<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE 76-0329620
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(713) 759-3636
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-------------------
JAMES C. RUTH
VICE PRESIDENT AND GENERAL COUNSEL
TEXAS EASTERN PRODUCTS PIPELINE COMPANY
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(713) 759-3636
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------
COPY TO:
JOHN A. WATSON JAMES M. PRINCE
FULBRIGHT & JAWORSKI L.L.P. ANDREWS & KURTH L.L.P.
1301 MCKINNEY, SUITE 5100 600 TRAVIS, SUITE 4200
HOUSTON, TEXAS 77010-3095 HOUSTON, TEXAS 77002-3090
(713) 651-5151 (713) 220-4200
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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 investment plans, check the following box. [_]
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. [_]
(Cover page continued)
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER NOTE(1) OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
___% Senior Notes due 2007 . . . . . . . . . . . . . . $150,000,000 100% $150,000,000 $45,455
- -----------------------------------------------------------------------------------------------------------------------------
___% Senior Notes due 2027 . . . . . . . . . . . . . . $240,000,000 100% $240,000,000 $72,727
- -----------------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . $390,000,000 100% $390,000,000 $118,182
=============================================================================================================================
</TABLE>
(1) Estimated solely for purposes of determining the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended
(the "Securities Act").
--------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 3
- --------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
- --------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED OCTOBER 22, 1997
PROSPECTUS
$390,000,000
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP
[LOGO]
$150,000,000 % SENIOR NOTES DUE 2007
$240,000,000 % SENIOR NOTES DUE 2027
--------------------
The % Senior Notes due , 2007 (the "2007 Notes") and the
% Senior Notes due , 2027 (the "2027 Notes") are being issued by TE
Products Pipeline Company, Limited Partnership (the "Partnership"). Interest
on the 2007 Notes and the 2027 Notes (collectively, the "Notes") is payable
semi-annually on and of each year, commencing ,
1998. The 2007 Notes will mature on , 2007, and the 2027 Notes will
mature on , 2027. The 2007 Notes may be redeemed at any time after ,
2002, and the 2027 Notes may be redeemed at any time after , 2007, in each
case at the option of the Partnership, in whole or in part, on not less than 30
nor more than 60 days' prior written notice, at the redemption prices set forth
in this Prospectus, together with all accrued but unpaid interest, if any, to
the date of redemption. See "Description of Notes--Optional Redemption".
Each series of Notes will be represented by one or more global notes
registered in the name of The Depository Trust Company (the "Depositary") or
its nominee. Interests in the global notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary
(with respect to beneficial interests of participants) or by participants or
persons that hold interests through participants (with respect to beneficial
interests of beneficial owners). Except as described in the accompanying
Prospectus, Notes in certificated form will not be issued. See "Description of
the Notes--Book Entry Procedures".
The Partnership is 99% owned by TEPPCO Partners, L.P. ("TEPPCO" or the
"Parent Partnership"). Limited Partnership Units of the Parent Partnership are
traded on the New York Stock Exchange under the symbol "TPP". Application has
been made to list the Notes on the New York Stock Exchange.
--------------------
<PAGE> 4
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) PARTNERSHIP(1)(3)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2007 Note . . . . . . . . . . . . . . . . % % %
- -----------------------------------------------------------------------------------------------------------------------
Per 2027 Note . . . . . . . . . . . . . . . . % % %
- -----------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . $ $ $
=======================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from , 1997.
(2) The Partnership has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting".
(3) Before deducting expenses payable by the Partnership estimated at $ .
--------------------
The Notes are being offered by the Underwriters, subject to prior
sale, when, as and if issued to and accepted by the Underwriters, subject to
certain conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. See
"Underwriting". It is expected that delivery of the Notes will be made through
the book-entry facilities of the Depositary on or about .
--------------------
MERRILL LYNCH & CO.
--------------------
The date of this Prospectus is , 1997.
2
<PAGE> 5
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES, INCLUDING PURCHASES OF THE NOTES TO STABILIZE THEIR MARKET PRICE AND
PURCHASES OF THE NOTES TO COVER ALL OR SOME OF A SHORT POSITION IN THE NOTES.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
AVAILABLE INFORMATION
The Partnership has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-3 under the Securities
Act of 1933, as amended (the "Securities Act"), for the registration of the
Notes offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain items of which are contained in exhibits
to, or incorporated by reference in, the Registration Statement as permitted by
the rules and regulations of the Commission. For further information with
respect to TEPPCO Partners, L.P. (the "Parent Partnership"), the Partnership
and the Notes offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, and financial statements and notes filed as a
part thereof or incorporated by reference therein. Statements made in this
Prospectus concerning the contents of any document referred to herein are not
necessarily complete. With respect to each such document filed with the
Commission as an exhibit to, or incorporated by reference in, the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Parent Partnership is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance therewith, the Parent Partnership files consolidated reports, proxy
statements and other information with the Commission. Under the rules and
policies of the Commission, it is not expected that the Partnership will file
separate periodic reports under the Exchange Act. Reports, proxy statements
and other information filed by the Parent Partnership may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material may be obtained by mail from the Public Reference
Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding the Parent Partnership and the Partnership. In addition, such
material may also be inspected and copied at the offices of the New York Stock
Exchange. Limited Partnership Units issued by the Parent Partnership are listed
on the New York Stock Exchange under the symbol "TPP".
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed with the Commission and are
incorporated by reference in this Prospectus: (i) the Annual Report on Form
10-K of the Parent Partnership (File No. 1-10403) for the year ended December
31, 1996 (the "1996 Form 10-K"), filed February 2, 1997, (ii) the Parent
Partnership's Quarterly Report on Form 10-Q for the period ended March 31,
1997, filed May 6, 1997, and (iii) the Parent Partnership's Quarterly Report on
Form 10-Q for the period ended June 30, 1997, filed August 7, 1997. All
documents filed by the Parent Partnership pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Notes registered on the Registration
Statement shall be deemed to be incorporated herein by reference and to be a
part hereof from the respective dates of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, or in any other subsequently
filed document that also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference
(not including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
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<PAGE> 6
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of the Prospectus under
Section 10(a) of the Securities Act will also be provided without charge to
each such person, upon written or oral request. Requests should be directed to
the Parent Partnership at 2929 Allen Parkway, P.O. Box 2521, Houston, Texas
77252-2521, Attention: Investor Relations (telephone number: (713) 759-3636).
NO SEPARATE FINANCIAL INFORMATION FOR THE PARTNERSHIP HAS BEEN
PROVIDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS BECAUSE: (I) THE
PARENT PARTNERSHIP DOES NOT ITSELF CONDUCT ANY OPERATIONS BUT RATHER ALL
OPERATIONS OF THE PARENT PARTNERSHIP AND ITS SUBSIDIARIES ARE CONDUCTED BY THE
PARTNERSHIP; (II) THE PARENT PARTNERSHIP HAS NO MATERIAL ASSETS OTHER THAN
SUBSTANTIALLY ALL OF THE OWNERSHIP INTEREST IN THE PARTNERSHIP; AND (III) ALL
OF THE ASSETS AND LIABILITIES SHOWN IN THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PARENT PARTNERSHIP ARE LOCATED AT THE PARTNERSHIP.
SYSTEM MAP
[MAP OF PIPELINE SYSTEM]
4
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements and notes thereto set forth or
incorporated by reference in this Prospectus.
THE PARTNERSHIP
TE Products Pipeline Company, Limited Partnership is a Delaware
limited partnership (the "Partnership") that was formed on March 7, 1990 to own
and operate the refined petroleum products and liquefied petroleum gases
("LPGs") pipeline business of Texas Eastern Products Pipeline Company, a
Delaware corporation (the "Company" or "General Partner"). The Company, an
indirect wholly owned subsidiary of Duke Energy Corporation ("Duke"), is the
general partner of the Partnership and has an approximate one percent general
partner's interest therein. TEPPCO Partners, L.P. (the "Parent Partnership")
is the limited partner of the Partnership and has an approximate 99% limited
partner's interest therein. The Parent Partnership is a publicly-held master
limited partnership, the Limited Partnership Units ("Units") of which are
listed on the New York Stock Exchange under the symbol "TPP". The Company, as
general partner, performs all management and operating functions required for
the Partnership pursuant to the Agreements of Limited Partnership of the
Partnership and the Parent Partnership (the "Partnership Agreements"). The
Company owns an effective combined two percent general partner's interest in
the Partnership and the Parent Partnership.
The Partnership is one of the largest pipeline common carriers of
refined petroleum products and LPGs in the United States. The Partnership owns
and operates an approximate 4,300-mile pipeline system (together with the
receiving, storage and terminaling facilities mentioned below, the "Pipeline
System" or "Pipeline" or "System") extending from southeast Texas through the
central and midwestern United States to the northeastern United States. The
Pipeline System includes delivery terminals along the Pipeline for outloading
product to other pipelines, tank trucks, rail cars or barges, as well as
substantial storage capacity at Mont Belvieu, Texas, the largest LPGs storage
complex in the United States, and at other locations. The Partnership also owns
two marine receiving terminals, one near Beaumont, Texas, and the other at
Providence, Rhode Island. The Providence terminal is not physically connected
to the Pipeline. As an interstate common carrier, the Pipeline System offers
interstate transportation services, pursuant to tariffs filed with the Federal
Energy Regulatory Commission (the "FERC"), to any shipper of refined petroleum
products and LPGs who requests such services, provided that the shipper and the
products tendered by such shipper for transportation satisfy the conditions and
specifications contained in the applicable tariff. In addition to the revenues
received by the Pipeline System from its interstate tariffs, it also receives
revenues from the shuttling of LPGs between refinery and petrochemical
facilities on the upper Texas Gulf Coast and ancillary transportation, storage
and marketing services at key points along the System. Substantially all the
petroleum products transported and stored in the Pipeline System are owned by
the Partnership's customers. Petroleum products are received at terminals
located principally on the southern end of the Pipeline System, stored,
scheduled into the Pipeline in accordance with customer nominations and shipped
to delivery terminals for ultimate delivery to the final distributor (e.g., gas
stations and retail propane distribution centers) or to other pipelines.
Pipelines are generally the lowest cost method for intermediate and long-haul
overland transportation of petroleum products. The Pipeline System is the only
pipeline that transports LPGs to the Northeast.
The Partnership conducts business and owns properties located in 12
states. Products are transported in liquid form from the upper Texas Gulf Coast
through two parallel underground pipelines that extend to Seymour, Indiana.
From Seymour, segments of the Pipeline System extend to the Chicago, Illinois;
Lima, Ohio; Selkirk, New York; and Philadelphia, Pennsylvania, areas.
5
<PAGE> 8
THE OFFERING
<TABLE>
<S> <C>
Securities Offered . . . . . $150,000,000 principal amount of % Senior Notes due 2007 and $240,000,000
principal amount of % Senior Notes due 2027.
Maturity Date . . . . . . . . , 2007 with respect to the 2007 Notes and , 2027 with respect to the
2027 Notes.
Interest Payment Dates . . . Interest on the Notes will be paid semi-annually in arrears on and
of each year, commencing , 1998.
Optional Redemption . . . . . The 2007 Notes will not be subject to redemption prior to , 2002.
Thereafter, the 2007 Notes are subject to redemption upon not less than 30 nor more
than 60 days' notice at the election of the Partnership at the redemption prices
set forth herein, together with accrued interest to the redemption date.
The 2027 Notes will not be subject to redemption prior to , 2007.
Thereafter, the 2027 Notes are subject to redemption upon not less than 30 nor more
than 60 days' notice at the election of the Partnership at the redemption prices
set forth herein, together with accrued interest to the redemption date. See
"Description of the Notes--Redemption".
Ranking . . . . . . . . . . . The Notes will be unsecured obligations of the Partnership and will rank on a parity
with all other unsecured and unsubordinated indebtedness of the Partnership. The
indenture governing the Notes does not limit the Partnership's ability to incur
additional indebtedness.
Certain Covenants . . . . . . The indenture governing the Notes will contain covenants, including, but not limited
to, covenants limiting (i) the creation of liens securing indebtedness and (ii)
sale and leaseback transactions.
Use of Proceeds . . . . . . . The net proceeds from the sale of the Notes offered hereby, estimated to be
approximately $387 million, will be used to repay the Partnership's First Mortgage
Notes of approximately $327 million, together with a redemption premium thereon
currently estimated at approximately $60 million. See "Use of Proceeds".
Listing . . . . . . . . . . . Application has been made to list the Notes on the New York Stock Exchange.
</TABLE>
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus and the documents incorporated by reference herein
include "forward-looking statements" within the meaning of various provisions
of the Securities Act and the Exchange Act. All statements, other than
statements of historical facts, included in this Prospectus and the documents
incorporated by reference herein that address activities, events or
developments that the Partnership expects or anticipates will or may occur in
the future, including such things as estimated future capital expenditures
(including the amount and nature thereof), business strategy and measures to
implement strategy, competitive strengths, goals, expansion and growth of the
Partnership's business and operations, plans, references to future success,
references to intentions as to future matters and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Partnership in light of its experience and its
perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate under the
circumstances. However, whether actual results and developments will conform
with the Partnership's expectations and predictions is subject to a number of
risks and uncertainties, including general economic, market or business
conditions, the opportunities (or
6
<PAGE> 9
lack thereof) that may be presented to and pursued by the Partnership,
competitive actions by other pipeline companies, changes in laws or
regulations, and other factors, many of which are beyond the control of the
Partnership. Consequently, all of the forward-looking statements made in this
Prospectus and the documents incorporated by reference herein are qualified by
these cautionary statements and there can be no assurance that the actual
results or developments anticipated by the Partnership will be realized or,
even if substantially realized, that they will have the expected consequences
to or effects on the Partnership or its business or operations.
7
<PAGE> 10
SUMMARY FINANCIAL AND OPERATING DATA
The following table sets forth, for the periods and at the dates
indicated, summary consolidated financial and operating data for the
Partnership and the Parent Partnership. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation". The summary
consolidated financial data should be read in conjunction with the Parent
Partnership's consolidated financial statements incorporated by reference in
this Prospectus.
No separate financial information for the Partnership has been
provided or incorporated by reference in this Prospectus because: (i) the
Parent Partnership does not itself conduct any operations but rather all
operations of the Parent Partnership and its subsidiaries are conducted by the
Partnership; (ii) the Parent Partnership has no material assets other than
substantially all of the ownership interest in the Partnership; and (iii) all
of the assets and liabilities shown in the consolidated financial statements
for the Parent Partnership are located at the Partnership.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(unaudited)
INCOME STATEMENT DATA (IN THOUSANDS, EXCEPT RATIOS AND TARIFF INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Transportation--Refined
Products . . . . . . . . . $ 70,041 $ 75,144 $ 89,442 $ 96,190 $ 98,641 $ 48,222 $ 52,661
Transportation--LPGs . . . . 61,385 74,270 73,458 70,576 80,219 39,583 37,744
Gain on sale of inventory . . 2,524 1,848 966 4,115 3,674 3,572 2,056
Mont Belvieu operations . . . 13,144 12,611 12,290 13,570 11,811 5,618 5,620
Other . . . . . . . . . . . . 19,128 19,761 21,146 19,265 21,680 10,800 9,993
--------- --------- --------- --------- --------- --------- ---------
Total operating revenues 166,222 183,634 197,302 203,716 216,025 107,795 108,074
--------- --------- --------- --------- --------- --------- ---------
Operating, general and
administrative . . . . . . . 75,276 79,469 85,197 96,419 96,541 46,270 46,020
Depreciation and amortization . 23,535 23,485 23,063 23,286 23,409 11,893 11,701
Taxes -- other than income
taxes . . . . . . . . . . . . 8,417 8,788 9,140 7,519 8,641 4,599 4,892
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses . . 107,228 111,742 117,400 127,224 128,591 62,762 62,613
--------- --------- --------- --------- --------- --------- ---------
Operating income . . . . . . 58,994 71,892 79,902 76,492 87,434 45,033 45,461
Interest expense, First
Mortgage Notes . . . . . . . (37,288) (36,965) (36,491) (35,844) (34,922) (17,552) (16,971)
Interest capitalized . . . . . 688 723 415 857 1,388 380 972
Other income -- net . . . . . . 2,716 1,881 3,189 5,689 5,346 2,880 1,774
Income before minority
interest . . . . . . . . . . 25,110 37,531 47,015 47,194 59,246 30,741 31,236
Minority interest . . . . . . . (254) (379) (475) (477) (598) (311) (316)
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative
effect of accounting change . 24,856 37,152 46,540 46,717 58,648 30,430 30,920
--------- --------- --------- --------- --------- --------- ---------
Accounting change, net of
minority interest . . . . . -- (949) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income . . . . . . . . $ 24,856 $ 36,203 $ 46,540 $ 46,717 $ 58,648 $ 30,430 $ 30,920
========= ========= ========= ========= ========= ========= =========
Consolidated ratios of
earnings to fixed charges . . 1.6 2.0 2.2 2.2 2.5 2.6 2.7
CASH FLOW DATA
Net cash provided by operating
activities . . . . . . . . . $ 54,977 $ 60,989 $ 70,082 $ 78,456 $ 86,121 $ 47,548 $ 40,480
Capital expenditures . . . . . $ 25,102 $ 16,240 $ 20,826 $ 25,967 $ 51,264 $ 15,635 $ 15,420
OPERATING DATA
Volumes delivered (Bbls):
Refined products . . . . . . 87,616 90,712 107,271 110,234 115,262 56,541 59,594
LPGs . . . . . . . . . . . . 34,821 38,813 36,636 38,237 41,640 20,154 20,011
Mont Belvieu operations . . . 28,482 22,035 28,695 30,148 22,522 11,346 12,819
--------- --------- --------- --------- --------- --------- ---------
Total . . . . . . . . . . . 150,919 151,560 172,602 178,619 179,424 88,041 92,424
========= ========= ========= ========= ========= ========= =========
Average system tariff per
barrel . . . . . . . . . . . $ 0.90 $ 1.01 $ 0.97 $ 0.96 $ 1.02 $ 1.02 $ 1.00
========= ========= ========= ========= ========= ========= =========
</TABLE>
8
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<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
BALANCE SHEET DATA (AT PERIOD END) 1995 1996 1997
--------- --------- ---------
(unaudited)
<S> <C> <C> <C>
Property, plant and
equipment--net . . . . . . . . . $ 533,470 $ 561,068 $ 563,884
Total assets . . . . . . . . . . 669,915 671,241 662,236
Total partners' capital . . . . . 276,381 290,311 297,841
</TABLE>
9
<PAGE> 12
<PAGE> 13
THE PARTNERSHIP
The Company, an indirect wholly owned subsidiary of Duke, is the
general partner of the Partnership and has an approximate one percent general
partner's interest therein. TEPPCO is the limited partner of the Partnership
and has an approximate 99% limited partner's interest therein. The Parent
Partnership is a publicly-held master limited partnership, the Units of which
are listed on the New York Stock Exchange under the symbol "TPP". The Company,
as general partner, performs all management and operating functions required
for the Partnership pursuant to the Partnership Agreements. The Company owns
an effective combined two percent general partner's interest in the Partnership
and the Parent Partnership. The Partnership was formed under the laws of the
State of Delaware in 1990. The Partnership's executive offices are located at
2929 Allen Parkway, P.O. Box 2521, Houston, Texas 77252-2521, and its telephone
number is (713) 759-3636.
The following chart depicts the organization relationships among the
Partnership, its partners and Duke:
[organizational chart]
10
<PAGE> 14
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby, estimated
to be approximately $387 million, will be used to repay the Partnership's 9.60%
Series A First Mortgage Notes due March 7, 2000 and the Partnership's 10.20%
Series B First Mortgage Notes due March 7, 2010 (collectively, the "First
Mortgage Notes"), together with a redemption premium currently estimated at
approximately $60 million. The precise amount of the redemption premium will
depend upon U.S. Treasury interest rates in effect on the day prior to the
redemption of the First Mortgage Notes. The closing of the offering of the
Notes and the redemption of the First Mortgage Notes are expected to occur
simultaneously. At June 30, 1997, outstanding principal under the Series A
Notes and Series B Notes was approximately $61 million and approximately $266
million, respectively. The First Mortgage Notes are secured by a mortgage on
substantially all of the property, plant and equipment of the Partnership. The
weighted average interest rate of the First Mortgage Notes at June 30, 1997,
was 10.087%.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Parent Partnership at June 30, 1997, and as adjusted to give effect to the sale
of the Notes and the application of the net proceeds therefrom as described
under "Use of Proceeds". This table should be read in conjunction with the
consolidated financial statements of the Parent Partnership and the notes
thereto incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
ACTUAL AS ADJUSTED
----------- ------------
(in thousands)
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,663 $ 35,663
Current maturities of First Mortgage Notes . . . . . . . . . . . . . . . . . . 17,000 --
First Mortgage Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309,512 --
2007 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 150,000
2027 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 240,000
Partners' capital:
General partner's interest . . . . . . . . . . . . . . . . . . . . . . . . 5,127 1,095
Limited partners' interests . . . . . . . . . . . . . . . . . . . . . . . . 292,714 236,746
</TABLE>
11
<PAGE> 15
SELECTED FINANCIAL DATA
The following table sets forth, for the periods and at the dates
indicated, selected consolidated financial and operating data for the
Partnership and the Parent Partnership. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation". The selected
consolidated financial data should be read in conjunction with the Parent
Partnership's consolidated financial statements incorporated by reference in
this Prospectus.
No separate financial information for the Partnership has been
provided or incorporated by reference in this Prospectus because: (i) the
Parent Partnership does not itself conduct any operations but rather all
operations of the Parent Partnership and its subsidiaries are conducted by the
Partnership; (ii) the Parent Partnership has no material assets other than
substantially all of the ownership interest in the Partnership; and (iii) all
of the assets and liabilities shown in the consolidated financial statements
for the Parent Partnership are located at the Partnership.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(in thousands, except ratios and tariff information) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues:
Transportation--Refined
Products ....................... $ 70,041 $ 75,144 $ 89,442 $ 96,190 $ 98,641 $ 48,222 $ 52,661
Transportation--LPGs ............ 61,385 74,270 73,458 70,576 80,219 39,583 37,744
Gain on sale of inventory ....... 2,524 1,848 966 4,115 3,674 3,572 2,056
Mont Belvieu operations ......... 13,144 12,611 12,290 13,570 11,811 5,618 5,620
Other ........................... 19,128 19,761 21,146 19,265 21,680 10,800 9,993
--------- --------- --------- --------- --------- --------- ---------
Total operating revenues ....... 166,222 183,634 197,302 203,716 216,025 107,795 108,074
--------- --------- --------- --------- --------- --------- ---------
Operating, general and
administrative .................. 75,276 79,469 85,197 96,419 96,541 46,270 46,020
Depreciation and amortization ..... 23,535 23,485 23,063 23,286 23,409 11,893 11,701
Taxes -- other than income
taxes ........................... 8,417 8,788 9,140 7,519 8,641 4,599 4,892
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses ........ 107,228 111,742 117,400 127,224 128,591 62,762 62,613
--------- --------- --------- --------- --------- --------- ---------
Operating income ................ 58,994 71,892 79,902 76,492 87,434 45,033 45,461
Interest expense, First
Mortgage Notes .................. (37,288) (36,965) (36,491) (35,844) (34,922) (17,552) (16,971)
Interest capitalized .............. 688 723 415 857 1,388 380 972
Other income -- net ............... 2,716 1,881 3,189 5,689 5,346 2,880 1,774
Income before minority
interest ...................... 25,110 37,531 47,015 47,194 59,246 30,741 31,236
Minority interest ................. (254) (379) (475) (477) (598) (311) (316)
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative
effect of accounting change .... 24,856 37,152 46,540 46,717 58,648 30,430 30,920
--------- --------- --------- --------- --------- --------- ---------
Accounting change, net of
minority interest .............. -- (949) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income ..................... $ 24,856 $ 36,203 $ 46,540 $ 46,717 $ 58,648 $ 30,430 $ 30,920
========= ========= ========= ========= ========= ========= =========
Consolidated ratios of
earnings to fixed charges (1) ... 1.6 2.0 2.2 2.2 2.5 2.6 2.7
CASH FLOW DATA
Net cash provided by operating
activities ...................... $ 54,977 $ 60,989 $ 70,082 $ 78,456 $ 86,121 $ 47,548 $ 40,480
Capital expenditures .............. $ 25,102 $ 16,240 $ 20,826 $ 25,967 $ 51,264 $ 15,635 $ 15,420
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
BALANCE SHEET DATA (AT PERIOD END) 1995 1996 1997
--------- --------- ---------
(unaudited)
<S> <C> <C> <C>
Property, plant and
equipment--net ................. $ 533,470 $ 561,068 $ 563,884
Total assets ................... 669,915 671,241 662,236
Total partners' capital ........ 276,381 290,311 297,841
</TABLE>
12
<PAGE> 16
- --------------
(1) The Parent Partnership's consolidated ratios of earnings to fixed charges
were computed by dividing earnings by fixed charges. For this purpose,
"earnings" consist of income from continuing operations before income
taxes, fixed charges (excluding interest capitalized) and minority
interest expenses of subsidiaries with fixed charges and "fixed charges"
consist of interest and amortization of debt expense, including the
interest portion of rental obligations deemed representative of the
interest factor.
13
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Partnership's operations consist of the transportation, storage
and terminaling of petroleum products. Operations are somewhat seasonal with
higher revenues generally realized during the first and fourth quarters of each
year. Refined products volumes are generally higher during the second and
third quarters because of greater demand for gasolines during the spring and
summer driving seasons. LPGs volumes are generally higher from November
through March due to higher demand in the Northeast for propane, a major fuel
for residential heating.
The Partnership's revenues are derived from the transportation of
refined products and LPGs, the storage and short-haul shuttle transportation of
LPGs at the Mont Belvieu, Texas complex, sale of product inventory and other
ancillary services. Labor and electric power costs comprise the two largest
operating expense items of the Partnership.
The following information is provided to facilitate increased
understanding of the years ended December 31, 1996, 1995 and 1994 and the
six-month periods ended June 30, 1997 and 1996 consolidated financial
statements and accompanying notes of the Partnership incorporated by reference
in this Prospectus. Material period-to-period variances in the consolidated
statements of income are discussed under "Results of Operations." The
"Financial Condition and Liquidity" section analyzes cash flows and financial
position. Discussion included in "Other Matters" addresses key trends, future
plans and contingencies. Throughout these discussions, management addresses
items that are reasonably likely to materially affect future liquidity or
earnings.
RESULTS OF OPERATIONS
Volume and average tariff information for the years ended December 31,
1996, 1995 and 1994 and the six-month periods ended June 30, 1997 and 1996 is
presented below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------- -------------------------
1996 1995 1994 1997 1996
----------- ----------- ----------- ----------- -----------
(unaudited)
(in thousands, except tariff information)
<S> <C> <C> <C> <C> <C>
Volumes Delivered (Bbls)
Refined products ...................... 115,262 110,234 107,271 59,594 56,541
LPGs .................................. 41,640 38,237 36,636 20,011 20,154
Mont Belvieu operations ............... 22,522 30,148 28,695 12,819 11,346
----------- ----------- ----------- ----------- -----------
Total ................................ 179,424 178,619 172,602 92,424 88,041
=========== =========== =========== =========== ===========
Average Tariff per Barrel
Refined products ...................... $ 0.86 $ 0.87 $ 0.83 $ 0.88 $ 0.85
LPGs .................................. 1.93 1.85 2.01 1.89 1.96
Mont Belvieu operations ............... 0.17 0.15 0.14 0.14 0.17
Average system tariff per barrel ..... $ 1.02 $ 0.96 $ 0.97 $ 1.00 $ 1.02
</TABLE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1996
For the six months ended June 30, 1997, refined products
transportation revenues increased $4.4 million, compared with the corresponding
period in 1996, due to a 5% increase in volumes delivered and a 4% increase in
the refined products average tariff per barrel. The increase in refined
products transportation volumes was attributable to higher deliveries of motor
fuel, distillate, natural gasoline and jet fuel during the second quarter of
1997, partially offset by lower deliveries of motor fuel and distillates during
the first quarter of 1997 due to increased refinery utilization in the Midwest
market areas and lower refinery production along the upper Texas Gulf
14
<PAGE> 18
Coast. The increase in the refined products average tariff per barrel during
1997 reflects a higher percentage of long-haul transportation deliveries and
the higher tariff rate on the Ark-La-Tex system.
LPGs transportation revenues decreased $1.8 million during the six
months ended June 30, 1997, compared with the same period in 1996, due
primarily to lower propane deliveries attributable to warmer winter weather in
the first quarter of 1997, and a decrease in butane deliveries as a result of
increased competing product being imported from Canada into the Midwest. These
decreases were partially offset by favorable price differentials of propane in
the Northeast market area during the second quarter of 1997, and stronger
demand for isobutane as a refinery feedstock due to the resumption during the
second quarter of 1997 of operations at a Northeast refinery that was shut down
throughout 1996. The 4% decrease in the LPGs average tariff per barrel
resulted from lower long-haul propane deliveries during the first quarter of
1997, as well as increased demand for short-haul deliveries along the upper
Texas Gulf Coast.
Revenues generated from Mont Belvieu operations increased slightly
during the six months ended June 30, 1997, compared with the corresponding
period in 1996, due primarily to higher terminaling fees on butane received
into the System and higher petrochemical demand along the upper Texas Gulf
Coast. These increases were largely offset by the decrease in the Mont Belvieu
operations average tariff per barrel for shuttle deliveries during 1997, which
resulted from higher contract deliveries, which generally carry lower tariffs.
Gains on the sale of inventory decreased during the six months ended
June 30, 1997, compared with the corresponding periods in 1996, as a result of
lower volumes of gasoline being sold during the second quarter of 1997.
Other operating revenues decreased during the six months ended June
30, 1997, as compared to the corresponding period in 1996, due to write downs
of product inventory recorded during the second quarter of 1997 and lower
propane imports received at the marine terminal at Providence, Rhode Island,
due primarily to warmer winter weather during the first quarter of 1997. These
decreases were partially offset by higher refined products terminaling fees
attributable to the increase in refined products transportation volumes
delivered in 1997.
Costs and expenses decreased slightly during the first six months of
1997, compared with the same period in 1996, due primarily to lower operating,
general and administrative expenses attributable to lower outside services for
System maintenance and remediation and lower product measurement losses. These
decreases were partially offset by increased thoughput-related costs, increased
labor and benefits expenses and a capacity lease agreement with Colonial
Pipeline Company. Lower operating, general and administrative expenses were
partially offset by higher property tax assessments for 1997.
Interest expense decreased during the six-month period in 1997,
compared with the same period in 1996, due to principal payments on the First
Mortgage Notes of $10.0 million and $13.0 million in March 1996 and 1997,
respectively. Capitalized interest increased $0.6 million during the six-month
period ended June 30, 1997, compared with the same period in 1996 as a result
of higher construction balances related to capital projects, which commenced
during 1996, and were completed during 1997. Other income, primarily interest,
decreased during the six months ended June 30, 1997, compared with the
corresponding period in 1996, as a result of lower cash balances in 1997.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net income for the year ended December 31, 1996 increased 25% to $58.6
million, compared with net income of $46.7 million for the year ended December
31, 1995. Net income for 1995 included $7.4 million of charges for the
settlement of certain litigation and remediation costs at the Partnership's
Seymour, Indiana, terminal. Excluding such charges, net income for 1996 would
have increased by $4.5 million, or 8%. The increase in net income for 1996
resulted from a $12.3 million increase in operating revenues, a $0.9 million
decrease in interest expense and a $0.5 million increase in interest
capitalized. These increases for 1996 were partially offset by a $1.4 million
increase in costs and expenses.
15
<PAGE> 19
Operating revenues for the year ended 1996 increased 6% to $216.0
million from $203.7 million for the year ended 1995. This $12.3 million
increase resulted from a $9.6 million increase in LPGs transportation revenues,
a $2.5 million increase in refined products transportation revenues and a $2.4
million increase in other operating revenues. These increases were partially
offset by a $1.8 million decrease in revenues generated from Mont Belvieu
operations and a $0.4 million decrease in product inventory sales.
Refined products transportation revenues increased $2.5 million for
the year ended December 31, 1996, compared with the prior year, as a result of
the 5% increase in volumes delivered. Jet fuel deliveries increased to 20.7
million barrels ("MMBbls") due to the completion of the pipeline connection to
the United States Air Force Base near Little Rock, Arkansas, in June 1996, as
well as higher demand from commercial airlines in the Midwest. Motor fuel
deliveries also increased during 1996 as a result of higher demand in the
Central and Midwest market areas. These increases were partially offset by
lower deliveries of methyl tertiary butyl ether ("MTBE"), reformulated gasoline
and gasoline blendstocks in the Chicago area, coupled with lower feedstock
demand along the upper Texas Gulf Coast.
LPGs transportation revenues increased $9.6 million, or 14%, for the
year ended December 31, 1996, compared with the prior year, due to the 9%
increase in volumes delivered and the 4% increase in the LPGs average tariff
per barrel. Propane deliveries increased to a record 35.2 MMBbls as a result
of colder winter weather during the first and second quarters of 1996, lower
inventory supplies and favorable price differentials. The increase in propane
deliveries was partially offset by a 2.8 MMBbls decrease in butane deliveries
attributable to increased Canadian supply imported into the Midwest, higher
Gulf Coast prices and the shut-down of a refinery in the Northeast that was
supplied by the Pipeline System. This refinery resumed operations in the
second quarter of 1997. The 4% increase in the LPGs average tariff per barrel
during 1996 resulted from increased long-haul propane deliveries in the upper
Midwest and Northeast, coupled with lower deliveries along the upper Texas Gulf
Coast.
Revenues generated from Mont Belvieu operations decreased $1.8 million
during 1996, compared with the prior year, due to decreased storage revenue and
lower terminaling fees on butane received into the System. Additionally,
shuttle deliveries decreased 25% from the prior year due primarily to low
butane and propane inventory supplies and lower petrochemical demand for
propane along the upper Texas Gulf Coast. The Mont Belvieu operations average
tariff per barrel for shuttle deliveries increased to $0.17 per barrel in 1996,
due to a lower percentage of contract deliveries, which generally carry lower
tariffs.
Gains on the sale of inventory decreased $0.4 million during 1996,
compared with the prior year, as a result of lower volumes of product sold in
1996.
Other operating revenues increased $2.4 million during the year ended
December 31, 1996, compared with 1995, due to higher propane imports at the
Partnership's marine terminal at Providence, Rhode Island, increased LPGs
terminaling fees and increased revenues resulting from greater volumes marketed
between customers at the Mont Belvieu complex.
Costs and expenses increased $1.4 million during the year ended
December 31, 1996, compared with the prior year, due primarily to a $1.1
million increase in taxes--other than income taxes, and a $0.1 million increase
in operating, general and administrative expenses. The increase in
taxes--other than income, was attributable to a $0.9 million adjustment
recorded during 1995 related to the reclassification of the Partnership as a
non-utility for Ohio property taxes. Operating, general and administrative
expenses increased in 1996 as a result of higher throughput-related expenses
including higher mainline power costs, increased usage of propane odorant and
gasoline additives, and expenses for external barges utilized during the fourth
quarter of 1996. Additionally, expenses were higher during 1996 due to
increased System maintenance, coupled with increased labor and benefits costs.
These increases were largely offset by $7.4 million of charges during 1995
related to the settlement of certain claims and environmental remediation costs
at the Partnership's Seymour, Indiana, terminal.
16
<PAGE> 20
Interest expense decreased $0.9 million during the year ended December
31, 1996, compared with 1995, due to the $10.0 million principal payment on the
First Mortgage Notes in March 1996. Interest capitalized increased $0.5
million over the prior year as a result of increased capital spending during
1996.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net income for the year ended December 31, 1995 totaled $46.7 million,
compared with net income of $46.5 million for the year ended December 31, 1994.
Net income for 1995 included $7.4 million of charges for the settlement of
certain litigation and remediation costs at the Partnership's Seymour, Indiana,
terminal. Excluding the charges, net income would have been $54.1 million, a
16% increase from 1994.
Operating revenues for the year ended 1995 increased 3% to $203.7
million from $197.3 million for the year ended 1994. This $6.4 million
increase resulted from a $6.8 million increase in refined products
transportation revenues, a $3.1 million increase in product inventory sales and
a $1.3 million increase in revenues generated from Mont Belvieu operations.
These increases were partially offset by a $2.9 million decrease in LPGs
transportation revenues and a $1.9 million decrease in other operating
revenues.
The $6.8 million, or 8%, increase in refined products transportation
revenues for the year ended December 31, 1995, compared with the prior year,
was due primarily to increased deliveries of jet fuel, MTBE and natural
gasoline, partially offset by lower deliveries of motor fuel. The increase in
jet fuel deliveries resulted from higher demand at airports served by the
Partnership as well as the full year impact of the completion of a pipeline
connection to the George Bush Intercontinental Airport, Houston, in July 1994.
Deliveries of MTBE increased during 1995 due primarily to contract deliveries
to the Midwest, which commenced during the first quarter of 1995, and increased
short-haul deliveries resulting from the completion of a vapor recovery unit at
the Partnership's marine terminal near Beaumont, Texas. The increase in
natural gasoline deliveries was attributable to increased demand for use as a
feedstock in the refining process as well as new supply contracts with Midwest
refiners. The decrease in motor fuel deliveries was primarily due to higher
local supply in the Partnership's Midwest market area. The increase in the
average System tariff per barrel was primarily due to the general rate
increase, averaging 4%, for refined products effective December 1, 1994.
The $2.9 million decrease in LPGs transportation revenues for the year
ended December 31, 1995, compared with the prior year, resulted from a $5.6
million decrease in propane transportation revenue, partially offset by a $2.7
million increase in butane transportation revenue. Propane transportation
revenue decreased 9% from 1994 due primarily to warmer than normal weather in
the upper Midwest and Northeast during the first quarter of 1995, partially
offset by a return of colder weather in these regions during the fourth quarter
of 1995. The increase in butane revenue resulted primarily from higher demand
for use in gasoline blending and favorable price differentials in the Midwest.
The increase in total LPGs volumes delivered was primarily attributable to
higher petrochemical demand for propane along the upper Texas Gulf Coast and
higher mainline butane volumes. The increase in propane deliveries along the
upper Texas Gulf Coast and lower long-haul propane deliveries resulted in a
lower LPGs average tariff per barrel during 1995.
Revenues generated from Mont Belvieu operations increased during 1995,
compared with the prior year, as a result of increased demand for shuttle
deliveries of propane and butane along the upper Texas Gulf Coast, coupled with
increased receipt charges on butane received for storage.
Other operating revenues decreased $1.9 million during the year ended
December 31, 1995, compared with 1994, due to lower propane imports at the
Partnership's marine terminal at Providence, Rhode Island, lower receipts of
gasoline at the Partnership's marine terminal near Beaumont, Texas, and lower
revenue generated from MTBE storage services. These decreases were partially
offset by higher revenue earned from terminaling operations along the Pipeline
System.
The increase in gain on sale of product inventory for the year ended
December 31, 1995, compared with the prior year, was due to higher volumes of
product inventory sold, coupled with higher margins.
17
<PAGE> 21
Costs and expenses increased $9.8 million during the year ended
December 31, 1995, compared with the prior year, due primarily to a $11.2
million increase in operating, general and administrative expenses, partially
offset by a $1.6 million decrease in taxes--other than income taxes.
Operating, general and administrative expenses included $7.4 million of charges
related to the settlement of certain claims and environmental remediation costs
at the Partnership's Seymour, Indiana, terminal during 1995. The additional
increase in operating, general and administrative expenses was due primarily to
higher outside services related to increased maintenance projects and
environmental remediation activities at certain Partnership facilities, higher
premiums for insurance and increased volume-related power costs, partially
offset by lower external leased storage costs. The decrease in taxes--other
than income taxes resulted from lower property taxes due primarily to a
reclassification of the Partnership as a non-utility in Ohio.
Interest expense decreased during the year ended December 31, 1995,
compared with 1994, due to the $7.0 million principal payment on the First
Mortgage Notes in March 1995.
Other income increased during the year ended December 31, 1995,
compared with the 1994, primarily from higher interest income earned on
investments.
FINANCIAL CONDITION AND LIQUIDITY
Net cash from operations totaled $40.5 million for the six-month
period ended June 30, 1997, compared with $47.5 million for the corresponding
period in 1996. The decrease resulted primarily from a decrease in working
capital sources of cash. The decrease in working capital sources of cash was
primarily due to higher accounts receivable balances related to increased
operating revenues during the second quarter of 1997 and lower inventory sales
during 1997, partially offset by lower cash payments for accrued expenses
during 1997. Net cash from operations for the six months ended June 30, 1997
and 1996 reflect semi-annual interest payments related to the First Mortgage
Notes of $17.1 million and $17.6 million, respectively.
Cash flows used in investing activities during the first six months of
1997 included $15.4 million of capital expenditures and $3.9 million of
additional cash investments, partially offset by $16.0 million from investment
maturities and $1.0 million of insurance proceeds related to the replacement
value of a 20-inch diameter auxiliary pipeline at the Red River in central
Louisiana, which was damaged in 1994 and subsequently removed from service.
Cash flows used in investing activities during the first six months of 1996
included $15.6 million of capital expenditures and additional investments of
$14.4 million, partially offset by matured investments of $9.9 million.
Capital expenditures are expected to total approximately $34 million for the
full year of 1997. The Partnership revises capital spending periodically in
response to changes in cash flows and operations. Interest income earned on
all investments is included in cash from operations.
The Partnership paid cash distributions of $23.6 million during the
six months ended June 30, 1997. Additionally, on July 14, 1997, the
Partnership declared a cash distribution of $0.80 per Unit for the three months
ended June 30, 1997, increasing the annualized distribution to $3.20 per Unit
from $3.00 per Unit. The second quarter cash distribution was paid on August
8, 1997 to Unitholders of record on July 31, 1997. The Partnership paid cash
distributions of $45.2 million ($2.90 per Unit), $40.3 million ($2.65 per Unit)
and $34.7 million ($2.37 per Unit) for each of the years ended 1996, 1995 and
1994, respectively. Distributions reflect the conversion of the Deferred
Participation Interests ("DPIs") (discussed below), effective with the
quarterly payment on May 13, 1994.
The First Mortgage Notes, which are secured by a mortgage on
substantially all property, plant and equipment of the Partnership, require
annual principal payments through March 2010. Interest is payable
semi-annually on March 7 and September 7. Cash and cash equivalents were
reduced by principal payments related to the First Mortgage Notes of $13.0
million, $10.0 million, $7.0 million and $5.0 million on March 7, 1997, 1996,
1995 and 1994, respectively. At June 30, 1997, the current maturities of the
First Mortgage Notes were $17.0 million. The note agreement relating to the
First Mortgage Notes limits the amount of cash distributions that can be made
by the Partnership to the Parent Partnership. Such restriction is not
anticipated to preclude the Parent
18
<PAGE> 22
Partnership from making quarterly distributions to Unitholders of at least
$0.80 per Unit during the remainder of 1997.
Net cash from operations for the year ended December 31, 1996, totaled
$86.1 million, comprised of $82.1 million of income before charges for
depreciation and amortization and $4.0 million from changes in other operating
assets and liabilities. This compares with cash flows from operations of $78.5
million for the year ended 1995, which was comprised of $70.0 million of income
before charges for depreciation and amortization and $8.5 million of cash
provided by other working capital changes. The $7.6 million increase in cash
provided by operations in 1996 reflects higher income earned in 1996, partially
offset by higher cash payments for accrued expenses in 1996. Net cash from
operations for the year ended December 31, 1994 totaled $70.1 million, which
was comprised of $69.6 million of income before charges for depreciation and
amortization and $0.5 million from working capital sources of cash. Net cash
from operations includes interest payments related to the First Mortgage Notes
of $34.7 million, $35.5 million and $36.1 million for each of the years ended
1996, 1995 and 1994, respectively.
The Partnership routinely invests excess cash in liquid investments as
part of its cash management program. Investments of cash in discounted
commercial paper and Eurodollar time deposits with original maturities at date
of purchase of 90 days or less are included in cash and cash equivalents.
Short-term investments of cash consist of investment-grade corporate notes with
maturities during 1997. Long-term investments are comprised of
investment-grade corporate notes with varying maturities between 1998 and 2001.
Interest income earned on all investments is included in cash from operations.
Cash flows from investing activities included proceeds from investments of
$18.6 million, $69.0 million and $23.8 million for each of the years ended
1996, 1995 and 1994, respectively. Cash flows from investing activities also
included additional investments of $14.4 million, $62.4 million and $65.5
million for each of the years ended 1996, 1995 and 1994, respectively.
Capital expenditures totaled $51.3 million for the year ended December
31, 1996, compared with capital expenditures of $26.0 million for the year
ended December 31, 1995. The increase in 1996 reflects higher spending for
revenue-generating projects that included the replacement of approximately 54
miles of an 8-inch diameter line with a 10-inch diameter line between
Shreveport, Louisiana, and El Dorado, Arkansas; pipeline modifications to
increase mainline capacity by 50,000 barrels per day between El Dorado and
Seymour, Indiana; and the completion of facilities required to deliver jet fuel
to the United States Air Force Base near Little Rock, Arkansas, which became
operational in June 1996. Capital expenditures for 1994 totaled $20.8 million.
Capital expenditures for System integrity projects and for sustaining existing
operations totaled $12.1 million, $16.1 million and $11.9 million for each of
the years ended 1996, 1995 and 1994, respectively.
The Partnership estimates that capital expenditures for 1997 will be
approximately $33.8 million. Approximately $9.0 million is expected to used
for revenue-generating projects including $5.3 million to be used to complete
the capacity expansion between Shreveport and El Dorado as well as the mainline
expansion to serve the Midwest market area. An additional $2.0 million is
projected to be spent to connect the Pipeline System to Colonial Pipeline
Company's pipeline at Beaumont, Texas. The remaining capital expenditures
during 1997 will primarily be used for life-cycle replacements and to upgrade
current facilities. The Partnership revises capital spending periodically in
response to changes in cash flows and operations.
During 1995 and 1994, the Partnership received $9.8 million and $0.2
million, respectively, in insurance proceeds related to the failure of a LPGs
storage cavern in Ohio during April 1993. Pursuant to the agreements relating
to the First Mortgage Notes, these proceeds were held in a trust account and
were invested in discounted commercial paper. The proceeds and interest income
were released by the trustee during August 1996 after storage and capacity
modifications were completed along the Pipeline System to replace the reduced
storage capacity of the failed storage cavern in Ohio.
In connection with the formation of the Parent Partnership in 1990,
the Company received 1,250,000 DPIs, which represent an effective 8.45% limited
partner interest in the Parent Partnership. Effective April 1, 1994, the DPIs
began participating in distributions of cash and allocations of profit and loss
because Available Cash (constituting Cash From Operations) for the preceding
two successive quarters was sufficient to distribute not less than the Minimum
Quarterly Distribution ($0.55 per Unit) with respect to all Units outstanding
at the applicable
19
<PAGE> 23
record date plus the DPIs. The DPIs began receiving cash distributions
effective with the quarterly payment on May 13, 1994.
OTHER MATTERS
The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the Pipeline System are in material
compliance with applicable environmental regulations, risks of significant
costs and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
Pipeline System, could result in substantial costs and liabilities to the
Partnership. The Partnership does not anticipate that changes in environmental
laws and regulations will have a material adverse effect on its financial
position, operations or cash flows in the near term.
The Partnership and the Indiana Department of Environmental Management
("IDEM") have entered into an Agreed Order that will ultimately result in a
remediation program for any on-site and off-site environmental problems
attributable to the Partnership's operations at the Seymour, Indiana, terminal.
As part of the Agreed Order, the Partnership has completed the remedial
investigation sampling for groundwater contamination and has submitted to IDEM
the final remedial investigation report for the Seymour terminal. In the
opinion of the General Partner, the completion of the remediation program to be
proposed by the Partnership, if such program is approved by IDEM, will not have
a material adverse impact on the Partnership.
During June 1997, the Partnership filed rate increases on selective
refined products tariffs and LPGs tariffs, averaging 1.7%. These rate
increases became effective July 1, 1997 without suspension or refund
obligation.
The Partnership periodically enters into futures contracts to hedge
its exposure to price risk on product inventory transactions. Recognized gains
and losses related to futures contracts which qualify as hedges are recognized
in income when the related inventory transactions are completed. Gains and
losses related to futures contracts, which have been insignificant, are
reported as a component of product inventory in the consolidated balance sheet
until recognized as income. At December 31, 1996, June 30, 1997, and the date
of this Prospectus, there were no outstanding futures contracts.
Effective January 1, 1996, the Partnership adopted Statement of
Financial Accounting Standards ("SFAS") 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," with no impact
to the Partnership's consolidated financial statements. Assets were grouped
and evaluated based on the ability to identify their respective cash flows.
In October 1995, the Financial Accounting Standards Board ("FASB")
issued SFAS 123, "Accounting for Stock-Based Compensation." This standard
addresses the timing and measurement of stock-based compensation expense. The
Partnership has elected to retain the approach of Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock issued to Employees," (the
intrinsic value method) for recognizing stock-based expense in the consolidated
financial statements. The Partnership adopted SFAS 123 in 1996 with respect to
the disclosure requirements set forth therein for companies retaining the
intrinsic value approach of APB No. 25. See Note 10 of the Notes to
Consolidated Financial Statements of the Partnership incorporated by reference
in this Prospectus.
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<PAGE> 24
BUSINESS AND PROPERTIES
GENERAL
The Partnership is one of the largest pipeline common carriers of
refined petroleum products and LPGs in the United States. The Partnership owns
and operates an approximate 4,300-mile pipeline system extending from southeast
Texas through the central and midwestern United States to the northeastern
United States. The Pipeline System includes delivery terminals along the
Pipeline for outloading product to other pipelines, tank trucks, rail cars or
barges, as well as substantial storage capacity at Mont Belvieu, Texas, the
largest LPGs storage complex in the United States, and at other locations. The
Partnership also owns two marine receiving terminals, one near Beaumont, Texas,
and the other at Providence, Rhode Island. The Providence terminal is not
physically connected to the Pipeline. As an interstate common carrier, the
Pipeline System offers interstate transportation services, pursuant to tariffs
filed with the FERC, to any shipper of refined petroleum products and LPGs who
requests such services, provided that the shipper and the products tendered by
such shipper for transportation satisfy the conditions and specifications
contained in the applicable tariff. In addition to the revenues received by
the Pipeline System from its interstate tariffs, it also receives revenues from
the shuttling of LPGs between refinery and petrochemical facilities on the
upper Texas Gulf Coast and ancillary transportation, storage and marketing
services at key points along the System. Substantially all the petroleum
products transported and stored in the Pipeline System are owned by the
Partnership's customers. Petroleum products are received at terminals located
principally on the southern end of the Pipeline System, stored, scheduled into
the Pipeline in accordance with customer nominations and shipped to delivery
terminals for ultimate delivery to the final distributor (e.g., gas stations
and retail propane distribution centers) or to other pipelines. Pipelines are
generally the lowest cost method for intermediate and long-haul overland
transportation of petroleum products. The Pipeline System is the only pipeline
that transports LPGs to the Northeast.
The Partnership's business depends in large part on (i) the level of
demand for refined petroleum products and LPGs in the geographic locations
served by it and (ii) the ability and willingness of customers having access to
the Pipeline System to supply such demand by deliveries through the System.
The Partnership cannot predict the impact of future fuel conservation measures,
alternate fuel requirements, governmental regulation, technological advances in
fuel economy and energy-generation devices, all of which could reduce the
demand for refined petroleum products and LPGs in the areas served by the
Partnership.
OPERATIONS
The Partnership conducts business and owns properties located in 12
states. Products are transported in liquid form from the upper Texas Gulf
Coast through two parallel underground pipelines that extend to Seymour,
Indiana. From Seymour, segments of the Pipeline System extend to the Chicago,
Illinois; Lima, Ohio; Selkirk, New York; and Philadelphia, Pennsylvania, areas.
The Pipeline System east of Todhunter, Ohio, is dedicated solely to LPGs
transportation and storage services.
The Pipeline System includes 30 storage facilities with an aggregate
storage capacity of 13 MMBbls of refined petroleum products and 38 MMBbls of
LPGs, including storage capacity leased to outside parties, as well as 20
product delivery terminals. In addition, the Pipeline System makes deliveries
to terminals and storage facilities owned by third parties.
PIPELINE SYSTEM
The Pipeline System is comprised of a 20-inch diameter line extending
in a generally northeasterly direction from Baytown, Texas (located
approximately 30 miles east of Houston), to a point in southwest Ohio near
Lebanon and Todhunter. A second line, which also originates at Baytown, is 16
inches in diameter until it reaches Beaumont, Texas, at which point it reduces
to a 14-inch diameter line. This second line extends along the same path as the
20-inch diameter line to the Pipeline System's terminal in El Dorado, Arkansas,
before continuing as a 16-inch diameter line to Seymour, Indiana. The Pipeline
System also has smaller diameter lines that extend laterally from El Dorado to
Helena and Arkansas City, Arkansas, from Tyler, Texas, to El Dorado and from
McRae,
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<PAGE> 25
Arkansas, to West Memphis, Arkansas. The lines from El Dorado to Helena and
Arkansas City have 10-inch diameters. The line from Tyler to El Dorado varies
in diameter from 8 inches to 10 inches. The line from McRae to West Memphis
has a 12-inch diameter. The Pipeline System also includes a 14-inch diameter
line from Seymour, Indiana, to Chicago, Illinois, and a 10-inch diameter line
running from Lebanon to Lima, Ohio. This 10-inch diameter pipeline connects to
the Buckeye Pipe Line Company system that serves, among others, markets in
Michigan and eastern Ohio. Also, the Pipeline System has a 6-inch diameter
pipeline connection to the Greater Cincinnati/Northern Kentucky International
Airport and a 8-inch diameter pipeline connection to the George Bush
Intercontinental Airport, Houston. In addition, there are numerous smaller
diameter lines associated with the gathering and distribution system.
The Pipeline System continues eastward from Todhunter, Ohio, to
Greensburg, Pennsylvania, at which point it branches into two segments, one
ending in Selkirk, New York (near Albany), and the other ending at Marcus Hook,
Pennsylvania (near Philadelphia). The Pipeline east of Todhunter and ending in
Selkirk is an 8-inch diameter line, whereas the line starting at Greensburg and
ending at Marcus Hook varies in diameter from 6 inches to 8 inches. East of
Todhunter, Ohio, the Partnership transports only LPGs through the Pipeline.
The Pipeline System has been constructed and is in general compliance
with applicable federal, state and local laws and regulations, and accepted
industry standards and practices. The Partnership performs regular maintenance
on all the facilities of the Pipeline System and has an ongoing process of
inspecting segments of the Pipeline System and making repairs and replacements
when necessary or appropriate. In addition, the Partnership conducts periodic
air patrols of the Pipeline System to monitor pipeline integrity and
third-party right of way encroachments.
TITLE TO PROPERTIES
The Partnership believes it has satisfactory title to all of its
assets. Although such properties are subject to liabilities in certain cases,
such as customary interests generally contracted in connection with acquisition
of the properties, liens for taxes not yet due, easements, restrictions, and
other minor encumbrances, the Partnership believes none of such burdens
materially detracts from the value of such properties or from the Partnership's
interest therein or will materially interfere with their use in the operation
of the Partnership's business. Substantially all of the property, plant and
equipment of the Partnership is subject to a mortgage securing the First
Mortgage Notes. Such mortgage will be released upon the repayment of the First
Mortgage Notes with the proceeds of the offering made hereby.
MAJOR BUSINESS SECTOR MARKETS
The Pipeline System's major operations are the transportation, storage
and terminaling of refined petroleum products and LPGs along its mainline
system, and the storage and short-haul transportation of LPGs associated with
its Mont Belvieu operations. Product deliveries on a regional basis over the
last three years were as follows:
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<PAGE> 26
<TABLE>
<CAPTION>
PRODUCT DELIVERIES (MMBbls)
YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Refined Products Transportation:
Central(1) ......................... 66.9 60.6 56.2
Midwest(2) ......................... 28.7 29.3 26.1
Ohio and Kentucky .................. 19.7 20.3 25.0
--------- --------- ---------
Subtotal .......................... 115.3 110.2 107.3
--------- --------- ---------
LPGs Mainline Transportation:
Central, Midwest and Kentucky(1)(2). 24.6 23.3 20.0
Ohio and Northeast(3) .............. 17.0 15.0 16.6
--------- --------- ---------
Subtotal .......................... 41.6 38.3 36.6
--------- --------- ---------
Mont Belvieu Operations:
LPGs ............................... 22.5 30.1 28.7
--------- --------- ---------
Total Product Deliveries .......... 179.4 178.6 172.6
========= ========= =========
</TABLE>
- -----------
(1) Arkansas, Louisiana, Missouri and Texas.
(2) Illinois and Indiana.
(3) New York and Pennsylvania.
The mix of products delivered varies seasonally, with gasoline demand
generally stronger in the spring and summer months and LPGs demand generally
stronger in the fall and winter months. Weather and economic conditions in the
geographic areas served by the Pipeline System also affect the demand for and
the mix of the products delivered.
Refined products and LPGs deliveries over the last three years were as
follows:
<TABLE>
<CAPTION>
PRODUCT DELIVERIES (MMBbls)
YEARS ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Refined Products Transportation:
Gasoline .......................... 65.4 64.1 67.3
Jet Fuels ......................... 20.7 18.1 14.9
Middle Distillates (1) ............ 23.2 22.4 23.3
MTBE/Toluene ...................... 6.0 5.6 1.8
--------- --------- ---------
Subtotal ......................... 115.3 110.2 107.3
--------- --------- ---------
LPGs Mainline Transportation:
Propane ........................... 35.2 29.1 28.9
Butanes ........................... 6.4 9.2 7.7
--------- --------- ---------
Subtotal ......................... 41.6 38.3 36.6
--------- --------- ---------
Mont Belvieu Operations:
LPGs .............................. 22.5 30.1 28.7
--------- --------- ---------
Total Product Deliveries ......... 179.4 178.6 172.6
========= ========= =========
</TABLE>
- ------------
(1) Primarily diesel fuel, heating oil and other middle distillates.
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<PAGE> 27
Refined Petroleum Products Transportation. The Pipeline System
transports refined petroleum products from the upper Texas Gulf Coast, eastern
Texas and southern Arkansas to the Central and Midwest regions of the United
States with deliveries in Texas, Louisiana, Arkansas, Missouri, Illinois,
Kentucky, Indiana and Ohio. At these points, refined petroleum products are
delivered to Partnership-owned terminals, connecting pipelines and
customer-owned terminals. The volume of refined petroleum products transported
by the Pipeline System is directly affected by the demand for such products in
the geographic regions the System serves. Such market demand varies based upon
the different end uses to which the refined products deliveries are applied.
Demand for gasoline, which accounts for a substantial portion of the volume of
refined products transported through the Pipeline System, depends upon price,
prevailing economic conditions and demographic changes in the markets served.
Demand for refined products used in agricultural operations is affected by
weather conditions, government policy and crop prices. Demand for jet fuel
depends upon prevailing economic conditions and military usage.
Effective January 1, 1995, the Clean Air Act Amendments of 1990
mandated the use of reformulated gasolines in nine metropolitan areas of the
United States, including the Houston and Chicago areas served by the System. A
portion of the reformulated and oxygenated gasolines includes MTBE as a major
blending component. The Partnership has invested in modifications to the
System needed to allow the Partnership to achieve increased revenues from the
transportation and storage of MTBE as well as other blending components used in
the production of reformulated gasolines.
LPGs Mainline Transportation. The Pipeline System transports LPGs
from the upper Texas Gulf Coast to the Central, Midwest and Northeast regions
of the United States. The Pipeline System east of Todhunter, Ohio, is devoted
solely to the transportation of LPGs. Since LPGs demand is generally stronger
in the winter months, the Pipeline System often operates near capacity during
such time. Propane deliveries are generally sensitive to the weather and
meaningful year-to-year variations have occurred and will likely continue to
occur.
The Partnership's ability to serve markets in the Northeast is
enhanced by its propane import terminal at Providence, Rhode Island. This
facility includes a 400,000-barrel refrigerated storage tank along with ship
unloading and truck loading facilities. Although the terminal is operated by
the Partnership, the utilization of the terminal is committed by contract to a
major propane marketer through May 2001.
Mont Belvieu LPGs Storage and Pipeline Shuttle. A key aspect of the
Pipeline System's LPGs business is its storage and pipeline asset base in the
Mont Belvieu, Texas, complex serving the fractionation, refining and
petrochemical industries. The complex is the largest of its kind in the United
States and provides substantial capacity and flexibility in the transportation,
terminaling and storage of natural gas liquids, LPGs and olefins.
The Partnership has 33 MMBbls of LPGs storage capacity, including
storage capacity leased to outside parties, at the Mont Belvieu complex. The
Partnership's Mont Belvieu short-haul transportation shuttle system, consisting
of a complex system of pipelines and interconnects, ties Mont Belvieu to
virtually every refinery and petrochemical facility on the upper Texas Gulf
Coast.
Product Sales and Other. The Partnership also derives revenue from
the sale of product inventory, terminaling activities and other ancillary
services associated with the transportation and storage of refined petroleum
products and LPGs.
CUSTOMERS
The Pipeline System's customers for the transportation of refined
petroleum products include major integrated oil companies, independent oil
companies and wholesalers. End markets for these deliveries are primarily (i)
retail service stations, (ii) truckstops, (iii) agricultural enterprises, (iv)
refineries (for MTBE and other blendstocks), and (v) military and commercial
jet fuel users.
Propane shippers include wholesalers and retailers who, in turn, sell
to commercial, industrial, agricultural and residential heating customers, as
well as utilities who use propane as a fuel source. Refineries constitute the
24
<PAGE> 28
Partnership's major customers for butane and isobutane, which are used as a
blendstock for gasolines and as a feedstock for alkylation units, respectively.
At December 31, 1996, the Pipeline System had approximately 165
customers. Transportation revenues (and percentage of total revenues)
attributable to the top 10 shippers were $81 million (38%), $77 million (38%),
and $74 million (37%) for the years ended December 31, 1996, 1995 and 1994,
respectively. During 1996 and 1995, no single customer accounted for greater
than 10% of total revenues. During 1994, billings to Marathon Oil Company, a
major integrated oil company, accounted for approximately 10% of the
Partnership's total revenues. Loss of a business relationship with a
significant customer could have an adverse affect on the consolidated financial
position and results of operations of the Partnership.
COMPETITION
The Pipeline System conducts operations without the benefit of
exclusive franchises from government entities. Interstate common carrier
transportation services are provided through the System pursuant to tariffs
filed with the FERC.
Because pipelines are generally the lowest cost method for
intermediate and long-haul overland movement of refined petroleum products and
LPGs, the Pipeline System's most significant competitors (other than indigenous
production in its markets) are pipelines in the areas where the Pipeline System
delivers products. Competition among common carrier pipelines is based
primarily on transportation charges, quality of customer service and proximity
to end users. The General Partner believes the Partnership is competitive with
other pipelines serving the same markets; however, comparison of different
pipelines is difficult due to varying product mix and operations.
Trucks, barges and railroads competitively deliver products in some of
the areas served by the Pipeline System. Trucking costs, however, render that
mode of transportation less competitive for longer hauls or larger volumes.
Barge fees for the transportation of refined products are generally lower than
the Partnership's tariffs. The Partnership faces competition from rail
movements of LPGs in several geographic areas. The most significant area is
the Northeast, where rail movements of propane from Sarnia, Canada, compete
with propane moved on the Pipeline System.
CAPITAL EXPENDITURES
Capital expenditures by the Partnership were $51.3 million for the
year ended December 31, 1996. This amount includes capitalized interest of
$1.4 million. Approximately $37.8 million was used for revenue-generating
projects and $12.1 million for System integrity projects and for sustaining
existing operations. Revenue-generating projects included $18.7 million of
expenditures to provide additional capacity from a refinery near Shreveport,
Louisiana, which included the replacement of approximately 54 miles of an
8-inch diameter line with a 10-inch diameter line between Shreveport and El
Dorado, Arkansas. Revenue-generating projects also included $11.9 million of
spending to increase mainline capacity by 50,000 barrels per day between El
Dorado and Seymour, Indiana. An additional $4.3 million of 1996 spending was
used to complete facilities required to deliver jet fuel to the United States
Air Force Base near Little Rock, Arkansas, which became operational in June
1996.
The Partnership estimates that capital expenditures for 1997 will be
approximately $33.8 million. Approximately $9.0 million is expected to used
for revenue-generating projects including $5.3 million to be used to complete
the capacity expansion between Shreveport and El Dorado as well as the mainline
expansion to serve the Midwest market area. An additional $2.0 million is
projected to be spent to connect the Pipeline System to Colonial Pipeline
Company's pipeline at Beaumont, Texas. The remaining capital expenditures
during 1997 will primarily be used for life-cycle replacements and to upgrade
current facilities. The Partnership revises capital spending periodically in
response to changes in cash flows and operations.
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<PAGE> 29
REGULATION
The Partnership's interstate common carrier pipeline operations are
subject to rate regulation by the FERC under the Interstate Commerce Act
("ICA"), the Energy Policy Act of 1992 ("Act") and rules and orders promulgated
pursuant thereto. FERC regulation requires that interstate oil pipeline rates
be posted publicly and that these rates be "just and reasonable" and
nondiscriminatory.
Rates of interstate oil pipeline companies, like the Partnership, are
currently regulated by FERC primarily through an index methodology, whereby a
pipeline is allowed to change its rates based on the change from year-to-year
in the Producer Price Index for finished goods less 1% ("PPI Index"). In the
alternative, an interstate oil pipeline company is allowed to support rate
filings by using a cost-of-service methodology, competitive market showings, or
agreements between shippers and the oil pipeline company that the rate is
acceptable.
In a June 1995 decision, the FERC disallowed the inclusion of imputed
income taxes in the cost-of-service tariff filing of Lakehead Pipeline Company,
Limited Partnership ("Lakehead"), an unrelated oil pipeline limited
partnership. The FERC's decision held that Lakehead was entitled to include an
income tax allowance in its cost-of-service for income attributable to
corporate partners but not on income attributable to individual partners. In
1996, Lakehead reached an agreement with its shippers on all contested rates
and has withdrawn its appeal of the June 1995 decision. In another FERC
proceeding, SFPP, L.P., the Administrative Law Judge in the Initial Decision
Concerning Rates, Terms and Conditions of Service, and Other Matters, followed
the Commission's decision in Lakehead and held that SFPP may claim an income
tax allowance with respect to income attributable to SFPP, Inc.'s general
partnership interest and income attributable to corporations holding publicly
traded limited partnership interests, but not for income attributable to
non-corporate limited partners, both individuals and other entities. The
decision also disallowed the income tax allowance attributable to SFPP, Inc.'s
limited partnership interest under facts peculiar to the way SFPP held their
limited partnership interests. Neither the FERC's decision in Lakehead nor the
Administrative Law Judge's initial decision in SFPP, L.P. impacts the
Partnership's current rates and rate structure; however, in view of the
uncertainties involved in this issue, there can be no assurance with respect to
current or future rates of the Partnership.
ENVIRONMENTAL MATTERS
The operations of the Partnership are subject to federal, state and
local laws and regulations relating to protection of the environment. Although
the Partnership believes the operations of the Pipeline System are in material
compliance with applicable environmental regulations, risks of significant
costs and liabilities are inherent in pipeline operations, and there can be no
assurance that significant costs and liabilities will not be incurred.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws and regulations and enforcement policies thereunder, and
claims for damages to property or persons resulting from the operations of the
Pipeline System, could result in substantial costs and liabilities to the
Partnership.
Water. The Federal Water Pollution Control Act of 1972, as renamed
and amended as the Clean Water Act ("CWA"), imposes strict controls against the
discharge of oil and its derivatives into navigable waters. The CWA provides
penalties for any discharges of petroleum products in reportable quantities and
imposes substantial potential liability for the costs of removing an oil or
hazardous substance spill. State laws for the control of water pollution also
provide varying civil and criminal penalties and liabilities in the case of a
release of petroleum or its derivatives in surface waters or into the
groundwater. Spill prevention control and countermeasure requirements of
federal laws require appropriate containment berms and similar structures to
help prevent the contamination of navigable waters in the event of a petroleum
tank spill, rupture or leak.
Contamination resulting from spills or release of refined petroleum
products is an inherent risk within the petroleum pipeline industry. To the
extent that groundwater contamination requiring remediation exists along the
Pipeline System as a result of past operations, the Partnership believes any
such contamination could be controlled or remedied without having a material
adverse effect on the financial condition of the Partnership, but such costs
are site specific, and there can be no assurance that the effect will not be
material in the aggregate.
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<PAGE> 30
The primary federal law for oil spill liability is the Oil Pollution
Act of 1990 ("OPA"), which addresses three principal areas of oil pollution --
prevention, containment and cleanup, and liability. It applies to vessels,
offshore platforms, and onshore facilities, including terminals, pipelines and
transfer facilities. In order to handle, store or transport oil, shore
facilities were required to file oil spill response plans with the appropriate
agency being either the United States Coast Guard, the United States Department
of Transportation Office of Pipeline Safety ("OPS") or the Environmental
Protection Agency ("EPA"). The Texas Oil Spill Prevention and Response Act of
1991 ("OSPRA"), which also regulates the unauthorized discharge of oil from
vessels and facilities, is designed to complement OPA. In order to conduct
business, the owner of a regulated facility must obtain a discharge prevention
and response certificate under OSPRA. Under OPA and OSPRA, responsible parties
for a regulated facility from which oil is discharged may be liable for removal
costs and natural resources damages. The General Partner believes that the
Partnership is in material compliance with regulations pursuant to OPA and
OSPRA.
The EPA has adopted regulations that require the Partnership to have
permits in order to discharge certain storm water run-off. Storm water
discharge permits may also be required by certain states in which the
Partnership operates. Such permits may require the Partnership to monitor and
sample the effluent. The General Partner believes that the Partnership is in
material compliance with effluent limitations at existing facilities.
Air Emissions. The operations of the Partnership are subject to the
federal Clean Air Act and comparable state and local statutes. The Clean Air
Act Amendments of 1990 (the "Clean Air Act") will require most industrial
operations in the United States to incur future capital expenditures in order
to meet the air emission control standards that are to be developed and
implemented by the EPA and state environmental agencies during the next decade.
Pursuant to the Clean Air Act, any Partnership facilities that emit volatile
organic compounds or nitrogen oxides and are located in ozone non-attainment
areas will face increasingly stringent regulations, including requirements that
certain sources install the reasonably available control technology. The EPA
is also required to promulgate new regulations governing the emissions of
hazardous air pollutants. Some of the Partnership's facilities are included
within the categories of hazardous air pollutant sources which will be affected
by these regulations.
The Clean Air Act also introduced the new concept of federal operating
permits for major sources of air emissions. Under this program, one federal
operating permit (a "Title V" permit) will be issued. The permit will act as
an umbrella that includes all other federal, state and local preconstruction
and/or operating permit provisions, emission standards, grandfathered rates,
and recordkeeping, reporting, and monitoring requirements in a single document.
The federal operating permit will be the tool that the public and regulatory
agencies use to review and enforce a site's compliance with all aspects of
clean air regulation at the federal, state and local level. The Partnership
expects approximately ten of its facilities to apply for and obtain these
federal operating permits in the next two years.
Solid Waste. The Partnership generates hazardous and non-hazardous
solid wastes that are subject to requirements of the federal Resource
Conservation and Recovery Act ("RCRA") and comparable state statutes.
Amendments to RCRA have required the EPA to promulgate regulations banning the
land disposal of all hazardous wastes unless the wastes meet certain treatment
standards or the land-disposal method meets certain waste containment criteria.
In 1990, the EPA issued the Toxicity Characteristic Leaching Procedure, which
substantially expanded the number of materials defined as hazardous waste.
Certain wastewater and other wastes generated from the Partnership's business
activities previously classified as nonhazardous are now classified as
hazardous due to the presence of dissolved aromatic compounds. The Partnership
has utilized waste minimization and recycling processes and has installed
pre-treatment facilities to reduce the volume of its hazardous waste. The
Partnership is currently permitted to utilize five regional on-site waste water
treatment facilities. Operating expenses of these facilities have not had a
material adverse effect on the financial position or results of operations of
the Partnership.
Superfund. The Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), also known as "Superfund," imposes liability, without
regard to fault or the legality of the original act, on certain classes of
persons who contributed to the release of a "hazardous substance" into the
environment. These persons include the owner or operator of a facility and
companies that disposed or arranged for the disposal of the hazardous
substances found at a facility. CERCLA also authorizes the EPA and, in some
instances, third parties to take actions in response to threats to the public
health or the environment and to seek to recover from the responsible
27
<PAGE> 31
classes of persons the costs they incur. In the course of its ordinary
operations, the Pipeline System generates wastes that may fall within CERCLA's
definition of a "hazardous substance." Should a disposal facility previously
used by the Partnership require clean up in the future, the Partnership may be
responsible under CERCLA for all or part of the costs required to clean up
sites at which such wastes have been disposed.
Other Environmental Proceedings. The IDEM has approved a remedial
investigation phase II sampling plan for the Partnership's Seymour, Indiana,
terminal. The phase II sampling plan is part of the Agreed Order entered into
between the Partnership and IDEM that will ultimately result in a remediation
program for any on-site and off-site environmental problems attributable to the
Partnership's operations at Seymour. In the opinion of the General Partner,
the completion of the remediation program to be proposed by the Partnership, if
such program is approved by IDEM, will not have a material adverse impact on
the Partnership.
The Partnership received a compliance order from the Louisiana
Department of Environmental Quality ("DEQ") during 1994 relative to potential
environmental contamination at the Partnership's Arcadia, Louisiana facility,
which may be attributable to the operations of the Partnership and surrounding
petroleum terminals of other companies. The Partnership has finalized a
negotiated Compliance Order with DEQ that will allow the Partnership to
continue with a remediation plan similar to the one previously agreed to by DEQ
and implemented by the Company. In the opinion of the General Partner, the
completion of the remediation program being proposed by the Partnership will
not have a future material adverse impact on the Partnership.
SAFETY REGULATION
The Partnership is subject to regulation by the United States
Department of Transportation ("DOT") under the Hazardous Liquid Pipeline Safety
Act of 1979 ("HLPSA") and comparable state statutes relating to the design,
installation, testing, construction, operation, replacement and management of
its pipeline facilities. HLPSA covers petroleum and petroleum products and
requires any entity that owns or operates pipeline facilities to comply with
such regulations, to permit access to and copying of records and to make
certain reports and provide information as required by the Secretary of
Transportation. The Partnership believes it is in material compliance with
HLPSA requirements.
The Partnership is also subject to the requirements of the federal
Occupational Safety and Health Act ("OSHA") and comparable state statutes. The
Partnership believes it is in material compliance with OSHA and state
requirements, including general industry standards, recordkeeping requirements
and monitoring of occupational exposure to benzene.
The OSHA hazard communication standard, the EPA community
right-to-know regulations under Title III of the federal Superfund Amendment
and Reauthorization Act, and comparable state statutes require the Partnership
to organize and disclose information about the hazardous materials used in its
operations. Certain parts of this information must be reported to employees,
state and local governmental authorities, and local citizens upon request. In
general, the Partnership expects to increase its expenditures during the next
decade to comply with higher industry and regulatory safety standards such as
those described above. Such expenditures cannot be accurately estimated at
this time, although the General Partner does not believe that they will have a
future material adverse impact on the Partnership.
The Partnership is subject to OSHA Process Safety Management ("PSM")
regulations which are designed to prevent or minimize the consequences of
catastrophic releases of toxic, reactive, flammable, or explosive chemicals.
These regulations apply to any process which involves a chemical at or above
the specified thresholds; or any process which involves a flammable liquid or
gas, as defined in the regulations, stored on site in one location, in a
quantity of 10,000 pounds or more. The Partnership utilizes certain covered
processes and maintains storage of LPG in pressurized tanks, caverns and wells
in excess of 10,000 pounds at various locations. Flammable liquids stored in
atmospheric tanks below their normal boiling point without benefit of chilling
or refrigeration are exempt. The Partnership believes it is in material
compliance with the PSM regulations.
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<PAGE> 32
LITIGATION
The Partnership has been, in the ordinary course of business, a
defendant in various lawsuits and a party to various other legal proceedings,
some of which are covered in whole or in part by insurance. The General
Partner believes that the outcome of such lawsuits and other proceedings will
not individually or in the aggregate have a material adverse effect on the
Partnership's financial condition, operations or cash flows. See
"--Environmental Matters--Other Environmental Proceedings."
EMPLOYEES
The Partnership does not have any employees, officers or directors.
The General Partner is responsible for the management of the Partnership. As
of December 31, 1996, the General Partner had 516 employees.
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<PAGE> 33
DESCRIPTION OF THE NOTES
The Notes are to be issued under an indenture to be dated as of
, 1997 (the "Indenture") between the Partnership and The Bank of New York, as
trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture do not purport to be complete,
and are subject, and are qualified in their entirety by reference, to all of
the provisions of the Indenture, including the definitions therein of certain
terms.
GENERAL
The Notes will be issued under the Indenture in two series which are
limited in the following aggregate principal amounts: $150,000,000 of 2007
Notes and $240,000,000 of 2027 Notes. The 2007 Notes will mature on , 2007.
The 2027 Notes will mature on , 2027. The Notes will bear
interest at the rate per annum shown on the front cover of this Prospectus from
, 1997 or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semi-annually on and of each
year, commencing , 1998, to the Person in whose name the Note
(or any predecessor Note) is registered at the close of business on the
preceding or , as the case may be. The
Notes will not be subject to any sinking fund but are subject to redemption at
the option of the Partnership.
The Notes and any future debt securities issued under the Indenture
will be unsecured obligations of the Partnership and will rank on a parity with
all other unsecured and unsubordinated indebtedness of the Partnership. The
Indenture does not limit the aggregate principal amount of debt securities that
may be issued thereunder and provides that debt securities may be issued
thereunder from time to time in one or more additional series. The Indenture
does not limit the Partnership's ability to incur additional indebtedness.
OPTIONAL REDEMPTION
The 2007 Notes. The 2007 Notes will not be subject to redemption
prior to , 2002. Thereafter, the 2007 Notes are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, at any
time, in whole or in part, at the election of the Partnership at the following
Redemption Prices (expressed in percentages of the principal amount) if
redeemed during the 12 months beginning of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
------------- ------------
<S> <C>
2002 . . . . %
2003 . . . . %
2004 . . . . %
2005 . . . . %
</TABLE>
and thereafter at 100% of the principal amount, together in each case with
accrued interest to the Redemption Date.
The 2027 Notes. The 2027 Notes will not be subject to redemption
prior to , 2007. Thereafter, the 2027 Notes are subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, at any
time, in whole or in part, at the election of the Partnership at the following
Redemption Prices (expressed in percentages of the principal amount) if
redeemed during the 12 months beginning of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
------------- ------------
<S> <C>
2007 . . . . %
2008 . . . . %
2009 . . . . %
2010 . . . . %
</TABLE>
30
<PAGE> 34
and thereafter at 100% of the principal amount, together in each case with
accrued interest to the Redemption Date.
BOOK ENTRY PROCEDURES
Upon issuance, all Notes of a series will be represented by one or
more fully registered global notes in the aggregate principal amount of such
series of Notes (whether one or more, and with respect to each series of Notes,
the "Global Notes"). Each such Global Note will be deposited with, or on
behalf of, The Depository Trust Company, as Depositary, and registered in the
name of the Depositary or a nominee thereof. The Depositary will maintain the
Notes in denominations of $1,000 and integral multiples thereof through its
book-entry facilities. Unless and until it is exchanged in whole or in part
for Notes of the related series in definitive form, no Global Note may be
transferred except as a whole by the Depositary to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary.
Ownership of beneficial interests in Notes of each series will be
limited to Persons that have accounts with the Depositary ("Participants") or
Persons that may hold interests through Participants. Upon the issuance of the
Global Note representing the Notes of a related series, the Depositary will
credit, on its book-entry registration and transfer system, the Participants'
accounts with the respective principal amounts of such Notes beneficially owned
by such Participants. Ownership of beneficial interests in such Global Note
will be shown on, and the transfer of such ownership interests will be effected
only through, records maintained by the Depositary or its nominee (with respect
to interests of Participants) and on the records of Participants (with respect
to interests of persons holding through Participants). The laws of some states
may require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limits and such laws may impair the
ability to own, transfer or pledge beneficial interests in Global Notes.
So long as the Depositary, or its nominee, is the registered owner of
a Global Note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the series of Notes represented by such
Global Note for all purposes under the Indenture. Except as provided below,
owners of beneficial interests in a Global Note will not be entitled to have
the Notes represented by such Global Notes registered in their names, will not
receive or be entitled to receive physical delivery of such Notes in definitive
form and will not be considered the owners or Holders thereof under the
Indenture. Accordingly, each Person owning a beneficial interest in a Global
Note must rely on the procedures of the Depositary and, if such Person is not a
Participant, on the procedures of the Participant through which such Person
owns its interest, to exercise any rights of a Holder under the Indenture. The
Partnership understands that under existing industry practices, in the event
that the Partnership requests any actions of Holders or that an owner of a
beneficial interest in such a Global Note desires to give or take any action
which a Holder is entitled to give or take under the Indenture, the Depositary
would authorize the Participants holding the relevant beneficial interests to
give or take such action, and such Participants would authorize beneficial
owners owning through such Participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.
Payment of principal of, premium, if any, and interest on, Notes
registered in the name of the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the Holder of the Global
Notes representing such Notes. None of the Partnership, the Trustee or any
other agent of the Partnership or agent of 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 or for supervising
or reviewing any records relating to such beneficial ownership interests. The
Partnership expects that the Depositary, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit the accounts of
the Participants with payment in amounts proportionate to their respective
beneficial interests in such Global Note as shown on the records of the
Depositary. The Partnership also expects that payments by Participants to
owners of beneficial interests in a Global Note will be governed by standing
customer instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name,"and will be the responsibility of such Participants.
The Depositary has advised the Partnership as follows: The Depositary
is a limited-purpose trust company organized under the Banking Law of the State
of New York, a member of the Federal Reserve System, a "clearing
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<PAGE> 35
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary was created to hold securities of its
Participants and to facilitate the clearance and settlement transactions among
its Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities certificates. The Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. Persons who are not
Participants may beneficially own securities held by the Depositary only
through Participants.
If (x) the Depositary is at any time unwilling or unable to continue
as Depositary or the Depositary ceases to be a clearing agency registered under
the Exchange Act and a successor Depositary registered as a clearing agency
under the Exchange Act is not appointed by the Partnership in 90 days, (y) the
Partnership, at its option, executes and delivers to the Trustee a Partnership
Order to the effect that the Global Notes shall be transferable and
exchangeable or (z) an Event of Default has occurred and is continuing with
respect to any series of the Notes, then upon notification to the Trustee, the
Global Notes (or in the case of the circumstances described in the preceding
clause (z), the Global Notes representing the series of Notes as to which an
Event of Default has occurred and is continuing) will, upon surrender thereof
by the Depositary, be transferable or exchangeable for Notes in definitive form
of like tenor and of an equal aggregate principal amount, in denominations of
$1,000 and integral multiples thereof. Such definitive Notes shall be
registered in such name or names, and issued to such Person or Persons, in each
case as the Depositary shall identify to the Trustee as the beneficial owners
of the related Notes. It is expected that such instructions may be based upon
directions received by the Depositary from Participants with respect to
ownership of beneficial interests in such Global Notes. None of the
Partnership, the Trustee or any other agent of the Partnership or agent of the
Trustee will have any liability for any delay by the Depositary in identifying
the beneficial owners of the Notes, and each such Person may conclusively rely
on and shall be protected in relying on, instruction from the Depositary for
all purposes (including with respect to registration and delivery, and the
respective principal amount, of the Notes to be issued).
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds.
So long as the Notes are subject to the Depositary's book-entry system, the
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and therefore the Depositary will require that secondary trading
activity be settled in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
LIMITATION ON LIENS
The Indenture will provide that the Partnership will not, and will not
permit any of its Subsidiaries to, create, assume or incur any Lien on any
Principal Property to secure any Debt of the Partnership or any other Person
(other than the Notes issued thereunder) without effectively providing that the
Notes shall be secured equally and ratably with, or prior to, such Debt so long
as such Debt shall be secured. There is, however, excluded from the foregoing
restriction the following: (a) Permitted Liens; (b) any Lien on any (i)
property or assets created at the time of its acquisition of such property or
assets by the Partnership or any of its Subsidiaries, or within one year after
such time, to secure all or part 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 of, such acquisition, or
(ii) property to secure all or part of the cost of the development,
construction, repair or improvement thereon or to secure Debt incurred prior
to, at the time of, or within one year after, the completion of such
development, construction, repair or improvement or the commencement of full
operations thereof (whichever is later),to provide funds for any such purpose;
(c) any Lien on any current assets that secures current liabilities or Debt of
the Partnership or its Subsidiaries; (d) (i) any Lien on any property or assets
existing thereon at the time of acquisition thereof by the Partnership or any
of its Subsidiaries (whether or not the obligations secured thereby are assumed
by the Partnership or any of its Subsidiaries), or (ii) the assumption by the
Partnership or any of its
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<PAGE> 36
Subsidiaries of obligations secured by any Lien existing at the time of
acquisition by the Partnership or any of its Subsidiaries of the property or
assets subject to such Lien or at the time of the acquisition of the Person
which owns such property or assets, or (iii) any Lien on any property or assets
of a Person existing thereon at the time (1) such Person becomes a Subsidiary
of the Partnership, (2) such Person is merged into, or consolidated with, the
Partnership or any of its Subsidiaries or (3) of a sale, lease or other
disposition of the properties of a Person (or division thereof) as an entirety
or substantially as an entirety to the Partnership or any of its Subsidiaries;
(e) any Lien on any property or assets of the Partnership or any of its
Subsidiaries in existence on the date of the Indenture or created pursuant to
an "after-acquired property" clause or similar term in existence on the date of
the Indenture or the terms of any mortgage, pledge agreement, security
agreement or similar agreement or instrument in existence on the date of the
Indenture; (f) any Lien arising by reason of any attachment, judgment, decree
or order of any governmental or court authority, so long as any proceeding
initiated to review such attachment, judgment, decree or order shall not have
been terminated or the period within which such proceeding may be initiated
shall not expire, or such attachment, judgment, decree or order shall otherwise
be effectively stayed; and (g) any extension, renewal, refinancing, refunding
or replacement (or successive extensions, renewals, refinancings, refundings or
replacements) of any Lien, in whole or part, that is referred to in clauses (a)
through (f) (inclusive) above, or any Debt secured thereby.
Notwithstanding the foregoing, under the Indenture, the Partnership
may, and may permit any of its Subsidiaries to, create, assume or incur any
Lien upon any Principal Property to secure any Debt of the Partnership or any
Person (other than the Notes) that is not excepted by clauses (a) through (g)
(inclusive) above without securing the Notes issued under the Indenture,
provided that, after giving effect to the creation, assumption or incurrence of
such Lien and Debt, and the application of proceeds of such Debt, if any,
received by the Partnership or any of its Subsidiaries as a result thereof, the
aggregate principal amount of all then Debt 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 (a)
through (d) (inclusive) of the first paragraph of the covenant below entitled
"Limitation on Sale-Leaseback Transactions") would not exceed 10% of
Consolidated Net Tangible Assets.
LIMITATION ON SALE-LEASEBACK TRANSACTIONS
The Indenture will provide that the Partnership will not, nor will it
permit any of its Subsidiaries to, engage in a Sale-Leaseback Transaction,
unless: (a) such Sale-Leaseback Transaction occurs within one year from the
date of completion of the acquisition of the Principal Property subject thereto
or the date of the completion of construction, development or substantial
repair or improvement, or commencement of full operations, on such Principal
Property, whichever is later; (b) the Sale-Leaseback Transaction involves a
lease for a period, including renewals, of not more than three years; (c) the
Partnership or such Subsidiary would be entitled to incur Debt secured by a
Lien on Principal Property 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 Notes pursuant to the above covenant entitled
"Limitation on Liens"; or (d) 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 (i) the prepayment, repayment, reduction or retirement of any
pari passu Funded Debt or Debt of the Partnership or any of its Subsidiaries,
or (ii) the expenditure or expenditures for Principal Property used or to be
used in the ordinary course of business of the Partnership or any of its
Subsidiaries.
Notwithstanding the foregoing, under the Indenture, the Partnership
may, and may permit each of it Subsidiaries to, effect any Sale-Leaseback
Transaction that is not excepted by clauses (a) through (d) (inclusive) of the
above paragraph, provided that, after giving effect thereto and the application
of proceeds, if any, received by the Partnership or any its Subsidiaries as a
result thereof, the net sale proceeds from such Sale-Leaseback Transaction,
together with the aggregate principal amount of all then outstanding Debt
(other than the Notes) secured by Liens upon Principal Property not excepted by
clauses (a) through (g) (inclusive) of the above covenant entitled "Limitation
on Liens", would not exceed 10% of the Consolidated Net Tangible Assets.
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<PAGE> 37
CERTAIN DEFINITIONS
The Indenture will define the following terms as follows:
"Consolidated Net Tangible Assets" means, at any date of
determination, the total amount of assets after deducting therefrom (a) all
current liabilities (excluding (i) 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 (ii) current maturities of long-term debt), and (b) the value (net of any
applicable reserves) of all goodwill, trade names, trademarks, patents or other
like intangible assets, all as set forth, or on a pro forma basis would be set
forth, in the consolidated balance sheet of the Partnership and its
Subsidiaries.
"Debt" means (without duplication) all liabilities for borrowed money,
and any guarantee therefor.
"Funded Debt" means Debt maturing one year or more from the date of
the creation thereof, Debt directly or indirectly renewable or extendible, at
the option of the debtor, by its terms or by the terms of the instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and Debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.
"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.
"Permitted Liens" means: (a) Liens upon rights-of-way for pipeline
purposes; (b) 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; (c) 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; (d) Liens
of taxes and assessments which are (i) for the then current year, (ii) not at
the time delinquent, or (iii) delinquent but the validity of which is being
contested at the time by the Partnership or any of its Subsidiaries in good
faith; (e) Liens of, or to secure performance of, leases; (f) 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; (g) any
Lien upon property or assets acquired or sold by the Partnership or any of its
Subsidiaries resulting from the exercise of any rights arising out of defaults
on receivables; (h) 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; (i) any
Lien in favor of the Partnership or any of its Subsidiaries; (j) 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 to secure any Debt incurred by
the Partnership or any of its Subsidiaries for the purpose of financing all or
any part of the purchase price or the cost of constructing, developing,
repairing or improving of the property or assets subject to such Lien; or (k)
any Lien securing industrial development, pollution control or similar revenue
bonds.
"Person" means (a) any form of business entity, association,
grouping, trust or other form now or hereafter permitted by the laws of any
State of the United States or utilized by businesses in the conduct of their
activities and (b) a natural person, as the context may require.
"Principal Property" means, whether owned or leased on the date of
the Indenture or thereafter acquired, (a) pipeline assets of the Partnership or
its Subsidiaries, including any related facilities employed in the
transportation, distribution, storage or marketing of refined petroleum
products or liquefied petroleum gases, that are located in the United States or
any territory or political subdivision thereof, and (b) processing or
manufacturing plant or terminal owned or leased by the Partnership or any of
its Subsidiaries that is located in the United States
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<PAGE> 38
of America or any territory or political subdivision thereof except, in the
case of either of the foregoing clauses (a) or (b), (i) any such assets
consisting of inventories, furniture, office fixtures and equipment (including
data processing equipment), vehicles and equipment used on, or useful with,
vehicles, and (ii) any such assets, plant or terminal which, in the opinion of
the Company's Board of Directors, is not material in relation to the activities
of the Partnership or of the Partnership and its Subsidiaries, taken as a
whole.
"Sale-Leaseback Transaction" means the sale or transfer by the
Partnership or any of its Subsidiaries of any Principal Property to a Person
(other than the Partnership or any of its Subsidiaries) and the taking back by
the Partnership or any of its Subsidiaries, as the case may be, of a lease of
such Principal Property.
"Subsidiary" means, as to a Person, any other Person as to which it
has the sole and absolute right to liquidate and terminate and upon such
liquidation and termination, it has the right to receive, after accommodation
for legitimate debts and similar obligations of such Person, at least 50% of
its assets.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Partnership may consolidate with or merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to,
any Person, provided (i) that the Partnership is the continuing entity or if
the Partnership is not the continuing entity, the continuing entity must be a
Person organized and validly existing under the laws of a domestic jurisdiction
and must assume the Partnership's obligations on the Notes and under the
Indenture, and (ii) that after giving effect to the transaction no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall exist.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to the Notes of any series thereunder: (a) failure to
pay principal of or any principal on any Note of that series when due; (b)
failure to pay any interest on any Note of that series when due, continued for
30 days; (c) failure to perform any other covenant of the Partnership in the
Notes of such series or Indenture (other than a covenant that has expressly
been included in the Indenture solely for the benefit of one or more series of
Notes other than that series), continued for 60 days after written notice has
been given by the Trustee, or the Holders of at least 25% in principal amount
of all series of the then outstanding Notes, as provided in the Indenture; and
(d) certain events in bankruptcy, insolvency or reorganization of the
Partnership.
If an Event of Default (other than an Event of Default described in
clause (d) above) with respect to any of the Notes of any series at the time
outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of each affected series of the then
outstanding Notes (voting as a single class) by notice to the Partnership as
provided in the Indenture may declare the principal amount of all affected
series of the Notes to be due and payable immediately. If an Event of Default
described in clause (d) above shall occur, the principal amount of all the then
outstanding Notes will automatically, and without any action by the Trustee or
any Holder, become immediately due and payable. After any acceleration, but
before a judgment or decree for the payment of the money due has been obtained
by the Trustee, the Holders of a majority in aggregate principal amount of the
then outstanding Notes of the series affected by such default (voting as a
single class), by written notice to the Trustee, may rescind and annul such
acceleration and its consequences if all Events of Default with respect to such
series of Notes, other than the non-payment of accelerated principal, have been
cured or waived as provided in the Indenture. For information as to waiver of
defaults, see "Modification and Waiver".
Subject to the provisions of the Indenture relating to the duties of
the Trustee in case an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders of the
Notes, unless such Holders of the Notes shall have offered to the Trustee
reasonable indemnity. Subject to such provisions for the indemnification of
the Trustee, the Holders of a majority in aggregate principal amount of the
then outstanding Notes of the affected series (voting as a single class) will
have
35
<PAGE> 39
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 such Notes.
No Holder of any Note of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the Notes of that series, (ii) the Holders of at
least 25% in aggregate principal amount of the then outstanding Notes of such
affected series (voting as a single class) have made written request, and such
Holder or Holders have offered reasonable indemnity, to the Trustee to
institute such proceeding in respect to such Event of Default as trustee and
(iii) the Trustee has failed to institute such proceeding, and has not received
from the Holders of a majority in aggregate principal amount of the then
outstanding Notes of that series (voting as a single class) a direction
inconsistent with such request, within 60 days after such notice, request and
offer. However, such limitations do not apply to any proceeding which is
instituted by a Holder of a Note for the enforcement of payment of the
principal of or interest on such Note on or after the applicable due date
specified in such Note.
The Partnership will be required to furnish to the Trustee annually a
statement by certain of its officers as to whether or not the Partnership, to
their knowledge, is in default in the performance or observance of any of the
terms, provisions and conditions of the Indenture and, if so, specifying all
such known defaults.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the
Partnership and the Trustee with the consent of the Holders of a majority in
principal amount of the then outstanding Notes affected by such modification or
amendment (voting as a single class); provided, however, that no such
modification or amendment may, without the consent of the Holder of each Note
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any such Note, (b) reduce the
principal amount of, or any interest on, any such Note, (c) reduce the amount
of principal of any such Note payable upon acceleration of the Maturity
thereof, (d) change the place or currency of payment of principal of, or
interest on, any such Note, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Note, (f) reduce the
percentage in principal amount of such Note, the consent of whose Holders is
required for modification or amendment of the Indenture, (g) reduce the
percentage in principal amount of such Note necessary for waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults or
(h) modify such provisions with respect to modification and waiver.
The Holders of a majority in principal amount of the then outstanding
Notes affected by such waiver (voting as a single class) may waive compliance
by the Partnership with certain restrictive provisions of the Indenture or
waive any past default under the Indenture, except a continuing default in the
payment of principal of or interest on such Notes and covenants and provisions
of the Indenture that under the proviso in the preceding paragraph cannot be
amended without the consent of the Holder of each Note affected thereby.
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Notes of any affected series (voting as a
single class) have given or taken any direction, notice, consent, waiver or
other action under the Indenture as of any date, certain Notes, including those
that have been defeased and discharged as described under "--Satisfaction and
Discharge; Defeasance--Defeasance and Discharge" will not be deemed to be
outstanding.
Except in certain limited circumstances, the Partnership will be
entitled to set any day as a record date for the purpose of determining the
Holders of Notes of a series entitled to give or take any direction, notice,
consent, waiver or other action under the Indenture, in the manner and subject
to the limitations provided in the Indenture. In certain limited
circumstances, the Trustee also will be entitled to set a record date for
action by Holders of Notes of a series. If a record date is set for any action
to be taken by Holders of the Notes of a series, such action may be taken only
by persons who are Holders of such Notes on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of the
Notes affected thereby (voting as a single class) within a specified period
following the record date. For any particular record date, this period will be
180 days or such
36
<PAGE> 40
shorter period as may be specified by the Partnership (or the Trustee, if it
sets the record date), and may be shortened or lengthened (but not beyond 180
days) from time to time.
SATISFACTION AND DISCHARGE; DEFEASANCE
Satisfaction and Discharge. The Indenture will provide that the
Partnership may satisfy and discharge certain obligations to Holders of Notes
of any series which have not already been delivered to the Trustee for
cancellation and which have either become due and payable or are by their terms
due and payable within one year or are to be called for redemption within one
year by (a) depositing or causing to be deposited with the Trustee funds in an
amount sufficient to pay the principal and any premium and interest to the date
of such deposit (in case of Notes of such series which have become due and
payable) or to the Stated Maturity or any applicable redemption date, as the
case may be, (b) paying or causing to be paid all other sums payable under the
Indenture with respect to such Notes, and (c) delivering to the Trustee an
Officer's Certificate relating to such satisfaction and discharge.
Defeasance and Discharge. The Indenture will provide that the
Partnership will be discharged from all its indebtedness and obligations with
respect to Notes of any series (except for certain obligations to exchange or
register the transfer of such outstanding Notes of such series, to replace
stolen, lost or mutilated outstanding Notes of such series, to maintain paying
agencies and to hold moneys for payment in trust) upon the deposit in trust for
the benefit of the Holders of such outstanding Notes of such series of money or
U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and interest on such
outstanding Notes of such series at Maturity in accordance with the terms of
the Indenture and such outstanding Notes of such series. Such defeasance or
discharge may occur only if, among other things, the Partnership has delivered
to the Trustee an Opinion of Counsel to the effect that the Partnership has
received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that Holders of such outstanding Notes of such series will not
recognize 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, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge were not to occur.
Defeasance of Certain Covenants. The Indenture will provide that the
Partnership may, with respect to Notes of any series omit to comply with
certain restrictive covenants, including the covenants described under
"Limitation on Liens", "Limitation on Sale-Leaseback Transactions" and
"Consolidation, Merger and Sale of Assets", in which event certain Events of
Default, which are described above in clause (c) (with respect to such
respective covenants) under "Events of Default", will no longer constitute
Events of Default with respect to such Notes of the series affected thereby.
The Partnership, in order to exercise such option to defease such covenants,
will be required to deposit, in trust for the benefit of the Holders of such
outstanding Notes of such series, money or U.S. Government Obligations, or
both, which, through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount sufficient to
pay the principal of and interest on such Notes at Maturity in accordance with
the terms of the Indenture and such outstanding Notes of such series. The
Partnership will also be required, among other things, to deliver to the
Trustee an Opinion of Counsel to the effect that Holders of such outstanding
Notes of such series will not recognize gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
defeasance were not to occur.
If subsequent to the completion of a defeasance of certain covenants
as described in the immediately preceding paragraph, such outstanding Notes of
an affected series are declared due and payable because of the occurrence of
any remaining Event of Default, the amount of money and U.S. Government
Obligations so deposited in trust would be sufficient to pay amounts due on
such Notes at Maturity but may not be sufficient to pay amounts due on such
Notes upon any acceleration resulting from such Event of Default. In such
case, the Partnership would remain liable for such payments.
37
<PAGE> 41
NON-RECOURSE TO COMPANY AND THE PARENT PARTNERSHIP; NO PERSONAL LIABILITY OF
OFFICERS, DIRECTORS, EMPLOYEES, STOCKHOLDERS OR UNITHOLDERS
The Indenture will provide that obligations of the Partnership under
the Indenture and the Notes will be non- recourse to the Company and the Parent
Partnership and their 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 Note by its acceptance thereof, will be deemed to have agreed
in the Indenture that (a) neither the Company nor its assets nor the Parent
Partnership nor its assets (nor any of their respective Affiliates other than
the Partnership, nor their respective assets) shall be liable for any of the
obligations of the Partnership under the Indenture or the Notes, and (b) no
director, officer, employee, stockholder or unitholder, as such, of the
Partnership, the Trustee, the Company, the Parent Partnership 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 the Notes by
reason of his, her or its status; provided, however, that the Company shall be
liable as general partner of the Partnership for up to $40 million of the
principal amount of the Notes, pro rated between the 2007 Notes and the 2027
Notes based upon the principal amounts thereof outstanding at the date of
determination.
NOTICES
Notices to Holders of the Notes will be given by mail to the addresses
of such Holders as they may appear in the Security Register.
TITLE
The Partnership, the Trustee and any agent of the Partnership or the
Trustee may treat the Person in whose name a Note is registered as the absolute
owner thereof (whether or not the Notes may be overdue) for the purpose of
making payment and for all other purposes.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the law of the State of New York.
38
<PAGE> 42
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement
(the "Purchase Agreement") among the Partnership and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Representative"), the Partnership has agreed
to sell to the Underwriters, and the Underwriters have severally agreed to
purchase, the respective principal amounts of the Notes set forth after their
names below. The Purchase Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Notes if any are
purchased.
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of 2027
UNDERWRITER 2007 Notes Notes
-------------- ---------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . $ $
-------------- ---------------
Total . . . . . . . . . . . . . . . . . . . . $ $
============== ===============
</TABLE>
The Underwriters have advised the Partnership that they propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus, and to certain dealers at such
price less a concession not in excess of % of the principal amount of
the Notes. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of % of the principal amount of the Notes to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
It is expected that the Notes will be listed on the New York Stock
Exchange. The Notes are a new issue of securities with no established trading
market. No assurance can be given as to the trading market for the Notes.
In order to facilitate the offering of the Notes the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Notes.
Until the distribution of the Notes is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Notes. As an exception to these rules, the
Underwriters are permitted to engage in certain transactions that stabilize the
price of the Notes. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Notes. If the
Underwriters create a short position in the Notes in connection with the
offering, i.e., if they sell more Notes than are set forth on the cover page of
this Prospectus, the Underwriters may reduce that short position by purchasing
Notes in the open market. In general, purchases of a security for the purpose
of stabilization or to reduce a short position could cause the price of the
security to be higher than it might be in the absence of such purchases.
Neither the Partnership nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Notes. In
addition, neither the Partnership nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The Partnership has agreed to indemnify the Underwriters against
certain liabilities (including reimbursements to the Underwriters for certain
fees and expenses of their counsel), including civil liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect of such liabilities.
39
<PAGE> 43
LEGAL MATTERS
The validity of the Notes will be passed upon for the Partnership by
Fulbright & Jaworski L.L.P., Houston, Texas. Certain legal matters will be
passed upon for the Underwriters by Andrews & Kurth L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of TEPPCO Partners, L.P. as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, incorporated by reference herein and elsewhere in the
registration statement, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
40
<PAGE> 44
===============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE PARTNERSHIP SINCE THE DATE
HEREOF, OR THAT INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain
Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Management's Discussion and Analysis
of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Business and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
===============================================================================
===============================================================================
[LOGO]
$390,000,000
TE PRODUCTS PIPELINE
COMPANY, LIMITED
PARTNERSHIP
$150,000,000 % Senior Notes Due 2007
$240,000,000 % Senior Notes Due 2027
-------------------
PROSPECTUS
-------------------
MERRILL LYNCH & CO.
===============================================================================
<PAGE> 45
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered hereby:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee . . . . . . . $ 118,182
NASD filing fee . . . . . . . . . . . . . . . . . . . . . . . . . *
New York Stock Exchange listing fees . . . . . . . . . . . . . . *
Printing and engraving costs . . . . . . . . . . . . . . . . . . *
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . *
Accounting fees and expenses . . . . . . . . . . . . . . . . . . *
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . *
Registrar and transfer agent fees . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . *
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ *
=========
</TABLE>
- -------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each partnership agreement provides that the Parent Partnership or the
Partnership, as the case may be, will indemnify (to the fullest extent
permitted by applicable law) certain persons (each, an "Indemnitee") from and
against any and all losses, claims, damage, liabilities (joint or several),
expenses (including, without limitation, legal fees and expenses), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
Indemnitee in connection with any claim, demand, action, suit or proceeding to
which the Indemnitee is or was an actual or threatened party and which relates
to the partnership agreement of the Parent Partnership or the Partnership or
the property, business, affairs or management of the Parent Partnership or the
Partnership. This indemnity is available only if the Indemnitee acted in good
faith, in a manner which such Indemnitee believed to be in or not opposed to
the best interests of the Partnership and, with respect to any criminal
proceeding, had no reasonable cause to believe its conduct was unlawful.
Indemnitees include the General Partner, any Departing Partner, any affiliate
of the General Partner or any Departing Partner, any person who is or was a
director, officer, employee or agent of the General Partner or any Departing
Partner or any affiliate of either, or any person who is or was serving at the
request of the General Partner, any Departing Partner, or any such affiliate as
a director, officer, partner, trustee, employee or agent of another person.
Expenses subject to indemnity will be paid by the applicable partnership to the
Indemnitee in advance, subject to receipt of an undertaking by or on behalf of
the Indemnitee to repay such amount if it is ultimately determined by a court
of competent jurisdiction that the Indemnitee is not entitled to
indemnification. The Parent Partnership will, to the extent commercially
reasonable, purchase and maintain insurance on behalf of the Indemnitees,
whether or not the applicable partnership would have the power to indemnify
such Indemnitees against liability under the applicable partnership agreement.
II-1
<PAGE> 46
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
**1.1 -- Form of Purchase Agreement.
4.1 -- Form of Agreement of Limited Partnership of the
Partnership (filed as Exhibit 10.1 to the Parent
Partnership's Registration Statement on Form S-3 (Reg.
No. 33-32203) and incorporated by reference herein).
4.2 -- Certificate of Limited Partnership of the Partnership
(filed as Exhibit 10.2 to the Parent Partnership's
Registration Statement on Form S-1 (Reg. No. 33-32203)
and incorporated by reference herein).
*4.3 -- Form of Indenture, dated as of ________, 1997, between
the Partnership and The Bank of New York, as Trustee.
*4.4 -- Form of Note (included in Exhibit 4.3).
**5.1 -- Opinion of Fulbright & Jaworski L.L.P.
*12.1 -- Computation of Ratio of Earnings to Fixed Charges.
*23.1 -- Consent of Independent Accountants.
**23.2 -- Consent of Counsel (the consent of Fulbright & Jaworski
L.L.P. to the use of their opinion as an exhibit to the
Registration Statement and the reference to their firm
in this Registration Statement is contained in their
opinion filed as Exhibit 5.1 hereto).
24.1 -- Powers of Attorney (included on page II-5 of this
Registration Statement as originally filed).
*25.1 -- Form T-1 Statement of Eligibility of the Trustee.
- ---------
* Filed herewith
** To be filed by amendment.
(b) Financial Statement Schedules
Not applicable.
ITEM 17. UNDERTAKINGS
I. The undersigned registrant hereby undertakes:
A. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement.
1. To include any prospectus required by Section
10(a)(3) of the Securities Act;
2. To reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
and
3. To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that paragraphs I.A.1 and I.A.2 above do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
II-2
<PAGE> 47
B. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
II. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
III. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the provisions
described in Item 15 above, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 48
SIGNATURE
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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 21st day of
October, 1997.
TE PRODUCTS PIPELINE COMPANY, LIMITED
PARTNERSHIP, by Texas Eastern Products
Pipeline Company, as General Partner
By: WILLIAM L. THACKER
William L. Thacker, Chairman of
the Board, President,
Chief Executive Officer and Director
II-4
<PAGE> 49
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Charles H. Leonard and James C. Ruth,
and each of them, either one of whom may act without joinder of the other, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all pre- and post- effective amendments to this
Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or the
substitute or substitutes of any or all of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
POSITION WITH THE
SIGNATURE GENERAL PARTNER DATE
- -------------------------- ---------------------------- --------------------
<S> <C> <C>
WILLIAM L. THACKER Chairman of the Board, October 21, 1997
William L. Thacker President and Director
(Chief Executive Officer)
CHARLES H. LEONARD Senior Vice President, Chief October 21, 1997
Charles H. Leonard Financial Officer and
Treasurer
(Principal Financial and
Accounting Officer)
JAMES T. HACKETT Director October 21, 1997
James T. Hackett
PAUL M. ANDERSON Director October 21, 1997
Paul M. Anderson
CARL D. CLAY Director October 21, 1997
Carl D. Clay
DERRILL CODY Director October 21, 1997
Derrill Cody
JOHN P. DESBARRES Director October 21, 1997
John P. DesBarres
</TABLE>
II-5
<PAGE> 50
<TABLE>
<CAPTION>
POSITION WITH THE
SIGNATURE GENERAL PARTNER DATE
- -------------------------- ---------------------------- --------------------
<S> <C> <C>
LEANDER W. JENNINGS Director October 21, 1997
Leander W. Jennings
GEORGE L. MAZANEC Director October 21, 1997
George L. Mazanec
JIM W. MOGG Director October 21, 1997
Jim W. Mogg
</TABLE>
II-6
<PAGE> 51
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
**1.1 -- Form of Purchase Agreement.
4.1 -- Form of Agreement of Limited Partnership of the
Partnership (filed as Exhibit 10.1 to the Parent
Partnership's Registration Statement on Form S-3 (Reg.
No. 33-32203) and incorporated by reference herein).
4.2 -- Certificate of Limited Partnership of the Partnership
(filed as Exhibit 10.2 to the Parent Partnership's
Registration Statement on Form S-1 (Reg. No. 33-32203)
and incorporated by reference herein).
*4.3 -- Form of Indenture, dated as of ________, 1997, between
the Partnership and The Bank of New York, as Trustee.
*4.4 -- Form of Note (included in Exhibit 4.3).
**5.1 -- Opinion of Fulbright & Jaworski L.L.P.
*12.1 -- Computation of Ratio of Earnings to Fixed Charges.
*23.1 -- Consent of Independent Accountants.
**23.2 -- Consent of Counsel (the consent of Fulbright & Jaworski
L.L.P. to the use of their opinion as an exhibit to the
Registration Statement and the reference to their firm
in this Registration Statement is contained in their
opinion filed as Exhibit 5.1 hereto).
24.1 -- Powers of Attorney (included on page II-5 of this
Registration Statement as originally filed).
*25.1 -- Form T-1 Statement of Eligibility of the Trustee.
</TABLE>
- ---------------------------
* Filed herewith
** to be filed by amendment
II-2
<PAGE> 1
Draft of October 21, 1997
================================================================================
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP
TO
THE BANK OF NEW YORK
TRUSTEE
------------------------------
INDENTURE
DATED AS OF OCTOBER ___, 1997
------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request . . . . . . . . . . . . . . . . . . . . . . . 3
Company Order . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Net Tangible Assets . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . 3
corporation . . . . . . . . . . . . . . . . . . . . . . . . . 3
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . 3
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 3
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . 4
Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . 4
General Partner . . . . . . . . . . . . . . . . . . . . . . . 4
General Partner Resolution . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 4
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . 4
Investment Company Act . . . . . . . . . . . . . . . . . . . . 4
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notice of Default . . . . . . . . . . . . . . . . . . . . . . 5
Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Officers' Certificate . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security . . . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . 7
Predecessor Security . . . . . . . . . . . . . . . . . . . . . 7
Principal Property . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . 8
Regular Record Date . . . . . . . . . . . . . . . . . . . . . 8
Responsible Officer . . . . . . . . . . . . . . . . . . . . . 8
Sale-Leaseback Transaction . . . . . . . . . . . . . . . . . . 8
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . 8
Security Register . . . . . . . . . . . . . . . . . . . . . . 8
Security Registrar . . . . . . . . . . . . . . . . . . . . . . 8
Special Record Date . . . . . . . . . . . . . . . . . . . . . 9
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . 9
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . 9
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S. Government Obligation . . . . . . . . . . . . . . . . . . 9
Vice President . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . 9
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . 10
SECTION 104. Acts of Holders; Record Dates . . . . . . . . . . . . . 10
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . 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 . . . . . . . . . . . . . . . . . 14
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . 14
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . 15
SECTION 114. Non Recourse . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . 16
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . 16
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . 18
SECTION 204. Form of Legend for Global Securities . . . . . . . . . 22
SECTION 205. Form of Trustee's Certificate of Authentication . . . . 23
ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . 23
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . 26
SECTION 303. Execution, Authentication, Delivery and Dating . . . . 26
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . 28
SECTION 305. Registration, Registration of Transfer and Exchange . . 28
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . 30
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . 31
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . 32
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . 32
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . 33
SECTION 311. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . 33
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . 34
ARTICLE V
REMEDIES
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . 35
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . 36
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 504. Trustee May File Proofs of Claims . . . . . . . . . . . 38
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 506. Application of Money Collected . . . . . . . . . . . . 38
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . 39
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . 39
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . 40
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . 40
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . 40
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . 40
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . 41
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . 41
SECTION 515. Waiver of Usury, Stay or Extension Laws . . . . . . . . 41
ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . 42
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . 43
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . 43
SECTION 604. Not Responsible for Recitals or Issuance of Securities 44
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . 44
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . 44
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . 45
SECTION 608. Conflicting Interests . . . . . . . . . . . . . . . . . 45
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . 45
SECTION 610. Resignation and Removal; Appointment of Successor . . . 46
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . 47
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 613. Preferential Collection of Claims Against Company . . . 48
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . 49
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 702. Preservation of Information; Communications to Holders 51
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . 51
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . 52
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only On Certain Terms . 52
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . 53
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders . . 53
SECTION 902. Supplemental Indentures with Consent of Holders . . . . 54
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . 55
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . 56
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . 56
SECTION 906. Reference in Securities to Supplemental Indentures . . 56
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . 56
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . 56
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . 57
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . 58
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1006. Limitation on Liens . . . . . . . . . . . . . . . . . . 58
SECTION 1007. Limitation on Sale-Leaseback Transactions . . . . . . . 60
SECTION 1008. 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 . . . . . . . . . . . . . . 63
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . 63
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . 63
ARTICLE XII
SINKING FUNDS
SECTION 1201. Applicability of Article . . . . . . . . . . . . . . . 64
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . 64
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . 64
ARTICLE XIII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1302. Defeasance and Discharge . . . . . . . . . . . . . . . 65
SECTION 1303. Covenant Defeasance . . . . . . . . . . . . . . . . . . 65
SECTION 1304. Condition to Defeasance or Covenant Defeasance . . . . 66
SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held
in Trust; Miscellaneous Provisions . . . . . . . . . . 67
SECTION 1306. Reinstatement . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
EXHIBITS:
Exhibit A - Form of Series A Securities . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Form of Series B Securities . . . . . . . . . . . . . . . . . . B-1
vi
<PAGE> 8
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTION 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) . . . . . . . . . . . . . . . . . 101
1004
(b). . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . Not Applicable
(d). . . . . . . . . . . . . . . . . . . Not Applicable
(e). . . . . . . . . . . . . . . . . . . 102
Section 315(a). . . . . . . . . . . . . . . . . . . 601
(b). . . . . . . . . . . . . . . . . . . 602
(c). . . . . . . . . . . . . . . . . . . 601
</TABLE>
- --------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
vii
<PAGE> 9
<TABLE>
<S> <C>
(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
part of the Indenture.
viii
<PAGE> 10
INDENTURE, dated as of October ___, 1997, between TE Products Pipeline
Company, Limited Partnership, a limited partnership duly formed and existing
under the laws of the State of Delaware (herein called the "Company"), having
its principal office at _________________________, and The Bank of New York, a
banking corporation duly organized and existing under the laws of the State of
New York, as Trustee (herein called the "Trustee"), having its principal office
at _____________________________.
RECITALS OF THE COMPANY
The Company 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 (herein called 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
Company, in accordance with its terms, have been done.
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, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation;
1
<PAGE> 11
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Indenture;
(5) 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;
(6) any gender used in this Indenture shall be deemed to include the
neuter, masculine or feminine genders;
(7) the term "or" is not inclusive, and the term "including" shall
mean including without limitation; and
(8) when used with references to the Securities, the expression of
like terms refers to Securities of the same series.
"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.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant 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 of the General Partner 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, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in either (a) that Place of Payment or (b) New York, New
York are authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, 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.
2
<PAGE> 12
"Company" means the Person named as the "Company" 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 "Company" shall
mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its General Partner's Chairman of the
Board, its Vice Chairman of the Board, its President or a Vice President, and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee, or if the Company 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.
"Consolidated Net Tangible Assets" means, at any date of determination,
the total amount of assets after deducting therefrom (a) all current
liabilities (excluding (i) 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 (ii) current maturities of long-term debt), and (b) the value (net of any
applicable reserves) of all goodwill, trade names, trademarks, patents or other
like intangible assets, all as set forth, or on a pro forma basis would be set
forth, in the consolidated balance sheet of the Company and its Subsidiaries.
"Corporate Trust Office" means the principal office of the Trustee in New
York, New York, (currently at 48 Wall Street, New York, New York) at which at
any particular time its corporate trust business shall be administered.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Debt" means (without duplication) all liabilities for borrowed money, and
any guarantee therefor.
"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.
"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.
"Event of Default" has the meaning specified in Section 501.
3
<PAGE> 13
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Funded Debt" means Debt maturing one year or more from the date of the
creation thereof, Debt directly or indirectly renewable or extendible, at the
option of the debtor, by its terms or by the terms of the instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and 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" has the meaning set forth in Section 114.
"General Partner Resolution" means a copy of a resolution certified by the
appropriate officer of the General Partner to have been duly adopted by the
General Partner and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Global Security" means a Security in global form that evidences all or
part of the Securities of any series, is authenticated and delivered to, and
registered in the name of, the Depositary for such Securities or a nominee
thereof and bears the legend set forth in Section 204 (or such legend as may be
specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed and 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" shall also 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.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"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
4
<PAGE> 14
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).
"Obligation" means every obligation for money borrowed and every
obligation evidenced by a bond, note, debenture or other similar instrument.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the General Partner of the Company (or if the Company shall change its form
of entity to other than a limited partnership, by Persons or officers, members,
agents and the like of positions comparable 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 of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may but does
not have to be counsel for the Company, and who shall be acceptable to the
Trustee.
"Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 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 cancelled 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 Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders of
such Securities; provided that, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
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(3) Securities, except to the extent provided in Sections 1302 and
1303, with respect to which the Company has effected Defeasance or Covenant
Defeasance pursuant to the applicable provisions of Article XIII; and
(4) 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 Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount
of the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to 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
thereof, determined as of such date in the manner provided as contemplated by
Section 301 on the date of original issuance of such Security, of the principal
amount of such Security (or, in the case of a Security described in Clause (A)
above, of the amount determined as provided in such Clause), and (C) Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company 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, waiver or other action, only Securities which the Trustee
knows to be so owned shall be so disregarded. The Trustee shall be protected in
relying on an Officer's Certificate or other evidence satisfactory to it in
determining ownership. Securities so owned as described in Clause (e) 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 Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor.
"Parent Company" means Teppco Partners, L.P., a limited partnership
duly formed and existing under the laws of the State of Delaware.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Permitted Liens" means: (a) Liens upon rights-of-way for pipeline
purposes; (b) 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; (c) 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
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<PAGE> 16
provision of law, to purchase or recapture or to designate a purchaser of, any
property; (d) Liens of taxes and assessments which are (i) for the then current
year, (ii) not at the time delinquent, or (iii) delinquent but the validity of
which is being contested at the time by the Company or any of its Subsidiaries
in good faith; (e) Liens of, or to secure performance of, leases; (f) any Lien
upon, or deposits of, any assets in favor of any surety company or clerk of
court for purpose of obtaining indemnity or stay of judicial proceedings; (g)
any Lien upon property or assets acquired or sold by the Company or any of its
Subsidiaries resulting from the exercise of any rights arising out of defaults
on receivables; (h) 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; (i) any
Lien in favor of the Company or any of its Subsidiaries: (j) 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 to secure any Debt incurred by the
Company or any of its Subsidiaries for the purpose of financing all or any
party of the purchase price or the cost of constructing, developing, repairing
or improving of the property or assets subject to such Lien; or (k) any Lien
securing industrial development, pollution control or similar revenue bonds.
"Person" means (a) any form of business entity, association, grouping,
trust or other form now or hereafter permitted by the laws of any State of the
United States or utilized by businesses in the conduct of their activities and
(b) a natural person, as the context may require.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where 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.
"Principal Property" means, whether owned or leased on the date of this
Indenture or hereafter acquired, (a) pipeline assets of the Company or its
Subsidiaries, including any related facilities employed in the transportation,
distribution, storage or marketing of refined petroleum products or liquefied
petroleum gases, that are located in the United States or any territory or
political subdivision thereof, and (b) processing or manufacturing plant or
terminal owned or leased by the Company or any of its Subsidiaries that is
located in the United States of America or any territory or political
subdivision thereof except, in the case of either of the foregoing clauses (a)
or (b), (i) any such assets consisting of inventories, furniture, office
fixtures and equipment (including data processing equipment), vehicles and
equipment used on, or useful with, vehicles, and (ii) any
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<PAGE> 17
such assets, plant or terminal which, in the opinion of the General Partner, is
not material in relation to the activities of the Company or of the Company and
its Subsidiaries, taken as a whole.
"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.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Sale-Leaseback Transaction" means the sale or transfer by the Company or
any of its Subsidiaries of any Principal Property to a Person (other than the
Company or any of its Subsidiaries) and the taking back by the Company or any
of its Subsidiaries, as the case may be, of a lease of such Principal Property.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Series A Securities" means the Company's % Senior Notes due 2007 to be
issued pursuant to this Indenture.
"Series B Securities" means the Company's % Senior Notes due 2027 to be
issued pursuant to this Indenture.
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"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, as to a Person, any other Person as to which it has
the sole and absolute right to liquidate and terminate and upon such
liquidation and termination, it has the right to receive, after accommodation
for legitimate debts and similar obligations of such Person, at least 50% of
its assets.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event 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 the Trustee with respect to Securities of
that series.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Vice President", when used with respect to the Company, the General
Partner or the Trustee, means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act, and as are necessary to demonstrate that all conditions
precedent, if any, provided for in this Indenture relating to such action have
been satisfied. Each such certificate and opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, and 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,
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(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; provided,
however, that with respect to matters of fact, an Opinion of Counsel may rely
on an Officer's Certificate or certificates of public officials, or both, as
applicable.
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 any officer of the Company 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 Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, 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, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed (either physically
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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 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 Company. 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 601) conclusive in favor of the Trustee and
the Company, 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 provided 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 registered or 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 to
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, but the Company
shall have no obligation to do so; provided that the Company may not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Securities of the relevant series
on such record date(or their duly appointed agents), and no other Persons,
shall be entitled to give or take the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless given or taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record
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date. Nothing in this paragraph shall be construed to prevent the Company from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite principal amount of the
Outstanding Securities of the relevant series on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Company,
at its own expense, shall cause notice of such record date, the proposed action
by Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any declaration
of acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512 , in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Trustee, at the Company's expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities of the relevant series in the manner set forth in Section
106.
With respect to any record date set pursuant to this Section, the party
hereto which set such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later date; provided that no such change shall be effective unless notice of
the proposed new Expiration Date is given to the other party hereto in writing,
and to each Holder of Securities of the relevant series in the manner set forth
in Section 106, on or prior to the then existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the party hereto which set such record date shall be deemed to
have initially designated the 180th day following such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing,
no Expiration Date shall be later than the 180th day following the applicable
record date.
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Without limiting the foregoing, a Holder entitled hereunder to 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 part of such principal amount.
Notwithstanding the foregoing, the Series A and Series B Securities issued
pursuant to this Indenture will vote together as a single class in accordance
with the provisions and procedures set forth herein, whenever both such series
(i) are affected by any default under this Indenture or amendment or supplement
to this Indenture, or (ii) are entitled to and desire to Act in accordance with
the provisions of this Indenture.
SECTION 105. Notices, Etc., to Trustee and Company.
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 Company 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: Indenture Trust
Division, or
(2) the Company 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 Company addressed to it
at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company.
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, 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. 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.
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In case by reason of the suspension of regular mail service or by reason
by 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 or with another provision hereof which is required
under the Trust Indenture Act to be a part of and govern this Indenture, the
latter provisions shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be 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 Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
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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 any Security 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.
SECTION 114. Non Recourse.
(1) Except as otherwise specified as contemplated in Section 301 for
Securities of a series, no directors, officer, employee, partner, stockholder
or unitholder, as such, of the Company (or of any such partners or unitholders)
shall have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation, except that the General Partner
shall, by operation of law as the general partner of the Company, have
liability for (a) the payment obligations on Outstanding Series A Securities in
an amount not to exceed $ million and (b) the payment obligations on
Outstanding Series B Securities in an amount not to exceed $ million, provided
that such liability of the General Partner shall not in any event exceed $40
million in the aggregate for payment obligations in respect of the Outstanding
Series A Securities and Outstanding Series B Securities as a whole. By accepting
a Security, each Holder shall waive and release all such liability, and as
applicable to the General Partner, limit the liability of the General Partner to
the amount aforesaid. The waiver and release, and limitation on liability, shall
be a part of the consideration for the issue of the Securities.
(2) Without limiting the generality of the foregoing, except as
otherwise specified as contemplated in Section 301 for Securities of a series,
so long as the Company is a limited partnership, the obligations of the Company
hereunder and under the Securities will, except as expressly provided in Clause
(1) of this Section 114, be non-recourse to Texas Eastern Products Pipeline
Company, a Delaware corporation, the general partner (the "General Partner") of
the Company (and its affiliates (other than the Company)), and principal of and
interest on the Securities otherwise will be payable only out of the cash flow
and assets of the Company. The Trustee hereby agrees, and each holder of a
Security will be deemed to have agreed, that, notwithstanding any statutory
and/or common law liability of a general partner for the debts and obligations
of a partnership, neither the General Partner nor its assets nor the Parent
Company nor its assets (nor any of its affiliates (other than the Company) nor
their respective assets) shall be liable for any of the obligations of the
Company hereunder or under the Securities, except, as to the General Partner,
to the extent expressly provided in Clause (1) of this Section; it being
expressly agreed and acknowledged that all such obligations of the Company
otherwise shall be payable and satisfied only from the cash flow and assets of
the Company.
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ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms 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 the rules of any securities exchange
or Depositary therefor or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof. 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 the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company 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.
The Series A Securities issued under this Indenture shall be issued in the
form of a Global Security substantially in the form set forth in Exhibit A
hereto. The Series B Securities issued under this Indenture shall be issued in
the form of a Global Security substantially in the form set forth in Exhibit B
hereto.
SECTION 202. Form of Face of Security.
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
[Insert Name of Security or series]
No. ___ $____
[CUSIP NO. ___]
TE Products Pipeline Company, Limited Partnership, a limited partnership
duly formed and existing under the laws of the State of Delaware (herein called
the "Company," 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
__________________ 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
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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, provided that any principal and premium, and any such
installment of interest, which is overdue shall bear interest at the rate of
__% per annum (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest shall be payable on demand. 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 will 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 whereof 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 on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said 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 and any overdue premium shall
bear interest at the rate of ___% per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are
due until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand. Any such interest on overdue
principal or premium which is not paid on demand shall bear interest at the
rate of ___% per annum (to the extent that the payment of such interest on
interest shall be legally enforceable), from the date of such demand until the
amount so demanded is paid or made available for payment. Interest on any
overdue interest shall be payable on demand.]
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 Company 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 [if applicable, insert -- ;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
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.
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<PAGE> 27
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be duly
executed under its seal.
Dated:
TE Products Pipeline Company, Limited Partnership.
By: Texas Eastern Products Pipeline Company,
as General Partner
By:
-----------------------------------------------
Attest:
- -----------------------------
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of _________ (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and _________, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), and
reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be authenticated and delivered. This Security is one
of the series designated on the face hereof [if applicable, insert -- , limited
in aggregate principal amount to $---------].
[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 _________,
19__], as a whole or in part, at the election of the Company, 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> 28
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
- ---- ---------------- ---- ----------------
<S> <C> <C> <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 Company, 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.]
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<PAGE> 29
[If applicable, insert -- Notwithstanding the foregoing, the Company may
not, prior to _________, redeem any Securities of this series as contemplated
by [if applicable, insert -- Clause (2) of] the preceding paragraph as a part
of, or in anticipation of, any refunding operation by the application, directly
or indirectly, of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial practice) of less
than ____% per annum.]
[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, insert - 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 Company
otherwise than through [if applicable, insert - mandatory] sinking fund
payments may be credited against subsequent [if applicable, insert - mandatory]
sinking fund payments otherwise required to be made [if applicable, insert -,
in the inverse order in which they become due].]
[If the Security is subject to redemption of any kind, insert -- In the
event of redemption of this Security in part only, 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 Indenture contains provisions for defeasance
at any time of [the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [,
in each case] upon compliance with certain conditions set forth in the
Indenture.]
[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 (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium 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
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time
20
<PAGE> 30
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in aggregate
principal amount of the Securities of this series at the time Outstanding and
Securities of other series affected by such Event of Default then 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 and Securities of other series affected by such Event of Default
then 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 Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company 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 $___ and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested in writing by the Holder surrendering the same.
21
<PAGE> 31
No service charge shall be made for any such registration of transfer or
exchange, but the Company 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 and
notice to the Trustee thereof, the Company, the Trustee and any agent of the
Company 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
be overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
[if applicable, insert -- No directors, officer, employee, partner,
stockholder or unitholder, as such, of the Company (or of any such partners or
unitholders) shall have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting this Security, each
Holder waives and releases all such liability. Without limiting the generality
of the foregoing, so long as the Company is a limited partnership, the
obligations of the Company hereunder will be non-recourse to Texas Eastern
Products Pipeline Company, a Delaware corporation, the general partner (the
"General Partner") of the Company (and its affiliates (other than the
Company)), and principal of and interest on this Security otherwise will be
payable only out of the cash flow and assets of the Company. The Trustee hereby
agrees, and each holder of a Security will be deemed to have agreed, that,
notwithstanding any statutory and/or common law liability of a general partner
for the debts and obligations of a partnership, neither the General Partner nor
its assets nor the Parent Company nor its assets (nor any of its affiliates
(other than the Company) nor their respective assets) shall be liable for any
of the obligations of the Company hereunder or under the Securities; it being
expressly agreed and acknowledged that all such obligations of the Company
otherwise shall be payable and satisfied only from the cash flow and assets of
the Company. By accepting this Security, each Holder agrees that,
notwithstanding any statutory and/or common law liability of a general partner
for the debts and obligations of a partnership, neither the General Partner nor
its assets nor the Parent Company nor its assets (nor any of its affiliates
(other than the Company) nor their respective assets) shall be liable for any
of the obligations of the Company hereunder or under this Security; it being
expressly agreed and acknowledged that all such obligations of the Company
otherwise shall be payable and satisfied only from the cash flow and assets of
the Company. This waiver and release, and limitation on liability shall be a
part of the consideration for the issue of this Security.]
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
22
<PAGE> 32
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 EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
SECTION 205. Form of Trustee's Certificate of Authentication.
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.
Except as set forth in this paragraph with respect to Series A Securities
and Series B Securities, the aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is unlimited. Initially,
two series of Securities shall be issued pursuant to this Indenture, the Series
A Securities and the Series B Securities, which shall be known and designated
respectively as the " % Senior Notes Due 2007" and the " % Senior Notes Due
2027" of the Company with such terms as are set forth herein and in the Exhibits
hereto. Series A Securities shall be issued, authenticated and delivered under
this Indenture in an aggregate principal amount limited to $ . Series B
Securities shall be issued, authenticated and delivered under this Indenture in
an aggregate principal amount limited to $ .
Additional 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,
23
<PAGE> 33
(1) the 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 principal of any Securities of the
series is payable;
(5) the rate or rates at which any Securities of the series shall
bear interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be payable
and the Regular Record Date for any such interest payable on any Interest
Payment Date;
(6) the place or places where (a) the principal of and any premium
and interest on any Securities of the series shall be payable, (b) Securities
of the series may be surrendered for registration of transfer or for exchange
and (c) notices and demand to or upon the Company in respect of Securities of
the series and this Indenture may be served;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other than
by a Board Resolution, the manner in which any election by the Company to
redeem the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous provisions
or at the option of the Holder thereof and the period or periods within which,
the price or prices at which and the terms and conditions upon which any
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 any Securities of the series shall be
issuable;
(10) 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 or pursuant to a formula, the manner in which such amounts shall be
determined;
24
<PAGE> 34
(11) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any premium
or interest on any Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose, including for purposes of the definition of
"Outstanding" in Section 101;
(12) if the principal of or any premium or interest on any Securities
of the series is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or currency units other than that or those
in which such Securities are stated to be payable, the currency, currencies or
currency units in which the principal of or any premium or interest on such
Securities as to which such election is made shall be payable, the periods
within which and the terms and conditions upon which such election is to be
made and the amount so payable (or the manner in which such amount shall be
determined);
(13) if other than the entire principal amount thereof, the portion
of the principal amount of any Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to Section
502;
(14) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity or which shall
be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in
any such case, the manner in which such amount deemed to be the principal
amount shall be determined);
(15) if other than as provided in Section 1302 or Section 1303, the
means of defeasance or covenant defeasance as may be specified for the
Securities of the series and, if other than by a Board Resolution, the manner
in which any election by the Company to defease or covenant defease such
Securities shall be evidenced;
(16) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities and,
in such case, the Depositary or Depositaries for such Global Security or Global
Securities, the form of any legend or legends which shall be borne by any such
Global Security in addition to or in lieu of that set forth in Section 204 and
any circumstances in addition to or in lieu of those set forth in Section 305
in which any such Global Security may be exchanged in whole or in part for
Securities registered, and any transfer of such Global Security in whole or in
part may be registered, in the name or names of Person other than the
Depositary for such Global Security or a nominee thereof;
(17) any addition to deletion from or modification of the Events of
Default which applies to any Securities of the series and any change in the
right of the Trustee or the requisite
25
<PAGE> 35
Holders of such Securities to declare the principal amount thereof due and
payable pursuant to Section 502;
(18) any addition to deletion from or modification of the covenants
set forth in Article X which applies to Securities of the series;
(19) if other than the Trustee, the identity of the Security
Registrar and any Paying Agent; and
(20) any other terms 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.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the General Partner of
the Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only 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 Company by the Chairman
of the Board, Vice Chairman of the Board, President or one of Vice Presidents
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
Company, 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 Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities,
26
<PAGE> 36
and the Trustee in accordance with the Company Order shall authenticate and
deliver such Securities as in this Indenture provided and not otherwise. If the
form or terms of the Securities of the series have been established by 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 of such Securities has been established by or
pursuant to Board Resolutions as permitted by Section 201, that such form has
been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms have
been established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company 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 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 in accordance with the Board Resolutions will affect
the Trustee's own rights, duties, obligations, responsibilities 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, unless the Trustee reasonably determines
otherwise, for the Company to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
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.
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 by one of its Responsible Officers,
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
27
<PAGE> 37
foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
309, for all purposes of this Indenture such Security shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to
the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company 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 Company 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 Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company 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 like
tenor and aggregate principal amount. 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 Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office being herein
sometimes collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities
entitled to registration or transfer as provided herein. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided. The Company may at any time replace
the Security Registrar, change such office or agency or act as its own Security
Registrar. The Company will give prompt written notice to the Trustee of any
such change.
Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company maintained pursuant to Section 1002 for
such purpose for that series, the Company 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 like tenor and aggregate principal amount.
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<PAGE> 38
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company 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 Company, 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 Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company 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 Company 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, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue,
register the transfer of or exchange any Securities of that series (or of that
series and specified tenor, as the case may be) during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for redemption under Section 1103
and ending at the close of business on the date of such mailing, or (B) 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.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each Global Security shall constitute a single Security
for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture and except
as otherwise specified as contemplated by Section 301, no Global Security may
be registered or exchanged in whole or in part for Securities registered, and
no transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary (i) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or
(ii) has ceased to be a clearing agency registered under the Exchange Act, (B)
there shall have occurred and be continuing an Event of Default with respect to
such Global Security or (C) there shall exist such circumstance, if any, in
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addition to or in lieu of the foregoing as have been specified for this purpose
as contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities issued
in exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with
security or indemnity reasonably required by the Company or the Trustee, the
Company 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 Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
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
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company 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.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
exchange for any mutilated Security or in lieu of any destroyed, lost or stolen
Security shall constitute an original additional contractual obligation of the
Company, 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
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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 Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company 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 or the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company 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
Company 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 Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be given to each Holder of Securities of such series in the manner
set forth in Section 106, 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 given, 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).
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(2) The Company 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 on which such Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice
given by the Company 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, 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.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company 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 Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company 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 Company, the
Trustee, and any agent of the Company or the Trustee as the owner of such
Global Security for all purposes whatsoever. None of the Company, the Trustee
nor any agent of the Company 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 interest 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 cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company 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 Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled 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 cancelled
Securities held by the Trustee shall be disposed of as directed by a Company
Order, and the Trustee shall thereafter deliver to the Company a certificate
with respect to such disposition.
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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.
SECTION 311. CUSIP Numbers.
The Company 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 Company 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 Securities herein expressly provided
for), and the Trustee, at the expense of the Company, 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 or U.S. Government Obligations has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company 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, or
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(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
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
an amount of money or U.S. Government Obligations 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 such Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company with respect to such Securities; and
(3) the Company 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 the Securities of any series, the obligations of the Company to the
Trustee under Section 607, the obligations of the Trustee to any Authenticating
Agent under Section 614 and, if money or U.S. Government Obligations shall have
been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this
Section, the obligations of the Company or Trustee under Section 402 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
and U.S. Government Obligations 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 Company 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 or U.S. Government
Obligations has been deposited with the Trustee.
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ARTICLE V
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of the Security of that series; or
(4) default in the performance of any covenant of the Company in this
Indenture (other than a covenant a default in the performance of which is
specifically dealt with elsewhere in this Section 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 for a period of 60 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of all series Outstanding (or,
if any such covenant is not applicable to all series of Securities, by the
Holders of at least 25% in principal amount of the Outstanding Securities of
all series to which it is applicable) 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
(5) the entry by a court of competent jurisdiction of a decree or
order under federal or state bankruptcy law or similar law for the relief of
debtors (A) for relief against the Company in any involuntary case or
proceeding, (B) adjudging the Company bankrupt or insolvent, (C) approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company, (D) appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of substantially all of its property, or (E) ordering the
winding up or liquidation of its affairs, and in each of the instances referred
to in the preceding Clause (A) through (E), the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect
for a period of 90 consecutive days; or
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(6) pursuant to applicable federal or state bankruptcy law or similar
law for the relief of debtors, the Company (A) commences a voluntary case or
proceeding, (B) consents to the entry of a decree or order for relief against
it in an involuntary case or proceeding, (C) consents to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of it or of substantially all of its
property, or (D) makes a general assignment for the benefit of its creditors;
or
(7) any other Event of Default provided pursuant to Section 301 with
respect to Securities of that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) 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 aggregate principal amount of each affected
series of the Outstanding Securities (voting as a single class) may declare the
principal amount of all the Securities of all such affected series (or, if any
Securities of any such affected series are Original Issue Discount Securities,
such portion of the principal amount of such Securities as may be specified by
the terms thereof) to be due and payable immediately, by a notice in writing to
the Company (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. If an Event of Default specified in Section 501(5)
or 501(6) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of that series (or, if any
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified by the terms
thereof) shall automatically, and without any declaration of other action on
the part of the Trustee or any Holder, 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 Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company 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
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(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 and annulment shall affect any subsequent Default or
impair any right consequent thereof.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company 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 Company will upon demand of it by the Trustee, pay to Trustee, 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 Company 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, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company 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 Company 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 Claims.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities) or its property, 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 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 any express trust, and any recovery 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 collected 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 on account of principal or any
premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
First: To the payment of all amounts due the Trustee under Section
607;
Second: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect of which
or for the benefit of which such money
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has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for the principal
and any premium and interest, respectively; and
Third: The balance, if any, to the Company.
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 all affected series (treated as a single class) 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 to the Trustee reasonable
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 of 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
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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 and in every such case, subject to any determination in
such proceeding, the Company, 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 or 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 that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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SECTION 513. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series may on behalf of the Holders of all of the Securities
of such series waive any existing Default or Event of Default with respect to
such series and its consequences, except a Default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) 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 or Event of Default shall cease to
exist and 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 Event of 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 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
Company.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company 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 Company (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.
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ARTICLE VI
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(1) Except during the continuance of an Event of Default,
(A) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(B) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(2) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise under the circumstances in the conduct of his own
affairs.
(3) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(A) this Subsection shall not be construed to limit the effect
of Subsection (1) of this Section;
(B) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(C) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; and
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(D) 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 and powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(4) 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 hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means 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.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
notice, 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 or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any
resolution of the General Partner shall be sufficiently evidenced by a General
Partner 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;
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(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 reasonable security or indemnity 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 make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
(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.
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
Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company 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 Company, 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 Company 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 of interest on any money received by it hereunder except as otherwise
agreed with the Company.
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SECTION 607. Compensation and Reimbursement.
The Company 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) except as otherwise expressly provided herein, 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.
SECTION 608. 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. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section and to the extent permitted by the Trust Indenture Act, 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 with respect to the Securities of any series 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.
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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 Company. 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
Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company 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 Company 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 Company by a Board Resolution may remove the
Trustee with respect to all Securities of which such Trustee acts as trustee,
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 of which such Trustee
acts as trustee 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 Company, 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
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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 Company 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
Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company 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 other similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
The Company 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.
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 Company 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 Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges and reimbursement of its expenses (including, reasonable
fees and expenses of counsel and agents), if any, to which such retiring
Trustee is otherwise legally entitled, 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.
In case of the appointment hereunder of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Company, 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 (1)
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, (2) 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
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is not retiring shall continue to be vested in the retiring Trustee, and (3)
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 Trustee 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 herein 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 Company or any successor Trustee, such
retiring Trustee shall 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.
Upon request of any such successor Trustee, the Company 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 the
first or second preceding paragraph, as the case may be.
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 Company.
If and when the Trustee shall be or become a creditor of the Company (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 Company (or any such other obligor).
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SECTION 614. Appointment of Authenticating Agent.
The Trustee 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
and subject to the direction of the Trustee to authenticate and deliver
Securities of such series issued upon original issue 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 Company 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 the corporate agency or
corporate trust business of an 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 the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. 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 Company. 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 Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. 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
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named as an Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
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 COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than _____ and ______ in each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities of each series as of the preceding _____
or _____, 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 Company 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;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of 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 Company and the Trustee that neither the Company nor the Trustee nor the
agent of either of them shall be held accountable by reason of any disclosure
of information as to 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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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 Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR
LEASE
SECTION 801. Company May Consolidate, Etc., Only On Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Company is the continuing entity or if the
Company is not the continuing entity the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Person organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the due and punctual payment of the principal of and any
premium and interest on all the Securities and the performance or observance of
every covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction no Default or
Event of Default exists;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental
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indenture comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
For the avoidance of doubt, in no regard shall the foregoing provisions of
this Section 801 restrict or otherwise pertain to any Subsidiary of the
Company.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company 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, the Company, when authorized by a
Board Resolution, 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 Company and
the assumption by any such successor of the covenants of the Company herein and
in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not
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registrable as to principal, and with or without interest coupons, or to permit
or facilitate the issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination shall become effective only when there is
no such Security Outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such provision;
or
(6) to secure the Securities pursuant to the requirements of Section
1006 or otherwise; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
611; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
to comply with any applicable mandatory provisions of law or to make any other
provisions with respect to matters or questions arising under this Indenture,
provided that such action pursuant to this Clause (9) shall not adversely
affect the interests of the Holders of Securities of any series in any material
respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of a majority in aggregate principal
amount of the Outstanding Securities of all series affected by such
supplemental indenture (voting as a single class), by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, 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 of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, 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 on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security or any other Security which would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of
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Payment where, or the coin or currency in which, any Security or any premium or
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment, or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby; provided,
however, that this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to "the Trustee" and
concomitant changes in this Section, or the deletion of this proviso, in
accordance with the requirements of Sections 611 and 901(8).
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.
Notwithstanding the foregoing, the Series A and Series B Securities issued
pursuant to this Indenture will vote together as a single class in accordance
with the provisions and procedures set forth herein, whenever both such series
(i) are affected by any Default under this Indenture or amendment or supplement
to this Indenture, or (ii) are entitled to and desire to Act in accordance with
the provisions of this Indenture.
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 Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to his 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 Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company 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 Company 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 such Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company 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 Company in respect of the Securities of that series and this Indenture
may be served. The Company 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 Company 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
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of the Trustee, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
The Company 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 Company of its obligation to maintain an office or
agency in each Place of Payment for Securities of any series for such purposes.
The Company 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 expressly provided in Section 301 with respect to a
series of Securities, the Company mutually designates as the Place of Payment
for each series of Securities the City of New York, New York, and initially
appoints the Trustee at its Corporate Trust Office as the Company's office or
agency for each such purpose in such city.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own 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 Company 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
Company will promptly notify the Trustee of its action or failure so to act.
The Company 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) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any Event of Default by the Company (or any other obligor upon
the Securities of that series) in the making of any payment in respect of the
Securities of that series (the occurrence and continuance of which such Paying
Agent has provided written notice to 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 upon the written request of the Trustee.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to
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pay, to the Trustee all sums held in trust by the Company 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 Company 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 Company, 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 Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company 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 Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, 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 Company.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 150 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the knowledge of the signers thereof a
Default or an Event of Default by the Company then exists and, if such signers
have knowledge of any Default or Event of Default, specifying all such Defaults
or Events of Defaults (as applicable) and the nature and status thereof.
SECTION 1005. Existence.
Subject to Article VIII, the Company 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
Company 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 Company and that the preservation of such rights
or franchise would not reasonably be expected to have a material adverse effect
on the payment and performance of the Company under the terms of the Securities
or this Indenture.
SECTION 1006. Limitation on Liens.
The Company will not, and will not permit any of its Subsidiaries to,
create, assume or incur, any Lien on any Principal Property to secure any Debt
of the Company of any other Person (other than the Securities issued hereunder)
without effectively providing that the Securities of any
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Outstanding series (other than any series which by its express terms is not
entitled to the benefits of this Section 1006) shall be secured equally and
ratably with, or prior to, such Debt so long as such Debt shall be secured.
There is, however, excluded from the foregoing restriction the following: (a)
Permitted Liens; (b) any Lien on any (i) property or assets created at the time
of its acquisitions of such property or assets by the Company or any of its
Subsidiaries, or within one year after such time, to secure all or part 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 of, such acquisition, or (ii) property to secure all or part of
the cost of the development, construction, repair or improvement thereon or to
secure Debt incurred prior to, at the time of, or within one year after, the
completion of such development, construction, repair or improvement or the
commencement of full operations thereof (whichever is later) to provide funds
for any such purpose; (c) any Lien on any current assets that secures current
liabilities or Debt of the Company or its Subsidiaries; (d) (i) any Lien on any
property or assets existing thereon at the time of acquisition thereof by the
Company or any of its Subsidiaries (whether or not the obligations secured
thereby are assumed by the Company or any of its Subsidiaries), or (ii) the
assumption by the Company or any of its Subsidiaries of obligations secured by
any Lien existing at the time of acquisition by the Company or any of its
Subsidiaries of the property or assets subject to such Lien or at the time of
the acquisition of the Person which owns such property or assets, or (iii) any
Lien on any property or assets of a Person existing thereon at the time (1)
such Person becomes a Subsidiary of the Company, (2) such Person is merged
into, or consolidated with, the Company or any of its Subsidiaries or (3) of a
sale, lease or other disposition of the properties of a Person (or division
thereof) as an entirety or substantially as an entirety to the Company or any
of its Subsidiaries; (e) any Lien on any property or assets of the Company or
any of its Subsidiaries in existence on the date of this Indenture or created
pursuant to an "after-acquired property" clause or similar term in existence on
the date of this Indenture or the terms of any mortgage, pledge agreement,
security agreement or similar agreement or instrument, in existence on the date
of this Indenture; (f) any Lien arising by reason of any attachment, judgment,
decree or order of any governmental or court authority, so long as any
proceeding initiated to review such attachment, judgment, decree or order shall
not have been terminated or the period within which such proceeding may be
initiated shall not expire, or such attachment, judgment, decree or order shall
otherwise be effectively stayed; and (g) any extension, renewal, refinancing,
refunding or replacement (or successive extensions, renewals, refinancing ,
refunding or replacements ) of any Lien, in whole or part, that is referred to
in clauses (a) through (f) (inclusive) above, or any Debt secured thereby.
Notwithstanding the foregoing, the Company may, and may permit any of its
Subsidiaries to create, assume or incur any Lien upon any Principal Property to
secure any Debt of the Company or any Person (other than the Securities) that
is not excepted by clauses (a) through (g) (inclusive) above without securing
the Securities issued under the Indenture, provided that, after giving effect
to the creation, assumption or incurrence of such Lien and Debt, and the
application of proceeds of such Debt, if any, received by the Company or any of
its Subsidiaries as a result thereof, the aggregate principal amount of all
then Debt outstanding secured by such Lien and all similar Liens, together with
all net sale proceeds from Sale-Leaseback Transactions (excluding
Sale-Leaseback
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Transactions permitted by clauses (a) through (d) (inclusive) of the first
paragraph of Section 1007 would not exceed 10% of Consolidated Net Tangible
Assets.
SECTION 1007. Limitation on Sale-Leaseback Transactions.
The Company will not, nor will it permit any of its Subsidiaries to,
engage in a Sale-Leaseback Transaction, unless: (a) such Sale-Leaseback
Transaction occurs within one year from the date of completion of the
acquisition of the Principal Property subject thereto or the date of the
completion of construction, development or substantial repair or improvement,
or commencement of full operations, on such Principal Property, whichever is
later; (b) the Sale-Leaseback Transaction involves a lease for a period,
including renewals, of not more than three years; (c) the Company or such
Subsidiary would be entitled to incur Debt secured by a Lien on Principal
Property 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 pursuant to Section 1006; or (d) the Company 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 (i) the prepayment, repayment,
reduction or retirement of any pari passu Funded Debt or Debt of the Company or
any of its Subsidiaries, or (ii) the expenditure or expenditures for Principal
Property used or to be used in the ordinary course of business of the Company
or any of its Subsidiaries.
Notwithstanding the foregoing, each of the Company may, and may permit
each of its Subsidiaries to, effect any Sale-Leaseback Transaction that is not
excepted by clauses (a) through (d) (inclusive) of the above paragraph,
provided that after giving effect thereto, and the application of proceeds, if
any, received by the Company or any of its Subsidiaries as a result thereof,
the net sale proceeds from such Sale-Leaseback Transaction, together with the
aggregate principal amount of all then outstanding Debt (other than the
Securities) secured by Liens upon Principal Property not excepted by clauses
(a) through (g) (inclusive) of Section 1006 would not exceed 10% of the
Consolidated Net Tangible Assets.
SECTION 1008. Waiver of Certain Covenants.
The Company may, with respect to the Securities of any series, omit in any
particular instance to comply with any term, provision or condition set forth
in any covenant provided pursuant to Section 301(18), 901(2) or 901(7) for the
benefit of the Holders of such series or in Section 1005, 1006 or 1007, if
before the time for such compliance the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities of such series, the
Holders 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 Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force in
effect.
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance
with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution or in another manner specified as contemplated by Section
301 for such Securities. In case of any redemption at the election of the
Company of less than all the Securities of any series (including any such
redemption affecting only a single Security), the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (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 prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
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
or unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of
a portion of the principal amount of any Security of such series, provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to redeemed (unless such redemption affects only a
single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected
for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
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The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of the 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, 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
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such Securities,
the principal amount) of the particular Securities to be redeemed and, if less
than all the Outstanding Securities of any series consisting of a single
Security are to be redeemed, the principal amount of the particular Security 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, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is 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 at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company 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
Company 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 Company 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 will 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 Subsidiary called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest form 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 Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company 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.
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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 any series except as otherwise specified as
contemplated by Section 301 for such Securities.
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 such Securities is herein referred to as an "optional sinking fund
payment." If provided for by the terms of any Securities, 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 as provided for by the terms of such Securities.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (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 Company
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 any Securities of such series required to be made
pursuant to the terms of such Securities as and to the extent provided for by
the terms of such Securities; provided that the Securities to be so credited
have not been previously so credited. The Securities to be so credited shall be
received and credited for such purpose by the Trustee at the Redemption Price,
as specified in the Securities so to be redeemed, 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 Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuring sinking fund payment for such
Securities pursuant to the terms of such Securities, 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 pursuant
to Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days prior to 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
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at the expense of the Company 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 AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The provisions of this Article shall be applicable to each series of
Securities, except as otherwise specified pursuant to Section 301 for
Securities of such series.
SECTION 1302. Defeasance and Discharge.
In addition to discharge of the Indenture pursuant to Section 401, the
Company shall be deemed to have paid and discharged the entire indebtedness on
all the Securities of such a series on the date of the deposit referred to in
Clause (1) of Section 1304, and the provisions of this Indenture with respect
to the Securities of such series shall no longer be in effect, (except as to
(1) the rights of Holders of such Securities to receive, solely from the trust
fund described in Section 1304 and as more fully set forth in such Section,
payments in respect of the principal of and any premium and interest on such
Securities when payments are due (other than by acceleration), (2) the
Company's obligations with respect to such Securities under Sections 304, 305,
306, 1002 and 1003, and (3) the rights, powers, trusts, obligations, duties and
immunities of the Trustee hereunder), and the Trustee, at the expense of the
Company, upon a Company Request, shall execute proper instruments acknowledging
the same, if the applicable conditions set forth in Section 1304 are satisfied
("Defeasance"). For this purpose, such Defeasance means that the Company (and
any other obligor of the Securities of such series) shall be deemed to have
paid and discharged the entire indebtedness represented by the Securities of
such series, which shall thereafter be deemed to be "Outstanding" only for the
purposes of Section 1305 and the rights and obligations referred to in Clauses
(1) through (3) (inclusive) of this Section 1302, and to have satisfied all its
other obligations under such Securities and this Indenture insofar as such
Securities are concerned. Subject to compliance with this Article, the Company
may exercise its option (if any) to have this Section applied to any Securities
notwithstanding the prior exercise of its option (if any) to have Section 1303
applied to such Securities.
SECTION 1303. Covenant Defeasance.
The Company shall be released on the date of the deposit referred to in
Clause (1) of Section 1304 from its obligations under Sections 801, 1006 and
1007, inclusive, and any covenants provided pursuant to Sections 301(18),
901(2) or 901(7) for the benefit of the Holders of such
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Securities, in each case with respect to the Securities of any series on and
after the date the applicable conditions set forth in Section 1304 are
satisfied ("Covenant Defeasance"); and the occurrence of any event specified in
Sections 501(4) (with respect to any of Sections 801, 1006 and 1007, inclusive,
and any such covenants provided pursuant to Sections 301(18), 901(2) or
901(7)), and 501(7) shall be deemed not to be or result in an Event of Default,
in each case with respect to the Securities of such series. For this purpose,
such Covenant Defeasance means that, with respect to the Securities of such
series (i) the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such specified
Section, whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any Section to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or Event of Default under Section 501, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby, and (ii) such Securities 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 of Holders (and the consequences of any therefor) in connection with
such specified covenants, but shall continue to be deemed Outstanding for all
other purposes hereunder.
SECTION 1304. Condition to Defeasance or Covenant Defeasance.
The following shall be the applicable conditions to the application of
Section 1302 or Section 1303 to any Securities or any series or Securities, as
the case may be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the requirements
contemplated by Section 609 and agrees to comply with the provisions of this
Article applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefits of the Holders of such Securities, (A) money in an amount, or
(B) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in an
amount, or (C) a combination thereof, in each case sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certificate thereof delivered to the Trustee, to pay the principal of
and any premium and interest on such Securities on the respective Stated
Maturities or any Redemption Date established pursuant to Clause (B) below, in
accordance with the terms of this Indenture and such Securities. As used
herein, "U.S. Government Obligation" means (x) any security which is (i) a
direct obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified in
clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment
66
<PAGE> 76
of principal of or interest on any U.S. Government Obligation which is so
specified and held, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.
(2) In order to have Section 1302 apply to any Securities or any
series of Securities, as the case may be, the Company shall have delivered to
the Trustee an Opinion of Counsel stating that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling or
(B) since the date of this Indenture, there has been a change in the applicable
federal income tax law, in either case (A) or (B) to the effect that, and based
thereon such opinion shall confirm that, the Holders of such Securities will
not recognize gain or loss for federal income tax purposes as a result of such
deposit and Defeasance and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit and Defeasance had not occurred.
(3) In order to have Section 1303 apply to any Securities or any
series of Securities, as the case may be, the Company shall have delivered to
the Trustee an Opinion of Counsel to the effect that the Holders of such
Securities will not recognize 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, in the same manner and at the same times as
would have been the case if such deposit and Covenant Defeasance had not
occurred.
(4) No Default or Event of Default with respect to such Securities or
any other Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 501(6) and (7),
at any time on or prior to the 90th day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied with respect
to such specified events until after such 90th day).
(5) 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.
(6) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance, as the case
may be, have been complied with.
SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other
67
<PAGE> 77
qualifying trustee (solely for purposes of this Section and Section 1306, the
Trustee and any such other trustee are referred to collectively as the
"Trustee") pursuant to Section 1304 in respect of any Securities shall be held
in trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
such Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Holders of such Securities for the payment or
redemption of which such funds have been deposited with the Trustee, of all
sums due and to become due thereon in respect of principal and any premiums and
interest, but money so held in trust need not be segregated from other funds
except to the extent required by law.
Anything in this Article to the contrary notwithstanding, the Trustee or
the Paying Agent, as applicable, shall promptly return, deliver or pay to the
Company from time to time upon Company Request any money or U.S. Government
Obligations held by it as provided in Section 1304 with respect to any
Securities which, at any time, are in excess of the amount thereof which would
then be required to effect the Defeasance or Covenant Defeasance, as the case
may be, with respect to such Securities. 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 1304.
SECTION 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article with respect to any
Securities by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the obligations under this Indenture and such Securities from which the
Company has been discharged or released pursuant to Section 1302 or 1303 shall
be revived and reinstated as though no deposit had occurred pursuant to Section
1304 with respect to such Securities, until such time as the Trustee or Paying
Agent is permitted to apply all money or U.S. Government Obligations held in
trust to Section 1305 with respect to such Securities in accordance with this
Article; provided, however, that if the Company (whether directly or by payment
to the Trustee or Paying Agent) makes any payment of principal of or any
premiums or interest on any such Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or U.S. Government
Obligations so held in trust.
This instrument may be executed in any number of counterparts, and by each
of the parties hereto on separate 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.
68
<PAGE> 78
In Witness Whereof, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
TE Products Pipeline Company, Limited
Partnership
By: Texas Eastern Products Pipeline
Company, its general partner
By
--------------------------------
Title:
----------------------------
Attest:
- -----------------------------
BANK OF NEW YORK,
as Trustee
By
------------------------------------
Title:
--------------------------------
Attest:
- -----------------------------
69
<PAGE> 79
State of _________ )
) ss.:
County of ________ )
On the ___ day of ______, ______, before me personally came ____________,
to me known, who, being by me duly sworn, did depose and say that he is
_____________ of Texas Eastern Products Pipeline Company, the General Partner
of TE Products Pipeline Company, Limited Partnership, one of the entities
described in and which executed the foregoing instrument; and that he signed
his name thereto by like authority.
------------------------------
State of _________ )
) ss.:
County of ________ )
On the ___ day of ______, ______, before me personally came ____________,
to me known, who, being by me duly sworn, did depose and say that he is
_____________ of The Bank of New York, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
------------------------------
70
<PAGE> 80
EXHIBIT A
FORM OF SERIES A SECURITIES
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 EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
% SENIOR NOTES DUE 2007
No.__________ $___________
CUSIP NO.___________
TE Products Pipeline Company, Limited Partnership, a limited partnership
duly formed and existing under the laws of the State of Delaware (herein called
the "Company," 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
__________________ Dollars on __________________, 2007 and to pay interest
thereon from _________, 1997 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,
provided that any principal and premium, and any such installment of interest,
which is overdue shall bear interest at the rate of __% per annum (to the
extent that the payment of such interest shall be legally enforceable), from
the dates such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand. 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 will 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 whereof 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 on which the Securities of this series may be listed,
A-1
<PAGE> 81
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of (and premium, if any) and any such interest on
this Security will be made at the office or agency of the Company maintained
for that purpose in New York, New York, 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; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be duly
executed under its seal.
Dated:
--------------------
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
By: Texas Eastern Products Pipeline Company,
as General Partner
By:
-------------------------------------
Attest:
- -------------------------
A-2
<PAGE> 82
[Reverse of Security]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of _________, 1997 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be authenticated and delivered. This
Security is one of the series designated on the face hereof and designated in
the Indenture as Series A Securities, limited in aggregate principal amount to
$_________.
The Securities of this series are subject to redemption upon not less than
30 nor more than 60 days' notice by mail, at any time on or after _________,
2002, as a whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount): If
redeemed on or before _________, 2003, ___% and if redeemed during the 12-
month period beginning _________ of the years indicated,
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
- ---- ---------------- ---- ----------------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption 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.
In the event of redemption of this Security in part only, 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.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
A-3
<PAGE> 83
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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in aggregate
principal amount of the Securities of this series at the time Outstanding and
Securities of other series affected by such Event of Default then 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 and Securities of other series affected by such Event of Default
then 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 Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed, by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new
A-4
<PAGE> 84
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 $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested in writing by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company 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 and
notice to the Trustee thereof, the Company, the Trustee and any agent of the
Company 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
be overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
No directors, officer, employee, partner, stockholder or unitholder, as
such, of the Company (or of any such partners or unitholders) shall have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation, except that the General Partner shall, by
operation of law as the general partner of the Company, have liability for the
payment obligations on Outstanding Series A Securities, including this
Security, in an amount not to exceed $ million, provided that such liability of
the General Partner shall not in any event exceed $40 million in the aggregate
for payment obligations in respect of all Outstanding Series A Securities and
Outstanding Series B Securities. By accepting this Security, each Holder waives
and releases all such liability. Without limiting the generality of the
foregoing, so long as the Company is a limited partnership, except as expressly
provided in the exception to the first sentence of this paragraph, the
obligations of the Company hereunder will be non-recourse to Texas Eastern
Products Pipeline Company, a Delaware corporation the general partner (the
"General Partner") of the Company (and its affiliates (other than the
Company)), and principal of and interest on this Security otherwise will be
payable only out of the cash flow and assets of the Company. The Trustee hereby
agrees, and each holder of a Security will be deemed to have agreed, that,
notwithstanding any statutory and/or common law liability of a general partner
for the debts and obligations of a partnership, neither the General Partner nor
its assets nor the Parent Company nor its assets (nor any of its affiliates
(other than the Company) nor their respective assets) shall be liable for any
of the obligations of the Company hereunder or under the Securities, except, as
to the General Partner, to the extent expressly provided in the exception to
the first sentence of this paragraph; it being expressly agreed and
acknowledged that all such obligations of the Company otherwise shall be
payable and satisfied only from the cash flow and assets of the Company. By
accepting this Security, each Holder agrees that, notwithstanding any statutory
and/or common law liability of a general partner for the debts and obligations
of a
A-5
<PAGE> 85
partnership, neither the General Partner nor its assets nor the Parent Company
nor its assets (nor any of its affiliates (other than the Company) nor their
respective assets) shall be liable for any of the obligations of the Company
hereunder or under this Security; it being expressly agreed and acknowledged
that all such obligations of the Company otherwise shall be payable and
satisfied only from the cash flow and assets of the Company except, as to the
General Partner, to the extent expressly provided in the exception to the first
sentence of this paragraph. This waiver and release, and limitation on
liability shall be a part of the consideration for the issue of this Security.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[Form of Trustee's Certificate of Authentication]
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
The Bank of New York
As Trustee
By
--------------------------
Authorized Officer
A-6
<PAGE> 86
EXHIBIT B
FORM OF SERIES B SECURITIES
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 EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
% SENIOR NOTES DUE 2027
No.____________ $__________
CUSIP NO.___________
TE Products Pipeline Company, Limited Partnership, a limited partnership
duly formed and existing under the laws of the State of Delaware (herein called
the "Company," 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
__________________ Dollars on __________________, 2027 and to pay interest
thereon from _________, 1997 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,
provided that any principal and premium, and any such installment of interest,
which is overdue shall bear interest at the rate of __% per annum (to the
extent that the payment of such interest shall be legally enforceable), from
the dates such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand. 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 will 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 whereof 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 on which the Securities of this series may be listed,
B-1
<PAGE> 87
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of (and premium, if any) and any such interest on
this Security will be made at the office or agency of the Company maintained
for that purpose in New York, New York, 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; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be duly
executed under its seal.
Dated:
--------------------
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
By: Texas Eastern Products Pipeline Company,
as General Partner
By:
-------------------------------------
Attest:
- -------------------------
B-2
<PAGE> 88
[Reverse of Security]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of _________, 1997 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be authenticated and delivered. This
Security is one of the series designated on the face hereof and designated in
the Indenture as Series B Securities, limited in aggregate principal amount to
$_________.
The Securities of this series are subject to redemption upon not less than
30 nor more than 60 days' notice by mail, at any time on or after _________,
2007, as a whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount): If
redeemed on or before _________, 2008, ___% and if redeemed during the 12-
month period beginning _________ of the years indicated,
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
- ---- ---------------- ---- ----------------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption 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.
In the event of redemption of this Security in part only, 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.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
B-3
<PAGE> 89
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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in aggregate
principal amount of the Securities of this series at the time Outstanding and
Securities of other series affected by such Event of Default then 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 and Securities of other series affected by such Event of Default
then 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 Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed, by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new
B-4
<PAGE> 90
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 $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested in writing by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company 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 and
notice to the Trustee thereof, the Company, the Trustee and any agent of the
Company 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
be overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
No directors, officer, employee, partner, stockholder or unitholder, as
such, of the Company (or of any such partners or unitholders) shall have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation, except that the General Partner shall, by
operation of law as the general partner of the Company, have liability for the
payment obligations on Outstanding Series B Securities, including this
Security, in an amount not to exceed $ million, provided that such liability of
the General Partner shall not in any event exceed $40 million in the aggregate
for payment obligations in respect of all Outstanding Series A Securities and
Outstanding Series B Securities. By accepting this Security, each Holder waives
and releases all such liability. Without limiting the generality of the
foregoing, so long as the Company is a limited partnership, except as expressly
provided in the exception to the first sentence of this paragraph, the
obligations of the Company hereunder will be non-recourse to Texas Eastern
Products Pipeline Company, a Delaware corporation, the general partner (the
"General Partner") of the Company (and its affiliates (other than the
Company)), and principal of and interest on this Security otherwise will be
payable only out of the cash flow and assets of the Company. The Trustee hereby
agrees, and each holder of a Security will be deemed to have agreed, that,
notwithstanding any statutory and/or common law liability of a general partner
for the debts and obligations of a partnership, neither the General Partner nor
its assets nor the Parent Company nor its assets (nor any of its affiliates
(other than the Company) nor their respective assets) shall be liable for any
of the obligations of the Company hereunder or under the Securities, except, as
to the General Partner, to the extent expressly provided in the exception to
the first sentence of this paragraph; it being expressly agreed and
acknowledged that all such obligations of the Company otherwise shall be
payable and satisfied only from the cash flow and assets of the Company. By
accepting this Security, each Holder agrees that, notwithstanding any statutory
and/or common law liability of a general partner for the debts and obligations
of a
B-5
<PAGE> 91
partnership, neither the General Partner nor its assets nor the Parent Company
nor its assets (nor any of its affiliates (other than the Company) nor their
respective assets) shall be liable for any of the obligations of the Company
hereunder or under this Security; it being expressly agreed and acknowledged
that all such obligations of the Company otherwise shall be payable and
satisfied only from the cash flow and assets of the Company except, as to the
General Partner, to the extent expressly provided in the exception to the first
sentence of this paragraph. This waiver and release, and limitation on
liability shall be a part of the consideration for the issue of this Security.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[Form of Trustee's Certificate of Authentication]
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
The Bank of New York
As Trustee
By
-------------------------
Authorized Officer
B-6
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- ------- ------- ------- ------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings(1) . . . . . . . . . . . . . . $ 59,682 $ 72,615 $80,317 $77,349 $88,822 $45,413 $ 46,433
Fixed charges(2) . . . . . . . . . . . $ 37,288 $ 36,965 $36,491 $35,844 $34,922 $17,552 $ 16,971
Earnings/fixed charges . . . . . . . . 1.6 2.0 2.2 2.2 2.5 2.6 2.7
</TABLE>
- ------------
(1) Income from continuing operations before income taxes, fixed charges
(excluding interest capitalized) and minority interest expenses of
subsidiaries with fixed charges.
(2) Interest and amortization of debt expense, including the interest portion
of rental obligations deemed representative of the interest factor.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
TEPPCO Partners, L.P.:
We consent to the incorporation by reference in the registration statement of
our report dated January 17, 1997, relating to the consolidated balance sheets
of TEPPCO Partners, L.P. as of December 31, 1996, and 1995, and the related
consolidated statements of income, partners' capital, and cash flows for each of
the years in the three-year period ended December 31, 1996, which report appears
in the December 31, 1996, Annual Report on Form 10-K of TEPPCO Partners, L.P.
and to the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Houston, Texas
October 20, 1997
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-----------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) []
-----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
13-5160382
(I.R.S. employer identification no.)
48 WALL STREET, NEW YORK, NEW YORK 10286
(Address of principal executive offices) (Zip Code)
-----------------------
THE BANK OF NEW YORK
10161 CENTURION PARKWAY
TOWERMARC PLAZA, 3RD FLOOR
JACKSONVILLE, FLORIDA 32256
ATTN: MS. JULIANNE KOVATZ
(904) 645-1961
(Name, address and telephone number of agent for service)
-----------------------
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP
(Exact name of obligor as specified in its charter)
DELAWARE 76-0329620
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(Address of principal executive offices ) (Zip Code)
$150,000,000 ______% SENIOR NOTES DUE 2007
$240,000,000 ______% SENIOR NOTES DUE 2027
(Title of indenture securities)
<PAGE> 2
1. General Information.
Furnish the following information as to the trustee --
(A) Name and address of each examining or supervising authority to
which it is subject.
SUPERINTENDENT OF BANKS OF THE STATE OF NEW YORK
2 RECTOR STREET
NEW YORK, NEW YORK 10006, AND ALBANY, NEW YORK 12203
FEDERAL RESERVE BANK OF NEW YORK
33 LIBERTY PLAZA
NEW YORK, NEW YORK 10045
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C. 20429
NEW YORK CLEARING HOUSE ASSOCIATION
NEW YORK, NEW YORK
(B) Whether it is authorized to exercise corporate trust powers.
YES.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
NONE.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule
24 of the Commission's Rules of Practice.
1. A copy of the Organization Certificate of the Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment 1 to Form T-1 filed with Registration Statement No.
33-6215; Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672; and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637).
2
<PAGE> 3
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019).
6. The consent of the Trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of Jacksonville
and the State of Florida, on the 20th day of October, 1997.
THE BANK OF NEW YORK
By: /s/ Julianne Kovatz
----------------------------
Julianne Kovatz, Agent
4
<PAGE> 5
EXHIBIT 6 TO FORM T-1
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, in connection with the proposed issuance of debt securities by TE
Products Pipeline Company, Limited Partnership, The Bank of New York hereby
consents that reports of examinations by Federal, State, Territorial or District
Authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
THE BANK OF NEW YORK
By: /s/ Julianne Kovatz
----------------------------
Julianne Kovatz, Agent
5
<PAGE> 6
EXHIBIT 7 TO FORM T-1
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, New York 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business June 30, 1997, published in accordance with a
call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin....................................................... $7,769,502
Interest-bearing balances........................................................ 1,472,524
Securities:
Held-to-maturity securities...................................................... 1,080,234
Available-for-sale securities.................................................... 3,046,199
Federal funds sold and securities purchased under
agreements to resell............................................................. 3,193,800
Loans and lease financing receivables:
Loans and leases, net of unearned income..............................$52,352,045
LESS: Allowance for loan and lease losses................................625,042
LESS: Allocated transfer risk reserve........................................429
Loans and leases, net of unearned income
and allowance and reserve............................................... 34,726,574
Assets held in trading accounts........................................................... 1,611,096
Premises and fixed assets (including capitalized leases).................................. 676,729
Other real estate owned................................................................... 22,460
Investments in unconsolidated subsidiaries and
associated companies............................................................. 209,959
Customers' liability to this bank on acceptances outstanding.............................. 1,357,731
Intangible assets......................................................................... 720,883
Other assets.............................................................................. 1,627,267
-------------
Total assets.............................................................................. $57,514,958
=============
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices.............................................................. $26,875,596
Noninterest-bearing...................................................$11,213,657
Interest-bearing.......................................................15,661,939
In foreign offices, Edge and Agreement
subsidiaries, and IBFs.................................................. 16,334,270
Noninterest-bearing.......................................................596,369
Interest-bearing.......................................................15,737,901
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased.......................................................... 1,583,157
Demand notes issued to the U.S. Treasury.................................................. 303,000
Trading liabilities....................................................................... 1,308,173
Other borrowed money:
With remaining maturity of one year or less...................................... 2,383,570
With remaining maturity of more than one year
through three years..................................................... 0
With remaining maturity of more than three years................................. 20,679
Bank's liability on acceptances executed and outstanding.................................. 1,377,244
Subordinated notes and debentures......................................................... 1,018,940
Other liabilities......................................................................... 1,732,792
-----------
Total liabilities......................................................................... $52,937,421
===========
EQUITY CAPITAL
Common Stock.............................................................................. $1,135,284
Surplus................................................................................... 731,319
Undivided profits and capital reserves.................................................... 2,721,258
Net unrealized holding gains (losses) on
available-for-sale securities.................................................... 1,948
Cumulative foreign currency translation adjustments....................................... ( 12,272)
-----------
Total equity capital...................................................................... 4,577,537
-----------
Total liabilities and equity capital...................................................... $57,514,958
===========
</TABLE>
<PAGE> 8
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
8
