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As filed with the Securities and Exchange Commission on , 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Star Gas Partners, L.P.
(Exact name of registrant as specified in its charter)
Delaware 5984 06-1437793
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code) Identification No.)
of incorporation or
organization)
2187 Atlantic Street Richard F. Ambury, Vice
P.O. Box 120011 President and Treasurer
Stamford, Connecticut Star Gas LLC
06912-0011 2187 Atlantic Street
(203) 328-7300 P.O. Box 120011
(Address, including zip Stamford, Connecticut 06912-0011
code, and (203) 328-7300
telephone number, (Name, address, including
including area code, of zip code, and
registrant's principal telephone number, including
executive offices) area code, of
agent for service)
Copy to:
Phillips Nizer Benjamin Krim & Ballon LLP
666 Fifth Avenue, 28th Floor
New York, New York 10103
(212) 977-9700
Attn: Alan Shapiro, Esq.
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
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, 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. [_]
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<TABLE>
<CAPTION>
Proposed
Title of Each Class of Securities Maximum Aggregate Amount of
to be Registered Offering Price(1)(2)(3) Registration Fee(1)
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<S> <C> <C>
Common Units............................
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Partnership Securities..................
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Debt Securities(4)......................
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Total.................................. $100,000,000 $26,400.00
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all securities offered from time to time pursuant to this
Registration Statement exceed $100,000,000. To the extent applicable, the
aggregate amount of common units registered is further limited to that
which is permissible under Rule 415(a)(4) under the Securities Act. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(2) There are being registered hereunder a presently indeterminate number of
common units and partnership securities and an indeterminate principal
amount of debt securities.
(3) The proposed maximum aggregate offering price for each class of securities
to be registered is not specified pursuant to General Instruction, II.D. of
Form S-3.
(4) If any debt securities are issued at an original issue discount, then the
offering price of such debt securities shall be in such amount as shall
result in an aggregate initial offering price not to exceed $100,000,000
less the dollar amount of any registered securities previously issued.
----------------
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 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
Subject to Completion: Dated , 2000
Star Gas Partners, L.P.
$100,000,000
[Star Gas Logo] Common Units
Partnership Securities
Debt Securities
This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read this prospectus and any supplement carefully
before you invest.
The common units are listed on the New York Stock Exchange under the symbol
"SGU." The last reported sale price of common units on the NYSE on ,
2000 was $ per common unit. We will provide information in the prospectus
supplement for the trading market, if any, for the debt securities and
partnership securities.
You should read "Risk Factors" beginning on page 3 of this prospectus for a
discussion of the material risks relating to an investment in the 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 information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to purchase
these securities in any state where the offer or sale is prohibited.
The date of this prospectus is , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
GUIDE TO READING THIS PROSPECTUS...... 1
WHO WE ARE............................ 2
ABOUT THIS PROSPECTUS................. 3
RISK FACTORS.......................... 3
Risks Inherent in Our Businesses.... 3
Risks Inherent in an Investment in
Star Gas Partners.................. 7
Tax Risks to Common Unitholders..... 10
THE PETRO TRANSACTION................. 13
Acquisition of Petro................ 13
Financings and Refinancings......... 13
New General Partner................. 14
Amendment of Partnership Agreement.. 14
USE OF PROCEEDS....................... 15
RATIO OF EARNINGS TO FIXED CHARGES.... 15
CASH DISTRIBUTION POLICY.............. 15
General Description of Cash
Distribution....................... 16
Quarterly Distributions of Available
Cash............................... 17
Distributions of Available Cash from
Operating Surplus During the
Subordination Period............... 17
Distributions of Available Cash from
Operating Surplus After the
Subordination Period............... 18
Incentive Distributions During the
Subordination Period............... 18
Incentive Distributions After the
Subordination Period............... 19
Distributions from Capital Surplus.. 20
Limitations and Prohibitions on
Distributions on Subordinated
Interests.......................... 20
Adjustment of Minimum Quarterly
Distribution and Target
Distribution Levels................ 20
Issuance of Additional Senior
Subordinated Units................. 21
Distributions of Cash upon
Liquidation During the
Subordination Period............... 23
Distributions of Cash upon
Liquidation After the Subordination
Period............................. 24
DESCRIPTION OF THE COMMON UNITS....... 25
The Rights of Unitholders........... 25
</TABLE>
<TABLE>
<S> <C>
Transfer Agent and Registrar........ 25
Obligations and Procedures for the
Transfer of Units.................. 25
DESCRIPTION OF PARTNERSHIP
SECURITIES........................... 27
Limitation on Issuance of Additional
Partnership Securities............. 27
Issuance of Additional Partnership
Securities......................... 27
DESCRIPTION OF DEBT SECURITIES........ 29
General............................. 29
Specific Terms of Each Series of
Debt Securities in the Prospectus
Supplement......................... 30
Provisions Only in the Senior
Indenture.......................... 31
Provisions Only in the Subordinated
Indenture.......................... 35
Provisions That Apply to Both
Indentures......................... 35
The Trustee......................... 41
FEDERAL INCOME TAX CONSIDERATIONS..... 42
Tax Consequences of Unit Ownership.. 42
Tax Treatment of Unitholders........ 45
Tax-exempt Organizations and Other
Investors.......................... 48
Tax Treatment of Operations......... 49
Administrative Matters.............. 50
Disposition of Units................ 53
State, Local and Other Tax
Considerations..................... 56
CONFLICTS OF INTEREST................. 57
Conflicts of Interest May Arise as a
Result of the Publicly-Traded
Limited Partnership Structure...... 57
Fiduciary Duties Owed to Unitholders
by the General Partner as
Prescribed by Law and the
Partnership Agreement.............. 58
PLAN OF DISTRIBUTION.................. 60
VALIDITY OF SECURITIES................ 60
EXPERTS............................... 60
WHERE YOU CAN FIND MORE INFORMATION... 61
FORWARD-LOOKING STATEMENTS............ 61
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE............................ 62
ANNEX A--APPLICATION FOR TRANSFER OF
COMMON UNITS......................... A-1
ANNEX B--GLOSSARY OF TERMS............ B-1
</TABLE>
i
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GUIDE TO READING THIS PROSPECTUS
The following information should help you understand some of the conventions
used in this prospectus.
. Throughout this prospectus, we refer to ourselves, Star Gas Partners,
L.P., as "we," or "us" or "Star Gas Partners." Generally we refer to
ourselves as "we" or "us" when discussing operations (such as "We are
the seventh largest retail distributor of propane......''), and as ""Star
Gas Partners'' when discussing our entity or its structure (such as
""Star Gas Partners conducts its operations through Star Gas Propane,
L.P....'').
. Except as the context otherwise requires, references to:
(1) the "Petro transaction" refers to our acquisition of Petroleum Heat
and Power Co., Inc. ("Petro") and certain related transactions that
closed on March 26, 1999;
(2) our operations prior to the completion of the transaction included
the operations of Star Gas Propane, L.P., referred to in this prospectus
as "Star Gas Propane" and its subsidiary; and
(3) our operations from the time of completion of the transaction include
all of the operations cited above together with Petro's home heating oil
operations.
. When we refer to a fiscal year, we are referring to Star Gas Partners'
fiscal year that ends September 30. Historically, Petro has operated on
a calendar year basis.
. This prospectus generally treats Petro's home heating oil operations as
if they had historically been owned and operated by Star Gas Partners.
Prior to the transaction, the home heating oil business and operations
referred to in this prospectus were owned and operated by Petro, which is
the parent of our former general partner. Following the transaction, the
home heating oil business and operations have been operated by Petro,
which is our wholly-owned subsidiary, Petro's immediate parent
corporation, Petro Holdings, Inc., referred to in this prospectus as
"Petro Holdings," and Petro's wholly-owned subsidiaries.
. As part of the transaction, we appointed a new general partner, Star Gas
LLC. References to the "general partner" generally refer to Star Gas LLC
unless the context refers to the period prior to the transaction, in
which case we are referring to Star Gas Corporation.
. For ease of reference, a glossary of some terms used in this prospectus is
included as Annex B to this prospectus. Capitalized terms not otherwise
defined in this prospectus have the meanings given in the glossary.
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WHO WE ARE
General
We are the seventh largest retail distributor of propane and the largest
retail distributor of home heating oil in the United States. Our propane
operations serve customers in the Midwest and Northeast regions, and our home
heating oil operations serve customers in the Northeast and Mid-Atlantic
regions.
Propane Operations
Our propane operations are primarily engaged in the retail distribution of
propane and related supplies and equipment to residential, commercial,
industrial, agricultural and motor fuel customers. We serve our approximately
186,000 propane customers from 78 branch locations and 53 satellite storage
facilities in the Midwest and the Northeast. In addition to our retail
business, we also serve approximately 30 wholesale customers from our
facilities in southern Indiana.
On a pro forma basis giving effect to acquisitions in fiscal 1999,
approximately 90% of our total sales were to retail customers and approximately
10% were to wholesale customers. Our retail sales have historically had a
greater profit margin, more stable customer base and less price sensitivity
than our wholesale business.
Home Heating Oil Operations
We are a leading consolidator in the highly fragmented home heating oil
industry. We serve approximately 335,000 home heating oil customers from 24
branch locations in the Northeast and Mid-Atlantic regions. We also install and
repair heating equipment 24 hours a day, seven days a week, 52 weeks a year,
generally within four hours of requests. These services are an integral part of
our basic home heating oil service, and are designed to maximize customer
satisfaction and loyalty.
As a result of a major strategic study, in 1996 we began to implement an
operational restructuring program designed to take advantage of our size within
the home heating oil industry. This program involves regionalization of our
home heating oil operation into three profit centers, which allows us to
operate more efficiently. In addition, this program enables us to access
developments in communication and computer technology that are in use by other
large distribution businesses, but are generally not used by other retail
heating oil companies. This program is designed to reduce our operating costs,
improve our customer service and establish a brand image among our heating oil
consumers.
For the twelve months ended September 30, 1999, approximately 78% of our
total sales were from sales of home heating oil, approximately 17% were from
the installation and repair of heating equipment and approximately 5% were from
the sale of other petroleum products, including diesel fuel and gasoline, to
commercial customers.
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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 the common units,
partnership securities and debt securities described in this prospectus in one
or more offerings. The common units, partnership securities and debt securities
are sometimes referred to in this prospectus as the "securities". Holders of
common units and partnership securities are referred to as "unitholders" and
holders of debt securities are referred to as "holders." This prospectus
provides you with a general description of us and the securities. Each time we
sell 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 its date. You
should carefully read this prospectus, the prospectus supplement and the
documents we have incorporated by reference under the heading "Incorporation of
Certain Documents by Reference."
RISK FACTORS
Before you invest in the securities, you should be aware that there are risks
in doing so, 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.
If any of the following risks actually occurs, then our business, financial
condition or results of operations could be materially adversely affected. In
such 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
securities could decline and you may lose all or part of your investment.
Risks Inherent in Our Businesses
Since Weather Conditions May Adversely Affect the Demand for Propane and Home
Heating Oil, Our Financial Condition Is Vulnerable to Warm Winters
Weather conditions have a significant impact on the demand for both propane
and home heating oil because our customers depend on these products principally
for space heating purposes. As a result, weather conditions may adversely
impact our operating results and financial condition. During the peak heating
season of October through March, sales of propane represent approximately 70%
to 75% of our annual retail propane volume and sales of home heating oil
represent approximately 75% to 80% of our annual home heating oil volume.
Actual weather conditions can vary substantially from year to year,
significantly affecting our financial performance. Furthermore, warmer than
normal temperatures in one or more regions in which we operate can
significantly decrease the total volume we sell and the gross profit realized
on those sales and, consequently, our results of operations. In fiscal 1999,
temperatures were significantly warmer than normal for the areas in which we
sell propane and home heating oil. We believe that overall levels of both pro
forma Available Cash from Operating Surplus and EBITDA generated during fiscal
1999 were adversely affected during fiscal 1999 primarily due to this
abnormally warm weather. Weather variations also affect demand for propane from
agricultural customers, because dry weather during the harvest season reduces
demand for propane used in crop drying.
Petro's Operating Results Will Be Adversely Affected If Its Significant
Customer Losses Are Not Offset or Reduced by Customer Gains
Petro's net attrition of home heating oil customers has averaged
approximately 5% per year over the five years through 1998. This rate
represents the net of its annual gross customer loss rate of approximately 15%
offset by customer gains of approximately 10% per year. In 1999, net attrition
was approximately 2.3%, representing gains of approximately 11.9% and gross
losses of approximately 14. 2%. Customer losses are the result of various
factors, including:
. customer relocations;
. supplier changes based primarily on price and service;
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. natural gas conversions; and
. credit problems.
Petro may not be able to maintain or reduce its customer attrition rate in the
future.
Sudden and Sharp Oil and Propane Price Increases That Cannot Be Passed on to
Customers May Adversely Affect Our Operating Results
The retail propane and home heating oil industries are "margin-based"
businesses in which gross profits depend on the excess of retail sales prices
over supply costs. Consequently, our profitability is sensitive to changes in
wholesale prices of propane and heating oil caused by changes in supply or
other market conditions. Many of these factors are beyond our control and thus,
when there are sudden and sharp increases in the wholesale costs of propane and
heating oil, we may not be able to pass on these increases to our customers
through retail sales prices. In addition, the timing of cost pass-throughs can
significantly affect margins. Wholesale price increases could reduce our gross
profits and could, if continuing over an extended period of time, reduce demand
by encouraging conservation or conversion to alternative energy sources.
Our home heating oil business also competes for customers with suppliers of
alternative energy products, principally natural gas. We could face additional
price competition from alternative heating sources such as electricity and
natural gas as a result of deregulation in those industries. Over the past five
years, conversions by Petro's customers from heating oil to other sources have
averaged approximately 1% per year of the homes it serves.
Market Volatility and/or Inflation May Cause Us to Sell Inventory at Less Than
the Price That We Purchased It, Which Would Adversely Affect Operating Results
Because of the potential volatility of propane prices, the market price for
propane could fall below the price at which we purchased it, which could
adversely affect gross margin or render sales from inventory unprofitable.
Propane is available from numerous sources, including integrated international
oil companies, independent refiners and independent wholesalers. We purchase
propane from a variety of suppliers under supply contracts and on the spot
market. The major portion of propane purchased by us is produced domestically
representing approximately 94% in fiscal 1999. To the extent that we purchase
propane from Canadian sources, approximately 6% in fiscal 1999, our propane
business will be subject to risks of disruption in foreign supply. We attempt
to minimize inventory risks by purchasing propane on a short-term basis. During
periods of low demand for propane, which generally occur during the summer
months, we have on occasion purchased, and may purchase in the future, large
volumes of propane at relatively attractive prices for storage in our 21
million gallon Indiana underground storage facility for future resale. We may
from time to time engage in transactions, such as options or fixed price
contracts to purchase propane, to hedge product costs in an attempt to reduce
cost volatility. To date, the level of these activities has not been
significant and we are not currently engaged in any of these transactions.
Inflation increases our operating and administrative costs. We attempt to
limit the effects of inflation on our operations through cost control efforts,
productivity improvement and increases in gross profit margins.
If We Do not Make Acquisitions on Economically Acceptable Terms, Our Future
Financial Performance Will Be Limited
Neither the propane nor the home heating oil industry is a growth industry
because of increased competition from alternative energy sources. A significant
portion of our growth in the past decade has been directly tied to the success
of our acquisition programs. Accordingly, our future financial performance will
depend on our ability to continue to make acquisitions at attractive prices. We
cannot assure you that we will be able to identify attractive acquisition
candidates, whether in the home heating oil or propane sector, in the future or
that we will be able to acquire businesses on economically acceptable terms. In
particular, competition for acquisitions in the propane business has
intensified and become more costly. Factors that may adversely
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affect our propane and home heating oil operating and financial results, such
as warm weather patterns, may limit our access to capital and adversely affect
our ability to make acquisitions. Any acquisition may involve potential risks,
including:
.an increase in our indebtedness;
.the inability to integrate the operations of the acquired business;
.the diversion of management's attention from other business concerns; and
.an excess of customer loss or loss of key employees from the acquired
business.
In addition, acquisitions may be dilutive to earnings and distributions to
the unitholders and any additional debt incurred to finance acquisitions may
affect our ability to make distributions to the unitholders.
Because of the Highly Competitive Nature of the Retail Propane and Home
Heating Oil Businesses, We May Not Be Able to Retain Existing Customers or
Acquire New Customers, Which Would Have An Adverse Impact on Our Operating
Results and Financial Condition
In both our propane and home heating oil business, if we are unable to
compete effectively, we may lose existing customers or fail to acquire new
customers, which would have a material adverse effect on our results of
operations and financial condition.
Many of our propane competitors and potential competitors are larger or have
substantially greater financial resources than we do, which may provide them
with some advantages. Generally, competition in the past few years has
intensified, partly as a result of warmer-than-normal weather and general
economic conditions. Most of our propane retail branch locations compete with
five or more marketers or distributors. The principal factors influencing
competition with other retail marketers are:
.price;
.reliability and quality of service;
.responsiveness to customer needs;
.safety concerns;
.long-standing customer relationships;
.the inconvenience of switching tanks and suppliers; and
.the lack of growth in the industry.
We can make no assurances that we will be able to compete successfully on the
basis of these factors. If a competitor attempts to increase market share by
reducing prices, our operating results and financial condition could be
materially and adversely affected. Competition from alternative energy sources
has been increasing as a result of reduced regulation of many utilities,
including natural gas and electricity.
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Our home heating oil business competes with heating oil distributors offering
a broad range of services and prices, from full service distributors, like
Petro, to those offering delivery only. Competition with other companies in the
home heating oil industry is based primarily on customer service and price.
Long-standing customer relationships are typical in the industry. It is
customary for companies to deliver home heating oil to their customers based
upon weather conditions and historical consumption patterns, without the
customer making an affirmative purchase decision. Most companies provide home
heating equipment repair service on a 24-hour per day basis. In some cases,
homeowners have formed buying cooperatives to purchase fuel oil from
distributors at a price lower than individual customers are otherwise able to
obtain. As a result of these factors, it may be difficult for Petro to acquire
new customers.
We Are Subject to Operating and Litigation Risks That Could Adversely Affect
Our Operating Results to the Extent Not Covered by Insurance
Our operations are subject to all operating hazards and risks normally
incidental to handling, storing and transporting and otherwise providing
customers with combustible liquids such as propane and home heating oil. As a
result, we may be a defendant in various legal proceedings and litigation
arising in the ordinary course of business. We maintain insurance policies with
insurers in amounts and with coverages and deductibles as we believe are
reasonable. However, there can be no assurance that this insurance will be
adequate to protect us from all material expenses related to potential future
claims for personal and property damage or that these levels of insurance will
be available in the future at economical prices. In addition, the occurrence of
an explosion, whether or not we are involved, may have an adverse effect on the
public's desire to use our products.
We Are Dependent on Principal Suppliers and Carriers, Increasing the Risk of
an Interruption in Supply That Might Result In a Loss of Revenues and/or
Customers
During fiscal year 1999, 14% of our propane purchases in the Midwest were
purchased on the spot market from various Mont Belvieu, Texas sources, 34% of
our propane purchases were from three refineries in Illinois, Kentucky and
Michigan owned by Marathon Ashland Petroleum, LLC and 13% were purchased from
three refineries in Illinois and Indiana owned by Amoco Canada Marketing Group.
Although we believe that alternative sources of propane are readily available,
if we are unable to purchase propane from our usual sources, the failure to
obtain alternate sources at competitive prices and on a timely basis could have
a material adverse effect on our business.
Historically, a substantial portion of the propane we purchase has originated
in Mont Belvieu, Texas and has been shipped to us through a major common
carrier pipeline. Any significant interruption in the service at Mont Belvieu
or on the common carrier pipeline could have a material adverse effect on our
business.
Our Results of Operations and Financial Condition May Be Adversely Affected by
Governmental Regulation and Associated Environmental and Regulatory Costs
Our home heating oil business is subject to a wide range of federal and state
laws and regulations related to environmental and other regulated matters.
Petro has implemented environmental programs and policies designed to avoid
potential liability and costs under applicable environmental laws. It is
possible, however, that Petro will have increased costs due to stricter
pollution control requirements or liabilities resulting from non-compliance
with operating or other regulatory permits. New environmental regulations might
adversely impact Petro's operations, including underground storage and
transportation of home heating oil. In addition, the environmental risks
inherently associated with our home heating oil operations, such as the risks
of accidental release or spill, are greater than those associated with our
propane operations. It is possible that material costs and liabilities will be
incurred, including those relating to claims for damages to property and
persons.
6
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Risks Inherent in an Investment in Star Gas Partners
Cash Distributions Are Not Guaranteed and May Fluctuate with Our Performance
and Reserve Requirements
Because distributions on the common units and partnership securities are
dependent on the amount of cash generated, distributions may fluctuate based on
our performance. The actual amount of cash that is available will depend upon
numerous factors, including:
.profitability of operations;
.required principal and interest payments on debt;
.cost of acquisitions;
.issuance of debt and equity securities;
.fluctuations in working capital;
.capital expenditures;
.adjustments in reserves;
.prevailing economic conditions; and
.financial, business and other factors.
Some of these factors are beyond the control of the general partner.
The partnership agreement gives the general partner discretion in
establishing reserves for the proper conduct of our business. These reserves
will also affect the amount of cash available for distribution. The general
partner may establish reserves for distributions on the senior subordinated
units only if those reserves will not prevent us from distributing the full
minimum quarterly distribution, plus any arrearages, on the common units for
the following four quarters.
The amount of cash needed to pay the minimum quarterly distribution for the
next four quarters on units outstanding on the date of this prospectus is
approximately $40.3 million. This figure represents $33.1 million for the
common units, $5.7 million for the senior subordinated units, $0.8 million for
the junior subordinated units and $0.7 million for the general partner units.
After giving pro forma effect to the Petro transaction, the amount of available
cash generated in the twelve months ended September 30, 1999 would have been
about $30.3 million.
Our Indebtedness May Limit Our Ability to Make Distributions and Affect our
Operations
We have debt that is substantial compared to our partners' capital. Principal
and interest payable on this debt will reduce cash available to make
distributions on the common units and partnership securities. Under specified
circumstances, the terms of our debt instruments, including the guarantee of
the senior secured notes which were issued in the Petro transaction,will limit
our ability to distribute cash to our unitholders and to borrow additional
funds. The limitations and restrictions in new debt that we and our
subsidiaries issue may be more restrictive than those in current debt. In
addition, some of our debt is secured by our assets. If we defaulted on this
secured debt, the lenders could institute foreclosure proceedings to seize our
assets. Any attempt to stay these foreclosure actions by seeking to reorganize
under the federal Bankruptcy Code would have a material adverse effect on us
and our unitholders.
Provisions Concerning Change of Control, Default and Preclusion From Paying
Distributions in Our Debt Instruments May Affect Distributions
Our debt instruments contain provisions relating to a "change of control." A
change of control of Star Gas Partners would result in approximately $170
million of Petro debt becoming immediately due and payable, and would result in
the re-rating of approximately $96 million of Star Gas Propane debt which could
lead to an increase in the interest rate of such debt. A change of control at
the Petro level would accelerate the Petro debt but not the Star Gas Propane
debt. In either case, this would necessarily affect our ability to make
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distributions to unitholders. Neither Star Gas Partners nor Petro is restricted
from entering into a transaction that would trigger the change of control
provisions. If these change of control provisions are triggered, some of the
outstanding debt may become due. It is possible that Star Gas Partners or Petro
would not have sufficient funds at the time of any change of control to make
the required debt payments or that restrictions in its other debt instruments
would not permit those payments. In some instances, lenders would have the
right to foreclose on Star Gas Partners' or Petro's assets if debt payments
were not made upon a change of control.
Our Holding Company Structure May Limit Our Ability Repay Debt Securities
We are a holding company and have no material operations and only limited
assets. Accordingly, our ability to service our debt obligations will be
entirely dependent upon the receipt of distributions from Star Gas Propane.
Our holding company structure results in two principal risks:
. Star Gas Propane may be restricted by contractual provisions or
applicable laws from providing us the cash that we need to pay our debt
service obligations, including payments on any debt securities we offer
under this prospectus; and
. In any liquidation, reorganization or insolvency proceeding involving
Star Gas Partners or in any other proceeding involving claims of
creditors (other than Star Gas Partners) of Star Gas Propane (including
trade creditors, secured creditors, taxing authorities and creditors
holding guarantees), your claim as a holder of any debt securities we
offer under this prospectus will be effectively subordinated and junior
to the claims of holders of any indebtedness of the Star Gas Propane. As
of September 30, 1999 there was $105.5 million of such indebtedness.
We May Sell Additional Limited Partner Interests, Diluting Existing Interests
of Unitholders
Our partnership agreement generally allows us to issue additional common
units and partnership securities. During the subordinated period, however, the
number of common units that we may issue is subject to certain limitations.
These limitations do not apply to issuances in connection with acquisitions
that are accretive. When we issue additional equity securities, your
proportionate partnership interest will decrease. Such an issuance could
negatively affect the amount of cash distributed to unitholders and the market
price of common units and partnership securities. Issuance of additional common
units will also diminish the relative voting strength of the previously
outstanding units. Following the end of the subordination period there are no
limits on the total number of common units or partnership securities that we
may issue.
The Partnership Agreement Contains Provisions Intended to Discourage a Change
of Management That May Diminish Trading Value
The partnership agreement contains specific provisions that may discourage
attempts to remove an incumbent general partner or otherwise change the
management of Star Gas Partners. These provisions may diminish the trading
price of the units under some circumstances.
Unitholders Have Limited Voting Rights and Do Not Control the General Partner
Unitholders have no right to elect the general partner on an annual or other
continuing basis. The general partner manages and operates Star Gas Partners
and Star Gas Propane. Unlike the holders of common stock in a corporation,
unitholders have only limited voting rights on matters affecting our business.
The general partner generally may not be removed unless approved by the holders
of 66 2/3% of the outstanding units, voting together as a single class but
excluding those held by the general partner and its affiliates. As a result,
unitholders have only limited influence on matters affecting our operation, and
it would be difficult for third parties to control or influence us. Although
the partnership agreement provides that the general partner may not, with
specified exceptions, transfer its general partner units to another person
before December 31, 2005 unless approved by a unit majority, the members of
Star Gas LLC may transfer their limited liability company interests in Star Gas
LLC to a third party at any time without the approval of the unitholders.
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There Is a Limited Call Right That May Require Unitholders to Sell Their
Units at an Undesirable Time or Price
If at any time less than 20% of the outstanding units of any class are held
by persons other than the general partner and its affiliates, the general
partner has the right to acquire all, but not less than all, of those units
held by the unaffiliated persons. The price for these units will generally
equal the then-current market price of the units. As a consequence, a
unitholder may be required to sell his units at an undesirable time or price.
The general partner may assign this acquisition right to any of its affiliates
or Star Gas Partners. After the subordination period ends, if we acquire more
than 66 2/3% of the Class B common units in a twelve-month period, then we will
have a similar call right.
Our Ability to Make Distributions May Be Adversely Affected by Our Obligation
to First Reimburse the General Partner
Before we make any distributions on the units, we will reimburse the general
partner for all expenses it has incurred on our behalf. The reimbursement of
those expenses and the payment of reasonable fees charged by the general
partner for services could adversely affect our ability to make distributions.
Reimbursable expenses and fees are determined by the general partner in its
sole discretion.
Unitholders May Not Have Limited Liability in Some Circumstances
A number of states have not clearly established limitations on the liability
of limited partners for the obligations of a limited partnership. If it were
determined that we had been conducting business in any state and had failed to
comply with the applicable limited partnership statute, or that the rights or
exercise of the rights by the limited partners as a group under the partnership
agreement constituted participation in the "control" of Star Gas Partners, then
a unitholder might be held liable to the same extent as the general partner for
our obligations.
The General Partner Has Conflicts of Interest and Limited Fiduciary
Responsibilities, Which May Permit the General Partner to Favor Its Own
Interests to the Detriment of Unitholders
Conflicts of interest have arisen and could arise in the future as a result
of relationships between the general partner and its affiliates, on the one
hand, and Star Gas Partners or any of the limited partners, on the other hand.
As a result of these conflicts the general partner may favor its own interests
and those of its affiliates over the interests of the unitholders. The nature
of these conflicts is ongoing and includes the following considerations.
. The general partner may limit its liability and reduce its fiduciary
duties, while also restricting the remedies available to unitholders for
actions that might, without the limitations, constitute breaches of
fiduciary duty. Unitholders are deemed to have consented to some actions
and conflicts of interest that might otherwise be deemed a breach of
fiduciary or other duties under applicable state law.
. The general partner is allowed to take into account the interests of
parties in addition to Star Gas Partners in resolving conflicts of
interest, thereby limiting its fiduciary duty to the unitholders.
. Except for Irik P. Sevin, who is subject to a non-competition agreement,
the general partner's affiliates are not prohibited from engaging in
other business or activities, including direct competition with us.
. The general partner determines the amount and timing of asset purchases
and sales, capital expenditures, borrowings and reserves, each of which
can impact the amount of cash that is distributed to unitholders.
. The general partner determines whether to issue additional units or other
equity securities of Star Gas Partners.
. The general partner determines which costs are reimbursable by us.
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. The general partner controls the enforcement of obligations owed to us by
the general partner.
. The general partner decides whether to retain separate counsel,
accountants or others to perform services for us.
. Some officers of the general partner, who will provide services to us,
may also devote significant time to the businesses of the general
partner's affiliates and will be compensated by these affiliates for the
services rendered to them.
. The general partner is not restricted from causing us to pay the general
partner or its affiliates for any services rendered on terms that are
fair and reasonable to us or entering into additional contractual
arrangements with any of these entities on our behalf.
. In some instances the general partner may borrow funds in order to permit
the payment of distributions.
Tax Risks to Common Unitholders
The Increase in Taxes Payable By Petro In the Future Will Reduce Dividends to
Star Gas Partners, Which May Reduce Distributions to Unitholders
Petro and its corporate affiliates do not expect to pay significant federal
income tax for several years following the Petro transaction. However, over
time the amount of federal income taxes paid by Petro and its corporate
affiliates will increase. This will reduce the amount of cash that we can
distribute to our unitholders. A successful IRS challenge to the deduction of
depreciation or interest on specific debt will increase Petro's and its
corporate affiliates' tax liability, also reducing our ability to distribute
cash to our unitholders.
The Petro transaction resulted in income to Petro equal to the difference in
the value of the Star Gas Partners units distributed in the merger, including
the amount of any debt of which Petro is relieved, and the federal income tax
basis Petro had in those units. Petro's net operating losses generally offset
this income and it incurred only nominal tax. The IRS could challenge the
amount of Petro's net operating losses and the use of the net operating losses
to offset income realized in the Petro transaction. A successful challenge
could reduce the cash we have available for distribution.
Petro and its corporate affiliates do not expect to pay significant federal
income tax for several years. Petro and its corporate affiliates do expect to
generate earnings and profits during that time, which will make part of the
distributions from these entities to Star Gas Partners taxable dividend income
to the unitholders. This dividend income cannot be offset by past or future
losses generated by our propane activities.
The IRS Could Classify Us as an Association Taxable as a Corporation, Which
Could Result in Our Paying Tax as an Entity Which Would Substantially Reduce
the Cash Available for Distribution to Unitholders
The federal income tax benefit of an investment in Star Gas Partners depends
largely on Star Gas Partners' classification as a partnership for federal
income tax purposes. Assuming the accuracy of factual matters represented as
true by the general partner and Star Gas Partners, counsel is of the opinion
that, as of , 1999, Star Gas Partners has been and will be classified as
a partnership for federal income tax purposes. No ruling from the IRS as to
classification has been or is expected to be requested. Instead, we intend to
rely on the opinion of counsel, which is not binding on the IRS. Based on the
representations of Star Gas Partners and the general partner and a review of
applicable legal authorities, counsel is also of the opinion that, as of
, 1999, at least 90% of our gross income is "qualifying income," within the
meaning of Section 7704 of the Internal Revenue Code. This means that our
income is derived from the exploration, development, mining or production,
processing, refining, transportation or marketing of any mineral or natural
resource or other items. Whether we will continue to be classified as a
partnership depends, at least partly, on our ability to continue to meet this
qualifying income test in the future.
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If we were classified as an association taxable as a corporation for federal
income tax purposes, we would pay tax on our income at corporate rates, which
is currently a 35% federal rate. If this were to occur, distributions to the
unitholders would generally be taxed again as corporate distributions, and no
income, gains, losses or deductions would flow through to the unitholders.
Because a tax would be imposed upon Star Gas Partners as an entity, the cash
available for distribution to unitholders would be substantially reduced.
Treatment of Star Gas Partners as an association that is taxable as a
corporation or otherwise as a taxable entity would result in a material
reduction in the anticipated cash flow and after-tax return to the unitholders,
likely causing a substantial reduction in the market value of the units.
There can be no assurance that the law will not change so as to cause Star
Gas Partners to be treated as an association taxable as a corporation for
federal income tax purposes or otherwise to be subject 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 Star Gas
Partners to taxation as a corporation or otherwise subjects Star Gas Partners
to entity-level taxation for income tax purposes, then specified provisions of
the partnership agreement are subject to change, including a decrease in
distributions to reflect the impact of that law on us.
A Unitholder May Be Required to Pay Taxes on Income From Star Gas Partners
Even if He Receives No Cash Distributions
A unitholder will be required to pay federal income taxes and, in some cases,
state and local income taxes on his allocable share of our income, whether or
not he receives cash distributions from us. No assurance can be given that a
unitholder will receive cash distributions equal to his allocable share of our
taxable income or even equal to the actual tax liability that results from this
allocable share of income. Further, upon the sale of his units, a unitholder
may incur a tax liability in excess of the amount of cash he receives.
Investors, Other Than Individuals That Are U.S. Residents, May Have Adverse
Tax Consequences From Owning Units
Investment in units by specific tax-exempt entities, regulated investment
companies and foreign persons raises issues unique to these persons. For
example, for any unitholder that is an organization exempt from federal income
tax, including IRAs and other retirement plans, virtually all of the
unitholder's allocable share of taxable income in the first few years will
constitute unrelated business taxable income and thus will be taxable to this
unitholder.
Because We Are a Registered Tax Shelter, A Unitholder or Star Gas Partners
Faces an Increased Risk of an IRS Audit Resulting In Taxes Payable on Star Gas
Partners' and Non-Star Gas Partners' Income
We are registered with the Secretary of the Treasury as a "tax shelter." The
IRS has issued the following tax shelter registration number to Star Gas
Partners: 96026000016. We cannot assure unitholders that we will not be audited
by the IRS or that adjustments to our income or losses will not be made. Any
unitholder owning less than a 1% profit interest in Star Gas Partners has very
limited rights to participate in the income tax audit process. Further, any
adjustments in our tax returns will lead to adjustments in the unitholders' tax
returns and may lead to audits of unitholders' tax returns and adjustments of
items unrelated to us. Each unitholder is responsible for any tax owed as the
result of an examination of his personal tax return.
Star Gas Partners Treats a Purchaser of Units As Having the Same Tax Benefits
As the Seller; the IRS May Challenge This Treatment Which Could Adversely
Affect the Value of the Units
Because we cannot match transferors and transferees of units and because of
other reasons, we have adopted depreciation and amortization conventions that
do not conform with all aspects of specified proposed and final Treasury
Regulations. A successful IRS challenge to those conventions could adversely
affect the amount of tax benefits available to a purchaser of units and could
have a negative impact on the value of the units.
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There Are State, Local and Other Taxes To Which Unitholders Will Probably Be
Subject Solely Because of an Investment In the Units
In addition to federal income taxes, unitholders will likely be subject to
other taxes, such as 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. A unitholder will likely
be required to file state and local income tax returns and pay state and local
income taxes in some or all of the various jurisdictions in which we do
business or own property and may be subject to penalties for failure to comply
with those requirements. The general partner anticipates that substantially all
of our income will be generated in the following states: Connecticut, Indiana,
Kentucky, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York,
Ohio, Pennsylvania, Rhode Island and West Virginia. Each of these states
currently imposes a personal income tax; however, New Hampshire's tax only
applies to interest and dividend income. It is the responsibility of each
unitholder to file all United States federal, state and local tax returns that
may be required of him. Counsel has not rendered an opinion on the state or
local tax consequences of ownership or sale of units.
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THE PETRO TRANSACTION
We acquired Petro through a four part transaction which closed on March 26,
1999. Each part of the transaction closed at the same time. The four principal
parts of the Petro transaction are described below.
Acquisition of Petro
On October 22, 1998, Petro, Star Gas Partners, Star Gas Propane and a wholly-
owned subsidiary of Star Gas Propane, executed a merger agreement. The parties
entered into an amended and restated merger agreement on February 3, 1999 to
reflect changes in the transaction. Under the merger agreement, upon the
completion of the transaction on March 26, 1999, the subsidiary was merged with
and into Petro, with Petro surviving the merger as a wholly-owned indirect
subsidiary of Star Gas Propane. As a result of the merger:
. each outstanding share of Petro Class A common stock, par value $0.10
per share, and Petro Class C common stock, par value $0.10 per share,
other than shares that have been exchanged in the exchange, was
converted into 0.11758 senior subordinated units;
. each outstanding share of Petro junior convertible preferred stock was
converted into 0.13064 common units; and
. each outstanding share of Petro Series C exchangeable preferred stock
due 2009 was converted into the right to receive $10.69 in cash per
share plus accrued and unpaid dividends except for an aggregate of
505,000 shares of Series C exchangeable preferred stock that were
converted into an aggregate of 400,531 common units.
There are 11,228 shares of Petro Class B common stock, par value $0.10 per
share, representing less than 0.01% of the issued and outstanding shares of
Petro common stock, which remained outstanding following the completion of the
Petro transaction.
The "exchange" occurred immediately prior to the merger and was comprised of
the following elements.
(a) Holders of Petro common stock, consisting of Irik P. Sevin, Audrey L.
Sevin, Hanseatic Corp. and Hanseatic Americas Inc., who are referred to as
the "LLC Owners," formed Star Gas LLC, to which they contributed a portion
of their shares of Petro common stock in exchange for all of the limited
liability company interests in Star Gas LLC. Star Gas LLC contributed those
shares to Star Gas Partners in exchange for general partner units. In
addition, the LLC Owners contributed their remaining shares of Petro common
stock to Star Gas Partners in exchange for junior subordinated units.
(b) Other Petro common stockholders who were affiliates of Petro
contributed shares of Petro common stock to Star Gas Partners in exchange
for Star Gas Partners senior subordinated units.
Financings and Refinancings
An integral element of the Petro transaction was the refinancing of Petro's
outstanding debt and preferred stock to substantially reduce Petro's ongoing
borrowing costs. This refinancing was accomplished through several related
transactions, which closed at the same time as the closing of the Petro
transaction.
To accomplish this refinancing, we offered and sold to the public 8.7 million
common units in an equity offering, the net proceeds of which were
approximately $115.8 million. We subsequently sold an additional 230,000 common
units upon the partial exercise of the underwriters' over-allotment option, the
net proceeds of which were approximately $3.0 million. Petro offered and sold,
in a private placement, $90.0 million of senior secured notes, the net proceeds
of which were approximately $87.6 million. Star Gas Partners and Petro Holdings
guaranteed the notes.
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All of the net proceeds of the equity offering, together with the $87.6
million of net proceeds from the debt offering and $5.4 million of Petro's cash
were used:
. to redeem $80.2 million of Petro's 12 1/4% Senior Subordinated
Debentures due 2005, $48.7 million of Petro's 10 1/8% Senior
Subordinated Notes due 2003, $74.3 million of Petro's 9 3/8% Senior
Subordinated Debentures due 2006 and the $17.4 million of Petro's 12
7/8% preferred stock at an aggregate redemption price of $201.3 million;
. to repurchase Petro's 1989 preferred stock; and
. to pay for $6.3 million of the expenses of the Petro transaction.
In lieu of a portion of the cash purchase price that would otherwise be due
to the holders of the Petro 12 7/8% preferred stock, we may in the future issue
an additional 175,000 senior subordinated units.
New General Partner
Since Star Gas Corporation is a wholly-owned subsidiary of Petro and was
acquired as our subsidiary in the Petro transaction, it was no longer able to
serve as our general partner. Our new general partner is Star Gas LLC, which is
owned by the LLC Owners. Star Gas LLC's business activities are limited to
those related to being our general partner. Star Gas LLC does not have a
significant net worth except for its interest in Star Gas Partners.
Amendment of Partnership Agreement
In order to complete the Petro transaction, we needed to amend our
partnership agreement and Star Gas Propane's partnership agreement in effect
before the transaction. The amendment, among other matters, increased the
minimum quarterly distribution from $0.55 to $0.575 per unit.
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USE OF PROCEEDS
Except as we may otherwise disclose in a prospectus supplement relating to an
offering of securities, we will use the net proceeds from the sale of the
securities for general partnership purposes. If we decide to allocate the net
proceeds of an offering of securities to a specific purpose we will make this
decision at the time of the offering and we will describe this allocation in
the related prospectus supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The table below sets forth the ratio of earnings to fixed charges of Star Gas
Partners for the periods indicated.
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................... -- 1.35x 1.27x -- --
</TABLE>
For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as earnings (loss) from continuing operations before income taxes,
plus fixed charges. Fixed charges consist of interest expense on all
indebtedness, the amortization of deferred debt issuance costs and the portion
of operating rental expense that is representative of the interest factor.
Earnings were inadequate to cover fixed charges by $6.0 million for the year
ended September 30, 1995; $0.9 million for the year ended September 30, 1998;
and $44.3 million for the year ended September 30, 1999. On a pro forma basis
after giving effect to the Petro transaction, the ratio of earnings to fixed
charges was 1.07x for the year ended September 30, 1999.
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CASH DISTRIBUTION POLICY
General Description of Cash Distribution
In general, we distribute to our partners on a quarterly basis, all of our
Available Cash in the manner described below. Available Cash is defined in the
glossary and generally means, for any of our fiscal quarters, all cash on hand
at the end of that quarter, less the amount of cash reserves that are necessary
or appropriate in the reasonable discretion of the general partner to:
(1) provide for the proper conduct of our business;
(2) comply with applicable law, any of our debt instruments or other
agreements; or
(3) provide funds for distributions to the common unitholders and the
senior subordinated unitholders during the next four quarters, in some
circumstances.
The general partner may not establish cash reserves for distributions to the
senior subordinated units unless the general partner has determined that the
establishment of reserves will not prevent us from distributing the minimum
quarterly distribution on all common units and any common unit arrearages for
the next four quarters. As discussed below, the restrictions on distributions
to senior subordinated units, junior subordinated units and general partner
units could result in cash that would otherwise be Available Cash being
reserved for other purposes.
Cash distributions will be characterized as distributions from either
Operating Surplus or Capital Surplus. This distinction affects the amounts
distributed among different classes of units. See "--Quarterly Distributions of
Available Cash."
Operating Surplus is defined in the glossary and generally means:
(1) the cash balance of Star Gas Partners on the date we began operations,
plus approximately $20.3 million, plus all of our cash receipts,
excluding cash receipts that constitute Capital Surplus; less
(2) all of our operating expenses, debt service payments, maintenance
capital expenditures and reserves established for future operations;
provided, however, that Operating Surplus is calculated without any
reduction for costs or expenses incurred in the transaction.
Capital Surplus is also defined in the glossary and is generally generated
only by borrowings other than for working capital purposes, sales of debt and
equity securities and sales or other dispositions of assets for cash, other
than inventory, accounts receivable and other assets, all as disposed of in the
ordinary course of business.
All Available Cash distributed from any source will be treated as distributed
from Operating Surplus until the sum of all Available Cash distributed since
our commencement equals the Operating Surplus as of the end of the quarter
before that distribution. This method of cash distribution avoids the
difficulty of trying to determine whether Available Cash is distributed from
Operating Surplus or Capital Surplus. Any excess Available Cash, irrespective
of its source, will be deemed to be Capital Surplus and distributed
accordingly.
If Capital Surplus is distributed on each common unit issued in our initial
public offering in an aggregate amount per unit equal to $22.00 per common
unit, the distinction between Operating Surplus and Capital Surplus will cease.
All distributions after that date will be treated as from Operating Surplus.
The general partner does not expect that there will be significant
distributions from Capital Surplus.
The senior subordinated units and the junior subordinated units are each a
separate class of interests in Star Gas Partners, and the rights of holders of
those interests to participate in distributions differ from the rights of the
holders of common units. When issued, the Class B common units will also be a
separate class of interests in Star Gas Partners.
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Quarterly Distributions of Available Cash
Except for the limitations and prohibitions on distributions discussed below,
we will make distributions to our partners for each of our fiscal quarters
before liquidation in an amount equal to all of our Available Cash for that
quarter. Distributions will be made approximately 45 days after each March 31,
June 30, September 30 and December 31, to holders of record on the applicable
record date. If we generate sufficient Available Cash to satisfy the limitation
described below, the first distribution permitted to be paid to the holders of
the senior subordinated units issued in the transaction will be paid for the
first quarter of our fiscal year 2000, which began on October 1, 1999. For a
discussion of the restrictions on distributions to the holders of subordinated
interests, see "--Limitations and Prohibitions on Distributions on Subordinated
Interests."
Upon expiration of the subordination period, all senior subordinated units
and junior subordinated units will be converted, on a one-for-one basis, into
Class B common units, and distributions on the general partner units will no
longer be subordinated to distributions on the common units. All references to
common units after the expiration of the subordination period are references to
Class A common units and Class B common units, collectively, unless otherwise
indicated. Neither Class A common units nor Class B common units will accrue
arrearages for any quarter after the subordination period, and senior
subordinated units, junior subordinated units and general partner units will
not accrue any arrearages on distributions for any quarter.
Distributions of Available Cash from Operating Surplus During the Subordination
Period
The subordination period is defined in the glossary and will generally extend
until the first day of any quarter beginning on or after October 1, 2002 that
each of the following three events occur:
(1) distributions of Available Cash from Operating Surplus on the common
units, senior subordinated units, junior subordinated units and general
partner units equal or exceed the sum of the minimum quarterly
distributions on all of the outstanding common units, senior
subordinated units, junior subordinated units and general partner units
for each of the three non-overlapping four-quarter periods immediately
preceding that date;
(2) the Adjusted Operating Surplus generated during each of the three
immediately preceding non-overlapping four-quarter periods equaled or
exceeded the sum of the minimum quarterly distributions on all of the
outstanding common units, senior subordinated units, junior
subordinated units and general partner units during those periods on a
fully diluted basis for employee options or other employee incentive
compensation. This includes all outstanding units and all common units
issuable upon exercise of employee options that have, as of the date of
determination, already vested or are scheduled to vest before the end
of the quarter immediately following the quarter for which the
determination is made. It also includes all units that have as of the
date of determination been earned by but not yet issued to our
management for incentive compensation; and
(3) there are no arrearages in payment of the minimum quarterly
distribution on the common units.
In specific circumstances, if the general partner is removed without cause,
the subordination period will end, any existing arrearages on the common units
will be extinguished, the senior subordinated units and junior subordinated
units will immediately convert into Class B common units and distributions on
the general partner units will no longer be subordinated.
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Distributions of Available Cash from Operating Surplus for any quarter during
the subordination period will be made in the following manner:
. First, 100% to the common units, pro rata, until there has been
distributed for each common unit an amount equal to the minimum quarterly
distribution for that quarter.
. Second, 100% to the common units, pro rata, until there has been
distributed for each common unit an amount equal to any cumulative common
unit arrearages on each common unit for any prior quarter.
. Third, 100% to the senior subordinated units, pro rata, until there has
been distributed for each senior subordinated unit an amount equal to the
minimum quarterly distribution for that quarter.
. Fourth, 100% to the junior subordinated units and general partner units,
pro rata, until there has been distributed for each junior subordinated
unit and general partner unit an amount equal to the minimum quarterly
distribution for that quarter.
. Thereafter, in the manner described in "--Incentive Distributions During
the Subordination Period" below.
The general partner has a 1.85% general partner interest in Star Gas Partners
in the form of general partner units and a 0.01% general partner interest in
Star Gas Propane. References in this prospectus to distributions on the general
partner units disregard the general partner's 0.01% general partner interest in
Star Gas Propane.
Distributions of Available Cash from Operating Surplus After the Subordination
Period
Distributions of Available Cash from Operating Surplus for any quarter after
the subordination period will be made in the following manner:
(1) First, 100% to all units, pro rata, until there has been distributed to
each unit an amount equal to the minimum quarterly distribution for
that quarter.
(2) Thereafter, in the manner described in "--Incentive Distributions After
the Subordination Period" below.
Incentive Distributions During the Subordination Period
For any quarter that both (1) and (2) below occur, holders of the senior
subordinated units, junior subordinated units and general partner units will
receive incentive distributions as described below.
(1) Available Cash from Operating Surplus is distributed to each of the
common units, senior subordinated units, junior subordinated units and
general partner units in an amount equal to the minimum quarterly
distribution.
(2) Available Cash has been distributed on outstanding common units in the
amount as may be necessary to eliminate any cumulative common unit
arrearages.
After the distributions described in (1) and (2) above are met, additional
Available Cash from Operating Surplus for that quarter will be distributed
among the units in the following manner:
. First, 100% to all units, until each unit has received, in addition to
any distributions to the common units to eliminate any cumulative common
unit arrearages, a total of $0.604 per unit for that quarter (the "First
Target Distribution").
. Second, 86.7% to all units, pro rata, and 13.3% to all senior
subordinated units, junior subordinated units and general partner units,
pro rata, until each common unit has received, in addition to any
distributions to eliminate any cumulative common unit arrearages, a total
of $0.711 per unit for that quarter (the "Second Target Distribution").
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. Third, 76.5% to all units, pro rata, and 23.5% to all senior subordinated
units, junior subordinated units and general partner units, pro rata,
until each common unit has received, in addition to any distributions to
eliminate any cumulative common unit arrearages, a total of $0.926 per
unit for that quarter (the "Third Target Distribution").
. Thereafter, 51.0% to all units, pro rata, and 49.0% to all senior
subordinated units, junior subordinated units and general partner units,
pro rata.
The partnership agreement may not be amended, including the issuance of
additional Star Gas Partners securities, in any manner that would increase the
aggregate amount of incentive distributions without the approval of a majority
of the outstanding units of the classes, each class voting separately, that
would be adversely affected.
The following table illustrates the amount of Available Cash from Operating
Surplus distributed pro rata as the base distribution to all unitholders pro
rata and the percentage of Available Cash distributed as incentive
distributions to the holders of senior subordinated units, junior subordinated
units and general partner units only at the target distribution levels. The
percentages in the table below are the percentage interests of the unitholders
in Available Cash from Operating Surplus distributed as base distributions to
all unitholders and distributed as incentive distributions based on the number
of units outstanding immediately after completion of the transaction.
<TABLE>
<CAPTION>
Percentage of Available Cash
Distributed as Incentive
Distributions to the Specified
Percentage of Percentage of Unit Class
Quarterly Available Cash Available Cash ---------------------------------
Distribution Distributed as Distributed as Senior Junior General
Amount per Base Incentive Subordinated Subordinated Partner
Common Unit Distributions Distributions Units Units Units
------------ -------------- -------------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Minimum Quarterly
Distribution........... $0.575 100.0% -- -- -- --
First Target
Distribution........... 0.604 100.0 -- -- -- --
Second Target
Distribution........... 0.711 86.7 13.3% 10.3% 1.6% 1.4%
Third Target
Distribution........... 0.926 76.5 23.5 18.2 2.9 2.4
Thereafter.............. -- 51.0 49.0 37.9 6.1 5.0
</TABLE>
The percentage allocation of incentive distributions among senior
subordinated units, junior subordinated units and general partner units, will
change in the future if there are additional non-proportional issuances of
units.
Incentive Distributions After the Subordination Period
For any quarter for which Available Cash from Operating Surplus is
distributed to each of the Class A common units, the Class B common units and
general partner units in an amount equal to the minimum quarterly distribution,
then any additional Available Cash from Operating Surplus for that quarter will
be distributed among the unitholders in the following manner:
. First, 100% to all units, pro rata, until each unit has received the First
Target Distribution.
. Second, 86.7% to all units, pro rata, and 13.3% to all Class B common
units and general partner units, pro rata, until each Class A common unit
has received the Second Target Distribution.
. Third, 76.5% to all units, pro rata, and 23.5% to all Class B common
units and general partner units, pro rata, until each Class A common unit
has received the Third Target Distribution.
. Thereafter, 51% to all units, pro rata, and 49% to all Class B common
units and general partner units, pro rata.
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Distributions from Capital Surplus
Distributions of Available Cash from Capital Surplus will be made 100% on all
units, pro rata, until each common unit that was issued in our initial public
offering has received distributions equal to $22.00. This was the unit price
from the initial public offering. Thereafter, all distributions from Capital
Surplus will be distributed as if they were from Operating Surplus.
When a distribution is made from Capital Surplus, it is treated as if it were
a repayment of the unit price from the initial public offering. To reflect
repayment, the minimum quarterly distribution and the target distribution
levels will be adjusted downward by multiplying each amount by a fraction. This
fraction is determined as follows: the numerator is the unrecovered initial
unit price immediately after giving effect to the repayment and the denominator
is the unrecovered initial unit price immediately before the repayment. For
example, based on the Unrecovered Initial Unit Price of $22.00 per unit and
assuming Available Cash from Capital Surplus of $11.00 per unit is distributed
on all common units issued in the initial public offering, then the amount of
the minimum quarterly distribution and the target distribution levels would
each be reduced to 50% of its initial level.
A "payback" of the unit price from the initial public offering occurs when
the unrecovered initial unit price is zero. At that time, the minimum quarterly
distribution and the target distribution levels each will have been reduced to
zero. All distributions of Available Cash from all sources after that time will
be treated as if they were from Operating Surplus. Because the minimum
quarterly distribution and the target distribution levels will have been
reduced to zero, the holders of the rights to incentive distributions will then
be entitled to receive 49% of all distributions of Available Cash, after
distributions for cumulative common unit arrearages.
Distributions from Capital Surplus will not reduce the minimum quarterly
distribution or any of the target distribution levels for the quarter in which
they are distributed.
Limitations and Prohibitions on Distributions on Subordinated Interests
Distributions on the senior subordinated units, junior subordinated units and
general partner units were prohibited during our fiscal year 1999 following the
completion of the Petro transaction. There was no prohibition on distributions
to common units during this time and all minimum quarterly distributions were
paid to common unitholders.
Beginning with the first quarter of our fiscal year 2000, which began on
October 1, 1999, no distributions will be made on the senior subordinated
units, junior subordinated units or general partner units, unless the aggregate
amount of distributions on all units for all quarters, beginning with the first
quarter of our fiscal year 2000, is equal to or less than the total Operating
Surplus generated by us since October 1, 1999. Solely for purposes of this
limitation, Operating Surplus does not include our cash balance on the date we
began operations, plus approximately $20.3 million.
The holders of the senior subordinated units, junior subordinated units and
general partner units are not prohibited from receiving distributions from
Capital Surplus in a partial liquidation during the subordination period.
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
In addition to adjustments made upon a distribution of Available Cash from
Capital Surplus, the following will each be proportionately adjusted upward or
downward, as appropriate, if any combination or subdivision of units should
occur:
(1) the minimum quarterly distribution;
(2) the target distribution levels;
(3) the Unrecovered Initial Unit Price;
20
<PAGE>
(4) the number of additional common units issuable during the
subordination period without a unitholder vote;
(5) the number of Class B common units issuable upon conversion of the
senior subordinated units and the junior subordinated units; and
(6) other amounts calculated on a per unit basis.
However, no adjustment will be made by reason of the issuance of additional
units for cash or property. For example, if a two-for-one split of the common
units should occur, the minimum quarterly distribution, the target distribution
levels and the Unrecovered Initial Unit Price would each be reduced to 50% of
its initial level.
The minimum quarterly distribution and target distribution levels may also be
adjusted if legislation is enacted or if existing law is modified or
interpreted in a manner that causes us to become taxable as a corporation or
otherwise subject to taxation as an entity for federal, state or local income
tax purposes. In this event, the minimum quarterly distribution and target
distribution levels for each quarter after that time would be reduced to
amounts equal to the product of:
(1) the minimum quarterly distribution or target distribution level;
multiplied by
(2) one minus the sum of:
(x) the highest marginal federal corporate income tax rate to which
we are then subject as an entity; plus
(y) any increase in the effective overall state and local income tax
rate to which we are subject as a result of the new imposition of
the entity level tax, after taking into account the benefit of
any deduction allowable for federal income tax purposes for the
payment of state and local income taxes, but only to the extent
of the increase in rates resulting from that legislation or
interpretation.
For example, assuming we are not previously subject to state and local income
tax, if we were to become taxable as an entity for federal income tax purposes
and we became subject to a maximum marginal federal, and effective state and
local, income tax rate of 38%, then the minimum quarterly distribution and the
target distribution levels would each be reduced to 62% of the amount thereof
immediately before the adjustment.
Issuance of Additional Senior Subordinated Units
The partnership agreement provides for the issuance of up to 909,000
additional senior subordinated units if Petro meets specified financial tests.
Specifically, if the dollar amount of Petro Adjusted Operating Surplus per
Petro Unit equals or exceeds $2.90 for any four-quarter period that occurs
between the first and fifth anniversaries of the Petro transaction, we will
issue 303,000 senior subordinated units to the holders of the senior
subordinated units, junior subordinated units and general partner units of
record for the final quarter of that four-quarter period. After the end of the
subordination period, we would instead issue 303,000 Class B common units to
the holders of the Class B common units and the general partner units. In any
case, we may not issue more than 303,000 senior subordinated units or Class B
common units in any 365-day period. Furthermore, we may not issue more than
909,000 senior subordinated units or Class B common units under this provision
in the aggregate. We will not issue any fractional units in the issuance of
these additional units but will pay to each holder who would otherwise be
entitled to a fractional unit an amount in cash in lieu of those fractional
units. The amount of cash to be paid will be determined by multiplying the
fraction by the current market price of a senior subordinated unit or a Class B
common unit, as the case may be. For this purpose, the current market price is
set as of the date three days prior to issuance of the additional units. On the
first day after the record date for distributions for the first quarter ending
on or after the fifth anniversary of completion of the Petro transaction, the
right to receive the additional units shall lapse and all conversion rights
shall cease to exist.
In addition, in lieu of a portion of the cash purchase price that would
otherwise be due to the holders of the Petro 12 7/8% preferred stock, we may in
the future issue an additional 175,000 senior subordinated units.
21
<PAGE>
"Petro Adjusted Operating Surplus" means, for any four-quarter period, the
Adjusted Operating Surplus generated by Petro, which includes all subsidiaries
of Star Gas Partners primarily engaged in the home heating oil business, during
that four quarter period. The determination of this amount is made in good
faith by a majority of the members of the board of directors of the general
partner acting with the concurrence of the audit committee. In calculating
Petro Adjusted Operating Surplus:
(1) debt service, including the payment of principal, interest and
premium on all debt incurred or assumed by Petro or any of its
affiliates, the proceeds of which are used by or for the benefit of
Petro, including the proceeds from the debt offering, shall be
included to the extent that debt service is included in the
calculation of Operating Surplus; and
(2) debt service, including the payment of principal, interest and
premium, on all debt incurred or assumed by Petro or any of its
affiliates, the proceeds of which are not used by or for the
benefit of Petro, shall be excluded.
"Petro Units", for any date, means the sum of:
(1) the excess of the number of units outstanding at completion of the
Petro transaction over the number of units outstanding immediately
before the completion of the Petro transaction;
(2) the number of units issued by Star Gas Partners after the
transaction to the extent the net proceeds of which are contributed
to Petro, which for these purposes includes all subsidiaries of
Star Gas Partners primarily engaged in the home heating oil
business;
(3) the number of senior subordinated units or Class B common units
issued under the partnership agreement based on the performance of
Petro; and
(4) the deemed number of units outstanding based upon a contribution of
capital to Petro by Star Gas Partners or any of its affiliates
after completion of the transaction, which contribution is not
covered by (2) above or traceable to debt proceeds, which number of
deemed units is obtained by dividing:
(A) the amount of that Star Gas Partners' contribution; by
(B) the Current Market Price of a common unit, or of a Class A
common unit after the termination of the subordination period.
For purposes of (4) above, the amount used to pay down the Petro debt discussed
below will be treated as if it were contributed to Petro by Star Gas Partners.
Specifically, Petro debt paid or debt allocated to Petro from internally
generated funds that exist at Petro only because Petro has not paid dividends
up to Star Gas Partners in an amount equal to the distributions that would have
been paid on the Petro Units had they been actual outstanding units of Star Gas
Partners will fall within (4) above. The distribution per senior subordinated
unit of Star Gas Partners shall be the amount that Star Gas Partners would have
been deemed to have distributed per Petro Unit had they been actual outstanding
units of Star Gas Partners. For purposes of the number of deemed outstanding
units in (4) above, those units shall be deemed to be issued on the date of the
capital contribution. For purposes of determining the number of outstanding
Petro Units for any period of time, the number of units issued under (2), (3)
and (4) above shall be determined on a weighted average basis based on the
amount of time they have been outstanding. For this purpose, common unit means
Class A common unit upon expiration of the subordination period. Petro Units
are not "units" as such term is used in this prospectus.
The terms upon which any of the said additional units may be issued may not
be amended in a manner that would materially adversely affect the rights of the
holders of those units without the affirmative vote of the holders of a
majority of the outstanding senior subordinated units, junior subordinated
units and general partner units, voting together as a single class.
22
<PAGE>
Distributions of Cash upon Liquidation During the Subordination Period
Following the beginning of the dissolution and liquidation, assets will be
sold or otherwise disposed of and the partners' capital account balances will
be adjusted to reflect any resulting gain or loss. The proceeds of liquidation
will first be applied to the payment of our creditors in the order of priority
provided in the partnership agreement and by law and, thereafter, be
distributed on the units in accordance with respective capital account
balances, as so adjusted.
Partners are entitled to liquidation distributions in accordance with capital
account balances. Although operating losses are allocated on all units pro
rata, the allocations of gains and losses attributable to liquidation are
intended to favor the holders of outstanding common units over the holders of
all other outstanding units, to the extent of the unrecovered initial unit
price plus any cumulative common unit arrearages. However, no assurance can be
given that there will be sufficient gain upon liquidation of Star Gas Partners
to enable the holders of common units to fully recover their Unrecovered
Initial Unit Price and arrearages, even though there may be cash available for
distribution to the holders of senior subordinated units and junior
subordinated units. The manner of the adjustment is provided in the partnership
agreement. If our liquidation occurs before the end of the subordination
period, any gain, or unrealized gain attributable to assets distributed in
kind, will be allocated to the partners in the following manner:
. First, to the partners that have negative balances in their capital
accounts, to the extent of and in proportion to, those negative balances.
. Second, 100% to the common units, pro rata, until the capital account for
each common unit is equal to the Unrecovered Initial Unit Price for that
common unit plus the amount of the minimum quarterly distribution for the
fiscal quarter during which the dissolution occurs, plus any cumulative
common unit arrearages on those common units.
. Third, 100% to the senior subordinated units, pro rata, until the capital
account for each senior subordinated unit is equal to the Unrecovered
Initial Unit Price plus the amount of the minimum quarterly distribution
for the fiscal quarter during which the dissolution occurs.
. Fourth, 100% to the junior subordinated units and general partner units,
pro rata, until the capital account for each junior subordinated unit is
equal to the Unrecovered Initial Unit Price plus the amount of the
minimum quarterly distribution for the fiscal quarter during which the
dissolution occurs.
. Fifth, 100% to all units, pro rata, until there has been allocated under
this clause an amount per common unit equal to (a) the excess of the
First Target Distribution per unit over the then effective minimum
quarterly distribution per unit for each quarter of Star Gas Partners'
existence, less (b) the amount per common unit of any distributions of
Available Cash from Operating Surplus in excess of the then effective
minimum quarterly distribution per unit that was distributed 100% to all
units, pro rata, for each quarter of Star Gas Partners' existence.
. Sixth, 86.7% to all units, pro rata, 13.3% to senior subordinated units,
junior subordinated units and general partner units, pro rata, until
there has been allocated under this clause an amount per common unit
equal to (a) the excess of the Second Target Distribution per common unit
over the First Target Distribution per common unit for each quarter of
Star Gas Partners' existence, less (b) the amount per common unit of any
distributions of Available Cash from Operating Surplus in excess of the
First Target Distribution per common unit but not in excess of the Second
Target Distribution for each quarter of Star Gas Partners' existence.
. Seventh, 76.5% to all units, pro rata, and 23.5% to all senior
subordinated units, junior subordinated units and general partner units,
pro rata, until there has been allocated under this clause an amount per
common unit equal to (a) the excess of the Third Target Distribution per
common unit over the Second Target Distribution but not in excess of the
Third Target Distribution for each quarter of Star Gas Partners'
existence.
. Thereafter, 51.0% to all units, pro rata, and 49.0% to all senior
subordinated units, junior subordinated units and general partner units,
pro rata.
23
<PAGE>
Any loss or unrealized loss will be allocated to the unitholders in the
following manner:
. First, 100% to the junior subordinated units and general partner units,
pro rata, in proportion to the positive balances in their capital
accounts until the positive balances in their capital accounts have been
reduced to zero.
. Second, 100% to the senior subordinated units in proportion to the
positive balances in their capital accounts until the positive balances
in their capital accounts have been reduced to zero.
. Third, 100% to the common units in proportion to the positive balances in
their capital accounts until the positive balances in their capital
accounts have been reduced to zero.
. Thereafter, to the general partner units.
Distributions of Cash upon Liquidation After the Subordination Period
If our liquidation occurs after the end of the subordination period, any
gain, or unrealized gain attributable to assets distributed in kind, will be
allocated to the partners in the following manner:
. First, to the partners that have negative balances in their capital
accounts to the extent of and in proportion to those negative balances.
. Second, 100% to all Class A common units and Class B common units, until
the capital account for each Class A common unit and Class B common unit
is equal to the Unrecovered Initial Unit Price, plus the amount of the
minimum quarterly distribution for the fiscal quarter during which the
dissolution occurs.
. Third, 100% to all units, pro rata, until there has been allocated under
this clause an amount per Class A common unit equal to (a) the excess of
the First Target Distribution per Class A common unit over the then
effective minimum quarterly distribution for each quarter of our
existence, less (b) the amount per Class A common unit of any
distributions of Available Cash from Operating Surplus in excess of the
then effective minimum quarterly distribution per Class A common unit
that was distributed 100% to units, pro rata, for each quarter of our
existence.
. Fourth, 86.7% to all units, pro rata, and 13.3% to Class B common units
and general partner units, pro rata, until there has been allocated under
this clause an amount per Class A common unit equal to (a) the excess of
the Second Target Distribution per Class A common unit over the First
Target Distribution per Class A common unit for each quarter of our
existence, less (b) the amount per Class A common unit of any
distributions of Available Cash from Operating Surplus in excess of the
First Target Distribution but not in excess of the Second Target
Distribution for each quarter of our existence.
. Fifth, 76.5% to all units, pro rata, and 23.5% to Class B common units
and general partner units, pro rata, until there has been allocated under
this clause an amount per Class A common unit equal to (a) the excess of
the Third Target Distribution per Class A common unit over the Second
Target Distribution per Class A common unit for each quarter of our
existence, less (b) the amount per Class A common unit of any
distributions of Available Cash from Operating Surplus in excess of the
Second Target Distribution but not in excess of the Third Target
Distribution for each quarter of our existence.
. Thereafter, 51.0% to all units, pro rata, and 49.0% to all Class B common
units and general partner units, pro rata.
Any loss or unrealized loss will be allocated to the general partner units,
the Class A common units and the Class B common units, pro rata, in proportion
to the positive balances in their capital accounts, until the positive balances
in those capital accounts have been reduced to zero.
Interim adjustments to capital accounts will be made at the time we issue
additional interests or make distributions of property. These adjustments will
be based on the fair market value of the interests issued or the property
distributed and any gain or loss resulting from the adjustments will be
allocated to the unitholders in the same manner as gain or loss is allocated
upon liquidation.
24
<PAGE>
DESCRIPTION OF THE COMMON UNITS
The common units have been registered under the Exchange Act and we are
subject to the reporting and certain other requirements of the Exchange Act. We
are required to file periodic reports containing financial and other
information with the SEC.
Purchasers of common units in this offering and later transferees of common
units, or their brokers, agents or nominees on their behalf, will be required
to execute transfer applications. The form of transfer application is included
as Annex A to this prospectus and is also shown on the reverse side of the
certificate representing common units. Purchasers may hold common units in
nominee accounts, provided that the broker, or other nominee, executes and
delivers a transfer application and becomes a limited partner. We will be
entitled to treat the nominee holder of a common unit as the absolute owner of
that unit, and the beneficial owner's rights will be limited solely to those
that it has against the nominee holder.
The Rights of Unitholders
Generally, the common units represent limited partner interests, which
entitle the holders of those units to participate in our distributions and
exercise the rights or privileges available to limited partners under the
partnership agreement. For a description of the relative rights and preferences
of holders of common units in and to our distributions, see "Cash Distribution
Policy."
Transfer Agent and Registrar
We have retained BankBoston N.A. as registrar and transfer agent for the
common units. The transfer agent receives a fee from us for serving in these
capacities. All fees charged by the transfer agent for transfers of common
units will be borne by us and not by the holders of common units, except that
fees similar to those customarily paid by stockholders for surety bond premiums
to replace lost or stolen certificates, taxes and other governmental charges,
special charges for services requested by a holder of a common unit and other
similar fees or charges will be borne by the unitholder. There will be no
charge to holders for disbursements of cash distributions. We will indemnify
the transfer agent, its agents and each of their shareholders, directors,
officers and employees against all claims and losses that may arise out of acts
performed or omitted for its activities as transfer agent, except for any
liability due to any negligence, gross negligence, bad faith or intentional
misconduct of the indemnified person or entity.
The transfer agent may resign, or be removed by us. If no successor is
appointed within 30 days, the general partner may act as the transfer agent and
registrar until a successor is appointed.
Obligations and Procedures for the Transfer of Units
Until a common unit has been transferred on our books, we and the transfer
agent, notwithstanding any notice to the contrary, may treat the record holder
as the absolute owner for all purposes, except as otherwise required by law or
stock exchange regulations. The transfer of the common units to persons that
purchase directly from underwriters will be accomplished through the
completion, execution and delivery of a transfer application by that purchaser
for that purchase. Any later transfers of a common unit will not be recorded by
the transfer agent or recognized by us unless the transferee executes and
delivers a transfer application. By executing and delivering a transfer
application, the transferee of common units does the following:
. Becomes the record holder of those units and shall be constituted as an
assignee until admitted into Star Gas Partners as a substituted limited
partner;
. Automatically requests admission as a substituted limited partner in Star
Gas Partners;
. Agrees to be bound by the terms and conditions of, and executes, the
partnership agreement;
25
<PAGE>
. Represents that the transferee has the capacity, power and authority to
enter into the partnership agreement;
. Grants powers of attorney to the general partner and any liquidator of
Star Gas Partners as specified in the partnership agreement; and
. Makes the consents and waivers contained in the partnership agreement.
An assignee will become a substituted limited partner of Star Gas Partners
for the transferred common units upon satisfaction of the following two
conditions:
. The consent of the general partner, which may be withheld for any reason
in its sole discretion.
. The recording of the name of the assignee on the books and records of
Star Gas Partners.
Common units are securities and are transferable according to the laws
governing transfer of securities. In addition to other rights acquired upon
transfer, the transferor gives the transferee the right to request admission as
a substituted limited partner in Star Gas Partners for the transferred common
units. A purchaser or transferee of common units who does not execute and
deliver a transfer application obtains only the following rights:
. The right to assign the common unit to a purchaser or other transferee.
. The right to transfer the right to seek admission as a substituted
limited partner in Star Gas Partners for the transferred common units.
Thus, a purchaser or transferee of common units who does not execute and
deliver a transfer application will not receive cash distributions, unless the
common units are held in a nominee or "street name" account and the nominee or
broker has executed and delivered a transfer application for those common
units. In addition, such purchaser or transferee may not receive some federal
income tax information or reports furnished to record holders of common units.
The transferor of common units will have a duty to provide the transferee with
all information that may be necessary to obtain registration of the transfer of
the common units, but a transferee agrees, by acceptance of the certificate
representing common units, that the transferor will not have a duty to insure
the execution of the transfer application by the transferee and will have no
liability or responsibility if the transferee neglects or fails to execute and
forward the transfer application to the transfer agent.
26
<PAGE>
DESCRIPTION OF PARTNERSHIP SECURITIES
Limitation on Issuance of Additional Partnership Securities
Except as discussed below, the general partner is authorized to cause us to
issue an unlimited number of additional partnership securities for the
consideration and on the terms and conditions established in its sole
discretion, without the approval of any limited partners. Partnership
securities means any class or series of units of limited partner interest other
than common units, any option, right, warrant or appreciation rights relating
to these securities or any other type of equity interest or rights to acquire
any equity interest that Start Gas Partners may issue according to its
partnership agreement.
Except as described in (1) through (3) below, during the subordination
period, we may not issue an aggregate of more than 2,500,000 additional common
units or units on a parity with the common units without the prior approval of
at least a majority of the outstanding common units, other than those held by
the general partner and its affiliates.
(1) If the issuance occurs:
(a) for an acquisition or a capital improvement; or
(b) to repay debt incurred for an acquisition or a capital
improvement;
in each case, where the acquisition or capital improvement involves
assets that would have, on a pro forma basis, resulted in an increase in
the amount of Adjusted Operating Surplus calculated on a per units basis
for all outstanding units for each of the four most recently completed
quarters.
(2) If the proceeds from the issuance are used exclusively to repay up to
$20 million of indebtedness of Star Gas Partners, Star Gas Propane or
any of its subsidiaries.
(3) The issuance of Class B common units upon the conversion of the senior
subordinated units and junior subordinated units at the end of the
subordination period.
Also, the partnership agreement may not be amended, including to permit the
issuance of additional partnership securities, in any manner that would
increase the aggregate amount of incentive distributions without the approval
of a majority of the outstanding units of the classes, each class voting
separately, that would be adversely affected.
Issuance of Additional Partnership Securities
The following is a description of the general terms and provisions of the
partnership securities. The particular terms of any series of partnership
securities will be described in the applicable prospectus supplement and the
amendment to the partnership agreement relating to that series of partnership
securities, which will be filed as an exhibit to or incorporated by reference
in this prospectus at or prior to the time of issuance of any such series of
partnership securities. If so indicated in a prospectus supplement, the terms
of any such series may differ from the terms set forth below.
Subject to the limitations described above, the general partner is authorized
to approve the issuance of one or more series of partnership securities without
further authorization of the limited partners and to fix the number of
securities, the designations, rights, privileges, restrictions and conditions
of any such series.
27
<PAGE>
The applicable prospectus supplement will set forth the number of securities,
particular designation, relative rights and preferences and the limitations of
any series of partnership securities in respect of which this prospectus is
delivered. The particular terms of any such series will including the
following:
. the maximum number of securities to constitute the series and the
designation and ranking thereof;
. the annual distribution rate, if any, on securities of the
series, whether such rate is fixed or variable or both, the dates
from which distributions will begin to accrue or accumulate,
whether distributions will be cumulative and whether such
distributions shall be paid in cash, securities or otherwise;
. whether the securities of the series will be redeemable and, if
so, the price at the terms and conditions on which the securities
of the series may be redeemed, including the time during which
securities of the series may be redeemed and any accumulated
distributions thereof that the holders of the securities of the
series shall be entitled to receive upon the redemption thereof;
. the liquidation preference, if any, applicable to securities of
the series;
. the terms and conditions, if any, on which the securities of the
series shall be convertible into, or exchangeable for, securities
of any other class or classes of partnership securities,
including the price or prices or the rate or rates of conversion
or exchange and the method, is any, of adjusting the same;
. the voting rights, if any, of the securities of the series;
The holders of partnership securities will have no preemptive rights.
Partnership securities will be fully paid and nonassessable when issued upon
full payment of the purchase price therefor. The prospectus supplement will
contain, if applicable, a description of the material United States federal
income tax consequences relating to the purchase and ownership of the series of
partnership securities offered by the prospectus supplement. The transfer
agent, registrar and distributions disbursement agent for the partnership
securities will be designated in the applicable prospectus supplement.
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DESCRIPTION OF DEBT SECURITIES
General
The debt securities will be:
. our direct secured or unsecured general obligations; and
. either senior debt securities or subordinated debt securities.
Senior debt securities will be issued under a Senior Indenture and
subordinated debt securities will be issued under a Subordinated Indenture. The
Senior Indenture and the Subordinated Indenture are each referred to as an
"Indenture" and collectively referred to as the "Indentures." We will enter
into the Indentures with a trustee that is qualified to act under the Trust
Indenture Act of 1939, as amended (the "TIA") (together with any other
trustee(s) chosen by us and appointed in a supplemental indenture with respect
to a particular series of debt securities, the "Trustee"). The Trustee for each
series of debt securities will be identified in the applicable prospectus
supplement. Any supplemental indentures will be filed by us from time to time
by means of an exhibit to a Current Report on Form 8-K and will be available
for inspection at the corporate trust office of the Trustee, or as described
below under "Where You Can Find More Information." The Indentures will be
subject to, and governed by, the TIA. We will execute an Indenture and
supplemental indenture if and when we issue any debt securities.
We have summarized below the material provisions of the Indentures in the
following order:
. those provisions that apply only to the Senior Indenture;
. those provisions that apply only to the Subordinated Indenture; and
. those provisions that apply to both Indentures.
We have not restated the Indentures in their entirety in this prospectus. You
should read the Indentures, because they, and not this description, control
your rights as holders of the debt securities. Capitalized terms used in the
summary have the meanings specified in the Indentures.
In the Indentures, the term "Subsidiary" means, with respect to any person:
. any partnership of which 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;
or
. any corporation, association or other business entity of which more than
50% of the total voting power of the 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.
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Specified Terms of Each Series of Debt Securities in the Prospectus Supplement
A prospectus supplement and a supplemental indenture relating to any series
of debt securities being offered will include specific terms relating to such
debt securities. These terms will include some or all of the following:
. whether the debt securities are senior or subordinated debt securities;
. the title of the debt securities;
. the total principal amount of the debt securities;
. the assets, if any, that are pledged as security for the payment of the
debt securities;
. whether we will issue the securities in individual certificates to each
holder in registered form, or in the form of temporary or permanent
global securities held by a depository on behalf of holders;
. the prices at which we will issue the debt securities;
. the portion of the principal amount that will be payable if the maturity
of the debt securities is accelerated;
. the currency or currency unit in which the debt securities will be
payable, if not U.S. dollars;
. 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;
. the date or dates on which the principal of the debt securities will be
payable;
. the interest rate that the debt securities will bear and the interest
payment dates for the debt securities;
. any conversion or exchange provisions;
. any optional redemption provisions;
. any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the debt securities;
. any changes to or additional Events of Default or covenants; and
. any other terms of the debt securities.
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Provisions Only in the Senior Indenture
Summary
The senior debt securities will rank equally in right of payment with all of
our other senior and unsubordinated debt and senior in right of payment to any
of our subordinated debt (including the subordinated debt securities). The
Senior Indenture will contain provisions that:
. limit our ability to put liens on our principal assets; and
. limit our ability to sell and lease back our principal assets.
The Subordinated Indenture will not contain any similar provisions. We have
described below these provisions and some of the defined terms used in them.
Limitations on Liens
The Senior Indenture will provide that Star Gas Partners will not, nor will
it permit any Subsidiary to, create, assume, incur of suffer to exist any lien
upon any property or assets, whether owned or leased on the date of the Senior
Indenture or thereafter acquired, to secure any debt of Star Gas Partners or
any other person (other than the senior debt securities issued thereunder),
without in any such case making effective provision whereby all of the senior
debt securities outstanding thereunder shall be secured equally and ratably
with, or prior to, such debt so long as such debt shall be so secured.
There is excluded from this restriction:
1. Permitted Liens (as defined below);
2. with respect to any series, any lien upon any property or assets of Star
Gas Partners or any Subsidiary in existence on the date the senior debt
securities of such series are first issued or provided for pursuant to
agreements existing on such date;
3. any lien upon any property or assets created at the time of acquisition
of such property or assets by Star Gas Partners or any Subsidiary or
within one year after such time to secure all or a portion of
indebtedness incurred to refund other indebtedness used to pay the
purchase price for such property or assets or debt incurred to finance
such purchase price, whether such debt was incurred prior to, at the
time of or within one year after the date of such acquisition;
4. any lien upon any property or assets existing thereon at the time of the
acquisition thereof by Star Gas Partners or any Subsidiary; provided,
however, that such lien only encumbers the property or assets so
acquired;
5. any lien upon property or assets of a person existing thereon at the
time such person becomes a Subsidiary by acquisition, merger or
otherwise; provided, however, that such lien only encumbers the property
or assets of such person at the time such person becomes a Subsidiary;
6. any lien upon any property or assets to secure all or part of
indebtedness incurred to refund other indebtedness used to pay the cost
of construction, development, repair or improvements thereon or to
secure debt incurred prior to, at the time of, or within one year after
completion of such construction, development, repair or improvements or
the commencement of full operations thereof (whichever is later), to
provide funds for any such purpose;
7. liens are imposed by law or order as a result of any proceeding before
any court or regulatory body that are being contested in good faith, and
liens which secure a judgment or other court-ordered award or settlement
as to which Star Gas Partners or the applicable Subsidiary has not
exhausted its appellate rights;
8. any lien upon any additions, improvements, replacements, repairs,
fixtures, appurtenances or component parts thereof attaching to or
required to be attached to property or assets pursuant to the terms of
any mortgage, pledge agreement, security agreement or other similar
instrument, creating a lien upon such property or assets permitted by
clauses (1) through (7) above; or
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9. any extension, renewal, refinancing, refunding or replacement (or
successive extensions, renewals, refinancing, refunding or replacements)
of liens, in whole or in part, referred to in clauses (1) through (8)
above; provided, however, that any such extension, renewal, refinancing,
refunding or replacement lien shall be limited to the property or assets
covered by the lien extended, renewed, refinanced, refunded or replaced
and that the obligations secured by any such extension, renewal,
refinancing, refunding or replacement lien shall be in an amount not
greater than the amount of the obligations secured by the lien extended,
renewed, refinanced, refunded or replaced plus any expenses of Star Gas
Partners and its subsidiaries (including any premium) incurred in
connection with such extension, renewal, refinancing, refunding
replacement; or
10. any lien resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing debt of Star Gas
Partners or any Subsidiary.
Notwithstanding the foregoing, under the Senior Indenture, Star Gas Partners
may, and may permit any Subsidiary to, create, assume, incur, or suffer to
exist any lien upon any property or assets to secure debt of Star Gas Partners
or any person (other than the senior debt securities) that is not excepted by
clauses (1) through (10), inclusive, above without securing the senior debt
securities issued under the Senior Indenture, provided that the aggregate
principal amount of all debt then outstanding secured by such lien and all
similar liens, together with all Attributable Indebtedness (as defined below)
from Sale-Leaseback Transactions (excluding Sale-Leaseback Transactions
permitted by clauses (1) through (4), inclusive, of the first paragraph of the
restriction on sale-leaseback covenant described below) does not exceed 10% of
Consolidated Net Worth (as defined below).
"Permitted Liens" means:
1. zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of real property or minor irregularities of
title incident thereto that do not, in the aggregate, materially detract
from the value of the property or the assets of Star Gas Partners and
its Subsidiaries taken as a whole;
2. any statutory or governmental lien or lien arising by operation of
law, or any mechanics', repairmen's, materialmen's, suppliers',
carriers', landlords', warehousemen's or similar lien incurred in the
ordinary course of business which is not yet due or which is being
contested in good faith by appropriate proceedings and any
undetermined lien which is incidental to construction, development,
improvement or repair;
3. the right reserved to, or vested in, any municipality or public
authority by the terms of any right, power, franchise, grant, license,
permit or by any provision of law, to purchase or recapture or to
designate a purchaser of any property;
4. liens of taxes and assessments which are (A) for the then current
year, (B) not at the time delinquent, or (C) delinquent but the
validity of which is being contested at the time by Star Gas Partners
or any Subsidiary in good faith;
5. liens of, or to secure performance of, leases, other than capital
leases;
6. any lien upon, or deposits of, any assets in favor of any surety
company or clerk of court for the purpose of obtaining indemnity or
stay of judicial proceedings;
7. any lien upon property or assets acquired or sold by Star Gas Partners
or any Subsidiary resulting from the exercise of any rights arising
out of defaults on receivables;
8. any lien incurred in the ordinary course of business in connection
with workers' compensation, unemployment insurance, temporary
disability, social security, retiree health or similar laws or
regulations or to secure obligations imposed by statute or
governmental regulations;
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9. any lien in favor of Star Gas Partners or any Subsidiary;
10. any lien in favor of the United States of America or any state
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any state thereof, to
secure partial, progress, advance, or other payments pursuant to any
contract or statute, or any debt incurred by Star Gas Partners or any
Subsidiary for the purpose of financing all or any part of the
purchase price of, or the cost of constructing, developing, repairing
or improving, the property or assets subject to such lien;
11. any lien securing industrial development, pollution control or similar
revenue bonds;
12. any lien securing debt of Star Gas Partners or any Subsidiary, all or
a portion of the net proceeds of which are used, substantially
concurrent with the funding thereof (and for purposes of determining
such "substantial concurrence," taking into consideration, among other
things, required notices to be given to holders of outstanding
securities under the Indenture (including the debt securities) in
connection with such refunding, refinancing or repurchase, and the
required corresponding durations thereof), to refinance, refund or
repurchase all outstanding securities under this Indenture (including
the debt securities), including the amount of all accrued interest
thereon and reasonable fees and expenses and premium, if any, incurred
by Star Gas Partners or any Subsidiary in connection therewith;
13. liens in favor of any person to secure obligations under the
provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested by any governmental authority in
connection with any contract or statute;
14. any lien upon or deposits of any assets to secure performance of bids,
trade contracts, leases or statutory obligations;
15. liens if any securing the payment of the securities; or
16. liens existing on any property of any person at the time it becomes a
Subsidiary, or existing prior to the time of acquisition (and not
created in anticipation of such acquisition) upon any property
acquired by Star Gas Partners or any Subsidiary through purchase,
merger or consolidation or otherwise, whether or not assumed by or
such Subsidiary, provided that (i) any such lien shall be confined
solely to the item or items of property so acquired and, if required
by the terms of the instrument originally creating such lien, other
property which is an improvement to or is acquired for specific use in
connection with such acquired property and (i) the principal amount of
the debt secured by any such lien shall at no time exceed an amount
equal to the lesser of (A) the cost of such property to Star Gas
Partners such Subsidiary, as the case may be, and (B) the fair market
value of such property (as determined in good faith by the general
partner of Star Gas Partners) at the time such person owning such
property becomes a Subsidiary or at the time of such acquisition by
Star Gas Partners or such Subsidiary, as the case may be.
"Consolidated Net Worth" means the amount by which
1. the total assets appearing on a consolidated balance sheet of Star Gas
Partners and its Subsidiaries prepared in accordance with generally
accepted accounting principles as of the date of determination (after
eliminating all amounts properly attributable to minority interests in
the stock and surplus, if any, of its Subsidiaries) exceeds
2. total liabilities of Star Gas Partners and its Subsidiaries appearing
on a consolidated balance sheet of Star Gas Partners and its
Subsidiaries prepared in accordance with generally accepted accounting
principles as of the date of determination;
in each case after eliminating all intercompany transactions.
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Restriction on Sale-Leasebacks
The Senior Indenture will provide that Star Gas Partners will not and will
not permit any Subsidiary to, engage in the sale or transfer by Star Gas
Partners or any Subsidiary of any property or assets to a person (other than
Star Gas Partners or a Subsidiary) and the taking back by Star Gas Partners or
any Subsidiary, as the case may be, of a lease of such property or assets (a
"Sale-Leaseback Transaction"), unless:
1. such Sale-Leaseback Transaction occurs within one year from the date
of completion of the acquisition of the property or assets subject
thereto or the date of the completion of construction, development or
substantial repair or improvement, or commencement of full operations
on such property or assets, whichever is later;
2. the Sale-Leaseback Transaction involves a lease for a period, including
renewals, of not more than the lesser of (A) three years and (B) 60% of
the useful remaining life of such property as determined in good faith
by the general partner of Star Gas Partners;
3. Star Gas Partners or such Subsidiary would be entitled to incur debt
secured by a lien on the property or assets subject thereto in a
principal amount equal to or exceeding the Attributable Indebtedness
from such Sale-Leaseback Transaction without equally and ratably
securing the senior debt securities; or
4. Star Gas Partners or such Subsidiary, within a one-year period after
such Sale-Leaseback Transaction, applies or causes to be applied an
amount not less than the Attributable Indebtedness from such Sale-
Leaseback Transaction to (A) the prepayment, repayment, redemption,
reduction or retirement of any debt of Star Gas Partners or any
Subsidiary that is not subordinated to the senior debt securities, or
(B) the expenditure or expenditures for property or assets used or to
be used in the ordinary course of business of Star Gas Partners or its
Subsidiaries.
"Attributable Indebtedness," when used with respect to any Sale-Leaseback
Transaction, means, as at the time of determination, the present value
(discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of property taxes,
repairs, maintenance, insurance, assessments, utilities, operating and labor
costs and other items that do not constitute payments for property rights)
during the remaining term of the lease included in such Sale-Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease that is terminable by the lessee upon the payment of a
penalty or other termination payment, such amount shall be the lesser of the
amount determined assuming termination upon the first date such lease may be
terminated (in which case the amount shall also include the amount of the
penalty or termination payment, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be so
terminated) or the amount determined assuming no such termination.
Notwithstanding the foregoing, under the Senior Indenture Star Gas Partners
may, and may permit any Subsidiary to, effect any Sale-Leaseback Transaction
that is not excepted by clauses (1) through (4), inclusive, of the above
paragraph, provided that the Attributable Indebtedness from such Sale-Leaseback
together with the aggregate principal amount of outstanding debt (other than
the senior debt securities) secured by liens upon property and assets not
excepted by clauses (1) through (16), inclusive, of the second paragraph of the
limitation on liens covenant described above, do not exceed 10% of Consolidated
Net Worth.
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Provisions Only in the Subordinated Indenture
Subordinated Debt Securities Subordinated to Senior Debt
The subordinated debt securities will rank junior in right of payment to all
of our Senior Debt. "Senior Debt" is defined to include all notes or other
evidences of indebtedness not expressed to be subordinate or junior in right of
payment to the subordinated debt securities or any other indebtedness of Star
Gas Partners ranking pari passu or junior in right of payment to the
subordinated debt securities.
Payment Blockages
The Subordinated Indenture will provide that no payment of principal,
interest and any premium on the subordinated debt securities may be made in the
event:
. we or our property are involved in any voluntary or involuntary
liquidation or bankruptcy;
. we fail to pay the principal, interest, any premium or any other amounts
on any Senior Debt when due; or
. we have a nonpayment default on any Senior Debt that imposes a payment
blockage on the subordinated debt securities for a maximum of 179 days at
any one time.
No Limitation on Amount of Senior Debt
The Subordinated Indenture will not limit the amount of Senior Debt that we
incur.
Provisions That Apply to Both Indentures
Consolidation, Merger or Asset Sale
Each Indenture will, in general, allow us to consolidate or merge with
another domestic entity. They will also allow us to sell, lease or transfer all
or substantially all of our property and assets to another domestic entity. If
this happens, the remaining or acquiring entity must assume all of our
responsibilities and liabilities under the Indentures including the payment of
all amounts due on the debt securities and performance of the covenants in the
Indentures.
However, we may only consolidate or merge with or into an entity or sell,
lease or transfer all or substantially all of our assets according to the terms
and conditions of the Indentures, which will include the following
requirements:
. the remaining or acquiring entity is organized under the laws of the
United States, any state or the District of Columbia;
. the remaining or acquiring entity assumes Star Gas Partners' obligations
under the Indentures; and
. immediately after giving effect to the transaction no Default or Event of
Default (as defined below) exists.
The remaining or acquiring entity will be substituted for us in the
Indentures with the same effect as if it had been an original party to the
Indentures. Thereafter, the successor may exercise our rights and powers under
the Indentures, in our name or in its own name. If we sell or transfer all or
substantially all of our assets, we will be released from all our liabilities
and obligations under the Indentures and under the debt securities. If we lease
all or substantially all of our assets, we will not be released from our
obligations under the Indentures.
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Modification of Indentures
We may modify or amend each Indenture if the holders of a majority in
principal amount of the outstanding debt securities of all series issued
under the Indenture affected by the modification or amendment consent to
it. Without the consent of each outstanding debt security affected,
however, no modification may:
. change the stated maturity of the principal of or any installment of
principal of or interest on any debt security
. reduce the principal amount of, the interest rate on or the premium
payable upon redemption of any debt security
. change the redemption date for any debt security
. Change our obligation, if any, to pay additional amounts
. reduce the principal amount of an original discount debt security payable
upon acceleration of maturity
. change the currency in which any debt security or any premium or interest
on any debt security is payable
. change the redemption right of any holder
. impair the right to institute suit for the enforcement of any payment on
any debt security
. reduce the percentage in principal amount of outstanding debt securities
of any series necessary to modify the Indenture, to waive compliance with
certain provisions of the Indenture or to waive certain defaults
. reduce quorum or voting requirements
. change our obligation to maintain an office or agency in the places and
for the purposes required by the Indenture
. modify any of the above provisions
We may modify or amend the Indenture without the consent of any holders of
the debt securities in certain circumstances, including:
. to provide for the assumption of our obligations under the Indenture and
the debt securities by a successor upon any merger, consolidation or
asset transfer
. to add covenants and events of default or to surrender any rights we have
under the Indenture
. to make any change that does not adversely affect any outstanding debt
securities of a series in any material respect
. to secure the senior debt securities as described above under "Provisions
Only in the Senior Indenture-Limitations on Liens"
. to provide for successor trustees
. to cure any ambiguity, omission, defect or inconsistency
The holders of a majority in principal amount of the outstanding debt
securities of any series may waive past defaults under the Indenture and
compliance by us with our covenants with respect to the debt securities of that
series only. Those holders may not however, waive any default in any payment on
any debt security of that series or compliance with a provision that cannot be
modified or amended without the consent of each holder affected.
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Events of Default and Remedies
"Event of Default" when used in an Indenture, will mean any of the following:
. failure to pay the principal of, or any premium on, any debt security
when due;
. failure to pay interest on any debt security for 30 days after such
payment is due;
. failure to perform any other covenant in the Indenture that continues for
60 days after being given written notice;
. certain events of bankruptcy, insolvency or reorganization of Star Gas
Partners; or
. any other Event of Default included in any Indenture or supplemental
indenture.
The subordination does not affect our obligation, which is absolute and
unconditional, to pay, when due, the principal of and any premium and interest
on the subordinated debt securities. In addition, the subordination does not
prevent the occurrence of any default under the subordinated indenture.
An Event of Default for a particular series of debt securities does not
necessarily constitute an Event of Default for any other series of debt
securities issued under an Indenture. The Trustee may withhold notice to the
holders of debt securities of any default (except in the payment of principal
or interest) if it considers such withholding of notice to be in the best
interests of the holders.
If an Event of Default for any series of debt securities occurs and
continues, the Trustee or the holders of at least 25% in aggregate principal
amount of the debt securities of the series may declare the entire principal of
all the debt securities of that series to be due and payable immediately. If
this happens, subject to certain conditions, the holders of a majority of the
aggregate principal amount of the debt securities of that series can void the
declaration.
Other than its duties in case of a default, a Trustee is not obligated to
exercise any of its rights or powers under any Indenture at the request, order
or direction of any holders, unless the holders offer the Trustee reasonable
indemnification. If they provide this reasonable indemnification, the holders
of a majority in principal amount of any series of debt securities may direct
the time, method and place of conducting any proceeding or any remedy available
to the Trustee, or exercising any power conferred upon the Trustee, for any
series of debt securities.
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No Limit on Amount of Debt Securities
Neither of the Indentures will limit the amount of debt securities that we
may issue. Each Indenture allows us to issue debt securities up to the
principal amount that we authorize.
Registration of Notes
We may issue debt securities of a series in registered, bearer, coupon or
form.
Minimum Denominations
Unless the prospectus supplement for each issuance of debt securities states
otherwise, the debt securities will be issued in registered form in amounts of
$1,000 each or multiples of $1,000.
No Personal Liability of General Partner
Unless otherwise stated in a prospectus supplement and supplemental indenture
relating to a series of debt securities being offered, the general partner and
its directors, officers, employees and stockholders will not have any liability
for our obligations under the Indentures or the debt securities. Each holder of
debt securities by accepting a debt security waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the debt securities.
Payment and Transfer
Principal, interest and any premium on fully registered securities will be
paid at designated places. Payment will be made by check mailed to the persons
in whose names the debt securities are registered on days specified in the
Indentures or any prospectus supplement. Debt securities payments in other
forms will be paid at a place designated by us and specified in a prospectus
supplement.
Fully registered securities may be transferred or exchanged at the corporate
trust office of the Trustee or at any other office or agency maintained by us
for such purposes, without the payment of any service charge except for any tax
or governmental charge.
Form, Exchange, Registration and Transfer
Debt securities of any series will be exchangeable for other debt securities
of the same series, the same total principal amount and the same terms but in
different authorized denominations in accordance with the Indenture. Holders
may present debt securities for registration of transfer at the office of the
security registrar or any transfer agent we designate. The security registrar
or transfer agent will effect the transfer or exchange when it is satisfied
with the documents of title and identity of the person making the request. We
will not charge a service charge for any registration of transfer or exchange
of the debt securities. We may, however, require the payment of any tax or
other governmental charge payable for that registration.
We will appoint the trustee under each Indenture as security registrar for
the debt securities issued under that Indenture. We are required to maintain an
office or agency for transfers and exchanges in each place of payment. We may
at any time designate additional transfer agents for any series of debt
securities.
In the case of any redemption in part, we will not be required:
. to issue, register the transfer of or exchange debt securities of a
series either during a period beginning 15 business days prior to the
selection of debt securities of that series for redemption and ending on
the close of business on the day of mailing of the relevant notice of
redemption or
. to register the transfer of or exchange any debt security, or portion of
any debt security, called for redemption, except the unredeemed portion
of any debt security we are redeeming in part.
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Discharging our Obligations
We may choose to either discharge our obligations on the debt securities of
any series in a legal defeasance, or to release ourselves from our covenant
restrictions on the debt securities of any series in a covenant defeasance. We
may do so at any time on the 91st day after we deposit with the Trustee
sufficient cash or government securities to pay the principal, interest, any
premium and any other sums due to the stated maturity date or a redemption date
of the debt securities of the series. If we choose the legal defeasance option,
the holders of the debt securities of the series will not be entitled to the
benefits of the Indenture except for registration of transfer and exchange of
debt securities, replacement of lost, stolen or mutilated debt securities,
conversion or exchange of debt securities, sinking fund payments and receipt of
principal and interest on the original stated due dates or specified redemption
dates.
We may discharge our obligations under the Indentures or release ourselves
from covenant restrictions only if we meet certain requirements. Among other
things, we must deliver an opinion of our legal counsel that the discharge will
not result in holders of debt securities having to recognize taxable income or
loss or subject then to different tax treatment. In the case of legal
defeasance, this opinion must be based on either an IRS letter ruling or change
in federal tax law. We may not have a default on the debt securities discharged
on the date of deposit. The discharge may not violate any of our agreements.
The discharge may not result in our becoming an investment company in violation
of the Investment Company Act of 1940.
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 ("DTC") will act as depositary. Book-entry notes of
a series will be issued in the form of a global note that will be deposited
with DTC. This means that we will not issue certificates to each holder. One
global note will be issued to DTC who will keep a computerized record of its
participants (for example, your broker) whose clients have purchased the notes.
The participant will then keep a record of its clients who purchased the notes.
Unless it is exchanged in whole or in part for a certificated note, a global
note may not be transferred, except that DTC, its nominees and their successors
may transfer a global note as a whole to one another.
Beneficial interests in global notes will be shown on, and transfers of
global notes 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 ("Direct Participants") deposit with DTC. DTC
also records the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participant's accounts. This eliminates the
need to exchange certificates. Direct 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
Direct Participant. The rules that apply to DTC and its participants are on
file with the SEC.
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
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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 notes 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 notes to owners of
beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global notes as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to Direct Participants whose accounts are credited
with notes on a record date, by using an omnibus proxy. Payments by
participants to owners of beneficial interests in the global notes, and voting
by participants, will be governed by the customary practices between the
participants and owners of beneficial interests, as is the case with notes 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.
Notes represented by a global note will be exchangeable for certificated
notes with the same terms in authorized denominations only if.
. 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
. we determine not to require all of the notes of a series to be
represented by a global note and notify the Trustee of our decision.
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The Trustee
Resignation or Removal of Trustee
If the Trustee has or shall acquire a conflicting interest within the meaning
of the Trust Indenture Act of 1939, as amended, the Trustee shall either
eliminate its interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and either the Senior
Indenture or Subordinated Indenture. Any resignation will require the
appointment of a successor trustee under the applicable Indenture in accordance
with the terms and conditions of such Indenture.
The Trustee may resign or be removed by us with respect to one or more series
of debt securities and a successor trustee may be appointed to act with respect
to any such series. The holders of a majority in aggregate principal amount of
the debt securities of any series may remove the Trustee with respect to the
debt securities of such series.
Limitations on Trustee if it is a Creditor of Star Gas Partners
Each Indenture will contain certain limitations on the right of the Trustee
thereunder, in the event that it becomes a creditor of Star Gas Partners, to
obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise.
Annual Trustee Report to Holders of Debt Securities
The Trustee is required to submit an annual report to the holders of the debt
securities regarding, among other things, the Trustee's eligibility to serve as
such, the priority of the Trustee's claims regarding certain advances made by
it, and any action taken by the Trustee materially affecting the debt
securities.
Certificates and Opinions to be Furnished to Trustee
Each Indenture will provide that, in addition to other certificates or
opinions that may be specifically required by other provisions of an Indenture,
every application by us for action by the Trustee shall be accompanied by a
certificate of certain of our officers and an opinion of counsel (who may be
our counsel) stating that, in the opinion of the signers, all conditions
precedent to such action have been complied with by us.
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FEDERAL INCOME TAX CONSIDERATIONS
This section is a summary of the material tax considerations that may be
relevant to prospective unitholders and, to the extent described below under
"--Legal Opinions and Advice," expresses the opinion of Andrews & Kurth L.L.P.
special counsel to the General Partner and us, insofar as it relates to matters
of law and legal conclusions. This section is based upon provisions of the
Internal Revenue Code, its existing and proposed regulations and administrative
rulings and court decisions as of January 3, 2000, all of which are subject to
change even with retroactive effect. 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 we or us are references to both us and Star Gas Propane.
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, non-resident aliens or other unitholders subject to specialized tax
treatment, such as tax-exempt institutions, foreign persons, individual
retirement accounts, REITs or mutual funds. Accordingly, each prospective
unitholder should consult, and should depend on, his own tax advisor in
analyzing the federal, state, local and foreign tax consequences peculiar to
him of the ownership or disposition of units.
Tax Consequences of Unit Ownership
Legal Opinions and Advice. Counsel is of the opinion that, as of January 3,
2000 and based on the representations and subject to the qualifications in the
detailed discussion that follows, for federal income tax purposes:
(1) Star Gas Partners and Star Gas Propane have been and will each be
treated as a partnership; and
(2) owners of units, with certain exceptions, as described in "--Tax
Treatment of Unitholders--Limited Partner Status" below, will be
treated as partners of Star Gas Partners, but not Star Gas Propane.
In addition, all statements as to matters of law and legal conclusions
contained in this section, unless otherwise noted, reflect the opinion of
counsel as of January 3, 2000.
No ruling has been or is expected to be requested from the IRS regarding our
classification as a partnership for federal income tax purposes, whether our
operations generate "qualifying income" under Section 7704 of the Code or any
other 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. Thus, no assurance can be provided that the opinions and statements
made here would 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
units and the prices at which 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, no assurance can be given that the
treatment of Star Gas Partners or an investment in Star Gas Partners will not
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 on the
following specific federal income tax issues:
(1) the treatment of a unitholder whose units are loaned to a short seller
to cover a short sale of units (see "--Tax Treatment of Unitholders--
Treatment of Short Sales");
(2) whether a unitholder acquiring units in separate transactions must
maintain a single aggregate adjusted tax basis in his units (see "--
Disposition of Units--Recognition of Gain or Loss");
(3) whether our monthly convention for allocating taxable income and losses
is permitted by existing Treasury Regulations (see "--Disposition of
Units--Allocations Between Transferors and Transferees");
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(4) whether our method for depreciating Section 743 adjustments is
sustainable (see "--Disposition of Units--Section 754 Election"); and
(5) whether the allocations of recapture income contained in the
partnership agreement will be respected (see "Tax Treatment of
Unitholders--Allocation of Star Gas Partners Income, Gain, Loss and
Deduction").
Partnership Status. A partnership is not a taxable entity and incurs no
federal income tax liability. Instead, each partner is required to take into
account his allocable 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. Distributions by a partnership to a
partner are generally not taxable unless the amount of cash distributed is in
excess of the partner's adjusted basis in his partnership interest.
No ruling has been or is expected to be sought from the IRS as to the status
of Star Gas Partners or Star Gas Propane as a partnership for federal income
tax purposes. Instead, we have relied on the opinion of counsel that, based
upon the Code, its regulations, published revenue rulings and court decisions
and representations described below, Star Gas Partners and Star Gas Propane
have been and will each be classified as a partnership for federal income tax
purposes.
In rendering its opinion, counsel has relied on factual representations made
by Star Gas Partners and the general partner. Such factual matters for taxable
years beginning before December 31, 1996 are as follows:
(a) For Star Gas Partners and Star Gas Propane, the general partner, at
all times while acting as general partner of the relevant
partnership, had a net worth, computed on a fair market value
basis, excluding its interest in Star Gas Partners and Star Gas
Propane and any notes or receivables due from such partnerships,
equal to at least $6.0 million;
(b) Star Gas Partners has been operated in accordance with
(1) all applicable partnership statutes,
(2) the partnership agreement and
(3) its description in this prospectus;
(c) Star Gas Propane has been operated in accordance with
(1) all applicable partnership statutes,
(2) the limited partnership agreement for Star Gas Propane and
(3) its description in this prospectus;
(d) The general partner has at all times acted independently of the
limited partners; and
(e) For each taxable year, less than 10% of the gross income of Star
Gas Partners has been derived from sources other than
(1) the exploration, development, production, processing, refining,
transportation or marketing of any mineral or natural resource,
including oil, gas or products thereof, or
(2) other items of qualifying income within the meaning of Section
7704(d) of the Code.
These factual matters for taxable years beginning after December 31, 1996 are
as follows:
(a) Neither Star Gas Partners nor Star Gas Propane has elected, or will
elect, to be treated as an association or corporation;
(b) Star Gas Partners has been and will be operated in accordance with
(1) all applicable partnership statutes,
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(2) the partnership agreement of Star Gas Partners as it may be
amended or restated, and
(3) its description in this prospectus;
(c) Star Gas Propane has been and will be operated in accordance with
(1) all applicable partnership statutes,
(2) the Star Gas Propane partnership agreement, and
(3) its description in this prospectus; and
(d) For each taxable year, more than 90% of the gross income of Star
Gas Partners has been and will be
(1) derived from the exploration, development, production,
processing, refining, transportation or marketing of any
mineral or natural resource, including oil, gas or their
products or
(2) other items of "qualifying income" within the meaning of
Section 7704(d) of the Code.
Section 7704 of the Code provides that publicly-traded partnerships will, as
a general rule, be taxed as corporations. However, an exception (the
"Qualifying Income Exception") exists with respect to publicly-traded
partnerships, 90% or more of whose gross income for every taxable year consists
of "qualifying income." Qualifying income includes interest from other than a
financial business, dividends and income and gains from the transportation and
marketing of crude oil, natural gas, and products thereof, including the retail
and wholesale marketing of propane and the transportation of propane and
natural gas liquids. Based upon the representations of Star Gas Partners and
the general partner and a review of the applicable legal authorities, counsel
is of the opinion that at least 90% of our gross income will constitute
qualifying income. We estimate that less than 7.0% of our gross income for each
taxable year will not constitute qualifying income.
If we fail to meet the Qualifying Income Exception, other than a failure that
is determined by the IRS to be inadvertent and 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 partners
in liquidation of their interests in Star Gas Partners. This contribution and
liquidation should be tax-free to unitholders and Star Gas Partners, 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 Star Gas Partners or Star Gas Propane were taxable as a corporation in any
taxable year, either as a result of a failure to meet the Qualifying Income
Exception or otherwise, its items of income, gain, loss and deduction would be
reflected only on its tax return rather than being passed through to the
unitholders, and its net income would be taxed to Star Gas Partners or Star Gas
Propane at corporate rates. In addition, any distribution made to a unitholder
would be treated as either taxable dividend income, to the extent of Star Gas
Partners' 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 units, or taxable capital gain, after the
unitholder's tax basis in the units is reduced to zero. Accordingly, treatment
of either Star Gas Partners or Star Gas Propane as an association taxable 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 assumption that we will be classified as
a partnership for federal income tax purposes.
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Tax Treatment of Unitholders
Limited Partner Status. Unitholders who have become limited partners of Star
Gas Partners will be treated as partners of Star Gas Partners for federal
income tax purposes. Counsel is of the opinion that (a) assignees who have
executed and delivered transfer applications, and are awaiting admission as
limited partners and (b) Star Gas Partners unitholders whose 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 units
will be treated as partners of Star Gas Partners for federal income tax
purposes. As there is no direct authority addressing assignees of units who are
entitled to execute and deliver transfer applications and thereby become
entitled to direct the exercise of attendant rights, but who fail to execute
and deliver transfer applications, Andrews & Kurth's opinion does not extend to
these persons. Furthermore, a purchaser or other transferee of 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 units unless
the units are held in a nominee or street name account and the nominee or
broker has executed and delivered a transfer application for those units.
A beneficial owner of 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 such units for federal income tax purposes. See "--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 this unitholder would
therefore be fully taxable as ordinary income. These holders should consult
their own tax advisors with respect to their status as partners in Star Gas
Partners for federal income tax purposes.
Flow-through of Taxable Income. No federal income tax will be paid by Star
Gas Partners. Instead, each Star Gas Partners unitholder who is a partner for
federal income tax purposes will be required to report on his income tax return
his allocable share of the income, gains, losses and deductions of Star Gas
Partners without regard to whether corresponding cash distributions are
received by that unitholder. Consequently, a unitholder may be allocated income
from Star Gas Partners even if he has not received a cash distribution. Each
unitholder will be required to include in income his allocable share of Star
Gas Partners income, gain, loss and deduction for the taxable year of Star Gas
Partners ending with or within the taxable year of the unitholder.
Although it is not expected that Petro and its affiliates will pay
significant federal income tax for several years, Petro and its affiliates
expect to generate earnings and profits during that time making a portion of
the distributions from them to Star Gas Partners taxable dividend income to
Star Gas Partners and thus, to the unitholders. Such dividend income cannot be
offset by past or future losses generated by our propane activities.
Treatment of Partnership Distributions. Distributions by Star Gas Partners to
a unitholder generally will not be taxable to him for federal income tax
purposes to the extent of the tax basis he has in his units immediately before
the distribution. Our cash distributions in excess of a Star Gas Partners
unitholder's tax basis generally will be considered to be gain from the sale or
exchange of the units, taxable in accordance with the rules described under
"Disposition of Units" below. 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. 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. See "--
Limitations on Deductibility of Star Gas Partners Losses."
A decrease in a unitholder's percentage interest in us because of our
issuance of additional units will decrease his share of our nonrecourse
liabilities, and 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 the tax basis he has in his units, if such
distribution reduces his share of our "unrealized receivables", including
depreciation recapture, and/or substantially appreciated "inventory items",
both as defined in Section 751 of the Code, and collectively, "Section 751
Assets". To that extent, he will be treated as having received a distribution
of his proportionate share of the Section 751 Assets and having exchanged those
assets with us in
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return for the non-pro rata portion of the actual distribution made to him.
This latter deemed exchange will generally result in a unitholder's realization
of ordinary income under Section 751(b) of the Code. That income will equal the
excess of (1) the non-pro rata portion of that distribution over (2) the Star
Gas Partners unitholder's tax basis for the share of such Section 751 Assets
deemed relinquished in the exchange.
Tax Rate. The top marginal income tax rate for individuals for 1999 is 39.6%.
Net capital gains of an individual are generally subject to a maximum 20% tax
rate if the asset was held for more than 12 months at the time of disposition.
Alternative Minimum Tax. Each unitholder will be required to take into
account his distributive share of any items of our income, gain, deduction, or
loss for purposes of the alternative minimum tax. The minimum tax rate for non-
corporate 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.
Basis of Units. A unitholder will have an initial tax basis for his units
equal to the price he paid for them or, generally, the adjusted basis of any
property contributed in exchange for units. His 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 Star Gas Partners and by the unitholder's share of Star Gas Partners'
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 that is recourse to the general partner, but will have a share,
generally based on his share of profits, of our nonrecourse liabilities. See
"--Disposition of Units--Recognition of Gain or Loss."
Limitations on Deductibility of Star Gas Partners Losses. The deduction by a
Star Gas Partners 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 its stock is owned
directly or indirectly by five or fewer individuals or tax-exempt
organizations, to the amount for which the unitholder is considered to be "at
risk" regarding our activities, if that is less than his tax basis. A
unitholder must recapture losses deducted in previous years to the extent that
distributions made to him 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 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 such 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 such 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 his
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 for 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 other publicly-traded companies,
interest and dividend income generated by us, such as dividends from Petro and
its affiliates, or salary or active business income. Passive losses that are
not deductible because they exceed
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a unitholder's income generated by us 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 such as 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
companies. The IRS has announced that Treasury Regulations will be issued that
characterize net passive income from a publicly-traded partnership as
investment income for purposes of the limitations on the deductibility of
investment interest.
Limitations on Interest Deductions. The deductibility of a non-corporate
taxpayer's "investment interest expense" is generally limited to the amount of
such taxpayer's "net investment income." As noted, a unitholder's share of our
net passive income will be treated as investment income for this purpose. In
addition, the unitholder's share of our portfolio income will be treated as
investment income. Investment interest expense includes:
(1) interest on indebtedness properly allocable to property held for
investment;
(2) our interest expense attributed to portfolio income; and
(3) 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.
Allocation of Star Gas Partners 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. At any time that distributions are made to
the common units and not to the senior subordinated units or junior
subordinated units, or that incentive distributions are made to holders of
senior subordinated units, junior subordinated units or general partner units
or to holders of senior subordinated units and not to junior subordinated units
or general partner units, gross income will be allocated to the recipients to
the extent of those distributions. If we have a net loss, our items of income,
gain, loss and deduction will generally be allocated first, to the general
partner and the unitholders in accordance with their percentage interests to
the extent of their positive capital accounts, as maintained under our
partnership, agreement, and, second, to the general partner.
As required by Section 704(c) of the Code and as permitted by its
Regulations, some items of our income, deduction, gain and loss will be
allocated in a manner to account for the difference between the tax basis and
fair market value of property that is contributed or deemed contributed to us
by a partner ("Contributed Property"). The effect of these allocations to a
noncontributing unitholder will be essentially the same as if the tax basis of
the Contributed Property were equal to its fair market value at the time of
contribution or deemed contribution. In addition, specified 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 sufficient to eliminate the negative balance as quickly as
possible.
Regulations provide that an allocation of items of Star Gas Partners income,
gain, loss or deduction, other than an allocation required by Section 704(c) of
the Code to eliminate the difference between a partner's "book" capital
account, credited with the fair market value of Contributed Property, and "tax"
capital
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account, credited with the tax basis of Contributed Property, (the "Book-Tax
Disparity"), will generally be given effect for federal income tax purposes in
determining a partner's distributive 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 distributive share of an item will be determined on the basis
of the partner's interest in Star Gas Partners, which will be determined by
taking into account all the facts and circumstances, including the partner's
relative contributions to Star Gas Partners, the interests of the partners in
economic profits and losses, the interest of the partners in cash flow and
other nonliquidating distributions and rights of the partners to distributions
of capital upon liquidation.
Counsel is of the opinion that allocations under our partnership agreement,
with the possible exception of the allocation of recapture income discussed
above, will be given effect for federal income tax purposes in determining a
partner's distributive share of an item of income, gain, loss or deduction.
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 any
general partner or any former unitholder, Star Gas Partners is 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 current Star Gas
Partners unitholders. We are authorized to amend the partnership agreement in
the manner necessary to maintain uniformity of intrinsic tax characteristics of
units and to 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 Star Gas Partners as described above could give rise
to an overpayment of tax on behalf of an individual partner in which event the
partner could file a claim for credit or refund.
Treatment of Short Sales. A Star Gas Partners unitholder whose units are
loaned to a "short seller" to cover a short sale of units may be considered as
having disposed of ownership 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, any of our income,
gain, deduction or loss for those units would not be reportable by the
unitholder, any cash distributions received by the unitholder for those units
would be fully taxable and all of these distributions would appear to be
treated as ordinary income. Unitholders desiring to assure their status as
partners and avoid the risk of gain recognition 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. See also "--
Disposition of Units--Recognition of Gain or Loss."
Tax-exempt Organizations and Other Investors
Ownership of units by employee benefit plans, other tax-exempt organizations,
nonresident aliens, foreign corporations, other foreign persons and regulated
investment companies raises issues unique to such persons and, as described
below, may have substantially adverse tax consequences. Employee benefit plans
and most other organizations that are 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 the
taxable income derived by such an organization from the ownership of a unit
will be unrelated business taxable income and thus will be taxable to that
unitholder.
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 certain related sources. It is not
anticipated that any significant amount of our gross income will include that
type of income at least in the next few years.
Under current rules applicable to publicly-traded partnerships, we are
required to withhold as taxes 39.6% of any cash distributions made to foreign
unitholders. A foreign unitholder may claim a credit for those taxes.
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If that tax exceeds the taxes due from the foreign unitholder, he may claim a
refund. Each foreign unitholder must obtain a taxpayer identification number
from the IRS and submit that number to our transfer agent on the applicable
Form W-8 in order to obtain a credit for the taxes withheld. A change in
applicable law may require us to change these procedures. In addition, non-
resident aliens and foreign corporations, trusts or estates that own units will
be considered to be engaged in business in the United States on account of
ownership of those units. As a consequence, they will be required to file
federal tax returns for their share of our income, gain, loss or deduction and
pay federal income tax at regular rates on any net income or gain.
Because a foreign corporation that owns units will be treated as engaged in a
United States trade or business, such a corporation may be subject to United
States branch profits tax 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 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,
such a unitholder is subject to special information reporting requirements
under Section 6038C of the 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 disposition of that unit to the extent that this gain is effectively
connected with a United States trade or business. Except to the extent the
ruling applies, as to which counsel has not opined, a foreign unitholder will
not be taxed or subject to withholding upon the 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 disposition.
Tax Treatment of Operations
Accounting Method and Taxable Year. We use the year ending December 31 as our
taxable year and we have adopted the accrual method of accounting for federal
income tax purposes. Each Star Gas Partners unitholder will be required to
include in income his allocable 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 allocable share of our
income, gain, loss and deduction in income for his taxable year, with the
result that he will be required to report in income for his taxable year his
share of more than one year of our income, gain, loss and deduction. See "--
Disposition of Units--Allocations Between Transferors and Transferees."
Initial Tax Basis, Depreciation and Amortization. The tax basis of our assets
is used for purposes of computing depreciation and cost recovery deductions
and, ultimately, gain or loss on the disposition of such assets. The federal
income tax burden associated with the difference between the fair market value
of property contributed and the tax basis established for such property will be
borne by the contributors of such property. See "--Tax Treatment of
Unitholders--Allocation of Star Gas Partners 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 for goodwill conveyed to us on formation. Property
subsequently acquired or constructed by us may be depreciated using accelerated
methods permitted by the 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 for
our property may be required to recapture such deductions as ordinary income
upon a sale of his interest in us. See "--Tax Treatment of Unitholders--
Allocation of Star Gas Partners Income, Gain, Loss and Deduction" and "--
Disposition of Units--Recognition of Gain or Loss."
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Uniformity of Units. Because we cannot match transferors and transferees of
units, uniformity of the economic and tax characteristics of the units to a
purchaser of these units must be maintained. In the absence of uniformity,
compliance with a number of federal income tax requirements, both statutory and
regulatory, could be substantially diminished. A lack of uniformity can result
from a literal application of Treasury Regulation Section 1.167(c)-1(a)(6) and
Proposed Treasury Regulation Section 1.197-2(g)(3). Any non-uniformity could
have a negative impact on the value of the units. See "--Disposition of Units--
Section 754 Election."
We intend to depreciate the portion of a Section 743(b) adjustment
attributable to unrealized appreciation in the value of contributed property or
adjusted 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 basis of such property, or
treat that portion as nonamortizable, to the extent attributable to property
the basis of which is not amortizable consistent with the proposed regulations
under Section 743, but despite its inconsistency with Treasury Regulation
Section 1.167(c)-1(a)(6) and Proposed Treasury Regulation
Section 1.197-2(g)(3), neither of which is expected to directly apply to a
material portion of the Partnership's assets. See "--Disposition of Units--
Section 754 Election." To the extent this 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 regulations and legislative
history. If we determine that this a position cannot reasonably be taken, we
may adopt a depreciation and amortization convention under which all purchasers
acquiring units in the same month would receive depreciation and amortization
deductions, whether attributable to basis or Section 743(b) adjustment, based
upon the same applicable rate as if they had purchased a direct interest in our
property. If such an aggregate approach is adopted, it may result in lower
annual depreciation and amortization deductions than would otherwise be
allowable to certain unitholders and risk the loss of depreciation and
amortization deductions not taken in the year that such deductions are
otherwise allowable. This convention 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
convention 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 type of 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. See "--
Disposition of Units--Recognition of Gain or Loss."
Valuation of Star Gas Partners Property and Basis of 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 determinations
of 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. These estimates and
determinations 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 determinations of
basis are later found to be incorrect, the character and amount of items of
income, gain, loss or deductions previously reported by Star Gas Partners
unitholders might change, and unitholders might be required to adjust their tax
liability for prior years.
State and Local Tax Considerations. For a discussion of the state and local
tax considerations arising from an investment in units, see "--State and Local
Tax Considerations" at the end of this section.
Administrative Matters
Information Returns and Audit Procedures. We intend to furnish to each
unitholder, within 90 days after the close of each calendar year, specific tax
information, including a Schedule K-1, which describes each unitholder's share
of our income, gain, loss and deduction for our preceding taxable year. In
preparing this information, which will generally not be reviewed by counsel, we
will use various accounting and reporting conventions, some of which have been
mentioned earlier, to determine the unitholder's share of income, gain, loss
and deduction. There is no assurance that any of those conventions will yield a
result that conforms to the
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requirements of the Code, regulations or administrative interpretations of the
IRS. Neither we nor counsel can assure prospective Star Gas Partners
unitholders that the IRS will not successfully contend in court that such
accounting and reporting conventions are impermissible. Any such 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 any audit of this kind may require each unitholder to adjust a
prior year's tax liability, and possibly may result in an audit of that
unitholder's 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 Code provides for
one partner to be designated as the "Tax Matters Partner" for these purposes.
The amended and restated partnership agreement appoints the general partner as
the Tax Matters Partner of Star Gas Partners.
The Tax Matters Partner will make specified 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 Star Gas Partners
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 such 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, such review may be sought by any unitholder having at
least a 1% interest in profits and by the unitholders having in the aggregate
at least a 5% profits interest. However, only one action for judicial review
will go forward, and each unitholder with an interest in the outcome may
participate. If Star Gas Partners elects to be treated as a large partnership,
which we have not done and do not currently intend to do, a unitholder will not
have the right to participate in settlement conferences with the IRS or to seek
a refund.
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 the
consistency requirement may subject a unitholder to substantial penalties.
However, if we elect to be treated as a large partnership, which it does not
currently intend to do, the unitholders would be required to treat all
partnership items in a manner consistent with our return.
Each partner in an electing large partnership takes into account separately a
number of items determined at the partnership level. In addition, miscellaneous
itemized deductions of an electing large partnership are not passed through to
the partners and 30% of such deductions are used at the partnership level.
A number of changes have recently been made to the tax compliance and
administrative rules relating to electing large partnerships. Adjustments
relating to partnership items for a previous taxable year are generally taken
into account by those persons who were partners in the previous taxable year.
Each partner in an electing large partnership, however, must take into account
his share of any adjustments to partnership items in the year those adjustments
are made. Alternatively, an electing large partnership could elect, or in some
circumstances could be required to, directly pay the tax resulting from any
adjustments of this kind. In either case, therefore, unitholders could bear
significant costs associated with tax adjustments relating to periods predating
their acquisition of units. Although we are authorized under our partnership
agreement to do so, we have not and do not expect to elect to have the large
partnership provisions apply to us because of the cost of their application.
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;
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(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 Code for failure to report this 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 predecessor general partner, as our
organizer, has registered us as a tax shelter with the Secretary of the
Treasury in 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 the following tax shelter registration number to Star Gas
Partners: 96026000016. Issuance of this Registration Number does not indicate
that investment in Star Gas Partners or the claimed tax benefits have been
reviewed, examined or approved by the IRS.
We must furnish the registration number to the unitholders, and 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. The unitholders must disclose the tax shelter
registration number of Star Gas Partners on Form 8271 to be attached to the tax
return on which any deduction, loss or other benefit generated by Star Gas
Partners is claimed or income of Star Gas Partners 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.
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 Code. No penalty will be imposed, however, for
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 of the understatement 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 such
position are disclosed on the return. More stringent rules apply to "tax
shelters," a term that in this context does not appear to include Star Gas
Partners. If any Star Gas Partners item of income, gain, loss or deduction
included in the distributive shares of unitholders might result in such an
"understatement" of income for which no "substantial authority" exists, we must
disclose the pertinent facts on its 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.
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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 that 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%.
Disposition of 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 in the units that were sold. The amount realized by the unitholder
will be measured by the sum of the cash or the fair market value of other
property received 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 such sale.
Prior distributions from us in excess of cumulative net taxable income for a
unit that decreased a unitholder's tax basis in that unit will, in effect,
become taxable income if the unit is sold at a price greater than the
unitholder's tax basis in that unit, even if the price is less than his
original cost.
Should the IRS successfully contest our convention to amortize only a portion
of the Section 743(b) adjustment, described under "--Disposition of Units--
Section 754 Election", attributable to an amortizable Section 197 intangible
after a sale by the general partner of units, a unitholder could realize
additional gain from the sale of units than if that convention had been
respected. In that case, the unitholder may have been entitled to additional
deductions against income in prior years but may be unable to claim them,
resulting in greater overall taxable income allocable to him than appropriate.
Counsel is unable to opine as to the validity of the convention but believes
such a contest by the IRS is unlikely because a successful contest could result
in substantial additional deductions to other unitholders.
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 a maximum
rate of 20%. A portion of this gain or loss, which could be substantial,
however, will be separately computed and taxed as ordinary income or loss under
Section 751 of the Code to the extent attributable to assets giving rise to
depreciation recapture or other "unrealized receivables" or to "inventory
items" owned by us. 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 the unit and may be
recognized even if there is a net taxable loss realized on the sale of the
unit. Thus, a unitholder may recognize both ordinary income and a capital loss
upon a disposition of units. Net capital loss may offset 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. Upon a sale or other disposition of less than all of such
interests, a portion of that tax basis must be allocated to the interests sold
using an "equitable apportionment" method. The ruling is unclear as to how the
holding period of these interests is determined once they are combined. If this
ruling is applicable to the holders of units, a unitholder will be unable to
select high or low basis units to sell as would be the case with corporate
stock. It is not clear whether the ruling applies to us, because, as is the
case with corporate stock, interests in us are evidenced by separate
certificates. Accordingly, counsel is unable to opine as to the effect this
ruling will have on the unitholders. A unitholder considering the purchase of
additional units or a sale of units purchased in separate transactions should
consult his tax advisor as to the possible consequences of this ruling.
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Specific provisions of the Code affect the taxation of certain 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:
(1) a short sale;
(2) an offsetting notional principal contract; or
(3) a futures or forward contract for 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 for a partnership
interest, the taxpayer will be treated as having sold that position if the
taxpayer or a related party then acquires the partnership interest or
substantially identical property. The Secretary of Treasury is also authorized
to issue regulations that treat a taxpayer who or 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 principal
national securities exchange on which the units are then traded 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 in the open market may be allocated
income, gain, loss and deduction accrued after the date of transfer.
The use of this allocation 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 the transferors and
the transferees of units. 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
transferors and transferees, as well as among partners whose interests
otherwise vary during a taxable period, to conform to a method permitted under
future Treasury Regulations.
A unitholder who owns units any time during a quarter and who disposes of
these units 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.
Section 754 Election. We have made the election permitted by Section 754 of
the Code, which generally permits us to adjust a unit purchaser's tax basis in
our assets ("inside basis") under Section 743(b) of the Code to reflect his
purchase price. That election is irrevocable without the consent of the IRS.
The Section 743(b) adjustment belongs to the purchaser and not to other
unitholders. For purposes of this discussion, a unitholder's inside basis in
our assets will be considered to have two components: (1) his share of our tax
basis in such assets ("Basis") and (2) his Section 743(b) adjustment to that
basis.
Proposed Treasury regulations under Section 743 of the Code would require a
portion of the Section 743(b) adjustment attributable to recovery property to
be depreciated over the remaining cost recovery period for the Section 704(c)
built-in gain. Nevertheless, the proposed regulations under Section 197
indicate that the Section 743(b) adjustment attributable to an amortizable
Section 197 intangible should be treated as a newly-acquired asset placed in
service in the month when the purchaser acquires the unit. 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 Code rather than
cost recovery deductions under Section 168 is generally required to be
depreciated using either the straight-line method or the 150% declining balance
method. Although the proposed
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regulations under Section 743 will likely eliminate many of the problems if
finalized in their current form, the depreciation and amortization methods and
useful lives associated with the Section 743(b) adjustment may differ from the
methods and useful lives generally used to depreciate the basis in these
properties. Under our partnership agreement, the general partner is authorized
to adopt a convention to preserve the uniformity of units even if that
convention is not consistent with specified Treasury Regulations. See "--Tax
Treatment of Operations--Uniformity of Units."
Although counsel is unable to opine as to the validity of an approach of this
type, we intend to depreciate the portion of a Section 743(b) adjustment
attributable to unrealized appreciation in the value of Contributed 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 Basis of such property, or treat that
portion as non-amortizable to the extent attributable to property the Basis of
which is not amortizable. This method is consistent with the proposed
regulations under Section 743 but is arguably inconsistent with Treasury
Regulation Section 1.167(c)-1(a)(6) and Proposed Treasury Regulation Section
1.197-2(g)(3), neither of which is expected to directly apply to a material
portion of our assets. To the extent this 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 regulations and legislative
history. If we determine that this position cannot reasonably be taken, we may
adopt a depreciation or amortization convention under which all purchasers
acquiring units in the same month would receive depreciation or amortization
deductions, whether attributable to basis or Section 743(b) adjustment, based
upon the same applicable rate as if they had purchased a direct interest in our
assets. Such an aggregate approach may result in lower annual depreciation or
amortization deductions than would otherwise be allowable to specified
unitholders. See "--Tax Treatment of Operations--Uniformity of Units."
The allocation of the Section 743(b) adjustment must be made in accordance
with the Code. The IRS may seek to reallocate some or all of any Section 743(b)
adjustment not so allocated by us to goodwill which, as an intangible asset,
would be amortizable over a longer period of time than our tangible assets.
A Section 754 election is advantageous if the transferee's tax basis in his
units is higher than those units' share of the aggregate tax basis to us of our
assets immediately prior to the transfer. In such a case, as a result of the
election, the transferee would have a higher tax basis in his share of our
assets for purposes of calculating, among other items, his depreciation and
depletion deductions and his share of any gain or loss on a sale of our assets.
Conversely, a Section 754 election is disadvantageous if the transferee's tax
basis in his units is lower than those unit's 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 adversely by the election.
The calculations involved in the Section 754 election are complex and we will
make them on the basis of assumptions as to the value of our assets and other
matters. We cannot assure that our determinations 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 such permission is granted, a subsequent
purchaser of Star Gas Partners units may be allocated more income than he would
have been allocated had the election not been revoked.
Notification Requirements. A Star Gas Partners unitholder who sells or
exchanges units is required to notify us in writing of that sale or exchange
within 30 days after the sale or exchange and in any event by no later than
January 15 of the year following the calendar year in which the sale or
exchange occurred. We are required to notify the IRS of that transaction and to
furnish certain 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.
Additionally, a transferor and a transferee of a unit will be required to
furnish statements to the IRS, filed with their income tax returns for the
taxable year in which the sale or exchange occurred, that describe the amount
of the consideration received for the unit that is allocated to our goodwill or
going concern value. Failure to satisfy these reporting obligations may lead to
the imposition of substantial penalties.
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Constructive Termination. Star Gas Partners and Star Gas Propane will be
considered to have been terminated if there is a sale or exchange of 50% or
more of the total interests in Star Gas Partners capital and profits within a
12-month period. A termination of Star Gas Partners will cause a termination of
Star Gas Propane. A termination of Star Gas Partners will result in the closing
of Star Gas Partners' taxable year for all Star Gas Partners unitholders. In
the case of a unitholder reporting on a taxable year other than a fiscal year
ending December 31, the closing of the tax year of Star Gas Partners may result
in more than 12 months' taxable income or loss of Star Gas Partners being
includable in his taxable income for the year of termination. Tax elections
required to be made by Star Gas Partners, including a new election under
Section 754 of the Code, must be made after a termination and a termination
could result in a deferral of Star Gas Partners deductions for depreciation. A
termination could also result in penalties if Star Gas Partners were unable to
determine that the termination had occurred. Moreover, a termination might
either accelerate the application of, or subject Star Gas Partners to, any tax
legislation enacted before the termination.
State, Local and Other Tax Considerations
In addition to federal income taxes, a unitholder will be subject to other
taxes, such as state and local income taxes, unincorporated business taxes, and
estate, inheritance or intangible taxes that may be imposed by the various
jurisdictions in which he or she resides or in which we do business or own
property. Although an analysis of those various taxes is not presented here,
each prospective unitholder should consider their potential impact on his
investment in Star Gas Partners. A unitholder will likely be required to file
state and local income tax returns and pay state and local income taxes in some
or all of the various jurisdictions in which we do business or own property and
may be subject to penalties for failure to comply with those requirements. Star
Gas Corporation anticipates that substantially all of our income will be
generated in the following states: Connecticut, Indiana, Kentucky, Maine,
Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio,
Pennsylvania, Rhode Island, and West Virginia. Each of these states currently
imposes a personal income tax; however, New Hampshire's tax only applies to
interest and dividend income. Some of them 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. A unitholder will be required to file state
income tax returns and to pay state income taxes in some or all of these states
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.
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 the
non-resident 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. See "--Tax Treatment of
Unitholders--Entity-Level Collections." Based on current law and our estimate
of our future operations, we do not anticipate that any amounts required to be
withheld will be material.
It is the responsibility of each unitholder to investigate the legal and tax
consequences of his investment in us, under the laws of pertinent states and
localities. 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 U.S. federal,
state and local, tax returns that may be required. Counsel has not rendered an
opinion on the state or local tax consequences of an investment in us.
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CONFLICTS OF INTEREST
Conflicts of Interest May Arise as a Result of the Publicly-Traded Limited
Partnership Structure
Conflicts of interest have arises and could arise in the future as a result
of relationships between the general partner and its affiliates, on the one
hand, and Star Gas Partners or any of the limited partners, on the other hand.
The directors and officers of the general partner have fiduciary duties to
manage the general partner in a manner beneficial to its members. In general
the general partner has a fiduciary duty to manage Star Gas Partners in a
manner beneficial to Star Gas Partners and the unitholders. The partnership
agreement contains provisions that allow the general partner to take into
account the interests of parties in addition to Star Gas Partners in resolving
conflicts of interest. In effect, these provisions limit its fiduciary duty to
the unitholders. The partnership agreement also restricts the remedies
available to unitholders for actions taken that without those limitations,
constitute breaches of fiduciary duty. An audit committee of the Star Gas LLC
board has been created, consisting of two directors who are not officers of the
general partner. At the request of the general partner the audit committee will
review conflicts of interest that may arise between the general partner or its
affiliates, on the one hand, and Star Gas Partners, on the other. Conflicts of
interest could arise in the situations described below, among others:
Actions Taken by the General Partner May Affect the Amount of Cash Available
for Distribution to Unitholders or Accelerate the Right to Convert Senior
Subordinated Units and Junior Subordinated Units. The amount of cash that is
available for distribution to unitholders is affected by decisions of the
general partner regarding matters such as:
. cash expenditures;
. participation in capital expansions and acquisitions;
. borrowings;
. issuance of additional units; and
. establishment of reserves.
In addition, borrowings by Star Gas Partners do not constitute a breach of
any duty owed by the general partner to the unitholders, including those
borrowings that have the purpose or effect of:
. causing incentive distributions to be made; or
. hastening the expiration of the subordination period.
The partnership agreements provides that we may borrow funds from the general
partner and its affiliates although the general partner and its affiliates may
not borrow funds from us.
Star Gas Partners' Borrowings May Enable the General Partner to Permit
Distributions on the Senior Subordinated Units, Junior Subordinated Units and
General Partner Units. Typically the general partner must act as a fiduciary to
Star Gas Partners and the unitholder, and therefore must consider our best
interests. However, it is not a breach of the general partner's fiduciary duty
under the partnership agreement if our borrowings are effected in a manner
that, directly or indirectly, enables the general partner to permit the payment
of distributions on the senior subordinated units, junior subordinated units
and general partner units.
The General Partner Intends to Limit Its Liability with Respect to Star Gas
Partners' Obligations. The general partner intends to limit its liability under
contractual arrangements so that the other party has recourse only as to all or
particular assets of Star Gas Partners, and not against the general partner or
its assets. The partnership agreement provides that any action taken by the
general partner to limit its liability, or that of Star Gas Partners, is not a
breach of the general partner's fiduciary duties, even if we could have
obtained more favorable terms without the limitation on liability.
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Unitholders Have No Right to Enforce Obligations of the General Partner and
Its Affiliates Under Agreements with Star Gas Partners. We will acquire
services from, or provide services to, the general partner and its affiliates
on an ongoing basis. The agreements relating to these arrangements will not
grant to the unitholders, separate and apart from Star Gas Partners, the right
to enforce the obligations of the general partner and its affiliates in favor
of Star Gas Partners.
Contracts Between Star Gas Partners on the One Hand, and the General Partner
and Its Affiliates on the Other Will Not Be the Result of Arm's-Length
Negotiations. The partnership agreement allows the general partner to pay
itself or its affiliates for any services rendered, provided these services are
rendered on terms that are fair and reasonable to us. The general partner may
also enter into additional contractual arrangements with any of its affiliates
on our behalf. Neither the partnership agreement nor any of the other
agreements, contracts and arrangements between Star Gas Partners, on the one
hand, and the general partner and its affiliates, on the other, are or will be
the result of arm's-length negotiations. All of these transactions entered into
are required to be on terms that are fair and reasonable to us.
The General Partner's Affiliates May Compete with Star Gas Partners. Except
for Irik P. Sevin, affiliates of the general partner are not prohibited from
competing with us. Mr. Sevin's noncompetition agreement with us provides that
he will not engage in the retail propane or retail home heating oil business in
the United States so long as he:
. is a director, officer or employee of the general partner, Star Gas
Partners or a subsidiary of Star Gas Partners; or
. .has access to information that would put Star Gas Partners at a
competitive disadvantage.
Further, Mr. Sevin is precluded from employing any person who was a managerial
employee of the general partner, Star Gas Partners or a subsidiary of Star Gas
Partners for the twelve-months after that employment so long as Mr. Sevin and
his mother, Ms. Audrey Sevin, own in the aggregate more than a 10% voting
interest in the general partner.
Fiduciary Duties Owed to Unitholders by the General Partner as Prescribed by
Law and the Partnership Agreement
The general partner is accountable to us and the Star Gas Partners
unitholders as a fiduciary. Consequently, the general partner must exercise
good faith and integrity in handling our assets and affairs. In contrast to the
relatively well-developed law concerning fiduciary duties owed by officers and
directors to the common stockholders of a corporation, the law concerning the
duties owed by general partners to other partners and to partnerships is
relatively undeveloped. Neither the Delaware Act nor case law defines with
particularity the fiduciary duties owed by general partners to limited partners
of a limited partnership. The Delaware Act does provide that Delaware limited
partnerships may, in their partnership agreements, restrict or expand the
fiduciary duties owed by general partners to limited partners and the
partnership. Fiduciary duties are generally considered to include an obligation
to act with the highest good faith, fairness and loyalty. Such duty of loyalty,
in the absence of a provision in a partnership agreement providing otherwise,
would generally prohibit a general partner from taking any action or engaging
in any transaction where a conflict of interest is present. In order to induce
the general partner to manage the business of Star Gas Partners, the
partnership agreement contains various provisions limiting the fiduciary duties
that might otherwise be owed by the general partner. The partnership agreement
also contains provisions that waive or consent to conduct by the general
partner that might otherwise raise issues of compliance with fiduciary duties
or applicable law.
In order to become a limited partner of Star Gas Partners, a unitholder is
required to agree to be bound by its provisions, including the provisions
discussed above. This is in accordance with the policy of the Delaware Act
favoring the principle of freedom of contract and the enforceability of
partnership agreements. The Delaware Act also provides that a partnership
agreement is enforceable even if not signed by a person being admitted as a
limited partner or becoming an assignee of a limited partner interest in
accordance with the terms of that agreement.
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Whenever a conflict of interest arises between the general partner or its
affiliates, on the one hand, and Star Gas Partners or any other partner, on the
other, the general partner shall resolve this conflict. The general partner
shall not be in breach of its obligations under the partnership agreement or
its duties to Star Gas Partners or the unitholders if the resolution of this
conflict is fair and reasonable to Star Gas Partners. Any resolution is deemed
to be fair and reasonable to Star Gas Partners if the resolution is:
(1) approved by the audit committee, although no party is obligated to
seek approval and the general partner may adopt a resolution or course
of action that has not received approval;
(2) on terms no less favorable to us than those generally being provided
to or available from unrelated third parties; or
(3) fair to us, taking into account the totality of the relationships
between the parties involved, including other transactions that may be
particularly favorable or advantageous to us.
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PLAN OF DISTRIBUTION
We may sell securities covered by this prospectus to or through underwriters
or dealers, and we also may sell securities directly to other purchasers or
through agents.
We will prepare a prospectus supplement for each offering that will disclose
the terms of the offering, including the name or names of any underwriters,
dealers or agents, the purchase price of the securities and the proceeds to us
from the sale, any underwriting discounts and other items constituting
compensation to underwriters, dealers or agents.
If we use underwriters or dealers in the sale, they will acquire the
securities for their own account and they may resell these securities from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more of such firms. Unless otherwise disclosed in the prospectus supplement,
the obligations of the underwriters to purchase securities will be subject to
certain conditions precedent, and the underwriters will be obligated to
purchase all of the securities offered by the prospectus supplement if any are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
We may sell the securities directly or through agents designated by us from
time to time. We will name any agent involved in the offering and sale of the
securities for which this prospectus is delivered, and disclose any commissions
payable by us to the agent or the method by which the commissions can be
determined in the prospectus supplement. Unless otherwise indicated in the
prospectus supplement, any agent will be acting on a best efforts basis for the
period of its appointment.
We may agree to indemnify underwriters, dealers and agents who participate in
the distribution of securities against certain liabilities, including
liabilities under the Securities Act.
VALIDITY OF SECURITIES
The validity of the securities will be passed upon for Star Gas Partners by
Phillips Nizer Benjamin Krim & Ballon LLP, New York, New York.
EXPERTS
The consolidated financial statements and schedule of Star Gas Partners, and
its subsidiary as of September 30, 1998 and 1999 and for the fiscal years ended
September 30, 1997, 1998 and 1999 incorporated by reference in this prospectus,
have been incorporated by reference in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference and upon
the authority of that firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Petro as of December
31, 1997 and 1998 and for the fiscal years ended December 31, 1996, 1997 and
1998, have been incorporated by reference in this prospectus in reliance upon
the report of KPMG LLP, independent certified public accountants, incorporated
by reference and upon the authority of that firm as experts in accounting and
auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read our SEC filings over the Internet at the
SEC's website at http://www.sec.gov. You may also read and copy documents at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Full addresses: Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; 7 World Trade Center, New York, New York,
10038; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call the SEC at 1-800-SEC-0330 for further information on
the public reference rooms.
We have filed with the SEC a registration statement on Form S-3, regarding
the securities offered by this prospectus. The SEC allows us to "incorporate by
reference" the information we file with them, which means we can disclose
important information to you by referring you to those documents. Regarding
Star Gas Partners and the Securities offered by this prospectus, we refer you
to that registration statement on Form S-3 and its related exhibits and
schedules for further information.
FORWARD-LOOKING STATEMENTS
Many of the statements contained in this prospectus, including, without
limitation, statements regarding our business strategy, plans and objectives of
our management for future operations and statements made under "Cash Available
for Distribution" are forward-looking within the meaning of the federal
securities laws. These statements use forward-looking words, such as
"anticipate," "continue," "expect," "may," "will," "estimate," "believe" or
other similar words. These statements discuss future expectations or contain
projections. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, actual results may differ from those
suggested by the forward-looking statements for various reasons, including:
. the effect of weather conditions on our financial performance;
. our ability to obtain new customers and retain existing customers;
. the price and supply of propane and home heating oil;
. our ability to successfully identify and close strategic acquisitions
and make cost saving changes in operations;
. the effect of national and regional economic conditions;
. the condition of the capital markets in the U.S.; and
. the political and economic stability of the oil producing regions of the
world.
When considering forward-looking statements, you should keep in mind the risk
factors referred to in this prospectus. The risk factors could cause our actual
results to differ materially from those contained in any forward-looking
statement. We disclaim any obligation to update the above list or to announce
publicly the result of any revisions to any of the forward-looking statements
to reflect future events or developments.
You should consider the above information when reading any forward-looking
statement in:
. this prospectus; or
. documents incorporated by reference in this prospectus.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Star Gas Partners with the SEC (File No. 33-
98490) are incorporated by reference in this prospectus:
. Star Gas Partners' 1999 Annual Report on Form 10-K.
. Star Gas Partners' Current Report on Form 8-K, dated February 18, 1999.
. Star Gas Partners' Current Report on Form 8-K, dated March 26, 1999.
In addition, all other reports and documents, we have filed under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and before this offering shall be deemed incorporated by reference in this
prospectus from the date of filing of those reports and documents. If
information in incorporated documents conflicts with information in this
prospectus you should rely on the most recent information. If information in an
incorporated document conflicts with information in another incorporated
document, you should rely on the most recent incorporated document.
This prospectus incorporates documents by reference that are not included
with this prospectus. These documents, excluding exhibits to the documents, are
available without charge, upon oral or written request by any person to whom
this prospectus is delivered. Contact Star Gas LLC, 2187 Atlantic Street,
Stamford, Connecticut 06902, Attention: Richard F. Ambury, Vice President and
Treasurer, telephone (203) 328-7313.
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ANNEX A--APPLICATION FOR TRANSFER OF COMMON UNITS
No transfer of the Common Units evidenced hereby will be registered on the
books of the Partnership, unless the certificate evidencing the Common Units to
be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on
the form shown or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of the
Assignee of the Common Units evidenced hereby.
The Assignee
(a) requests admission as a Substituted Limited Partner and agrees to
comply with and be bound by, and hereby executes, the Amended and
Restated Agreement of Limited Partnership of Star Gas Partners, L.P.
(the "Partnership"), as amended, supplemented or restated to the date
hereof (the "Partnership Agreement"),
(b) represents and warrants that the Assignee has all right, power and
authority and, if an individual, the capacity necessary to enter into
the Partnership Agreement,
(c) appoints the General Partner and, if a Liquidator shall be appointed,
the Liquidator of the Partnership as the Assignee's attorney-in-fact to
execute, swear to, acknowledge and file any document, including,
without limitation, the Partnership Agreement and any amendment thereto
and the Certificate of Limited Partnership of the Partnership and any
amendment hereto, necessary or appropriate for the Assignee's admission
as a Substituted Limited Partner and as a party to the Partnership
Agreement,
(d) gives the powers of attorney provided for in the Partnership Agreement
and
(e) makes the waivers and gives the consents and approvals contained in the
Partnership Agreement. Capitalized terms not defined here have the
meanings assigned to those terms in the Partnership Agreement.
Date: _______________
- ------------------------------------- -------------------------------------
Social Security or other identifying Signature of Assignee
number of Assignee
-------------------------------------
- ------------------------------------- Name and Address of Assignee
Purchase Price including
commissions, if any
Type of Entity (check one):
[_] Individual [_] Partnership [_] Corporation
[_] Trust [_] Other (specify) __________________________________
Nationality (check one):
[_] U.S. Citizen, Resident or Domestic Entity
[_] Foreign Corporation [_] Non-resident Alien
A-1
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If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended, the
Partnership must withhold tax with respect to certain transfers of property if
a holder of an interest in the Partnership is a foreign person. To inform the
Partnership that no withholding is required with respect to the undersigned
interestholder's interest in it, the undersigned hereby certifies the following
(or, if applicable, certifies the following on behalf of the interestholder).
Complete Either A or B:
A. Individual Interestholder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identification number (Social Security Number) is _____.
3. My home address is _____________________________________________________.
B. Partnership, Corporation or Other Interestholder
1. ________________________________________________________ is not a foreign
(Name of Interestholder)
corporation, foreign partnership, foreign trust or foreign estate (as
those terms are defined in the Code and Treasury Regulations).
2. The interestholder's U.S. employer identification number is ____________.
3. The interestholder's office address and place of incorporation (if
applicable) is _____________________________________________________________
________________________________________________________________________.
The interestholder agrees to notify the Partnership within sixty (60) days of
the date the interestholder becomes a foreign person.
The interestholder understands that this certificate may be disclosed to the
Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this certification
and to the best of my knowledge and belief it is true, correct and complete
and, if applicable, I further declare that I have authority to sign this
document on behalf of
---------------------
(Name of Interestholder)
---------------------
Signature and Date
---------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
A-2
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ANNEX B--GLOSSARY OF TERMS
Adjusted Operating Surplus: For any period, Operating Surplus generated
during that period as adjusted to:
(a) decrease Operating Surplus by;
(1) any net increase in working capital borrowings during that
period, and
(2) any net reduction in cash reserves for Operating Expenditures
during that period not relating to an Operating Expenditure made
during that period; and
(b) increase Operating Surplus by;
(1) any net decrease in working capital borrowings during that
period; and
(2) any net increase in cash reserves for Operating Expenditures
during that period required by any debt instrument for the
repayment of principal, interest or premium.
Adjusted Operating Surplus does not include that portion of Operating
Surplus included in clause (a)(1) of the definition of Operating Surplus.
Available Cash: For any quarter prior to liquidation:
(a) the sum of:
(1) all cash and cash equivalents of the Star Gas Partners and its
subsidiaries on hand at the end of that quarter; and
(2) all additional cash and cash equivalents of Star Gas Partners
and its subsidiaries on hand on the date of determination of
Available Cash for that quarter resulting from Working Capital
Borrowings after the end of that quarter;
(b) less the amount of cash reserves that is necessary or appropriate
in the reasonable discretion of the general partner to:
(1) provide for the proper conduct of the business of Star Gas
Partners and its subsidiaries (including reserves for future
capital expenditures) after that quarter;
(2) provide funds for minimum quarterly distributions and cumulative
common unit arrearages for any one or more of the next four
quarters; or
(3) comply with applicable law or any debt instrument or other
agreement or obligation to which any member of Star Gas Partners
and its subsidiaries is a party or its assets are subject;
provided, however, that the general partner may not establish cash
reserves for distributions to the senior subordinated units unless the
general partner has determined that in its judgment the establishment
of reserves will not prevent Star Gas Partners from distributing the
minimum quarterly distribution on all common units and any common unit
arrearages thereon for the next four quarters; and,
provided further, that disbursements made by Star Gas Partners and
its subsidiaries or cash reserves established, increased or reduced
after the end of that quarter but on or before the date of
determination of Available Cash for that quarter shall be deemed to
have been made, established, increased or reduced, for purposes of
determining Available Cash, within that quarter if the general partner
so determines.
Capital Account: The capital account maintained for a partner under the
amended and restated partnership agreement. The Capital Account for a common
unit, a subordinated unit, a junior subordinated unit, a general partner unit
or any other specified interest in Star Gas Partners shall be the amount which
that Capital Account would be if that common unit, subordinated unit, junior
subordinated unit, general partner unit or other interest in Star Gas Partners
were the only interest in Star Gas Partners held by a partner.
B-1
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Capital Surplus: All Available Cash distributed by Star Gas Partners from any
source will be treated as distributed from Operating Surplus until the sum of
all Available Cash distributed since the commencement of Star Gas Partners
equals the Operating Surplus as of the end of the quarter before that
distribution. Any excess Available Cash will be deemed to be Capital Surplus.
Closing Price: The last sale price on a day, regular way, or in case no sale
takes place on that day, the average of the closing bid and asked prices on
that day, regular way. In either case, as reported in the principal
consolidated transaction reporting system for securities listed or admitted to
trading on the principal national securities exchange on which the units of
that class are listed or admitted to trading. If the units of that class are
not listed or admitted to trading on any national securities exchange, the last
quoted price on that day. If no quoted price exists, the average of the high
bid and low asked prices on that day in the over-the-counter market, as
reported by the Nasdaq Stock Market or any other system then in use. If on any
day the units of that class are not quoted by any organization of that type,
the average of the closing bid and asked prices on that day as furnished by a
professional market maker making a market in the units of the class selected by
the board of directors of the general partner. If on that day no market maker
is making a market in the units of that class, the fair value of such units on
that day as determined reasonably and in good faith by the board of directors
of the general partner.
Current Market Price: With respect to any class of units listed or admitted
to trading on any national securities exchange as of any date, the average of
the daily Closing Prices for the 20 consecutive trading days immediately prior
to such date.
Interim Capital Transactions:
(a) borrowings, refinancings or refundings of indebtedness and sales of
debt securities (other than Working Capital Borrowings and other
than for items purchased on open account in the ordinary course of
business) by any member of Star Gas Partners and its subsidiaries;
(b) sales of equity interests (including common units sold to the
underwriters in the exercise of their over-allotment option) by any
member of Star Gas Partners and its subsidiaries; and
(c) sales or other voluntary or involuntary dispositions of any assets
of any member of Star Gas Partners and its subsidiaries (other than
sales or other dispositions of inventory in the ordinary course of
business, sales or other dispositions of other current assets,
including, without limitation, receivables and accounts, in the
ordinary course of business and sales or other dispositions of
assets as a part of normal retirements or replacements), in each
case before the dissolution and liquidation of Star Gas Partners.
Operating Expenditures: All expenditures of Star Gas Partners and its
subsidiaries including taxes, reimbursements of the general partner, debt
service payments, and capital expenditures, subject to the following:
(a) Payments (including prepayments) of principal and premium on a debt
shall not be an Operating Expenditure if the payment is;
(1) required for the sale or other disposition of assets or
(2) made for the refinancing or refunding of indebtedness with the
proceeds from new indebtedness or from the sale of equity
interests. For purposes of the foregoing, at the election and in
the reasonable discretion of the general partner, any payment of
principal or premium shall be deemed to be refunded or
refinanced by any indebtedness incurred or to be incurred by
Star Gas Partners and its subsidiaries within 180 days before or
after that payment to the extent of the principal amount of that
indebtedness.
B-2
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(b) Operating Expenditures shall not include;
(1) capital expenditures made for acquisitions or for capital
improvements (as opposed to capital expenditures made to
maintain assets);
(2) payment of transaction expenses relating to Interim Capital
Transactions;
(3) payment of transaction expenses related to the merger and the
transactions contemplated by the merger; or
(4) distributions to partners. Where capital expenditures are made
in part for acquisitions or capital improvements and in part for
other purposes, the general partner's good faith allocation
between the amounts paid for each shall be conclusive.
Operating Surplus: As to any period before liquidation:
(a) the sum of:
(1) $20,340,600 plus all cash of Star Gas Partners and its
subsidiaries on hand as of the close of business on the closing
date of the initial public offering;
(2) all the cash receipts of Star Gas Partners and its subsidiaries
for the period beginning on the closing date of the initial
public offering and ending with the last day of that period,
other than cash receipts from Interim Capital Transactions
(except to the extent specified in the amended and restated
partnership agreement; and
(3) all cash receipts of Star Gas Partners and its subsidiaries
after the end of that period but on or before the date of
determination of Operating Surplus for the period resulting from
borrowings for working capital purposes; less
(b) the sum of:
(1) Operating Expenditures for the period beginning on the date of
the closing of the initial public offering and ending with the
last day of that period; and
(2) the amount of cash reserves that is necessary or advisable in
the reasonable discretion of the general partner to provide
funds for future Operating Expenditures; provided, however, that
disbursements made (including contributions to Star Gas Partners
or any of its subsidiaries or disbursements on behalf of Star
Gas Partners or any of its subsidiaries) or cash reserves
established, increased or reduced after the end of that period
but on or before the date of determination of Available Cash for
that period shall be deemed to have been made, established,
increased or reduced, for purposes of determining Operating
Surplus, within that period if the general partner so
determines.
Notwithstanding the foregoing, "Operating Surplus" for the quarter in which the
liquidation date occurs and any later quarter shall equal zero.
subordination period: The subordination period will extend from the date of
the closing of the initial public offering until the first to occur of the
following:
(a) the first day of any quarter beginning on or after October 1, 2002
for which;
(1) distributions of Available Cash from Operating Surplus on each
of the outstanding common units, senior subordinated units,
junior subordinated units and general partner units equaled or
exceeded the sum of the minimum quarterly distribution on all of
the outstanding common units and junior subordinated units for
each of the three non-overlapping four-quarter periods
immediately preceding that date;
(2) the Adjusted Operating Surplus, generated during each of the
three immediately preceding, non-overlapping four quarter
periods equaled or exceeded the sum of minimum quarterly
B-3
<PAGE>
distribution on all of the common units, senior subordinated
units, junior subordinated units and general partner units that
were outstanding during those periods on a fully diluted basis
for employee options or other employee incentive compensation
(i.e., taking into account for purposes of that determination all
outstanding common units, senior subordinated units, junior
subordinated units and general partner units and all common units
issuable upon exercise of employee options that have, as of the
date of determination, already vested or are scheduled to vest
before the end of the quarter immediately following the quarter
for which determination is made, and all units that have, as of
the date of determination, been earned by but not yet issued to
management of Star Gas Partners for incentive compensation); and
(3) there are no arrearages in payment of the minimum quarterly
distribution on the common units.
(b) the date on which the general partner is removed as general partner
of Star Gas Partners upon the requisite vote by limited partners
under circumstances where cause does not exist; provided, however,
that if the general partner is removed during the subordination
period within 12 months after the end of a six-quarter period in
which the minimum quarterly distribution was not made on the common
units for more than one of those quarters (excluding for this
purpose the payment of any common unit arrearages) and the first
quarter of that six-quarter period that the minimum quarterly
distribution on common units was not made occurs after March 31,
2001, then the subordination period will not end. In the event that
the general partner is removed under the circumstances described
above, the junior subordinated units shall convert into senior
subordinated units on a one-for-one basis and the distribution
rights on the general partner units will rank equally with the
senior subordinated units.
Working Capital Borrowings: Borrowings under to a facility or other
arrangement requiring all of its borrowings to be reduced to a relatively
small amount each year for an economically meaningful period of time.
Borrowings that are not intended exclusively for working capital purposes
shall not be treated as Working Capital Borrowings.
B-4
<PAGE>
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must
not rely on any unauthorized information. This prospectus does not offer to
sell or buy any Securities in any jurisdiction where it is unlawful. The
information in this prospectus is correct as of the date that information is
given.
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Guide To Reading This Prospectus........................................... 1
Who We Are................................................................. 2
About This Prospectus...................................................... 3
Risk Factors............................................................... 3
The Petro Transaction...................................................... 13
Use of Proceeds............................................................ 15
Ratio of Earnings to Fixed Charges......................................... 15
Cash Distribution Policy .................................................. 17
Description of Common Units................................................ 26
Description of Partnership Securities...................................... 28
Description of Debt Securities............................................. 30
Federal Income Tax Considerations.......................................... 43
Conflicts of Interest......................................................
Plan of Distribution....................................................... 61
Validity of Securities..................................................... 61
Experts.................................................................... 61
Where You Can Find More Information........................................ 62
Forward-Looking Statements................................................. 62
Incorporation of Certain Documents by Reference............................ 63
Annex A -- Application for Transfer of Common Units........................ A-1
Annex B -- Glossary of Terms............................................... B-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Star Gas Partners, L.P.
$100,000,000
Common Units
Partnership Securities
Debt Securities
----------------
PROSPECTUS
----------------
----------------
, 2000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution (1)
<TABLE>
<S> <C>
SEC Registration Fee................................................... $26,400
NASD Fee............................................................... --
Printing and Engraving Expenses........................................ 40,000
New York Stock Exchange Listing Fee.................................... --
Accounting Fees and Expenses........................................... 20,000
Legal Fees and Expenses................................................ 50,000
Transfer Agent and Registrar Fees...................................... 1,000
Miscellaneous.......................................................... 1,000
-------
Total.............................................................. $
=======
</TABLE>
- --------
(1) The amounts set forth above, except for the SEC, NASD and New York Stock
Exchange fees, are in each case estimated.
Item 15. Indemnification of Directors and Officers
The Partnership Agreement and the Operating Partnership Agreement provide
that the Partnership or the Operating Partnership, as the case may be, will
indemnify (to the fullest extent permitted by applicable law) certain persons
from and against any and all losses, claims, damages, liabilities (joint or
several), expenses (including, without limitation, legal fees and expenses),
judgements, fines and amounts paid in settlement actually and reasonably
incurred by such Indemnitee in connection with any claim, demand, action, suit
or proceeding to which the Indemnitee is or was an actual or threatened party
and which relates to the Partnership Agreement or the Operating Partnership
Agreement or the property, business, affairs or management of the Partnership
or the Operating Partnership. This indemnity is available only if the
Indemnitee acted in good faith, in a manner in which such Indemnitee believed
to be in, or not opposed to, the best interests of the Partnership and, with
respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. Indemnitees include the General Partner, any Departing
Partner, any affiliate of the General Partner or any Departing Partner, any
person who is or was a director, officer, employee or agent of the general
partner or any Departing Partner or any affiliate of either, or any person who
is or was serving at the request of the General Partner, any Departing Partner,
or any such affiliate as a director, officer, partner, trustee, employee or
agent of another person. Expenses subject to indemnity will be paid by the
applicable partnership to the Indemnitee in advance, subject to receipt of an
undertaking by or on behalf of the Indemnitee to repay such amount if it is
ultimately determined by a court of competent jurisdiction that the Indemnitee
is not entitled to indemnification. The Partnership will, to the extent
commercially reasonable, purchase and maintain insurance on behalf of the
Indemnitees, whether or not the Partnership would have the power to indemnify
such Indemnitees against liability under the applicable partnership agreement.
Star Gas LLC maintains a policy of directors' and officers' liability insurance
on behalf of its officers and directors.
II-1
<PAGE>
Item 16. Exhibits
The following is a complete list of Exhibits filed or incorporated by
reference as part of this Registration Statement.
<TABLE>
<CAPTION>
Exhibit Description
- ------- ----------------------------------------------------------------------------
<S> <C>
4.2 Form of Agreement of Limited Partnership of Star Gas Partners,
L.P.+
4.3 Form of Agreement of Limited Partnership of Star Gas
Propane, L.P.+
4.4 Form of Senior Indenture**
4.5 Form of Subordinated Indenture**
5.1 Opinion of Phillips Nizer Benjamin Krim & Ballon LLP
as to the validity of the securities being registered.**
8.1 Opinion of Andrews & Kurth L.L.P. as to certain federal
income tax matters.**
23.1 Consent of KPMG LLP.**
23.2 Consent of Phillips Nizer Benjamin Krim & Ballon LLP
(included in their opinion filed as Exhibit 5.1).**
23.3 Consent of Andrews & Kurth L.L.P. (included in their
opinion filed as Exhibit 8.1).**
24.1 Powers of Attorney (included on the Registration Statement Signature Page)**
99.1 Balance Sheet of Star Gas LLC**
</TABLE>
- --------
** Filed herewith.
+ Incorporated by reference to an exhibit to the Registrant's Registration
Statement on Form S-4, File No. 333-66005, filed with the Commission on
October 22, 1998.
Item 17. Undertakings
(1) 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 that is incorporated by reference in the Registration Statement
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.
(2) Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the provisions described in Item 15 of this Registration
Statement or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the 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 against the Registrant 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.
(3) 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 this Registration
II-2
<PAGE>
Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and
any 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;
provided, however, that the undertakings set forth in paragraph
(a)(i) and (a)(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 with or furnished to the
commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in this 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 the
Registration Statement. Provided, however, that paragraphs (a)(i)
and (a)(ii) 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 Section 15(d) of the Exchange Act 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;
(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.
(4) To respond to requests for information that is incorporated by reference
into this Prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally promptly means. This includes
information contained in documents filed subsequent to the effective day of the
Registration Statement through the date of responding to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration Statement when it
became effective.
(6) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(7) That every prospectus (i) that is filed pursuant to paragraph (6)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act of
1933, 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Stamford, state of Connecticut, on
December 30, 1999.
Star Gas Partners, L.P.
By: STAR GAS LLC, as
General Partner
/s/ Irik P. Sevin
By: ____________________
Irik P. Sevin
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Each Person whose signature appears below appoints Irik Sevin, Richard F.
Ambury and George Leibowitz and each of them, any of whom may act without the
joinder of the other, as his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including and amendment thereto) for this offering that is to
be effective upon filing pursuant to Rule 462 (b) under the Securities Act, and
to file the same, with all exhibits thereto, and all other documents in
connection, therewith, with the Securities and Exchange Commission, granted
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or world do in person, hereby
ratifying and confirming all that said attorney-in-fact and agents or any of
them or their or his or her substitute and substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Irik P. Sevin Chairman of the Board, December 30, 1999
______________________________________ Chief Executive Officer
Irik P. Sevin and Director (Principal
Executive Officer)
/s/ George Leibowitz Chief Financial Officer December 30, 1999
______________________________________ (Principal Financial and
George Leibowitz Accounting Officer)
/s/ Audrey L. Sevin Director December 30, 1999
______________________________________
Audrey L. Sevin
/s/ William Nicoletti Director December 30, 1999
______________________________________
William Nicoletti
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Paul Biddelman Director December 30, 1999
______________________________________
Paul Biddelman
/s/ Thomas J. Edelman Director December 30, 1999
______________________________________
Thomas J. Edelman
/s/ I. Joseph Massoud Director December 30, 1999
______________________________________
I. Joseph Massoud
Director December 30, 1999
______________________________________
</TABLE> Stephen Russell
II-5
<PAGE>
Exhibit 4.4
Draft: December 27, 1999
================================================================================
FORM OF SENIOR INDENTURE
STAR GAS PARTNERS, L.P.
Issuer
and
_____________________
Trustee
INDENTURE
Dated as of ________, 2000
SENIOR DEBT SECURITIES
================================================================================
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS OF THE PARTNERSHIP................................................................................... 1
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............................................. 1
SECTION 101. Definitions.................................................................................. 1
SECTION 102. Compliance Certificates and Opinions......................................................... 9
SECTION 103. Form of Documents Delivered to Trustee....................................................... 9
SECTION 104. Acts of Holders; Record Dates................................................................ 10
SECTION 105. Notices, Etc., to Trustee and Partnership.................................................... 11
SECTION 106. Notice to Holders; Waiver.................................................................... 11
SECTION 107. Conflict with Trust Indenture Act............................................................ 11
SECTION 108. Effect of Headings and Table of Contents..................................................... 11
SECTION 109. Successors and Assigns....................................................................... 12
SECTION 110. Separability Clause.......................................................................... 12
SECTION 111. Benefits of Indenture........................................................................ 12
SECTION 112. Governing Law................................................................................ 12
SECTION 113. Legal Holidays............................................................................... 12
SECTION 114. Language of Notices, Etc..................................................................... 12
SECTION 115. Non-Recourse to the General Partner; No Personal Liability of Officers, Directors,
Employees or Partners........................................................................ 12
ARTICLE II SECURITY FORMS..................................................................................... 13
SECTION 201. Forms Generally.............................................................................. 13
SECTION 202. Form of Face of Security..................................................................... 13
SECTION 203. Form of Reverse of Security.................................................................. 15
SECTION 204. Global Securities............................................................................ 19
SECTION 205. Form of Trustee's Certificate and Authorization ............................................. 20
ARTICLE III THE SECURITIES.................................................................................... 20
SECTION 301. Amount Unlimited; Issuable in Series......................................................... 20
SECTION 302. Denominations................................................................................ 23
SECTION 303. Execution, Authentication, Delivery and Dating............................................... 23
SECTION 304. Temporary Securities......................................................................... 25
SECTION 305. Registration, Registration of Transfer and Exchange.......................................... 25
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities............................................. 26
SECTION 307. Payment of Interest; Interest Rights Preserved............................................... 27
SECTION 308. Persons Deemed Owners........................................................................ 28
SECTION 309. Cancellation................................................................................. 29
SECTION 310. Computation of Interest...................................................................... 29
SECTION 311. CUSIP Numbers................................................................................ 29
ARTICLE IV SATISFACTION AND DISCHARGE......................................................................... 29
SECTION 401. Satisfaction and Discharge of Indenture...................................................... 29
SECTION 402. Application of Trust Money................................................................... 30
ARTICLE V REMEDIES ........................................................................................... 31
SECTION 501. Events of Default............................................................................ 31
SECTION 502. Acceleration of Maturity; Rescission and Annulment........................................... 31
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.............................. 32
</TABLE>
i
<PAGE>
Table of Contents
-----------------
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 504. Trustee May File Proofs of Claim............................................................. 33
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.................................. 33
SECTION 506. Application of Money Collected............................................................... 33
SECTION 507. Limitation on Suits.......................................................................... 34
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest.................... 34
SECTION 509. Restoration of Rights and Remedies........................................................... 34
SECTION 510. Rights and Remedies Cumulative............................................................... 35
SECTION 511. Delay or Omission Not Waiver................................................................. 35
SECTION 512. Control by Holders........................................................................... 35
SECTION 513. Waiver of Past Defaults...................................................................... 35
SECTION 514. Undertaking for Costs........................................................................ 36
SECTION 515. Waiver of Usury, Stay or Extension Laws...................................................... 36
ARTICLE VI THE TRUSTEE........................................................................................ 36
SECTION 601. Certain Duties and Responsibilities.......................................................... 36
SECTION 602. Notice of Defaults........................................................................... 36
SECTION 603. Certain Rights of Trustee.................................................................... 37
SECTION 604. Not Responsible for Recitals or Issuance of Securities....................................... 37
SECTION 605. May Hold Securities.......................................................................... 38
SECTION 606. Money Held in Trust.......................................................................... 38
SECTION 607. Compensation and Reimbursement............................................................... 38
SECTION 608. Disqualification; Conflicting Interests...................................................... 39
SECTION 609. Corporate Trustee Required; Eligibility...................................................... 39
SECTION 610. Resignation and Removal; Appointment of Successor............................................ 39
SECTION 611. Acceptance of Appointment by Successor....................................................... 40
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.................................. 41
SECTION 613. Preferential Collection of Claims Against Partnership........................................ 41
SECTION 614. Appointment of Authenticating Agent.......................................................... 41
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP............................................. 43
SECTION 701. Partnership to Furnish Trustee Names and Addresses of Holders................................ 43
SECTION 702. Preservation of Information; Communications to Holders....................................... 43
SECTION 703. Reports by Trustee........................................................................... 43
SECTION 704. Reports by Partnership....................................................................... 44
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE,TRANSFER OR LEASE.............................................. 44
SECTION 801. Partnership May Consolidate, Etc., Only on Certain Terms..................................... 44
SECTION 802. Successor Substituted........................................................................ 45
ARTICLE IX SUPPLEMENTAL INDENTURES............................................................................ 45
SECTION 901. Supplemental Indentures Without Consent of Holders........................................... 45
SECTION 902. Supplemental Indentures with Consent of Holders.............................................. 46
SECTION 903. Execution of Supplemental Indentures......................................................... 47
SECTION 904. Effect of Supplemental Indentures............................................................ 47
SECTION 905. Conformity with Trust Indenture Act.......................................................... 47
SECTION 906. Reference in Securities to Supplemental Indentures........................................... 47
ARTICLE X COVENANTS........................................................................................... 47
SECTION 1001. Payment of Principal, Premium and Interest................................................... 47
</TABLE>
ii
<PAGE>
Table of Contents
-----------------
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1002. Maintenance of Office or Agency.............................................................. 48
SECTION 1003. Money for Securities Payments to Be Held in Trust............................................ 48
SECTION 1004. Statement by Officers as to Default.......................................................... 49
SECTION 1005. Existence.................................................................................... 49
SECTION 1006. Limitations on Liens......................................................................... 49
SECTION 1007. Restriction of Sale-Leaseback Transaction.................................................... 51
SECTION 1008. Waiver of Certain Covenants.................................................................. 51
ARTICLE XI REDEMPTION OF SECURITIES........................................................................... 52
SECTION 1101. Applicability of Article..................................................................... 52
SECTION 1102. Election to Redeem; Notice to Trustee........................................................ 52
SECTION 1103. Selection by Trustee of Securities to be Redeemed............................................ 52
SECTION 1104. Notice of Redemption......................................................................... 52
SECTION 1105. Deposit of Redemption Price.................................................................. 53
SECTION 1106. Securities Payable on Redemption Date........................................................ 53
SECTION 1107. Securities Redeemed in Part.................................................................. 53
ARTICLE XII SINKING FUNDS..................................................................................... 54
SECTION 1201. Applicability of Article..................................................................... 54
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities........................................ 54
SECTION 1203. Redemption of Securities for Sinking Fund.................................................... 54
ARTICLE XIII DEFEASANCE....................................................................................... 55
SECTION 1301. Applicability of Article..................................................................... 55
SECTION 1302. Legal Defeasance............................................................................. 55
SECTION 1303. Covenant Defeasance.......................................................................... 56
SECTION 1304. Application by Trustee of Funds Deposited for Payment of Securities.......................... 57
</TABLE>
iii
<PAGE>
Table of Contents
-----------------
(Continued)
STAR GAS PARTNERS, L.P.
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE
TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
----------- -----------------
<S> <C>
Section. 310 (a)(1).................................................... 609
(a)(2).................................................... 609
(a)(3).................................................... Not Applicable
(a)(4).................................................... Not Applicable
(b)....................................................... 608; 610
Section. 311 (a)....................................................... 613
(b)....................................................... 613
Section. 312 (a)....................................................... 701; 702
(b)....................................................... 702
(c)....................................................... 702
Section. 313 (a)....................................................... 703
(b)....................................................... 703
(c)....................................................... 703
(d)....................................................... 703
Section. 314 (a)....................................................... 704
(a)(4).................................................... 104; 1004
(b)....................................................... Not Applicable
(c)(1).................................................... 101
(c)(2).................................................... 101; 102
(c)(3).................................................... Not Applicable
(d)....................................................... Not Applicable
(e)....................................................... 102
Section. 315 (a)....................................................... 601
(b)....................................................... 602
(c)....................................................... 601
(d)....................................................... 601
(e)....................................................... 514
Section. 316 (a)....................................................... 101
(a)(1)(A)................................................. 502; 512
(a)(1)(B)................................................. 513
(a)(2).................................................... Not Applicable
(b)....................................................... 508
(c)....................................................... 104
Section. 317 (a)(1).................................................... 503
(a)(2).................................................... 504
(b)....................................................... 1003
Section. 318 (a)....................................................... 107
</TABLE>
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
iv
<PAGE>
INDENTURE dated as of __________, _____, between STAR GAS PARTNERS, L.P., a
Delaware limited partnership (the "Partnership"), having its principal office at
2187 Atlantic Avenue, Stamford, Connecticut 06902 and _____________, a ________
banking corporation, as Trustee (the "Trustee").
RECITALS OF THE PARTNERSHIP
The Partnership has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (the "Securities"), to be
issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Partnership, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act that
are required to be a part of this Indenture and, to the extent applicable, shall
be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly, or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the date of such
computation;
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(5) the words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
1
<PAGE>
"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.
"Attributable Indebtedness", when used with respect to any Sale-Leaseback
Transaction, means, as at the time of determination, the present value
(discounted at the rate set forth or implicit in the terms of the lease included
in such transaction) of the total obligations of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items that do not constitute payments for property rights)
during the remaining term of the lease included in such Sale-Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease that is terminable by the lessee upon the payment of a
penalty or other termination payment, such amount shall be the lesser of the
amount determined assuming termination upon the first date such lease may be
terminated (in which case the amount shall also include the amount of the
penalty or termination payment, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be so
terminated) or the amount determined assuming no such termination.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Authorized Newspaper" means a newspaper, in the English language or in an
official language of the country of publication, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state
law for the relief of debtors or the protection of creditors.
"Board of Directors" means the board of directors of the General Partner,
or the executive or any other committee of that board duly authorized to act in
respect thereof. If the Partnership shall change its form of entity to other
than a limited partnership, the references to officers or the Board of Directors
of the General Partner shall mean the officers or the Board of Directors (or
other comparable governing body) of the Partnership.
"Board Resolution" means a copy of a resolution certified by the Corporate
Secretary of the General Partner, the principal financial officer of the General
Partner or any other authorized officer of the General Partner or a person duly
authorized by any of them, to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or other
location, means, except as otherwise provided as contemplated by Section 301
with respect to any series of Securities, each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in that
Place of Payment or other location are authorized or obligated by law, executive
order or regulation to close.
"Capital Interests" means any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock, including,
without limitation, with respect to partnerships,
2
<PAGE>
partnership interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Consolidated Net Worth" means the amount by which
(i) the total assets appearing on a consolidated balance sheet of the
Company and the Subsidiaries prepared in accordance with GAAP as of the date of
determination (after eliminating all amounts properly attributable to minority
interests in the stock and surplus, if any, of the Subsidiaries) exceeds
(ii) total liabilities of the Company and the Subsidiaries appearing on a
consolidated balance sheet of the Company and the Subsidiaries prepared in
accordance with GAAP as of the date of determination;
in each case after eliminating all intercompany transactions.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which at the date hereof is ________.
"corporation" includes corporations, associations, limited liability
companies, joint-stock companies and business trusts.
"covenant defeasance" has the meaning specified in Section 1303.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed, any purchase money obligation created or assumed by
such Person and any guarantee of the foregoing.
"Default" means, with respect to a series of Securities, any event which
is, or after notice or lapse of time or both would become, an Event of Default
with respect to Securities of such series.
"Defaulted Interest" has the meaning specified in Section 307.
"defeasance" has the meaning specified in Section 1302.
"Definitive Security" means a Security other than a Global Security or a
temporary Security.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301, until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter
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shall mean or include each Person which is then a Depositary hereunder, and if
at any time there is more than one such Person, shall be a collective reference
to such Persons.
"Dollar" or "$" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any statute successor thereto.
"Funded Debt" means all Debt maturing one year or more from the date of the
creation thereof, all Debt directly or indirectly renewable or extendible, at
the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more, provided that Funded Debt shall not include Debt under any bank or
institutional working capital facility which requires a clean up for a period of
at least 60 consecutive days in each fiscal year of the Company.
"General Partner" means Star Gas LLC, a Delaware corporation.
"Global Security" means a Security in global form that evidences all or
part of the Securities of any series and is registered in the name of the
Depositary for such Securities or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument, and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" also shall include the terms of particular series of Securities
established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Issue Date" means with respect to any series of Debt Securities issued
under either Indenture the date on which Debt Securities of that series are
initially issued under that Indenture.
"Lien" means, as to any entity, any mortgage, lien, pledge, security
interest or other encumbrance in or on, or adverse interest or title of any
vendor, lessor, lender or other secured party to or of the entity under
conditional sale or other title retention agreement or capital lease with
respect to, any property or asset of the entity.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
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"Notice of Default" means a written notice of the kind specified in Section
501(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer or the Secretary,
of the General Partner (or if the Partnership shall change its form of entity to
other than a limited partnership, by Persons or officers, members, agents and
comparable positions as applicable to those of the foregoing nature, as
applicable), and delivered to the Trustee. One of the officers or such other
Persons (as applicable) signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the General Partner (or if the Partnership shall change its form of entity to
other than a limited partnership, by Persons or officers, members, agents and
comparable positions as applicable to those of the foregoing nature, as
applicable).
"Opinion of Counsel" means a written opinion of legal counsel, who may be
an employee of or counsel for the Partnership.
"Original Issue Discount Security" means any Security which provides for an
amount less than the stated principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities 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 Securities; provided, however, that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor has been made;
(3) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Partnership; and
(4) Securities, except to the extent provided in Sections 1302 and
1303, with respect to which the Partnership has effected defeasance or covenant
defeasance as provided in Article XIII;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (A) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof on such date pursuant to Section 502, (B) the principal amount of a
Security denominated in one or more currencies or currency units other than U.S.
dollars shall be the U.S. dollar equivalent of such currencies or currency
units, determined in the manner provided as contemplated by Section 301 on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent (as so
determined) on the date of original issuance of such Security, of the amount
determined as provided in Clause (A) above) of such Security, and (C) Securities
owned by the Partnership or any other obligor
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upon the 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
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned as described in Clause (C) above 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
Securities and that the pledgee is not the Partnership or any other obligor upon
the Securities or any Affiliate of the Partnership or of such other obligor.
"Pari Passu Debt" means any Debt of the Partnership, whether outstanding on
the Issue Date or thereafter created, incurred or assumed, unless, in the case
of any particular Debt, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such Debt
shall be subordinated in right of payment to the Securities.
"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" or "Partnership Order" means a written request or
order signed in the name of the Partnership by the Chairman of the Board,
President or a Vice President of the General Partner, and by the Treasurer or
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 the like positions comparable to
those of the foregoing nature, as applicable.
"Paying Agent" means any Person authorized by the Partnership to pay the
principal of or any premium or interest on any Securities on behalf of the
Partnership.
"Periodic Offering" means an offering of Securities of a series from time
to time, the specific terms of which Securities, including, without limitation,
the rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the
original issue date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by Section 301
with respect thereto, are to be determined by the Partnership upon the issuance
of such Securities.
"Permitted Liens" means (i) zoning restrictions, easements, licenses,
covenants, reservations, restrictions on the use of real property or minor
irregularities of title incident thereto that do not, in the aggregate,
materially detract from the value of the property or the assets of the
Partnership and its Subsidiaries taken as a whole; (ii) any statutory or
governmental Lien or Lien arising by operation of law, or any mechanics',
repairmen's, materialmen's, suppliers', carriers', landlords', warehousemen's or
similar Lien incurred in the ordinary course of business which is not yet due or
which is being contested in good faith by appropriate proceedings and any
undetermined Lien which is incidental to construction, development, improvement
or repair; (iii) the right reserved to, or vested in, any municipality or public
authority by the terms of any right, power, franchise, grant, license, permit or
by any provision of law, to purchase or recapture or to designate a purchaser
of, any property; (iv) Liens of taxes and assessments which are (A) for the then
current year, (B) not at the time delinquent, or (C) delinquent but the validity
of which is being contested at the time by the Partnership or any Subsidiary in
good faith; (v) Liens of, or to secure performance of, leases, other than
capital leases; (vi) any Lien upon, or deposits of, any assets in favor of any
surety company or clerk of court for the purpose of obtaining indemnity or stay
of judicial proceedings; (vii) any Lien upon property or assets acquired or sold
by the Partnership or any Subsidiary resulting from the exercise of any rights
arising out of defaults on receivables; (viii) any Lien incurred in the ordinary
course of business in connection with workmen's compensation, unemployment
insurance,
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temporary disability, social security, retiree health or similar laws or
regulations or to secure obligations imposed by statute or governmental
regulations; (ix) any Lien in favor of the Partnership or any Subsidiary; (x)
any Lien in favor of the United States of America or any state thereof, or any
department, agency or instrumentality or political subdivision of the United
States of America or any state thereof, to secure partial, progress, advance, or
other payments pursuant to any contract or statute, or any Debt incurred by the
Partnership or any Subsidiary for the purpose of financing all or any part of
the purchase price of, or the cost of constructing, developing, repairing or
improving, the property or assets subject to such Lien; (xi) any Lien securing
industrial development, pollution control or similar revenue bonds; (xii) any
Lien securing Debt of the Partnership or any Subsidiary, all or a portion of the
net proceeds of which are used, substantially concurrent with the funding
thereof (and for purposes of determining such "substantial concurrence," taking
into consideration, among other things, required notices to be given to Holders
of outstanding securities under this Indenture (including the Securities) in
connection with such refunding, refinancing or repurchase, and the required
corresponding durations thereof), to refinance, refund or repurchase all
outstanding securities under this Indenture (including the Securities),
including the amount of all accrued interest thereon and reasonable fees and
expenses and premium, if any, incurred by the Partnership or any Subsidiary in
connection therewith; (xiii) Liens in favor of any Person to secure obligations
under the provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested by any governmental authority in connection
with any contract or statute; or (xiv) any Lien upon or deposits of any assets
to secure performance of bids, trade contracts, leases or statutory obligations;
(xv) Liens if any securing the payment of the securities; (xvi) Liens existing
on any property of any Person at the time it becomes a Subsidiary, or existing
prior to the time of acquisition (and not created in anticipation of such
acquisition) upon any property acquired by the Company or any Subsidiary through
purchase, merger or consolidation or otherwise, whether or not assumed by the
Company or such Subsidiary, provided that (i) any such Lien shall be confined
-------- -
solely to the item or items of property so acquired and, if required by the
terms of the instrument originally creating such Lien, other property which is
an improvement to or is acquired for specific use in connection with such
acquired property and (ii) the principal amount of the Debt secured by any such
--
Lien shall at no time exceed an amount equal to the lesser of (A) the cost of
-
such property to the Company or such Subsidiary, as the case may be, and (B) the
-
fair market value of such property (as determined in good faith by the general
partner of the Company) at the time such Person owning such property becomes a
Subsidiary or at the time of such acquisition by the Company or such Subsidiary,
as the case may be.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization or government, or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means, unless otherwise specifically provided for with respect to such series as
contemplated by Section 301, the office or agency of the Partnership in The City
of New York and such other place or places where, subject to the provisions of
Section 1002, the principal of and any premium and interest on the Securities of
that series are payable as specified as contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same Debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same Debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
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"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Sale-Leaseback Transaction" means the sale or transfer by the Partnership
or any Subsidiary of any property or assets to a Person (other than the
Partnership or a Subsidiary) and the taking back by the Partnership or any
Subsidiary, as the case may be, of a lease of such property or assets.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means, (i) any partnership of which 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, or (ii) any corporation, association or other business
entity of which more than 50% of the total voting power of the 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.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as otherwise provided
in Section 905; provided, however, that if the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean each Trustee with respect to Securities of that series.
"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, each of which are not callable or redeemable at the option of the
issuer thereof.
"Vice President," when used with respect to the Partnership, means any vice
president of the General Partner, or when used with respect to the Trustee,
means any vice president of the Trustee.
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SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Partnership to the Trustee to take
any action under any provision of this Indenture, the Partnership shall furnish
to the Trustee such certificates or opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the General Partner, or
an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (except for certificates provided for in
Section 1004) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual, 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
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Partnership or the General
Partner may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Partnership or
the General Partner stating that the information with respect to such factual
matters is in the possession of the Partnership or the General Partner, unless
such counsel knows that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed (either physically or by means of a facsimile
or an electronic transmission, provided that such electronic transmission is
transmitted through the facilities of a Depositary) by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered (either physically or by means of a facsimile or an electronic
transmission, provided that such electronic transmission is transmitted through
the facilities of a Depositary) to the Trustee and, where it is hereby expressly
required, to the Partnership. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 315 of the
Trust Indenture Act) conclusive in favor of the Trustee and the Partnership, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership, principal amount and serial numbers of Securities held by
any Person, and the date of commencement of such Person's holding the same,
shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other action of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Partnership
in reliance thereon, whether or not notation of such action is made upon such
Security.
Without limiting the foregoing, a Holder entitled hereunder to give or take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any different part of such principal amount.
The Partnership may set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities of such series, but the Partnership shall have no
obligation to do so. With regard to any record date set pursuant to this
paragraph, the Holders of Outstanding Securities of the relevant series on such
record date (or their duly appointed agents), and only such Persons, shall be
entitled to give or take the relevant action, whether or not such Holders remain
Holders after such record date.
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SECTION 105. Notices, Etc., to Trustee and Partnership.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Partnership shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trustee Administration, or
(2) the Partnership by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Partnership addressed to it at 2187 Atlantic Avenue, Stamford, Connecticut
06902, to the attention of the Corporate Secretary, or at any other address
previously furnished in writing to the Trustee by the Partnership.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid (if international mail, by
air mail), to each Holder affected by such event, at his address as it appears
in the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Partnership shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the 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 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of the Securities of any series which specifically
states that such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) need not be made at such Place of
Payment on such date, 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 Interest
Payment Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
SECTION 114. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or
Act required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
SECTION 115. Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners.
Obligations of the Partnership under this Indenture and the Securities
hereunder are non-recourse to the General Partner, and its respective Affiliates
(other than the Partnership), and payable only out of cash flow and assets of
the Partnership. The Trustee, and each Holder of a Security by its acceptance
thereof, will be deemed to have agreed in this Indenture that (1) neither the
General Partner nor its assets (nor any of its respective Affiliates other than
the Partnership, nor their respective assets) shall be liable for any of the
obligations of the Partnership under this Indenture or such Securities, and (2)
no director, officer, employee, stockholder or unitholder, as such, of the
Partnership, the Trustee, the General Partner
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or any Affiliate of any of the foregoing entities shall have any personal
liability in respect of the obligations of the Partnership under this Indenture
or such Securities by reason of his, her or its status.
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution 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 may be required to comply with applicable tax
laws or the rules of any securities exchange or automated quotation system on
which the Securities of such series may be listed or traded or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by an authorized officer or other authorized Person on behalf of the
Partnership and delivered to the Trustee at or prior to the delivery of the
Partnership Order contemplated by Section 303 for the authentication and
delivery of such Securities.
The definitive Securities 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 Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
[Insert any legend required by the United States Internal Revenue Code and
the regulations thereunder.]
[If a Global Security,--insert legend required by Section 204 of the
Indenture] [If applicable, insert--UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION, TO THE PARTNERSHIP OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
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STAR GAS PARTNERS, L.P.
[TITLE OF SECURITY]
NO. _________ U.S.$________
[CUSIP No. ]
STAR GAS PARTNERS, L.P., a Delaware limited partnership (herein called the
"Partnership", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to _______,
or registered assigns, the principal sum of United States Dollars on
___________________ [if the Security is to bear interest prior to Maturity,
insert--, and to pay interest thereon from _______, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on _______ and _______ in each year, commencing _______, at the
rate of ___% per annum, until the principal hereof is paid or made available for
payment [if applicable, insert--, and at the rate of ___% per annum on any
overdue principal and premium and on any overdue installment of interest]. [If
applicable, insert -- The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount of
interest payable for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the days elapsed in any partial month.
In the event that any date on which interest is payable on this Security is not
a Business Day, then a payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on the date the payment was originally payable. A "Business Day" shall
mean, when used with respect to any Place of Payment, each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in that Place of Payment are authorized or obligated by law, executive order or
regulation to close.] The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ______________ or ______________ (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice of which shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or automated quotation system, all as more fully provided in such
Indenture].
[If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of ___% per annum, which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of ___% per annum, which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.]
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[If a Global Security, insert--Payment of the principal of [(and premium,
if any)] and [if applicable, insert--any such] interest on this Security will be
made by transfer of immediately available funds to a bank account in
_______________ designated by the Holder in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts [state other currency].]
[If a Definitive Security, insert--Payment of the principal of [(and
premium, if any)] and [if applicable, insert--any such] interest on this
Security will be made at the office or agency of the Partnership maintained for
that purpose in _________, [in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts] [state other currency] [or subject to any laws or regulations
applicable thereto and to the right of the Partnership (as provided in the
Indenture) to rescind the designation of any such Paying Agent, at the [main]
offices of _________ in ____________ and _________ in _________, or at such
other offices or agencies as the Partnership may designate, by [United States
Dollar] [state other currency] check drawn on, or transfer to a [United States
Dollar] account maintained by the payee with, a bank in The City of New York (so
long as the applicable Paying Agent has received proper transfer instructions in
writing at least [ ] days prior to the payment date)] [if applicable, insert--;
provided, however, that payment of interest may be made at the option of the
Partnership by [United States Dollar] [state other currency] check mailed to the
addresses of the Persons entitled thereto as such addresses shall appear in the
Security Register] [or by transfer to a [United States Dollar] [state other
currency] account maintained by the payee with a bank in The City of New York
[state other Place of Payment] (so long as the applicable Paying Agent has
received proper transfer instructions in writing by the Record Date prior to the
applicable Interest Payment Date)].]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Partnership has caused this instrument to be duly
executed.
Dated:
STAR GAS PARTNERS, L.P.,
By: Star Gas LLC,
Its General Partner
By: ______________________________________________
Name:
Title:
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Partnership (the "Securities"), issued and to be issued in one or more series
under an Indenture dated as of _________, 2000 (the "Indenture"), among the
Partnership and ____________, as Trustee (the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, obligations, duties
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and immunities thereunder of the Partnership, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. As provided in the Indenture, the Securities may be
issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest,
if any, at different rates, may be subject to different redemption provisions,
if any, may be subject to different sinking, purchase or analogous funds, if
any, may be subject to different covenants and Events of Default and may
otherwise vary as in the Indenture provided or permitted. This Security is one
of the series designated on the face hereof [if applicable, insert--, limited in
aggregate principal amount to U.S.$______].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, [if
applicable, insert--(1) on in any year commencing with the year ____ and ending
with the year ____ through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time [if
applicable, insert--on or after ________, ________], as a whole or in part, at
the election of the Partnership, at the following Redemption Prices (expressed
as percentages of the principal amount): If redeemed [if applicable, insert--on
or before ______________, ___%, and if redeemed] during the 12-month period
beginning of the years indicated, ________
Year Redemption Price
------------- -----------------------
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, (1) on
________ in any year commencing with the year ____ and ending with the year ____
through operation of the sinking fund for this series at the Redemption Prices
for redemption through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert--on or after ___________], as a whole or in part, at the
election of the Partnership, at the Redemption Prices for redemption otherwise
than through operation of the sinking fund (expressed as percentages of the
principal amount) set forth in the table below: If redeemed during the 12-month
period beginning ____________ of the years indicated,
Redemption Price for
Redemption Price for Redemption Otherwise Than
Redemption Through Operation Through Operation of
Year of the Sinking Fund the Sinking Fund
- -------- -------------------------------- -----------------------------
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
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<PAGE>
[If applicable, insert -- The sinking fund for this series provides for the
redemption in each year beginning with the year ____ and ending with the year
____ of [if applicable,--not less than $_____ ("mandatory sinking fund") and not
more than] $_____ aggregate principal amount of Securities of this series.
Securities of this series acquired or redeemed by the Partnership otherwise than
through [if applicable,--mandatory] sinking fund payments may be credited
against subsequent [if applicable,--mandatory] sinking fund payments otherwise
required to be made [if applicable,--in the inverse order in which they become
due].]
[If the Security is subject to redemption in part of any kind, insert -- In
the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert -- The Securities of this series are not redeemable
prior to Stated Maturity.]
[If the Security is not an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to--insert formula for determining the
amount. Upon payment (1) of the amount of principal so declared due and payable,
and (2) of interest on any overdue principal and overdue interest, all of the
Partnership's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Partnership and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Partnership and the Trustee with
the consent of not less than the Holders of a majority in aggregate principal
amount of the Outstanding Securities of all series to be affected (voting as one
class). The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Outstanding Securities of all
affected series (voting as one class), on behalf of the Holders of all
Securities of such series, to waive compliance by the Partnership with certain
provisions of the Indenture. The Indenture permits, with certain exceptions as
therein provided, the Holders of a majority in principal amount of Securities of
any series then Outstanding to waive past defaults under the Indenture with
respect to such series and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder
17
<PAGE>
of this Security for the enforcement of any payment of principal hereof or [any
premium or] interest hereon on or after the respective due dates expressed
herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Partnership, which
is absolute and unconditional, to pay the principal of and [any premium and]
interest on this Security at the times, place(s) and rate, and in the coin or
currency, herein prescribed.
[If a Global Security, insert--This Global Security or portion hereof may
not be exchanged for Definitive Securities of this series except in the limited
circumstances provided in the Indenture. The holders of beneficial interests in
this Global Security will not be entitled to receive physical delivery of
Definitive Securities except as described in the Indenture and will not be
considered the Holders thereof for any purpose under the Indenture.]
[If a Definitive Security, insert -- As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Security
is registerable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Partnership in [if
applicable, insert -- any place where the principal of and any premium and
interest on this Security are payable] [if applicable, insert -- The City of New
York [, or, subject to any laws or regulations applicable thereto and to the
right of the Partnership (limited as provided in the Indenture) to rescind the
designation of any such transfer agent, at the [main] offices of _______________
____________ in __________________ and _________________ in ______________ or at
such other offices or agencies as the Partnership may designate]], duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Partnership and the Security Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.]
The Securities of this series are issuable only in registered form without
coupons in denominations of U.S.$ [state other currency] and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Partnership may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Partnership, the Trustee and any agent of the Partnership or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security is overdue, and neither the
Partnership, the Trustee nor any such agent shall be affected by notice to the
contrary.
Obligations of the Partnership under the Indenture and the Securities
thereunder, including this Security, are non-recourse to Star Gas LLC (the
"General Partner") and its Affiliates (other than the Partnership), and payable
only out of cash flow and assets of the Partnership. The Trustee, and each
Holder of a Security by its acceptance hereof, will be deemed to have agreed in
the Indenture that (1) neither the General Partner nor its assets (nor any of
its Affiliates other than the Partnership, nor its respective assets) shall be
liable for any of the obligations of the Partnership under the Indenture or such
Securities, including this Security, and (2) no director, officer, employee,
stockholder or unitholder, as such, of the Partnership, the Trustee, the General
Partner or any Affiliate of any of the foregoing entities
18
<PAGE>
shall have any personal liability in respect of the obligations of the
Partnership under the Indenture or such Securities by reason of his, her or its
status.
The Indenture contains provisions that relieve the Partnership from the
obligation to comply with certain restrictive covenants in the Indenture and for
satisfaction and discharge at any time of the entire indebtedness upon
compliance by the Partnership with certain conditions set forth in the
Indenture.
This Security shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[If a Definitive Security, insert as a separate page --
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________ (Please Print or
Typewrite Name and Address of Assignee) the within instrument of STAR GAS
PARTNERS, L.P. and does hereby irrevocably constitute and appoint
________________________ Attorney to transfer said instrument on the books of
the within-named Partnership, with full power of substitution in the premises.
Please Insert Social Security or Other Identifying Number of Assignee:
_________________________________ ______________________________________
______________________________________
Dated (Signature)
Signature Guarantee:
______________________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.]
SECTION 204. Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO,
OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY
PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER
MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF
TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A
GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
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If Securities of a series are issuable in whole or in part in the form of
one or more Global Securities, as specified as contemplated by Section 301,
then, notwithstanding Clause (9) of Section 301 and the provisions of Section
302, any Global Security shall represent such of the Outstanding Securities of
such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced or increased, as the case
may be, to reflect exchanges. Any endorsement of a Global Security to reflect
the amount, or any reduction or increase in the amount, of Outstanding
Securities represented thereby shall be made in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in
a Partnership Order. Subject to the provisions of Sections 303, 304 and 305, the
Trustee shall deliver and redeliver any Global Security in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Partnership Order. Any instructions by the Partnership with respect
to endorsement or delivery or redelivery of a Global Security shall be in a
Partnership Order (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel).
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Global Security if such Security was never issued and
sold by the Partnership and the Partnership delivers to the Trustee the Global
Security together with a Partnership Order (which need not comply with Section
102 and need not be accompanied by an Opinion of Counsel) with regard to the
reduction or increase, as the case may be, in the principal amount of Securities
represented thereby, together with the written statement contemplated by the
last sentence of Section 303.
SECTION 205. Form of Trustee's Certificate and Authorization.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
___________________________________________,
As Trustee
By:________________________________________
Authorized Officer
ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
20
<PAGE>
(5) the form and title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other series);
(6) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of the series pursuant
to Section 304, 305, 306, 906 or 1107 and except for any Securities which,
pursuant to Section 303, are deemed never to have been authenticated and
delivered hereunder);
(7) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest;
(8) the date or dates on which the Securities will be issued and on
which the principal of, and premium, if any, on the Securities of the series is
payable or the method of determination thereof;
(9) the rate or rates (which may be fixed or variable) at which the
Securities of the series shall bear interest, if any, or the method of
determination thereof, the date or dates from which such interest shall accrue,
or the method of determination thereof, the Interest Payment Dates on which any
such interest shall be payable and the Regular Record Date for any interest
payable on any Interest Payment Date;
(10) the place or places where, subject to the provisions of Section
1002, the principal of and any premium and interest on Securities of the series
shall be payable, Securities of the series may be surrendered for registration
of transfer, Securities of the series may be surrendered for exchange and
notices, and demands to or upon the Partnership in respect of the Securities of
the series and this Indenture may be served;
(11) the period or periods, if any, within which, the price or prices
at which and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership or otherwise;
(12) the obligation, if any, of the Partnership to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
upon the happening of a specified event or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(13) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(14) whether payment of principal of and premium, if any, and
interest, if any, on the Securities of the series shall be without deduction for
taxes, assessments or governmental charges paid by Holders of the series;
(15) the currency, currencies or currency units in which payment of
the principal of and any premium and interest on any Securities of the series
shall be denominated, payable, redeemable or purchasable if other than the
currency of the United States of America and the manner of determining
21
<PAGE>
the equivalent thereof in the currency of the United States of America for
purposes of the definition of "Outstanding" in Section 101;
(16) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference to an
index, the manner in which such amounts shall be determined;
(17) if the principal of or any premium or interest on any Securities
of the series is to be payable, at the election of the Partnership or a Holder
thereof, in one or more currencies or currency units other than that or those in
which the Securities are stated to be payable, the currency, currencies or
currency units in which payment of the principal of and any premium and interest
on Securities of such series as to which such election is made shall be payable,
and the periods within which and the terms and conditions upon which such
election is to be made;
(18) the right, if any, of the Partnership to defer payments of
interest by extending the interest payment periods and specify the duration of
such extension, the Interest Payment Dates on which such interest shall be
payable and whether and under what circumstances additional interest on amounts
deferred shall be payable;
(19) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the method of determination thereof;
(20) if and as applicable, that the Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities (and
whether in temporary or permanent global form) and, in such case, the Depositary
or Depositaries for such Global Security or Global Securities and any
circumstances other than those set forth in Section 305 in which any such Global
Security may be transferred to, and registered and exchanged for Securities
registered in the name of, a Person other than the Depositary for such Global
Security or a nominee thereof and in which any such transfer may be registered;
(21) any deletions from, modifications of or additions to the Events
of Default set forth in Section 501 or the covenants of the Partnership set
forth in Article X pertaining to the Securities of the series;
(22) if and the terms and conditions upon which any Securities of the
series may be converted into or exchanged for securities, which may include,
without limitation, capital stock, of any class or series of the Partnership or
any other issuer;
(23) if other than as provided in Sections 1302 and 1303, the terms
and conditions upon which and the manner in which such series of Securities may
be defeased or discharged;
(24) if other than the Trustee, the identity of the Security Registrar
and any Paying Agent;
(25) any restrictions or other provisions with respect to the transfer
or exchange of the Securities;
(26) the assets, if any, that are pledged as security for the payment
of the Securities; and
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(27) any other terms of the Securities of the series (which terms
shall not be inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened, without the consent of the
Holders, for increases in the aggregate principal amount of such series of
Securities and issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such series.
If any of the terms of the series are established by action taken by or
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized person of the
General Partner on behalf of the Partnership and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth, or providing
the manner for determining, the terms of the series.
With respect to Securities of a series subject to a Periodic Offering, such
Board Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Partnership Order,
or that such terms shall be determined by the Partnership, or one or more of the
Partnership's agents designated in an Officers' Certificate, in accordance with
a Partnership Order.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such specified denomination with respect to
the Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Partnership by the Chairman of
the Board, Chief Executive Officer, Chief Financial Officer, President or any
Vice President of the General Partner and need not be attested. The signature of
any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the General Partner shall bind the Partnership,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Partnership may deliver Securities of any series executed by the
Partnership to the Trustee for authentication, together with a Partnership Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Partnership Order shall authenticate and deliver such
Securities; provided, however, that in the case of Securities offered in a
Periodic Offering, the Trustee shall authenticate and deliver such Securities
from time to time in accordance with such other procedures (including, without
limitation, the receipt by the Trustee of oral or electronic instructions from
the Partnership or its duly authorized agents, thereafter promptly confirmed in
writing) acceptable to the
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Trustee as may be specified by or pursuant to a Partnership Order delivered to
the Trustee prior to the time of the first authentication of Securities of such
series. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form or forms of such Securities have been established
by or pursuant to Board Resolution as permitted by Section
201, that such form or forms have been established in
conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been, or in the case of
Securities of a series offered in a Periodic Offering, will
be, established by or pursuant to a Board Resolution as
permitted by Section 301, that such terms have been, or in the
case of Securities of a series offered in a Periodic Offering,
will be, established in conformity with the provisions of this
Indenture, subject, in the case of Securities of a series
offered in a Periodic Offering, to any conditions specified in
such Opinion of Counsel; and
(3) that such 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,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles.
If such form or forms or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Partnership Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Partnership of any of such
Securities, the form or forms and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel and the
other documents delivered pursuant to Sections 201 and 301 and this Section, as
applicable, in connection with the first authentication of Securities of such
series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
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certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Partnership, and the Partnership shall deliver such Security to the Trustee for
cancellation as provided in Section 309 for all purposes of this Indenture, such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the
Partnership may execute, and upon Partnership Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the Definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Partnership will
cause Definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of Definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for Definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Partnership maintained pursuant to Section
1002 for the purpose of exchanges of Securities of such series, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more Definitive Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount and tenor. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Partnership shall cause to be kept at an office or agency of the
Partnership in The City of New York a register (the register maintained in such
office or in any other office or agency of the Partnership in a Place of Payment
being herein sometimes referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Partnership shall
provide for the registration of Securities and of transfers of Securities. The
Partnership shall, prior to the issuance of any Securities hereunder, appoint
the Trustee as the initial "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided and its corporate
trust office which, at the date hereof, is located at _____________, as the
initial office or agency in The City of New York where the Security Register
will be maintained. The Partnership may at any time replace such Security
Registrar, change such office or agency or act as its own Security Registrar.
The Partnership will give prompt written notice to the Trustee of any change of
the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series
at the office or agency of the Partnership maintained pursuant to Section 1002
for such purpose, the Partnership shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
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At the option of the Holder, Securities of any series (except a Global
Security) may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Partnership shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Partnership, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Partnership or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Partnership and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Partnership may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304 or 1107 not involving any transfer.
Neither the Trustee nor the Partnership shall be required (1) to issue,
register the transfer of or exchange Securities of any series (or of any series
and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of Securities of that series selected for redemption under Section 1103 and
ending at the close of business on the day of such mailing, or (2) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any other provision in this Indenture and except as
otherwise specified as contemplated by Section 301, no Global Security may be
transferred to, or registered or exchanged for Securities registered in the name
of, any Person other than the Depositary for such Global Security or any nominee
thereof, and no such transfer may be registered, except as provided in this
paragraph. Every Security authenticated and delivered upon registration or
transfer of, or in exchange for or in lieu of, a Global Security shall be a
Global Security, except as provided in this paragraph. If (1) (A) the Depositary
for a Global Security notifies the Partnership that it is unwilling or unable to
continue as Depositary for such Global Security or ceases to be a clearing
agency registered under the Exchange Act, and (B) a successor Depositary is not
appointed by the Partnership within 90 days, (2) an Event of Default has
occurred and is continuing with respect to the Securities of such series and the
Security Registrar has received a request from the Depositary to issue
certificated securities in lieu of all or a portion of the Global Securities of
such series (in which case the Partnership shall deliver certificated securities
within 30 days of such request) or (3) the Partnership determines in its sole
discretion that Securities of a series issued in global form shall no longer be
represented by a Global Security, then such Global Security may be exchanged by
such Depositary for Definitive Securities of the same series, of any authorized
denomination and of a like aggregate principal amount and tenor, registered in
the names of, and the transfer of such Global Security or portion thereof may be
registered to, such Persons as such Depositary shall direct.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with such
security or indemnity as may be required by the Partnership or the Trustee to
save each of them and any agent of either of them harmless, the Partnership
shall execute and the Trustee shall authenticate and deliver in exchange
therefor
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a new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Partnership and the Trustee (1) evidence
to their satisfaction of the destruction, loss or theft of any Security and (2)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Partnership or the Trustee that such Security has been acquired by a bona fide
purchaser, the Partnership shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding. If, after the delivery of such new Security,
a bona fide purchaser of the original Security in lieu of which such new
Security was issued presents for payment or registration such original Security,
the Trustee shall be entitled to recover such new Security from the party to
whom it was delivered or any party taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Partnership and the Trustee in connection therewith.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Partnership in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Partnership
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in exchange for
any mutilated Security or in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of the
Partnership, whether or not the mutilated, destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Partnership, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Partnership may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) 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 Security
of such series and the date of the
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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
prepaid, to each Holder of Securities of such series at his 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 Securities of such series (or
their respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Partnership may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange or automated quotation system on which
such Securities may be listed or traded, 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.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security, shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
For each series of Securities, the Partnership shall, prior to 11:00 a.m.
(New York City time) on each payment date for principal and premium, if any, and
interest, if any, deposit with the Trustee money in immediately available funds
sufficient to make cash payments due on the applicable payment date.
SECTION 308. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, prior to due presentment of a Security for
registration of transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Sections 305 and 307) any interest
on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and neither the Partnership, the Trustee nor any agent of
the Partnership or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Partnership,
the Trustee and any agent of the Partnership or the Trustee as the owner of such
Global Security for all purposes whatsoever. None of the Partnership, the
Trustee nor 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 beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
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SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Partnership may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Partnership may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Partnership has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of in accordance with its
customary procedures, and the Trustee shall thereafter deliver to the
Partnership a certificate with respect to such disposition.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months and interest on the
Securities of each series for any partial period shall be computed on the basis
of a 360-day year of twelve 30-day months and the number of days elapsed in any
partial month.
SECTION 311. CUSIP Numbers.
The Partnership in issuing the Securities may use "CUSIP" numbers (in
addition to the other identification numbers printed on the Securities), and, if
so, the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such "CUSIP" 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 "CUSIP" numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Partnership Request cease to be of further effect
with respect to Securities of any series (except as to any surviving rights of
registration of transfer or exchange of such Securities herein expressly
provided for), and the Trustee, at the expense of the Partnership, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to such Securities, when
(1) either
(A) all such Securities theretofore authenticated and
delivered (other than (i) such Securities which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 306, and (ii) such Securities for whose
payment money has theretofore been deposited in trust or
segregated and held in trust by the Partnership and thereafter
repaid to the Partnership or discharged
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from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the
name, and at the expense, of the Partnership, and the
Partnership in the case of (i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for this
purpose an amount of money in the currency or currency
units in which such Securities are payable sufficient
to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for
cancellation, for principal and any premium and
interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Partnership has paid or caused to be paid all other sums
payable hereunder by the Partnership with respect to such Securities; and
(3) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture with respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to Securities of any series, (x) the obligations of the Partnership to
the Trustee under Section 607, the obligations of the Trustee to any
Authenticating Agent under Section 614 and the right of the Trustee to resign
under Section 610 shall survive, and (y) if money shall have been deposited with
the Trustee pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Partnership and/or the Trustee under Sections 402, 606, 701
and 1002 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Partnership acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
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ARTICLE V
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of
that series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the performance, or breach, of any term,
covenant or warranty of the Partnership in this Indenture (other than a term,
covenant or warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with or which has expressly been included in
this Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Partnership by the
Trustee or to the Partnership and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(4) the Partnership pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of any
order for relief against it in an involuntary case, (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or (D) makes a general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against the Partnership
in an involuntary case, (B) appoints a Custodian of the Partnership or for all
or substantially all of its property, or (C) orders the liquidation of the
Partnership; and the order or decree remains unstayed and in effect for 90 days;
or
(6) any other Event of Default provided as contemplated by
Section 301 with respect to Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount of (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof), and accrued but unpaid interest, if any, on all of the Securities of
that series to be due and payable immediately, by a notice in writing to the
Partnership (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become immediately
due and payable.
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At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Partnership and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Partnership has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due
otherwise than by such declaration of acceleration and
any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Partnership covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof, the Partnership will,
upon demand of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for
principal and any premium and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in
such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Partnership fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Partnership or any other obligor upon such Securities and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Partnership or any other obligor upon such Securities,
wherever situated.
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If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Partnership or any
other obligor upon the Securities, their property or their creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money or property collected or to be applied by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money or property on
account of principal or any premium or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Securities in respect of which or for the
benefit of which such money has been
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collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and any premium and
interest, respectively; and
THIRD: The balance, if any, to the Partnership.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(1) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(2) such Holder or Holders have offered and, if requested,
provided to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request;
(3) the Trustee for 60 days after its receipt of such notice,
request and offer and, if requested, provision of security or indemnity has
failed to institute any such proceeding; and
(4) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Sections 305 and
307) interest on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then in every such case, subject to any determination in such
proceeding, the Partnership, the Trustee and the Holders shall be restored
severally
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and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series 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
Securities of such series; provided, however, that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee shall
have the right to decline to follow any such direction if the Trustee in good
faith shall determine that the proceeding so directed would involve the Trustee
in personal liability or would otherwise be contrary to applicable law.
SECTION 513. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all the Securities of
such series waive any past default hereunder with respect to such series and its
consequences, except
(1) a continuing default in the payment of the principal of or
any premium or interest on any Security of such series, or
(2) a default in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.
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Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, however, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Partnership.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Partnership covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Partnership (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or security or indemnity satisfactory to it 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 602. Notice of Defaults.
If a Default occurs and is continuing with respect to the Securities of any
series, the Trustee shall, within 90 days after it occurs, transmit, in the
manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
notice of all uncured or unwaived Defaults known to it; provided, however, that,
except in the case of a Default in payment on the Securities of any series, the
Trustee may withhold the notice if it determines in good faith that withholding
such notice is in the interests of Holders of Securities of such series;
provided, further, however, that, in the case of any default or breach of the
character specified in Section 501(3) with respect to the Securities of such
series, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.
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SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely on 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, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(2) any request, direction, order or demand of the Partnership
mentioned herein shall be sufficiently evidenced by a Partnership Request or
Partnership Order (other than delivery of any Security to the Trustee for
authentication and delivery pursuant to Section 303, which shall be sufficiently
evidenced as provided therein) and any resolution of the Board of Directors
shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) 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, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may, without obligation to do so, make such
further inquiry or investigation into such facts or matters as it may see fit;
(7) 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 with due care by it
hereunder; and
(8) the Trustee may request that the Partnership deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Partnership, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. Neither the Trustee nor any Authenticating
Agent
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makes any representations as to the validity or sufficiency of this Indenture or
of the Securities. The Trustee or any Authenticating Agent shall not be
accountable for the use or application by the Partnership of Securities or the
proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Partnership, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Partnership with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder 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 money received by it hereunder except as otherwise
agreed with the Partnership.
SECTION 607. Compensation and Reimbursement.
The Partnership agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.
The obligations of the Partnership under this Section to compensate the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder.
Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 501(4) or Section 501(5), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any applicable Bankruptcy Law.
The provisions of this Section shall survive the satisfaction and discharge
of this Indenture and the defeasance of the Securities.
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SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one or more Trustees hereunder with respect to
the Securities of each series, at least one of which shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus required by the Trust Indenture Act. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such Person shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or
more series by giving written notice thereof to the Partnership. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Partnership.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Partnership or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Partnership or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (A) the Partnership, acting
pursuant to the authority of a Board Resolution, may remove the Trustee with
respect to all Securities, or (B) subject to Section 514, any Holder who has
been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.
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If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Partnership, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Partnership and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Partnership. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Partnership or the Holders and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
The Partnership shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(1) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Partnership and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Partnership or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(2) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the
Partnership, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (A) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (B) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (C) 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
as co-trustees of the same trust and that each such Trustee shall be trustee of
a
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trust or trusts separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, but, on request of the Partnership or any successor
Trustee, such retiring Trustee shall, upon payment of its charges, duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(3) Upon request of any such successor Trustee, the Partnership
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (1) or (2) of this Section, as the case may be.
(4) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Partnership.
If and when the Trustee shall be or become a creditor of the Partnership or
any other obligor upon the Securities, the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Partnership or any such other obligor.
SECTION 614. Appointment of Authenticating Agent.
The Trustee (upon notice to the Partnership) may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon original issue (in accordance with procedures acceptable to
the Trustee) and upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Partnership and shall at all times be a corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes
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reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of such Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or such Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Partnership. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Partnership. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Partnership. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
Except with respect to an Authenticating Agent appointed at the request of
the Partnership, the Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
___________________________________,
As Trustee
By:________________________________
As Authenticating Agent
By:________________________________
As Authorized Officer
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ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP
SECTION 701. Partnership to Furnish Trustee Names and Addresses of Holders.
The Partnership will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than _______ 15 and _______ 15 in each
year, a list for each series of Securities, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Securities of
such series as of the preceding ______ 30 or ________ 31, as the case may be,
and
(2) 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 content as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar for Securities of a series, no such list need be furnished with
respect to such series of Securities.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act. The rights of the Holders to communicate
with other Holders with respect to their rights under this Indenture or under
the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Partnership and the Trustee that neither the Partnership nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to the names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than _____ 15 in each calendar year with
respect to the 12-month period ending on the previous _____ 15, commencing
______ 15, ____.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Partnership. The
Partnership will notify the Trustee when any Securities are listed on any stock
exchange.
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SECTION 704. Reports by Partnership.
The Partnership shall:
(1) file with the Trustee, within 15 days after the Partnership is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Partnership may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Partnership is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the Trustee and the
Commission (unless the Commission will not accept such a filing), in accordance
with rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Partnership with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Partnership pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE,TRANSFER OR LEASE
SECTION 801. Partnership May Consolidate, Etc., Only on Certain Terms.
The Partnership shall not consolidate with or merge into any other Person
or sell, lease or transfer its properties and assets as, or substantially as, an
entirety to, any Person, unless:
(1) (A) in the case of a merger, the Partnership is the surviving
entity, or (B) the Person formed by such consolidation or into which the
Partnership is merged or the Person which acquires by sale or transfer, or which
leases, the properties and assets of the Partnership as, or substantially as, an
entirety must expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form reasonably satisfactory to the Trustee,
all of the obligations of the Partnership under this Indenture and the
Securities;
(2) the surviving entity or successor Person is a Person organized
and existing under the laws of the United States of America, any State thereof
or the District of Columbia;
(3) immediately after giving effect to such transaction, no Default
or Event of Default exists; and
(4) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, transfer or lease and the
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supplemental indenture required in connection with such transaction comply with
this Article and that all conditions precedent herein provided for relating to
such transaction have been complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Partnership with, or merger of the
Partnership into, any other Person or any sale, transfer or lease of the
properties and assets of the Partnership as, or substantially as, an entirety in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Partnership is merged or to which such sale, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Partnership under this Indenture with the same effect as if
such successor Person had been named originally as the Partnership herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders of Securities, the Partnership and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to secure any of such Securities;
(2) to evidence the succession of another Person to the Partnership
under this Indenture and the Securities and the assumption by such successor
Person of the obligations of the Partnership hereunder;
(3) to add covenants and Events of Default for the benefit of the
Holders of all or any series of such Securities or to surrender any right or
power conferred by this Indenture upon the Partnership;
(4) to add to, change or eliminate any of the provisions of this
Indenture, provided that any such addition, change or elimination does not
adversely affect any outstanding Securities of any series in any material
respect;
(5) to establish the forms or terms of the Securities of any series
issued hereunder;
(6) to cure any ambiguity or correct any inconsistency in this
Indenture;
(7) to evidence the acceptance of appointment by a successor Trustee;
(8) to qualify this Indenture under the Trust Indenture Act;
(9) to provide for uncertificated securities in addition to
certificated securities;
(10) to supplement any provisions of this Indenture necessary to
permit or facilitate the defeasance and discharge of any series of Securities,
provided that such action does not adversely affect the interests of the Holders
of Securities of such series or any other series; and
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(11) to comply with the rules or regulations of any securities
exchange or automated quotation system on which any of the Securities may be
listed or traded.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of all Outstanding Securities affected by such supplemental
indenture (voting as one class), the Partnership and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture, or modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided that the Partnership
and the Trustee may not, without the consent of the Holder of each Outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest, if any, on, any Security, or reduce the
principal amount thereof or premium, if any, on or the rate of interest thereon
or alter the method of computation of interest;
(2) change the Redemption Date for any debt security;
(3) change our obligation, if any, to pay additional amounts;
(4) reduce the principal amount of any Original Issue Discount
Security payable upon acceleration of Maturity;
(5) change the coin or currency in which any Security or any premium
or interest on any Security is payable;
(6) change the redemption right of any Holder;
(7) impair the right to institute suit for the enforcement of any
payment of principal of, premium, if any, or interest on, any Security;
(8) reduce the percentage in principal amount of Securities required
for any such supplemental indenture or for any waiver provided for in this
Indenture;
(9) reduce quorum or voting requirements;
(10) change the Partnership's obligation to maintain an office or
agency for payment of Securities and the other matters specified herein; or
(11) modify any of the provisions of this Indenture relating to the
execution of supplemental indentures with the consent of Holders of Securities
which are discussed in this Section or modify any provisions relating to the
waiver by Holders of Securities of past defaults and covenants, except to
increase any required percentage or to provide that other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
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covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but 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.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article 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. If the Partnership shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Partnership, to any such supplemental indenture
may be prepared and executed by the Partnership and authenticated and delivered
by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Partnership covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
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SECTION 1002. Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Partnership in respect of the Securities of that 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 such presentations, surrenders, notices and
demands.
The Partnership may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Partnership of its obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such
purposes. The Partnership will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Except as otherwise specified with respect to a series of Securities as
contemplated by Section 301, the Partnership hereby initially designates as the
Place of Payment for each series of Securities The City and State of New York,
and initially appoints the Trustee at its Corporate Trust Office as the
Partnership's office or agency for each such purpose in such city.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Partnership or any of its Subsidiaries shall at any time act as
Paying Agent with respect to any series of Securities, it will, on or before
each due date of the principal of or any premium or interest on any of the
Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and any premium
and interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Partnership shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Partnership will promptly notify the Trustee of its action or
failure so to act.
The Partnership will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) hold all sums held by it for
the payment of the principal of (and premium, if any) or interest, if any, on
Securities of that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (2) give the Trustee notice of any default by the
Partnership (or any other obligor upon the Securities of that series) in the
making of any payment of principal (and premium, if any) or interest, if any, on
the Securities of that series; and (3) during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the Trustee
all sums held in trust by such Paying Agent for payment in respect of the
Securities of that series.
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The Partnership may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Partnership Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Partnership or such Paying Agent, 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; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Partnership, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Partnership on Partnership Request, or (if then held by the
Partnership) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Partnership for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Partnership as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Partnership cause to be published once, in an Authorized
Newspaper in each Place of Payment with respect to such series, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Partnership.
SECTION 1004. Statement by Officers as to Default.
The Partnership will deliver to the Trustee, within 150 days after the end
of each fiscal year of the Partnership ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signer thereof the Partnership is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Partnership shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article VIII, the Partnership will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Partnership shall not be required to preserve any such right or franchise if it
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Partnership.
SECTION 1006. Limitations on Liens.
The Partnership will not, nor will it permit any Subsidiary to, create,
assume, incur or suffer to exist any Lien upon any property or assets, whether
owned or leased on the date of this Indenture or thereafter acquired, to secure
any Debt of the Partnership or any other Person (other than the Securities
issued hereunder), without in any such case making effective provision whereby
all of the Securities Outstanding hereunder shall be secured equally and ratably
with, or prior to, such Debt so long as such Debt shall be so secured. This
restriction shall not apply to:
(1) Permitted Liens;
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(2) any Lien upon any property or assets of the Partnership or any
Subsidiary in existence on the Issue Date or provided for pursuant to agreements
existing on the Issue Date;
(3) any Lien upon any property or assets created at the time of
acquisition of such property or assets by the Partnership or any Subsidiary or
within one year after such time to secure all or a portion of the purchase price
for such property or assets or Debt incurred to finance such purchase price,
whether such Debt was incurred prior to, at the time of or within one year after
the date of such acquisition;
(4) any Lien upon any property or assets existing thereon at the time
of the acquisition thereof by the Partnership or any Subsidiary (whether or not
the obligations secured thereby are assumed by the Partnership or any
Subsidiary); provided, however, that such Lien only encumbers the property or
assets so acquired;
(5) any Lien upon any property or assets of a Person existing thereon
at the time such Person becomes a Subsidiary by acquisition, merger or
otherwise; provided, however, that such Lien only encumbers the property or
assets of such Person at the time such Person becomes a Subsidiary;
(6) any Lien upon any property or assets to secure all or part of the
cost of construction, development, repair or improvements thereon or to secure
Debt incurred prior to, at the time of, or within one year after completion of
such construction, development, repair or improvements or the commencement of
full operations thereof (whichever is later), to provide funds for any such
purpose;
(7) Liens imposed by law or order as a result of any proceeding
before any court or regulatory body that is being contested in good faith, and
Liens which secure a judgment or other court-ordered award or settlement as to
which the Partnership or the applicable Subsidiary, as the case may be, has not
exhausted its appellate rights;
(8) any lien upon any additions, improvements, replacements, repairs,
fixtures, appurtenances or component parts thereof attaching to or required to
be attached to property or assets pursuant to the terms of any mortgage, pledge
agreement, security agreement or other similar instrument, creating a lien upon
such property or assets permitted by clauses (1) through (7) above;
(9) any extension, renewal, refinancings, refundings or replacement
(or successive extensions, renewals, refinancing, refunding or replacements) of
Liens, in whole or in part, referred to in Clauses (1) through (8), inclusive,
of this Section; provided, however, that any such extension, renewal,
refinancing, refunding or replacement Lien shall be limited to the property or
assets covered by the Lien extended, renewed, refinanced, refunded or replaced
and that the obligations secured by any such extension, renewal, refinancing,
refunding or replacement Lien shall be in an amount not greater than the amount
of the obligations secured by the Lien extended, renewed, refinanced, refunded
or replaced and any expenses of the Partnership and its Subsidiaries (including
any premium) incurred in connection with such extension, renewal, refinancing,
refunding or replacement; or
(10) any Lien resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing Debt of the Partnership or
any Subsidiary.
Notwithstanding the foregoing provisions of this Section, the Partnership
may, and may permit any Subsidiary to, create, assume, incur or suffer to exist
any Lien upon any property or assets to secure Debt of the Partnership or any
Person (other than the Securities) that is not excepted by Clauses (1) through
(10), inclusive, of this Section without securing the Securities issued
hereunder, provided that the aggregate principal amount of all Debt then
outstanding secured by such Lien and all similar Liens,
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together with all net sale proceeds from Sale-Leaseback Transactions (excluding
Sale-Leaseback Transactions permitted by Clauses (1) through (4), inclusive, of
Section 1007), does not exceed 10% of Consolidated Net Tangible Assets.
SECTION 1007. Restriction of Sale-Leaseback Transaction.
The Partnership will not, and will not permit any Subsidiary to, engage in
a Sale-Leaseback Transaction, unless:
(1) such Sale-Leaseback Transaction occurs within one year from the
date of completion of the acquisition of the property or assets subject thereto
or the date of the completion of construction, development or substantial repair
or improvement, or commencement of full operations on such property or assets,
whichever is later;
(2) the Sale-Leaseback Transaction involves a lease for a period,
including renewals, of not more than the lesser of (a) three years and (b) 60%
of the useful remaining life of such property;
(3) the Partnership or such Subsidiary would be entitled to incur
Debt secured by a Lien on the property or assets subject thereto in a principal
amount equal to or exceeding the net sale proceeds from such Sale-Leaseback
Transaction without equally and ratably securing the Securities; or the
Partnership or such Subsidiary, within a one-year period after such Sale-
Leaseback Transaction, applies or causes to be applied an amount not less than
the net sale proceeds from such Sale-Leaseback Transaction to (A) the
prepayment, repayment, redemption, reduction or retirement of Pari Passu Debt of
the Partnership or any Subsidiary, or (B) the expenditure or expenditures for
property or assets used or to be used in the ordinary course of business of the
Partnership or its Subsidiaries.
Notwithstanding the foregoing provisions of this Section, the Partnership
may, and may permit any Subsidiary to, effect any Sale-Leaseback Transaction
that is not excepted by Clauses (1) through (4), inclusive, of this Section,
provided that the net sale proceeds from such Sale-Leaseback Transaction,
together with the aggregate principal amount of then outstanding Debt (other
than the Securities) secured by Liens upon Principal Properties not excepted by
Clauses (1) through (10), inclusive, of Section 1006, do not exceed 10% of the
Consolidated Net Tangible Assets.
SECTION 1008. Waiver of Certain Covenants.
The Partnership may omit in any particular instance to comply with any
term, provision or condition set forth in Section 1005, 1006 or 1007 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in aggregate principal amount of the
Outstanding Securities of all affected series (voting as one class) shall, by
Act of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition, but no such waiver
shall extend to or affect such term, provision or condition except to the extent
so expressly waived, and, until such waiver shall become effective, the
obligations of the Partnership and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
A waiver which changes or eliminates any term, provision or condition of
this Indenture which has expressly been included solely for the benefit of one
or more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such term, provision or
condition, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Partnership to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the
Partnership of less than all the Securities of any series, the Partnership
shall, not less than 30 nor more than 60 days prior to the Redemption Date fixed
by the Partnership (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities (1) prior
to the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, or (2) pursuant to an election
of the Partnership which is subject to a condition specified in the terms of
such Securities, the Partnership shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction or condition.
SECTION 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed),
the particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by lottery for redemption of
portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly notify the Partnership in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail (if international
mail, by air mail), postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series and of
a specified tenor are to be redeemed, the identification (and, in the case of
partial redemption of any Securities, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest thereon
will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed shall be given by the
Partnership or, at the Partnership's request, by the Trustee in the name and at
the expense of the Partnership.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, 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 as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Partnership shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Partnership at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Partnership or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Partnership 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 Security without
service charge, a new Security or Securities of the same series and of like
tenor, of any authorized denomination as requested by such
53
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Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE XII
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series 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 Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Partnership (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption), and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Partnership pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities (unless a shorter period shall be satisfactory to the
Trustee), 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, 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 Securities of that series pursuant to
Section 1202 and stating the basis for such credit and that such Securities have
not been previously so credited, and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1106 and 1107.
54
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ARTICLE XIII
DEFEASANCE
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to each series of
Securities except as otherwise specified as contemplated by Section 301 for
Securities of such series.
SECTION 1302. Legal Defeasance.
In addition to discharge of the Indenture pursuant to Section 401, the
Partnership shall be deemed to have paid and discharged the entire indebtedness
on all the Securities of such a series on the 91st day after the date of the
deposit referred to in Clause (1) below, and the provisions of this Indenture
with respect to the Securities of such series shall no longer be in effect
(except as to (i) rights of registration of transfer and exchange of Securities
of such series and the Partnership's right of optional redemption, if any, (ii)
substitution of mutilated, destroyed, lost or stolen Securities, (iii) rights of
Holders of Securities to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor or on the specified
redemption dates therefor (but not upon acceleration), and remaining rights of
the holders to receive mandatory sinking fund payments, if any, (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, and the
Partnership's obligations in connection therewith (including, but not limited
to, Section 607), (v) the rights, if any, to convert or exchange the Securities
of such series, (vi) the rights of the Holders of Securities of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them, and (vii) the obligations of the Partnership
under Section 1002), and the Trustee, at the expense of the Partnership, shall,
upon a Partnership Request, execute proper instruments acknowledging the same,
if the conditions set forth below are satisfied (hereinafter, "defeasance"):
(1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust, for the purposes of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of such series (A) cash
in an amount, or (B) in the case of any series of Securities the payments on
which may only be made in legal coin or currency of the United States, U.S.
Government Obligations, maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash, or (C) a combination
thereof, certified to be sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof Delivered to the Trustee, to pay (i) the principal and interest and
premium, if any, on all Securities of such series on each date that such
principal, interest or premium, if any, is due and payable or on any Redemption
Date established pursuant to Clause (3) below, and (ii) any mandatory sinking
fund payments on the dates on which such payments are due and payable in
accordance with the terms of the Indenture and the Securities of such series;
(2) The Partnership has delivered to the Trustee an Opinion of
Counsel based on the fact that (A) the Partnership has received from, or there
has been published by, the Internal Revenue Service a ruling, or (B) since the
date hereof, there has been a change in the applicable federal income tax law,
in either case to the effect that, and such opinion shall confirm that, the
Holders of the Securities of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge 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, defeasance and discharge had not occurred;
55
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(3) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(4) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be continuing
on the date of such deposit;
(5) Such defeasance shall not cause the Trustee to have a conflicting
interest within the meaning of the Trust Indenture Act (assuming all Securities
are in default within the meaning of such Act);
(6) Such defeasance shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the
Partnership is a party or by which it is bound;
(7) Such defeasance shall not result in the trust arising from such
deposit constituting an investment company within the meaning of the Investment
Company Act of 1940, as amended, unless such trust shall be registered under
such Act or exempt from registration thereunder; and
(8) The Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this provision
have been complied with.
For this purpose, such defeasance means that the Partnership and any other
obligor upon the Securities of such series shall be deemed to have paid and
discharged the entire debt represented by the Securities of such series, which
shall thereafter be deemed to be "Outstanding" only for the purposes of Section
1304 and the rights and obligations referred to in Clauses (i) through (vii),
inclusive, of the first paragraph of this Section, and to have satisfied all its
other obligations under the Securities of such series and this Indenture insofar
as the Securities of such series are concerned.
SECTION 1303. Covenant Defeasance.
The Partnership and any other obligor shall be released on the 91st day
after the date of the deposit referred to in Clause (1) below from its
obligations under Sections 704, 801, 1005, 1006 and 1007 with respect to the
Securities of any series on and after the date the conditions set forth below
are satisfied (hereinafter, "covenant defeasance"), and the Securities of such
series shall thereafter be deemed to be not "Outstanding" for the purposes of
any request, demand, authorization, direction, notice, waiver, consent or
declaration or other action or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
Outstanding for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Securities of such series, the
Partnership may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section, whether
directly or indirectly by reason of any reference elsewhere herein to such
Section or by reason of any reference in such Section to any other provision
herein or in any other document and such omission to comply shall not constitute
a Default or an Event of Default under Section 501, but, except as specified
above, the remainder of this Indenture and the Securities of such series shall
be unaffected thereby. The following shall be the conditions to application of
this Section 1303:
(1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities of such series, (A) cash in
56
<PAGE>
an amount, or (B) in the case of any series of Securities the payments on which
may only be made in legal coin or currency of the United States, U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (i) the principal and interest and premium, if any, on all
Securities of such series on each date that such principal, interest or premium,
if any, is due and payable or on any Redemption Date established pursuant to
Clause (2) below, and (ii) any mandatory sinking fund payments on the day on
which such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series;
(2) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(3) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be continuing
on the date of such deposit;
(4) The Partnership has delivered to the Trustee an Opinion of
Counsel which shall confirm that the Holders of the Securities of such series
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and covenant defeasance and will be subject to federal
income tax on the same amount and in the same manner and at the same time as
would have been the case if such deposit and covenant defeasance had not
occurred;
(5) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all
Securities are in default within the meaning of such Act);
(6) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Partnership is a party or by which it is bound;
(7) Such covenant defeasance shall not result in the trust arising
from such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder; and
(8) The Partnership has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for relating to the
covenant defeasance contemplated by this provision have been complied with.
SECTION 1304. Application by Trustee of Funds Deposited for Payment of
Securities.
Subject to the provisions of the last paragraph of Section 1003, all moneys
or U.S. Government Obligations deposited with the Trustee pursuant to Section
1302 or 1303 (and all funds earned on such moneys or U.S. Government
Obligations) shall be held in trust and applied by it to the payment, either
directly or through any Paying Agent (including the Partnership acting as its
own Paying Agent), to the Holders of the particular Securities of such series
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law. Subject to Sections 1302 and 1303, the Trustee shall promptly
pay to the Partnership upon request any excess moneys held by it at any time.
SECTION 1305. Repayment to Partnership.
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The Trustee and any Paying Agent promptly shall pay or return to the
Partnership upon Partnership Request any money and U.S. Government Obligations
held by them at any time that are not required for the payment of the principal
of and any interest on the Securities of any series for which money or U.S.
Government Obligations have been deposited pursuant to Section 1302 or 1303.
The provisions of the last paragraph of Section 1003 shall apply to any
money held by the Trustee or any Paying Agent under this Article that remains
unclaimed for two years after the Maturity of any series of Securities for which
money or U.S. Government Obligations have been deposited pursuant to Section
1302 or 1303.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
STAR GAS PARTNERS, L.P.
By: Star Gas LLC,
Its General Partner
By:__________________________________________
Name:
Title:
[TRUSTEE]
By:__________________________________________
Name:
Title:
58
<PAGE>
Exhibit 4.5
Draft: December 27, 1999
================================================================================
FORM OF SUBORDINATED INDENTURE
STAR GAS PARTNERS, L.P.
Issuer
and
_____________________
Trustee
INDENTURE
Dated as of ________, 2000
SUBORDINATED DEBT SECURITIES
================================================================================
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
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<S> <C>
RECITALS OF THE PARTNERSHIP................................................................ 1
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................... 1
SECTION 101. Definitions.................................................................. 1
SECTION 102. Compliance Certificates and Opinions......................................... 7
SECTION 103. Form of Documents Delivered to Trustee....................................... 7
SECTION 104. Acts of Holders; Record Dates................................................ 8
SECTION 105. Notices, Etc., to Trustee and Partnership.................................... 9
SECTION 106. Notice to Holders; Waiver.................................................... 9
SECTION 107. Conflict with Trust Indenture Act............................................ 9
SECTION 108. Effect of Headings and Table of Contents..................................... 10
SECTION 109. Successors and Assigns....................................................... 10
SECTION 110. Separability Clause.......................................................... 10
SECTION 111. Benefits of Indenture........................................................ 10
SECTION 112. Governing Law................................................................ 10
SECTION 113. Legal Holidays............................................................... 10
SECTION 114. Language of Notices, Etc..................................................... 10
SECTION 115. Non-Recourse to the General Partner; No Personal Liability of Officers,
Directors, Employees or Partners............................................ 10
ARTICLE II SECURITY FORMS.................................................................. 11
SECTION 201. Forms Generally.............................................................. 11
SECTION 202. Form of Face of Security..................................................... 11
SECTION 203. Form of Reverse of Security.................................................. 13
SECTION 204. Global Securities............................................................ 17
SECTION 205. Form of Trustee's Certificate and Authorization.............................. 18
ARTICLE III THE SECURITIES................................................................. 18
SECTION 301. Amount Unlimited; Issuable in Series......................................... 18
SECTION 302. Denominations................................................................ 21
SECTION 303. Execution, Authentication, Delivery and Dating............................... 21
SECTION 304. Temporary Securities......................................................... 23
SECTION 305. Registration, Registration of Transfer and Exchange.......................... 23
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities............................. 24
SECTION 307. Payment of Interest; Interest Rights Preserved............................... 25
SECTION 308. Persons Deemed Owners........................................................ 26
SECTION 309. Cancellation................................................................. 27
SECTION 310. Computation of Interest...................................................... 27
SECTION 311. CUSIP Numbers................................................................ 27
ARTICLE IV SATISFACTION AND DISCHARGE...................................................... 27
SECTION 401. Satisfaction and Discharge of Indenture...................................... 27
SECTION 402. Application of Trust Money................................................... 28
ARTICLE V REMEDIES......................................................................... 28
SECTION 501. Events of Default............................................................ 28
SECTION 502. Acceleration of Maturity; Rescission and Annulment........................... 29
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.............. 30
</TABLE>
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(continued)
<TABLE>
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<S> <C>
SECTION 504. Trustee May File Proofs of Claim............................................. 31
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.................. 31
SECTION 506. Application of Money Collected............................................... 31
SECTION 507. Limitation on Suits.......................................................... 32
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.................................................................... 32
SECTION 509. Restoration of Rights and Remedies........................................... 32
SECTION 510. Rights and Remedies Cumulative............................................... 32
SECTION 511. Delay or Omission Not Waiver................................................. 33
SECTION 512. Control by Holders........................................................... 33
SECTION 513. Waiver of Past Defaults...................................................... 33
SECTION 514. Undertaking for Costs........................................................ 33
SECTION 515. Waiver of Usury, Stay or Extension Laws...................................... 34
ARTICLE VI THE TRUSTEE..................................................................... 34
SECTION 601. Certain Duties and Responsibilities.......................................... 34
SECTION 602. Notice of Defaults........................................................... 34
SECTION 603. Certain Rights of Trustee.................................................... 34
SECTION 604. Not Responsible for Recitals or Issuance of Securities....................... 35
SECTION 605. May Hold Securities.......................................................... 35
SECTION 606. Money Held in Trust.......................................................... 36
SECTION 607. Compensation and Reimbursement............................................... 36
SECTION 608. Disqualification; Conflicting Interests...................................... 36
SECTION 609. Corporate Trustee Required; Eligibility...................................... 36
SECTION 610. Resignation and Removal; Appointment of Successor............................ 37
SECTION 611. Acceptance of Appointment by Successor....................................... 38
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.................. 39
SECTION 613. Preferential Collection of Claims Against Partnership........................ 39
SECTION 614. Appointment of Authenticating Agent.......................................... 39
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP.......................... 40
SECTION 701. Partnership to Furnish Trustee Names and Addresses of Holders................ 40
SECTION 702. Preservation of Information; Communications to Holders....................... 41
SECTION 703. Reports by Trustee........................................................... 41
SECTION 704. Reports by Partnership....................................................... 41
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.......................... 42
SECTION 801. Partnership May Consolidate, Etc., Only on Certain Terms..................... 42
SECTION 802. Successor Substituted........................................................ 42
ARTICLE IX SUPPLEMENTAL INDENTURES......................................................... 42
SECTION 901. Supplemental Indentures Without Consent of Holders........................... 42
SECTION 902. Supplemental Indentures with Consent of Holders.............................. 43
SECTION 903. Execution of Supplemental Indentures......................................... 44
SECTION 904. Effect of Supplemental Indentures............................................ 45
SECTION 905. Conformity with Trust Indenture Act.......................................... 45
SECTION 906. Reference in Securities to Supplemental Indentures........................... 45
</TABLE>
ii
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(continued)
<TABLE>
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ARTICLE X COVENANTS........................................................................ 45
SECTION 1001. Payment of Principal, Premium and Interest.................................. 45
SECTION 1002. Maintenance of Office or Agency............................................. 45
SECTION 1003. Money for Securities Payments to Be Held in Trust........................... 46
SECTION 1004. Statement by Officers as to Default......................................... 47
SECTION 1005. Existence................................................................... 47
SECTION 1006. Waiver of Certain Covenants................................................. 47
ARTICLE XI REDEMPTION OF SECURITIES........................................................ 47
SECTION 1101. Applicability of Article.................................................... 47
SECTION 1102. Election to Redeem; Notice to Trustee....................................... 47
SECTION 1103. Selection by Trustee of Securities to be Redeemed........................... 48
SECTION 1104. Notice of Redemption........................................................ 48
SECTION 1105. Deposit of Redemption Price................................................. 49
SECTION 1106. Securities Payable on Redemption Date....................................... 49
SECTION 1107. Securities Redeemed in Part................................................. 49
ARTICLE XII SINKING FUNDS.................................................................. 49
SECTION 1201. Applicability of Article.................................................... 49
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities....................... 50
SECTION 1203. Redemption of Securities for Sinking Fund................................... 50
ARTICLE XIII DEFEASANCE.................................................................... 50
SECTION 1301. Applicability of Article.................................................... 50
SECTION 1302. Legal Defeasance............................................................ 50
SECTION 1303. Covenant Defeasance......................................................... 52
SECTION 1304. Application by Trustee of Funds Deposited for Payment of Securities......... 53
SECTION 1305. Repayment to Partnership.................................................... 53
ARTICLE XIV SUBORDINATION OF SECURITIES.................................................... 54
SECTION 1401. Securities Subordinated to Senior Debt...................................... 54
SECTION 1402. Distribution on Dissolution, Liquidation and Reorganization;
Subrogation of Securities................................................... 54
SECTION 1403. Payments on Securities Permitted............................................ 56
SECTION 1404. Authorization of Holders of Securities to Trustee to Effect Subordination... 56
SECTION 1405. Notices to Trustee.......................................................... 56
SECTION 1406. Trustee as Holder of Senior Debt............................................ 57
SECTION 1407. Modification of Terms of Senior Debt........................................ 57
</TABLE>
iii
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STAR GAS PARTNERS, L.P.
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
--------------- -----------------
<S> <C> <C>
Section 310 (a) (1).............................. 609
(a) (2).............................. 609
(a) (3).............................. Not Applicable
(a) (4).............................. Not Applicable
(b).................................. 608; 610
Section 311 (a).................................. 613
(b).................................. 613
Section 312 (a).................................. 701; 702
(b).................................. 702
(c).................................. 702
Section 313 (a).................................. 703
(b).................................. 703
(c).................................. 703
(d).................................. 703
Section 314 (a).................................. 704
(a) (4).............................. 104; 1004
(b).................................. Not Applicable
(c) (1).............................. 101
(c) (2).............................. 101; 102
(c) (3).............................. Not Applicable
(d).................................. Not Applicable
(e).................................. 102
Section 315 (a).................................. 601
(b).................................. 602
(c).................................. 601
(d).................................. 601
(e).................................. 514
Section 316 (a).................................. 101
(a) (1) (A).......................... 502; 512
(a) (1) (B).......................... 513
(a) (2).............................. Not Applicable
(b).................................. 508
(c).................................. 104
Section 317 (a) (1).............................. 503
(a) (2).............................. 504
(b).................................. 1003
Section 318 (a).................................. 107
</TABLE>
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
iv
<PAGE>
INDENTURE dated as of ___________, 2000, between STAR GAS PARTNERS, L.P., a
Delaware limited partnership (the "Partnership"), having its principal office at
2187 Atlantic Avenue, Stamford, Connecticut 06902, and _____________, a
_________ banking corporation, as Trustee (the "Trustee").
RECITALS OF THE PARTNERSHIP
The Partnership has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Partnership, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act that
are required to be a part of this Indenture and, to the extent applicable, shall
be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly, or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect to
any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the date of such
computation;
(4) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(5) the words "Article" and "Section" refer to an Article and
Section, respectively, of this Indenture.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
1
<PAGE>
"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.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Authorized Newspaper" means a newspaper, in the English language or in an
official language of the country of publication, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state
law for the relief of debtors or the protection of creditors.
"Board of Directors" means the board of directors of the General Partner,
or the executive or any other committee of that board duly authorized to act in
respect thereof. If the Partnership shall change its form of entity to other
than a limited partnership, the references to officers or the Board of Directors
of the General Partner shall mean the officers or the Board of Directors (or
other comparable governing body) of the Partnership.
"Board Resolution" means a copy of a resolution certified by the Corporate
Secretary of the General Partner, the principal financial officer of the General
Partner or any other authorized officer of the General Partner or a person duly
authorized by any of them, to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or other
location, means, except as otherwise provided as contemplated by Section 301
with respect to any series of Securities, each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in that
Place of Payment or other location are authorized or obligated by law, executive
order or regulation to close.
"Capital Interests" means any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which at the date hereof is __________.
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"corporation" includes corporations, associations, limited liability
companies, joint-stock companies and business trusts.
"covenant defeasance" has the meaning specified in Section 1303.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Debt" means any obligation created or assumed by any Person for the
repayment of money borrowed, any purchase money obligation created or assumed by
such Person and any guarantee of the foregoing.
"Default" means, with respect to a series of Securities, any event which
is, or after notice or lapse of time or both would become, an Event of Default
with respect to Securities of such series.
"Defaulted Interest" has the meaning specified in Section 307.
"defeasance" has the meaning specified in Section 1302.
"Definitive Security" means a Security other than a Global Security or a
temporary Security.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301, until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter shall mean or include each Person which is then a Depositary
hereunder, and if at any time there is more than one such Person, shall be a
collective reference to such Persons.
"Dollar" or "$" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any statute successor thereto.
"General Partner" means Star Gas LLC, a Delaware corporation.
"Global Security" means a Security in global form that evidences all or
part of the Securities of any series and is registered in the name of the
Depositary for such Securities or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument, and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" also shall include the terms of particular series of Securities
established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
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"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
501(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer or the Secretary,
of the General Partner (or if the Partnership shall change its form of entity to
other than a limited partnership, by Persons or officers, members, agents and
comparable positions as applicable to those of the foregoing nature, as
applicable), and delivered to the Trustee. One of the officers or such other
Persons (as applicable) signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer
of the General Partner (or if the Partnership shall change its form of entity to
other than a limited partnership, by Persons or officers, members, agents and
comparable positions as applicable to those of the foregoing nature, as
applicable).
"Opinion of Counsel" means a written opinion of legal counsel, who may be
an employee of or counsel for the Partnership.
"Original Issue Discount Security" means any Security which provides for an
amount less than the stated principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Securities 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 Securities; provided, however, that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor has been made;
(3) Securities which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Partnership; and
(4) Securities, except to the extent provided in Sections 1302 and 1303,
with respect to which the Partnership has effected defeasance or covenant
defeasance as provided in Article XIII;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (A) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof on such date pursuant to Section 502, (B) the principal amount of a
Security denominated in one or more currencies or currency units other than
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U.S. dollars shall be the U.S. dollar equivalent of such currencies or currency
units, determined in the manner provided as contemplated by Section 301 on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent (as so
determined) on the date of original issuance of such Security, of the amount
determined as provided in Clause (A) above) of such Security, and (C) Securities
owned by the Partnership or any other obligor upon the 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 Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned as described in Clause
(C) above 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 Securities and that the pledgee is not the
Partnership or any other obligor upon the Securities or any Affiliate of the
Partnership or of such other obligor.
"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" or "Partnership Order" means a written request or
order signed in the name of the Partnership by the Chairman of the Board,
President or a Vice President of the General Partner, and by the Treasurer or
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 the like positions comparable to
those of the foregoing nature, as applicable.
"Paying Agent" means any Person authorized by the Partnership to pay the
principal of or any premium or interest on any Securities on behalf of the
Partnership.
"Periodic Offering" means an offering of Securities of a series from time
to time, the specific terms of which Securities, including, without limitation,
the rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the
original issue date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by Section 301
with respect thereto, are to be determined by the Partnership upon the issuance
of such Securities.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization or government, or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means, unless otherwise specifically provided for with respect to such series as
contemplated by Section 301, the office or agency of the Partnership in The City
of New York and such other place or places where, subject to the provisions of
Section 1002, the principal of and any premium and interest on the Securities of
that series are payable as specified as contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same Debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same Debt as the mutilated, destroyed, lost or stolen Security.
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"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Debt" of the Partnership, unless otherwise provided with respect to
the Securities of a series as contemplated by Section 301, means (1) all Debt of
the 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 Securities or to other
Debt which is pari passu with or subordinated to the Securities, 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 Debt" include (a) Debt of the
Partnership owed or owing to any Subsidiary of the Partnership or any officer,
director or employee of the Partnership or any Subsidiary of the Partnership,
(b) Debt to trade creditors or (c) any liability for taxes owed or owing by the
Partnership.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means, (i) any partnership of which 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, or (ii) any corporation, association or other business
entity of which more than 50% of the total voting power of the 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.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as otherwise provided
in Section 905; provided, however, that if the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean each Trustee with respect to Securities of that series.
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"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, each of which are not callable or redeemable at the option of the
issuer thereof.
"Vice President", when used with respect to the Partnership, means any vice
president of the General Partner, or when used with respect to the Trustee,
means any vice president of the Trustee.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Partnership to the Trustee to take
any action under any provision of this Indenture, the Partnership shall furnish
to the Trustee such certificates or opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the General Partner, or
an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (except for certificates provided for in
Section 1004) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual, 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
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Partnership or the General
Partner may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Partnership or
the General Partner stating that the information with respect to such factual
matters is in the possession of the
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Partnership or the General Partner, unless such counsel knows that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed (either physically or by means of a facsimile
or an electronic transmission, provided that such electronic transmission is
transmitted through the facilities of a Depositary) by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered (either physically or by means of a facsimile or an electronic
transmission, provided that such electronic transmission is transmitted through
the facilities of a Depositary) to the Trustee and, where it is hereby expressly
required, to the Partnership. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 315 of the
Trust Indenture Act) conclusive in favor of the Trustee and the Partnership, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership, principal amount and serial numbers of Securities held by
any Person, and the date of commencement of such Person's holding the same,
shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other action of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Partnership
in reliance thereon, whether or not notation of such action is made upon such
Security.
Without limiting the foregoing, a Holder entitled hereunder to give or take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any different part of such principal amount.
The Partnership may set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to give
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Securities of such series, but the Partnership shall have no
obligation to do so. With regard to
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any record date set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to give or take the relevant
action, whether or not such Holders remain Holders after such record date.
SECTION 105. Notices, Etc., to Trustee and Partnership.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Partnership shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trustee Administration, or
(2) the Partnership by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Partnership addressed to it at 2187 Atlantic Avenue, Stamford, Connecticut 06902
to the attention of the Corporate Secretary, or at any other address previously
furnished in writing to the Trustee by the Partnership.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid (if international mail, by
air mail), to each Holder affected by such event, at his address as it appears
in the Security Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder, whether or
not such Holder actually receives such notice.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.
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SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Partnership shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the 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 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of the Securities of any series which specifically
states that such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) need not be made at such Place of
Payment on such date, 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 Interest
Payment Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
SECTION 114. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or
Act required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
SECTION 115. Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners.
Obligations of the Partnership under this Indenture and the Securities
hereunder are non-recourse to the General Partner, and its respective Affiliates
(other than the Partnership), and payable only out of cash flow and assets of
the Partnership. The Trustee, and each Holder of a Security by its acceptance
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thereof, will be deemed to have agreed in this Indenture that (1) neither the
General Partner nor its assets (nor any of its respective Affiliates other than
the Partnership, nor their respective assets) shall be liable for any of the
obligations of the Partnership under this Indenture or such Securities, and (2)
no director, officer, employee, stockholder or unitholder, as such, of the
Partnership, the Trustee, the General Partner or any Affiliate of any of the
foregoing entities shall have any personal liability in respect of the
obligations of the Partnership under this Indenture or such Securities by reason
of his, her or its status.
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution 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 may be required to comply with applicable tax
laws or the rules of any securities exchange or automated quotation system on
which the Securities of such series may be listed or traded or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by an authorized officer or other authorized Person on behalf of the
Partnership and delivered to the Trustee at or prior to the delivery of the
Partnership Order contemplated by Section 303 for the authentication and
delivery of such Securities.
The definitive Securities 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 Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
[Insert any legend required by the United States Internal Revenue Code and the
regulations thereunder.] [If a Global Security,--insert legend required by
Section 204 of the Indenture] [If applicable, insert--UNLESS THIS SECURITY IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION, TO THE PARTNERSHIP OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]
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STAR GAS PARTNERS, L.P.
[TITLE OF SECURITY]
No. __________ U.S. $__________
[CUSIP No.__________]
STAR GAS PARTNERS, L.P., a Delaware limited partnership (herein called the
"Partnership", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
___________, or registered assigns, the principal sum of United States Dollars
on ________________ [if the Security is to bear interest prior to Maturity,
insert--, and to pay interest thereon from ______, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on __________ and ____________ in each year, commencing
_____________, at the rate of ___% per annum, until the principal hereof is paid
or made available for payment [if applicable, insert--, and at the rate of ___%
per annum on any overdue principal and premium and on any overdue installment of
interest]. [If applicable, insert -- The amount of interest payable for any
period shall be computed on the basis of twelve 30-day months and a 360-day
year. The amount of interest payable for any partial period shall be computed on
the basis of a 360-day year of twelve 30-day months and the days elapsed in any
partial month. In the event that any date on which interest is payable on this
Security is not a Business Day, then a payment of the interest payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) with the
same force and effect as if made on the date the payment was originally payable.
A "Business Day" shall mean, when used with respect to any Place of Payment,
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by
law, executive order or regulation to close.] The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the ___________ or
____________ (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice of which shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or automated quotation system, all as more fully provided in such
Indenture].
[If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of ___% per annum, which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of ___% per annum, which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.]
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<PAGE>
[If a Global Security, insert--Payment of the principal of [(and premium,
if any)] and [if applicable, insert--any such] interest on this Security will be
made by transfer of immediately available funds to a bank account in ____
designated by the Holder in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [state other currency].]
[If a Definitive Security, insert--Payment of the principal of [(and
premium, if any)] and [if applicable, insert--any such] interest on this
Security will be made at the office or agency of the Partnership maintained for
that purpose in ___________, [in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts] [state other currency] [or subject to any laws or regulations
applicable thereto and to the right of the Partnership (as provided in the
Indenture) to rescind the designation of any such Paying Agent, at the [main]
offices of __________ in __________ and _________ in __________ , or at such
other offices or agencies as the Partnership may designate, by [United States
Dollar] [state other currency] check drawn on, or transfer to a [United States
Dollar] account maintained by the payee with, a bank in The City of New York [ ]
(so long as the applicable Paying Agent has received proper transfer
instructions in writing at least [ ] days prior to the payment date)] [if
applicable, insert--; provided, however, that payment of interest may be made at
the option of the Partnership by [United States Dollar] [state other currency]
check mailed to the addresses of the Persons entitled thereto as such addresses
shall appear in the Security Register] [or by transfer to a [United States
Dollar] [state other currency] account maintained by the payee with a bank in
The City of New York [state other Place of Payment] (so long as the applicable
Paying Agent has received proper transfer instructions in writing by the Record
Date prior to the applicable Interest Payment Date)].].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Partnership has caused this instrument to be duly
executed.
Dated:__________ STAR GAS PARTNERS, L.P.,
By: Star Gas LLC,
Its General Partner
By:_______________________________________
Name:
Title:
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Partnership (the "Securities"), issued and to be issued in one or more series
under an Indenture dated as of ________, 2000 (the "Indenture"), between the
Partnership and ____________, as Trustee (the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Partnership, the Trustee and the Holders of the Securities and of the
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<PAGE>
terms upon which the Securities are, and are to be, authenticated and delivered.
As provided in the Indenture, the Securities may be issued in one or more
series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest, if any, at different
rates, may be subject to different redemption provisions, if any, may be subject
to different sinking, purchase or analogous funds, if any, may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided or permitted. This Security is one of the series designated
on the face hereof [if applicable, insert--, limited in aggregate principal
amount to U.S.$___________].
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, [if
applicable, insert--(1) on in any year commencing with the year ______ and
ending with the year _____ through operation of the sinking fund for this series
at a Redemption Price equal to 100% of the principal amount, and (2)] at any
time [if applicable, insert--on or after ______, ______], as a whole or in part,
at the election of the Partnership, at the following Redemption Prices expressed
as percentages of the principal amount): If redeemed [if applicable, insert--on
or before ____, ___%, and if redeemed] during the 12-month period beginning of
the years indicated, __________
Year Redemption Price
---- ----------------
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption [if applicable, insert--(whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, (1) on
___________ in any year commencing with the year ____ and ending with the year
____ through operation of the sinking fund for this series at the Redemption
Prices for redemption through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below, and (2) at
any time [if applicable, insert--on or after ________], as a whole or in part,
at the election of the Partnership, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If redeemed during the
12-month period beginning ________________ of the years indicated,
<TABLE>
<CAPTION>
Redemption Price for
Redemption Price for Redemption Otherwise Than
Redemption Through Operation Through Operation of the
Year of the Sinking Fund Sinking Fund
---- -------------------------- ---------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the
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<PAGE>
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.]
[If applicable, insert--The sinking fund for this series provides for the
redemption on __________ in each year beginning with the year ________ and
ending with the year ____ of [if applicable,--not less than $______ ("mandatory
sinking fund") and not more than] $________ aggregate principal amount of
Securities of this series. Securities of this series acquired or redeemed by the
Partnership otherwise than through [if applicable,--mandatory] sinking fund
payments may be credited against subsequent [if applicable,--mandatory] sinking
fund payments otherwise required to be made [if applicable,--in the inverse
order in which they become due].]
[If the Security is subject to redemption in part of any kind, insert--In
the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert--The Securities of this series are not redeemable
prior to Stated Maturity.]
[If the Security is not an Original Issue Discount Security, insert--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to--insert formula for determining the
amount. Upon payment (1) of the amount of principal so declared due and payable,
and (2) of interest on any overdue principal and overdue interest, all of the
Partnership's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Partnership and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Partnership and the Trustee with
the consent of not less than the Holders of a majority in aggregate principal
amount of the Outstanding Securities of all series to be affected (voting as one
class). The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Outstanding Securities of all
affected series (voting as one class), on behalf of the Holders of all
Securities of such series, to waive compliance by the Partnership with certain
provisions of the Indenture. The Indenture permits, with certain exceptions as
therein provided, the Holders of a majority in principal amount of Securities of
any series then Outstanding to waive past defaults under the Indenture with
respect to such series and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of
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<PAGE>
a majority in principal amount of Securities of this series at the time
Outstanding a direction inconsistent with such request, and shall have failed to
institute any such proceeding, for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of principal
hereof or [any premium or] interest hereon on or after the respective due dates
expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Partnership, which
is absolute and unconditional, to pay the principal of and [any premium and]
interest on this Security at the times, place(s) and rate, and in the coin or
currency, herein prescribed.
[If a Global Security, insert--This Global Security or portion hereof may
not be exchanged for Definitive Securities of this series except in the limited
circumstances provided in the Indenture.
The holders of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Definitive Securities except as
described in the Indenture and will not be considered the Holders thereof for
any purpose under the Indenture.]
[If a Definitive Security, insert--As provided in the Indenture and subject
to certain limitations therein set forth, the transfer of this Security is
registerable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Partnership in [if
applicable, insert -- any place where the principal of and any premium and
interest on this Security are payable] [if applicable, insert-- The City of New
York [, or, subject to any laws or regulations applicable thereto and to the
right of the Partnership (limited as provided in the Indenture) to rescind the
designation of any such transfer agent, at the [main] offices of _______________
in ___________ and _________ in _________ or at such other offices or agencies
as the Partnership may designate]], duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Partnership and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.]
The Securities of this series are issuable only in registered form without
coupons in denominations of U.S.$ [state other currency] and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Partnership may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Partnership, the Trustee and any agent of the Partnership or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security is overdue, and neither the
Partnership, the Trustee nor any such agent shall be affected by notice to the
contrary.
This Security is subordinated in right of payment to Senior Debt, to the
extent provided in the Indenture.
Obligations of the Partnership under the Indenture and the Securities
thereunder, including this Security, are non-recourse to Star Gas LLC (the
"General Partner") and its Affiliates (other than the
16
<PAGE>
Partnership), and payable only out of cash flow and assets of the Partnership.
The Trustee, and each Holder of a Security by its acceptance hereof, will be
deemed to have agreed in the Indenture that (1) neither the General Partner nor
its assets (nor any of its Affiliates other than the Partnership, nor their
respective assets) shall be liable for any of the obligations of the Partnership
under the Indenture or such Securities, including this Security, and (2) no
director, officer, employee, stockholder or unitholder, as such, of the
Partnership, the Trustee, the General Partner or any Affiliate of any of the
foregoing entities shall have any personal liability in respect of the
obligations of the Partnership under the Indenture or such Securities by reason
of his, her or its status.
The Indenture contains provisions that relieve the Partnership from the
obligation to comply with certain restrictive covenants in the Indenture and for
satisfaction and discharge at any time of the entire indebtedness upon
compliance by the Partnership with certain conditions set forth in the
Indenture.
This Security shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[If a Definitive Security, insert as a separate page--
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________ (Please Print or
Typewrite Name and Address of Assignee) the within instrument of STAR GAS
PARTNERS, L.P. and does hereby irrevocably constitute and appoint _____________
Attorney to transfer said instrument on the books of the within-named
Partnership, with full power of substitution in the premises.
Please Insert Social Security or Other Identifying Number of Assignee:
_______________________________ __________________________________
Dated:_________________________ __________________________________
(Signature)
Signature Guarantee:_____________________________
(Participant in a Recognized Signature
Guaranty Medallion Program)
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.]
SECTION 204. Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR
REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY
PERSON OTHER THAN THE
17
<PAGE>
DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON
REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS
SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT
IN SUCH LIMITED CIRCUMSTANCES.
If Securities of a series are issuable in whole or in part in the form of
one or more Global Securities, as specified as contemplated by Section 301,
then, notwithstanding Clause (9) of Section 301 and the provisions of Section
302, any Global Security shall represent such of the Outstanding Securities of
such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced or increased, as the case
may be, to reflect exchanges. Any endorsement of a Global Security to reflect
the amount, or any reduction or increase in the amount, of Outstanding
Securities represented thereby shall be made in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in
a Partnership Order. Subject to the provisions of Sections 303, 304 and 305, the
Trustee shall deliver and redeliver any Global Security in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Partnership Order. Any instructions by the Partnership with respect
to endorsement or delivery or redelivery of a Global Security shall be in a
Partnership Order (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel).
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Global Security if such Security was never issued and
sold by the Partnership and the Partnership delivers to the Trustee the Global
Security together with a Partnership Order (which need not comply with Section
102 and need not be accompanied by an Opinion of Counsel) with regard to the
reduction or increase, as the case may be, in the principal amount of Securities
represented thereby, together with the written statement contemplated by the
last sentence of Section 303.
SECTION 205. Form of Trustee's Certificate and Authorization.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
____________________________________
As Trustee
____________________________________
Authorized Officer
ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
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<PAGE>
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the form and title of the Securities of the series (which
shall distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the Securities will be issued and
on which the principal of, and premium, if any, on the Securities of the series
is payable or the method of determination thereof;
(5) the rate or rates (which may be fixed or variable) at which
the Securities of the series shall bear interest, if any, or the method of
determination thereof, the date or dates from which such interest shall accrue,
or the method of determination thereof, the Interest Payment Dates on which any
such interest shall be payable and the Regular Record Date for any interest
payable on any Interest Payment Date;
(6) the place or places where, subject to the provisions of
Section 1002, the principal of and any premium and interest on Securities of the
series shall be payable, Securities of the series may be surrendered for
registration of transfer, Securities of the series may be surrendered for
exchange and notices, and demands to or upon the Partnership in respect of the
Securities of the series and this Indenture may be served;
(7) the period or periods, if any, within which, the price or
prices at which and the terms and conditions upon which Securities of the series
may be redeemed, in whole or in part, at the option of the Partnership or
otherwise;
(8) the obligation, if any, of the Partnership to redeem or
purchase Securities of the series pursuant to any sinking fund or analogous
provisions or upon the happening of a specified event or at the option of a
Holder thereof and the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the series shall be
issuable;
(10) whether payment of principal of and premium, if any, and
interest, if any, on the Securities of the series shall be without deduction for
taxes, assessments or governmental charges paid by Holders of the series;
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<PAGE>
(11) the currency, currencies or currency units in which payment
of the principal of and any premium and interest on any Securities of the series
shall be denominated, payable, redeemable or purchasable if other than the
currency of the United States of America and the manner of determining the
equivalent thereof in the currency of the United States of America for purposes
of the definition of "Outstanding" in Section 101;
(12) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference to an
index, the manner in which such amounts shall be determined;
(13) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Partnership or
a Holder thereof, in one or more currencies or currency units other than that or
those in which the Securities are stated to be payable, the currency, currencies
or currency units in which payment of the principal of and any premium and
interest on Securities of such series as to which such election is made shall be
payable, and the periods within which and the terms and conditions upon which
such election is to be made;
(14) the right, if any, of the Partnership to defer payments of
interest by extending the interest payment periods and specify the duration of
such extension, the Interest Payment Dates on which such interest shall be
payable and whether and under what circumstances additional interest on amounts
deferred shall be payable;
(15) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the method of determination thereof;
(16) if and as applicable, that the Securities of the series
shall be issuable in whole or in part in the form of one or more Global
Securities (and whether in temporary or permanent global form) and, in such
case, the Depositary or Depositaries for such Global Security or Global
Securities and any circumstances other than those set forth in Section 305 in
which any such Global Security may be transferred to, and registered and
exchanged for Securities registered in the name of, a Person other than the
Depositary for such Global Security or a nominee thereof and in which any such
transfer may be registered;
(17) any deletions from, modifications of or additions to the
Events of Default set forth in Section 501 or the covenants of the Partnership
set forth in Article X pertaining to the Securities of the series;
(18) if the terms and conditions upon which any Securities of the
series may be converted into or exchanged for securities, which may include,
without limitation, capital stock, of any class or series of the Partnership or
any other issuer;
(19) if other than as provided in Sections 1302 and 1303, the
terms and conditions upon which and the manner in which such series of
Securities may defeased or discharged;
(20) if other than the Trustee, the identity of the Security
Registrar and any Paying Agent;
(21) any restrictions or other provisions with respect to the
transfer or exchange of the Securities;
20
<PAGE>
(22) the assets, if any, that are pledged as security for the
payment of the Securities; and
(23) any other terms of the Securities of the series (which terms
shall not be inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened, without the consent of the
Holders, for increases in the aggregate principal amount of such series of
Securities and issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such series.
If any of the terms of the series are established by action taken by or
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized person of the
General Partner on behalf of the Partnership and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth, or providing
the manner for determining, the terms of the series.
With respect to Securities of a series subject to a Periodic Offering, such
Board Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Partnership Order,
or that such terms shall be determined by the Partnership, or one or more of the
Partnership's agents designated in an Officers' Certificate, in accordance with
a Partnership Order.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such specified denomination with respect to
the Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Partnership by the
Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President or any Vice President of the General Partner and need not be attested.
The signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the General Partner shall bind the
Partnership, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Partnership may deliver Securities of any series executed by the
Partnership to the Trustee for authentication, together with a Partnership Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Partnership Order shall authenticate and deliver such
Securities; provided, however, that in the case of Securities offered in a
Periodic Offering, the Trustee shall
21
<PAGE>
authenticate and deliver such Securities from time to time in accordance with
such other procedures (including, without limitation, the receipt by the Trustee
of oral or electronic instructions from the Partnership or its duly authorized
agents, thereafter promptly confirmed in writing) acceptable to the Trustee as
may be specified by or pursuant to a Partnership Order delivered to the Trustee
prior to the time of the first authentication of Securities of such series. If
the form or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(1) if the form or forms of such Securities have been
established by or pursuant to Board Resolution as permitted by Section 201, that
such form or forms have been established in conformity with the provisions of
this Indenture;
(2) if the terms of such Securities have been, or in the case of
Securities of a series offered in a Periodic Offering, will be, established by
or pursuant to a Board Resolution as permitted by Section 301, that such terms
have been, or in the case of Securities of a series offered in a Periodic
Offering, will be, established in conformity with the provisions of this
Indenture, subject, in the case of Securities of a series offered in a Periodic
Offering, to any conditions specified in such Opinion of Counsel; and
(3) that such 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, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
If such form or forms or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Partnership Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Partnership of any of such
Securities, the form or forms and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel and the
other documents delivered pursuant to Sections 201 and 301 and this Section, as
applicable, in connection with the first authentication of Securities of such
series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
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certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Partnership, and the Partnership shall deliver such Security to the Trustee for
cancellation as provided in Section 309 for all purposes of this Indenture, such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the
Partnership may execute, and upon Partnership Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the Definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Partnership will
cause Definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of Definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for Definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Partnership maintained pursuant to Section
1002 for the purpose of exchanges of Securities of such series, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more Definitive Securities
of the same series, of any authorized denominations and of a like aggregate
principal amount and tenor. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Partnership shall cause to be kept at an office or agency of the
Partnership in The City of New York a register (the register maintained in such
office or in any other office or agency of the Partnership in a Place of Payment
being herein sometimes referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Partnership shall
provide for the registration of Securities and of transfers of Securities. The
Partnership shall, prior to the issuance of any Securities hereunder, appoint
the Trustee as the initial "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided and its corporate
trust office which, at the date hereof, is located at ______________________, as
the initial office or agency in The City of New York where the Security Register
will be maintained. The Partnership may at any time replace such Security
Registrar, change such office or agency or act as its own Security Registrar.
The Partnership will give prompt written notice to the Trustee of any change of
the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series
at the office or agency of the Partnership maintained pursuant to Section 1002
for such purpose, the Partnership shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor.
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At the option of the Holder, Securities of any series (except a Global
Security) may be exchanged for other Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Partnership shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Partnership, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Partnership or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Partnership and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Partnership may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304 or 1107 not involving any transfer.
Neither the Trustee nor the Partnership shall be required (1) to issue,
register the transfer of or exchange Securities of any series (or of any series
and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of Securities of that series selected for redemption under Section 1103 and
ending at the close of business on the day of such mailing, or (2) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any other provision in this Indenture and except as
otherwise specified as contemplated by Section 301, no Global Security may be
transferred to, or registered or exchanged for Securities registered in the name
of, any Person other than the Depositary for such Global Security or any nominee
thereof, and no such transfer may be registered, except as provided in this
paragraph. Every Security authenticated and delivered upon registration or
transfer of, or in exchange for or in lieu of, a Global Security shall be a
Global Security, except as provided in this paragraph. If (1) (A) the Depositary
for a Global Security notifies the Partnership that it is unwilling or unable to
continue as Depositary for such Global Security or ceases to be a clearing
agency registered under the Exchange Act, and (B) a successor Depositary is not
appointed by the Partnership within 90 days, (2) an Event of Default has
occurred and is continuing with respect to the Securities of such series and the
Security Registrar has received a request from the Depositary to issue
certificated securities in lieu of all or a portion of the Global Securities of
such series (in which case the Partnership shall deliver certificated securities
within 30 days of such request) or (3) the Partnership determines in its sole
discretion that Securities of a series issued in global form shall no longer be
represented by a Global Security, then such Global Security may be exchanged by
such Depositary for Definitive Securities of the same series, of any authorized
denomination and of a like aggregate principal amount and tenor, registered in
the names of, and the transfer of such Global Security or portion thereof may be
registered to, such Persons as such Depositary shall direct.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with such
security or indemnity as may be required by the Partnership or the Trustee to
save each of them and any agent of either of them harmless, the Partnership
shall execute and the Trustee shall authenticate and deliver in exchange
therefor
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a new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Partnership and the Trustee (1) evidence
to their satisfaction of the destruction, loss or theft of any Security and (2)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Partnership or the Trustee that such Security has been acquired by a bona fide
purchaser, the Partnership shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding. If, after the delivery of such new Security,
a bona fide purchaser of the original Security in lieu of which such new
Security was issued presents for payment or registration such original Security,
the Trustee shall be entitled to recover such new Security from the party to
whom it was delivered or any party taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Partnership and the Trustee in connection therewith.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Partnership in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Partnership
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
exchange for any mutilated Security or in lieu of any destroyed, lost or stolen
Security shall constitute an original additional contractual obligation of the
Partnership, whether or not the mutilated, destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Partnership, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Partnership may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest,
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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 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 prepaid, to each Holder of
Securities of such series at his 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 Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
(2) The Partnership may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange or automated quotation system on which
such Securities may be listed or traded, 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.
Subject to the foregoing provisions of this Section and Section 305, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security, shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
For each series of Securities, the Partnership shall, prior to 11:00 a.m.
(New York City time) on each payment date for principal and premium, if any, and
interest, if any, deposit with the Trustee money in immediately available funds
sufficient to make cash payments due on the applicable payment date.
SECTION 308. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, prior to due presentment of a Security for
registration of transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Sections 305 and 307) any interest
on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and neither the Partnership, the Trustee nor any agent of
the Partnership or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Partnership,
the Trustee and any agent of the Partnership or the Trustee as the owner of such
Global Security for all purposes whatsoever. None of the Partnership, the
Trustee nor 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 beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
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SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Partnership may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Partnership may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Partnership has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of in accordance with its
customary procedures, and the Trustee shall thereafter deliver to the
Partnership a certificate with respect to such disposition.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months and interest on the
Securities of each series for any partial period shall be computed on the basis
of a 360-day year of twelve 30-day months and the number of days elapsed in any
partial month.
SECTION 311. CUSIP Numbers.
The Partnership in issuing the Securities may use "CUSIP" numbers (in
addition to the other identification numbers printed on the Securities), and, if
so, the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such "CUSIP" 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 "CUSIP" numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Partnership Request cease to be of further effect
with respect to Securities of any series (except as to any surviving rights of
registration of transfer or exchange of such Securities herein expressly
provided for), and the Trustee, at the expense of the Partnership, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to such Securities, when
(1) either
(A) all such Securities theretofore authenticated and delivered
(other than (i) such Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306, and (ii) such
Securities for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Partnership and thereafter repaid to the
Partnership or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
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(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Partnership,
and the Partnership in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
this purpose an amount of money in the currency or currency units in which such
Securities are payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal and any premium and interest to the date of such deposit (in the
case of Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Partnership has paid or caused to be paid all other sums
payable hereunder by the Partnership with respect to such Securities; and
(3) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture with respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to Securities of any series, (x) the obligations of the Partnership to
the Trustee under Section 607, the obligations of the Trustee to any
Authenticating Agent under Section 614 and the right of the Trustee to resign
under Section 610 shall survive, and (y) if money shall have been deposited with
the Trustee pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Partnership and/or the Trustee under Sections 402, 606, 701
and 1002 and the last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Partnership acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE V
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary
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or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days (whether or not such payment is prohibited by the provisions
of Article XIV hereof); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity (whether or not such payment is
prohibited by the provisions of Article XIV hereof); or
(3) default in the performance, or breach, of any term, covenant or
warranty of the Partnership in this Indenture (other than a term, covenant or
warranty a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Partnership by the
Trustee or to the Partnership and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(4) the Partnership pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of any
order for relief against it in an involuntary case, (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or (D) makes a general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Partnership in an
involuntary case, (B) appoints a Custodian of the Partnership or for all or
substantially all of its property, or (C) orders the liquidation of the
Partnership; and the order or decree remains unstayed and in effect for 90 days;
or
(6) any other Event of Default provided as contemplated by Section
301 with respect to Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount of (or, if any of the Securities
of that series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified in the terms thereof),
and accrued but unpaid interest, if any, on all of the Securities of that series
to be due and payable immediately, by a notice in writing to the Partnership
(and to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Partnership and
the Trustee, may rescind and annul such declaration and its consequences if:
(1) the Partnership has paid or deposited with the Trustee a sum
sufficient to pay
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(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor
in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent Default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Partnership covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days (whether or not such payment is prohibited by the provisions
of Article XIV hereof), or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof (whether or not such payment is
prohibited by the provisions of Article XIV hereof), the Partnership will, upon
demand of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for
principal and any premium and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in
such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Partnership fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Partnership or any other obligor upon such Securities and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Partnership or any other obligor upon such Securities,
wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
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SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Partnership or any other
obligor upon the Securities, their property or their creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money or property collected or to be applied by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money or property on
account of principal or any premium or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: Subject to Article XIV, to the payment of the amounts then due and
unpaid for principal of and any premium and interest on the
Securities in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority
of any kind, according to the amounts due and payable on such
Securities for principal and any premium and interest,
respectively; and
THIRD: The balance, if any, to the Partnership.
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SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered and, if requested, provided
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer and, if requested, provision of security or indemnity has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Sections 305 and
307) interest on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then in every such case, subject to any determination in such
proceeding, the Partnership, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or
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reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series 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
Securities of such series; provided, however, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to the provisions of Section 601, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good faith
shall determine that the proceeding so directed would involve the Trustee in
personal liability or would otherwise be contrary to applicable law.
SECTION 513. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all the Securities of
such series waive any past default hereunder with respect to such series and its
consequences, except
(1) a continuing default in the payment of the principal of or any
premium or interest on any Security of such series, or
(2) a default in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
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, suffered or
omitted by it as Trustee, a court may require any party
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litigant in such suit to file an undertaking to pay the costs of such suit, and
may assess costs against any such party litigant, in the manner and to the
extent provided in the Trust Indenture Act; provided, however, that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Partnership.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Partnership covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Partnership (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or security or indemnity satisfactory to it 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 602. Notice of Defaults.
If a Default occurs and is continuing with respect to the Securities of any
series, the Trustee shall, within 90 days after it occurs, transmit, in the
manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
notice of all uncured or unwaived Defaults known to it; provided, however, that,
except in the case of a Default in payment on the Securities of any series, the
Trustee may withhold the notice if it determines in good faith that withholding
such notice is in the interests of Holders of Securities of such series;
provided, further, however, that, in the case of any default or breach of the
character specified in Section 501(3) with respect to the Securities of such
series, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely on 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, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(2) any request, direction, order or demand of the Partnership
mentioned herein shall be sufficiently evidenced by a Partnership Request or
Partnership Order (other than delivery of any
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Security to the Trustee for authentication and delivery pursuant to Section 303,
which shall be sufficiently evidenced as provided therein) and any resolution of
the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) 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, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may, without obligation to do so, make such further
inquiry or investigation into such facts or matters as it may see fit;
(7) 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 with due care by it
hereunder; and
(8) the Trustee may request that the Partnership deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Partnership, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. Neither the Trustee nor any Authenticating
Agent makes any representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee or any Authenticating Agent shall
not be accountable for the use or application by the Partnership of Securities
or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Partnership, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Partnership with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
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SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder 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 money received by it hereunder except as otherwise
agreed with the Partnership.
SECTION 607. Compensation and Reimbursement.
The Partnership agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Partnership under this Section to compensate the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder.
Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 501(4) or Section 501(5), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any applicable Bankruptcy Law.
The provisions of this Section shall survive the satisfaction and discharge
of this Indenture and the defeasance of the Securities.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one or more Trustees hereunder with respect to
the Securities of each series, at least one of which shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus required by the Trust Indenture Act. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a supervising or examining
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authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or
more series by giving written notice thereof to the Partnership. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Partnership.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Partnership or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Partnership or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (A) the Partnership, acting pursuant to the
authority of a Board Resolution, may remove the Trustee with respect to all
Securities, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities and the appointment of a
successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Partnership, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Partnership and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Partnership. If no successor Trustee with
respect to the
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Securities of any series shall have been so appointed by the Partnership or the
Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
The Partnership shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(1) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Partnership and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Partnership or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(2) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Partnership,
the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (A) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (B)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(C) 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 as co-trustees of
the same trust and that each such 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; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, but, on request of the Partnership or any successor Trustee,
such retiring Trustee shall, upon payment of its charges, duly assign, transfer
and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(3) Upon request of any such successor Trustee, the Partnership shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (1) or (2) of this Section, as the case may be.
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(4) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Partnership.
If and when the Trustee shall be or become a creditor of the Partnership or
any other obligor upon the Securities, the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Partnership or any such other obligor.
SECTION 614. Appointment of Authenticating Agent.
The Trustee (upon notice to the Partnership) may appoint an Authenticating
Agent or Agents with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon original issue (in accordance with procedures acceptable to
the Trustee) and upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Partnership and shall at all times be a corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of such Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or such Authenticating
Agent.
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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Partnership. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Partnership. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Partnership. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
Except with respect to an Authenticating Agent appointed at the request of
the Partnership, the Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
__________________________________
As Trustee
By:_______________________________
As Authenticating Agent
By:_______________________________
Authorized Officer
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND
PARTNERSHIP
SECTION 701. Partnership to Furnish Trustee Names and Addresses of Holders.
The Partnership will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than ____ 15 and _______ 15 in each
year, a list for each series of Securities, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Securities of
such series as of the preceding ______ 30 or _______ 31, as the case may be, and
(2) 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 content as of a date not more than 15 days prior to the time
such list is furnished; provided, however, that if and so long as the Trustee
shall be the Security Registrar for Securities of a series, no such list need be
furnished with respect to such series of Securities.
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SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall comply with the obligations imposed upon it pursuant to
Section 312 of the Trust Indenture Act.
The rights of the Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Partnership and the Trustee that neither the Partnership nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to the names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than _____ 15 in each calendar year with
respect to the 12-month period ending on the previous _____ 15, commencing _____
15, ____.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Partnership. The
Partnership will notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 704. Reports by Partnership.
The Partnership shall:
(1) file with the Trustee, within 15 days after the Partnership is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Partnership may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Partnership is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the Trustee and the
Commission (unless the Commission will not accept such a filing), in accordance
with rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Partnership with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof with
the Trustee, such summaries of any
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information, documents and reports required to be filed by the Partnership
pursuant to paragraphs (1) and (2) of this Section as may be required by rules
and regulations prescribed from time to time by the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Partnership May Consolidate, Etc., Only on Certain Terms.
The Partnership shall not consolidate with or merge into any other Person
or sell, lease or transfer its properties and assets as, or substantially as, an
entirety to, any Person, unless:
(1) (A) in the case of a merger, the Partnership is the surviving
entity, or (B) the Person formed by such consolidation or into which the
Partnership is merged or the Person which acquires by sale or transfer, or which
leases, the properties and assets of the Partnership as, or substantially as, an
entirety must expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form reasonably satisfactory to the Trustee,
all of the obligations of the Partnership under this Indenture and the
Securities;
(2) the surviving entity or successor Person is a Person organized
and existing under the laws of the United States of America, any State thereof
or the District of Columbia;
(3) immediately after giving effect to such transaction, no Default
or Event of Default exists; and
(4) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, transfer or lease and the supplemental indenture required in
connection with such transaction comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Partnership with, or merger of the
Partnership into, any other Person or any sale, transfer or lease of the
properties and assets of the Partnership as, or substantially as, an entirety in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Partnership is merged or to which such sale, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Partnership under this Indenture with the same effect as if
such successor Person had been named originally as the Partnership herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders of Securities, the Partnership and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
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(1) to evidence the succession of another Person to the Partnership
under this Indenture and the Securities and the assumption by such successor
Person of the obligations of the Partnership hereunder;
(2) to add covenants and Events of Default for the benefit of the
Holders of all or any series of such Securities or to surrender any right or
power conferred by this Indenture upon the Partnership;
(3) to add to, change or eliminate any of the provisions of this
Indenture, provided that any such addition, change or elimination does not
adversely affect any outstanding Securities of any series in any material
respect;
(4) to establish the forms or terms of the Securities of any series
issued hereunder;
(5) to cure any ambiguity or correct any omission, defect or
inconsistency in this Indenture;
(6) to evidence the acceptance of appointment by a successor Trustee;
(7) to qualify this Indenture under the Trust Indenture Act;
(8) to provide for uncertificated securities in addition to
certificated securities;
(9) to supplement any provisions of this Indenture necessary to
permit or facilitate the defeasance and discharge of any series of Securities,
provided that such action does not adversely affect the interests of the Holders
of Securities of such series or any other series; and
(10) to comply with the rules or regulations of any securities
exchange or automated quotation system on which any of the Securities may be
listed or traded.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of all Outstanding Securities affected by such supplemental
indenture (voting as one class), the Partnership and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture, or modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided that the Partnership
and the Trustee may not, without the consent of the Holder of each Outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest, if any, on, any Security, or reduce the
principal amount thereof or premium, if any, on or the rate of interest thereon
or modify the provisions of this Indenture with respect to the subordination of
the Securities in a manner adverse to the Holders or adversely affect any right
to convert or exchange any Security into any other security, or alter the method
of computation of interest;
(2) change the Redemption Date for any debt security;
(3) change our obligation, if any, to pay additional amounts;
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(4) reduce the principal amount of an Original Issue Discount
Security payable upon acceleration of Maturity;
(5) change the coin or currency in which any Security or any premium
or interest on any Security is payable;
(6) change the redemption right of any Holder;
(7) impair the right to institute suit for the enforcement of any
payment of principal of, premium, if any, or interest on, any Security;
(8) reduce the percentage in principal amount of Securities required
for any such supplemental indenture or for any waiver provided for in this
Indenture;
(9) reduce quorum or voting requirements;
(10) change the Partnership's obligation to maintain an office or
agency for payment of Securities and the other matters specified herein;
(11) modify the provisions of this Indenture with respect to the
subordination of any Security in a manner adverse to the Holder thereof; or
(12) modify any of the provisions of this Indenture relating to the
execution of supplemental indentures with the consent of Holders of Securities
which are discussed in this Section or modify any provisions relating to the
waiver by Holders of Securities of past defaults and covenants, except to
increase any required percentage or to provide that other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of 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 Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but 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.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article 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. If the Partnership shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Partnership, to any such supplemental indenture
may be prepared and executed by the Partnership and authenticated and delivered
by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Partnership covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Partnership in respect of the Securities of that 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 such presentations, surrenders, notices and
demands.
The Partnership may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Partnership of its obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such
purposes. The Partnership will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
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Except as otherwise specified with respect to a series of Securities as
contemplated by Section 301, the Partnership hereby initially designates as the
Place of Payment for each series of Securities The City and State of New York,
and initially appoints the Trustee at its Corporate Trust Office as the
Partnership's office or agency for each such purpose in such city.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Partnership or any of its Subsidiaries shall at any time act as
Paying Agent with respect to any series of Securities, it will, on or before
each due date of the principal of or any premium or interest on any of the
Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and any premium
and interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Partnership shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Partnership will promptly notify the Trustee of its action or
failure so to act.
The Partnership will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) hold all sums held by it for
the payment of the principal of (and premium, if any) or interest, if any, on
Securities of that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided; (2) give the Trustee notice of any default by the
Partnership (or any other obligor upon the Securities of that series) in the
making of any payment of principal (and premium, if any) or interest, if any, on
the Securities of that series; and (3) during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the Trustee
all sums held in trust by such Paying Agent for payment in respect of the
Securities of that series.
The Partnership may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Partnership Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Partnership or such Paying Agent, 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; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Partnership, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Partnership on Partnership Request, or (if then held by the
Partnership) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Partnership for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Partnership as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Partnership cause to be published once, in an Authorized
Newspaper in each Place of Payment with respect to such series, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Partnership.
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SECTION 1004. Statement by Officers as to Default.
The Partnership will deliver to the Trustee, within 150 days after the end
of each fiscal year of the Partnership ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signer thereof the Partnership is in default in the performance and observance
of any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Partnership shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article VIII, the Partnership will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Partnership shall not be required to preserve any such right or franchise if it
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Partnership.
SECTION 1006. Waiver of Certain Covenants.
The Partnership may omit in any particular instance to comply with any
term, provision or condition set forth in Section 1005, with respect to the
Securities of any series if before the time for such compliance the Holders of
at least a majority in aggregate principal amount of the Outstanding Securities
of all affected series (voting as one class) shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Partnership and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
A waiver which changes or eliminates any term, provision or condition of
this Indenture which has expressly been included solely for the benefit of one
or more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such term, provision or
condition, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Partnership to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the
Partnership of less than all the Securities of any series, the Partnership
shall, not less than 30 nor more than 60 days prior to the Redemption Date fixed
by the Partnership (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if
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applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities (1) prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, or (2) pursuant to an election of the Partnership which is subject to
a condition specified in the terms of such Securities, the Partnership shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction or condition.
SECTION 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed),
the particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by lottery for redemption of
portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series.
The Trustee shall promptly notify the Partnership in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail (if international
mail, by air mail), postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series and
of a specified tenor are to be redeemed, the identification (and, in the case of
partial redemption of any Securities, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and that interest thereon
will cease to accrue on and after said date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of Securities to be redeemed shall be given by the
Partnership or, at the Partnership's request, by the Trustee in the name and at
the expense of the Partnership.
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SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, 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 as provided in Section 1003) an amount
of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Partnership shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Partnership at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Partnership or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Partnership 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 Security without
service charge, a new Security or Securities of the same series and of like
tenor, 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 Security so surrendered.
ARTICLE XII
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series 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 Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund
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payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Partnership (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption), and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Partnership pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities (unless a shorter period shall be satisfactory to the
Trustee), 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, 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 Securities of that series pursuant to
Section 1202 and stating the basis for such credit and that such Securities have
not been previously so credited, and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1106 and 1107.
ARTICLE XIII
DEFEASANCE
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to each series of
Securities except as otherwise specified as contemplated by Section 301 for
Securities of such series.
SECTION 1302. Legal Defeasance.
In addition to discharge of the Indenture pursuant to Section 401, the
Partnership shall be deemed to have paid and discharged the entire indebtedness
on all the Securities of such a series on the 91st day after the date of the
deposit referred to in Clause (1) below, and the provisions of this Indenture
with respect to the Securities of such series shall no longer be in effect
(except as to (i) rights of registration of transfer and exchange of Securities
of such series and the Partnership's right of optional redemption, if any, (ii)
substitution of mutilated, destroyed, lost or stolen Securities, (iii) rights of
Holders of Securities to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor or on the specified
redemption dates therefor (but not upon acceleration), and remaining rights of
the holders to receive mandatory sinking fund payments, if any, (iv) the rights,
obligations, duties and immunities of
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the Trustee hereunder, and the Partnership's obligations in connection therewith
(including, but not limited to, Section 607), (v) the rights, if any, to convert
or exchange the Securities of such series, (vi) the rights of the Holders of
Securities of such series as beneficiaries hereof with respect to the property
so deposited with the Trustee payable to all or any of them, and (vii) the
obligations of the Partnership under Section 1002), and the Trustee, at the
expense of the Partnership, shall, upon a Partnership Request, execute proper
instruments acknowledging the same, if the conditions set forth below are
satisfied (hereinafter, "defeasance"):
(1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust, for the purposes of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of such series (A) cash
in an amount, or (B) in the case of any series of Securities the payments on
which may only be made in legal coin or currency of the United States, U.S.
Government Obligations, maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash, or (C) a combination
thereof, certified to be sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (i) the principal and interest and
premium, if any, on all Securities of such series on each date that such
principal, interest or premium, if any, is due and payable or on any Redemption
Date established pursuant to Clause (3) below, and (ii) any mandatory sinking
fund payments on the dates on which such payments are due and payable in
accordance with the terms of the Indenture and the Securities of such series;
(2) The Partnership has delivered to the Trustee an Opinion of
Counsel based on the fact that (A) the Partnership has received from, or there
has been published by, the Internal Revenue Service a ruling, or (B) since the
date hereof, there has been a change in the applicable federal income tax law,
in either case to the effect that, and such opinion shall confirm that, the
Holders of the Securities of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge 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, defeasance and discharge had not occurred;
(3) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(4) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be continuing
on the date of such deposit;
(5) Such defeasance shall not cause the Trustee to have a conflicting
interest within the meaning of the Trust Indenture Act (assuming all Securities
are in default within the meaning of such Act);
(6) Such defeasance shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the
Partnership is a party or by which it is bound;
(7) Such defeasance shall not result in the trust arising from such
deposit constituting an investment company within the meaning of the Investment
Company Act of 1940, as amended, unless such trust shall be registered under
such Act or exempt from registration thereunder; and
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(8) The Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this provision
have been complied with.
For this purpose, such defeasance means that the Partnership and any other
obligor upon the Securities of such series shall be deemed to have paid and
discharged the entire debt represented by the Securities of such series, which
shall thereafter be deemed to be "Outstanding" only for the purposes of Section
1304 and the rights and obligations referred to in Clauses (i) through (vii),
inclusive, of the first paragraph of this Section, and to have satisfied all its
other obligations under the Securities of such series and this Indenture insofar
as the Securities of such series are concerned.
SECTION 1303. Covenant Defeasance.
The Partnership and any other obligor, if any, shall be released on the
91st day after the date of the deposit referred to in Clause (1) below from its
obligations under Sections 704, 801 and 1005 with respect to the Securities of
any series on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Securities of such series shall
thereafter be deemed to be not "Outstanding" for the purposes of any request,
demand, authorization, direction, notice, waiver, consent or declaration or
other action or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding for
all other purposes hereunder. For this purpose, such covenant defeasance means
that, with respect to the Securities of such series, the Partnership may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section, whether directly or indirectly by
reason of any reference elsewhere herein to such Section or by reason of any
reference in such Section to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or an Event of
Default under Section 501, but, except as specified above, the remainder of this
Indenture and the Securities of such series shall be unaffected thereby. The
following shall be the conditions to application of this Section 1303:
(1) The Partnership has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities of such series, (A) cash in an
amount, or (B) in the case of any series of Securities the payments on which may
only be made in legal coin or currency of the United States, U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (i) the principal and interest and premium, if any, on all
Securities of such series on each date that such principal, interest or premium,
if any, is due and payable or on any Redemption Date established pursuant to
Clause (2) below, and (ii) any mandatory sinking fund payments on the day on
which such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series;
(2) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments), notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(3) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be continuing
on the date of such deposit;
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(4) The Partnership has delivered to the Trustee an Opinion of
Counsel which shall confirm that the Holders of the Securities of such series
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and covenant defeasance and will be subject to federal
income tax on the same amount and in the same manner and at the same time as
would have been the case if such deposit and covenant defeasance had not
occurred;
(5) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all
Securities are in default within the meaning of such Act);
(6) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Partnership is a party or by which it is bound;
(7) Such covenant defeasance shall not result in the trust arising
from such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940, as amended, unless such trust shall be
registered under such Act or exempt from registration thereunder; and
(8) The Partnership has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for relating to the
covenant defeasance contemplated by this provision have been complied with.
SECTION 1304. Application by Trustee of Funds Deposited for Payment of
Securities.
Subject to the provisions of the last paragraph of Section 1003, all moneys
or U.S. Government Obligations deposited with the Trustee pursuant to Section
1302 or 1303 (and all funds earned on such moneys or U.S. Government
Obligations) shall be held in trust and applied by it to the payment, either
directly or through any Paying Agent (including the Partnership acting as its
own Paying Agent), to the Holders of the particular Securities of such series
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law. Subject to Sections 1302 and 1303, the Trustee shall promptly
pay to the Partnership upon request any excess moneys held by it at any time.
SECTION 1305. Repayment to Partnership.
The Trustee and any Paying Agent promptly shall pay or return to the
Partnership upon Partnership Request any money and U.S. Government Obligations
held by them at any time that are not required for the payment of the principal
of and any interest on the Securities of any series for which money or U.S.
Government Obligations have been deposited pursuant to Section 1302 or 1303.
The provisions of the last paragraph of Section 1003 shall apply to any
money held by the Trustee or any Paying Agent under this Article that remains
unclaimed for two years after the Maturity of any series of Securities for which
money or U.S. Government Obligations have been deposited pursuant to Section
1302 or 1303.
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ARTICLE XIV
SUBORDINATION OF SECURITIES
SECTION 1401. Securities Subordinated to Senior Debt.
(1) The Partnership, for itself, its successors and assigns,
covenants and agrees, and each Holder of Securities, by his acceptance thereof,
likewise covenants and agrees, that the payment of the principal of (and
premium, if any), and interest on each and all of the Securities is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all Senior Debt of the
Partnership.
(2) If (A) the Partnership shall default (a "Payment Default") in the
payment of any principal of, premium, if any, or interest, if any, on any Senior
Debt of the Partnership when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration of acceleration or
otherwise, or (B) any other default shall occur with respect to Senior Debt of
the Partnership and the maturity of such Senior Debt has been accelerated in
accordance with its terms, then, upon written notice of such default to the
Partnership and the Trustee by the holders of Senior Debt of the Partnership or
any trustee therefor, unless and until, in either case, the default has been
cured or waived or has ceased to exist, or, any such acceleration has been
rescinded or such Senior Debt has been paid in full, no direct or indirect
payment (in cash, property, securities, by set-off or otherwise) shall be made
or agreed to be made on account of the principal of, premium, if any, or
interest, if any, on any of the Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Securities other than
those made in capital stock of the Partnership (or cash in lieu of fractional
shares thereof).
(3) If any default (other than a Payment Default) occurs under the
Senior Debt of the Partnership, 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 at the expiration of any applicable
grace periods (a "Senior Nonmonetary Default"), then, upon the receipt by the
Partnership and the Trustee of written notice thereof (a "Payment Blockage
Notice") from or on behalf of holders of such Senior Debt of the Partnership
specifying an election to prohibit such payment and other action by the
Partnership in accordance with the following provisions of this paragraph (3),
the Partnership may not make any payment or take any other action that would be
prohibited by paragraph (2) of this Section 1401 during the period (the "Payment
Blockage Period") commencing on the date of receipt of such Payment Blockage
Notice and ending on the earlier of (A) the date, if any, on which the holders
of such Senior Debt or their representative notifies the Trustee that such
Senior Nonmonetary Default is cured or waived or ceases to exist or the Senior
Debt to which such Senior Nonmonetary Default relates is discharged or (B) the
179th day after the date of receipt of such Payment Blockage Notice.
Notwithstanding the provisions described in the immediately preceding sentence,
the Partnership may resume payments on the Securities following such Payment
Blockage Period.
SECTION 1402. Distribution on Dissolution, Liquidation and Reorganization;
Subrogation of Securities.
Upon any distribution of assets of the Partnership upon any dissolution,
winding up, liquidation or reorganization of the Partnership, whether in
bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Partnership or otherwise (subject to the power of a court
of competent jurisdiction to make other equitable provision reflecting the
rights conferred in this Indenture upon the Senior Debt of
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the Partnership and the holders thereof with respect to the Securities and the
Holders thereof by a lawful plan or reorganization under applicable bankruptcy
law),
(1) the holders of all Senior Debt of the Partnership shall be
entitled to receive payment in full of the principal thereof, premium, if any,
interest, and any interest thereon, due thereon before the Holders of the
Securities are entitled to receive any payment upon the principal, premium,
interest of or on the Securities or interest on overdue amounts thereof; and
(2) any payment or distribution of assets of the Partnership of any
kind or character, whether in cash, property or securities, to which the Holders
of the Securities or the Trustee (on behalf of the Holders) would be entitled
except for the provisions of this Article XIV shall be paid by the liquidating
trustee or agent or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of Senior Debt of the Partnership or their representative or
representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Debt may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the principal
of, premium, if any, interest, and any interest thereon, on the Senior Debt of
the Partnership held or represented by each, to the extent necessary to make
payment in full of all Senior Debt of the Partnership remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Partnership of any kind or character, whether in
cash, property or securities, shall be received by the Trustee (on behalf of the
Holders) or the Holders of the Securities before all Senior Debt of the
Partnership is paid in full, such payment or distribution shall be paid over to
the holders of such Senior Debt or their representative or representatives or to
the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Debt may have been issued, ratably as aforesaid,
for application to the payment of all Senior Debt remaining unpaid until all
such Senior Debt shall have been paid in full, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt of the Partnership, the
Holders of the Securities shall be subrogated to the rights of the holders of
such Senior Debt to receive payments or distributions of cash, property or
securities of the Partnership applicable to Senior Debt of the Partnership until
the principal, premium, interest, and any interest thereon, of or on the
Securities shall be paid in full and no such payments or distributions to the
Holders of the Securities of cash, property or securities otherwise
distributable to the Senior Debt of the Partnership shall, as between the
Partnership, its creditors other than the holders of Senior Debt of the
Partnership, and the Holders of the Securities, be deemed to be a payment by the
Partnership to or on account of the Securities. It is understood that the
provisions of this Article XIV are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of Senior Debt of the Partnership, on the other hand. Nothing
contained in this Article XIV or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as between the Partnership, its
creditors other than the holders of Senior Debt of the Partnership, and the
Holders of the Securities, the obligation of the Partnership, which is
unconditional and absolute, to pay to the Holders of the Securities the
principal, premium, interest, and any interest thereon, of or on the Securities
as and when the same shall become due and payable in accordance with their
terms, or to affect the relative rights of the Holders of the Securities and
creditors of the Partnership other than the holders of Senior Debt of the
Partnership, nor shall anything herein or in the Securities prevent the Trustee
or the Holder of any Security from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article XIV of the holders of such Senior Debt in respect of
cash, property or securities of the Partnership received upon the exercise of
any such remedy. Upon any payment or distribution of assets of the Partnership
referred to in this Article
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XIV, the Trustee shall be entitled to conclusively rely upon a certificate of
the liquidating trustee or agent or other person making any distribution to the
Trustee for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior Debt of the Partnership and other
indebtedness of the Partnership, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto or to this Article XIV.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt of the Partnership. The Trustee shall not be liable to
any such holder if it shall pay over or distribute to or on behalf of Holders of
Securities or the Partnership moneys or assets to which any holder of Senior
Debt of the Partnership shall be entitled by virtue of this Article XIV. The
rights and claims of the Trustee under Section 607 shall not be subject to the
provisions of this Article XIV.
If the Trustee or any Holder of Securities does not file a proper claim or
proof of debt in the form required in any proceeding referred to above prior to
30 days before the expiration of the time to file such claim in such proceeding,
then the holder of any Senior Debt of the Partnership is hereby authorized, and
has the right, to file an appropriate claim or claims for or on behalf of such
Holder of Securities.
SECTION 1403. Payments on Securities Permitted.
Nothing contained in this Indenture or in any of the Securities shall (1)
affect the obligation of the Partnership to make, or prevent the Partnership
from making, at any time except as provided in Sections 1401 and 1402, payments
of principal, premium, interest, and any interest thereon, of or on the
Securities or (2) prevent the application by the Trustee of any moneys deposited
with it hereunder to the payment of or on account of the principal, premium,
interest or other amounts, and any interest thereon, of or on the Securities
unless the Trustee shall have received at its Corporate Trust Office written
notice of any event prohibiting the making of such payment two Business Days (A)
prior to the date fixed for such payment, (B) prior to the execution of an
instrument to satisfy and discharge this Indenture based upon the deposit of
funds under Section 401(1)(b), (C) prior to the execution of an instrument
acknowledging the defeasance of such Securities pursuant to Section 1302 or (D)
prior to any deposit pursuant to clause (1) of Section 1303 with respect to such
Securities.
SECTION 1404. Authorization of Holders of Securities to Trustee to Effect
Subordination.
Each Holder of Securities by his acceptance thereof, whether upon original
issue or upon transfer or assignment, authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article XIV and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 1405. Notices to Trustee.
The Partnership shall give prompt written notice to a Responsible Officer
of the Trustee located at the Corporate Trust Office of the Trustee of any fact
known to the Partnership which would prevent the making of any payment to or by
the Trustee in respect of the Securities. Notwithstanding the provisions of this
Article XIV or any other provisions of this Indenture, neither the Trustee nor
any Paying Agent (other than the Partnership) shall be charged with knowledge of
the existence of any Senior Debt of the Partnership or of any event which would
prohibit the making of any payment of moneys to or by the Trustee or such Paying
Agent, unless and until the Trustee or such Paying Agent shall have received (in
the case of the Trustee, at its Corporate Trust Office) written notice thereof
from the Partnership or from the holder of any Senior Debt of the Partnership or
from the trustee for or representative of any Senior Debt of the Partnership
together with proof satisfactory to the Trustee of such holding of such Senior
Debt or of the authority of such trustee or representative; provided, however,
that if at least two Business
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Days prior to the date upon which by the terms hereof any such moneys may become
payable for any purpose (including, without limitation, the payment of the
principal, premium, interest, of or on any Security, or any interest thereon) or
the date on which the Trustee shall execute an instrument acknowledging
satisfaction and discharge of this Indenture or the defeasance of Securities
pursuant to Section 1302 or the date on which a deposit pursuant to clause (1)
of Section 1303 is made, the Trustee shall not have received with respect to
such moneys or the moneys deposited with it as a condition to such satisfaction
and discharge or defeasance the notice provided for in this Section 1405, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary, which may be received by it on or after such two
Business Days prior to such date. The Trustee shall be entitled to conclusively
rely on the delivery to it of a written notice by a person representing himself
to be a holder of Senior Debt of the Partnership (or a trustee or representative
on behalf of such holder) to establish that such a notice has been given by a
holder of Senior Debt of the Partnership or a trustee or representative on
behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Debt of the Partnership to participate in any payment or
distribution pursuant to this Article XIV, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Debt of the Partnership held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article XIV
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.
SECTION 1406. Trustee as Holder of Senior Debt.
The Trustee shall be entitled to all the rights set forth in this Article
XIV in respect of any Senior Debt of the Partnership at any time held by it to
the same extent as any other holder of Senior Debt of the Partnership and
nothing in this Indenture shall be construed to deprive the Trustee of any of
its rights as such holder.
SECTION 1407. Modification of Terms of Senior Debt.
Any renewal or extension of the time of payment of any Senior Debt of the
Partnership or the exercise by the holders of Senior Debt of the Partnership of
any of their rights under any instrument creating or evidencing such Senior
Debt, including without limitation the waiver of default thereunder, may be made
or done all without notice to or assent from Holders of the Securities or the
Trustee.
No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any liability
or obligation under or in respect of, or of any of the terms, covenants or
conditions of any indenture or other instrument under which any Senior Debt of
the Partnership is outstanding or of such Senior Debt, whether or not such
release is in accordance with the provisions of any applicable document, shall
in any way alter or affect any of the provisions of this Article XIV or of the
Securities relating to the subordination thereof.
This instrument may be executed with counterpart signature pages or in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
STAR GAS PARTNERS, L.P.
By: Star Gas LLC,
Its General Partner
By:______________________________
Name:
Title:
[Trustee]
By:______________________________
Name:
Title
<PAGE>
EXHIBIT 5.1
Phillips Nizer Benjamin Krim & Ballon LLP
666 Fifth Avenue
New York, New York 10103-0084
January 3, 2000
Star Gas Partners, L.P.
2187 Atlantic Street
Stamford, CT 06912-0011
Re: Registration Statement on Form S-3
----------------------------------
Dear Ladies and Gentlemen:
We refer to the above-captioned registration statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), filed by Star Gas Partners, L.P., a Delaware limited partnership (the
"Partnership"), with the Securities and Exchange Commission, relating to common
units of limited partnership interests in the Partnership and partnership
securities consisting of any class or series of units of limited partnership
interests in the Partnership, any option, right, warrant or appreciation rights
relating to these securities or any other type of equity interest or rights to
acquire any equity interest that the Partnership may issue according to its
partnership agreement (collectively, the "Equity Securities") and senior debt
securities and subordinated debt securities (collectively, the "Debt
Securities") to be issued and sold by the Partnership from time to time pursuant
to Rule 415 under the Act for an aggregate initial offering price not to exceed
$100,000,000.
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings ascribed to them in the Registration Statement.
We have examined (i) the form of the Senior Indenture filed by the
Partnership as Exhibit 4.4 to the Registration Statement to be executed by the
Partnership and the trustee thereunder (the "Senior Indenture"), pursuant to
which the senior Debt Securities may be issued and (ii) the form of the
Subordinated Indenture filed by the Partnership as Exhibit 4.5 to the
Registration Statement to be executed by the Partnership and the trustee
thereunder (the "Subordinated Indenture"), pursuant to which the subordinated
Debt Securities may be issued. In addition, we have made such examination of
law and have examined originals or copies, certified or otherwise authenticated
to our satisfaction, of all such records, agreements and other instruments,
certificates and orders of public officials, certificates of the general partner
of the Partnership and representatives of the Partnership, and other documents
that we have deemed necessary to render the opinions hereinafter set forth.
<PAGE>
Star Gas Partners, L.P.
Page -2-
January 3, 2000
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to the original thereof of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such latter
documents.
Based on the foregoing, we are of the opinion that:
1. The Partnership has been duly formed and is validly existing as a
limited partnership in good standing under the laws of the State of Delaware.
2. With respect to Equity Securities, when (a) the Partnership has
taken all necessary action to approve the issuance of such Equity Securities,
the terms of the offering thereof and related matters and (b) such Equity
Securities have been issued and delivered in accordance with the terms of the
Partnership Agreement and the applicable definitive purchase, underwriting or
similar agreement approved by the Partnership upon payment (or delivery) of the
consideration therefor provided for therein, such Equity Securities will be
validly issued, fully paid and nonassesable.
3. With respect to Debt Securities to be issued under a Senior
Indenture, when (a) the Senior Indenture has been duly authorized and validly
executed and delivered by the Partnership and the Trustee, (b) the Senior
Indenture has been duly qualified under the Trust Indenture Act of 1939, as
amended, (c) the Partnership has taken all necessary action to approve the
issuance and terms of such Debt Securities, the terms of the offering thereof
and related matters and (d) such Debt Securities have been duly executed,
authenticated, issued and delivered in accordance with the terms of the Senior
Indenture and the applicable definitive purchase, underwriting or similar
agreement approved by the Partnership upon payment (or delivery) of the
consideration therefor provided for therein, such Debt Securities will be
legally issued and will constitute valid and legally binding obligations of the
Partnership, enforceable against the Partnership, except as the enforceability
thereof is subject to the effect of (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other law relating to or affecting
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4. With respect to Debt Securities to be issued under a Subordinated
Indenture, when (a) the Subordinated Indenture has been duly authorized and
validly executed and delivered by the Partnership and the Trustee, (b) the
Subordinated Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended, (c) the Partnership has taken all necessary action to approve
the issuance and terms of such Debt Securities, the terms of the offering
thereof and related matters and (d) such Debt Securities have been duly
executed, authenticated, issued and delivered in accordance with the terms of
the Subordinated Indenture and the applicable definitive purchase, underwriting
or similar agreement approved by the Partnership upon payment (or delivery) of
the consideration therefor provided for therein, such Debt Securities will be
legally issued and will constitute valid and legally binding obligations of the
Partnership, enforceable against the Partnership, except as the enforceability
thereof is subject to the effect of (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent
<PAGE>
Star Gas Partners, L.P.
Page -3-
January 3, 2000
conveyance or other laws relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
We are attorneys admitted to practice in the State of New York. Our
opinion relates only to the laws of the State of New York, applicable federal
law of the United States of America and the corporate and limited partnership
laws of Delaware. We express no opinion on the law of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Validity of Securities" in the related Prospectus.
Very truly yours,
/s/
PHILLIPS NIZER BENJAMIN
KRIM & BALLON LLP
<PAGE>
EXHIBIT 8.1
January 3, 2000
Star Gas Partners, L.P.
2187 Atlantic Street
Stamford, Connecticut 06912
Ladies and Gentlemen:
We have acted as special counsel to Star Gas Partners, L.P. (the
"Partnership") and Star Gas LLC in connection with the registration and offering
(the "Offering") of up to $100,000,000 of common units representing limited
partner interests ("Common Units") in the Partnership pursuant to the
Registration Statement on Form S-3 of the Partnership relating to the Common
Units (the "Registration Statement"). In connection therewith, we have
participated in the preparation of the discussion (the "Discussion") set forth
under the caption "Federal Income Tax Considerations" in the prospectus included
in the Registration Statement (the "Prospectus"). Capitalized terms used and not
otherwise defined herein are used as defined in the Prospectus.
The Discussion, subject to the qualifications stated therein,
constitutes our opinion as to the material United States federal income tax
consequences for purchasers of Common Units pursuant to the Offering as of the
date set forth above. We assume no obligation to update this 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 Discussion. The
issuance of such consent does not concede that we are an "expert" for the
purposes of the Securities Act of 1933.
Sincerely,
ANDREWS & KURTH L.L.P.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Star Gas Partners, L.P.
We consent to incorporation by reference in the registration statement to be
filed on Form S-3 of Star Gas Partners, L.P. of our report dated November 30,
1999, relating to the consolidated balance sheets of Star Gas Partners, L.P. and
subsidiary as of September 30, 1998 and 1999, and the related consolidated
statements of operations, partners' capital and cash flows for each of the years
in the three-year period ended September 30, 1999 and related schedule, which
report appears in the September 30, 1999 annual report on Form 10-K of Star Gas
Partners, L.P.
Additionally, we consent to incorporation by reference in the registration
statement to be filed on Form S-3 of Star Gas Partners, L.P. of our report dated
February 16, 1999, relating to the consolidated balance sheets of Petroleum Heat
and Power Co., Inc. and subsidiaries as of December 31, 1997 and 1998, and the
related consolidated statements of operations, changes in shareholders' equity
(deficiency) and cash flows for each of the years in the three-year period ended
December 31, 1998 and related schedule, which report is included in the February
18, 1999 current report on Form 8-K of Star Gas Partners, L.P.
Additionally, we consent to the inclusion in the registration statement to be
filed on Form S-3 of Star Gas Partners, L.P. of our report dated December 30,
1999, relating to the balance sheet of Star Gas LLC as of September 30, 1999,
which report is included herein.
We also consent to the reference to our firm under the heading "Experts" in the
prospectus.
Stamford, Connecticut
December 30, 1999
<PAGE>
EXHIBIT 99.1
INDEPENDENT AUDITORS' REPORT
The Management and Owners of
Star Gas LLC:
We have audited the accompanying balance sheet of Star Gas LLC (the Company) as
of September 30, 1999. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Star Gas LLC as of September 30,
1999, in conformity with generally accepted accounting principles.
KPMG LLP
Stamford, Connecticut
December 30, 1999
<PAGE>
Star Gas LLC
Balance Sheet
As of September 30, 1999
(in thousands)
Assets
Investment in Partnerships $ 994
--------------
Total Assets $ 994
==============
Liabilities and Shareholders' Equity
Shareholders' Equity
Membership Interests $ --
Additional Paid-in Capital 1,581
Retained Deficit (587)
--------------
Shareholders' Equity 994
--------------
Total Liabilities and Shareholders' Equity $ 994
==============
See accompanying note to balance sheet
<PAGE>
NOTE TO BALANCE SHEET
Star Gas LLC is the General Partner of Star Gas Partners, L.P., "the
Partnership" and Star Gas Propane, L.P. The LLC owns a 1.85% interest in Star
Gas Partners, L.P., and a 0.1% interest in Star Gas Propane, L.P. which is
99.9% owned by the Partnership.
The Partnership is a leading distributor of propane and home heating oil in the
United States. Star Gas Propane, L.P., a subsidiary of the Partnership, markets
and distributes propane gas and related products to approximately 186,000 retail
and wholesale customers in the Midwest and Northeast. Petro Holdings, Inc., the
former Petroleum Heat and Power Co., Inc. ("Petro"), an indirect wholly owned
subsidiary of Star Gas Propane, L.P. is the nation's largest distributor of home
heating oil and serves approximately 335,000 customers in the Northeast and
Mid-Atlantic region of the United States.
The General Partner conducts, directs and manages all activities of the
Partnership and is reimbursed on a monthly basis for all direct and indirect
expenses it incurs on their behalf including the cost of employee wages. The
Partnership agreement places significant restrictions on the General Partner's
authority to make Partnership affecting decisions such as possessing or
assigning specific partnership property, admitting a new partner, committing an
act that would not allow the ongoing ordinary business of the Partnership, or
transferring of interest as General Partner. Additionally, the Partnership
agreement allows for the removal of the General Partner by a 2/3 vote of the
common unitholders of the Partnership.
Star Gas LLC was established as the General Partner effective March 26, 1999
when the four shareholders of Star Gas LLC contributed their outstanding shares
of Petro common stock for all of the membership interests in Star Gas LLC. Star
Gas LLC contributed those shares to the Partnership in exchange for 325,729
general partner units, valued at approximately $1,581,000. The results of
operations of Star Gas LLC reflect its share of the results of operations of
the Partnership from March 26, 1999 through September 30, 1999.
