing the terms of issuance of any series of Debt Securities;
(b) an executed supplemental Indenture, if any;
(c) an Officers' Certificate; and
(d) an Opinion of Counsel prepared in accordance with Section 13.05
which shall also state:
(i) that the form of such Debt Securities has been established
by or pursuant to a resolution of the Board of Directors or by a
supplemental Indenture as permitted by Section 2.01 in conformity with
the provisions of this Indenture;
(ii) that the terms of such Debt Securities have been
established by or pursuant to a resolution of the Board of Directors or
by a supplemental Indenture as permitted by Section 2.03 in conformity
with the provisions of this Indenture;
(iii) that such Debt Securities, when authenticated and
delivered by the Trustee and issued by the Partnership in the manner
and subject to any conditions specified in such Opinion of Counsel,
will constitute valid and legally binding obligations of the
Partnership, enforceable in accordance with their terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability;
(iv) that the Partnership has the partnership power to issue
such Debt Securities and has duly taken all necessary partnership
action with respect to such issuance;
(v) that the issuance of such Debt Securities will not
contravene the organizational documents of the Partnership or result in
any material violation of any of the terms or provisions of any law or
regulation or of any material indenture, mortgage or other agreement
known to such counsel by which the Partnership is bound;
(vi) that authentication and delivery of such Debt Securities
and the execution and delivery of any supplemental Indenture will not
violate the terms of this Indenture; and
(vii) such other matters as the Trustee may reasonably
request.
12
Such Opinion of Counsel need express no opinion as to whether a court
in the United States would render a money judgment in a currency other than that
of the United States.
The Trustee shall have the right to decline to authenticate and deliver
any Debt Securities under this Section 2.05 if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith by its board of directors or trustees, executive committee or a
trust committee of directors, trustees or vice presidents (or any combination
thereof) shall determine that such action would expose the Trustee to personal
liability to existing Holders.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Partnership to authenticate Debt Securities of any series. Unless limited
by the terms of such appointment, an authenticating agent may authenticate Debt
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, paying agent or agent
for service of notices and demands.
Unless otherwise provided in the form of Debt Security for any series,
each Debt Security shall be dated the date of its authentication.
Section 2.06. Denomination of Debt Securities. Unless otherwise
provided in the form of Debt Security for any series, the Debt Securities of
each series shall be issuable only as fully registered Debt Securities in such
Dollar denominations as shall be specified or contemplated by Section 2.03. In
the absence of any such specification with respect to the Debt Securities of any
series, the Debt Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
Section 2.07. Registration of Transfer and Exchange.
(a) The Partnership shall keep or cause to be kept a register for each
series of Debt Securities issued hereunder (hereinafter collectively referred to
as the "Debt Security Register"), in which, subject to such reasonable
regulations as it may prescribe, the Partnership shall provide for the
registration of all Debt Securities and the transfer of Debt Securities as in
this Article II provided. At all reasonable times the Debt Security Register
shall be open for inspection by the Trustee. Subject to Section 2.15, upon due
presentment for registration of transfer of any Debt Security at any office or
agency to be maintained by the Partnership in accordance with the provisions of
Section 4.02, the Partnership shall execute and the Trustee shall authenticate
and deliver in the name of the transferee or transferees a new Debt Security or
Debt Securities of authorized denominations for a like aggregate principal
amount. In no event may Debt Securities be issued as, exchanged for, bearer
securities.
Unless and until otherwise determined by the Partnership by resolution
of the Board of Directors, the register of the Partnership for the purpose of
registration, exchange or registration of transfer of the Debt Securities shall
be kept at the principal corporate trust office of the Trustee and, for this
purpose, the Trustee shall be designated "Registrar."
Debt Securities of any series (other than a Global Security, except as
set forth below) may be exchanged for a like aggregate principal amount of Debt
Securities of the same series of
13
other authorized denominations. Subject to Section 2.15, Debt Securities to be
exchanged shall be surrendered at the office or agency to be maintained by the
Partnership as provided in Section 4.02, and the Partnership shall execute and
the Trustee shall authenticate and deliver in exchange therefor the Debt
Security or Debt Securities which the Holder making the exchange shall be
entitled to receive.
(b) All Debt Securities presented or surrendered for registration of
transfer, exchange or payment shall (if so required by the Partnership, the
Trustee or the Registrar) be duly endorsed or be accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Partnership,
the Trustee and the Registrar, duly executed by the Holder or his attorney duly
authorized in writing.
All Debt Securities issued in exchange for or upon transfer of Debt
Securities shall be the valid obligations of the Partnership, evidencing the
same debt, and entitled to the same benefits under this Indenture as the Debt
Securities surrendered for such exchange or transfer.
No service charge shall be made for any exchange or registration of
transfer of Debt Securities (except as provided by Section 2.09), but the
Partnership may require payment of a sum sufficient to cover any tax, fee,
assessment or other governmental charge that may be imposed in relation thereto,
other than those expressly provided in this Indenture to be made at the
Partnership's own expense or without expense or without charge to the Holders.
The Partnership shall not be required (i) to issue, register the
transfer of or exchange any Debt Securities for a period of 15 days next
preceding any mailing of notice of redemption of Debt Securities of such series
or (ii) to register the transfer of or exchange any Debt Securities selected,
called or being called for redemption.
Prior to the due presentation for registration of transfer of any Debt
Security, the Partnership, the Trustee, any paying agent or any Registrar may
deem and treat the Person in whose name a Debt Security is registered as the
absolute owner of such Debt Security for the purpose of receiving payment of
principal of, and premium, if any, and interest on, such Debt Security and for
all other purposes whatsoever, whether or not such Debt Security is overdue, and
none of the Partnership, the Subsidiary Guarantors, the Trustee, any paying
agent or Registrar shall be affected by notice to the contrary.
None of the Partnership, the Subsidiary Guarantors, the Trustee, any
agent of the Trustee, any paying agent or any Registrar will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 2.08. Temporary Debt Securities. Pending the preparation of
definitive Debt Securities of any series, the Partnership may execute and the
Trustee shall authenticate and deliver temporary Debt Securities (printed,
lithographed, photocopied, typewritten or otherwise produced) of any authorized
denomination, and substantially in the form of the definitive Debt Securities in
lieu of which they are issued, in registered form with such omissions,
insertions and variations as may be appropriate for temporary Debt Securities,
all as may be determined by the
14
Partnership with the concurrence of the Trustee. Temporary Debt Securities may
contain such reference to any provisions of this Indenture as may be
appropriate. Every temporary Debt Security shall be executed by the Partnership
and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive Debt
Securities.
If temporary Debt Securities of any series are issued, the Partnership
will cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series upon surrender of the temporary Debt
Securities of such series at the office or agency of the Partnership at a Place
of Payment for such series, without charge to the Holder thereof, except as
provided in Section 2.07 in connection with a transfer. Upon surrender for
cancellation of any one or more temporary Debt Securities of any series, the
Partnership shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debt Securities of the
same series of authorized denominations and of like tenor. Until so exchanged,
temporary Debt Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Debt Securities of such series.
Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Debt Securities represented
thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global
Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount to be
exchanged and endorsed.
Section 2.09. Mutilated, Destroyed, Lost or Stolen Debt Securities. If
(a) any mutilated Debt Security is surrendered to the Trustee at its corporate
trust office or (b) the Partnership and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debt Security, and there
is delivered to the Partnership and the Trustee such security or indemnity as
may be required by them to save each of them and any paying agent harmless, and
neither the Partnership nor the Trustee receives notice that such Debt Security
has been acquired by a bona fide purchaser, then the Partnership shall execute
and, upon a Partnership Order, the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Debt
Security, a new Debt Security of the same series of like tenor, form, terms and
principal amount, bearing a number not contemporaneously Outstanding. Upon the
issuance of any substituted Debt Security, the Partnership may require the
payment of a sum sufficient to cover any tax, fee, assessment or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Debt which has matured or is about to
mature or which has been called for redemption shall become mutilated or be
destroyed, lost or stolen, the Partnership may, instead of issuing a substituted
Debt Security, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated Debt Security) if the applicant for
such payment shall furnish the Partnership and the Trustee with such security or
indemnity as either may require to save it harmless from all risk, however
remote, and, in case of destruction, loss or theft, evidence to the satisfaction
of the Partnership and the Trustee of the destruction, loss or theft of such
Debt Security and of the ownership thereof.
15
Every substituted Debt Security of any series issued pursuant to the
provisions of this Section 2.09 by virtue of the fact that any Debt Security is
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Partnership, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Debt
Securities of that series duly issued hereunder. All Debt Securities shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Debt Securities, and shall preclude any and all other rights or
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
Section 2.10. Cancellation of Surrendered Debt Securities. All Debt
Securities surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to the Partnership or any paying agent or a
Registrar, be delivered to the Trustee for cancellation by it, or if surrendered
to the Trustee, shall be canceled by it, and no Debt Securities shall be issued
in lieu thereof except as expressly permitted by any of the provisions of this
Indenture. All canceled Debt Securities held by the Trustee shall be destroyed
(subject to the record retention requirements of the Exchange Act) and
certification of their destruction delivered to the Partnership, unless
otherwise directed. On request of the Partnership, the Trustee shall deliver to
the Partnership canceled Debt Securities held by the Trustee. If the Partnership
shall acquire any of the Debt Securities, however, such acquisition shall not
operate as a redemption or satisfaction of the Debt represented thereby unless
and until the same are delivered or surrendered to the Trustee for cancellation.
The Partnership may not issue new Debt Securities to replace Debt Securities it
has redeemed, paid or delivered to the Trustee for cancellation.
Section 2.11. Provisions of the Indenture and Debt Securities for the
Sole Benefit of the Parties and the Holders. Nothing in this Indenture or in the
Debt, expressed or implied, shall give or be construed to give to any Person,
other than the parties hereto, the Holders or any Registrar or paying agent, any
legal or equitable right, remedy or claim under or in respect of this Indenture,
or under any covenant, condition or provision herein contained; all its
covenants, conditions and provisions being for the sole benefit of the parties
hereto, the Holders and any Registrar and paying agents.
Section 2.12. Payment of Interest; Interest Rights Preserved.
(a) Interest on any Debt Security that is payable and is punctually
paid or duly provided for on any interest payment date shall be paid to the
Person in whose name such Debt Security is registered at the close of business
on the regular record date for such interest notwithstanding the cancellation of
such Debt Security upon any transfer or exchange subsequent to the regular
record date. Payment of interest on Debt Securities shall be made at the
corporate trust office of the Trustee (except as otherwise specified pursuant to
Section 2.03), or at the option of the Partnership, by check mailed to the
address of the Person entitled thereto as such address shall appear in the Debt
Security Register or, if provided pursuant to Section 2.03 and in accordance
with arrangements satisfactory to the Trustee, at the option of the Registered
Holder by wire transfer to an account designated by the Registered Holder.
16
(b) Subject to the foregoing provisions of this Section 2.12 and
Section 2.17, each Debt Security of a particular series delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Debt Security of the same series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debt
Security.
Section 2.13. Securities Denominated in Dollars. Except as otherwise
specified pursuant to Section 2.03 for Debt Securities of any series, payment of
the principal of, and premium, if any, and interest on, Debt Securities of such
series will be made in Dollars.
Section 2.14. Wire Transfers. Notwithstanding any other provision to
the contrary in this Indenture, the Partnership may make any payment of monies
required to be deposited with the Trustee on account of principal of, or
premium, if any, or interest on, the Debt Securities (whether pursuant to
optional or mandatory redemption payments, interest payments or otherwise) by
wire transfer in immediately available funds to an account designated by the
Trustee before 11:00 a.m., New York City time, on the date such moneys are to be
paid to the Holders of the Debt Securities in accordance with the terms hereof.
Section 2.15. Securities Issuable in the Form of a Global Security.
(a) If the Partnership shall establish pursuant to Sections 2.01 and
2.03 that the Debt Securities of a particular series are to be issued in whole
or in part in the form of one or more Global Securities, then the Partnership
shall execute and the Trustee or its agent shall, in accordance with Section
2.05, authenticate and deliver, such Global Security or Securities, which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, the Outstanding Debt Securities of such series to be
represented by such Global Security or Securities, or such portion thereof as
the Partnership shall specify in an Officers' Certificate, shall be registered
in the name of the Depositary for such Global Security or Securities or its
nominee, shall be delivered by the Trustee or its agent to the Depositary or
pursuant to the Depositary's instruction and shall bear a legend substantially
to the following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE PARTNERSHIP OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO HEREIN",
17
or such other legend as may then be required by the Depositary for such Global
Security or Securities.
(b) Notwithstanding any other provision of this Section 2.15 or of
Section 2.07 to the contrary, and subject to the provisions of paragraph (c)
below, unless the terms of a Global Security expressly permit such Global
Security to be exchanged in whole or in part for definitive Debt Securities in
registered form, a Global Security may be transferred, in whole but not in part
and in the manner provided in Section 2.07, only by the Depositary to a nominee
of the Depositary for such Global Security, or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary, or by the Depositary or a
nominee of the Depositary to a successor Depositary or a nominee of such
successor for such Global Security selected or approved by the Partnership, or
to a nominee of such successor Depositary.
(c) (i) If at any time the Depositary for a Global Security or
Securities notifies the Partnership that it is unwilling or unable to
continue as Depositary for such Global Security or Securities or if at
any time the Depositary for the Debt Securities for such series shall
no longer be eligible or in good standing under the Exchange Act or
other applicable statute, rule or regulation, the Partnership shall
appoint a successor Depositary with respect to such Global Security or
Securities. If a successor Depositary for such Global Security or
Securities is not appointed by the Partnership within 90 days after the
Partnership receives such notice or becomes aware of such
ineligibility, the Partnership shall execute, and the Trustee or its
agent, upon receipt of a Partnership Order for the authentication and
delivery of such individual Debt Securities of such series in exchange
for such Global Security, will authenticate and deliver, individual
Debt Securities of such series of like tenor and terms in definitive
form in an aggregate principal amount equal to the principal amount of
the Global Security in exchange for such Global Security or Securities.
(ii) The Partnership may at any time and in its sole discretion
determine that the Debt Securities of any series or portion thereof
issued or issuable in the form of one or more Global Securities shall
no longer be represented by such Global Security or Securities. In such
event the Partnership will execute, and the Trustee, upon receipt of a
Partnership Order for the authentication and delivery of individual
Debt Securities of such series in exchange in whole or in part for such
Global Security, will authenticate and deliver individual Debt
Securities of such series of like tenor and terms in definitive form in
an aggregate principal amount equal to the principal amount of such
series or portion thereof in exchange for such Global Security or
Securities.
(iii) If specified by the Partnership pursuant to Sections 2.01 and
2.03 with respect to Debt Securities issued or issuable in the form of
a Global Security, the Depositary for such Global Security may
surrender such Global Security in exchange in whole or in part for
individual Debt Securities of such series of like tenor and terms in
definitive form on such terms as are acceptable to the Partnership, the
Trustee and such Depositary. Thereupon the Partnership shall execute,
and the Trustee or its agent upon receipt of a
18
Partnership Order for the authentication and delivery of definitive
Debt Securities of such series shall authenticate and deliver, without
service charge, to each Person specified by such Depositary a new Debt
Security or Securities of the same series of like tenor and terms and
of any authorized denomination as requested by such Person in aggregate
principal amount equal to and in exchange for such Person's beneficial
interest in the Global Security; and to such Depositary a new Global
Security of like tenor and terms and in an authorized denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of Debt
Securities delivered to Holders thereof.
(iv) In any exchange provided for in any of the preceding three
paragraphs, the Partnership will execute and the Trustee or its agent
will authenticate and deliver individual Debt Securities. Upon the
exchange of the entire principal amount of a Global Security for
individual Debt Securities, such Global Security shall be canceled by
the Trustee or its agent. Except as provided in the preceding
paragraph, Debt Securities issued in exchange for a Global Security
pursuant to this Section 2.15 shall be registered in such names and in
such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or the Registrar.
The Trustee or the Registrar shall deliver such Debt Securities to the
Persons in whose names such Debt Securities are so registered.
(v) Payments in respect of the principal of and interest on any Debt
Securities registered in the name of the Depositary or its nominee will
be payable to the Depositary or such nominee in its capacity as the
registered owner of such Global Security. The Partnership and the
Trustee may treat the Person in whose name the Debt Securities,
including the Global Security, are registered as the owner thereof for
the purpose of receiving such payments and for any and all other
purposes whatsoever. None of the Partnership, the Trustee, any
Registrar, the paying agent or any agent of the Partnership or the
Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of the beneficial
ownership interests of the Global Security by the Depositary or its
nominee or any of the Depositary's direct or indirect participants, or
for maintaining, supervising or reviewing any records of the
Depositary, its nominee or any of its direct or indirect participants
relating to the beneficial ownership interests of the Global Security,
the payments to the beneficial owners of the Global Security of amounts
paid to the Depositary or its nominee, or any other matter relating to
the actions and practices of the Depositary, its nominee or any of its
direct or indirect participants. None of the Partnership, the Trustee
or any such agent will be liable for any delay by the Depositary, its
nominee, or any of its direct or indirect participants in identifying
the beneficial owners of the Debt Securities, and the Partnership and
the Trustee may conclusively rely on, and will be protected in relying
on, instructions from the Depositary or its nominee for all purposes
(including with respect to the registration and delivery, and the
respective principal amounts, of the Debt Securities to be issued).
Section 2.16. Medium Term Securities. Notwithstanding any contrary
provision herein, if all Debt Securities of a series are not to be originally
issued at one time, it shall not be necessary for the Partnership to deliver to
the Trustee an Officers' Certificate, resolutions of the
19
Board of Directors, supplemental Indenture, Opinion of Counsel or written order
or any other document otherwise required pursuant to Section 2.01, 2.03, 2.05 or
13.05 at or prior to the time of authentication of each Debt Security of such
series if such documents are delivered to the Trustee or its agent at or prior
to the authentication upon original issuance of the first such Debt Security of
such series to be issued; provided, that any subsequent request by the
Partnership to the Trustee to authenticate Debt Securities of such series upon
original issuance shall constitute a representation and warranty by the
Partnership that, as of the date of such request, the statements made in the
Officers' Certificate delivered pursuant to Section 2.05 or 13.05 shall be true
and correct as if made on such date and that the Opinion of Counsel delivered at
or prior to such time of authentication of an original issuance of Debt
Securities shall specifically state that it shall relate to all subsequent
issuances of Debt Securities of such series that are identical to the Debt
Securities issued in the first issuance of Debt Securities of such series.
A Partnership Order delivered by the Partnership to the Trustee in the
circumstances set forth in the preceding paragraph, may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the telephonic
or written order of Persons designated in such written order (any such
telephonic instructions to be promptly confirmed in writing by such Person) and
that such Persons are authorized to determine, consistent with the Officers'
Certificate, supplemental Indenture or resolution of the Board of Directors
relating to such written order, such terms and conditions of such Debt
Securities as are specified in such Officers' Certificate, supplemental
Indenture or such resolution.
Section 2.17. Defaulted Interest. Any interest on any Debt Security of
a particular series which is payable, but is not punctually paid or duly
provided for, on the dates and in the manner provided in the Debt Securities of
such series and in this Indenture (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Registered Holder thereof on the relevant
record date by virtue of having been such Registered Holder, and such Defaulted
Interest may be paid by the Partnership, at its election in each case, as
provided in clause (i) or (ii) below:
(i) The Partnership may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series are registered at the close of business on a special record
date for the payment of such Defaulted Interest, which shall be fixed
in the following manner. The Partnership shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
such Registered Security of such series and the date of the proposed
payment, and at the same time the Partnership shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Partnership of such special record date and, in the name and at the
expense of the Partnership, shall cause notice of the proposed
20
payment of such Defaulted Interest and the special record date therefor
to be mailed, first class postage pre-paid, to each Holder thereof at
its address as it appears in the Security Register, not less than 10
days prior to such special record date. Notice of the proposed payment
of such Defaulted Interest and the special record date therefor having
been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Registered Securities of such series are registered at
the close of business on such special record date.
(ii) The Partnership may make payment of any Defaulted
Interest on the Debt Securities of such series in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Debt Securities of such series may be listed, and
upon such notice as may be required by such exchange, if, after notice
given by the Partnership to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.18. CUSIP Numbers. The Partnership in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
accuracy of such numbers either as printed on the Securities or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Partnership
will promptly notify the Trustee in writing of any change in the "CUSIP"
numbers.
ARTICLE III
REDEMPTION OF DEBT SECURITIES
Section 3.01. Applicability of Article. The provisions of this Article
shall be applicable to the Debt Securities of any series which are redeemable
before their Stated Maturity except as otherwise specified as contemplated by
Section 2.03 for Debt Securities of such series.
Section 3.02. Notice of Redemption; Selection of Debt Securities. In
case the Partnership shall desire to exercise the right to redeem all or, as the
case may be, any part of the Debt Securities of any series in accordance with
their terms, by resolution of the Board of Directors or a supplemental
Indenture, the Partnership shall fix a date for redemption and shall give notice
of such redemption at least 30 and not more than 60 days prior to the date fixed
for redemption to the Holders of Debt Securities of such series so to be
redeemed as a whole or in part, in the manner provided in Section 13.03. The
notice if given in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the Holder receives such notice. In any
case, failure to give such notice or any defect in the notice to the Holder of
any Debt Security of a series designated for redemption as a whole or in part
shall not affect the validity of the proceedings for the redemption of any other
Debt Security of such series.
Each such notice of redemption shall specify the date fixed for
redemption, the redemption price at which Debt Securities of such series are to
be redeemed, the Place or Places of Payment that payment will be made upon
presentation and surrender of such Debt Securities, that any interest accrued to
the date fixed for redemption will be paid as specified in said notice,
21
that the redemption is for a sinking fund payment (if applicable), that, unless
otherwise specified in such notice, that, if the Partnership defaults in making
such redemption payment or if the Debt Securities of that series are
subordinated pursuant to the terms of Article XII, the paying agent is
prohibited from making such payment pursuant to the terms of this Indenture,
that on and after said date any interest thereon or on the portions thereof to
be redeemed will cease to accrue, that in the case of Original Issue Discount
Securities original issue discount accrued after the date fixed for redemption
will cease to accrue, the terms of the Debt Securities of that series pursuant
to which the Debt Securities of that series are being redeemed and that no
representation is made as to the correctness or accuracy of the CUSIP number, if
any, listed in such notice or printed on the Debt Securities of that series. If
less than all the Debt Securities of a series are to be redeemed the notice of
redemption shall specify the CUSIP numbers of the Debt Securities of that series
to be redeemed. In case any Debt Security of a series is to be redeemed in part
only, the notice of redemption shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Debt Security, a new Debt Security or Debt
Securities of that series in principal amount equal to the unredeemed portion
thereof, will be issued.
At least 45 days but not more than 60 days before the redemption date
unless the Trustee consents to a shorter period, the Partnership shall give
written notice to the Trustee of the redemption date, the principal amount of
Debt Securities to be redeemed and the series and terms of the Debt Securities
pursuant to which such redemption will occur. Such notice shall be accompanied
by an Officers' Certificate and an Opinion of Counsel from the Partnership to
the effect that such redemption will comply with the conditions herein. If fewer
than all the Debt Securities of a series are to be redeemed, the record date
relating to such redemption shall be selected by the Partnership and given in
writing to the Trustee, which record date shall be not less than 15 days after
the date of notice to the Trustee.
By 11 a.m., New York City time, on the redemption date for any Debt
Securities, the Partnership shall deposit with the Trustee or with a paying
agent (or, if the Partnership is acting as its own paying agent, segregate and
hold in trust) an amount of money in Dollars (except as provided pursuant to
Section 2.03) sufficient to pay the redemption price of such Debt Securities or
any portions thereof that are to be redeemed on that date.
If less than all the Debt Securities of like tenor and terms of a
series are to be redeemed (other than pursuant to mandatory sinking fund
redemptions) the Trustee shall select, on a pro rata basis, by lot or by such
other method as in its sole discretion it shall deem appropriate and fair, the
Debt Securities of that series or portions thereof (in multiples of $1,000) to
be redeemed. In any case where more than one Debt Security of such series is
registered in the same name, the Trustee in its discretion may treat the
aggregate principal amount so registered as if it were represented by one Debt
Security of such series. The Trustee shall promptly notify the Partnership in
writing of the Debt Securities selected for redemption and, in the case of any
Debt Securities selected for partial redemption, the principal amount thereof to
be redeemed. If any Debt Security called for redemption shall not be so paid
upon surrender thereof on such redemption date, the principal, premium, if any,
and interest shall bear interest until paid from the redemption date at the rate
borne by the Debt Securities of that series. If less than all the Debt
Securities of unlike tenor and terms of a series are to be redeemed, the
particular Debt Securities to be redeemed shall be selected by the Partnership.
Provisions of this Indenture that
22
apply to Debt Securities called for redemption also apply to portions of Debt
Securities called for redemption.
Section 3.03. Payment of Debt Securities Called for Redemption. If
notice of redemption has been given as provided in Section 3.03, the Debt
Securities or portions of Debt Securities of the series with respect to which
such notice has been given shall become due and payable on the date and at the
Place or Places of Payment stated in such notice at the applicable redemption
price, together with any interest accrued to the date fixed for redemption, and
on and after said date (unless the Partnership shall default in the payment of
such Debt Securities at the applicable redemption price, together with any
interest accrued to said date) any interest on the Debt Securities or portions
of Debt Securities of any series so called for redemption shall cease to accrue,
any original issue discount in the case of Original Issue Discount Securities
shall cease to accrue. On presentation and surrender of such Debt Securities at
the Place or Places of Payment in said notice specified, the said Debt
Securities or the specified portions thereof shall be paid and redeemed by the
Partnership at the applicable redemption price, together with any interest
accrued thereon to the date fixed for redemption.
Any Debt Security that is to be redeemed only in part shall be
surrendered at the corporate trust office or such other office or agency of the
Partnership as is specified pursuant to Section 2.03 with, if the Partnership,
the Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Partnership, the Registrar
and the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing, and the Partnership shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Debt Security without service
charge, a new Debt Security or Debt Securities of the same series, of like tenor
and form, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Debt Security so surrendered; except that if a Global
Security is so surrendered, the Partnership shall execute, and the Trustee shall
authenticate and deliver to the Depositary for such Global Security, without
service charge, a new Global Security in a denomination equal to and in exchange
for the unredeemed portion of the principal of the Global Security so
surrendered. In the case of a Debt Security providing appropriate space for such
notation, at the option of the Holder thereof, the Trustee, in lieu of
delivering a new Debt Security or Debt Securities as aforesaid, may make a
notation on such Debt Security of the payment of the redeemed portion thereof.
Section 3.04. Mandatory and Optional Sinking Funds. The minimum amount
of any sinking fund payment provided for by the terms of Debt Securities of any
series, resolution of the Board of Directors or a supplemental Indenture is
herein referred to as a "mandatory sinking fund payment", and any payment in
excess of such minimum amount provided for by the terms of Debt Securities of
any series, resolution of the Board of Directors or a supplemental Indenture is
herein referred to as an "optional sinking fund payment."
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Partnership may at
its option (a) deliver to the Trustee Debt Securities of that series theretofore
purchased or otherwise acquired by the Partnership or (b) receive credit for the
principal amount of Debt Securities of that series which have been redeemed
either at the election of the Partnership pursuant to the terms of such Debt
Securities or
23
through the application of permitted optional sinking fund payments pursuant to
the terms of such Debt Securities, resolution or supplemental Indenture;
provided, that such Debt Securities have not been previously so credited. Such
Debt Securities shall be received and credited for such purpose by the Trustee
at the redemption price specified in such Debt Securities, resolution or
supplemental Indenture for redemption through operation of the sinking fund and
the amount of such mandatory sinking fund payment shall be reduced accordingly.
Section 3.05. Redemption of Debt Securities for Sinking Fund. Not less
than 60 days prior to each sinking fund payment date for any series of Debt
Securities, the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, any resolution or supplemental Indenture,
the portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Debt Securities of that series pursuant to this Section 3.05 (which Debt
Securities, if not previously redeemed, will accompany such certificate) and
whether the Partnership intends to exercise its right to make any permitted
optional sinking fund payment with respect to such series. Such certificate
shall also state that no Event of Default has occurred and is continuing with
respect to such series. Such certificate shall be irrevocable and upon its
delivery the Partnership shall be obligated to make the cash payment or payments
therein referred to, if any, by 11 a.m., New York City time, on the next
succeeding sinking fund payment date. Failure of the Partnership to deliver such
certificate (or to deliver the Debt Securities specified in this paragraph)
shall not constitute a Default, but such failure shall require that the sinking
fund payment due on the next succeeding sinking fund payment date for that
series shall be paid entirely in cash and shall be sufficient to redeem the
principal amount of such Debt Securities subject to a mandatory sinking fund
payment without the option to deliver or credit Debt Securities as provided in
this Section 3.05 and without the right to make any optional sinking fund
payment, if any, with respect to such series.
Any sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made in cash
which shall equal or exceed $100,000 (or a lesser sum if the Partnership shall
so request) with respect to the Debt Securities of any particular series shall
be applied by the Trustee on the sinking fund payment date on which such payment
is made (or, if such payment is made before a sinking fund payment date, on the
sinking fund payment date following the date of such payment) to the redemption
of such Debt Securities at the Redemption Price specified in such Debt
Securities, resolution or supplemental Indenture for operation of the sinking
fund together with any accrued interest to the date fixed for redemption. Any
sinking fund moneys not so applied or allocated by the Trustee to the redemption
of Debt Securities shall be added to the next cash sinking fund payment received
by the Trustee for such series and, together with such payment, shall be applied
in accordance with the provisions of this Section 3.05. Any and all sinking fund
moneys with respect to the Debt Securities of any particular series held by the
Trustee on the last sinking fund payment date with respect to Debt Securities of
such series and not held for the payment or redemption of particular Debt
Securities shall be applied by the Trustee, together with other moneys, if
necessary, to be deposited sufficient for the purpose, to the payment of the
principal of the Debt Securities of that series at its Stated Maturity.
24
The Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in the last paragraph of
Section 3.02 and the Partnership shall cause notice of the redemption thereof to
be given in the manner provided in Section 3.02 except that the notice of
redemption shall also state that the Debt Securities are being redeemed by
operation of the sinking fund. Such notice having been duly given, the
redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 3.03.
At least one business day before each sinking fund payment date, the
Partnership shall pay to the Trustee (or, if the Partnership is acting as its
own paying agent, the Partnership shall segregate and hold in trust) in cash a
sum equal to any interest accrued to the date fixed for redemption of Debt
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section 3.05.
The Trustee shall not redeem any Debt Securities of a series with
sinking fund moneys or mail any notice of redemption of such Debt Securities by
operation of the sinking fund for such series during the continuance of a
Default in payment of interest on such Debt Securities or of any Event of
Default (other than an Event of Default occurring as a consequence of this
paragraph) with respect to such Debt Securities, except that if the notice of
redemption of any such Debt Securities shall theretofore have been mailed in
accordance with the provisions hereof, the Trustee shall redeem such Debt
Securities if cash sufficient for that purpose shall be deposited with the
Trustee for that purpose in accordance with the terms of this Article III.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such Default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such Default or
Event of Default, be held as security for the payment of such Debt Securities;
provided, however, that in case such Event of Default or Default shall have been
cured or waived as provided herein, such moneys shall thereafter be applied on
the next sinking fund payment date for such Debt Securities on which such moneys
may be applied pursuant to the provisions of this Section 3.05.
ARTICLE IV
PARTICULAR COVENANTS OF THE PARTNERSHIP
Section 4.01. Payment of Principal of, and Premium, If Any, and
Interest on, Debt Securities. The Partnership, for the benefit of each series of
Debt Securities, will duly and punctually pay or cause to be paid the principal
of, and premium, if any, and interest on, each of the Debt Securities at the
place, at the respective times and in the manner provided herein, in the Debt
Securities. Each installment of interest on the Debt Securities may at the
Partnership's option be paid by mailing checks for such interest payable to the
Person entitled thereto pursuant to Section 2.07(a) to the address of such
Person as it appears on the Debt Security Register.
Principal, premium and interest of Debt Securities of any series shall
be considered paid on the date due if, by 11 a.m., New York City time, on such
date the Trustee or any paying agent holds in accordance with this Indenture
money sufficient to pay in Dollars all principal, premium and interest then due
and, in the case of Debt Securities subordinated pursuant to the terms of
Article XII, the Trustee or such paying agent, as the case may be, is not
prohibited from paying such money to the Holders on that date pursuant to the
terms of this Indenture.
25
The Partnership shall pay interest on overdue principal at the rate
specified therefor in the Debt Securities and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Section 4.02. Maintenance of Offices or Agencies for Registration of
Transfer, Exchange and Payment of Debt Securities. The Partnership will maintain
in each Place of Payment for any series of Debt Securities an office or agency
where Debt Securities of such series may be presented or surrendered for
payment, where Debt Securities of such series may be surrendered for transfer or
exchange and where notices and demands to or upon the Partnership in respect of
the Debt Securities of such series and this Indenture may be served. The
Partnership will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Partnership shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the corporate trust
office of the Trustee, and the Partnership hereby appoints the Trustee as its
agent to receive all presentations, surrenders, notices and demands.
The Partnership may also from time to time designate different or
additional offices or agencies to be maintained for such purposes (in or outside
of such Place of Payment), and may from time to time rescind any such
designation; provided, however, that no such designation or rescission shall in
any manner relieve the Partnership of its obligations described in the preceding
paragraph. The Partnership will give prompt written notice to the Trustee of any
such additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.
Section 4.03. Appointment to Fill a Vacancy in the Office of Trustee.
The Partnership, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so
that there shall at all times be a Trustee hereunder with respect to each series
of Debt Securities.
Section 4.04. Duties of Paying Agents, etc. The Partnership shall cause
each paying agent, if any, other than the Trustee, to execute and deliver to the
Trustee an instrument in which such agent shall agree with the Trustee, subject
to the provisions of this Section 4.04,
(i) that it will hold all sums held by it as such agent for
the payment of the principal of, and premium, if any, or interest on,
the Debt Securities of any series (whether such sums have been paid to
it by the Partnership or by any other obligor on the Debt Securities of
such series) in trust for the benefit of the Holders of the Debt
Securities of such series;
(ii) that it will give the Trustee notice of any failure by
the Partnership (or by any other obligor on the Debt Securities of such
series) to make any payment of the principal of, and premium, if any,
or interest on, the Debt Securities of such series when the same shall
be due and payable; and
26
(iii) that it will at any time during the continuance of an
Event of Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held by it as such agent.
(b) If the Partnership shall act as its own paying agent, it will, on
or before each due date of the principal of, and premium, if any, or interest
on, the Debt Securities of any series, set aside, segregate and hold in trust
for the benefit of the Holders of the Debt Securities of such series a sum
sufficient to pay such principal, premium, if any, or interest so becoming due.
The Partnership will promptly notify the Trustee of any failure by the
Partnership to take such action or the failure by any other obligor on such Debt
Securities to make any payment of the principal of, and premium, if any, or
interest on, such Debt Securities when the same shall be due and payable.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the
Partnership may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent, as required by
this Section 4.04, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Partnership or such paying agent.
(d) Whenever the Partnership shall have one or more paying agents with
respect to any series of Debt Securities, it will, prior to each due date of the
principal of, and premium, if any, or interest on, any Debt Securities of such
series, deposit with any such paying agent a sum sufficient to pay the
principal, premium or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled thereto, and (unless any such paying agent
is the Trustee) the Partnership will promptly notify the Trustee of its action
or failure so to act.
(e) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 11.05.
Section 4.05. SEC Reports; Financial Statements.
(a) The Partnership shall, so long as any of the Debt Securities are
outstanding, file with the Trustee, within 15 days after it files the same with
the SEC, copies of the annual reports and the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) that the Partnership is required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the Partnership
is not subject to the requirements of such Section 13 or 15(d), the Partnership
shall file with the Trustee, within 15 days after it would have been required to
file the same with the SEC, financial statements, including any notes thereto
(and with respect to annual reports, an auditors' report by a firm of
established national reputation), and a "Management's Discussion and Analysis of
Financial Condition and Results of Operations," both comparable to that which
the Partnership would have been required to include in such annual reports,
information, documents or other reports if the Partnership had been subject to
the requirements of such Section 13 or 15(d). The Partnership shall also comply
with the provisions of TIA Section 314(a).
(b) If the Partnership is required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Partnership shall,
so long as any of the Debt
27
Securities are outstanding, cause any annual report furnished to its
stockholders generally and any quarterly or other financial reports furnished by
it to its stockholders generally to be filed with the Trustee and mailed to the
Holders in the manner and to the extent provided in Section 5.03.
(c) The Partnership shall provide the Trustee with a sufficient number
of copies of all reports and other documents and information that the Trustee
may be required to deliver to Holders under this Section.
Section 4.06. Compliance Certificate.
(a) The Partnership shall, so long as any of the Debt Securities are
outstanding, deliver to the Trustee, within 120 days after the end of each
fiscal year of the Partnership, an Officers' Certificate stating that a review
of the activities of the Partnership and its Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers of the
Partnership with a view to determining whether the Partnership has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his knowledge the Partnership has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof, without regard to any grace period or requirement of notice
required by this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which such
Officer may have knowledge and what action the Partnership, is taking or
proposes to take with respect thereto) and that to the best of his knowledge no
event has occurred and remains in existence by reason of which payments on
account of the principal of, or premium, if any, or interest, if any, on the
Debt Securities are prohibited or, if such event has occurred, a description of
the event and what action the Partnership is taking or proposes to take with
respect thereto.
(b) The Partnership shall, so long as any of the Debt Securities are
outstanding, deliver to the Trustee within 30 days after the occurrence of any
Default or Event of Default under this Indenture, an Officers' Certificate
specifying such Default or Event of Default, the status thereof and what action
the Partnership is taking or proposes to take with respect thereto.
Section 4.07. Further Instruments and Acts. The Partnership will, upon
request of the Trustee, execute and deliver such further instruments and do such
further acts as may reasonably be necessary or proper to carry out more
effectually the purposes of this Indenture.
Section 4.08. Existence. The Partnership shall do or cause to be done
all things necessary to preserve and keep in full force and effect its
partnership existence and the partnership and other existence of each of its
Subsidiaries and all rights (charter and statutory) and franchises of the
Partnership and its Subsidiaries, provided that the Partnership shall not be
required to preserve its existence as a limited partnership, or the partnership
existence of any Subsidiary of the Partnership or any such right or franchise,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Partnership and the
Subsidiaries and that the loss thereof would not have a material adverse effect
on the business, prospects, assets or financial condition of the Partnership and
its
28
Subsidiaries taken as a whole and would not have any material adverse effect on
the payment and performance of the obligations of the Partnership under the Debt
Securities and this Indenture.
Section 4.09. Maintenance of Properties. The Partnership shall cause
all properties owned by the Partnership or any of its Subsidiaries or used or
held for use in the conduct of its business or the business of any such
Subsidiary to be maintained and kept in good condition, repair and working order
(reasonable wear and tear excepted) and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Partnership
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided that nothing in
this Section shall prevent the Partnership from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Partnership, desirable in the conduct of its business or the business of
any such Subsidiary and not disadvantageous in any material respect to the
Holders.
Section 4.10. Payment of Taxes and Other Claims. The Partnership shall
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Partnership or any of its Subsidiaries or upon the income,
profits or property of the Partnership or any of its Subsidiaries, and (ii) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon the property of the Partnership or any of its Subsidiaries;
provided that the Partnership shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
ARTICLE V
HOLDERS' LISTS AND REPORTS BY THE TRUSTEE
Section 5.01. Partnership to Furnish Trustee Information as to Names
and Addresses of Holders; Preservation of Information. The Partnership covenants
and agrees that it will furnish or cause to be furnished to the Trustee with
respect to the Debt Securities of each series:
(a) not more than 10 days after each record date with respect to the
payment of interest, if any, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such record date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Partnership of any such request, a list of
similar form and contents as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that so long as the Trustee shall be the Registrar, such
lists shall not be required to be furnished.
The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders (i)
contained in the most recent list furnished to it as provided in this Section
5.01 or (ii) received by it in the capacity of paying agent or Registrar (if so
acting) hereunder.
29
The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.
Section 5.02. Communications to Holders. Holders may communicate
pursuant to Section 312(b) of the TIA with other Holders with respect to their
rights under this Indenture or the Debt Securities. The Partnership, the
Trustee, the Registrar and anyone else shall have the protection of Section
312(c) of the TIA.
Section 5.03. Reports by Trustee. Within 60 days after each January 31,
beginning with the first January 31 following the date of this Indenture, and in
any event on or before April 1 in each year, the Trustee shall mail to Holders a
brief report dated as of such January 31 that complies with TIA Section 313 (a);
provided, however, that if no event described in TIA Section 313 (a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted. The Trustee also shall comply with TIA Section 313 (b).
Reports pursuant to this Section 5.03 shall be transmitted by mail:
(a) to all Holders, as the names and addresses of such Holders appear
in the Debt Security Register; and
(b) except in the cases of reports under Section 313(b)(2) of the TIA,
to each Holder of a Debt Security of any series whose name and address appear in
the information preserved at the time by the Trustee in accordance with Section
5.01.
A copy of each report at the time of its mailing to Holders shall be
filed with the Securities and Exchange Commission and each stock exchange (if
any) on which the Debt Securities of any series are listed. The Partnership
agrees to notify promptly the Trustee whenever the Debt Securities of any series
become listed on any stock exchange and of any delisting thereof.
Section 5.04. Record Dates for Action by Holders. If the Partnership
shall solicit from the holders of Debt Securities of any series any action
(including the making of any demand or request, the giving of any direction,
notice, consent or waiver or the taking of any other action), the Partnership
may, at its option, by resolution of the Board of Directors, fix in advance a
record date for the determination of Holders of Debt Securities entitled to take
such action, but the Partnership shall have no obligation to do so. Any such
record date shall be fixed at the Partnership's discretion. If such a record
date is fixed, such action may be sought or given before or after the record
date, but only the Holders of Debt Securities of record at the close of business
on such record date shall be deemed to be Holders of Debt Securities for the
purpose of determining whether Holders of the requisite proportion of Debt
Securities of such series Outstanding have authorized or agreed or consented to
such action, and for that purpose the Debt Securities of such series Outstanding
shall be computed as of such record date.
30
ARTICLE VI
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT
Section 6.01. Events of Default. If any one or more of the following
shall have occurred and be continuing with respect to Debt Securities of any
series (each of the following, an "Event of Default"):
(a) default in the payment of any installment of interest upon any Debt
Securities of that series as and when the same shall become due and payable,
whether or not such payment shall be prohibited by Article XII, if applicable,
and continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of or premium, if any, on
any Debt Securities of that series as and when the same shall become due and
payable, whether at maturity, upon redemption, by declaration, upon required
repurchase or otherwise, whether or not such payment shall be prohibited by
Article XII, if applicable; or
(c) default in the payment of any sinking fund payment with respect to
any Debt Securities of that series as and when the same shall become due and
payable; or
(d) failure on the part of the Partnership, or if any series of Debt
Securities Outstanding under this Indenture is entitled to the benefits of a
Guarantee, any of the Subsidiary Guarantors, duly to observe or perform any
other of the covenants or agreements on the part of the Partnership, or if
applicable, any of the Subsidiary Guarantors, in the Debt Securities of that
series, in any resolution of the Board of Directors authorizing the issuance of
that series of Debt Securities, in this Indenture with respect to such series or
in any supplemental Indenture with respect to such series (other than a covenant
a default in the performance of which is elsewhere in this Section specifically
dealt with), continuing for a period of 60 days after the date on which written
notice specifying such failure and requiring the Partnership, or if applicable,
the Subsidiary Guarantor, to remedy the same shall have been given, by
registered or certified mail, to the Partnership, or if applicable, the
Subsidiary Guarantor, by the Trustee or to the Partnership, or if applicable,
the Subsidiary Guarantor, and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Debt Securities of that series at the time
Outstanding; or
(e) the Partnership, or if any series of Debt Securities Outstanding
under this Indenture is entitled to the benefits of a Guarantee, any of the
Subsidiary Guarantors, pursuant to or within the meaning of any Bankruptcy Law,
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property; or
(iv) makes a general assignment for the benefit of its
creditors;
31
(f) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Partnership, or if any series of
Debt Securities Outstanding under this Indenture is entitled to the
benefits of a Guarantee, any of the Subsidiary Guarantors, as debtor in
an involuntary case,
(ii) appoints a Custodian of the Partnership, or if any series
of Debt Securities Outstanding under this Indenture is entitled to the
benefits of a Guarantee, any of the Subsidiary Guarantors, or a
Custodian for all or substantially all of the property of the
Partnership, or if applicable, any of the Subsidiary Guarantors, or
(iii) orders the liquidation of the Partnership, or if any
series of Debt Securities Outstanding under this Indenture is entitled
to the benefits of a Guarantee, any of the Subsidiary Guarantors,
and the order or decree remains unstayed and in effect for 60 days;
(g) if any series of Debt Securities Outstanding under this Indenture
is entitled to the benefits of a Guarantee, the Guarantee of any of the
Subsidiary Guarantors ceases to be in full force and effect with respect to Debt
Securities of that series or is declared null and void in a judicial proceeding
or the Subsidiary Guarantors deny or disaffirm their obligations under the
Indenture or such Guarantee; or
(h) any other Event of Default provided with respect to Debt Securities
of that series;
then and in each and every case that an Event of Default described in clause
(a), (b), (c), (d), (g), or (h) with respect to Debt Securities of that series
at the time Outstanding occurs and is continuing, unless the principal of and
interest on all the Debt Securities of that series shall have already become due
and payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Debt Securities of that series then Outstanding
hereunder, by notice in writing to the Partnership (and to the Trustee if given
by Holders), may declare the principal of (or, if the Debt Securities of that
series are Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of that series) and interest
on all the Debt Securities of that series to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due and
payable, anything in this Indenture or in the Debt Securities of that series
contained to the contrary notwithstanding. If an Event of Default described in
clause (e) or (f) occurs, then and in each and every such case, unless the
principal of and interest on all the Debt Securities shall have become due and
payable, the principal of (or, if any Debt Securities are Original Issue
Discount Debt Securities, such portion of the principal amount as may be
specified in the terms thereto) and interest on all the Debt Securities then
Outstanding hereunder shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders,
anything in this Indenture or in the Debt Securities contained to the contrary
notwithstanding.
The Holders of a majority in aggregate principal amount of the Debt
Securities of a particular series by written notice to the Trustee may waive all
past Defaults (except with respect to the nonpayment of principal, premium or
interest) and rescind an acceleration and its
32
consequences if the rescission would not conflict with any judgment or decree
already rendered and if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
acceleration. Upon any such rescission, the parties hereto shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the parties hereto shall continue as though no such
proceeding had been taken.
Section 6.02. Collection of Debt by Trustee, etc. If an Event of
Default occurs and is continuing, the Trustee, in its own name and as trustee of
an express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and unpaid
or enforce the performance of any provision of the Debt Securities of the
affected series or this Indenture, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Subsidiary Guarantors or the Partnership or any other
obligor upon the Debt Securities of such series (and collect in the manner
provided by law out of the property of the Subsidiary Guarantors or the
Partnership or any other obligor upon the Debt Securities of such series
wherever situated the moneys adjudged or decreed to be payable).
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Subsidiary Guarantors or the Partnership or any other
obligor upon the Debt Securities of any series under Title 11 of the United
States Code or any other Federal or State bankruptcy, insolvency or similar law,
or in case a receiver, trustee or other similar official shall have been
appointed for its property, or in case of any other similar judicial proceedings
relative to the Subsidiary Guarantors or the Partnership or any other obligor
upon the Debt Securities of any series, its creditors or its property, the
Trustee, irrespective of whether the principal of Debt Securities of any series
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 6.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
(or, if the Debt Securities of such series are Original Issue Discount Debt
Securities, such portion of the principal amount as may be specified in the
terms of such series) owing and unpaid in respect of the Debt Securities of such
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all advances
made, by the Trustee except as a result of its negligence or bad faith) and of
the Holders thereof allowed in any such judicial proceedings relative to the
Subsidiary Guarantors or the Partnership, or any other obligor upon the Debt
Securities of such series, its creditors or its property, and to collect and
receive any moneys or other property payable or deliverable on any such claims,
and to distribute all amounts received with respect to the claims of such
Holders and of the Trustee on their behalf, and any receiver, assignee or
trustee in bankruptcy or reorganization is hereby authorized by each of such
Holders to make payments to the Trustee, and, in the event that the Trustee
shall consent to the making of payments directly to such Holders, to pay to the
Trustee such amount as shall be sufficient to cover reasonable compensation to
the Trustee, its agents, attorneys and counsel, and all other reasonable
expenses and liabilities incurred, and all advances made, by the Trustee except
as a result of its negligence or bad faith.
33
All rights of action and of asserting claims under this Indenture, or
under any of the Debt Securities of any series, may be enforced by the Trustee
without the possession of any such Debt Securities, or the production thereof in
any trial or other proceedings relative thereto, and any such action or
proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment (except for any
amounts payable to the Trustee pursuant to Section 7.06) shall be for the
ratable benefit of the Holders of all the Debt Securities in respect of which
such action was taken.
In case of an Event of Default hereunder the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Section 6.03. Application of Moneys Collected by Trustee. Any moneys or
other property collected by the Trustee pursuant to Section 6.02 with respect to
Debt Securities of any series shall be applied, after giving effect to the
provisions of Article XII, if applicable, in the order following, at the date or
dates fixed by the Trustee for the distribution of such moneys or other
property, upon presentation of the several Debt Securities of such series in
respect of which moneys or other property have been collected, and the notation
thereon of the payment, if only partially paid, and upon surrender thereof if
fully paid:
FIRST: To the payment of all money due the Trustee pursuant to Section
7.06;
SECOND: In case the principal of the Outstanding Debt Securities in
respect of which such moneys have been collected shall not have become due, to
the payment of interest on the Debt Securities of such series in the order of
the maturity of the installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee) upon the overdue
installments of interest at the rate or Yield to Maturity (in the case of
Original Issue Discount Debt Securities) borne by the Debt Securities of such
series, such payments to be made ratably to the Persons entitled thereto,
without discrimination or preference;
THIRD: In case the principal of the Outstanding Debt Securities in
respect of which such moneys have been collected shall have become due, by
declaration or otherwise, to the payment of the whole amount then owing and
unpaid upon the Debt Securities of such series for principal and premium, if
any, and interest, with interest on the overdue principal and premium, if any,
and (to the extent that such interest has been collected by the Trustee) upon
overdue installments of interest at the rate or Yield to Maturity (in the case
of Original Issue Discount Debt Securities) borne by the Debt Securities of such
series; and, in case such moneys shall be insufficient to pay in full the whole
amount so due and unpaid upon the Debt Securities of such series, then to the
payment of such principal and premium, if any, and interest, without preference
or priority of principal and premium, if any, over interest, or of interest over
principal and premium, if any, or of any installment of interest over any other
installment of interest, or of any Debt Security of such series over any Debt
Security of such series, ratably to the aggregate of such principal and premium,
if any, and interest; and
34
FOURTH: The remainder, if any, shall be paid to the Subsidiary
Guarantors or the Partnership, as applicable, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.03. At least 15 days before such record date,
the Partnership shall mail to each Holder and the Trustee a notice that states
the record date, the payment date and amount to be paid.
Section 6.04. Limitation on Suits by Holders. No Holder of any Debt
Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise, upon or under or with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such Holder previously shall have given to the Trustee
written notice of an Event of Default with respect to Debt Securities of that
same series and of the continuance thereof and unless the Holders of not less
than 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request upon the Trustee to institute such
action or proceedings in respect of such Event of Default in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action or proceedings and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 6.06; it being
understood and intended, and being expressly covenanted by the Holder of every
Debt Security with every other Holder and the Trustee, that no one or more
Holders shall have any right in any manner whatever by virtue or by availing of
any provision of this Indenture to affect, disturb or prejudice the rights of
any Holders, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all such
Holders. For the protection and enforcement of the provisions of this Section
6.04, each and every Holder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Notwithstanding any other provision in this Indenture, however, the
right of any Holder of any Debt Security to receive payment of the principal of,
and premium, if any, and (subject to Section 2.12) interest on, such Debt
Security, on or after the respective due dates expressed in such Debt Security,
and to institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.05. Remedies Cumulative; Delay or Omission in Exercise of
Rights Not a Waiver of Default. All powers and remedies given by this Article VI
to the Trustee or to the Holders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the Holders, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any Holder to exercise any right or power accruing upon any Default
occurring and continuing as aforesaid, shall impair any such right or power, or
shall be construed to be a waiver of any such Default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
35
given by this Article VI or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders.
Section 6.06. Rights of Holders of Majority in Principal Amount of Debt
Securities to Direct Trustee and to Waive Default. The Holders of a majority in
aggregate principal amount of the Debt Securities of any series at the time
Outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of such series; provided, however, that such direction shall not be otherwise
than in accordance with law and the provisions of this Indenture, and that
subject to the provisions of Section 7.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee being advised by counsel
shall determine that the action so directed may not lawfully be taken, or if the
Trustee shall by a responsible officer or officers determine that the action so
directed would involve it in personal liability or would be unjustly prejudicial
to Holders of Debt Securities of such series not taking part in such direction;
and provided, further, however, that nothing in this Indenture contained shall
impair the right of the Trustee to take any action deemed proper by the Trustee
and which is not inconsistent with such direction by such Holders. Prior to the
acceleration of the maturity of the Debt Securities of any series, as provided
in Section 6.01, the Holders of a majority in aggregate principal amount of the
Debt Securities of that series at the time Outstanding may on behalf of the
Holders of all the Debt Securities of that series waive any past Default or
Event of Default and its consequences for that series specified in the terms
thereof as contemplated by Section 2.03, except a Default in the payment of the
principal of, and premium, if any, or interest on, any of the Debt Securities
and a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Holder affected thereby. In case of any such
waiver, such Default shall cease to exist, any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture, and the Subsidiary Guarantors, the Partnership, the Trustee and the
Holders of the Debt Securities of that series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereon.
Section 6.07. Trustee to Give Notice of Defaults Known to It, but May
Withhold Such Notice in Certain Circumstances. The Trustee shall, within 90 days
after the occurrence of a Default known to it, or if later, within 30 days after
the Trustee obtains actual knowledge of the Default, with respect to a series of
Debt Securities give to the Holders thereof, in the manner provided in Section
13.03, notice of all Defaults with respect to such series known to the Trustee,
unless such Defaults shall have been cured or waived before the giving of such
notice; provided, that, except in the case of Default in the payment of the
principal of, or premium, if any, or interest on, any of the Debt Securities of
such series or in the making of any sinking fund payment with respect to the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a committee of directors or responsible officers of the Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
thereof.
Section 6.08. Requirement of an Undertaking To Pay Costs in Certain
Suits under the Indenture or Against the Trustee. All parties to this Indenture
agree, and each Holder of any Debt Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or
36
in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit in the manner and to the extent provided in the TIA, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 6.08 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 25 percent in
principal amount of the Outstanding Debt Securities of that series or to any
suit instituted by any Holder for the enforcement of the payment of the
principal of, or premium, if any, or interest on, any Debt Security on or after
the due date for such payment expressed in such Debt Security.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(a) this paragraph shall not be construed to limit the effect of the
first paragraph of this Section 7.01;
(b) prior to the occurrence of an Event of Default with respect to the
Debt Securities of a series and after the curing or waiving of all Events of
Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to
Debt Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with respect
to such series as are specifically set forth in this Indenture, and no
implied covenants or obligations with respect to such series shall be
read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Indenture; but the Trustee shall examine the
37
evidence furnished to it pursuant to Sections 4.05 and 4.06 to
determine whether or not such evidence conforms to the requirement of
this Indenture;
(iii) the Trustee shall not be liable for an error of judgment
made in good faith by a responsible officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iv) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it with respect to Debt
Securities of any series in good faith in accordance with the direction
of the Holders of not less than a majority in aggregate principal
amount of the Outstanding Debt Securities of that series relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to Debt Securities
of such series.
None of the provisions of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any personal financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 7.02. Certain Rights of Trustee. Except as otherwise provided
in Section 7.01:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note or
other paper or document (whether in its original or facsimile form) believed by
it to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Partnership
mentioned herein shall be sufficiently evidenced by a Partnership Order (unless
other evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Partnership;
(c) the Trustee may consult with counsel, and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders of Debt Securities of any series pursuant to the
provisions of this Indenture, unless such Holders shall
38
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default and after the curing
of all Events of Default which may have occurred, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, approval or other paper or document, unless requested in writing
to do so by the Holders of a majority in aggregate principal amount of the then
Outstanding Debt Securities of a series affected by such matter; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. The reasonable expense of every
such investigation shall be paid by the Partnership or, if paid by the Trustee,
shall be repaid by the Partnership upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder; and
(h) if any property other than cash shall at any time be subject to a
Lien in favor of the Holders, the Trustee, if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by the
supplemental instrument subjecting such property to such lien, shall be entitled
to make advances for the purpose of preserving such property or of discharging
tax Liens or other prior Liens or encumbrances thereon.
Section 7.03. Trustee Not Liable for Recitals in Indenture or in Debt
Securities. The recitals contained herein, in the Debt Securities (except the
Trustee's certificate of authentication) shall be taken as the statements of the
Partnership, and the Trustee assumes no responsibility for the correctness of
the same. The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Debt Securities of any series, except that the
Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Debt Securities and perform its obligations
hereunder, and that the statements made by it or to be made by it in a Statement
of Eligibility and Qualification on Form T-1 supplied to the Partnership are
true and accurate. The Trustee shall not be accountable for the use or
application by the Partnership of any of the Debt Securities or of the proceeds
thereof.
Section 7.04. Trustee, Paying Agent or Registrar May Own Debt
Securities. The Trustee or any paying agent or Registrar, in its individual or
any other capacity, may become the owner or pledgee of Debt Securities and
subject to the provisions of the TIA relating to conflicts of interest and
preferential claims may otherwise deal with the Partnership with the same rights
it would have if it were not Trustee, paying agent or Registrar.
39
Section 7.05. Moneys Received by Trustee to Be Held in Trust. Subject
to the provisions of Section 11.05, all moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for interest
on any moneys received by it hereunder. So long as no Event of Default shall
have occurred and be continuing, all interest allowed on any such moneys shall
be paid from time to time to the Partnership upon a Partnership Order.
Section 7.06. Compensation and Reimbursement. The Partnership covenants
and agrees to pay in Dollars to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and, except as otherwise
expressly provided herein, the Partnership will pay or reimburse in Dollars the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents, attorneys and counsel and of all Persons not
regularly in its employ), including without limitation, Section 6.02, except any
such expense, disbursement or advances as may arise from its negligence or bad
faith. The Partnership also covenants to indemnify in Dollars the Trustee for,
and to hold it harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on the part of the Trustee, arising
out of or in connection with the acceptance or administration of this trust or
trusts hereunder, including the reasonable costs and expenses of defending
itself against any claim of liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligations of the
Partnership under this Section 7.06 to compensate and indemnify the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional Debt hereunder and shall survive the satisfaction and
discharge of this Indenture. The Partnership and the Holders agree that such
additional Debt shall be secured by a Lien prior to that of the Debt Securities
upon all property and funds held or collected by the Trustee, as such, except
funds held in trust for the payment of principal of, and premium, if any, or
interest on, particular Debt Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency, reorganization or other similar
law.
Section 7.07. Right of Trustee to Rely on an Officers' Certificate
Where No Other Evidence Specifically Prescribed. Except as otherwise provided in
Section 7.01, whenever in the administration of the provisions of this Indenture
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee and such certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant to the
Trustee for any action taken, suffered or omitted by it under the provisions of
this Indenture upon the faith thereof.
40
Section 7.08. Separate Trustee; Replacement of Trustee. The Partnership
may, but need not, appoint a separate Trustee for any one or more series of Debt
Securities. The Trustee may resign with respect to one or more or all series of
Debt Securities at any time by giving notice to the Partnership. The Holders of
a majority in principal amount of the Debt Securities of a particular series may
remove the Trustee for such series and only such series by so notifying the
Trustee and may appoint a successor Trustee. The Partnership shall remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Partnership or by the Holders of a
majority in principal amount of the Debt Securities of a particular series and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Partnership shall
promptly appoint a successor Trustee. No resignation or removal of the Trustee
and no appointment of a successor Trustee shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.08.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Partnership. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of Debt Securities of each applicable series. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the Lien provided for in Section 7.06.
If a successor Trustee does not take office within 60 days after the
retiring Trustee gives notice of resignation or is removed, the retiring Trustee
or the Holders of 25% in principal amount of the Debt Securities of any
applicable series may petition any court of competent jurisdiction for the
appointment of a successor Trustee for the Debt Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of Debt
Securities of any applicable series may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee for the Debt Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to this Section
7.08, the Partnership's obligations under Section 7.06 shall continue for the
benefit of the retiring Trustee.
In the case of the appointment hereunder of a separate or successor
trustee with respect to the Debt Securities of one or more series, the
Partnership, any retiring Trustee and each successor or separate Trustee with
respect to the Debt Securities of any applicable series shall execute and
deliver an Indenture supplemental hereto (i) which shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of
41
any retiring Trustee with respect to the Debt Securities of any series as to
which any such retiring Trustee is not retiring shall continue to be vested in
such retiring Trustee and (ii) that shall add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, it being
understood that nothing herein or in such supplemental Indenture shall
constitute such Trustees co-trustees of the same trust and that each such
separate, retiring or successor Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee.
Section 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been authenticated, any successor to the Trustee may authenticate such Debt
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in this Indenture
provided that the certificate of the Trustee shall have.
Section 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of Section 310(a) of the TIA. The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. No obligor upon the Debt
Securities of a particular series or Person directly or indirectly controlling,
controlled by or under common control with such obligor shall serve as Trustee
upon the Debt Securities of such series. The Trustee shall comply with Section
310(b) of the TIA; provided, however, that there shall be excluded from the
operation of Section 310(b)(1) of the TIA this Indenture or any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Partnership are outstanding if the
requirements for such exclusion set forth in Section 310(b)(1) of the TIA are
met.
Section 7.11. Preferential Collection of Claims Against Partnership.
The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor
relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or
been removed shall be subject to Section 311(a) of the TIA to the extent
indicated therein.
Section 7.12. Compliance with Tax Laws. The Trustee hereby agrees to
comply with all U.S. Federal income tax information reporting and withholding
requirements applicable to it with respect to payments of premium (if any) and
interest on the Debt Securities, whether acting as Trustee, Security Registrar,
paying agent or otherwise with respect to the Debt Securities.
42
ARTICLE VIII
CONCERNING THE HOLDERS
Section 8.01. Evidence of Action by Holders. Whenever in this Indenture
it is provided that the Holders of a specified percentage in aggregate principal
amount of the Debt Securities of any or all series may take action (including
the making of any demand or request, the giving of any direction, notice,
consent or waiver or the taking of any other action) the fact that at the time
of taking any such action the Holders of such specified percentage have joined
therein may be evidenced by any instrument or any number of instruments of
similar tenor executed by Holders in Person or by agent or proxy appointed in
writing, by the record of the Holders voting in favor thereof at any meeting of
Holders duly called and held in accordance with the provisions of Section 5.02
or by a combination of such instrument or instruments and any such record of
such a meeting of Holders.
Section 8.02. Proof of Execution of Instruments and of Holding of Debt
Securities. Subject to the provisions of Sections 7.01, 7.02 and 13.11, proof of
the execution of any instrument by a Holder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Debt Securities of any series shall be proved by
the Debt Security Register or by a certificate of the Registrar for such series.
The Trustee may require such additional proof of any matter referred to in this
Section 8.02 as it shall deem necessary.
Section 8.03. Who May Be Deemed Owner of Debt Securities. Prior to due
presentment for registration of transfer of any Debt Security, the Partnership,
the Trustee, any paying agent and any Registrar may deem and treat the Person in
whose name any Debt Security shall be registered upon the books of the
Partnership as the absolute owner of such Debt Security (whether or not such
Debt Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account of
the principal of and premium, if any, and (subject to Section 2.03) interest on
such Debt Security and for all other purposes, and neither the Partnership nor
the Trustee nor any paying agent nor any Registrar shall be affected by any
notice to the contrary; and all such payments so made to any such Holder for the
time being, or upon his order, shall be valid and, to the extent of the sum or
sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Debt Security.
None of the Partnership, the Trustee, any paying agent or the Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Section 8.04. Instruments Executed by Holders Bind Future Holders. At
any time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Debt Securities of any series specified in
this Indenture in connection with such action and subject to the following
paragraph, any Holder of a Debt Security which is shown by the evidence to be
included in the Debt Securities the Holders of which have consented to such
action may, by
43
filing written notice with the Trustee at its corporate trust office and upon
proof of holding as provided in Section 8.02, revoke such action so far as
concerns such Debt Security. Except as aforesaid any such action taken by the
Holder of any Debt Security shall be conclusive and binding upon such Holder and
upon all future Holders and owners of such Debt Security and of any Debt
Security issued upon transfer thereof or in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon such
Debt Security or such other Debt Securities. Any action taken by the Holders of
the percentage in aggregate principal amount of the Debt Securities of any
series specified in this Indenture in connection with such action shall be
conclusively binding upon the Partnership, the Trustee and the Holders of all
the Debt Securities of such series.
The Partnership may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders of Debt Securities entitled to give
their consent or take any other action required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders of Debt
Securities at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders of Debt Securities after such record date. No such
consent shall be valid or effective for more than 120 days after such record
date unless the consent of the Holders of the percentage in aggregate principal
amount of the Debt Securities of such series specified in this Indenture shall
have been received within such 120-day period.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Purposes for Which Supplemental Indenture May Be Entered
into Without Consent of Holders. The Partnership and the Subsidiary Guarantors,
when authorized by resolutions of the Board of Directors, and the Trustee may
from time to time and at any time, without the consent of Holders, enter into an
Indenture or Indentures supplemental hereto (which shall conform to the
provisions of the TIA as in force at the date of the execution thereof) for one
or more of the following purposes:
(a) to evidence the succession pursuant to Article X of another Person
to the Partnership or any of the Subsidiary Guarantors, or successive
successions, and the assumption by the Successor Partnership (as defined in
Section 10.01) of the covenants, agreements and obligations of the Partnership
or the Subsidiary Guarantors in this Indenture and in the Debt Securities;
(b) to surrender any right or power herein conferred upon the
Partnership or the Subsidiary Guarantors, to add to the covenants of the
Partnership or the Subsidiary Guarantors such further covenants, restrictions,
conditions or provisions for the protection of the Holders of all or any series
of Debt Securities (and if such covenants are to be for the benefit of less than
all series of Debt Securities, stating that such covenants are expressly being
included solely for the benefit of such series) as the Board of Directors shall
consider to be for the protection of the Holders of such Debt Securities, and to
make the occurrence, or the occurrence and continuance, of a Default in any of
such additional covenants, restrictions, conditions or provisions a Default
44
or an Event of Default permitting the enforcement of all or any of the several
remedies provided in this Indenture; provided, that in respect of any such
additional covenant, restriction, condition or provision such supplemental
Indenture may provide for a particular period of grace after Default (which
period may be shorter or longer than that allowed in the case of other Defaults)
or may provide for an immediate enforcement upon such Default or may limit the
remedies available to the Trustee upon such Default or may limit the right of
the Holders of a majority in aggregate principal amount of any or all series of
Debt Securities to waive such default;
(c) to cure any ambiguity or omission or to correct or supplement any
provision contained herein, in any supplemental Indenture or in any Debt
Securities of any series that may be defective or inconsistent with any other
provision contained herein, in any supplemental Indenture or in the Debt
Securities of such series; to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee, or to make such other provisions in regard to
matters or questions arising under this Indenture as shall not adversely affect
the interests of any Holders of Debt Securities of any series;
(d) to modify or amend this Indenture in such a manner as to permit the
qualification of this Indenture or any Indenture supplemental hereto under the
TIA as then in effect, except that nothing herein contained shall permit or
authorize the inclusion in any Indenture supplemental hereto of the provisions
referred to in Section 316(a)(2) of the TIA;
(e) to add to or change any of the provisions of this Indenture to
change or eliminate any restrictions on the payment of principal of, or premium,
if any, on, Debt Securities; provided, that any such action shall not adversely
affect the interests of the Holders of Debt Securities of any series in any
material respect or permit or facilitate the issuance of Debt Securities of any
series in uncertificated form;
(f) to comply with Article X;
(g) in the case of any Debt Securities subordinated pursuant to Article
XII, to make any change in Article XII that would limit or terminate the
benefits available to any holder of Senior Indebtedness (or Representatives
therefor) under Article XII;
(h) to add guarantees with respect to any or all of the Debt Securities
or to secure any or all of the Debt Securities;
(i) to make any change that does not adversely affect the rights of any
Holder;
(j) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Debt Securities; provided,
however, that any such addition, change or elimination not otherwise permitted
under this Section 9.01 shall neither apply to any Debt Security of any series
created prior to the execution of such supplemental Indenture and entitled to
the benefit of such provision nor modify the rights of the Holder of any such
Debt Security with respect to such provision or shall become effective only when
there is no such Debt Security Outstanding;
(k) to evidence and provide for the acceptance of appointment hereunder
by a successor or separate Trustee with respect to the Debt Securities of one or
more series and to add
45
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee;
(l) to establish the form or terms of Debt Securities of any series as
permitted by Sections 2.01 and 2.03.
The Trustee is hereby authorized to join with the Partnership and the
Subsidiary Guarantors in the execution of any such supplemental Indenture, to
make any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer, assignment, mortgage or pledge
of any property thereunder, but the Trustee shall not be obligated to enter into
any such supplemental Indenture which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental Indenture authorized by the provisions of this Section
9.01 may be executed by the Partnership, the Subsidiary Guarantors and the
Trustee without the consent of the Holders of any of the Debt Securities at the
time Outstanding, notwithstanding any of the provisions of Section 9.02.
In the case of Debt Securities subordinated pursuant to Article XII, an
amendment under this Section 9.01 may not make any change that adversely affects
the rights under Article XII of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
Representative thereof authorized to give a consent) consent to such change.
Section 9.02. Modification of Indenture with Consent of Holders of Debt
Securities. Without notice to any Holder but with the consent (evidenced as
provided in Section 8.01) of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such supplemental Indenture (including consents obtained in
connection with a tender offer or exchange offer for any such series of Debt
Securities), the Partnership and the Subsidiary Guarantors, when authorized by
resolutions of the Board of Directors, and the Trustee may from time to time and
at any time enter into an Indenture or Indentures supplemental hereto (which
shall conform to the provisions of the TIA as in force at the date of execution
thereof) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of any supplemental
Indenture or of modifying in any manner the rights of the Holders of the Debt
Securities of such series; provided, that no such supplemental Indenture,
without the consent of the Holders of each Debt Security so affected, shall:
reduce the percentage in principal amount of Debt Securities of any series whose
Holders must consent to an amendment; reduce the rate of or extend the time for
payment of interest on any Debt Security; reduce the principal of or extend the
Stated Maturity of any Debt Security; reduce the premium payable upon the
redemption of any Debt Security or change the time at which any Debt Security
may or shall be redeemed in accordance with Article III; make any Debt Security
payable in currency other than the Dollar; impair the right of any Holder to
receive payment of, premium, if any, principal of and interest on such Holder's
Debt Securities on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Debt Securities;
in the case of any Debt Security subordinated pursuant to Article XII, make any
change in Article XII that adversely affects the rights of any Holder under
Article XII; release any security that may have been granted in
46
respect of the Debt Securities; make any change in Section 6.06 or this Section
9.02; or release the Subsidiary Guarantors or modify the Guarantee in any manner
adverse to the Holders.
A supplemental Indenture which changes or eliminates any covenant or
other provision of this Indenture which has been expressly included solely for
the benefit of one or more particular series of Debt Securities or which
modifies the rights of the Holders of Debt Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Debt Securities of any other
series.
Upon the request of the Partnership and the Subsidiary Guarantors,
accompanied by a copy of resolutions of the Board of Directors authorizing the
execution of any such supplemental Indenture, and upon the filing with the
Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall
join with the Partnership in the execution of such supplemental Indenture unless
such supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion but shall not be obligated to enter into such supplemental
Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
Indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
In the case of any Debt Securities subordinated pursuant to Article
XII, an amendment under this Section 9.02 may not make any change that adversely
affects the rights under Article XII of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
Representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the
Partnership shall mail to Holders of Debt Securities of each series affected
thereby a notice briefly describing such amendment. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section 9.02.
Section 9.03. Effect of Supplemental Indentures. Upon the execution of
any supplemental Indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Partnership, the
Subsidiary Guarantors and the Holders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental Indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental Indenture complies with the provisions of
this Article IX.
Section 9.04. Debt Securities May Bear Notation of Changes by
Supplemental Indentures. Debt Securities of any series authenticated and
delivered after the execution of any supplemental Indenture pursuant to the
provisions of this Article IX may, and shall if required by
47
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental Indenture. New Debt Securities of any series
so modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental Indenture may be prepared and executed by the Partnership,
authenticated by the Trustee and delivered in exchange for the Debt Securities
of such series then Outstanding. Failure to make the appropriate notation or to
issue a new Debt Security of such series shall not affect the validity of such
amendment.
ARTICLE X
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 10.01. Consolidations and Mergers of the Partnership and the
Subsidiary Guarantors. Neither the Partnership nor any Subsidiary Guarantor
shall consolidate with or merge with or into any Person, or convey, transfer or
lease all or substantially all its assets to any Person, unless: (a) either (i)
the Partnership or such Subsidiary Guarantor shall be the continuing Person in
the case of a merger or (ii) in the case of the Partnership, the resulting,
surviving or transferee Person if other than the Partnership (the "Successor
Partnership"), or in the case of such Subsidiary Guarantor, the resulting,
surviving or transferee Person if other than such Subsidiary Guarantor, shall be
a Person organized and existing under the laws of the United States, any State
thereof or the District of Columbia and the Successor Partnership shall
expressly assume, by an Indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations of the
Partnership or such Subsidiary Guarantor, as the case may be, under the
Indenture and the Debt Securities according to their tenor (in the case of the
Partnership) and the Guarantee (in the case of such Subsidiary Guarantor); (b)
immediately after giving effect to such transaction (and treating any Debt which
becomes an obligation of the Successor Partnership or any Subsidiary of the
Partnership as a result of such transaction as having been incurred by the
Successor Partnership or such Subsidiary at the time of such transaction), no
Default or Event of Default would occur or be continuing; and (c) the
Partnership or such Subsidiary Guarantor, as the case may be, shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
Indenture (if any) complies with this Indenture; provided that nothing in this
Section 10.01 shall restrict or prohibit the consolidation or merger of any
Subsidiary Guarantor into, or the conveyance, transfer or lease of all or
substantially all of the assets of any Subsidiary Guarantor to, the Partnership
or any other Subsidiary Guarantor.
Section 10.02. Rights and Duties of Successor Partnership or Successor
Subsidiary Guarantor. In case of any consolidation or merger, or conveyance or
transfer of the assets of the Partnership or any Subsidiary Guarantor as an
entirety or substantially as an entirety in accordance with Section 10.01, the
Successor Partnership shall succeed to and be substituted for the Partnership or
the successor Subsidiary Guarantor shall succeed to and be substituted for such
Subsidiary Guarantor, as the case may be, with the same effect as if it had been
named herein as the respective party to this Indenture, and the predecessor
entity shall be released from all liabilities and obligations under the
Indenture and the Debt Securities (in the case of the Partnership) or the
Guarantee (in the case of any Subsidiary Guarantor), except that no such release
will occur in the case of a lease of all or substantially all of its assets. The
Successor Partnership thereupon may cause to be signed, and may issue either in
its own name or in the
48
name of the Partnership, any or all the Debt Securities issuable hereunder which
theretofore shall not have been signed by the Partnership and delivered to the
Trustee; and, upon the order of the Successor Partnership, instead of the
Partnership, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any Debt
Securities which previously shall have been signed and delivered by the officers
of the Partnership to the Trustee for authentication, and any Debt Securities
which the Successor Partnership thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Debt Securities so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Debt Securities theretofore or thereafter issued in accordance with the
terms of this Indenture as though all such Debt Securities had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the Debt
Securities thereafter to be issued as may be appropriate.
ARTICLE XI
SATISFACTION AND DISCHARGE OF
INDENTURE; DEFEASANCE; UNCLAIMED MONEYS
Section 11.01. Applicability of Article. The provisions of this Article
XI relating to defeasance of Debt Securities shall be applicable to each series
of Debt Securities except as otherwise specified pursuant to Section 2.03 for
Debt Securities of such series.
Section 11.02. Satisfaction and Discharge of Indenture; Defeasance.
(a) If at any time the Partnership shall have delivered to the Trustee
for cancellation all Debt Securities of any series theretofore authenticated and
delivered (other than any Debt Securities of such series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.09 and Debt Securities for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Partnership as provided in
Section 11.05) or all Debt Securities of such series not theretofore delivered
to the Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Partnership shall deposit with the
Trustee as trust funds the entire amount in cash sufficient to pay at maturity
or upon redemption all Debt Securities of such series not theretofore delivered
to the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due on such date of maturity or redemption date, as
the case may be, and if in either case the Partnership shall also pay or cause
to be paid all other sums payable hereunder by the Partnership, then this
Indenture shall cease to be of further effect (except as to any surviving rights
of registration of transfer or exchange of such Debt Securities herein expressly
provided for) with respect to the Debt Securities of such series, and the
Trustee, on demand of the Partnership accompanied by an Officers' Certificate
and an Opinion of Counsel and at the cost and expense of the Partnership, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture.
49
(b) Subject to Sections 11.02(c), 11.03 and 11.07, the Partnership at
any time may terminate, with respect to Debt Securities of a particular series,
all its obligations under the Debt Securities of such series and this Indenture
with respect to the Debt Securities of such series ("legal defeasance option")
or the operation of Sections 6.01(d), (g) and (h) and, as they relate to the
Subsidiary Guarantors only, Sections 6.01(e) and (f) ("covenant defeasance
option"). If the Partnership exercises its legal defeasance option, the
Guarantee will terminate with respect to that series of Debt Securities. The
Partnership may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Partnership exercises its legal defeasance option, payment of
the Debt Securities of the defeased series may not be accelerated because of an
Event of Default. If the Partnership exercises its covenant defeasance option,
payment of the Debt Securities of the defeased series may not be accelerated
because of an Event of Default specified in Sections 6.01(d), (g) and (h) and,
with respect to the Subsidiary Guarantors only, Sections 6.01(e) and (f) (except
to the extent covenants or agreements referenced in such Sections remain
applicable).
Upon satisfaction of the conditions set forth herein and upon request
of the Partnership, the Trustee shall acknowledge in writing the discharge of
those obligations that the Partnership terminates.
(c) Notwithstanding clauses (a) and (b) above, the Partnership's
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.10, 11.05, 11.06
and 11.07 shall survive until the Debt Securities of the defeased series have
been paid in full. Thereafter, the Partnership's obligations in Sections 7.06,
11.05 and 11.06 shall survive.
Section 11.03. Conditions of Defeasance. The Partnership may exercise
its legal defeasance option or its covenant defeasance option with respect to
Debt Securities of a particular series only if:
(a) the Partnership irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of, and
premium, if any, and interest on, the Debt Securities of such series to maturity
or redemption, as the case may be;
(b) the Partnership delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their opinion
that the payments of principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay the principal, premium and interest when due on all the Debt
Securities of such series to maturity or redemption, as the case may be;
(c) 91 days pass after the deposit is made and during the 91-day period
no Default specified in Section 6.01(e) or (f) with respect to the Partnership
occurs which is continuing at the end of the period;
(d) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
50
(e) the deposit does not constitute a default under any other agreement
binding on the Partnership and, if the Debt Securities of such series are
subordinated pursuant to Article XII, is not prohibited by Article XII;
(f) the Partnership delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940;
(g) in the event of the legal defeasance option, the Partnership shall
have delivered to the Trustee an Opinion of Counsel stating that the Partnership
has received from the Internal Revenue Service a ruling, or since the date of
this Indenture there has been a change in the applicable Federal income tax law,
in either case of the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of Debt Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred;
(h) in the event of the covenant defeasance option, the Partnership
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of Debt Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred; and
(i) the Partnership delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Debt Securities of such series as contemplated
by this Article XI have been complied with.
Before or after a deposit, the Partnership may make arrangements
satisfactory to the Trustee for the redemption of Debt Securities of such series
at a future date in accordance with Article III.
Section 11.04. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article XI. It shall apply the deposited money and the money from U.S.
Government Obligations through any paying agent and in accordance with this
Indenture to the payment of principal of, and premium, if any, and interest on,
the Debt Securities of the defeased series. In the event the Debt Securities of
the defeased series are subordinated pursuant to Article XII, money and
securities so held in trust are not subject to Article XII.
Section 11.05. Repayment to Partnership. The Trustee and any paying
agent shall promptly turn over to the Partnership upon request any excess money
or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and any
paying agent shall pay to the Partnership upon request any money held by them
for the payment of principal, premium or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to such money must look to the
Partnership for payment as general creditors.
51
Section 11.06. Indemnity for U.S. Government Obligations. The
Partnership shall pay and shall indemnify the Trustee and the Holders against
any tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
Section 11.07. Reinstatement. If the Trustee or any paying agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article XI by reason of any legal proceeding or by reason of any order or
judgment of any court or government authority enjoining, restraining or
otherwise prohibiting such application, the Partnership's obligations under this
Indenture and the Debt Securities of the defeased series shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XI until
such time as the Trustee or any paying agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article XI.
ARTICLE XII
SUBORDINATION OF DEBT SECURITIES AND GUARANTEE
Section 12.01. Applicability of Article; Agreement To Subordinate. The
provisions of this Article XII shall only be applicable to the Debt Securities
of any series (Debt Securities of such series referred to in this Article XII as
"Subordinated Debt Securities") designated, pursuant to Section 2.03, as
subordinated to Senior Indebtedness and any related Guarantee of such
Subordinated Debt Securities. Each Holder by accepting a Subordinated Debt
Security agrees that the Debt evidenced by such Subordinated Debt Security and
any related Guarantee of such Subordinated Debt Security is subordinated in
right of payment, to the extent and in the manner provided in this Article XII,
to the prior payment of all Senior Indebtedness and that the subordination is
for the benefit of and enforceable by the holders of Senior Indebtedness. All
provisions of this Article XII shall be subject to Section 12.12.
Section 12.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of the Partnership or the Subsidiary Guarantors,
as the case may be, to creditors upon a total or partial liquidation or a total
or partial dissolution of the Partnership or the Subsidiary Guarantors, as the
case may be, or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Partnership or the Subsidiary Guarantors, as
the case may be, or their respective property:
(a) holders of Senior Indebtedness of the Partnership or any Subsidiary
Guarantor, as the case may be, shall be entitled to receive payment in full in
cash of such Senior Indebtedness of such Person (including interest (if any),
accruing on or after the commencement of a proceeding in bankruptcy, whether or
not allowed as a claim against the Partnership or the Subsidiary Guarantors, as
the case may be, in such bankruptcy proceeding) before Holders of Subordinated
Debt Securities and any related Guarantee shall be entitled to receive any
payment of principal of, or premium, if any, or interest on, the Subordinated
Debt Securities from the Partnership, or any payment in respect of the Guarantee
from the Subsidiary Guarantors; and
(b) until the Senior Indebtedness of the Partnership or any Subsidiary
Guarantor, as the case may be, is paid in full, any distribution to which
Holders of Subordinated Debt Securities and any related Guarantee would be
entitled but for this Article XII shall be made to
52
holders of Senior Indebtedness of the Partnership or the Subsidiary Guarantors,
as the case may be, as their interests may appear, except that such Holders may
receive shares of stock and any debt securities that are subordinated to Senior
Indebtedness of the Partnership or the Subsidiary Guarantors, as the case may
be, to at least the same extent as the Subordinated Debt Securities of the
Partnership or the related Guarantee of any Subsidiary Guarantor, respectively.
Section 12.03. Default on Senior Indebtedness. The Partnership and the
Subsidiary Guarantors may not pay the principal of, or premium, if any, or
interest on, the Subordinated Debt Securities or any related Guarantee or make
any deposit pursuant to Article XI and may not repurchase, redeem or otherwise
retire (except, in the case of Subordinated Debt Securities that provide for a
mandatory sinking fund pursuant to Section 3.05, by the delivery of Subordinated
Debt Securities by the Partnership to the Trustee pursuant to the first
paragraph of Section 3.06) any Subordinated Debt Securities (collectively, "pay
the Subordinated Debt Securities") if any principal, premium or interest in
respect of Senior Indebtedness of such Person is not paid within any applicable
grace period (including at maturity) or any other default on Senior Indebtedness
of such Person occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, the default has
been cured or waived and any such acceleration has been rescinded or such Senior
Indebtedness has been paid in full in cash; provided, however, that the
Partnership and the Subsidiary Guarantors may make payments on the Subordinated
Debt Securities or any related Guarantee without regard to the foregoing if the
Partnership and the Trustee receive written notice approving such payment from
the Representative of each issue of Designated Senior Indebtedness. During the
continuance of any default with respect to any Designated Senior Indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Partnership
and the Subsidiary Guarantors may not make payments on the Subordinated Debt
Securities or any related Guarantee for a period (a "Payment Blockage Period")
commencing upon the receipt by the Partnership and the Trustee (and if such
Designated Senior Indebtedness is Debt of a Subsidiary Guarantor, the Subsidiary
Guarantor)of written notice of such default from the Representative of any
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period (a "Blockage Notice") and ending 179 days thereafter (or earlier
if such Payment Blockage Period is terminated by written notice to the Trustee
and the Partnership (and if such Designated Senior Indebtedness is Debt of a
Subsidiary Guarantor, the Subsidiary Guarantor) from the Person or Persons who
gave such Blockage Notice, by repayment in full in cash of such Designated
Senior Indebtedness or because the default giving rise to such Blockage Notice
is no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section 12.03), unless the holders of such Designated
Senior Indebtedness or the Representative of such holders shall have accelerated
the maturity of such Designated Senior Indebtedness, the Partnership and the
Subsidiary Guarantors may resume payments on the Subordinated Debt Securities
and related Guarantees after such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to any number of issues of Designated Senior
Indebtedness during such period, unless otherwise specified pursuant to Section
2.03 for the Subordinated Debt Securities of a series; provided, however, that
in no event may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this Section 12.03, no default or event
of default which
53
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Blockage Period by the Representative of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
Section 12.04. Acceleration of Payment of Debt Securities. If payment
of the Subordinated Debt Securities is accelerated because of an Event of
Default, the Partnership shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representatives) of the acceleration.
Section 12.05. When Distribution Must Be Paid Over. If a distribution
is made to Holders of Subordinated Debt Securities or a related Guarantee that
because of this Article XII should not have been made to them, the Holders who
receive such distribution shall hold it in trust for holders of Senior
Indebtedness and pay it over to them as their interests may appear.
Section 12.06. Subrogation. After all Senior Indebtedness is paid in
full and until the Subordinated Debt Securities are paid in full, Holders
thereof shall be subrogated to the rights of holders of Senior Indebtedness to
receive distributions applicable to Senior Indebtedness. A distribution made
under this Article XII to holders of Senior Indebtedness which otherwise would
have been made to Holders of Subordinated Debt Securities is not, as between the
Partnership or the Subsidiary Guarantors, as the case may be, and such Holders,
a payment by the Partnership or the Subsidiary Guarantors, as the case may be,
on Senior Indebtedness.
Section 12.07. Relative Rights. This Article XII defines the relative
rights of Holders of Subordinated Debt Securities and holders of Senior
Indebtedness. Nothing in this Indenture shall:
(a) impair, as between the Partnership or the Subsidiary Guarantors, as
the case may be, and Holders of either Subordinated Debt Securities or Debt
Securities, the obligation of the Partnership or the Subsidiary Guarantors, as
the case may be, which is absolute and unconditional, to pay principal of, and
premium, if any, and interest on, the Subordinated Debt Securities and the Debt
Securities in accordance with their terms; or
(b) prevent the Trustee or any Holder of either Subordinated Debt
Securities or Debt Securities from exercising its respective available remedies
upon a Default, subject to the rights of holders of Senior Indebtedness to
receive distributions otherwise payable to Holders of Subordinated Debt
Securities.
Section 12.08. Subordination May Not Be Impaired by Partnership. No
right of any holder of Senior Indebtedness to enforce the subordination of the
Debt evidenced by the Subordinated Debt Securities and the Guarantee in respect
thereof shall be impaired by any act or failure to act by the Partnership or the
Subsidiary Guarantors or by its failure to comply with this Indenture.
Section 12.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 12.03, the Trustee or any paying agent may continue to make payments on
Subordinated Debt
54
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a responsible officer of the
Trustee receives notice satisfactory to it that payments may not be made under
this Article XII. The Partnership, the Registrar, any paying agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
however, that, if an issue of Senior Indebtedness has a Representative, only the
Representative may give the notice on behalf of the Holders of the Senior
Indebtedness of that issue.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and any paying agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article XII with respect
to any Senior Indebtedness which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness; and nothing in Article VII
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article XII shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.06.
Section 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
Section 12.11. Article XII Not to Prevent Defaults or Limit Right to
Accelerate. The failure to make a payment pursuant to the Subordinated Debt
Securities, whether directly or pursuant to the Guarantee, by reason of any
provision in this Article XII shall not be construed as preventing the
occurrence of a Default. Nothing in this Article XII shall have any effect on
the right of the Holders or the Trustee to accelerate the maturity of either the
Subordinated Debt Securities or the Debt Securities, as the case may be.
Section 12.12. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article XI by the Trustee for the
payment of principal of, and premium, if any, and interest on, the Subordinated
Debt Securities or the Debt Securities shall not be subordinated to the prior
payment of any Senior Indebtedness or subject to the restrictions set forth in
this Article XII, and none of the Holders thereof shall be obligated to pay over
any such amount to the Partnership, the Subsidiary Guarantors or any holder of
Senior Indebtedness of the Partnership or the Subsidiary Guarantors or any other
creditor of the Partnership or the Guarantor.
Section 12.13. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Holders shall be
entitled to rely upon any order or decree of a court of competent jurisdiction
in which any proceedings of the nature referred to in Section 12.02 are pending,
upon a certificate of the liquidating trustee or agent or other Person making
such payment or distribution to the Trustee or to such Holders or upon the
Representatives for the holders of Senior Indebtedness for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other Debt of the
Partnership or the Subsidiary Guarantors, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XII. In the event that the Trustee determines, in
good faith,
55
that evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article XII, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this Article XII, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The provisions of Sections
7.01 and 7.02 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article XII.
Section 12.14. Trustee to Effectuate Subordination. Each Holder by
accepting a Subordinated Debt Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders of Subordinated Debt Securities
and the holders of Senior Indebtedness as provided in this Article XII and
appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 12.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders of Subordinated Debt
Securities or the Partnership or the Subsidiary Guarantors or any other Person,
money or assets to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article XII or otherwise.
Section 12.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Subordinated Debt Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Subordinated Debt Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Successors and Assigns of Partnership Bound by
Indenture. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of the Partnership, the Subsidiary
Guarantors or the Trustee shall bind their respective successors and assigns,
whether so expressed or not.
Section 13.02. Acts of Board, Committee or Officer of Successor
Partnership Valid. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Partnership or the Subsidiary Guarantors shall and may be done
and performed with like force and effect by the like board, committee or officer
of any Successor Partnership.
56
Section 13.03. Required Notices or Demands. Any notice or communication
by the Partnership, the Subsidiary Guarantors or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by registered or
certified mail (return receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, to the other's address:
If to the Partnership or the Subsidiary Guarantors:
TEPPCO Partners, L.P.
TE Products Pipeline Company, Limited Partnership
TCTM, L.P.
TEPPCO Midstream Companies, L.P.
Jonah Gas Gathering Company
2929 Allen Parkway
Houston, Texas 77252
Attention: Chief Financial Officer
Telecopy No. 713-759-3636
If to the Trustee:
First Union National Bank
5847 San Felipe, Suite 1050
Houston, Texas 77057
Attn: Corporate Trust Department
Telecopy: 713-278-4329
The Partnership, the Subsidiary Guarantors or the Trustee by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; on the first Business
Day on or after being sent, if telecopied and the sender receives confirmation
of successful transmission; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice required or permitted to a Holder by the Partnership, the
Subsidiary Guarantors or the Trustee pursuant to the provisions of this
Indenture shall be deemed to be properly mailed by being deposited postage
prepaid in a post office letter box in the United States addressed to such
Holder at the address of such Holder as shown on the Debt Security Register. Any
report pursuant to Section 313 of the TIA shall be transmitted in compliance
with subsection (c) therein.
Notwithstanding the foregoing, any notice to Holders of Floating Rate
Debt Securities regarding the determination of a periodic rate of interest, if
such notice is required pursuant to Section 2.03, shall be sufficiently given if
given in the manner specified pursuant to Section 2.03.
In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, then such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose hereunder.
57
In the event it shall be impracticable to give notice by publication,
then such notification as shall be given with the approval of the Trustee shall
constitute sufficient notice for every purpose hereunder.
Failure to mail a notice or communication to a Holder or any defect in
it or any defect in any notice by publication as to a Holder shall not affect
the sufficiency of such notice with respect to other Holders. If a notice or
communication is mailed or published in the manner provided above, it is
conclusively presumed duly given.
Section 13.04. Indenture and Debt Securities to Be Construed in
Accordance with the Laws of the State of New York. THIS INDENTURE, EACH DEBT
SECURITY AND THE GUARANTEE SHALL BE DEEMED TO BE NEW YORK CONTRACTS, AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID
STATE.
Section 13.05. Officers' Certificate and Opinion of Counsel to Be
Furnished upon Application or Demand by the Partnership. Upon any application or
demand by the Partnership to the Trustee to take any action under any of the
provisions of this Indenture, the Partnership shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such document is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the Person
making such certificate or opinion has read such covenant or condition, (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based, (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Section 13.06. Payments Due on Legal Holidays. In any case where the
date of maturity of interest on or principal of and premium, if any, on the Debt
Securities of a series or the date fixed for redemption or repayment of any Debt
Security or the making of any sinking fund payment shall not be a business day
at any Place of Payment for the Debt Securities of such series, then payment of
interest or principal and premium, if any, or the making of such sinking fund
payment need not be made on such date at such Place of Payment, but may be made
on the next succeeding business day at such Place of Payment with the same force
and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date. If a record date is
not a business day, the record date shall not be affected.
Section 13.07. Provisions Required by TIA to Control. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
another provision included in this
58
Indenture which is required to be included in this Indenture by any of Sections
310 to 318, inclusive, of the TIA, such required provision shall control.
Section 13.08. Computation of Interest on Debt Securities. Interest, if
any, on the Debt Securities shall be computed on the basis of a 360-day year of
twelve 30-day months, except as may otherwise be provided pursuant to Section
2.03.
Section 13.09. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and any paying agent may make reasonable rules for their functions.
Section 13.10. No Recourse Against Others. The General Partner and its
directors, officers, employees, incorporators and stockholders, as such, shall
have no liability for any obligations of the Subsidiary Guarantors or the
Partnership under the Debt Securities, the Indenture or the Guarantee or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. By accepting a Debt Security, each Holder shall waive and release all
such liability. The waiver and release shall be part of the consideration for
the issue of the Debt Securities.
Section 13.11. Severability. In case any provision in this Indenture or
the Debt Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 13.12. Effect of Headings. The article and section headings
herein and in the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 13.13. Indenture May Be Executed in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
ARTICLE XIV
GUARANTEE
Section 14.01. Unconditional Guarantee.
(a) Notwithstanding any provision of this Article XIV to the contrary,
the provisions of this Article XIV shall be applicable only to, and inure solely
to the benefit of, the Debt Securities of any series designated, pursuant to
Section 2.03, as entitled to the benefits of the Guarantee of each of the
Subsidiary Guarantors.
(b) For value received, each of the Subsidiary Guarantors hereby fully,
unconditionally and absolutely guarantees (the "Guarantee") to the Holders and
to the Trustee the due and punctual payment of the principal of, and premium, if
any, and interest on the Debt Securities and all other amounts due and payable
under this Indenture and the Debt Securities by the Partnership, when and as
such principal, premium, if any, and interest shall become due and payable,
whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise, according to the terms of the Debt Securities and this
Indenture, subject to (i) the
59
limitations set forth in Section 14.03 and (ii) in the case of the Guarantee of
the Subordinated Debt Securities, to the subordination provisions contained in
Article XII.
(c) Failing payment when due of any amount guaranteed pursuant to the
Guarantee, for whatever reason, each of the Subsidiary Guarantors will be
jointly and severally obligated to pay the same immediately, subject, in the
case of the Guarantee of the Subordinated Debt Securities, to the subordination
provisions contained in Article XII. The Guarantee hereunder (other than the
Guarantee of Subordinated Debt Securities) is intended to be a general,
unsecured, senior obligation of each of the Subsidiary Guarantors and will rank
pari passu in right of payment with all Debt of such Subsidiary Guarantor that
is not, by its terms, expressly subordinated in right of payment to the
Guarantee. Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder, shall be full, unconditional and absolute, irrespective of the
validity, regularity or enforceability of the Debt Securities, the Guarantee
(including the Guarantee of any other Subsidiary Guarantor) or this Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Debt Securities with respect to any provisions hereof or thereof,
the recovery of any judgment against the Partnership or any other Subsidiary
Guarantor, or any action to enforce the same or any other circumstances which
might otherwise constitute a legal or equitable discharge or defense of the
Subsidiary Guarantors. Each of the Subsidiary Guarantors hereby agrees that in
the event of a default in payment of the principal of, or premium, if any, or
interest on the Debt Securities, whether at the stated maturity or by
declaration of acceleration, call for redemption or otherwise, legal proceedings
may be instituted by the Trustee on behalf of the Holders or, subject to Section
6.04, by the Holders, on the terms and conditions set forth in this Indenture,
directly against such Subsidiary Guarantor to enforce the Guarantee without
first proceeding against the Partnership or any other Subsidiary Guarantor.
(d) The obligations of each of the Subsidiary Guarantors under this
Article XIV shall be as aforesaid full, unconditional and absolute and shall not
be impaired, modified, released or limited by any occurrence or condition
whatsoever, including, without limitation, (A) any compromise, settlement,
release, waiver, renewal, extension, indulgence or modification of, or any
change in, any of the obligations and liabilities of the Partnership or any of
the Subsidiary Guarantors contained in the Debt Securities or this Indenture,
(B) any impairment, modification, release or limitation of the liability of the
Partnership, any of the Subsidiary Guarantors or either of their estates in
bankruptcy, or any remedy for the enforcement thereof, resulting from the
operation of any present or future provision of any applicable Bankruptcy Law,
as amended, or other statute or from the decision of any court, (C) the
assertion or exercise by the Partnership, any of the Subsidiary Guarantors or
the Trustee of any rights or remedies under the Debt Securities or this
Indenture or their delay in or failure to assert or exercise any such rights or
remedies, (D) the assignment or the purported assignment of any property as
security for the Debt Securities, including all or any part of the rights of the
Partnership or any of the Subsidiary Guarantors under this Indenture, (E) the
extension of the time for payment by the Partnership or any of the Subsidiary
Guarantors of any payments or other sums or any part thereof owing or payable
under any of the terms and provisions of the Debt Securities or this Indenture
or of the time for performance by the Partnership or any of the Subsidiary
Guarantors of any other obligations under or arising out of any such terms and
provisions or the extension or the renewal of any thereof, (F) the modification
or amendment (whether material or otherwise) of any duty, agreement or
obligation of the Partnership or any of the Subsidiary Guarantors set forth in
this
60
Indenture, (G) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all of the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of, or other similar proceeding affecting, the Partnership or any of the
Subsidiary Guarantors or any of their respective assets, or the disaffirmance of
the Debt Securities, the Guarantee or this Indenture in any such proceeding, (H)
the release or discharge of the Partnership or any of the Subsidiary Guarantors
from the performance or observance of any agreement, covenant, term or condition
contained in any of such instruments by operation of law, (I) the
unenforceability of the Debt Securities, the Guarantee or this Indenture or (J)
any other circumstances which might otherwise constitute a legal or equitable
discharge of a surety or guarantor.
(e) Each of the Subsidiary Guarantors hereby (A) waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
the merger, insolvency or bankruptcy of the Partnership or any of the Subsidiary
Guarantors, and all demands whatsoever, (B) acknowledges that any agreement,
instrument or document evidencing the Guarantee may be transferred and that the
benefit of its obligations hereunder shall extend to each holder of any
agreement, instrument or document evidencing the Guarantee without notice to it
and (C) covenants that the Guarantee will not be discharged except by complete
performance of the Guarantee. Each of the Subsidiary Guarantors further agrees
that if at any time all or any part of any payment theretofore applied by any
Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including without limitation, the insolvency, bankruptcy or
reorganization of the Partnership or any of the Subsidiary Guarantors, the
Guarantee shall, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence notwithstanding such
application, and the Guarantee shall continue to be effective or be reinstated,
as the case may be, as though such application had not been made.
(f) Each of the Subsidiary Guarantors shall be subrogated to all rights
of the Holders and the Trustee against the Partnership in respect of any amounts
paid by such Subsidiary Guarantor pursuant to the provisions of this Indenture,
provided, however, that such Subsidiary Guarantor, shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation until all of the Debt Securities and the Guarantee shall have been
paid in full or discharged.
Section 14.02. Execution and Delivery of Guarantee. To further evidence
the Guarantee set forth in Section 14.01, each of the Subsidiary Guarantors
hereby agree that a notation relating to such Guarantee, substantially in the
form attached hereto as Annex A, shall be endorsed on each Debt Security
entitled to the benefits of the Guarantee authenticated and delivered by the
Trustee and executed by either manual or facsimile signature of an officer of
Subsidiary Guarantor, or in the case of a Subsidiary Guarantor that is a limited
partnership, an officer of the general partner of each Subsidiary Guarantor.
Each of the Subsidiary Guarantors hereby agree that the Guarantee set forth in
Section 14.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Debt Security a notation relating to the Guarantee. If any
officer of the Subsidiary Guarantor, or in the case of a Subsidiary Guarantor
that is a limited partnership, any officer of the general partner of the
Subsidiary Guarantor, whose signature is on this Indenture or a Debt Security no
longer holds that office at the time the Trustee authenticates such Debt
Security or at any time thereafter, the Guarantee of such Debt
61
Security shall be valid nevertheless. The delivery of any Debt Security by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of the Guarantee set forth in this Indenture on behalf of the
Subsidiary Guarantors.
The Trustee hereby accepts the trusts in this Indenture upon the terms
and conditions herein set forth.
Section 14.03. Limitation on Subsidiary Guarantors' Liability.
(a) Each Subsidiary Guarantor and by its acceptance hereof each Holder
of a Debt Security entitled to the benefits of the Guarantee hereby confirms
that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any Federal or state law. To effectuate
the foregoing intention, the Holders of a Debt Security entitled to the benefits
of the Guarantee and the Subsidiary Guarantors hereby irrevocably agree that the
obligations of each Subsidiary Guarantor under its Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor and to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Guarantee, result
in the obligations of such Subsidiary Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under Federal or
state law.
Section 14.04. Release of Subsidiary Guarantors from Guarantee.
(a) Notwithstanding any other provisions of this Indenture, the
Guarantee of any Subsidiary Guarantor may be released upon the terms and subject
to the conditions set forth in this Section 14.04. Provided that no Default
shall have occurred and shall be continuing under this Indenture, any Guarantee
incurred by a Subsidiary Guarantor pursuant to this Article XIV shall be
unconditionally released and discharged (i) automatically upon (A) any sale,
exchange or transfer, to any Person that is not an Affiliate of the Partnership,
of all of the Partnership's direct or indirect limited partnership or other
equity interests in, or all or substantially all the assets of, such Subsidiary
Guarantor (provided such sale, exchange or transfer is not prohibited by this
Indenture) or (B) the merger of such Subsidiary Guarantor into the Partnership
or any other Subsidiary Guarantor or the liquidation and dissolution of such
Subsidiary Guarantor (in each case to the extent not prohibited by this
Indenture) or (ii) following delivery of a written notice of such release or
discharge by the Partnership to the Trustee, upon (x) the release or discharge
of all guarantees by such Subsidiary Guarantor of any Debt of the Partnership
other than obligations arising under this Indenture and any Debt Securities
issued hereunder, except a discharge or release by or as a result of payment
under such guarantees and (y) after giving effect to the proposed release and
discharge, the aggregate total combined assets of all Subsidiaries of the
Partnership that are not Subsidiary Guarantors do not exceed 2% of consolidated
assets of the Partnership.
(b) The Trustee shall deliver an appropriate instrument evidencing any
release of a Subsidiary Guarantor from the Guarantee upon receipt of a written
request of the Partnership accompanied by an Officers' Certificate and an
Opinion of Counsel the Subsidiary Guarantor is entitled to such release in
accordance with the provisions of this Indenture. Any Subsidiary
62
Guarantor not so released remains liable for the full amount of principal of
(and premium, if any, on) and interest on the Debt Securities entitled to the
benefits of such Guarantee as provided in this Indenture, subject to the
limitations of Section 14.03.
Section 14.05. Subsidiary Guarantor Contribution. In order to provide
for just and equitable contribution among the Subsidiary Guarantors, the
Subsidiary Guarantors shall agree, inter se, that in the event any payment or
distribution is made by any Subsidiary Guarantor (a "Funding Guarantor") under
its Guarantee, such Funding Guarantor shall be entitled to a contribution from
each other Subsidiary Guarantor (if any) in a pro rata amount based on the net
assets of each Subsidiary Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Partnership's obligations with respect to the Debt Securities or any other
Subsidiary Guarantor's obligations with respect to its Guarantee.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
63
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
TEPPCO PARTNERS, L.P.
By: Texas Eastern Products Pipeline
Company, LLC
Its General Partner
By:
------------------------------------
Charles H. Leonard
Senior Vice President, Chief
Financial Officer and Treasurer
TE PRODUCTS PIPELINE COMPANY, LIMITED
PARTNERSHIP
By: TEPPCO GP, Inc.
Its General Partner
By:
------------------------------------
Charles H. Leonard
Senior Vice President, Chief
Financial Officer and Treasurer
TCTM, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
------------------------------------
Charles H. Leonard
Senior Vice President, Chief
Financial Officer and Treasurer
TEPPCO MIDSTREAM COMPANIES, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
------------------------------------
Charles H. Leonard
Senior Vice President, Chief
Financial Officer and Treasurer
64
JONAH GAS GATHERING COMPANY
By: TEPPCO GP, Inc.
Its Managing General Partner
By:
----------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
FIRST UNION NATIONAL BANK, as Trustee
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
65
ANNEX A
NOTATION OF GUARANTEE
Each of the Subsidiary Guarantors (which term includes any successor
Person under the Indenture), has fully, unconditionally and absolutely
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture, the due and punctual payment of the principal of,
and premium, if any, and interest on the Debt Securities and all other amounts
due and payable under the Indenture and the Debt Securities by the Partnership.
The obligations of the Subsidiary Guarantors to the Holders of Debt
Securities and to the Trustee pursuant to the Guarantee and the Indenture are
expressly set forth in Article XIV of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Guarantee.
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP
By: TEPPCO GP, Inc.
Its General Partner
By:
------------------------------------
Charles H. Leonard
Senior Vice President, Chief
Financial Officer and Treasurer
TCTM, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
------------------------------------
Charles H. Leonard
Senior Vice President, Chief
Financial Officer and Treasurer
TEPPCO MIDSTREAM COMPANIES, L.P.
By: TEPPCO GP, Inc.
Its General Partner
By:
------------------------------------
Charles H. Leonard
Senior Vice President, Chief
Financial Officer and Treasurer
A-1
JONAH GAS GATHERING COMPANY
By: TEPPCO GP, Inc.
Its Managing General Partner
By:
----------------------------------------
Charles H. Leonard
Senior Vice President, Chief Financial
Officer and Treasurer
A-2
EXHIBIT 5.1
[VINSON & ELKINS LETTERHEAD]
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
November 30, 2001
TEPPCO Partners, L.P.
TE Products Pipeline Company, Limited Partnership
TCTM, L.P.
TEPPCO Midstream Companies, L.P.
Jonah Gas Gathering Company
2929 Allen Parkway
Houston, Texas 77252
Ladies and Gentlemen:
We have acted as counsel for TEPPCO Partners, L.P., a Delaware limited
partnership (the "Partnership"), with respect to certain legal matters in
connection with the registration by the Partnership under the Securities Act of
1933, as amended (the "Securities Act"), of the offer and sale by the
Partnership from time to time, pursuant to Rule 415 under the Securities Act, of
(i) units representing limited partner interests in the Partnership (the
"Units"), (ii) unsecured debt securities, in one or more series, consisting of
notes, debentures or other evidences of indebtedness (the "Debt Securities") and
(iii) guarantees (the "Guarantees") of such Debt Securities by TE Products
Pipeline Company, Limited Partnership, a Delaware limited partnership ("TE
Products"), TCTM, L.P., a Delaware limited partnership ("TCTM"), TEPPCO
Midstream Companies, L.P., a Delaware limited partnership ("TEPPCO Midstream"),
and Jonah Gas Gathering Company, a Wyoming general partnership ("Jonah" and,
together with TE Products, TCTM and TEPPCO Midstream, the "Operating
Partnerships"). The Units, Debt Securities and Guarantees are collectively
referred to herein as the "Securities." We have also participated in the
preparation of the Prospectus (the "Prospectus") contained in the Partnership's
Registration Statement on Form S-3 (the "Registration Statement") to which this
opinion is an exhibit. Capitalized terms not defined herein shall have the
meanings ascribed to them in the Prospectus.
In rendering the opinions set forth below, we have examined and relied
upon (i) the Registration Statement, including the Prospectus; (ii) the Third
Amended and Restated Agreement of Limited Partnership of the Partnership, dated
as of September 21, 2001; (iii) the Second Amended and Restated Agreement of
Limited Partnership of TE Products, dated as of September 21, 2001; (iv) the
Amended and Restated Agreement of Limited Partnership of TCTM, dated as of
September 21, 2001; (v) the Agreement of Limited Partnership of TEPPCO
Midstream, dated as of September 24, 2001, (vi) the Agreement of Partnership of
Jonah dated as of June 20, 1996; (vii) the forms of Senior and Subordinated
Indenture filed as exhibits to the Registration Statement and (viii) such
certificates, statutes and other instruments and documents as we consider
appropriate for purposes of the opinions hereafter expressed.
In connection with this opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto (including post-effective
amendments), will have become effective; (ii) a Prospectus Supplement will have
been prepared and filed with the Commission describing the Securities offered
thereby; (iii) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner stated in the
Registration Statement and the appropriate Prospectus Supplement; (iv) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered will have been duly authorized and validly executed and
delivered by the Partnership and the other parties thereto; and (v) any
Securities issuable upon conversion, exchange or exercise of any Security being
offered will be duly authorized, created and, if appropriate, reserved for
issuance upon such conversion, exchange or exercise.
Based upon and subject to the foregoing, we are of the opinion that:
1. With respect to the Units, when (i) the Partnership has taken
all necessary action to approve the issuance of such Units,
the terms of the offering and related matters and (ii) the
Units have been issued and delivered in accordance with terms
of the applicable definitive purchase, underwriting or similar
agreement approved by the Partnership upon payment of the
consideration therefor provided for therein, then the Units
will be validly issued, fully paid and non-assessable.
2. With respect to the Debt Securities and the Guarantees, when
(i) the Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended; (ii) the Partnership and
the Operating Partnerships have taken all necessary action to
approve the issuance and terms of such Debt Securities and
Guarantees, the terms of the offering thereof and related
matters; and (iii) such Debt Securities and Guarantees have
been duly executed, authenticated, issued and delivered in
accordance with the provisions of the Indenture and the
applicable definitive purchase, underwriting or similar
agreement approved by the Partnership and the Operating
Partnerships upon payment of the consideration therefor
provided for therein, such Debt Securities and Guarantees will
be legally issued and will constitute valid and legally
binding obligations of the Partnership and the Operating
Partnerships, respectively, enforceable against the
Partnership and the Operating Partnerships in accordance with
their terms, except as such enforcement is subject to any
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or other law relating to or affecting creditors'
rights generally and general principles of equity.
The opinions expressed herein are qualified in the following respects:
A. We have assumed, without independent verification, that the
certificates for the Units will conform to the specimens
thereof examined by us and will have been duly countersigned
by a transfer agent and duly registered by a registrar of the
Units.
B. We have assumed that (i) each document submitted to us for
review is accurate and complete, each such document that is an
original is authentic, each such document that is a copy
conforms to an authentic original and all signatures on each
such document are genuine, and (ii) each certificate from
governmental officials reviewed by us is accurate, complete
and authentic, and all official public records are accurate
and complete.
C. This opinion is limited in all respects to federal laws, the
Delaware Revised Uniform Limited Partnership Act and the
Constitution of the State of Delaware, as interpreted by the
courts of the State of Delaware and of the United States.
We hereby consent to the references to this firm under the captions
"Federal Income Tax Considerations" and "Legal Matters" in the Prospectus and to
the filing of this opinion as an Exhibit to the Registration Statement. By
giving such consent, we do not admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Securities and Exchange Commission issued thereunder.
Very truly yours,
/s/ Vinson & Elkins L.L.P.
EXHIBIT 8.1
[VINSON & ELKINS L.L.P. LETTERHEAD]
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
November 29, 2001
TEPPCO Partners, L.P.
TE Products Pipeline Company, Limited Partnership
TCTM, L.P.
TEPPCO Midstream Companies, L.P.
Jonah Gas Gathering Company
2929 Allen Parkway
Houston, Texas 77252
Ladies and Gentlemen:
We have acted as counsel for TEPPCO Partners, L.P., a Delaware limited
partnership (the "Partnership"), with respect to certain legal matters in
connection with the registration by the Partnership under the Securities Act of
1933, as amended (the "Securities Act"), of the offer and sale by the
Partnership from time to time, pursuant to Rule 415 under the Securities Act, of
(i) units representing limited partner interests in the Partnership (the
"Units"), (ii) unsecured debt securities, in one or more series, consisting of
notes, debentures or other evidences of indebtedness (the "Debt Securities") and
(iii) guarantees (the "Guarantees") of such Debt Securities by TE Products
Pipeline Company, Limited Partnership, a Delaware limited partnership, TCTM,
L.P., a Delaware limited partnership, TEPPCO Midstream Companies, L.P., a
Delaware limited partnership, and Jonah Gas Gathering Company, a Wyoming general
partnership. The Units, Debt Securities and Guarantees are collectively referred
to herein as the "Securities". We have also participated in the preparation of
the Prospectus (the "Prospectus") contained in the Partnership's Registration
Statement on Form S-3 (the "Registration Statement") to which this opinion is an
exhibit.
In connection therewith, we prepared the discussion set forth under the
caption "Tax Considerations" in the Prospectus (the "Discussion"). Capitalized
terms not defined herein shall have the meanings ascribed to them in the
Prospectus.
All statements of legal conclusions contained in the Discussion, unless
otherwise noted, reflect our opinion with respect to the matters set forth
therein as of the effective date of the Registration Statement. In addition, we
are of the opinion that the federal income tax discussion in the Prospectus with
respect to those matters as to which no legal conclusions are provided is an
accurate discussion of such federal income tax matters (except for the
representations and statements of fact of the Partnership and its General
Partner, included in such discussion, as to which we express no opinion).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Prospectus. This
consent does not constitute an admission that we are "experts" within the
meaning given such term by the Securities Act.
Very truly yours,
/s/ Vinson & Elkins L.L.P.
EXHIBIT 23.1
INDEPENDENT ACCOUNTANTS' CONSENT
To the Partners of TEPPCO Partners, L.P.
We consent to the use of our reports on TEPPCO Partners, L.P., TE Products
Pipeline Company, Limited Partnership and Texas Eastern Products Pipeline
Company, LLC incorporated herein by reference and to the reference to our firm
under the heading "Experts" in the prospectus included as part of this
registration statement.
/s/ KPMG LLP
Houston, Texas
November 30, 2001
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of TEPPCO Partners, L.P. of our reports dated September
25, 2000 relating to the combined financial statements of ARCO Pipe Line
Company's APL Business (as defined in the Amended and Restated Purchase
Agreement with Texas Eastern Products Pipeline Company, LLC) and the financial
statements of Seaway Crude Pipeline Company, which appear in the Current Report
on Form 8-K/A of TEPPCO Partners, L.P. filed October 3, 2000. We also consent to
the reference to us under the headings "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
November 30, 2001
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of TEPPCO Partners, L.P. of our report dated October 31,
2001 relating to the financial statements of Jonah Gas Gathering Company as of
December 31, 2000 and for the periods June 1 to December 31, 2000 and January 1
to May 31, 2000 (Predecessor), which appears in the Current Report on Form 8-K/A
of TEPPCO Partners, L.P. filed November 9, 2001. We also consent to the
reference to us under the headings "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
November 30, 2001
EXHIBIT 25.1
Registration No. 333-
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _____
First Union National Bank
(Exact name of trustee as specified in its charter)
United States of America
(Jurisdiction of incorporation or organization if not a U.S. national bank)
22-1147033
(I.R.S. Employer Identification Number)
One First Union
301 South College Street
Charlotte, North Carolina
(Address of principal executive offices)
28288
(Zip code)
Kevin M. Dobrava
First Union National Bank
Corporate Trust Group
5847 San Felipe, Suite 1050
Houston, Texas 77057
(713) 278-4320
(Name, address and telephone number of agent for service)
TEPPCO Partners, L.P.
(Exact name of each obligor as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
76-0291058
(I.R.S. Employer Identification No.)
2929 Allen Parkway
P.O. Box 2521
Houston, Texas
(Address of principal executive offices)
77252-2521
(Zip code)
Debt Securities
(Title of the indenture securities)
ITEM 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
a. Name and address of each examining or supervising authority to which it is
subject.
NAME ADDRESS
Board of Governors of the Federal Washington, D.C.
Reserve System
Comptroller of the Currency Washington, D.C.
Federal Deposit Insurance Washington, D.C.
Corporation
b. Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
The obligor is not an affiliate of the trustee.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE. Furnish the following information as
to each class of voting securities of the trustee:
As of (Insert date within 31 days).
------
COL. A COL. B
TITLE OF CLASS AMOUNT OUTSTANDING
Not Applicable
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES. If the trustee is a trustee under
another indenture under which any other securities, or certificates of interest
or participation in any other securities, of the obligor are outstanding,
furnish the following information:
a. Title of the securities outstanding under each such other indenture.
Not Applicable.
b. A brief statement of the facts relied upon as a basis for the claim that no
conflicting interest within the meaning of Section 310(b)(1) of the Act arises
as a result of the trusteeship under any such other indenture, including a
statement as to how the indenture securities will rank as compared with the
securities issued under such other indenture.
Not Applicable.
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS. If the trustee or any of the directors or executive officers of
the trustee is a director, officer, partner, employee, appointee, or
representative of the obligor of any underwriter for the obligor, identify each
such person having any such connection and state the nature of each such
connection.
Not Applicable
2
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner, and executive
officer of the obligor.
As of (Insert date within 31 days).
----------------
COL. D
COL. C PERCENTAGE OF VOTING
SECURITIES
COL. A COL. B AMOUNT OWNED REPRESENTED BY AMOUNT GIVEN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY IN COL. C
Not Applicable.
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS. Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter:
As of (Insert date within 31 days).
------------------
COL. D
COL. C PERCENTAGE OF VOTING
SECURITIES
COL. A COL. B AMOUNT OWNED REPRESENTED BY AMOUNT GIVEN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY IN COL. C
Not Applicable
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. Furnish the
following information as to securities of the obligor owned beneficially or held
as collateral security for obligations in default by the trustee:
As of (Insert date within 31 days).
------------------
COL. C
AMOUNT OWNED COL.
COL. B BENEFICIALLY OR PERCENT OF CLASS
WHETHER THE SECURITIES HELD AS COLLATERAL REPRESENTED BY
COL. A ARE VOTING OR SECURITY FOR AMOUNT GIVEN
TITLE OF CLASS NONVOTING SECURITIES OBLIGATIONS IN DEFAULT IN COL. C
Not Applicable.
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. If the trustee
owns beneficially or hold as collateral security for obligations in default any
securities of an underwriter for the obligor, furnish the following information
as to each class of securities of such underwriter any of which are so owned or
held by the trustee:
As of (Insert date within 31 days).
-----------------
COL. C COL. D
AMOUNT OWNED BENEFICIALLY PERCENT OF CLASS
COL. A COL. B OR HELD AS COLLATERAL REPRESENTED BY
TITLE OF ISSUER AMOUNT SECURITY FOR OBLIGATIONS AMOUNT GIVEN
AND TITLE OF CLASS OUTSTANDING IN DEFAULT BY TRUSTEE IN COL. C
Not Applicable
3
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. If the trustee owns beneficially
or holds as collateral security for obligations in default voting securities of
a person who, to the knowledge of the trustee (1) owns 10 percent or more of the
voting securities of the obligor or (2) is an affiliate, other than a
subsidiary, of the obligor, furnish the following information as to the voting
securities of such person:
As of (Insert date within 31 days).
------------------
COL. C COL. D
AMOUNT OWNED BENEFICIALLY PERCENT OF CLASS
COL. A COL. B OR HELD AS COLLATERAL REPRESENTED BY
TITLE OF ISSUER AMOUNT SECURITY FOR OBLIGATIONS AMOUNT GIVEN
AND TITLE OF CLASS OUTSTANDING IN DEFAULT BY TRUSTEE IN COL. C
Not Applicable
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. If the
trustee owns beneficially or holds as collateral security for obligations in
default any securities of a person who, to the knowledge of the trustee, owns 50
percent or more of the voting securities of the obligor, furnish the following
information as to each class of securities of such person any of which are so
owned or held by the trustee:
As of (Insert date within 31 days).
------------------
COL. C COL. D
AMOUNT OWNED BENEFICIALLY PERCENT OF CLASS
COL. A COL. B OR HELD AS COLLATERAL REPRESENTED BY
TITLE OF ISSUER AMOUNT SECURITY FOR OBLIGATIONS AMOUNT GIVEN
AND TITLE OF CLASS OUTSTANDING IN DEFAULT BY TRUSTEE IN COL. C
Not Applicable
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. Except as noted in the
instructions, if the obligor is indebted to the trustee, furnish the following
information:
As of (Insert date within 31 days).
----------
COL. A COL. B COL. C
NATURE OF INDEBTEDNESS AMOUNT OUTSTANDING DATE DUE
Not Applicable
ITEM 13 DEFAULTS BY THE OBLIGOR.
a. State whether there is or has been a default with respect to the securities
under this indenture. Explain the nature of any such default.
None.
b. If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
Not Applicable
4
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS. If any underwriter is an affiliate
of the trustee, describe each such affiliation.
Not Applicable
ITEM 15. FOREIGN TRUSTEE. Identify the order or rule pursuant to which the
foreign trustee is authorized to act as sole trustee under indentures qualified
or to be qualified under the Act.
Not Applicable
ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
statement of eligibility.
1. Articles of Association of First Union National Bank as now
in effect.*
2. Certificate of Authority of the trustee to commence
business.*
3. Copy of the authorization of the trustee to exercise
corporate trust powers.*
4. Existing bylaws of the trustee.
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or examining
authority. **
8. Not Applicable.
9. Not Applicable.
- ------------------------
* Previously filed with the Securities and Exchange Commission as an Exhibit
to Form T-1 in connection with Registration Statement Number 333-47985
incorporated herein by reference.
** This report is available over the Internet at the website of the Federal
Deposit Insurance Corporation and this report as therein contained is
incorporated herein by reference. This website is located at
http://www2.fdic.gov/idasp/main.asp. Once at that address, type in "First Union
National Bank" at the field entitled "Institution Name" then click on the "Find"
field above where the name of the bank has been typed in then click on the
certificate number for First Union National Bank (33869) then click on the
"Generate Report" field.
NOTES:
Note 1: The Trustee is a subsidiary of Wachovia Corporation, a bank
holding company; all of the voting securities of the trustee are held by
Wachovia Corporation.
5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, First Union National Bank, a national banking association organized and
existing under the laws of the United States of America, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the city of Houston, and State of Texas, on
the 16th day of November, 2001.
FIRST UNION NATIONAL BANK
(Trustee)
By: /s/ Kevin M. Dobrava
-----------------------------------------
Kevin M. Dobrava, Vice President
(Name and Title)
6
EXHIBIT 6
First Union National Bank, pursuant to the requirements of Section
321(b) of the Trust Indenture Act of 1939, as amended (the "Act") in connection
with the proposed issuance by TEPPCO Partners, L.P. of its Debt Securities to be
issued hereby consents that reports of examination by federal, state,
territorial, or district authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor, as contemplated by
Section 321(b) of the Act.
Dated: November 16, 2001
FIRST UNION NATIONAL BANK
By: /s/ Kevin M. Dobrava
---------------------------------
Kevin M. Dobrava, Vice President
7
EXHIBIT 4
BY-LAWS OF
FIRST UNION NATIONAL BANK
Charter No. 1
Effective June 19, 2001
BY-LAWS OF
FIRST UNION NATIONAL BANK
ARTICLE I
Meetings of Shareholders
Section 1.1 Annual Meeting. The annual meeting of the shareholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday of April in
each year, commencing with the year 1998, except that the Board of Directors
may, from time to time and upon passage of a resolution specifically setting
forth its reasons, set such other date for such meeting during the month of
April as the Board of Directors may deem necessary or appropriate; provided,
however, that if an annual meeting would otherwise fall on a legal holiday, then
such annual meeting shall be held on the second business day following such
legal holiday. The holders of a majority of the outstanding shares entitled to
vote which are represented at any meeting of the shareholders may choose persons
to act as Chairman and as Secretary of the meeting.
Section 1.2 Special Meetings. Except as otherwise specifically provided
by statute, special meetings of the shareholders may be called for any purpose
at any time by the Board of Directors or by any three or more shareholders
owning, in the aggregate, not less than ten percent of the stock of the
Association. Every such special meeting, unless otherwise provided by law, shall
be called by mailing, postage prepaid, not less than ten days prior to the date
fixed for such meeting, to each shareholder at his address appearing on the
books of the Association, a notice stating the purpose of the meeting.
Section 1.3 Nominations for Directors. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any stockholder
of any outstanding class of capital stock of the bank entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the bank, shall be made in writing and shall be delivered
or mailed to the President of the Bank and to the Comptroller of the Currency,
Washington, D. C., not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors, provided however,
that if less than 21 days' notice of such meeting is given to shareholders, such
nomination shall be mailed or delivered to the President of the Bank and to the
Comptroller of the Currency not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the bank that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the bank owned by the notifying
shareholder. Nominations not made in accordance herewith may, in his discretion,
be disregarded by the chairman of the meeting, and upon his instructions, the
vote tellers may disregard all votes cast for each such nominee.
Section 1.4 Judges of Election. The Board may at any time appoint from
among the shareholders three or more persons to serve as Judges of Election at
any meeting of
9
shareholders; to act as judges and tellers with respect to all votes by ballot
at such meeting and to file with the Secretary of the meeting a Certificate
under their hands, certifying the result thereof.
Section 1.5 Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this Association shall act as proxy. Proxies shall be valid only for one
meeting, to be specified therein, and any adjournments of such meeting. Proxies
shall be dated and shall be filed with the records of the meeting.
Section 1.6 Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
Section 2.1 Board of Directors. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
Section 2.2 Number. The Board shall consist of not less than five nor
more than twenty-five directors, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution of a
majority of the full Board or by resolution of the shareholders at any meeting
thereof; provided, however, that a majority of the full Board of Directors may
not increase the number of directors to a number which, (1) exceeds by more than
two the number of directors last elected by shareholders where such number was
fifteen or less, and (2) to a number which exceeds by more than four the number
of directors last elected by shareholders where such number was sixteen or more,
but in no event shall the number of directors exceed twenty-five.
Section 2.3 Organization Meeting. The Secretary of the meeting upon
receiving the certificate of the judges, of the result of any election, shall
notify the directors-elect of their election and of the time at which they are
required to meet at the Main Office of the Association for the purpose of
organizing the new Board and electing and appointing officers of the Association
for the succeeding year. Such meeting shall be held as soon thereafter as
practicable. If, at the time fixed for such meeting, there shall not be a quorum
present, the directors present may adjourn the meeting from time to time, until
a quorum is obtained.
Section 2.4 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such place and time as may be designated by
resolution of the Board of Directors. Upon adoption of such resolution, no
further notice of such meeting dates or the places or times thereof shall be
required. Upon the failure of the Board of Directors to adopt such a resolution,
regular meetings of the Board of Directors shall be held, without notice, on the
third Tuesday in February, April, June, August, October and December, commencing
with the year 1997, at the main office or at such other place and time as may be
designated by the Board of Directors. When any regular meeting of the Board
would otherwise fall on a holiday, the meeting shall be held on the next
business day unless the Board shall designate some other day.
10
Section 2.5 Special Meetings. Special meetings of the Board of
Directors may be called by the President of the Association, or at the request
of three (3) or more directors. Each member of the Board of Directors shall be
given notice stating the time and place, by telegram, letter, or in person, of
each such special meeting.
Section 2.6 Quorum. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less number
may adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice.
Section 2.7 Vacancies. When any vacancy occurs among the directors, the
remaining members of the Board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the Board, or at a special meeting called for that purpose.
Section 2.8 Advisory Boards. The Board of Directors may appoint
Advisory Boards for each of the states in which the Association conducts
operations. Each such Advisory Board shall consist of as many persons as the
Board of Directors may determine. The duties of each Advisory Board shall be to
consult and advise with the Board of Directors and senior officers of the
Association in such state with regard to the best interests of the Association
and to perform such other duties as the Board of Directors may lawfully
delegate. The senior officer in such state, or such officers as directed by such
senior officer, may appoint advisory boards for geographic regions within such
state and may consult with the State Advisory Boards prior to such appointments.
ARTICLE III
Committees of the Board
Section 3.1 The Board of Directors, by resolution adopted by a majority
of the number of directors fixed by these By-Laws, may designate two or more
directors to constitute an Executive Committee and other committees, each of
which, to the extent authorized by law and provided in such resolution, shall
have and may exercise all of the authority of the Board of Directors and the
management of the Association. The designation of any committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or any member of the Board of Directors by law. The Board of Directors
reserves to itself alone the power to act on (1) dissolution, merger or
consolidation, or disposition of substantially all corporate property, (2)
designation of committees or filling vacancies on the Board of Directors or on a
committee of the Board (except as hereinafter provided), (3) adoption, amendment
or repeal of By-laws, (4) amendment or repeal of any resolution of the Board
which by its terms is not so amendable or repealable, and (5) declaration of
dividends, issuance of stock, or recommendations to stockholders of any action
requiring stockholder approval.
The Board of Directors or the Chairman of the Board of Directors of the
Association may change the membership of any committee at any time, fill
vacancies therein, discharge any committee or member thereof either with or
without cause at any time, and change at any time the authority and
responsibility of any such committee.
A majority of the members of any committee of the Board of Directors
may fix such committee's rules of procedure. All action by any committee shall
be reported to the Board of Directors at a meeting succeeding such action,
except such actions as the Board may not
11
require to be reported to it in the resolution creating any such committee. Any
action by any committee shall be subject to revision, alteration, and approval
by the Board of Directors, except to the extent otherwise provided in the
resolution creating such committee; provided, however, that no rights or acts of
third parties shall be affected by any such revision or alteration.
ARTICLE IV
Officers and Employees
Section 4.1 Officers. The officers of the Association may be a Chairman
of the Board, a Vice Chairman of the Board, one or more Chairmen or Vice
Chairmen (who shall not be required to be directors of the Association), a
President, one or more Vice Presidents, a Secretary, a Cashier or Treasurer, and
such other officers, including officers holding similar or equivalent titles to
the above in regions, divisions or functional units of the Association, as may
be appointed by the Board of Directors. The Chairman of the Board and the
President shall be members of the Board of Directors. Any two or more offices
may be held by one person, but no officer shall sign or execute any document in
more than one capacity.
Section 4.2 Election, Term of Office, and Qualification. Each officer
shall be chosen by the Board of Directors and shall hold office until the annual
meeting of the Board of Directors held next after his election or until his
successor shall have been duly chosen and qualified, or until his death, or
until he shall resign, or shall have been disqualified, or shall have been
removed from office.
Section 4.2(a) Officers Acting as Assistant Secretary. Notwithstanding
Section 1 of these By-laws, any Senior Vice President, Vice President, or
Assistant Vice President shall have, by virtue of his office, and by authority
of the By-laws, the authority from time to time to act as an Assistant Secretary
of the Bank, and to such extent, said officers are appointed to the office of
Assistant Secretary.
Section 4.3 Chief Executive Officer. The Board of Directors shall
designate one of its members to be the President of this Association, and the
officer so designated shall be an ex officio member of all committees of the
Association except the Examining Committee, and its Chief Executive Officer
unless some other officer is so designated by the Board of Directors.
Section 4.4 Duties of Officers. The duties of all officers shall be
prescribed by the Board of Directors. Nevertheless, the Board of Directors may
delegate to the Chief Executive Officer the authority to prescribe the duties of
other officers of the corporation not inconsistent with law, the charter, and
these By-laws, and to appoint other employees, prescribe their duties, and to
dismiss them. Notwithstanding such delegation of authority, any officer or
employee also may be dismissed at any time by the Board of Directors.
Section 4.5 Other Employees. The Board of Directors may appoint from
time to time such tellers, vault custodians, bookkeepers, and other clerks,
agents, and employees as it may deem advisable for the prompt and orderly
transaction of the business of the Association, define their duties, fix the
salary to be paid them, and dismiss them. Subject to the authority of the Board
of Directors, the Chief Executive Officer or any other officer of the
Association authorized by him, may appoint and dismiss all such tellers, vault
custodians, bookkeepers and other clerks, agents, and employees, prescribe their
duties and the conditions of their employment, and from time to time fix their
compensation.
12
Section 4.6 Removal and Resignation. Any officer or employee of the
Association may be removed either with or without cause by the Board of
Directors. Any employee other than an officer elected by the Board of Directors
may be dismissed in accordance with the provisions of the preceding Section 4.5.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the Chief Executive Officer of the Association. Any such
resignation shall become effective upon its being accepted by the Board of
Directors, or the Chief Executive Officer.
ARTICLE V
Fiduciary Powers
Section 5.1 Capital Management Group. There shall be an area of this
Association known as the Capital Management Group which shall be responsible for
the exercise of the fiduciary powers of this Association. The Capital Management
Group shall consist of four service areas: Fiduciary Services, Retail Services,
Investments and Marketing. The Fiduciary Services unit shall consist of personal
trust, employee benefits, corporate trust and operations. The General Office for
the Fiduciary Services unit shall be located in Charlotte, N.C., with additional
Trust Offices in such locations as the Association shall determine from time to
time.
Section 5.2 Trust Officers. There shall be a General Trust Officer of
this Association whose duties shall be to manage, supervise and direct all the
activities of the Capital Management Group. Further, there shall be one or more
Senior Trust Officers designated to assist the General Trust Officer in the
performance of his duties. They shall do or cause to be done all things
necessary or proper in carrying out the business of the Capital Management Group
in accordance with provisions of applicable law and regulation.
Section 5.3 General Trust Committee. There shall be a General Trust
Committee composed of not less than four (4) members of the Board of Directors
or officers of this Association who shall be appointed annually, or from time to
time, by the Board of Directors of this Association. Each member shall serve
until his successor is appointed. The Board of Directors or the Chairman of the
Board may change the membership of the General Trust Committee at any time, fill
any vacancies therein, or discharge any member thereof with or without cause at
any time. The General Trust Committee shall counsel and advise on all matters
relating to the business or affairs of the Capital Management Group and shall
adopt overall policies for the conduct of the business of the Capital Management
Group, including, but not limited to: general administration, investment
policies, new business development, and review for approval of major assignments
of functional responsibilities. The General Trust Committee shall appoint the
members of the following subcommittees: the Investment Policy Committee,
Personal Trust Administration Committee, Account Review Committee, and Corporate
and Institutional Accounts Committee. The General Trust Committee shall meet at
least quarterly or as called for by its Chairman or any three (3) members of the
Committee. A quorum shall consist of three (3) members. In carrying out its
responsibilities, the General Trust Committee shall review the fiduciary
activities of the Capital Management Group and may assign the administration and
performance of any fiduciary powers or duties to any officers or employees of
the Capital Management Group or to the Investment Policy Committee, Personal
Trust Administration Committee, Account Review Committee, or Corporate and
Institutional Accounts Committee, or other committees it may designate. One of
the methods to be used in the review process will be the scrutiny of the Reports
of Examination by the Office of the Comptroller of the Currency and the reports
of the Audit Division of First Union Corporation, as they relate to the
activities of the Capital Management Group. The Chairman of the General Trust
Committee shall be appointed
13
by the Chairman of the Board of Directors. The Chairman of the General Trust
Committee shall cause to be recorded in appropriate minutes all actions taken by
the Committee. The minutes shall be signed by its Secretary, approved by its
Chairman and submitted to the Board of Directors at its next regularly scheduled
meeting following a meeting of the General Trust Committee. The Board of
Directors retains responsibility for the proper exercise of this Association's
fiduciary powers.
Section 5.4 Investment Policy Committee. There shall be an Investment
Policy Committee composed of not less than seven (7) officers and/or employees
of this Association, who shall be appointed annually or from time to time by the
General Trust Committee. Each member shall serve until his or her successor is
appointed. Meetings shall be called by the Chairman or by any two (2) members of
the Committee. A quorum shall consist of five (5) members. The Investment Policy
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the General Trust Committee. All actions taken by the
Investment Policy Committee shall be recorded in appropriate minutes, signed by
the Secretary thereof, approved by its Chairman, and submitted to the General
Trust Committee at its next ensuing regular meeting for its review and
approval."
Section 5.5 Personal Trust Administration Committee. There shall be a
Personal Trust Administration Committee composed of not less than five (5)
officers and/or employees of this Association, who shall be appointed annually
or from time to time by the General Trust Committee. Each member shall serve
until his or her successor is appointed. Meetings shall be called by the
Chairman or by any three (3) members of the Committee. A quorum shall consist of
three (3) members. The Personal Trust Administration Committee shall exercise
such fiduciary powers and perform such duties as may be assigned to it by the
General Trust Committee. All actions taken by the Personal Trust Administration
Committee shall be recorded in appropriate minutes, signed by the Secretary
thereof, approved by its Chairman, and submitted to the General Trust Committee
at its next ensuing regular meeting for its review and approval."
Section 5.6 Account Review Committee. There shall be an Account Review
Committee composed of not less than four (4) officers and/or employees of this
Association, who shall be appointed annually or from time to time by the General
Trust Committee. Each member shall serve until his or her successor is
appointed. Meetings shall be called by the Chairman or by any two (2) members of
the Committee. A quorum shall consist of three (3) members. The Account Review
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the General Trust Committee. All actions taken by the Account
Review Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman, and submitted to the General Trust
Committee at its next ensuing regular meeting for its review and approval."
Section 5.7 Corporate and Institutional Accounts Committee. There shall
be a Corporate and Institutional Accounts Committee composed of not less than
five (5) officers and/or employees of this Association, who shall be appointed
annually or from time to time by the General Trust Committee. Each member shall
serve until his or her successor is appointed. Meetings shall be called by the
Chairman or by any two (2) members of the Committee. A quorum shall consist of
three (3) members. The Corporate and Institutional Accounts Committee shall
exercise such fiduciary powers and perform such duties as may be assigned to it
by the General Trust Committee. All actions taken by the Corporate and
Institutional Accounts Committee shall be recorded in appropriate minutes,
signed by the Secretary thereof, approved by its Chairman, and submitted to the
General Trust Committee at its next ensuing regular meeting for its review and
approval."
14
ARTICLE VI
Stock and Stock Certificates
Section 6.1 Transfers. Shares of stock shall be transferable on the
books of the Association, and a transfer book shall be kept in which all
transfers of stock shall be recorded. Every person becoming a shareholder by
such transfer shall, in proportion to his shares, succeed to all rights and
liabilities of the prior holder of such shares.
Section 6.2 Stock Certificates. Certificates of stock shall bear the
signature of the Chairman, the Vice Chairman, the President, or a Vice President
(which may be engraved, printed, or impressed), and shall be signed manually or
by facsimile process by the Secretary, Assistant Secretary, Cashier, Assistant
Cashier, or any other officer appointed by the Board of Directors for that
purpose, to be known as an Authorized Officer, and the seal of the Association
shall be engraved thereon. Each certificate shall recite on its face that the
stock represented thereby is transferable only upon the books of the Association
properly endorsed.
ARTICLE VII
Corporate Seal
Section 7.1 The President, the Cashier, the Secretary, or any Assistant
Cashier, or Assistant Secretary, or other officer thereunto designated by the
Board of Directors shall have authority to affix the corporate seal to any
document requiring such seal, and to attest the same. Such seal shall be
substantially in the following form.
ARTICLE VIII
Miscellaneous Provisions
Section 8.1 Fiscal Year. The fiscal year of the Association shall be
the calendar year.
Section 8.2 Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, notices,
applications, schedules, accounts, affidavits, bonds, undertakings, proxies, and
other instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the Board,
the Vice Chairman of the Board, any Chairman or Vice Chairman, the President,
any Vice President or Assistant Vice President, the Secretary or any Assistant
Secretary, the Cashier or Treasurer or any Assistant Cashier or Assistant
Treasurer, or any officer holding similar or equivalent titles to the above in
any regions, divisions or functional units of the Association, or, if in
connection with the exercise of fiduciary powers of the Association, by any of
said officers or by any Trust Officer or Assistant Trust Officer (or equivalent
titles); provided, however, that where required, any such instrument shall be
attested by one of said officers other than the officer executing such
instrument. Any such instruments may also be executed, acknowledged, verified,
delivered or accepted in behalf of the Association in such other manner and by
such other officers as the
15
Board of Directors may from time to time direct. The provisions of this Section
8.2 are supplementary to any other provision of these By-laws.
Section 8.3 Records. The Articles of Association, the By-laws, and the
proceedings of all meetings of the shareholders, the Board of Directors,
standing committees of the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be signed by the
Secretary, Cashier, or other officer appointed to act as Secretary of the
meeting.
ARTICLE IX
By-laws
Section 9.1 Inspection. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
Section 9.2 Amendments. The By-laws may be amended, altered or
repealed, at any regular or special meeting of the Board of Directors, by a vote
of a majority of the whole number of Directors.
16
Exhibit A
First Union National Bank
Article X
Emergency By-laws
In the event of an emergency declared by the President of the United
States or the person performing his functions, the officers and employees of
this Association will continue to conduct the affairs of the Association under
such guidance from the directors or the Executive Committee as may be available
except as to matters which by statute require specific approval of the Board of
Directors and subject to conformance with any applicable governmental directives
during the emergency.
OFFICERS PRO TEMPORE AND DISASTER
Section 1. The surviving members of the Board of Directors or the
Executive Committee shall have the power, in the absence or disability of any
officer, or upon the refusal of any officer to act, to delegate and prescribe
such officer's powers and duties to any other officer, or to any director, for
the time being.
Section 2. In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of this
Association by its directors and officers as contemplated by these By-laws, any
two or more available members of the then incumbent Executive Committee shall
constitute a quorum of that Committee for the full conduct and management of the
affairs and business of the Association in accordance with the provisions of
Article II of these By-laws; and in addition, such Committee shall be empowered
to exercise all of the powers reserved to the General Trust Committee under
Section 5.3 of Article V hereof. In the event of the unavailability, at such
time, of a minimum of two members of the then incumbent Executive Committee, any
three available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Association in
accordance with the foregoing provisions of this section. This By-law shall be
subject to implementation by resolutions of the Board of Directors passed from
time to time for that purpose, and any provisions of these By-laws (other than
this section) and any resolutions which are contrary to the provisions of this
section or to the provisions of any such implementary resolutions shall be
suspended until it shall be determined by an interim Executive Committee acting
under this section that it shall be to the advantage of this Association to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-laws.
Officer Succession
BE IT RESOLVED, that if consequent upon war or warlike damage or
disaster, the Chief Executive Officer of this Association cannot be located by
the then acting Head Officer or is unable to assume or to continue normal
executive duties, then the authority and duties of the Chief Executive Officer
shall, without further action of the Board of Directors, be automatically
assumed by one of the following persons in the order designated:
17
Chairman
President
Division Head/Area Administrator - Within this officer class, officers
shall take seniority on the basis of length of service in such office
or, in the event of equality, length of service as an officer of the
Association.
Any one of the above persons who in accordance with this resolution
assumes the authority and duties of the Chief Executive Officer shall continue
to serve until he resigns or until five-sixths of the other officers who are
attached to the then acting Head Office decide in writing he is unable to
perform said duties or until the elected Chief Executive Officer of this
Association, or a person higher on the above list, shall become available to
perform the duties of Chief Executive Officer of the Association.
BE IT FURTHER RESOLVED, that anyone dealing with this Association may
accept a certification by any three officers that a specified individual is
acting as Chief Executive Officer in accordance with this resolution; and that
anyone accepting such certification may continue to consider it in force until
notified in writing of a change, said notice of change to carry the signatures
of three officers of the Association.
18
Alternate Locations
The offices of the Association at which its business shall be conducted shall be
the main office thereof in each city which is designated as a City Office (and
branches, if any), and any other legally authorized location which may be leased
or acquired by this Association to carry on its business. During an emergency
resulting in any authorized place of business of this Association being unable
to function, the business ordinarily conducted at such location shall be
relocated elsewhere in suitable quarters, in addition to or in lieu of the
locations heretofore mentioned, as may be designated by the Board of Directors
or by the Executive Committee or by such persons as are then, in accordance with
resolutions adopted from time to time by the Board of Directors dealing with the
exercise of authority in the time of such emergency, conducting the affairs of
this Association. Any temporarily relocated place of business of this
Association shall be returned to its legally authorized location as soon as
practicable and such temporary place of business shall then be discontinued.
Acting Head Offices
BE IT RESOLVED, that in case of and provided because of war or warlike
damage or disaster, the General Office of this Association, located in
Charlotte, North Carolina, is unable temporarily to continue its functions, the
Raleigh office, located in Raleigh, North Carolina, shall automatically and
without further action of this Board of Directors, become the "Acting Head
Office of this Association";
BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage
or disaster, both the General Office of this Association and the said Raleigh
Office of this Association are unable to carry on their functions, then and in
such case, the Asheville Office of this Association, located in Asheville, North
Carolina, shall, without further action of this Board of Directors, become the
"Acting Head Office of this Association"; and if neither the Raleigh Office nor
the Asheville Office can carry on their functions, then the Greensboro Office of
this Association, located in Greensboro, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association"; and if neither the Raleigh Office, the Asheville Office, nor the
Greensboro Office can carry on their functions, then the Lumberton Office of
this Association, located in Lumberton, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association". The Head Office shall resume its functions at its legally
authorized location as soon as practicable.
19
