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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 1999
REGISTRATION NO. 333-86057
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HERITAGE PROPANE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 73-1493906
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
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8801 SOUTH YALE AVENUE, SUITE 310 H. MICHAEL KRIMBILL
TULSA, OKLAHOMA 74137 PRESIDENT
(918) 492-7272 HERITAGE PROPANE PARTNERS, L.P.
(Address, including zip code, and telephone 8801 SOUTH YALE AVENUE, SUITE 310
number, including area code, of TULSA, OKLAHOMA 74137
registrant's principal executive (918) 492-7272
offices) (Name, address, including zip code, and telephone number,
including area code, of agent for service)
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With a copy to:
JOSHUA DAVIDSON
BAKER & BOTTS, L.L.P.
ONE SHELL PLAZA
HOUSTON, TEXAS 77002-4995
FAX: (713) 229-1522
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective. [ ]
If the only securities being registered on this Form are to be 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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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.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER 13, 1999
$150,000,000
HERITAGE PROPANE PARTNERS, L.P.
COMMON UNITS
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 traded on the New York Stock Exchange under the
symbol "HPG." On September 10, 1999, the last reported sales price for the
common units as reported on the New York Stock Exchange Composite Transactions
Tape was $22.50 per common unit. We will provide information in the prospectus
supplement for the expected trading market, if any, for the debt securities.
You should carefully consider each of the risk factors described under
"Risk Factors" beginning on page 3 of this Prospectus.
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 buy these
securities in any state where the offer or sale is prohibited.
The date of this Prospectus is , 1999.
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TABLE OF CONTENTS
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WHO WE ARE....................................................................2
ABOUT THIS PROSPECTUS.........................................................2
RISK FACTORS..................................................................3
USE OF PROCEEDS .............................................................12
RATIO OF EARNINGS TO FIXED CHARGES ..........................................13
DESCRIPTION OF COMMON UNITS .................................................13
DESCRIPTION OF DEBT SECURITIES ..............................................16
TAX CONSIDERATIONS ..........................................................28
PLAN OF DISTRIBUTION ........................................................43
FORWARD LOOKING STATEMENTS ..................................................44
WHERE YOU CAN FIND MORE INFORMATION..........................................45
LEGAL OPINIONS ..............................................................46
EXPERTS .....................................................................46
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WHO WE ARE
We are a publicly traded Delaware limited partnership engaged in the
sale, distribution and marketing of propane and other related products in the
United States. We believe that we are the seventh largest retail marketer of
propane in the United States (as measured by retail gallons sold). We currently
serve more than 250,000 residential, commercial, industrial and agricultural
customers from 149 district locations in 26 states. Our operations extend from
coast to coast with concentrations in the western, upper midwestern and
southeastern regions of the United States, with expansion into the northeastern
United States in the last two years.
We maintain our principal executive offices at 8801 South Yale Avenue,
Suite 310, Tulsa, Oklahoma 74137, and our telephone number is (918) 492-7272.
As used in this prospectus, "we," "us," "our" and "Heritage Propane"
mean Heritage Propane Partners, L.P. and, unless the context requires otherwise,
our subsidiary operating partnership, Heritage Operating, L.P., and our wholly
owned subsidiary, Heritage Service Corp. Our subsidiary operating partnership is
sometimes referred to in this prospectus as the "Operating Partnership."
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 and
debt securities described in this prospectus in one or more offerings. The
common units and debt securities are sometimes referred to in this prospectus as
the "Securities." 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 "Where You Can Find More Information."
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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 BUSINESS
Since weather conditions may adversely affect demand for propane, our
financial condition is vulnerable to warm winters
Weather conditions have a significant impact on the demand for propane
for both heating and agricultural purposes. Many of our customers rely heavily
on propane as a heating fuel. Typically, we sell approximately 66% of our retail
propane volume during the peak heating season of October through March. Lower
sales volume due to warmer winter weather will adversely affect our results of
operations. Furthermore, variations in weather in one or more of the regions
where we operate can significantly affect the total volume of propane that we
sell and the profits realized on these sales. In fiscal 1998, temperatures were
significantly warmer than normal in areas in which we sell propane. Agricultural
demand for propane is also affected by weather during the harvest season as poor
harvests reduce demand for propane used in crop drying.
Sudden and sharp propane price increases may adversely affect our
operating results
The amount of gross profit we make selling propane retail depends on
the excess of the sales price we receive over our propane supply costs. Propane
is a commodity and the price we pay for it can change significantly in response
to changes in supply or other market conditions over which we have no control.
Since we may not be able to pass on to our customers immediately or in full all
increases in our wholesale cost of propane, these increases could reduce our
gross profits.
Market volatility may cause us to sell inventory at less than the price
we purchased it, which could adversely affect our 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 would
adversely affect our profits or render sales from such inventory unprofitable.
While we generally attempt to minimize this inventory risk by purchasing propane
on a short-term basis, we may on occasion, depending on inventory and price
outlooks, purchase and store propane at both our service centers and in our
major storage facilities for future resale. We may purchase large volumes of
propane during periods of low demand and low prices, which generally occur
during the summer months, at the then current market price.
We are dependent on our principal suppliers which increases the risk of
an interruption in supply
During the first nine months of fiscal 1999, 67% of our propane was
purchased from domestic suppliers, and 33% was purchased through M-P Oils, Ltd.,
one of our wholly owned subsidiaries. M-P Oils, Ltd. holds a 60% interest in a
Canadian partnership that supplies our volume requirements in the northern
states. Although we believe that alternative sources of propane are readily
available, if we were 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
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material adverse effect on our business. Because we purchase propane from
foreign sources, our business is subject to risks of disruption in foreign
supply.
Because of the highly competitive nature of the retail propane
business, we may not be able to maintain existing customers or acquire
new customers, which would have an adverse impact on our operating
results and financial condition
If we are unable to compete effectively in the propane business, we may
lose existing customers or fail to acquire new customers, which will have a
material adverse effect on our results of operations and financial condition. We
compete with a number of large national and regional firms and several thousand
small independent firms. Because of the relatively low barriers to entry into
the retail propane market, there is potential for small independent propane
retailers, as well as other companies who may not be engaged in retail propane
distribution, to compete with our retail outlets. As a result, we are always
subject to the risk of additional competition in the future. Certain of our
competitors have greater financial resources than we do. Should a competitor
attempt to increase market share by decreasing prices, our financial condition
and results of operations could be materially adversely affected. Generally,
warmer-than-normal weather further intensifies competition. We believe that our
ability to compete effectively depends on the reliability of our service, our
responsiveness to customers and our ability to maintain competitive retail
prices.
Propane competes with other sources of energy, some of which are less
costly for equivalent energy value. We compete for customers against suppliers
of electricity, natural gas and fuel oil. Competition from alternative energy
sources has been increasing as a result of reduced regulation of many utilities,
including natural gas and electricity. Except for certain industrial and
commercial applications, propane is generally not competitive with natural gas
in areas where natural gas pipelines already exist because natural gas is a
significantly less expensive source of energy than propane. The gradual
expansion of the nation's natural gas distribution systems has resulted in the
availability of natural gas in many areas that previously depended upon propane.
Although propane is similar to fuel oil in certain applications and market
demand, propane and fuel oil compete to a lesser extent primarily because of the
cost of converting from one to the other.
If we do not make acquisitions on economically acceptable terms, our
future financial performance will be limited
The retail propane industry is mature, and we foresee only limited
growth in total retail demand for propane. Moreover, because of long-standing
customer relationships that are typical in our industry, the inconvenience of
switching tanks and suppliers and propane's higher cost relative to other energy
sources, such as natural gas, it may be difficult for us to acquire new retail
customers except through acquisitions. Therefore, our ability to grow will
depend primarily upon our ability to acquire other retail propane distributors
and to successfully integrate them into our existing operations and to make
cost-saving changes. We cannot guarantee that we will identify attractive
acquisition candidates in the future, that we will be able to acquire such
businesses on economically acceptable terms or successfully integrate them into
our existing operations and make cost-saving changes, that any acquisition will
not dilute earnings and distributions to our unitholders or that any additional
debt incurred to finance an acquisition will not adversely affect our ability to
make distributions to unitholders. We are subject to certain covenants contained
in our debt agreements that may restrict our ability to incur debt to finance
acquisitions. In addition, to the extent that warm weather or other factors
adversely affects our operating and financial results, our access to capital and
our acquisition activities may be limited.
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 delivering combustible liquids like propane.
As a result, we have been, and are likely to be, a defendant in
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various legal proceedings arising in the ordinary course of business. We
maintain insurance policies with insurers in such amounts and with such
coverages and deductibles as we believe are reasonable and prudent. However, we
cannot guarantee that our insurance will be adequate to protect us from all
material expenses related to potential future claims for personal injury and
property damage or that such levels of insurance will be available at economical
prices.
Energy efficiency and technological advances may affect the demand for
propane and adversely affect our operating results
The national trend toward increased conservation and technological
advances, including installation of improved insulation and the development of
more efficient furnaces and other heating devices, has decreased the demand for
propane by retail customers. We cannot predict how future conservation measures
or technological advances in heating, conservation, energy generation or other
devices might affect our operations.
Our results of operations and financial condition may be adversely
affected by governmental regulation and associated environmental and
regulatory costs
The propane business is subject to a wide range of federal and state
laws and regulations related to environmental and other regulated matters. We
have implemented environmental programs and policies designed to avoid potential
liability and costs under applicable environmental laws. It is possible,
however, that we 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
our operations, storage and transportation of propane. It is possible that
material costs and liabilities will be incurred, including those relating to
claims for damages to property and persons.
RISKS INHERENT IN AN INVESTMENT IN HERITAGE PROPANE
Cash distributions are not guaranteed and may fluctuate with our
performance and other external factors
Because distributions on the common units 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:
o cash flow generated by operations;
o required principal and interest payments on our debt;
o the costs of acquisitions;
o restrictions contained in our debt instruments;
o issuances of debt and equity securities;
o fluctuations in working capital;
o capital expenditures;
o adjustments in reserves made by the general partner in its
discretion;
o prevailing economic conditions; and
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o financial, business and other factors, a number of which will be
beyond our control.
Cash distributions are dependent primarily on cash flow, including from
reserves, and not on profitability, which is affected by non-cash items.
Therefore, cash distributions might be made during periods when we record losses
and might not be made during periods when we record profits.
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 distribution priority of holders of common units terminates at the
end of the subordination period
Currently the common units have the right to receive distributions of
available cash from our operations in an amount equal to $0.50 per unit before
any distributions of such available cash are made on our subordinated units.
This priority right is scheduled to end when certain financial tests, which are
related to generating cash from operations and distributing at least $0.50 per
unit on all common units and subordinated units, are satisfied for each of three
consecutive four-quarter periods ending on or after May 31, 2001. If these
financial tests are met, the subordinated units will convert into common units
and will thereafter share equally with other common units in distributions of
available cash. Pursuant to the terms of the partnership agreement, on July 7,
1999, 925,736 subordinated units converted into common units. The conversion of
the subordinated units was dependent on meeting these financial tests for the
period commencing with our public offering in June 1996. An additional 925,736
subordinated units will convert to common units after May 31, 2000 if these
financial tests are met for the three consecutive four-quarter periods ending on
such date. We met these financial tests for the four-quarter periods ended May
31, 1997, May 31, 1998 and May 31, 1999 and expect that we will meet the
remaining financial test in the four-quarter period ending May 31, 2000. The
period during which the common units have a priority right in distributions and
in which the right of the subordinated units to distributions is subordinated is
referred to as the subordination period.
We may sell additional limited partner interests, diluting existing
interests of unitholders
Our partnership agreement generally allows us to issue additional
limited partner interests and other equity securities without the approval of
the unitholders. During the subordination period, however, which will generally
extend at least through May 31, 2001, 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 or capital improvements that are
accretive, the repayment of certain indebtedness or certain employee benefit
plans. When we issue additional equity securities, your proportionate
partnership interest will decrease and the amount of cash distributed on each
unit and the market price of common units could decrease. Issuance of additional
common units will also diminish the relative voting strength of each previously
outstanding unit. Following the end of the subordination period, there are no
limits on the total number of common units or other equity securities that we
may issue.
Our debt agreements may limit our ability to make distributions to
unitholders and our financial flexibility
As of May 31, 1999, we had outstanding $167 million in senior secured
promissory notes with insurance companies and $22.8 million outstanding under
our bank credit facility. Our leverage may adversely affect our ability to
finance future operations and capital needs, limit our ability to pursue
acquisitions and other business opportunities and make our results of operations
more susceptible to adverse economic conditions. We may in the future incur
additional debt to finance acquisitions or for general business purposes, which
could result in a significant increase in our leverage. The payment of principal
and interest on our debt will reduce the cash available to make distributions on
the common units. We will not be able to make any distributions to our
unitholders if there is or will be an event of default under our debt
agreements. Our ability to make principal and interest payments depends on
future performance, which performance is subject to many factors, several of
which
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will be outside our control. We have granted liens on substantially all of our
personal property (other than vehicles) to secure our existing debt. If an event
of default occurs, the lenders can foreclose on the collateral.
The notes and the bank credit facility contain provisions relating to
changes in ownership. If these provisions are triggered, the outstanding debt
may become due. If that happens, we cannot guarantee that we would be able to
pay the debt. The general partner and its stockholders are not prohibited from
entering into a transaction that would trigger these change-in-ownership
provisions. The notes and the bank credit facility also contain restrictive
covenants that limit our ability to incur additional debt and to engage in
certain transactions. This could reduce our ability to capitalize on business
opportunities that arise. Any new indebtedness could have similar or greater
restrictions.
Our holding company structure may limit our ability to 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 the Operating
Partnership.
Our holding company structure results in two principal risks:
o The Operating Partnership 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
o In any liquidation, reorganization or insolvency proceeding
involving Heritage Propane or in any other proceeding involving
claims of creditors (other than Heritage Propane) of the
Operating Partnership (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 junior to the claims of holders of
any indebtedness of the Operating Partnership.
RISKS ARISING FROM OUR PARTNERSHIP STRUCTURE AND RELATIONSHIPS WITH OUR GENERAL
PARTNER
The general partner is not elected by the unitholders and cannot be
removed without its consent
The general partner manages and operates Heritage Propane. Unlike the
holders of common stock in a corporation, common unitholders will have only
limited voting rights on matters affecting our business. Common unitholders will
have no right to elect the general partner or the directors of the general
partner on an annual or other continuing basis, and the general partner may not
be removed except upon the vote of the holders of at least 66 2/3% of the
outstanding units (including units owned by the general partner and its
affiliates) and the election of a successor general partner by the vote of the
holders of not less than a majority of the outstanding common units and the
holders of not less than a majority of the outstanding subordinated units, each
voting as a separate class. Because the general partner owns all of the
subordinated units and more than one-third of all units, the general partner
cannot be removed without its consent.
Persons owning 20% or more of the common units cannot vote
Any units held by a person that owns 20% or more of any class of units
then outstanding cannot be voted. This limitation does not apply to the general
partner and its affiliates. This provision may:
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o discourage a person or group from attempting to remove the
general partner or otherwise changing management; and
o reduce the price at which the common units will trade under
certain circumstances.
Unitholders may be required to sell their units to the general partner
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 will have the right to acquire all, but not less than all, of those
units at a price no less than their then-current market price. As a consequence,
a unitholder may be required to sell his common units at an undesirable time or
price. The general partner may assign this purchase right to any of its
affiliates or Heritage Propane.
The general partner can protect itself against dilution
Whenever we issue equity securities to any person other than the
general partner and its affiliates, the general partner has the right to
purchase additional limited partnership interests on the same terms to maintain
its percentage interest in Heritage Propane. No other unitholder has a similar
right. Therefore, only the general partner may protect itself against dilution
caused by the issuance of additional equity securities.
Unitholders may not have limited liability in certain circumstances and
may be liable for the return of certain distributions
A number of states have not clearly established limitations on the
liabilities of limited partners for the obligations of a limited partnership.
The unitholders might be held liable for our obligations as if they were a
general partner if:
o a court or government agency determined that we were conducting
business in the state but had not complied with the state's
partnership statute; or
o unitholders' rights to act together to remove or replace the
general partner or take other actions under the partnership
agreement constitute "control" of our business.
Unitholders may have liability to repay distributions
Unitholders will not be liable for assessments in addition to their
initial capital investment in the common units. Under certain circumstances,
however, unitholders may have to repay Heritage Propane amounts wrongfully
returned or distributed to them. Under Delaware law, we may not make a
distribution to you if the distribution causes the liabilities of Heritage
Propane to exceed the fair value of Heritage Propane's assets. Liabilities to
partners on account of their partnership interests and non-recourse liabilities
are not counted for purposes of determining whether a distribution is permitted.
Delaware law provides that a limited partner who receives such a distribution
and knew at the time of the distribution that the distribution violated Delaware
law will be liable to the limited partnership for the distribution amount for
three years from the distribution date. Under Delaware law, an assignee who
becomes a substituted limited partner of a limited partnership is liable for the
obligations of the assignor to make contributions to the partnership. However,
such an assignee is not obligated for liabilities unknown to him at the time he
or she became a limited partner if the liabilities could not be determined from
the partnership agreement.
The partnership agreement modifies the fiduciary duties of the general
partner under Delaware law
Our partnership agreement contains language limiting the liability of
the general partner to us and the unitholders. For example, our partnership
agreement provides that:
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o The general partner does not breach any duty to us or the
unitholders by borrowing funds or approving any borrowing. The
general partner is protected even if the purpose or effect of the
borrowing is to increase incentive distributions to the general
partner or to hasten the conversion of subordinated units into
common units;
o The general partner does not breach any duty to us or the
unitholders by taking any actions consistent with the standards
of reasonable discretion outlined in the definitions of Available
Cash and Operating Surplus contained in our partnership
agreement; and
o The general partner does not breach any standard of care or duty
by resolving conflicts of interest unless the general partner
acts in bad faith.
The modifications of state law standards of fiduciary duty contained in
our partnership agreement may significantly limit the ability of unitholders to
successfully challenge the actions of the general partner as being a breach of
what would otherwise have been a fiduciary duty. These standards include the
highest duties of good faith, fairness and loyalty to the limited partners. Such
a duty of loyalty would generally prohibit a general partner of a Delaware
limited partnership from taking any action or engaging in any transaction for
which it has a conflict of interest. Under the partnership agreement, the
general partner may exercise its broad discretion and authority in the
management of Heritage Propane and the conduct of its operations as long as the
general partner's actions are in the best interest of Heritage Propane.
POTENTIAL CONFLICTS OF INTEREST RELATED TO THE OPERATION OF HERITAGE PROPANE
Certain conflicts of interest could arise among the general partner and
Heritage Propane. Such conflicts may include, among others, the following
situations:
o we do not have any employees and we rely solely on employees of
the general partner and its affiliates;
o under the partnership agreement, we reimburse the general partner
for the costs of managing and operating Heritage Propane;
o decisions of the general partner concerning the amount and timing
of cash expenditures, borrowings, issuances of additional units
and reserves in any quarter may affect the level of cash
available to pay quarterly distributions to unitholders;
o the general partner tries to avoid being personally liable for
Heritage Propane's obligations. The general partner is permitted
to protect its assets in this manner by the partnership
agreement. Under the partnership agreement, the general partner
does not breach its fiduciary duty even if Heritage Propane could
have obtained more favorable terms without limitations on the
general partner's liability;
o under the partnership agreement, the general partner may pay its
affiliates for any services rendered on terms fair and reasonable
to Heritage Propane. The general partner may also enter into
additional contracts with any of its affiliates on Heritage
Propane's behalf. Agreements or contracts between Heritage
Propane and the general partner (and its affiliates) are not the
result of arms length negotiations;
o the general partner does not breach the partnership agreement by
exercising its call rights to purchase limited partnership
interests or by assigning its call rights to one of its
affiliates or to Heritage Propane.
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TAX RISKS
For a general discussion of the expected federal income tax
consequences of owning and disposing of common units, see "Tax Considerations."
Tax treatment is dependent on partnership status
The availability to a common unitholder of the federal income tax
benefits of an investment in the common units depends, in large part, on our
classification as a partnership for federal income tax purposes. Based on
certain representations of the general partner and Heritage Propane, Baker &
Botts, L.L.P., our tax counsel, is of the opinion that, under current law, we
will be classified as a partnership for federal income tax purposes. However, no
ruling from the IRS as to such status has been or is expected to be requested.
Instead, we are relying on the opinion of our tax counsel, which is not binding
on the IRS. One of the representations on which the opinion of our tax counsel
is based is that at least 90% of our gross income for each taxable year will be
"qualifying income" within the meaning of Section 7704 of the Internal Revenue
Code. Whether we will continue to be classified as a partnership in part depends
on our ability to meet this qualifying income test in the future.
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
(currently a 35% federal rate). Distributions to the common unitholders would
generally be taxed a second time as corporate distributions, and no income,
gains, losses or deductions would flow through to the unitholders. Because a tax
would be imposed upon us as an entity, the cash available for distribution to
the common unitholders would be substantially reduced. Treatment of us as a
taxable entity would cause a material reduction in the anticipated cash flow and
after-tax return to the common unitholders, likely causing a substantial
reduction in the value of the common units.
We cannot guarantee that the law will not be changed so as to cause us
to be treated as an association taxable as a corporation for federal income tax
purposes or otherwise to be subject to entity-level taxation. Our partnership
agreement provides that if a law is enacted or existing law is modified or
interpreted in a manner that subjects us to taxation as a corporation or
otherwise subjects us to entity-level taxation for federal, state or local
income tax purposes, certain provisions of our partnership agreement will be
subject to change. Such changes would include a decrease in the minimum
quarterly distribution and the target distribution levels to reflect the impact
of such law on us.
We have not requested an IRS ruling with respect to our classification
as a partnership
We have not requested a ruling from the IRS with respect to our
classification as a partnership for federal income tax purposes, whether our
propane operations generate "qualifying income" under Section 7704 of the
Internal Revenue Code or any other matter affecting us. Accordingly, the IRS may
adopt positions that differ from the conclusions of our tax counsel expressed in
this prospectus or the positions taken by us. It may be necessary to resort to
administrative or court proceedings in an effort to sustain some or all of our
tax counsel's conclusions or the positions taken by us. A court may not concur
with some or all of our conclusions. Any contest with the IRS may materially and
adversely impact the market for the common units and the prices at which they
trade. In addition, the costs of any contest with the IRS will be borne directly
or indirectly by some or all of the unitholders and the general partner.
A unitholder's tax liability could exceed cash distributions on his
units
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, even
if he receives no cash distributions from us. We cannot guarantee that a
unitholder will receive cash distributions equal to his allocable share of our
taxable income or
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even the tax liability to him resulting from that income. Further, a unitholder
may incur a tax liability, in excess of the amount of cash received, upon the
sale of his common units.
Ownership of common units may have adverse tax consequences for
tax-exempt organizations and certain other investors
Investment in common units by certain tax-exempt entities, regulated
investment companies and foreign persons raises issues unique to them. For
example, virtually all of our taxable income allocated to organizations exempt
from federal income tax, including individual retirement accounts and other
retirement plans, will be unrelated business taxable income and thus will be
taxable to the unitholder. Very little of our income will be qualifying income
to a regulated investment company. Distributions to foreign persons will be
reduced by withholding taxes.
Only calendar-year taxpayers may become partners
Only calendar-year taxpayers may purchase common units. Any unitholder
who is not a calendar-year taxpayer will not be admitted to Heritage Propane as
a partner, will not be entitled to receive distributions or federal income tax
allocations from Heritage Propane and may only transfer these interests to a
purchaser or other transferee.
There are limits on the deductibility of losses
In the case of taxpayers subject to the passive loss rules (generally,
individuals and closely held corporations), any losses generated by us will only
be available to offset our future income and cannot be used to offset income
from other activities, including other passive activities or investments. Unused
losses may be deducted when the unitholder disposes of his entire investment in
us in a fully taxable transaction with an unrelated party. A unitholder's share
of our net passive income may be offset by unused losses from us carried over
from prior years, but not by losses from other passive activities, including
losses from other publicly traded partnerships.
Tax shelter registration could increase risk of potential audit by the
IRS
We are registered with the IRS as a "tax shelter." The IRS has issued
us the following tax shelter registration number: 96234000014. Issuance of the
registration number does not indicate that an investment in us or the claimed
tax benefits have been reviewed, examined or approved by the IRS. We cannot
guarantee that we will not be audited by the IRS or that tax adjustments will
not be made. The rights of a unitholder owning less than a 1% profits interest
in us to participate in the income tax audit process are very limited. 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 would bear the cost of any expenses
incurred in connection with an examination of his personal tax return.
Tax gain or loss on disposition of common units could be different than
expected
A unitholder who sells common units will recognize gain or loss equal
to the difference between the amount realized and his tax basis in the common
units. Prior distributions in excess of cumulative net taxable income allocated
for a common unit which decreased a unitholder's tax basis in that common unit
will, in effect, become taxable income if the common unit is sold at a price
greater than the unitholder's tax basis in that common unit, even if the price
is less than his original cost. A portion of the amount realized, whether or not
representing gain, may be ordinary income. Furthermore, should the IRS
successfully contest some conventions used by us, a unitholder could recognize
more gain on the sale of common units than would be the case under those
conventions, without the benefit of decreased income in prior years.
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Reporting of partnership tax information is complicated and subject to
audits
We will furnish each unitholder with a Schedule K-1 that sets forth his
allocable share of income, gains, losses and deductions. In preparing these
schedules, we will use various accounting and reporting conventions and adopt
various depreciation and amortization methods. We cannot guarantee that these
schedules will yield a result that conforms to statutory or regulatory
requirements or to administrative pronouncements of the IRS. Further, our tax
return may be audited, which could result in an audit of a unitholder's
individual tax return and increased liabilities for taxes because of adjustments
resulting from the audit.
There is a possibility of loss of tax benefits relating to
nonuniformity of common units and nonconforming depreciation
conventions
Because we cannot match transferors and transferees of common units,
uniformity of the economic and tax characteristics of the common units to a
purchaser of common units of the same class must be maintained. To maintain
uniformity and for other reasons, we have adopted certain depreciation and
amortization conventions that do not conform with all aspects of certain
proposed and final Treasury Regulations. A successful challenge to those
conventions by the IRS could adversely affect the amount of tax benefits
available to a purchaser of common units and could have a negative impact on the
value of the common units.
There are state, local and other tax considerations
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 he resides or 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. It is the responsibility of each
unitholder to file all United States federal, state and local tax returns that
may be required of him. Our tax counsel has not rendered an opinion on the state
or local tax consequences of an investment in us.
Unitholders may have negative tax consequences if we default on our
debt or sell assets
If we default on any of our debt, the lenders will have the right to
sue us for non-payment. Such an action could cause an investment loss and
negative tax consequences for unitholders through the realization of taxable
income by unitholders without a corresponding cash distribution. Likewise, if we
were to dispose of assets and realize a taxable gain while there is substantial
debt outstanding and proceeds of the sale were applied to the debt, unitholders
could have increased taxable income without a corresponding cash distribution.
USE OF PROCEEDS
We will use the net proceeds from the sale of the Securities for
general business purposes, including debt repayment, future acquisitions,
capital expenditures and working capital. We may change the potential uses of
the net proceeds in a prospectus supplement.
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RATIO OF EARNINGS TO FIXED CHARGES
The table below sets forth the ratio of earnings to fixed charges of the
Partnership and for Heritage Holdings, Inc. (Predecessor) for the periods
indicated.
<TABLE>
<CAPTION>
Nine Months Two Months Ten Months
Ended Year Ended Ended Ended Year Ended
May 31, August 31, August 31, June 30, August 31,
------- ---------- ---------- ---------- -----------
1999 1998 1998 1997 1996(1) 1996 1995 1994
---- ---- ----- ---- -------- ---- ---- ----
(Predecessor) (Predecessor)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings 2.3x 2.3x 1.5x 1.4x - 1.4x 1.0x 1.1x
to fixed charges
</TABLE>
(1) For the two months ended August 31, 1996, earnings were inadequate to
cover fixed charges by $1.8 million.
These computations include Heritage Propane and the Operating Partnership on a
consolidated basis for the periods indicated and Heritage Holdings, Inc.
(Predecessor) and subsidiaries on a consolidated basis for the periods
indicated. For these ratios, "earnings" is the amount resulting from adding the
following items:
- pre-tax income from continuing operations, before equity in earnings of
affiliates;
- distributed income of equity investees; and
- fixed charges.
The term "fixed charges" means the sum of the following:
- interest expensed;
- amortized debt issuance costs; and
- estimated interest element of rentals.
Earnings from continuing operations for the periods presented were reduced by
certain non-cash expenses, consisting principally of depreciation and
amortization and a non-cash employee stock ownership plan charge. Such non-cash
charges, excluding amortized debt issuance costs, totaled $8.6 million for the
year ended August 31, 1994, $8.7 million for the year ended August 31, 1995,
$7.2 million for the ten months ended June 30, 1996, $1.7 million for the two
months ended August 31, 1996, $10.8 million for the year ended August 31, 1997,
$13.4 million for the year ended August 31, 1998, and $9.8 million and $10.7
million for the nine months ended May 31, 1998 and 1999, respectively.
DESCRIPTION OF COMMON UNITS
NUMBER OF UNITS
As of September 13, 1999, we had 5,825,674 common units outstanding,
representing an approximate 66% limited partner interest in Heritage Propane,
and 2,777,207 subordinated units outstanding, representing an approximate 32%
limited partner interest in Heritage Propane. Heritage Holdings, Inc., our
general partner, owns all of the subordinated units and 1,116,243 of the common
units as well as the 2% general partner interest. The common units and the
subordinated units represent limited partner interests in Heritage Propane,
which entitle the holders thereof to participate in distributions and exercise
the rights and privileges available to limited partners under our partnership
agreement. A copy of our partnership agreement is filed as an exhibit to the
registration statement of which this prospectus is a part. A summary of the
important provisions of our partnership agreement is included in our reports
filed with the SEC.
Under our partnership agreement we may issue, without further
unitholder action, an unlimited number of additional limited partner interests
and other equity securities with such rights, preferences and privileges as
shall be established by the general partner in its sole discretion, except that,
during the subordination period, we may not issue equity securities senior to
the common units or an aggregate of more than 2,012,500 common units
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or other units having rights to distributions or in liquidation ranking on a
parity with the common units without the prior approval of at least a majority
of the outstanding common units voting as a class and at least a majority of the
outstanding subordinated units voting as a class; provided that, we may issue an
unlimited number of additional common units or parity securities prior to the
end of the subordination period and without unitholder approval in connection
with certain accretive acquisitions or the repayment of up to $30 million of
certain indebtedness.
COMMON UNITS
Listing
Our outstanding common units are listed on the NYSE under the symbol
"HPG." Any additional common units we issue will also be listed on the NYSE.
Voting
Each record holder of a unit has a vote according to his percentage
interest in Heritage Propane; provided that, if at any time any person or group
(other than our general partner and its affiliates) owns beneficially 20% or
more of all common units, any common units owned by that person or group shall
not be voted on any matter and shall not be considered to be outstanding when
sending notices of a meeting of unitholders (unless otherwise required by law),
calculating required votes, determining the presence of a quorum or for other
similar purposes under our partnership agreement. Except as otherwise provided
by law or our partnership agreement, the holders of common units and
subordinated units vote as one class.
Distributions
Our partnership agreement requires us to distribute all of our
"Available Cash" to our unitholders and our general partner within 45 days
following the end of each fiscal quarter. "Available Cash" generally means, with
respect to any fiscal quarter of Heritage Propane, all of our cash on hand at
the end of each quarter, less reserves established by our general partner in its
sole discretion to provide for the proper conduct of our business, to comply
with applicable law or agreements, or to provide funds for future distributions
to partners.
Currently, the common units have the right to receive distributions of
Available Cash from our operations in an amount equal to $0.50 per unit before
any distributions of such Available Cash are made on the subordinated units.
This subordination period is scheduled to end when certain financial tests,
which are related to generating cash from operations and distributing at least
$0.50 per unit on all common units and subordinated units, are satisfied for
each of three consecutive four-quarter periods ending on or after May 31, 2001.
If these financial tests are met, the subordinated units will convert into
common units and will thereafter share equally with other common units in
distributions of Available Cash. Pursuant to the terms of the partnership
agreement, on July 7, 1999, 925,736 subordinated units converted into common
units. The conversion of the subordinated units was dependent on meeting these
financial tests for the period commencing with our public offering in June 1996.
An additional 925,736 subordinated units will convert to common units after May
31, 2000 if these financial tests are met for the three consecutive four-quarter
periods ending on such date. We met these financial tests for the four-quarter
periods ended May 31, 1997, May 31, 1998 and May 31, 1999 and expect that we
will meet the remaining financial tests in the four-quarter period ending May
31, 2000; however, there can be no assurance that we will meet the remaining
financial tests in the three consecutive four-quarter periods ending May 31,
2000 or in any subsequent three consecutive four-quarter periods.
During the subordination period we distribute Available Cash from our
operations as follows:
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o first, 98% to the holders of common units, pro rata, and 2% to
the general partner, until the holders of common units have
received $0.50 per common unit for such quarter and any prior
quarter in which they failed to receive $0.50 per common unit;
o second, 98% to the holders of subordinated units, pro rata, and
2% to the general partner, until the holders of subordinated
units have received $0.50 per subordinated unit for such quarter;
o third, 98% to all unitholders, pro rata, and 2% to the general
partner, until all unitholders have received $0.55 per unit for
such quarter;
o fourth, 85% to all unitholders, pro rata, and 15% to the general
partner, until all unitholders have received $0.635 per unit for
such quarter;
o fifth, 75% to all unitholders, pro rata, and 25% to the general
partner, until all unitholders have received $0.825 per unit for
such quarter; and
o sixth, thereafter 50% to all unitholders, pro rata, and 50% to
the general partner.
Following the end of the subordination period, Available Cash from our
operations will be distributed as follows:
o first, 98% to all unitholders, pro rata, and 2% to the general
partner, until all unitholders have received $0.50 per unit for
such quarter;
o second, 98% to all unitholders, pro rata, and 2% to the general
partner, until all unitholders have received $0.55 per unit for
such quarter;
o third, 85% to all unitholders, pro rata, and 15% to the general
partner, until all unitholders have received $0.635 per unit for
such quarter;
o fourth, 75% to all unitholders, pro rata, and 25% to the general
partner, until all unitholders have received $0.825 per unit for
such quarter; and
o fifth, thereafter 50% to all unitholders, pro rata, and 50% to
the general partner.
Our quarterly distribution of Available Cash is currently $.5625 per
unit per quarter.
TRANSFER AGENT AND REGISTRAR
Our transfer agent and registrar for the common units is American Stock
Transfer & Trust Company. You may contact them at the following address:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005-2301
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<PAGE> 17
DESCRIPTION OF DEBT SECURITIES
GENERAL
The debt securities will be:
o our direct secured or unsecured general obligations; and
o 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 summarized the material provisions of the Indentures in the
following order:
o those provisions that apply only to the Senior Indenture;
o those provisions that apply only to the Subordinated Indenture;
and
o 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 this section, references to Heritage Propane relate only to Heritage
Propane Partners, L.P., the issuer of the debt securities, and not to our
Subsidiaries. In the Indentures, the term "Subsidiary" means, with respect to
any person:
o 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
o 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.
At present, our only Subsidiaries are the Operating Partnership and Heritage
Service Corp.
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<PAGE> 18
SPECIFIC 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:
o whether the debt securities are senior or subordinated debt
securities;
o the title of the debt securities;
o the total principal amount of the debt securities;
o the assets, if any, that are pledged as security for the payment
of the debt securities;
o whether we will issue the debt 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;
o the prices at which we will issue the debt securities;
o the portion of the principal amount that will be payable if the
maturity of the debt securities is accelerated;
o the currency or currency unit in which the debt securities will
be payable, if not U.S. dollars;
o any right we may have to defer payments of interest by extending
the dates payments are due and whether interest on those deferred
amounts will be payable as well;
o the dates on which the principal of the debt securities will be
payable;
o the interest rate that the debt securities will bear and the
interest payment dates for the debt securities;
o any conversion or exchange provisions;
o any optional redemption provisions;
o any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the debt securities;
o any changes to or additional Events of Default or covenants; and
o any other terms of the debt securities.
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:
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<PAGE> 19
o limit our ability to put liens on our principal assets; and
o 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 Heritage Propane 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 the
Senior Indenture or thereafter acquired, to secure any debt of Heritage Propane
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
Heritage Propane 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 Heritage Propane 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 Heritage Propane 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
Heritage Propane 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 and any
expenses of Heritage Propane 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 Heritage Propane or
any Subsidiary.
Notwithstanding the foregoing, under the Senior Indenture, Heritage
Propane 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 Heritage Propane
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-leasebacks covenant described below) does not exceed 10% of
Consolidated Net Tangible Assets (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 Heritage Propane or any of its Subsidiaries or
impair the use of such property in the operation of the business
of Heritage Propane or any of its Subsidiaries;
(2) any statutory or governmental lien or lien arising by operation
of law, or any mechanics', repairmen's, materialmen's,
suppliers', vendors', 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 Heritage
Propane 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 Heritage
Propane or any Subsidiary resulting from the exercise of any
rights arising out of defaults on receivables;
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<PAGE> 21
(8) any lien incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance,
temporary disability, social security, retiree health or similar
laws or regulations or to secure obligations imposed by statute
or governmental regulations;
(9) any lien in favor of Heritage Propane 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 Heritage Propane 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 Heritage Propane 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 the Indenture
(including the debt securities), including the amount of all
accrued interest thereon and reasonable fees and expenses and
premium, if any, incurred by Heritage Propane 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; or
(14) any lien upon or deposits of any assets to secure performance of
bids, trade contracts, leases or statutory obligations.
"Consolidated Net Tangible Assets" means, at any date of determination,
the total amount of assets after deducting therefrom:
(1) all current liabilities (excluding (A) any current liabilities
that by their terms are extendable or renewable at the option of
the obligor thereon to a time more than 12 months after the time
as of which the amount thereof is being computed, and (B) current
maturities of debt), and
(2) the value (net of any applicable reserves) of all goodwill, trade
names, trademarks, patents and other like intangible assets, all
as set forth, or on a pro forma basis would be set forth, on the
consolidated balance sheet of Heritage Propane and its
consolidated subsidiaries for Heritage Propane's most recently
completed fiscal quarter, prepared in accordance with generally
accepted accounting principles.
Restriction on Sale-Leasebacks
The Senior Indenture will provide that Heritage Propane will not, and
will not permit any Subsidiary to, engage in the sale or transfer by Heritage
Propane or any Subsidiary of any property or assets to a person (other than
Heritage Propane or a Subsidiary) and the taking back by Heritage Propane or any
Subsidiary, as the case may be, of a lease of such property or assets (a
"Sale-Leaseback Transaction"), unless:
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(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) Heritage Propane 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) Heritage Propane 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
Heritage Propane 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 Heritage Propane or its
Subsidiaries.
"Attributable Indebtedness," when used with respect to any 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 Heritage
Propane 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 (10), inclusive, of the second
paragraph of the limitation on liens covenant described above, do not exceed 10%
of Consolidated Net Tangible Assets.
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, including guarantees of Heritage Propane for
money borrowed by Heritage Propane, not expressed to be subordinate or junior in
right of payment to any other indebtedness of Heritage Propane.
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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:
o we or our property are involved in any voluntary or involuntary
liquidation or bankruptcy;
o we fail to pay the principal, interest, any premium or any other
amounts on any Senior Debt when due; or
o 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.
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 will 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:
o the remaining or acquiring entity is organized under the laws of
the United States, any state or the District of Columbia;
o the remaining or acquiring entity assumes Heritage Propane's
obligations under the Indentures; and
o 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:
o change the stated maturity of the principal of or any installment
of principal of or interest on any debt security
o reduce the principal amount of, the interest rate on or the
premium payable upon redemption of any debt security
o change the redemption date for any debt security
o change our obligation, if any, to pay additional amounts
o reduce the principal amount of an original discount debt security
payable upon acceleration of maturity
o change the coin or currency in which any debt security or any
premium or interest on any debt security is payable
o change the redemption right of any holder
o impair the right to institute suit for the enforcement of any
payment on any debt security
o 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
o reduce quorum or voting requirements
o change our obligation to maintain an office or agency in the
places and for the purposes required by the Indenture
o 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:
o 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
o to add covenants and events of default or to surrender any rights
we have under the Indenture
o to make any change that does not adversely affect any outstanding
debt securities of a series in any material respect
o to secure the senior debt securities as described above under
"Provisions Only in the Senior Indenture -- Limitations on Liens"
o to provide for successor trustees
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o 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.
EVENTS OF DEFAULT AND REMEDIES
"Event of Default" when used in an Indenture, will mean any of the
following:
o failure to pay the principal of or any premium on any debt
security when due;
o failure to pay interest on any debt security for 30 days;
o failure to perform any other covenant in the Indenture that
continues for 60 days after being given written notice;
o certain events of bankruptcy, insolvency or reorganization of
Heritage Propane; or
o 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 indemnity. 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.
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.
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MINIMUM DENOMINATIONS
Unless the prospectus supplement for each issuance of debt securities
states otherwise the 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:
o 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
o 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:
o DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered
under applicable law and a successor depositary is not appointed
by us within 90 days; or
o we determine not to require all of the notes of a series to be
represented by a global note and notify the Trustee of our
decision.
THE TRUSTEE
Resignation or Removal of Trustee
Under provisions of the Indentures and the Trust Indenture Act of 1939,
as amended, governing trustee conflicts of interest, any uncured Event of
Default with respect to any series of senior debt securities will force the
trustee to resign as trustee under either the Subordinated Indenture or the
Senior Indenture. Also, any uncured Event of Default with respect to any series
of subordinated debt securities will force the trustee to resign as trustee
under either the Senior Indenture or the 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 Heritage Propane
Each Indenture will contain certain limitations on the right of the
Trustee thereunder, in the event that it becomes a creditor of Heritage Propane,
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.
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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.
TAX CONSIDERATIONS
This section is a summary of material tax considerations that may be
relevant to prospective unitholders and, to the extent set forth below under "--
Legal Opinions and Advice," expresses the opinion of Baker & Botts, L.L.P.,
special counsel to Heritage Propane, insofar as it relates to matters of law and
legal conclusions. This section is based upon current provisions of the Internal
Revenue Code, existing and proposed regulations thereunder and current
administrative rulings and court decisions as of September 13, 1999, all of
which are subject to change. Subsequent changes in such authorities may cause
the tax consequences to vary substantially from the consequences described
below. Unless the context otherwise requires, references in this section to "us"
are references to Heritage Propane and the Operating Partnership.
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 common units.
LEGAL OPINIONS AND ADVICE
Counsel is of the opinion that, as of September 13, 1999 and based on
the accuracy of the representations and subject to the qualifications set forth
in the detailed discussion that follows, for federal income tax purposes (i)
Heritage Propane and the Operating Partnership will each be treated as a
partnership, and (ii) owners of common units, with certain exceptions, as
described in "--Limited Partner Status" below, will be treated as partners of
Heritage Propane, but not the Operating Partnership. 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 September 13, 1999. All
references to "us," "we" or "our" are to Heritage Propane and not Baker & Botts,
L.L.P.
We have not requested, and do not expect to request, a ruling from the
IRS with respect to our classification as a partnership for federal income tax
purposes, whether our propane operations generate "qualifying income" under
Section 7704 of the Internal Revenue Code or any other matter affecting us or
prospective unitholders. Instead, we have relied, and will rely, on the opinions
of counsel as to these matters. An opinion of counsel represents only that
counsel's best legal judgment and does not bind the IRS or the courts. No
assurance can be provided that the opinions and statements set forth herein
would be sustained by a court if contested by the IRS. Any such contest with the
IRS may materially and adversely impact the market for the common units and the
prices at which common units trade even if we prevail. 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 our
treatment, or an investment in Heritage Propane, will not be significantly
modified by future legislative or administrative changes or court decisions. Any
such modification may or may not be retroactively applied.
For the reasons hereinafter described, counsel has not rendered an
opinion with respect to the following specific federal income tax issues:
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(1) the treatment of a unitholder whose common units are loaned to a
short seller to cover a short sale of common units (see "--Tax
Treatment of Unitholders-- Treatment of Short Sales");
(2) whether a unitholder acquiring common units in separate
transactions must maintain a single aggregate adjusted tax basis
in his common units (see "--Disposition of Common 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 Common Units--Allocations Between Transferors
and Transferees"); and
(4) whether our method for depreciating Section 743 adjustments is
sustainable (see "--Tax Treatment of Operations--Section 754
Election").
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 to a partner is in
excess of the partner's adjusted basis in his partnership interest.
We have not requested, and do not expect to request any ruling from the
IRS as to the status of Heritage Propane or the Operating Partnership as a
partnership for federal income tax purposes. Instead we have relied on the
opinion of counsel that, based upon the Internal Revenue Code, Treasury
Regulations, published revenue rulings and court decisions and representations
described below, Heritage Propane and the Operating Partnership will each be
classified as a partnership for federal income tax purposes. In rendering its
opinion, counsel has relied on certain factual representations made by Heritage
Propane and the general partner. Such factual matters are as follows:
(a) Neither Heritage Propane nor the Operating Partnership has
elected or will elect to be treated as an association or
corporation;
(b) Heritage Propane and the Operating Partnership have been and will
be operated in accordance with:
(1) all applicable partnership statutes;
(2) the partnership agreement or operating partnership
agreement (whichever is applicable);
and
(3) the description of the applicable agreement in this
Prospectus; and
(c) For each taxable year, more than 90% of our gross income will be
derived from:
(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 as to which counsel has or will opine are
"qualifying income" within the meaning of Section 7704(d)
of the Internal Revenue Code.
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Section 7704 of the Internal Revenue Code provides that publicly-traded
partnerships will, as a general rule, be taxed as corporations. However, an
exception, referred to as the "Qualifying Income Exception," exists with respect
to publicly-traded partnerships of which 90% or more of the gross income for
every taxable year consists of "qualifying income." Qualifying income includes
interest from other than a financial business, dividends and income and gains
from the processing, transportation and marketing of crude oil, natural gas, and
products thereof, including the retail and wholesale marketing of propane,
certain hedging activities and the transportation of propane and natural gas
liquids. Based upon the representations of Heritage Propane 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 constitutes qualifying income.
If we fail to meet the Qualifying Income Exception, other than a
failure which is determined by the IRS to be inadvertent and which is cured
within a reasonable time after discovery, we will be treated as if we
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 us.
This contribution and liquidation should be tax-free to unitholders and Heritage
Propane, 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 Heritage Propane or the Operating Partnership were treated as an
association 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 our net income would be
taxed to Heritage Propane or the Operating Partnership at corporate rates. In
addition, any distributions we made to a unitholder would be treated as either
taxable dividend income, to the extent of Heritage Propane's 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
common units, or taxable capital gain, after the unitholder's tax basis in the
common units is reduced to zero. Accordingly, treatment of either Heritage
Propane or the Operating Partnership 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 common units.
The discussion below is based on the assumption that we will be
classified as a partnership for federal income tax purposes.
TAX TREATMENT OF UNITHOLDERS
Limited Partner Status
Unitholders who have become our limited partners will be treated as our
partners for federal income tax purposes. Counsel is of the opinion that
assignees who have executed and delivered Transfer Applications, and are
awaiting admission as limited partners, and unitholders whose common 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
common units will be treated as our partners for federal income tax purposes.
Because there is no direct authority addressing assignees of common 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, it is not clear whether such assignees will be
treated as partners of Heritage Propane for federal income tax purposes.
Furthermore, a purchaser or other transferee of common units who does not
execute and deliver a Transfer Application may not receive certain federal
income tax information or reports furnished to record holders of common units
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 with respect
to such common units.
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A beneficial owner of common units whose common 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 common units for federal income tax
purposes. See "--Tax Treatment of Unitholders--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 such a unitholder would therefore be fully taxable as
ordinary income. These holders should consult their own tax advisors with
respect to their status as our partners for federal income tax purposes.
Flow-through of Taxable Income
We will not pay any federal income tax. Instead, each unitholder must
report on his income tax return his allocable share of our income, gains, losses
and deductions without regard to whether corresponding cash distributions are
received by that unitholder. Consequently, a unitholder may be allocated a share
of our income even if he has not received a cash distribution. Each unitholder
must include in income his allocable share of our income, gain, loss and
deduction for our taxable year ending with or within his taxable year.
Treatment of Partnership Distributions
Distributions by us 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
common units immediately before the distribution. Our cash distributions in
excess of a unitholder's tax basis generally will be considered to be gain from
the sale or exchange of the common units, taxable in accordance with the rules
described under "--Disposition of Common 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 that 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 "--Tax Treatment of Unitholders--Limitations on
Deductibility of Partnership Losses."
A decrease in a unitholder's percentage interest in us because of our
issuance of additional common units will decrease such unitholder's share of
nonrecourse liabilities, and thus will result in a corresponding deemed
distribution of cash. A non-pro rata distribution of money or property may
result in ordinary income to a unitholder, regardless of his tax basis in his
common units, if such distribution reduces the unitholder's share of our
"unrealized receivables," including depreciation recapture, and/or substantially
appreciated "inventory items," both as defined in Section 751 of the Internal
Revenue Code, and collectively, "Section 751 Assets". To that extent, the
unitholder will be treated as having been distributed his proportionate share of
the Section 751 Assets and having exchanged such assets with us in return for
the non-pro rata portion of the actual distribution made to him. This latter
deemed exchange will generally result in the unitholder's realization of
ordinary income under Section 751(b) of the Internal Revenue Code. Such income
will equal the excess of (1) the non-pro rata portion of such distribution over
(2) the unitholder's tax basis for the share of such Section 751 Assets deemed
relinquished in the exchange.
Alternative Minimum Tax
Each unitholder will be required to take into account his distributive
share of any of our items of income, gain, deduction or loss for purposes of the
alternative minimum tax. A portion of our depreciation deductions may be treated
as an item of tax preference for this purpose. A unitholder's alternative
minimum taxable income derived from us may be higher than his share of our net
income because we may use accelerated methods of depreciation for purposes of
computing federal taxable income or loss. The minimum tax rate for noncorporate
taxpayers is 26% on the first $175,000 of alternative minimum taxable income in
excess of the exemption amount
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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 common units on their liability for the alternative minimum tax.
Basis of Common Units
A unitholder will have an initial tax basis for his common units equal
to the amount he paid for the common units plus his share of our nonrecourse
liabilities. That basis will be increased by his share of our income and by any
increases in his share of our nonrecourse liabilities. That basis will be
decreased, but not below zero, by distributions from us, by his share of our
losses, by any decrease in his share of our nonrecourse liabilities and by his
share of our expenditures that are not deductible in computing our taxable
income and are not required to be capitalized. A limited partner will have no
share of our debt which is recourse to the general partner, but will have a
share, generally based on his share of profits, of our nonrecourse liabilities.
See "--Disposition of Common Units--Recognition of Gain or Loss."
Limitations on Deductibility of Partnership Losses
The deduction by a unitholder of his share of our losses will be
limited to his tax basis in his common 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 certain
tax-exempt organizations, to the amount for which the unitholder is considered
to be "at risk" with respect to our activities, if that is less than the
unitholder's tax basis. A unitholder must recapture losses deducted in previous
years to the extent that our distributions cause the unitholder's 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 the unitholder's tax basis or at risk
amount, whichever is the limiting factor, subsequently increases. Upon the
taxable disposition of a common 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 his tax basis
in his common units, excluding any portion of that basis attributable to his
share of our nonrecourse liabilities, reduced by any amount of money the
unitholder borrows to acquire or hold his common units if the lender of such
borrowed funds owns an interest in us, is related to the unitholder or can look
only to common units for repayment. A unitholder's at risk amount will increase
or decrease as the tax basis of the unitholder's common 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 certain closely-held corporations and personal service
corporations can deduct losses from passive activities, generally, activities in
which the taxpayer does not materially participate, only to the extent of the
taxpayer's income from those passive activities. The passive loss limitations
are applied separately with respect to each publicly-traded partnership.
Consequently, any passive losses we generate will only be available to offset
future income generated by us and will not be available to offset income from
other passive activities or investments, including other publicly-traded
partnerships, or salary or active business income. Passive losses which are not
deductible because they exceed a unitholder's share of our income may be
deducted in full when he disposes of his entire investment in us in a fully
taxable transaction to 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 from us, but it may not be offset by any other current or
carryover losses from other passive activities, including those attributable to
other publicly-traded partnerships. The IRS has announced that Treasury
Regulations will be issued which
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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 net passive income from us 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 common unit. Net investment income includes gross income
from property held for investment and amounts treated as portfolio income
pursuant to 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 Partnership Income, Gain, Loss and Deduction
In general, if we have a net profit, our items of income, gain, loss
and deduction are allocated among the general partner and the unitholders in
accordance with their respective percentage interests in us. At any time that
distributions are made to the common units and not to the subordinated units, or
that incentive distributions are made to the general partner, gross income is
allocated to the recipients to the extent of such distributions. If we have a
net loss, our items of income, gain, loss and deduction are generally allocated
first, to the general partner and the unitholders in accordance with their
respective percentage interests to the extent of their positive capital
accounts, as maintained under the partnership agreement, and, second, to the
general partner.
As required by Section 704(c) of the Internal Revenue Code and as
permitted by its Regulations, certain items of our income, deduction, gain and
loss are allocated to account for the difference between the tax basis and fair
market value of property contributed or deemed contributed to us by each of our
partners, referred to in this discussion as "Contributed Property," and to
account for the difference between the fair market value of our assets and their
carrying value on our books at the time of any offering made pursuant to this
prospectus. The effect of these allocations to a unitholder purchasing common
units pursuant to this prospectus will be essentially the same as if the tax
basis of our assets were equal to their fair market value at the time of
purchase. In addition, certain items of recapture income are allocated to the
extent possible to the partner allocated the deduction or curative allocation
giving rise to the treatment of such 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 partnership income,
gain, loss or deduction, other than an allocation required by Section 704(c) of
the Internal Revenue Code to eliminate the difference between a partner's "book"
capital account, credited with the fair market value of Contributed Property,
and "tax" capital
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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 the partnership, which will be determined by taking
into account all the facts and circumstances, including the partners' relative
contributions to the partnership, 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, with the exception of the issues
described in "Tax Treatment of Operations--Section 754 Election" and
"Disposition of Common Units--Allocations Between Transferors and Transferees,"
allocations under our partnership agreement will be given effect for federal
income tax purposes in determining a partner's distributive share of an item of
income, gain, loss or deduction.
TAX TREATMENT OF OPERATIONS
Accounting Method and Taxable Year
We currently 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 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.
Initial Tax Basis, Depreciation and Amortization
We use the tax basis of our various assets for purposes of computing
depreciation and cost recovery deductions and, ultimately, gain or loss on the
disposition of such assets. Our assets initially had an aggregate tax basis
equal to the tax basis of the assets in the possession of the general partner
immediately prior to our formation. The federal income tax burden associated
with the difference between the fair market value of our property and its tax
basis immediately prior to this offering will be borne by partners holding
interests in us prior to this offering. See "--Tax Treatment of Unitholders--
Allocation of Partnership Income, Gain, Loss and Deduction."
If we dispose of depreciable property by sale, foreclosure, or
otherwise, all or a portion of any gain, determined by reference to the amount
of depreciation previously deducted and the nature of the property, may be
subject to the recapture rules and taxed as ordinary income rather than capital
gain. Similarly, a partner who has taken cost recovery or depreciation
deductions with respect to property owned by us 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 Partnership Income, Gain, Loss and
Deduction" and "--Disposition of Common Units--Recognition of Gain or Loss."
Costs incurred in our organization are being amortized over a period of
60 months. The costs incurred in promoting the issuance of common units (i.e.
syndication expenses) must be capitalized and cannot be deducted currently,
ratably or upon our termination. Uncertainties exist regarding the
classification of costs as organization expenses, which may be amortized, and as
syndication expenses, which may not be amortized. Under recently adopted
regulations, underwriting discounts and commissions are treated as a syndication
cost.
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Section 754 Election
We have made the election permitted by Section 754 of the Internal
Revenue Code. The election is irrevocable without the consent of the IRS. The
election generally permits us to adjust a common unit purchaser's tax basis in
our assets ("inside basis") pursuant to Section 743(b) of the Internal Revenue
Code to reflect his purchase price. This election does not apply to a person who
purchases units directly from us. The Section 743(b) adjustment belongs to the
purchaser and not to other partners. For purposes of this discussion, a
partner's inside basis in our assets will be considered to have two components:
(1) his share of our tax basis in such assets ("common basis") and (2) his
Section 743(b) adjustment to that basis.
Proposed Treasury Regulations under Section 743 of the Internal Revenue
Code require a partnership that adopts the remedial allocation method (which we
have done) to depreciate a portion of the Section 743(b) adjustment attributable
to recovery property 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 common 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 Internal Revenue Code
rather than cost recovery deductions under Section 168 of the Internal Revenue
Code is generally required to be depreciated using either the straight-line
method or the 150% declining balance method. Although the proposed regulations
under Section 743 will likely eliminate many of the inconsistencies 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 common basis in such
properties. Pursuant to our partnership agreement, we have adopted a convention
to preserve the uniformity of common units even if such convention is not
consistent with certain Treasury Regulations. See "--Uniformity of Common
Units."
Although counsel is unable to opine as to the validity of this method,
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 common basis of such property, or treat that portion as
non-amortizable to the extent attributable to property the common 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), which is not expected to directly apply to a material portion
of our assets, and Proposed Treasury Regulation Section 1.197-2(g)(3). To the
extent such Section 743(b) adjustment is attributable to appreciation in value
in excess of the unamortized Book-Tax Disparity, we will apply the rules
described in the Treasury Regulations 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 common units in the
same month would receive depreciation or amortization, whether attributable to
common 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 certain unitholders. See "--Uniformity of Common
Units."
The allocation of the Section 743(b) adjustment must be made in
accordance with the Internal Revenue Code. The IRS may seek to reallocate some
or all of any Section 743(b) adjustment not so allocated by us to goodwill.
Goodwill, 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 common units is higher than such common units' share of the aggregate tax
basis 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
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sale of our assets. Conversely, a Section 754 election is disadvantageous if the
transferee's tax basis in his common units is lower than such common units'
share of the aggregate tax basis of our assets immediately prior to the
transfer. Thus, the fair market value of the common units may be affected either
favorably or adversely by the election.
The calculations involved in the Section 754 election are complex and
are made by us on the basis of certain assumptions as to the value of our assets
and other matters. There is no assurance that the determinations made by us 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 common units may be allocated more income than he would
have been allocated had the election not been revoked.
Valuation of Partnership Property and Basis of Properties
The federal income tax consequences of the ownership and disposition of
common units will depend in part on our estimates as to 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 with respect to
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 subsequently found to be incorrect,
the character and amount of items of income, gain, loss or deductions previously
reported by unitholders might change, and unitholders might be required to
adjust their tax liability for prior years.
Entity-Level Collections
If we are required or elect under applicable law to pay any federal,
state or local income tax on behalf of any unitholder or the general partner or
any former unitholder, we are authorized to pay those taxes from our funds. Such
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 unitholders. We are authorized to amend our partnership
agreement in the manner necessary to maintain uniformity of intrinsic tax
characteristics of common units and to adjust subsequent distributions, so that
after giving effect to such distributions, the priority and characterization of
distributions otherwise applicable under our partnership agreement is maintained
as nearly as is practicable. Payments by us as described above could give rise
to an overpayment of tax on behalf of an individual partner in which event the
partner could file a claim for credit or refund.
Treatment of Short Sales
A unitholder whose common units are loaned to a "short seller" to cover
a short sale of common units may be considered as having disposed of ownership
of those common units. If so, he would no longer be a partner with respect to
those common 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 with respect to those common units would not be reportable by
the unitholder, any cash distributions received by the unitholder with respect
to those common units would be fully taxable and all of such 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 common 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 Common Units--Recognition of Gain or Loss."
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DISPOSITION OF COMMON UNITS
Recognition of Gain or Loss
A unitholder will recognize gain or loss on a sale of common units
equal to the difference between the amount realized and the unitholder's tax
basis for the common units sold. A unitholder's amount realized will be measured
by the sum of the cash or the fair market value of other property received 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 common 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
allocated for a common unit which decreased a unitholder's tax basis in such
common unit will, in effect, become taxable income if the common unit is sold at
a price greater than the unitholder's tax basis in such common 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 "--Tax Treatment of
Operations--Section 754 Election," attributable to an amortizable Section 197
intangible after a sale of common units, a unitholder could realize additional
gain from the sale of common units than had such convention 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, with the result
to him of greater overall taxable income than appropriate. Counsel is unable to
opine as to the validity of the convention because of the lack of specific
regulatory authority for its use.
Gain or loss recognized by a unitholder, other than a "dealer" in
common units, on the sale or exchange of a common unit will generally be taxable
as capital gain or loss. Capital gain recognized on the sale of common units
held for more than 12 months will generally be taxed at 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 Internal Revenue 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 common unit and may be recognized
even if there is a net taxable loss realized on the sale of the common unit.
Thus, a unitholder may recognize both ordinary income and a capital loss upon a
disposition of common 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 common units, a unitholder will be
unable to select high or low basis common units to sell as would be the case
with corporate stock. It is not clear whether the ruling applies to us because,
similar to corporate stock, our interests are evidenced by separate
certificates. Accordingly, counsel is unable to opine as to the effect such
ruling will have on the unitholders. A unitholder considering the purchase of
additional common units or a sale of common units purchased in separate
transactions should consult his tax advisor as to the possible consequences of
such ruling.
Certain provisions of the Internal Revenue Code affect the taxation of
certain financial products and securities, including partnership interests by
treating a taxpayer as having sold an "appreciated" partnership
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interest, one in which gain would be recognized if it were sold, assigned or
otherwise terminated at its fair market value, if the taxpayer or a related
person enters into,
(1) a short sale;
(2) an offsetting notional principal contract; or
(3) a futures or forward contract with respect to the partnership
interest or substantially identical property.
Moreover, if a taxpayer has previously entered into a short sale, an
offsetting notional principal contract or a futures or forward contract with
respect to a partnership interest, the taxpayer will be treated as having sold
such position if the taxpayer or a related person then acquires the partnership
interest or substantially similar property. The Secretary of the Treasury is
also authorized to issue regulations that treat a taxpayer that enters into
transactions or positions that have substantially the same effect as the
preceding transactions as having constructively sold the financial position.
Allocations Between Transferors and Transferees
In general, our taxable income and losses are determined annually, are
prorated on a monthly basis and are subsequently apportioned among the
unitholders in proportion to the number of common units owned by each of them as
of the opening of the principal national securities exchange on which the common
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 is 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 common units in the open
market may be allocated income, gain, loss and deduction accrued after the date
of transfer.
The use of this method may not be permitted under existing Treasury
Regulations. Accordingly, counsel is unable to opine on the validity of this
method of allocating income and deductions between the transferors and the
transferees of common 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.
Any unitholder who owns common units at any time during a quarter and
who disposes of such common units prior to the record date set for a cash
distribution with respect to such quarter will be allocated items of our income,
gain, loss and deductions attributable to such quarter but will not be entitled
to receive that cash distribution.
Notification Requirements
A unitholder who sells or exchanges common 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 with respect 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 transferee of a common unit
will be required to furnish a statement to the IRS, filed with its income tax
return for the taxable year in which the sale or exchange
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occurred, that sets forth the amount of the consideration paid for the common
unit. Failure to satisfy these reporting obligations may lead to the imposition
of substantial penalties.
Constructive Termination
We will be considered to have been terminated if there is a sale or
exchange of 50% or more of the total interests in our capital and profits within
a 12-month period. If we elect to be treated as a large partnership, which we
currently do not intend to do, we will not terminate by reason of the sale or
exchange of interests in us. A termination of Heritage Propane will cause a
termination of the Operating Partnership. Any such termination would result in
the closing of our taxable year for all unitholders. New tax elections required
to be made by us, including a new election under Section 754 of the Internal
Revenue Code, must be made subsequent to a termination, and a termination could
result in a deferral of our deductions for depreciation. A termination could
also result in penalties if we were unable to determine that the termination had
occurred. Moreover, a termination might either accelerate the application of, or
subject us to, any tax legislation enacted prior to the termination.
UNIFORMITY OF COMMON UNITS
Because we cannot match transferors and transferees of common units,
uniformity of the economic and tax characteristics of the common units to a
purchaser of such common 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 common units. See "--Tax Treatment of
Operations--Section 754 Election."
Although counsel is unable to opine on the validity of this method, we
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 common basis of such property, or treat that portion as
nonamortizable, to the extent attributable to property the common 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), which is not expected to directly apply to a material portion
of our assets, and Proposed Treasury Regulation Section 1.197-2(g)(3). See
"--Tax Treatment of Operations--Section 754 Election." To the extent such
Section 743(b) adjustment is attributable to appreciation in value in excess of
the unamortized Book-Tax Disparity, we apply the rules described in the Treasury
Regulations and legislative history. If we determine that this position cannot
reasonably be taken, we may adopt a depreciation and amortization convention
under which all purchasers acquiring common units in the same month would
receive depreciation and amortization deductions, whether attributable to common
basis or Section 743(b) basis, 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 common 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 such a challenge were sustained, the
uniformity of common units might be affected, and the gain from the sale of
common units might be increased without the benefit of additional deductions.
See "--Disposition of Common Units--Recognition of Gain or Loss."
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TAX-EXEMPT ORGANIZATIONS AND CERTAIN OTHER INVESTORS
Ownership of common 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 exempt from federal income tax,
including individual retirement accounts and other retirement plans, are subject
to federal income tax on unrelated business taxable income. Virtually all of our
taxable income allocated to such an organization will be unrelated business
taxable income and thus will be taxable to such a unitholder.
A regulated investment company or "mutual fund" is required to derive
90% or more of its gross income from interest, dividends, 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.
Non-resident aliens and foreign corporations, trusts or estates which
hold common units will be considered to be engaged in business in the United
States on account of ownership of common units. As a consequence they will be
required to file federal tax returns in respect of their share of our income,
gain, loss or deduction and pay federal income tax at regular rates on any net
income or gain. Generally, a partnership is required to pay a withholding tax on
the portion of the partnership's income which is effectively connected with the
conduct of a United States trade or business and which is allocable to the
foreign partners, regardless of whether any actual distributions have been made
to such partners. However, under rules applicable to publicly-traded
partnerships, we will withhold taxes (currently at the rate of 39.6%) on actual
cash distributions made quarterly to foreign unitholders. Each foreign
unitholder must obtain a taxpayer identification number from the IRS and submit
that number to our Transfer Agent on a Form W-8 in order to obtain credit for
the taxes withheld. A change in applicable law may require us to change these
procedures.
Because a foreign corporation which owns common 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 at a rate of 30%, in addition to
regular federal income tax, on its allocable 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. An
income tax treaty between the United States and the country in which the foreign
corporate unitholder is a "qualified resident" may reduce or eliminate this tax.
In addition, such a unitholder is subject to special information reporting
requirements under Section 6038C of the Internal Revenue Code.
Under a ruling of the IRS, a foreign unitholder who sells or otherwise
disposes of a common unit will be subject to federal income tax on gain realized
on the disposition of such common unit to the extent that such gain is
effectively connected with a United States trade or business of the foreign
unitholder. Apart from the ruling, a foreign unitholder will not be taxed upon
the disposition of a common unit if that foreign unitholder has held less than
5% in value of the common units during the five-year period ending on the date
of the disposition and if the common units are regularly traded on an
established securities market at the time of the disposition.
ADMINISTRATIVE MATTERS
Information Returns and Audit Procedures
We intend to furnish to each unitholder, within 90 days after the close
of each calendar year, certain tax information, including a Substitute Schedule
K-1, which sets forth such 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 in the previous
discussion, 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 which conforms to the requirements of the
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Internal Revenue Code, Treasury Regulations or administrative interpretations of
the IRS. We cannot assure prospective 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 common units.
The IRS may audit our federal income tax information returns.
Adjustments resulting from any such audit may require each unitholder to adjust
a prior year's tax liability, and possibly may result in an audit of the
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 Internal Revenue Code provides
for one partner to be designated as the "Tax Matters Partner" for these
purposes. Our partnership agreement appoints the general partner as our Tax
Matters Partner.
The Tax Matters Partner will make certain elections on our behalf and
on behalf of the unitholders and can extend the statute of limitations for
assessment of tax deficiencies against unitholders with respect to items in our
returns. The Tax Matters Partner may bind a unitholder with less than a 1%
profits interest in us to a settlement with the IRS unless that unitholder
elects, by filing a statement with the IRS, not to give 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 our 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. However, if we elect to be treated as a
large partnership, which we do not intend to do because of the costs of
application, a unitholder will not have a 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. Partners in electing large partnerships are required to treat all
items from the partnership's return in a manner consistent with such return. If
we elect to be treated as a large partnership, each partner would take into
account separately his share of the following items, determined at the
partnership level: (1) taxable income or loss from passive loss limitation
activities; (2) taxable income or loss from other activities, such as portfolio
income or loss; (3) net capital gains to the extent allocable to passive loss
limitation activities and other activities; (4) tax exempt interest; (5) a net
alternative minimum tax adjustment separately computed for passive loss
limitation activities and other activities; (6) general credits; (7) low-income
housing credit; (8) rehabilitation credit; (9) foreign income taxes; (10) credit
for producing fuel from a nonconventional source; and (11) any other items the
Secretary of Treasury deems appropriate. Moreover, miscellaneous itemized
deductions would not be passed through to the partners and 30% of those
deductions would be used at the partnership level.
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 such adjustments are made. Alternatively, a large partnership could elect
to or, in some circumstances, could be required to directly pay the tax
resulting from any such adjustments. In either case, therefore, unitholders of
an electing large partnership could bear significant costs associated with tax
adjustments relating to periods predating their acquisition of units. We do not
expect to elect to have the large partnership provisions apply to us because of
the cost of their application.
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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 (i) a person that is not a United States person, (ii) a foreign government,
an international organization or any wholly-owned agency or instrumentality of
either of the foregoing, or (iii) a tax-exempt entity; (c) the amount and
description of common units held, acquired or transferred for the beneficial
owner; and (d) certain 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 certain
information on common units they acquire, hold or transfer for their own
account. A penalty of $50 per failure, up to a maximum of $100,000 per calendar
year, is imposed by the Internal Revenue Code for failure to report such
information to us. The nominee is required to supply the beneficial owner of the
common units with the information furnished to us.
Registration as a Tax Shelter
The Internal Revenue Code requires that "tax shelters" be registered
with the Secretary of the Treasury. The temporary Treasury Regulations
interpreting the tax shelter registration provisions of the Internal Revenue
Code are extremely broad. It is arguable that we are not subject to the
registration requirement on the basis that we do not constitute a tax shelter.
However, the general partner, as our principal organizer, has registered us as a
tax shelter with the Secretary of the Treasury in the absence of assurance that
we are not 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 us the following tax shelter registration number:
96234000014.
ISSUANCE OF THE REGISTRATION NUMBER DOES NOT INDICATE THAT AN
INVESTMENT IN US 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 common unit in a subsequent
transaction must furnish the registration number to the transferee. The penalty
for failure of the transferor of a common unit to furnish the registration
number to the transferee is $100 for each such failure. The unitholders must
disclose our tax shelter registration number on Form 8271 to be attached to the
tax return on which any deduction, loss or other benefit generated by us is
claimed or our income is included. A unitholder who fails to disclose the tax
shelter registration number on his return, without reasonable cause for that
failure, will be subject to a $250 penalty for each failure. Any penalties
discussed herein are not deductible for federal income tax purposes.
Registration as a tax shelter may increase the risk of an audit.
Accuracy-Related Penalties
An additional tax equal to 20% of the amount of any portion of an
underpayment of tax which is attributable to one or more specified causes,
including negligence or disregard of rules or regulations, substantial
understatements of income tax and substantial valuation misstatements, is
imposed by the Internal Revenue Code. No penalty will be imposed, however, with
respect to any portion of an underpayment if it is shown that there was a
reasonable cause for that portion and that the taxpayer acted in good faith with
respect to that portion.
A substantial understatement of income tax in any taxable year exists
if the amount of the understatement exceeds the greater of 10% of the tax
required to be shown on the return for the taxable year or $5,000 ($10,000 for
most corporations). The amount of any understatement subject to penalty
generally is reduced if any portion is attributable to a position adopted on the
return (i) with respect to which there is, or was, "substantial authority" or
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(ii) 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 us. If any
item of our 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 our
return. In addition, we will make a reasonable effort to furnish sufficient
information for unitholders to make adequate disclosure on their returns to
avoid liability for this penalty.
A substantial valuation misstatement exists if the value of any
property, or the adjusted basis of any property, claimed on a tax return is 200%
or more of the amount determined to be the correct amount of such valuation or
adjusted basis. No penalty is imposed unless the portion of the underpayment
attributable to a substantial valuation misstatement exceeds $5,000 ($10,000 for
most corporations). If the valuation claimed on a return is 400% or more than
the correct valuation, the penalty imposed increases to 40%.
STATE, LOCAL AND OTHER TAX CONSIDERATIONS
In addition to federal income taxes, 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 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 us. We currently conduct business in 26 states. Many of these
states currently impose a state income tax. 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. Some of the states may require us, or we may elect, to withhold a
percentage of income from amounts to be distributed to a unitholder who is not a
resident of the state. Withholding, the amount of which may be greater or less
than a particular unitholder's income tax liability to the state, generally does
not relieve 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
future operations, we anticipate that any amounts required to be withheld will
not be material.
IT IS THE RESPONSIBILITY OF EACH UNITHOLDER TO INVESTIGATE THE LEGAL
AND TAX CONSEQUENCES, UNDER THE LAWS OF PERTINENT STATES AND LOCALITIES OF HIS
INVESTMENT IN US. ACCORDINGLY, EACH PROSPECTIVE UNITHOLDER SHOULD CONSULT, AND
MUST DEPEND UPON, HIS OWN TAX COUNSEL OR OTHER ADVISOR WITH REGARD TO THOSE
MATTERS. FURTHER, IT IS THE RESPONSIBILITY OF EACH UNITHOLDER TO FILE ALL STATE
AND LOCAL, AS WELL AS U.S. FEDERAL, TAX RETURNS THAT MAY BE REQUIRED OF SUCH
UNITHOLDER. COUNSEL HAS NOT RENDERED AN OPINION ON THE STATE OR LOCAL TAX
CONSEQUENCES OF AN INVESTMENT IN US.
PLAN OF DISTRIBUTION
We may sell the Securities covered by this prospectus, directly,
through agents, or to or through underwriters or dealers (possibly including our
affiliates). Read the prospectus supplement to find the terms of the Securities
offering, including:
o the names of any underwriters, dealers or agents;
o the offering price;
o underwriting discounts;
o sales agents' commissions;
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o other forms of underwriter or agent compensation;
o discounts, concessions or commissions that underwriters may pass
on to other dealers;
o any exchange on which the Securities are listed.
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 the
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.
During and after an offering through underwriters, the underwriters
may purchase and sell the Securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters also may impose a penalty bid, which means that selling
concessions allowed to syndicate members or other broker-dealers for the
offered securities sold for their account may be reclaimed by the syndicate if
the offered securities are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the offered securities, which may be higher than the
price that might otherwise prevail in the open market. If commenced, the
underwriters may discontinue these activities at any 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 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.
Any brokers or dealers that participate in the distribution of the
Securities may be "underwriters" within the meaning of the Securities Act for
such sales. Profits, commissions, discounts or concessions received by any such
broker or dealer may be underwriting discounts and commissions under the
Securities Act.
We may, through agreements, indemnify underwriters, dealers or agents
who participate in the distribution of the Securities against certain
liabilities including liabilities under the Securities Act. We may also provide
funds for payments such underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents, and their affiliates may conduct business with
us and our affiliates in the ordinary course of their businesses.
FORWARD LOOKING STATEMENTS
Some information in this prospectus or any prospectus supplement may
contain forward-looking statements. Such statements use forward-looking words
such as "anticipate," "continue," "estimate," "expect," "may," "will," or other
similar words. These statements discuss future expectations or contain
projections. Specific factors which could cause actual results to differ from
those in the forward-looking statements, include:
o the effect of weather conditions on demand for propane;
o price and availability of propane supplies;
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o the availability of capacity to transport propane to market
areas;
o competition from other energy sources and within the propane
industry;
o operating risks incidental to transporting, sorting, and
distributing propane;
o changes in interest rates;
o governmental legislation and regulations;
o energy efficiency and technology trends;
o our ability to acquire other retail propane distributors and
successfully integrate them into our existing operations and make
cost saving changes;
o our ability to obtain new customers and retain existing
customers;
o the condition of the capital markets in the United States; and .
o the political and economic stability of the oil producing nations
of the world.
When considering forward-looking statements, you should keep in mind
the risk factors described in "Risk Factors" above. 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 statements in:
o this prospectus;
o documents incorporated in this prospectus by reference;
o reports filed with the SEC;
o press releases; or
o oral statements made by us or any of our officers or other
persons acting on our behalf.
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 public reference room maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room.
We also provide information to the NYSE because the common units are
traded on the NYSE. You may obtain reports and other information at the offices
of the NYSE at 20 Broad Street, New York, New York 10002.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose to you important information
contained in other documents filed with the SEC by referring you to those
documents. The information incorporated by reference is an important part of
this prospectus. Information
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we later file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below:
o our annual report on Form 10-K for the year ended August 31,
1998;
o our quarterly reports on Form 10-Q for the quarters ended
November 30, 1998, February 28, 1999 and May 31, 1999;
o the description of the common units in our registration statement
on Form 8-A (File No. 1-11727) filed pursuant to the Securities
Exchange Act of 1934 on May 14, 1996 and any amendments or
reports filed to update the description; and
o all documents filed by us under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 between the date of this
prospectus and the termination of the registration statement.
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.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Heritage Propane Partners, L.P.
8801 S. Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Attention: H. Michael Krimbill
Telephone: (918) 492-7272
You should only rely on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are making offers of
the securities only in states where the offer is permitted. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of those documents.
LEGAL OPINIONS
Certain legal matters relating to the Securities being offered will be
passed upon for us by Baker & Botts, L.L.P., Houston, Texas. If certain legal
matters in connection with an offering of Securities made by this prospectus and
a related prospectus supplement are passed on by counsel for the underwriters of
such offering, that counsel will be named in the applicable prospectus
supplement relating to that offering.
EXPERTS
The consolidated financial statements of Heritage Propane Partners,
L.P. incorporated by reference and the consolidated balance sheet of Heritage
Holdings, Inc. included as an exhibit to this registration statement, to the
extent and for the periods indicated in their reports, have been audited by
Arthur Andersen LLP, independent public accountants, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We will incur and pay the following costs of this transaction. All
amounts other than the Securities and Exchange Commission registration fee are
estimated.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 41,700
Legal fees and expenses 50,000
Accounting fees and expenses 15,000
Printing expenses 25,000
Transfer Agent and Registrar fees and expenses 10,000
Miscellaneous 8,300
---------
Total $ 150,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The partnership agreement of Heritage Propane provides that Heritage
Propane will indemnify the general partner, any departing partner, any person
who is or was an affiliate of the general partner or any departing partner, and
any person who is or was an officer, director, partner or trustee of the general
partner or any departing partner or any affiliate of the general partner or any
departing partner, or any person who is or was serving at the request of the
general partner or any departing partner or any affiliate of the general partner
or any departing partner as an officer, director, employee, partner, agent or
trustee of another person (each, an "Indemnitee"), to the fullest extent
permitted by law, from and against any and all losses, claims, damages,
liabilities (joint and several), expenses (including, without limitation, legal
fees and expenses), judgments, fines, penalties, interest, settlements and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as any of the foregoing; provided that in
each case the Indemnitee acted in good faith and in a manner that such
Indemnitee reasonably believed to be in or not opposed to the best interests of
Heritage Propane and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful. Any indemnification under these
provisions will be only out of the assets of Heritage Propane, and the general
partner shall not be personally liable for, or have any obligation to contribute
or loan funds or assets to Heritage Propane to enable it to effectuate, such
indemnification. Heritage Propane is authorized to purchase (or to reimburse the
general partner or its affiliates for the cost of) insurance against liabilities
asserted against and expenses incurred by such persons in connection with
Heritage Propane's activities, regardless of whether Heritage Propane would have
the power to indemnify such person against such liabilities under the provisions
described above.
ITEM 16. EXHIBITS
**1.1 - Form of Underwriting Agreement
***3.1 - Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (Exhibit 3.1 to Heritage Propane's
registration statement on Form S-1, File No. 333-4018,
filed on June 21, 1996)
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4.1 - Form of Senior Indenture (filed herewith)
4.2 - Form of Subordinated Indenture (filed herewith)
5.1 - Opinion of Baker & Botts, L.L.P. as to the legality of
the securities registered hereby (filed herewith)
8.1 - Opinion of Baker & Botts, L.L.P. as to tax matters
(filed herewith)
*12.1 - Computation of ratio of earnings to fixed charges
23.1 - Consent of Baker & Botts, L.L.P. (included in Exhibits
5.1 and 8.1)
23.2 - Consent of Arthur Andersen LLP (filed herewith)
*24.1 - Power of Attorney (included on signature page)
**26.1 - Form T-1 Statement of Eligibility and Qualification
99.1 - Balance Sheet of Heritage Holdings, Inc. (filed
herewith)
- --------------------------------
* Previously filed
** To be filed by a post-effective amendment to this
registration statement or as an exhibit to a current report
on Form 8-K.
*** Incorporated by reference.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and/or persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Heritage Propane of expenses incurred or paid by a
director, officer or controlling person of Heritage Propane in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
Heritage Propane 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.
The undersigned registrant hereby undertakes:
(1) 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, represents a fundamental
change in the information set forth in the registration
statement;
(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 1(i) and 1(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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the registration statement.
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(2) 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.
(3) 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.
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.
II-3
<PAGE> 51
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Tulsa, State of Oklahoma,
on September 13, 1999.
HERITAGE PROPANE PARTNERS, L.P.
(A Delaware Limited Partnership)
By: HERITAGE HOLDINGS, INC.
as General Partner
By: /s/ James E. Bertelsmeyer
-------------------------------
James E. Bertelsmeyer
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ James E. Bertelsmeyer Chairman of the Board, Chief Executive Officer September 13, 1999
- --------------------------------- and Director (Principal Executive Officer)
James E. Bertelsmeyer
* Director September 13, 1999
- ---------------------------------
J. T. Atkins
* Director September 13, 1999
- ---------------------------------
Bill W. Byrne
* Director September 13, 1999
- ---------------------------------
J. Charles Sawyer
* President and Chief Financial Officer (Principal September 13, 1999
- --------------------------------- Financial Officer and Principal Accounting Officer)
H. Michael Krimbill
</TABLE>
* By: /s/ JAMES E. BERTELSMEYER
---------------------------
James E. Bertelsmeyer
Attorney-in-fact
II-4
<PAGE> 52
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- ------------
<S> <C> <C>
**1.1 - Form of Underwriting Agreement
***3.1 - Agreement of Limited Partnership of Heritage Propane Partners,
L.P. (Exhibit 3.1 to Heritage Propane's registration statement on
Form S-1, File No. 333-4018, filed on June 21, 1996)
4.1 - Form of Senior Indenture (filed herewith)
4.2 - Form of Subordinated Indenture (filed herewith)
5.1 - Opinion of Baker & Botts, L.L.P. as to the legality of the
securities registered hereby (filed herewith)
8.1 - Opinion of Baker & Botts, L.L.P. as to tax matters (filed
herewith)
*12.1 - Computation of ratio of earnings to fixed charges
23.1 - Consent of Baker & Botts, L.L.P. (included in Exhibits 5.1 and
8.1)
23.2 - Consent of Arthur Andersen LLP (filed herewith)
*24.1 - Power of Attorney (included on signature page)
**26.1 - Form T-1 Statement of Eligibility and Qualification
99.1 - Balance Sheet of Heritage Holdings, Inc. (filed herewith)
- -----------------
</TABLE>
* Previously filed.
** To be filed by a post-effective amendment to this registration
statement or as an exhibit to a current report on Form 8-K.
*** Incorporated by reference.
II-5
<PAGE> 1
EXHIBIT 4.1
Draft: September 10, 1999
================================================================================
HERITAGE PROPANE PARTNERS, L.P.
Issuer
and
-----------------
Trustee
-----------------
INDENTURE
Dated as of _____________, 1999
-----------------
SENIOR DEBT SECURITIES
-----------------
================================================================================
<PAGE> 2
HERITAGE PROPANE 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.
<PAGE> 3
TABLE OF CONTENTS
-------------
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions................................................................................1
Section 102. Compliance Certificates and Opinions......................................................11
Section 103. Form of Documents Delivered to Trustee....................................................11
Section 104. Acts of Holders; Record Dates.............................................................12
Section 105. Notices, Etc., to Trustee and Partnership.................................................13
Section 106. Notice to Holders; Waiver.................................................................13
Section 107. Conflict with Trust Indenture Act.........................................................14
Section 108. Effect of Headings and Table of Contents..................................................14
Section 109. Successors and Assigns....................................................................14
Section 110. Separability Clause.......................................................................14
Section 111. Benefits of Indenture.....................................................................15
Section 112. Governing Law.............................................................................15
Section 113. Legal Holidays............................................................................15
Section 114. Language of Notices, Etc..................................................................15
Section 115. Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners ...............................................15
ARTICLE II SECURITY FORMS
Section 201. Forms Generally...........................................................................16
Section 202. Form of Face of Security..................................................................16
Section 203. Form of Reverse of Security...............................................................19
Section 204. Global Securities.........................................................................24
Section 205. Form of Trustee's Certificate and Authorization ..........................................25
ARTICLE III THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series......................................................25
Section 302. Denominations.............................................................................29
Section 303. Execution, Authentication, Delivery and Dating............................................29
Section 304. Temporary Securities......................................................................31
Section 305. Registration, Registration of Transfer and Exchange.......................................31
Section 306. Mutilated, Destroyed, Lost and Stolen Securities..........................................33
Section 307. Payment of Interest; Interest Rights Preserved............................................34
Section 308. Persons Deemed Owners.....................................................................35
Section 309. Cancellation..............................................................................36
Section 310. Computation of Interest...................................................................36
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 311. CUSIP Numbers.............................................................................36
ARTICLE IV SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture...................................................36
Section 402. Application of Trust Money................................................................38
ARTICLE V REMEDIES
Section 501. Events of Default.........................................................................38
Section 502. Acceleration of Maturity; Rescission and Annulment........................................39
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee...........................40
Section 504. Trustee May File Proofs of Claim..........................................................41
Section 505. Trustee May Enforce Claims Without Possession of Securities...............................41
Section 506. Application of Money Collected............................................................41
Section 507. Limitation on Suits.......................................................................42
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest..............................................................................43
Section 509. Restoration of Rights and Remedies........................................................43
Section 510. Rights and Remedies Cumulative............................................................43
Section 511. Delay or Omission Not Waiver..............................................................43
Section 512. Control by Holders........................................................................44
Section 513. Waiver of Past Defaults...................................................................44
Section 514. Undertaking for Costs.....................................................................44
Section 515. Waiver of Usury, Stay or Extension Laws...................................................45
ARTICLE VI THE TRUSTEE
Section 601. Certain Duties and Responsibilities.......................................................45
Section 602. Notice of Defaults........................................................................45
Section 603. Certain Rights of Trustee.................................................................46
Section 604. Not Responsible for Recitals or Issuance of Securities....................................47
Section 605. May Hold Securities.......................................................................47
Section 606. Money Held in Trust.......................................................................47
Section 607. Compensation and Reimbursement............................................................47
Section 608. Disqualification; Conflicting Interests...................................................48
Section 609. Corporate Trustee Required; Eligibility...................................................48
Section 610. Resignation and Removal; Appointment of Successor.........................................48
Section 611. Acceptance of Appointment by Successor....................................................50
Section 612. Merger, Conversion, Consolidation or Succession to Business...............................51
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 613. Preferential Collection of Claims Against Partnership.....................................51
Section 614. Appointment of Authenticating Agent.......................................................51
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP
Section 701. Partnership to Furnish Trustee Names and Addresses of Holders.............................53
Section 702. Preservation of Information; Communications to Holders....................................53
Section 703. Reports by Trustee........................................................................54
Section 704. Reports by Partnership....................................................................54
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Partnership May Consolidate, Etc., Only on Certain Terms..................................55
Section 802. Successor Substituted.....................................................................55
ARTICLE IX SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders........................................56
Section 902. Supplemental Indentures with Consent of Holders...........................................57
Section 903. Execution of Supplemental Indentures......................................................58
Section 904. Effect of Supplemental Indentures.........................................................58
Section 905. Conformity with Trust Indenture Act.......................................................58
Section 906. Reference in Securities to Supplemental Indentures........................................58
ARTICLE X COVENANTS
Section 1001. Payment of Principal, Premium and Interest................................................59
Section 1002. Maintenance of Office or Agency...........................................................59
Section 1003. Money for Securities Payments to Be Held in Trust.........................................60
Section 1004. Statement by Officers as to Default.......................................................61
Section 1005. Existence.................................................................................61
Section 1006. Limitations on Liens......................................................................61
Section 1007. Restriction of Sale-Leaseback Transaction.................................................63
Section 1008. Waiver of Certain Covenants...............................................................64
ARTICLE XI REDEMPTION OF SECURITIES
Section 1101. Applicability of Article..................................................................64
Section 1102. Election to Redeem; Notice to Trustee.....................................................64
Section 1103. Selection by Trustee of Securities to be Redeemed.........................................65
Section 1104. Notice of Redemption......................................................................65
Section 1105. Deposit of Redemption Price...............................................................66
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 1106. Securities Payable on Redemption Date.....................................................66
Section 1107. Securities Redeemed in Part...............................................................66
ARTICLE XII SINKING FUNDS
Section 1201. Applicability of Article..................................................................67
Section 1202. Satisfaction of Sinking Fund Payments with Securities.....................................67
Section 1203. Redemption of Securities for Sinking Fund.................................................67
ARTICLE XIII DEFEASANCE
Section 1301. Applicability of Article..................................................................68
Section 1302. Legal Defeasance..........................................................................68
Section 1303. Covenant Defeasance.......................................................................70
Section 1304. Application by Trustee of Funds Deposited for Payment of Securities.......................71
Section 1305. Repayment to Partnership..................................................................72
</TABLE>
iv
<PAGE> 7
INDENTURE dated as of __________, 1999, between HERITAGE PROPANE
PARTNERS, L.P., a Delaware limited partnership (the "Partnership"), having its
principal office at 8801 South Yale Avenue, Suite 310, Tulsa, Oklahoma 74137
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
1
<PAGE> 8
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.
"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.
2
<PAGE> 9
"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.
"Consolidated Net Tangible Assets" means, at any date of
determination, the total amount of assets after deducting therefrom (x) all
current liabilities (excluding (A) any current liabilities that by their terms
are extendable or renewable at the option of the obligor thereon to a time more
than 12 months after the time as of which the amount thereof is being computed,
and (B) current maturities of long-term debt), and (y) the value (net of any
applicable reserves) of all goodwill, trade names, trademarks, patents and other
like intangible assets, all as set forth on the consolidated balance sheet of
the Partnership and its consolidated subsidiaries for the Partnership's most
recently completed fiscal quarter, prepared in accordance with generally
accepted accounting principles.
3
<PAGE> 10
"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 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.
4
<PAGE> 11
"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.
"General Partner" means Heritage Holdings, Inc., 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.
"Notice of Default" means a written notice of the kind specified in
Section 501(3).
5
<PAGE> 12
"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
6
<PAGE> 13
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 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.
7
<PAGE> 14
"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 or any of its Subsidiaries or impair the use of such property in the
operation of the business of the Partnership or any of its Subsidiaries; (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, 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.
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<PAGE> 15
"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.
"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.
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<PAGE> 16
"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, with respect to any Person, in the case of a
partnership, more than 50% of the partners' Capital Interests (considering all
partners' Capital 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 a combination thereof or, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
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.
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<PAGE> 17
"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
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<PAGE> 18
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.
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.
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<PAGE> 19
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.
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 8801 South Yale Avenue, Suite 310, Tulsa,
Oklahoma 74137, 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
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<PAGE> 20
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.
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.
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<PAGE> 21
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 its 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.
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<PAGE> 22
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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<PAGE> 23
HERITAGE PROPANE PARTNERS, L.P.
[TITLE OF SECURITY]
NO. U.S.$
[CUSIP No. ]
HERITAGE PROPANE 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].
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<PAGE> 24
[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.]
[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.
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<PAGE> 25
IN WITNESS WHEREOF, the Partnership has caused this instrument to be
duly executed.
Dated:
HERITAGE PROPANE PARTNERS, L.P.,
By: Heritage Holdings, Inc.,
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 _________, 1999 (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 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, ________
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<PAGE> 26
Year Redemption Price 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 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 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
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<PAGE> 27
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
21
<PAGE> 28
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 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
22
<PAGE> 29
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 Heritage Holdings, Inc.
(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
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 HERITAGE
PROPANE PARTNERS, L.P. and does hereby irrevocably constitute and appoint
________________________ Attorney to
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<PAGE> 30
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:
----------------------------------
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.
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
24
<PAGE> 31
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.
25
<PAGE> 32
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
26
<PAGE> 33
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;
(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;
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<PAGE> 34
(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 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;
(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
be 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;
(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.
28
<PAGE> 35
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 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
29
<PAGE> 36
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
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
30
<PAGE> 37
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.
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<PAGE> 38
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.
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
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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 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
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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 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
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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
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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
(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
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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 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
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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
(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
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(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.
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:
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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 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
(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.
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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 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.
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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 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.
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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
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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.
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
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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 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
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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 Securities of any series shall have been so appointed by the
Partnership or the
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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
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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
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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.
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.
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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 May 15 and November 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 April 30 or October 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.
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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 July 15 in each calendar year
with respect to the 12-month period ending on the previous May 15, commencing
May 15, 1999.
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,
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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 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
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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
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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.
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
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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.
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.
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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,
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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;
(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;
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(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.
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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, 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
(4) 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.
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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.
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
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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,
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(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
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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 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
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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 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
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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
(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.
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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 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
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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.
71
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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.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
HERITAGE PROPANE PARTNERS, L. P.
By: Heritage Holdings, Inc.,
Its General Partner
By:
------------------------------------
Name:
Title:
[Trustee]
By:
------------------------------------
Name:
Title:
72
<PAGE> 1
Exhibit 4.2
Draft: September 10, 1999
================================================================================
FORM OF SUBORDINATED INDENTURE
HERITAGE PROPANE PARTNERS, L.P.
Issuer
Trustee
INDENTURE
Dated as of ________, 1999
SUBORDINATED DEBT SECURITIES
================================================================================
<PAGE> 2
HERITAGE PROPANE 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>
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NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions................................................................................1
Section 102. Compliance Certificates and Opinions.......................................................8
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.........................................................12
Section 108. Effect of Headings and Table of Contents..................................................12
Section 109. Successors and Assigns....................................................................12
Section 110. Separability Clause.......................................................................12
Section 111. Benefits of Indenture.....................................................................12
Section 112. Governing Law.............................................................................13
Section 113. Legal Holidays............................................................................13
Section 114. Language of Notices, Etc..................................................................13
Section 115. Non-Recourse to the General Partner; No Personal Liability
of Officers, Directors, Employees or Partners.............................................13
ARTICLE II
SECURITY FORMS
Section 201. Forms Generally...........................................................................14
Section 202. Form of Face of Security..................................................................14
Section 203. Form of Reverse of Security...............................................................17
Section 204. Global Securities.........................................................................22
Section 205. Form of Trustee's Certificate and Authorization...........................................23
ARTICLE III
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series......................................................23
Section 302. Denominations.............................................................................27
Section 303. Execution, Authentication, Delivery and Dating............................................27
Section 304. Temporary Securities......................................................................29
</TABLE>
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Section 305. Registration, Registration of Transfer and Exchange.......................................29
Section 306. Mutilated, Destroyed, Lost and Stolen Securities..........................................31
Section 307. Payment of Interest; Interest Rights Preserved............................................32
Section 308. Persons Deemed Owners.....................................................................33
Section 309. Cancellation..............................................................................34
Section 310. Computation of Interest...................................................................34
Section 311. CUSIP Numbers.............................................................................34
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture...................................................35
Section 402. Application of Trust Money................................................................36
ARTICLE V
REMEDIES
Section 501. Events of Default.........................................................................36
Section 502. Acceleration of Maturity; Rescission and Annulment........................................37
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee...........................38
Section 504. Trustee May File Proofs of Claim..........................................................39
Section 505. Trustee May Enforce Claims Without Possession of Securities...............................39
Section 506. Application of Money Collected............................................................40
Section 507. Limitation on Suits.......................................................................40
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest..............................................................................41
Section 509. Restoration of Rights and Remedies........................................................41
Section 510. Rights and Remedies Cumulative............................................................41
Section 511. Delay or Omission Not Waiver..............................................................42
Section 512. Control by Holders........................................................................42
Section 513. Waiver of Past Defaults...................................................................42
Section 514. Undertaking for Costs.....................................................................43
Section 515. Waiver of Usury, Stay or Extension Laws...................................................43
</TABLE>
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<TABLE>
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ARTICLE VI
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.......................................................43
Section 602. Notice of Defaults........................................................................44
Section 603. Certain Rights of Trustee.................................................................44
Section 604. Not Responsible for Recitals or Issuance of Securities....................................45
Section 605. May Hold Securities.......................................................................45
Section 606. Money Held in Trust.......................................................................45
Section 607. Compensation and Reimbursement............................................................46
Section 608. Disqualification; Conflicting Interests...................................................46
Section 609. Corporate Trustee Required; Eligibility...................................................47
Section 610. Resignation and Removal; Appointment of Successor.........................................47
Section 611. Acceptance of Appointment by Successor....................................................48
Section 612. Merger, Conversion, Consolidation or Succession to Business...............................49
Section 613. Preferential Collection of Claims Against Partnership.....................................50
Section 614. Appointment of Authenticating Agent.......................................................50
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND PARTNERSHIP
Section 701. Partnership to Furnish Trustee Names and Addresses of Holders.............................52
Section 702. Preservation of Information; Communications to Holders ...................................52
Section 703. Reports by Trustee........................................................................52
Section 704. Reports by Partnership....................................................................53
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Partnership May Consolidate, Etc., Only on Certain Terms..................................54
Section 802. Successor Substituted.....................................................................54
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders........................................55
Section 902. Supplemental Indentures with Consent of Holders...........................................56
</TABLE>
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Section 903. Execution of Supplemental Indentures......................................................57
Section 904. Effect of Supplemental Indentures.........................................................57
Section 905. Conformity with Trust Indenture Act.......................................................57
Section 906. Reference in Securities to Supplemental Indentures........................................58
ARTICLE X
COVENANTS
Section 1001. Payment of Principal, Premium and Interest................................................58
Section 1002. Maintenance of Office or Agency...........................................................58
Section 1003. Money for Securities Payments to Be Held in Trust.........................................59
Section 1004. Statement by Officers as to Default.......................................................60
Section 1005. Existence.................................................................................60
Section 1006. Waiver of Certain Covenants...............................................................60
ARTICLE XI
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article..................................................................61
Section 1102. Election to Redeem; Notice to Trustee.....................................................61
Section 1103. Selection by Trustee of Securities to be Redeemed.........................................61
Section 1104. Notice of Redemption......................................................................62
Section 1105. Deposit of Redemption Price...............................................................62
Section 1106. Securities Payable on Redemption Date.....................................................63
Section 1107. Securities Redeemed in Part...............................................................63
ARTICLE XII
SINKING FUNDS
Section 1201. Applicability of Article..................................................................63
Section 1202. Satisfaction of Sinking Fund Payments with Securities.....................................64
Section 1203. Redemption of Securities for Sinking Fund.................................................64
</TABLE>
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ARTICLE XIII
DEFEASANCE
Section 1301. Applicability of Article..................................................................64
Section 1302. Legal Defeasance..........................................................................65
Section 1303. Covenant Defeasance.......................................................................66
Section 1304. Application by Trustee of Funds Deposited for Payment of
Securities................................................................................68
Section 1305. Repayment to Partnership..................................................................68
ARTICLE XIV
SUBORDINATION OF SECURITIES
Section 1401. Securities Subordinated to Senior Debt....................................................69
Section 1402. Distribution on Dissolution, Liquidation and Reorganization;
Subrogation of Securities.................................................................70
Section 1403. Payments on Securities Permitted..........................................................72
Section 1404. Authorization of Holders of Securities to Trustee to Effect
Subordination.............................................................................72
Section 1405. Notices to Trustee........................................................................72
Section 1406. Trustee as Holder of Senior Debt..........................................................73
Section 1407. Modification of Terms of Senior Debt......................................................73
</TABLE>
v
<PAGE> 8
INDENTURE dated as of ___________, 1998, between HERITAGE PROPANE
PARTNERS, L.P., a Delaware limited partnership (the "Partnership"), having its
principal office at 8801 South Yale Avenue, Suite 310, Tulsa, Oklahoma 74137,
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
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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.
"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.
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<PAGE> 10
"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 __________.
"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.
3
<PAGE> 11
"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 Heritage Holdings, Inc., 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.
"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.
4
<PAGE> 12
"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:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) 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;
(iii) 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
(iv) 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,
5
<PAGE> 13
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 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.
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<PAGE> 14
"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.
"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.
7
<PAGE> 15
"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.
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
8
<PAGE> 16
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.
9
<PAGE> 17
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.
10
<PAGE> 18
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.
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 8801 South Yale Avenue, Suite 310, Tulsa,
Oklahoma 74137 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.
11
<PAGE> 19
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.
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.
12
<PAGE> 20
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 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.
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<PAGE> 21
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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<PAGE> 22
HERITAGE PROPANE PARTNERS, L.P.
[TITLE OF SECURITY]
No. U.S. $
---------- ---------
[CUSIP No. ]
HERITAGE PROPANE 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
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<PAGE> 23
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.]
[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.
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<PAGE> 24
IN WITNESS WHEREOF, the Partnership has caused this instrument to be
duly executed.
Dated: HERITAGE PROPANE PARTNERS, L.P.,
--------------
By: Heritage Holdings, Inc.,
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 ________, 1998 (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 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, __________________________
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<PAGE> 25
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
</TABLE>
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 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
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<PAGE> 26
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
19
<PAGE> 27
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 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
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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 Heritage Holdings, Inc.
(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 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
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<PAGE> 29
Assignee) the within instrument of HERITAGE PROPANE 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.
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
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<PAGE> 30
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.
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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
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<PAGE> 32
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;
(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
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<PAGE> 33
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 be 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;
(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
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<PAGE> 34
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 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;
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<PAGE> 35
(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
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
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<PAGE> 36
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.
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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.
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
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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 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
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<PAGE> 39
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 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
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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
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of beneficial ownership interests of a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
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.
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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
(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
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(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 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
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(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:
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(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 (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.
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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.
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
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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.
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;
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(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 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
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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.
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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 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;
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(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.
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.
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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.
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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
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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 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.
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(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.
(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
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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
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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 May 15 and November 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 April 30 or October 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.
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Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 15 in each calendar year
with respect to the 12-month period ending on the previous May 15, commencing
May 15, 1999.
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 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.
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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.
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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 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.
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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;
(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
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(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.
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.
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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.
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
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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
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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. 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
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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 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
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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.
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.
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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
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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.
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.
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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
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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
(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
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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;
(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;
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(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 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 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.
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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 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
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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 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.
71
<PAGE> 79
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 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
72
<PAGE> 80
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.
73
<PAGE> 81
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.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
HERITAGE PROPANE PARTNERS, L.P.
By: Heritage Holdings, Inc.,
Its General Partner
By:
----------------------------
Name:
Title:
[Trustee]
By:
----------------------------
Name:
Title:
74
<PAGE> 1
EXHIBIT 5.1
[BAKER & BOTTS, L.L.P. LETTERHEAD]
September 13, 1999
Heritage Propane Partners, L.P.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Gentlemen:
As set forth in the Registration Statement on Form S-3 (Registration
No. 333-86057), as amended (the "Registration Statement"), filed with the
Securities and Exchange Commission (the "Commission") by Heritage Propane
Partners, L.P., a Delaware limited partnership (the "Partnership"), under the
Securities Act of 1933, as amended (the "Act"), relating to common units
("Common Units") and debt securities ("Debt Securities") of the Partnership
(together, the "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 $150,000,000, certain legal matters in connection with the
Securities are being passed upon for you by us.
In our capacity as your counsel in the connection referred to above,
we have examined (i) the Partnership's Certificate of Limited Partnership and
Agreement of Limited Partnership, each as amended to date, (ii) the form of the
Senior Indenture filed as Exhibit 4.1 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, (iii) the form of
the Subordinated Indenture filed as Exhibit 4.2 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
and (iv) the originals, or copies certified or otherwise identified, of
certificates of public officials and of representatives of the Partnership,
statutes and other instruments and documents as a basis for the opinions
hereafter expressed.
In connection with this opinion, we have assumed that (i) the
Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective; (ii) a prospectus supplement will have
been prepared and filed with the Commission describing the Securities offered
thereby; (iii) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner stated in the
Registration Statement and the appropriate prospectus supplement; (iv) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered will have been duly authorized and validly executed and
<PAGE> 2
Heritage Propane Partners, L.P. - 2 - September 13, 1999
delivered by the Partnership and the other parties thereto; and (v) any
securities issuable upon conversion, redemption, exchange or exercise of any
Securities being offered will be duly authorized, created and, if appropriate,
reserved for issuance upon such conversion, redemption, exchange or exercise.
Based upon and subject to the foregoing, we are of the opinion that:
1. With respect to Common Units, when (a) the Partnership has taken
all necessary action to approve the issuance of such Common Units, the
terms of the offering thereof and related matters and (b) such Common
Units have been issued and delivered in accordance with the terms of the
applicable definitive purchase, underwriting or similar agreement approved
by the Partnership upon payment (or delivery) of the consideration
therefor provided for therein, such Common Units will be validly issued
and, on the assumption that the holder of such Common Units is not also a
general partner of the Partnership and does not participate in the control
of the Partnership's business, such Common Units will be fully paid and
nonassessable.
2. 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 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).
3. 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
<PAGE> 3
Heritage Propane Partners, L.P. - 3 - September 13, 1999
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
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 hereby consent to the filing of this opinion of counsel as
Exhibit 5.1 to the Registration Statement. We also consent to the reference to
our Firm under the heading "Legal Opinions" in the prospectus forming a part of
the Registration Statement. In giving this consent, we do not hereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Baker & Botts, L.L.P.
<PAGE> 1
EXHIBIT 8.1
[BAKER & BOTTS, L.L.P. LETTERHEAD]
September 13, 1999
Heritage Propane Partners, L.P.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Re: Tax Opinion
Gentlemen:
We have acted as special counsel in connection with the Registration
Statement on Form S-3 (the "Registration Statement") of Heritage Propane
Partners, L.P., a Delaware limited partnership (the "Partnership"), relating to
the registration of the offering and sale (the "Offering") of common units
("Common Units") and debt securities ("Debt Securities") of the Partnership
(together, the "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 $150,000,000. In connection therewith, we have participated
in the preparation of the discussion set forth under the caption "Tax
Considerations" (the "Discussion") in the Registration Statement with respect to
the Common Units. Capitalized terms used and not otherwise defined herein are
used as defined in the Registration Statement.
The Discussion, subject to the qualifications stated therein,
constitutes our opinion as to the material United States federal income tax
consequences for purchasers of the Common Units pursuant to the Offering.
A discussion with regard to the material United States federal
income tax consequences, if any, for purchasers of the Debt Securities pursuant
to the Offering will be included in a prospectus supplement relating to the
issuance of such securities. An opinion with respect to any such discussion will
be filed as an exhibit to a Current Report on Form 8-K of the Partnership.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm and this opinion
contained in the Discussion. In giving this consent, however, we do not hereby
admit that we are within the category of persons whose consent is required under
section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Baker & Botts, L.L.P.
<PAGE> 1
Exhibit 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
October 15, 1998 included in Heritage Propane Partners, L.P. Form 10-K for the
year ended August 31, 1998, and to the use of our report dated September 8, 1999
on the consolidated balance sheet of Heritage Holdings, Inc. included in this
registration statement, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
September 13, 1999
<PAGE> 1
EXHIBIT 99.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Heritage Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of Heritage
Holdings, Inc. and subsidiaries (the Company) as of August 31, 1998. 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 financial statement 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 Heritage Holdings, Inc. and
subsidiaries as of August 31, 1998, in conformity with generally accepted
accounting principles.
Tulsa, Oklahoma
September 8, 1999
1
<PAGE> 2
HERITAGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
August 31, May 31,
1998 1999
---------- -----------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,555 $ 2,936
Marketable securities 4,933 3,817
Accounts receivable, net 10,444 12,378
Inventories 12,545 9,083
Prepaid expenses 1,359 1,495
Assets held in trust 1,530 1,330
--------- ---------
Total current assets 34,366 31,039
ASSETS HELD IN TRUST 3,717 2,391
PROPERTY, PLANT AND EQUIPMENT, net 139,534 152,575
INVESTMENT IN AFFILIATES 4,739 5,603
INTANGIBLES AND OTHER ASSETS, net 69,783 73,643
--------- ---------
Total assets $ 252,139 $ 265,251
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Working capital facility $ 10,600 $ 6,600
Accounts payable 12,769 12,762
Accrued and other current liabilities 11,223 11,367
Current maturities of long-term debt 2,399 2,332
--------- ---------
Total current liabilities 36,991 33,061
LONG-TERM DEBT, less current maturities 180,312 196,262
MINORITY INTEREST 77,566 79,801
DEFERRED TAXES 72,604 72,604
--------- ---------
367,473 381,728
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par value, 600,000 shares authorized,
534,788 shares issued and outstanding 5 5
Additional paid-in capital 11,817 11,912
Accumulated deficit (123,493) (122,238)
Other comprehensive income (loss) (861) 986
Notes receivable from sale of common stock (2,802) (7,142)
--------- ---------
Total stockholders' deficit (115,334) (116,477)
--------- ---------
Total liabilities and stockholders' deficit $ 252,139 $ 265,251
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
2
<PAGE> 3
HERITAGE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEETS
(in thousands, except share/unit and per share/unit amounts)
(unaudited as to information for May 31, 1999)
1. OPERATIONS AND ORGANIZATION:
The accompanying consolidated balance sheets include the accounts of Heritage
Holdings, Inc., its subsidiaries, including Heritage Propane Partners, L.P.
and Heritage Operating, L.P., and a majority owned partnership. The Company
accounts for its 50 percent partnership interest in another propane retailer
under the equity method. All significant intercompany transactions and accounts
have been eliminated in consolidation.
Heritage Propane Partners, L.P., a Delaware limited partnership (the
Partnership), was formed April 24, 1996, to acquire, own and operate the propane
business and substantially all of the assets of Heritage Holdings, Inc., a
Delaware corporation (the Company or General Partner). In order to simplify the
Partnership's obligation under the laws of several jurisdictions in which the
Partnership conducts business, the Partnership's activities are conducted
through a subsidiary operating partnership, Heritage Operating, L.P. (the
Operating Partnership). The Partnership holds a 98.9899 percent limited partner
interest and the General Partner holds a 1.0101 percent general partner interest
in the Operating Partnership.
On June 28, 1996, the Partnership completed its initial public offering (the
IPO) of 4,025,000 Common Units, representing limited partner interests in the
Partnership, to the public at a price of $20.25 a unit. Concurrent with the
closing of the IPO, the Company issued $120,000 principal amount of Senior
Secured Notes (the Notes) to certain institutional investors in a private
placement. The Company conveyed substantially all of its assets (other than
approximately $76,831 in proceeds from the issuance of the Notes) to the
Operating Partnership in exchange for a general partner interest and all of the
limited partner interests in the Operating Partnership and the assumption by
the Operating Partnership of substantially all of the liabilities of the
Company. The assets of the Company were transferred to the Operating
Partnership at historical cost with no step-up in basis recorded by the
Operating Partnership. The Company conveyed all of its limited partner interest
in the Operating Partnership to the Partnership in exchange for 3,702,943
Subordinated Units and a general partner interest in the Partnership. On July
26, 1996, the underwriters exercised their option to purchase an additional
260,000 Common Units and the Partnership received proceeds of approximately
$4,898. As a result, the Company received ownership of a 45.4 percent limited
partner interest and an aggregate two percent general partner interest in the
Partnership and the Operating Partnership.
As a result of the above transactions, the Company has an unrealized gain of
approximately $57,414 representing the difference between the net liabilities
of $38,905 transferred to the Operating Partnership and its underlying equity
in the Partnership at the IPO date of $18,509. The limited partner units
received by the Company are subordinated to the Common Units sold to the public
as the Common Units have preferential distribution rights during the
Subordination Period. After the Subordination Period (see Note 6), the Company
will
3
<PAGE> 4
recognize a gain in income of $57,414. The unrealized gain is recorded as
minority interest in the consolidated balance sheets.
In contemplation of the offering, the Company entered into a letter agreement
with its nonmanagement/director shareholders. Pursuant to the terms of the
agreement, the Company, together with certain members of management and
directors, repurchased equity interests of the nonmanagement/director
shareholders. The members of management issued notes aggregating $5,000 in
connection with the repurchase. Additionally, the Company used approximately
$61,156 of the proceeds of the Notes to finance the repurchase of equity
interests in the Company.
The Partnership contributed the net proceeds of approximately $79,763 from the
IPO to the Operating Partnership. The Operating Partnership applied the net
proceeds, together with approximately $40,898 in cash contributed by the
Company to finance the repayment of all of the Company's indebtedness to the
Prudential Insurance Company of America.
The Operating Partnership sells propane and propane-related products to
approximately 240,000 retail customers in 26 states throughout the United
States. The Partnership is also a wholesale propane supplier in the
southwestern United States and in Canada, the latter through participation in a
Canadian partnership. The Partnership grants credit to its customers for the
purchase of propane and propane-related products.
2. SIGNIFICANT ACCOUNTING POLICIES AND BALANCE SHEET DETAIL:
MARKETABLE SECURITIES
The Company determines the appropriate classification of marketable securities
at the time of purchase and reevaluates such designation at each balance sheet
date. Marketable securities that have been classified as available-for-sale are
carried at fair value, with unrealized gains and losses reported as other
comprehensive income. Securities available for sale consist of equity
securities with historical costs of $5,794 and $2,831, gross unrealized gains
of $221 and $1,038, gross unrealized losses of $1,082 and $52 and a market
value of $4,933 and $3,817 at August 31, 1998 and May 31, 1999, respectively.
INVENTORIES
Inventories are valued at the lower of cost or market. The cost of fuel
inventories is determined using the average cost method while the cost of
appliances, parts and fittings is determined by the first-in, first-out method.
Inventories consist of the following:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1999
---------- -----------
<S> <C> <C>
Fuel $ 7,939 $ 3,984
Appliances, parts and fittings 4,606 5,099
-------- --------
$ 12,545 $ 9,083
======== ========
</TABLE>
4
<PAGE> 5
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets. Expenditures for maintenance and repairs
are expensed as incurred. Components and useful lives of property, plant and
equipment are as follows:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1999
----------- -----------
<S> <C> <C>
Land and improvements $ 7,809 $ 8,205
Buildings and improvements (10 to 30 years) 13,387 16,223
Bulk storage, equipment and facilities (3 to 30 years) 18,418 18,783
Tanks and other equipment (5 to 30 years) 101,419 112,980
Vehicles (5 to 7 years) 27,739 31,770
Furniture and fixtures (5 to 10 years) 4,478 4,717
Other 1,619 1,375
----------- -----------
174,869 194,053
Less- accumulated depreciation (35,335) (41,478)
----------- -----------
$ 139,534 $ 152,575
=========== ===========
</TABLE>
INTANGIBLES AND OTHER ASSETS
Intangibles and other assets are stated at cost net of amortization computed on
the straight-line and effective interest methods. Components and useful lives
of intangibles and other assets are as follows:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1999
----------- -----------
<S> <C> <C>
Goodwill (30 years) $ 45,514 $ 48,158
Noncompete agreements (10 to 15 years) 25,181 33,091
Customer lists (15 years) 12,110 15,537
Other 6,905 6,132
---------- ----------
89,710 102,918
Less- accumulated amortization (19,927) (29,275)
---------- ----------
$ 69,783 $ 73,643
========== ==========
</TABLE>
The Company's policy is to review intangible assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. If such a review should indicate that the
carrying amount of intangible assets is not recoverable, the Company's policy
is to reduce the carrying amount of such assets to fair value. The Company's
policy is to eliminate from its balance sheet any fully amortized intangibles
and the related accumulated amortization.
5
<PAGE> 6
ACCRUED AND OTHER CURRENT LIABILITIES
Accrued and other current liabilities consist of the following:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1999
----------- -----------
<S> <C> <C>
Interest payable $ 3,880 $ 5,218
Wages and benefits 3,232 2,730
Deferred tank rent 1,204 1,280
Taxes other than income 542 569
Customer deposits 1,492 831
Other 873 739
--------- ---------
$ 11,223 $ 11,367
========= =========
</TABLE>
INCOME TAXES
Effective September 1, 1996, the Company elected to be treated as an S
Corporation for tax reporting purposes. This election results in the Company no
longer operating as a taxable entity for federal and state tax reporting
purposes. As an S Corporation, the taxable income of the Company is included in
the taxable income of its shareholders. Deferred taxes are recorded for the
estimated liability for income tax on built-in gains related to the difference
between the estimated fair value and book value of the investment in the
Partnership. These deferred taxes will not be paid unless the Company disposes
of its partnership units held on September 1, 1996, before September 1, 2006.
At that time, the deferred income taxes would be eliminated from the balance
sheet and be recorded as retained earnings.
OTHER COMPREHENSIVE INCOME
The Company applies Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," which requires companies to report all
changes in equity during a period, except those resulting from investment by
owners and distributions to owners, in the financial statements for the period
in which they are recognized. The Company includes unrealized gains and losses
on available-for-sale securities in other comprehensive income.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
FAIR VALUE
The carrying amount of accounts receivable and accounts payable approximates
their fair value. Based on the estimated borrowing rates currently available to
the Company for long-term loans with similar terms and average maturities, the
aggregate fair value at August 31, 1998, of the Company's long-term debt
approximates the aggregate carrying amount.
6
<PAGE> 7
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in a derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement. Companies
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. The adoption of this statement did not have any
material effect on the Company's financial statements.
3. ASSETS HELD IN TRUST:
In connection with the IPO, the Company retained $9,613 from the proceeds of
the Notes. These proceeds were placed in various trusts to be paid to the
noteholders of noncompete agreements entered into by the Company prior to the
IPO. The proceeds are disbursed monthly from the trust in accordance with the
noncompete agreements. The Company retains all earnings from the trust assets.
4. WORKING CAPITAL FACILITIES AND LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1999
----------- -----------
<S> <C> <C>
8.55% Senior Secured Notes $ 120,000 $ 120,000
Medium Term Note Program:
7.17% Series A Senior Secured Notes 12,000 12,000
7.26% Series B Senior Secured Notes 20,000 20,000
6.50% Series C Senior Secured Notes 5,000 5,000
6.59% Series D Senior Secured Notes 5,000 5,000
6.67% Series E Senior Secured Notes 5,000 5,000
Senior Revolving Acquisition Facility 600 16,200
Notes Payable on noncompete agreements with interest imputed at rates
averaging 8%, due in installments through 2008, collateralized by a
first security lien on certain assets of the Partnership
13,165 13,926
Other 1,946 1,468
----------- -----------
182,711 198,594
Current maturities of long-term debt (2,399) (2,332)
----------- -----------
$ 180,312 $ 196,262
=========== ===========
</TABLE>
7
<PAGE> 8
Maturities of the Senior Secured Notes and the Medium Term Note Program are as
follows:
<TABLE>
<S> <C>
8.55% Senior Notes: mature at the rate of $12,000 on June 30 in each of
the years 2002 to and including 2011.
Series A Notes: mature at the rate of $2,400 on November 19 in each
of the years 2005 to and including 2009.
Series B Notes: mature at the rate of $2,000 on November 19 in each
of the years 2003 to and including 2012.
Series C Notes: mature at the rate of $714 on March 13 in each of the
years 2000 to and including 2003, $357 on March 13,
2004, $1,073 on March 13, 2005, and $357 in each of
the years 2006 and 2007.
Series D Notes: mature at the rate of $556 on March 13 in each of
the years 2002 to and including 2010.
Series E Notes: mature at the rate of $714 on March 13 in each of
the years 2007 to and including 2013.
</TABLE>
The Notes and the Medium Term Note Program contain restrictive covenants,
including limitations on substantial disposition of assets, changes in
ownership of the Partnership, additional indebtedness and require the
maintenance of certain financial ratios. At August 31, 1998 and May 31, 1999,
the Partnership was in compliance with all covenants. All receivables,
contracts, equipment, inventory, general intangibles, cash concentration
accounts, and the common stock of the Partnership's subsidiaries secure the
Notes and the noteholders have recourse against the Company.
The Partnership maintains a credit agreement with various financial
institutions with a Senior Revolving Working Capital Facility and Acquisition
Facility. On July 2, 1999, this agreement was amended to extend the maturity
dates by two years. The amended credit agreement consists of the following:
A $20,000 Senior Revolving Working Capital Facility, expiring June 30,
2002, with $10,600 and $6,600 outstanding at August 31, 1998 and May
31, 1999, respectively. The interest rate and interest payment dates
vary depending on the terms the Partnership agrees to when the money
is borrowed. The weighted average interest rate was 6.93 percent and
7.59 percent at August 31, 1998 and May 31, 1999, respectively. The
Partnership must be free of all working capital borrowings for 30
consecutive days each fiscal year. A commitment fee of .375 percent is
paid on the unused portion of the facility.
A $30,000 Senior Revolving Acquisition Facility is available through
December 31, 2001, at which time the outstanding amount must be paid
in ten equal quarterly installments, beginning March 31, 2002. The
interest rate and interest payment dates vary depending on the terms
the Partnership agrees to when the money is borrowed. The average
interest rate was 7.03 percent and 7.38 percent at August 31, 1998 and
May 31, 1999, respectively. A commitment fee of .375 percent is paid
on the unused portion of the facility.
Future maturities at August 31, 1998, of long-term debt for each of the next
five fiscal years and thereafter are $2,399 in 1999; $3,483 in 2000; $2,218 in
2001; $14,542 in 2002; $14,545 in 2003 and $145,524 thereafter.
8
<PAGE> 9
5. COMMITMENTS AND CONTINGENCIES:
Certain property and equipment is leased under noncancelable leases which
require fixed monthly rental payments, and expire at various dates through
2008. At August 31, 1998, fiscal year future minimum lease commitments for such
leases are $1,598 in 1999; $851 in 2000; $667 in 2001; $565 in 2002; $454 in
2003 and $879 thereafter.
The Company is a party to various legal proceedings incidental to its business.
Certain claims, suits and complaints arising in the ordinary course of business
have been filed or are pending against the Company. In the opinion of
management, all such matters are covered by insurance, are without merit or
involve amounts, which, if resolved unfavorably, would not have a significant
effect on the financial position or results of operations of the Company.
6. PARTNERSHIP UNITS:
The Partnership's capital consists of 4,876,725 Common Units representing a
55.7 percent limited partner interest, 3,702,943 Subordinated Units owned by
the General Partner representing a 42.3 percent limited partner interest and a
two percent general partner interest.
The Partnership is expected to make quarterly cash distributions of all of its
Available Cash, generally defined as consolidated cash receipts less
consolidated operating expenses, debt service payments, maintenance capital
expenditures and net changes in reserves established by the General Partner for
future requirements. These reserves are retained to provide for the proper
conduct of the Partnership business, or to provide funds for distributions with
respect to any one or more of the next four fiscal quarters.
Distributions by the Partnership in an amount equal to 100 percent of its
Available Cash will generally be made 98 percent to the Common and Subordinated
Unitholders and two percent to the General Partner, subject to the payment of
incentive distributions to the holders of Incentive Distribution Rights to the
extent that certain target levels of cash distributions are achieved. To the
extent there is sufficient Available Cash, the holders of Common Units have the
right to receive the Minimum Quarterly Distribution ($.50 per Unit), plus any
arrearages, prior to any distribution of Available Cash to the holders of
Subordinated Units. Common Units will not accrue arrearages for any quarter
after the Subordination Period and Subordinated Units will not accrue any
arrearages with respect to distributions for any quarter.
In general, the Subordination Period will continue indefinitely until the first
day of any quarter beginning after May 31, 2001, in which distributions of
Available Cash equal or exceed the Minimum Quarterly Distribution (MQD) on the
Common Units and the Subordinated Units for each of the three consecutive
four-quarter periods immediately preceding such date. Prior to the end of the
Subordination Period, 925,736 Subordinated Units will convert to Common Units
after May 31, 1999 and another 925,736 Subordinated Units will convert to
Common Units after May 31, 2000, if distributions of Available Cash on the
Common Units and Subordinated Units equal or exceed the MQD for each of the
three consecutive four-quarter periods preceding such date. Upon expiration of
the Subordination Period, all remaining Subordinated Units will convert to
Common Units.
The Partnership is expected to make distributions of its Available Cash within
45 days after the end of each fiscal quarter ending November, February, May and
August to holders of record on the applicable record date. A prorata MQD of
$.353 per Common and Subordinated Unit was
9
<PAGE> 10
made on October 15, 1996 for the two month period between the IPO and the
fourth quarter ended August 31, 1996. The MQD was made to the Common and
Subordinated Unitholders for the quarters ended November 30, 1996 through May
31, 1999. For the quarter ended November 30, 1998, the Partnership increased its
quarterly distribution to $.5125. For the quarters ended February 28, 1999 and
May 31, 1999, the Partnership increased its quarterly distribution to $.5625. On
July 7, 1999, 925,736 Subordinated Units held by the Company converted to Common
Units.
7. REGISTRATION STATEMENTS:
Effective November 19, 1997, the Partnership registered 2,000,000 additional
Common Units that may be issued from time to time by the Partnership by means
of a prospectus delivered in connection with its negotiations for acquisition
of other businesses, properties or securities in business combination
transactions. On August 6, 1998, 60,606 Common Units were issued from this
registration statement in connection with the acquisition of certain assets of
another propane company. On August 27, 1999, the Partnership filed a shelf
registration statement to sell as much as $150,000 of debt securities and
Common Units.
8. NOTES RECEIVABLE:
At August 31, 1998, notes receivable consists of notes issued by various
members of management to exercise stock options. In connection with the IPO,
members of management issued $5,000 of notes to third parties to repurchase the
equity interest of nonmanagement/director shareholders of the Company. In
December 1998, the third-party notes were refinanced through the Company and
include the noteholders' shares of common stock of the Company as collateral.
The notes bear interest at 7-8%, payable each December 30, and mature in June
2011. Sinking fund payments equal to 33 1/3% of the original principal amount
of the notes are due June 28, 2003, 2004 and 2005. Prior to maturity, interest
and sinking fund payments shall be payable only out of distributions from the
Company.
10
<PAGE> 11
9. SUPPLEMENTAL INFORMATION:
The following balance sheet of the Company includes its investment in the
Partnership on an equity basis. Such presentation is included to provide
additional information with respect to the Company's financial position on a
stand alone basis:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1999
---------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,718 $ 254
Marketable securities 4,933 3,817
Receivable from Partnership 1,192 1,234
Assets held in trust 1,530 1,330
--------- ---------
Total current assets 9,373 6,635
ASSETS HELD IN TRUST 3,717 2,391
OTHER ASSETS 277 341
--------- ---------
Total assets $ 13,367 $ 9,367
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,620 $ 1,645
Current maturities of long-term debt 1,196 1,112
--------- ---------
Total current liabilities 2,816 2,757
LONG-TERM DEBT, less current portion 2,881 1,793
NEGATIVE INVESTMENT IN PARTNERSHIP 50,400 48,690
DEFERRED TAXES 72,604 72,604
--------- ---------
Total liabilities 128,701 125,844
--------- ---------
STOCKHOLDERS' DEFICIT:
Common stock $.01 par value, 600,000 authorized,
534,788 issued and outstanding 5 5
Additional paid-in capital 11,817 11,912
Accumulated deficit (123,493) (122,238)
Other comprehensive income (loss) (861) 986
Notes receivable from sale of common stock (2,802) (7,142)
--------- ---------
Total stockholders' deficit (115,334) (116,477)
--------- ---------
Total liabilities and stockholders' deficit $ 13,367 $ 9,367
========= =========
</TABLE>
11
