AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 2003
REGISTRATION NO. 333-
REGISTRATION NO. 333-
REGISTRATION NO. 333-
REGISTRATION NO. 333-
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
HERITAGE PROPANE PARTNERS, L.P. DELAWARE 73-1493906
HERITAGE OPERATING, L.P. DELAWARE 73-1495293
HERITAGE SERVICE CORP. DELAWARE 73-1495294
HERITAGE-BI STATE, L.L.C. DELAWARE 73-1496351
HERITAGE ENERGY RESOURCES, L.L.C. OKLAHOMA 73-1588029
(Exact name of each registrant (State or other jurisdiction of (I.R.S. Employer
as specified in its charter) incorporation or organization) Identification Number)
----------------
8801 SOUTH YALE AVENUE, SUITE 310
TULSA, OKLAHOMA 74137
(918) 492-7272
(Address, including zip code, and telephone number, including area code, of each
registrant's principal executive offices)
-----------------
MICHAEL L. GREENWOOD
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
HERITAGE PROPANE PARTNERS, L.P.
8801 SOUTH YALE AVENUE, SUITE 310
TULSA, OKLAHOMA 74137
(918) 492-7272
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------
COPIES TO:
JOSHUA DAVIDSON ROBERT A. BURK
BAKER BOTTS L.L.P. DOERNER, SAUNDERS, DANIEL &
ONE SHELL PLAZA ANDERSON, L.L.P.
910 LOUISIANA STREET 320 SOUTH BOSTON, SUITE 500
HOUSTON, TEXAS 77002-4995 TULSA, OKLAHOMA 74103-3725
(713) 229-1234 (918) 582-1211
-----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this registration statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.[X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
PROPOSED
MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
AMOUNT TO BE OFFERING OFFERING PRICE REGISTRATION FEE
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT (1) (2)
- ----------------------------------------------------------------------------------------------------------------------------------
Primary Offering:
Common Units representing limited partner interests (3)
Debt Securities of Heritage Propane Partners, L.P. (4)(5)
Debt Securities of Heritage Operating, L.P. (5)(6)
Guarantees of Debt Securities (7)
Total for sale by registrants (8) $ 800,000,000 $ 64,720
Secondary Offering: (9)
Common Units representing limited partner interests 6,415,762 $ 30.89 (10) $ 198,182,889 $ 16,033
--------- ------------ ------------- -------------
Total $ 998,182,889 $ 78,949 (11)
=================================================================================================================================
(1) Rule 457(o) permits the registration fee to be calculated on the basis
of the maximum offering price of all of the securities listed and,
therefore, with respect to the securities offered by the registrants,
the table does not specify by each class information as to the amount
to be registered or the proposed maximum offering price per security.
(2) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933 with respect to the securities offered
by the registrants (reflecting the offering price rather than the
principal amount of any debt securities issued at a discount) and
pursuant to 457(c) with respect to the Common Units offered by the
selling unitholders based on the average of the high and low sales
prices of Common Units on the New York Stock Exchange on July 21,
2003.
(3) Subject to Note 8 below, an indeterminate amount of Common Units as may
be sold from time to time by Heritage Propane Partners, L.P. is being
registered hereunder.
(4) Subject to Note 8 below, an indeterminate principal amount of Debt
Securities as may be sold from time to time by Heritage Propane
Partners, L.P. is being registered hereunder.
(5) If any Debt Securities are issued at an original issue discount, then
the offering price of those Debt Securities shall be in an amount that
will result in an aggregate initial offering price not to exceed
$800,000,000, less the dollar amount of any registered securities
previously issued.
(6) Subject to Note 8 below, an indeterminate principal amount of Debt
Securities as may be sold from time to time by Heritage Operating, L.P.
is being registered hereunder.
(7) Heritage Propane Partners, L.P. will fully, irrevocably and
unconditionally guarantee on an unsecured basis the Debt Securities of
Heritage Operating, L.P. Heritage Service Corp., Heritage-Bi State,
L.L.C. and Heritage Energy Resources, L.L.C. may also guarantee the
Debt Securities of Heritage Operating, L.P. on the same basis. Heritage
Operating, L.P., Heritage Service Corp., Heritage-Bi State, L.L.C. and
Heritage Energy Resources, L.L.C. may guarantee the Debt Securities of
Heritage Propane Partners, L.P. on an unsecured basis. Pursuant to Rule
457(n) of the Securities Act of 1933, no separate fee is payable with
respect to the guarantees of the Debt Securities being registered
hereunder.
(8) In no event will the aggregate offering price of all securities issued
by the registrants from time to time pursuant to this Registration
Statement exceed $800,000,000.
(9) Up to 6,415,762 Common Units may be sold from time to time pursuant to
this Registration Statement by the selling unitholders.
(10) Estimated solely for the purpose of determining the registration fee on
the basis of the average of the high and low sales prices of Common
Units on the New York Stock Exchange on July 21, 2003.
(11) Pursuant to Rule 457(p) under the Securities Act, the registrants
hereby offset the registration fee required in connection with this
Registration Statement by $1,804 previously paid by the registrants
in respect of $6,491,400 of unsold securities registered pursuant to
the Registration Statement on Form S-3 (Registration No. 333-86057)
filed with the Securities and Exchange Commission on August 27, 1999.
Accordingly, pursuant to Rule 457(p), the total filing fee paid
herewith is $78,949.
EACH REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting any offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JULY 25, 2003
$800,000,000
HERITAGE PROPANE PARTNERS, L.P.
COMMON UNITS
DEBT SECURITIES
---------------
HERITAGE OPERATING, L.P.
DEBT SECURITIES
---------------
6,415,762
COMMON UNITS
OFFERED BY SELLING UNITHOLDERS
---------------
The following securities may be offered under this prospectus:
- Common units representing limited partner interests in
Heritage Propane Partners, L.P.;
- Debt securities of Heritage Propane Partners, L.P.; and
- Debt securities of Heritage Operating, L.P., in an aggregate
initial offering price of $800,000,000; and
- Up to 6,415,762 common units offered by selling unitholders.
The aggregate initial offering price of the securities that we offer by
this prospectus will not exceed $800,000,000. We will offer the securities in
amounts, at prices and on terms to be determined by market conditions at the
time of our offerings. This prospectus describes only the general terms of these
securities and the general manner in which we will offer the securities. The
specific terms of any securities we offer will be included in a supplement to
this prospectus. The prospectus supplement will describe the specific manner in
which we will offer the securities and also may add, update or change
information contained in this prospectus. The common units are traded on the New
York Stock Exchange under the symbol "HPG."
You should read this prospectus and the prospectus supplement carefully
before you invest in any of our securities. This prospectus may not be used to
consummate sales of our securities unless it is accompanied by a prospectus
supplement.
Investing in our securities involves risk. You should carefully
consider the risk factors described under "Risk Factors" beginning on page 3 of
this prospectus before you make any investment in our securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ,2003.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS.......................................................................... 1
WHO WE ARE..................................................................................... 1
THE SUBSIDIARY GUARANTORS...................................................................... 1
WHERE YOU CAN FIND MORE INFORMATION............................................................ 1
RISK FACTORS................................................................................... 3
FORWARD-LOOKING STATEMENTS..................................................................... 14
USE OF PROCEEDS................................................................................ 15
RATIO OF EARNINGS TO FIXED CHARGES............................................................. 15
DESCRIPTION OF THE COMMON UNITS................................................................ 17
CASH DISTRIBUTION POLICY....................................................................... 21
DESCRIPTION OF THE DEBT SECURITIES............................................................. 26
SELLING UNITHOLDERS............................................................................ 35
MATERIAL TAX CONSIDERATIONS.................................................................... 36
INVESTMENT IN US BY EMPLOYEE BENEFIT PLANS..................................................... 48
PLAN OF DISTRIBUTION........................................................................... 49
LEGAL MATTERS.................................................................................. 50
EXPERTS........................................................................................ 50
You should rely only on the information contained in this prospectus,
any prospectus supplement and the documents we have incorporated by reference.
We have not authorized anyone else to give you different information. We are not
offering these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents. We will disclose any material changes in our affairs in an amendment
to this prospectus, a prospectus supplement or a future filing with the
Securities and Exchange Commission incorporated by reference in this prospectus.
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
have filed with the Securities and Exchange Commission using a "shelf"
registration process. Under this shelf registration process, we may sell, in one
or more offerings, up to $800,000,000 in total aggregate offering price of
securities described in this prospectus. In addition, certain selling
unitholders may offer and sell up to 6,415,762 common units under this
prospectus. This prospectus provides you with a general description of us and
the securities offered under this prospectus. Unless otherwise provided in a
prospectus supplement, we will not receive any proceeds from sales of common
units by the selling unitholders.
Each time we or a selling unitholder sells securities under this
prospectus, we will provide a prospectus supplement that will contain specific
information about the terms of that offering and the securities being offered.
The prospectus supplement also may add to, update or change information in this
prospectus. If there is any inconsistency between the information in this
prospectus and any prospectus supplement, you should rely on the information in
the prospectus supplement. You should read carefully this prospectus, any
prospectus supplement and the additional information described below under the
heading "Where You Can Find More Information."
As used in this prospectus, "we," "us" and "our" and similar terms mean
either or both of Heritage Propane Partners, L.P. and Heritage Operating, L.P.
and their subsidiaries, unless the context indicates otherwise.
WHO WE ARE
We are a publicly traded Delaware limited partnership formed in
conjunction with our initial public offering in June of 1996. We are engaged in
the retail and wholesale marketing of propane and related appliances and
services. We believe we are the fourth largest retail marketer of propane in the
United States, currently serving more than 650,000 customers from nearly 300
customer service locations in 29 states. Our operations extend from coast to
coast, with concentrations in the western, upper midwestern, northeastern, and
southeastern regions of the United States. We are also a wholesale propane
supplier in the southwestern and southeastern United States and in Canada, the
latter through participation in M-P Energy Partnership. M-P Energy Partnership
is a Canadian partnership in which we own a 60% interest, engaged in
lower-margin wholesale marketing and which also supplies our northern U.S.
locations. U.S. Propane, L.P. serves as our general partner and U.S. Propane,
L.L.C. serves as the general partner of U.S. Propane, L.P.
We maintain our principal executive offices at 8801 South Yale Avenue,
Suite 310, Tulsa, Oklahoma 74137, and our telephone number is (918) 492-7272.
THE SUBSIDIARY GUARANTORS
Heritage Propane Partners, L.P. will, and Heritage Service Corp.,
Heritage-Bi State, L.L.C. and Heritage Energy Resources, L.L.C. may,
unconditionally guarantee any series of debt securities of Heritage Operating,
L.P. offered by this prospectus, as set forth in a related prospectus
supplement. Heritage Operating, L.P., Heritage Service Corp., Heritage-Bi State,
L.L.C. and Heritage Energy Resources, L.L.C. may unconditionally guarantee any
series of debt securities of Heritage Propane Partners, L.P. offered by this
prospectus, as set forth in a related prospectus supplement. As used in this
prospectus, the term "Subsidiary Guarantors" means Heritage Service Corp.,
Heritage-Bi State, L.L.C. and Heritage Energy Resources, L.L.C. and also
includes Heritage Operating, L.P. when discussing subsidiary guarantees of the
debt securities of Heritage Propane Partners, L.P. The term "Guarantor" means
Heritage Propane Partners, L.P. in its role as guarantor of the debt securities
of Heritage Operating, L.P.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement with the SEC under the
Securities Act of 1933 that registers the securities offered by this prospectus.
The registration statement, including the attached exhibits, contains additional
relevant information about us. The rules and regulations of the SEC allow us to
omit some information included in the registration statement from this
prospectus.
In addition, we file annual, quarterly and other reports and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-732-0330 for further information on the operation
of the SEC's public reference room. Our SEC filings are available on the SEC's
web site at http://www.sec.gov. We also make available free of charge on our
website, at http://www.heritagepropane.com, all materials that we file
electronically with the SEC, including our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, Section 16
1
reports and amendments to these reports as soon as reasonably practicable after
such materials are electronically filed with, or furnished to, the SEC.
Additionally, you can obtain information about us through the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, on which our common units
are listed.
The SEC allows us to "incorporate by reference" the information we have
filed with the SEC. This means that we can disclose important information to you
without actually including the specific information in this prospectus by
referring you to other documents filed separately with the SEC. These other
documents contain important information about us, our financial condition and
results of operations. The information incorporated by reference is an important
part of this prospectus. Information that we file later with the SEC will
automatically update and may replace information in this prospectus and
information previously filed with the SEC.
We incorporate by reference in this prospectus the documents listed
below:
- our annual report on Form 10-K for the year ended August 31,
2002;
- our quarterly reports on Form 10-Q for the quarters ended
November 30, 2002, February 28, 2003 and May 31, 2003;
- our current reports on Form 8-K filed December 11, 2002,
January 6, 2003, May 12, 2003, May 14, 2003, May 20, 2003 and
July 25, 2003;
- our current report on Form 8-K/A filed March 18, 2003;
- the description of our common units in our registration
statement on Form 8-A (File No. 1-11727) filed pursuant to the
Securities Exchange Act of 1934 on May 14, 1996 and any
amendments or reports filed to update the description; and
- all documents filed by us under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 between the date
of this prospectus and the termination of the registration
statement.
You may obtain any of the documents incorporated by reference in this
prospectus from the SEC through the SEC's website at the address provided above.
You also may request a copy of any document incorporated by reference in this
prospectus (excluding any exhibits to those documents, unless the exhibit is
specifically incorporated by reference in this document), at no cost, by
visiting our internet website at www.heritagepropane.com, or by writing or
calling us at the following address:
Heritage Propane Partners, L.P.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Attention: Michael L. Greenwood
Telephone: (918) 492-7272
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RISK FACTORS
Limited partner interests are inherently different from the capital
stock of a corporation, although many of the business risks to which we are
subject are similar to those that would be faced by a corporation engaged in a
similar business. Before you invest in our securities, you should consider
carefully the following risk factors, together with all of the other information
included in this prospectus, any prospectus supplement and the documents we have
incorporated by reference.
If any of the following risks actually were to occur, our business,
financial condition or results of operations could be affected materially and
adversely. In that case, we may be unable to make distributions to our
unitholders or pay interest on, or the principal of, any debt securities, the
trading price of our securities could decline and you could lose all or part of
your investment.
RISKS INHERENT IN OUR BUSINESS
SINCE WEATHER CONDITIONS MAY ADVERSELY AFFECT DEMAND FOR PROPANE, OUR
FINANCIAL CONDITION IS VULNERABLE TO WARM WINTERS
Weather conditions have a significant impact on the demand for propane
for both heating and agricultural purposes because many of our customers rely
heavily on propane as a heating fuel. Typically, we sell approximately
two-thirds of our retail propane volume during the peak-heating season of
October through March. Our results of operations can be adversely affected by
warmer winter weather which results in lower sales volumes. Variations in
weather in one or more of the regions where we operate can significantly affect
the total volume of propane that we sell and the profits realized on these
sales. Agricultural demand for propane is also affected by weather during the
harvest season as poor harvests or dry weather reduce demand for propane used in
crop drying.
SUDDEN AND SHARP PROPANE PRICE INCREASES THAT CANNOT BE PASSED ON TO
CUSTOMERS MAY ADVERSELY AFFECT OUR PROFIT MARGINS
The propane industry is a "margin-based" business in which gross
profits depend on the excess of sales prices over supply costs. As a result, our
profitability is sensitive to changes in energy prices, and in particular,
changes in wholesale prices of propane. When there are sudden and sharp
increases in the wholesale cost of propane, we may not be able to pass on these
increases to our customers through retail or wholesale prices. Propane is a
commodity and the price we pay for it can fluctuate significantly in response to
changes in supply or other market conditions over which we have no control. In
addition, the timing of cost pass-throughs can significantly affect margins.
Sudden and extended wholesale price increases could reduce our gross profits and
could, if continued over an extended period of time, reduce demand by
encouraging our retail customers to conserve or convert to alternative energy
sources.
OUR RESULTS OF OPERATIONS AND OUR ABILITY TO MAKE DISTRIBUTIONS OR PAY
INTEREST OR PRINCIPAL ON DEBT SECURITIES COULD BE NEGATIVELY IMPACTED BY PRICE
AND INVENTORY RISK AND MANAGEMENT OF THESE RISKS
We generally attempt to minimize our price and inventory risk by
purchasing product on a short-term basis, under supply contracts that typically
have a one-year term and at a price that fluctuates based on the prevailing
market prices at major delivery points. In order to help ensure adequate supply
sources are available during periods of high demand, we may purchase large
volumes of propane during periods of low demand or low price, which generally
occur during the summer months, for storage in our facilities, at major storage
facilities or for future delivery. This strategy may not be effective in
limiting our price and inventory risks if, for example, market, weather or other
conditions prevent or allocate the delivery of physical product during periods
of peak demand. If the market price falls below the price at which we made such
purchases, it could adversely affect our profits.
Some of our propane sales are pursuant to commitments at fixed prices.
To mitigate the price risk related to our anticipated sales volumes under the
commitments, we may purchase and store physical product and/or enter into fixed
price over-the-counter energy commodity forward contracts and options.
Generally, over-the-counter energy commodity forward contracts have terms of
less than one year. We enter into such contracts and exercise such options at
volume levels that we believe are necessary to manage these commitments. The
risk management of our inventory and contracts for the future purchase of
product could impair our profitability if the customers do not fulfill their
obligations.
We also engage in other trading activities, and may enter into other
types of over-the-counter energy commodity forward contracts and options. These
trading activities are based on our management's estimates of
3
future events and prices and are intended to generate a profit. However, if
those estimates are incorrect or other market events outside of our control
occur, such activities could generate a loss in future periods and potentially
impair our profitability.
WE ARE DEPENDENT ON OUR PRINCIPAL SUPPLIERS, WHICH INCREASES THE RISK
OF AN INTERRUPTION IN SUPPLY
During the first nine months of fiscal 2003, we purchased approximately
41.8% of our propane from two suppliers. If supplies from these sources were
interrupted, the cost of procuring replacement supplies and transporting those
supplies from alternative locations might be materially higher and, at least on
a short-term basis, margins could be adversely affected. We purchased 19% of our
total propane needs for use in our northern operations during the first nine
months of fiscal 2003 from MP Energy, the Canadian partnership in which we own a
60% interest. Supply from Canada is subject to the additional risk of disruption
associated with foreign trade.
Historically, a substantial portion of the propane we purchase has
originated from one of the industry's major markets located in Mont Belvieu,
Texas and has been shipped to us through major common carrier pipelines. Any
significant interruption in the service at Mont Belvieu or other major market
points, or on the common carrier pipelines we use would adversely affect our
ability to obtain propane.
BECAUSE OF THE HIGHLY COMPETITIVE NATURE OF THE RETAIL PROPANE
BUSINESS, WE MAY NOT BE ABLE TO MAINTAIN EXISTING CUSTOMERS OR ACQUIRE NEW
CUSTOMERS, WHICH WOULD HAVE AN ADVERSE IMPACT ON OUR OPERATING RESULTS AND
FINANCIAL CONDITION
We compete with a number of large national and regional propane
companies, some of whom have greater financial resources than we do, and several
thousand small independent propane companies. Because of the relatively low
barriers to entry into the retail propane market, there is potential for small
independent propane retailers, as well as other companies that may not be
engaged in retail propane distribution, to compete with our retail outlets. As a
result, we are always subject to the risk of additional competition in the
future. Generally, warmer-than-normal weather further intensifies competition.
Most of our propane retail branch locations compete with several other marketers
or distributors in their service areas. The principal factors influencing
competition with other retail marketers are:
- price,
- reliability and quality of service,
- responsiveness to customer needs,
- safety concerns,
- long-standing customer relationships,
- the inconvenience of switching tanks and suppliers, and
- the lack of growth in the industry.
We can make no assurances that we will be able to compete successfully on the
basis of these factors.
COMPETITION FROM ALTERNATIVE ENERGY SOURCES MAY CAUSE US TO LOSE
CUSTOMERS, THEREBY REDUCING OUR REVENUES
Competition from alternative energy sources has been increasing as a
result of reduced regulation of many utilities. Propane is generally not
competitive with natural gas in areas where natural gas pipelines already exist
because natural gas is a less expensive source of energy than propane. The
gradual expansion of natural gas distribution systems and the availability of
natural gas in many areas that previously depended upon propane could cause us
to lose customers, thereby reducing our revenues. Fuel oil also competes with
propane and is generally less expensive than propane. In addition, the
successful development and increasing usage of alternative energy sources could
adversely affect our operations.
4
IF WE DO NOT CONTINUE TO MAKE ACQUISITIONS ON ECONOMICALLY ACCEPTABLE
TERMS, OUR FUTURE FINANCIAL PERFORMANCE WILL BE LIMITED
The propane industry is not a growth industry in part because of
increased competition from alternative energy sources. In addition, because of
long-standing customer relationships that are typical in the retail propane
industry, the inconvenience of switching tanks and suppliers, and propane's
higher cost relative to other energy sources, such as natural gas, we may have
difficulty in increasing our retail customer base except through acquisitions.
Therefore, our ability to grow will depend primarily upon our ability to acquire
other retail propane distributors. Any acquisition may involve one or more of
the following risks, including:
- an increase in our indebtedness, which may affect credit
ratings and our ability to make distributions to unitholders;
- the inability to integrate the operations of the acquired
business into our existing operations and make cost-saving
changes such that the acquisition will be accretive to
earnings and distributions to unitholders;
- the diversion of management's attention from other business
concerns;
- the assumption of unknown liabilities and/or the inability or
failure of the sellers to indemnify us under the acquisition
agreements; and
- greater-than-expected loss of customers or employees from the
acquired business.
We are also subject to certain covenants contained in our debt
agreements that may restrict our ability to incur debt to finance acquisitions.
In addition, to the extent that warm weather or other factors adversely affects
our operating and financial results, our access to capital and our acquisition
activities may be limited. If we were to acquire a material amount of
non-propane assets as part of our expansion strategy, we would face the
additional risk of integrating a new line of business into our operations.
WE ARE SUBJECT TO OPERATING AND LITIGATION RISKS THAT COULD ADVERSELY
AFFECT OUR OPERATING RESULTS
Our operations are subject to all operating hazards and risks normally
incidental to handling, storing and delivering combustible liquids like propane.
As a result, we have been, and are likely to be, a defendant in various legal
proceedings arising in the ordinary course of business. Our insurance may not be
adequate to protect us from all material expenses related to potential future
claims for personal injury and property damage and we may not be able to
continue purchasing such levels of insurance at economical prices. In addition,
the occurrence of a serious accident involving propane, whether or not we are
involved, may have an adverse effect on the public's desire to use propane.
ENERGY EFFICIENCY AND TECHNOLOGICAL ADVANCES MAY AFFECT THE DEMAND FOR
PROPANE AND ADVERSELY AFFECT OUR OPERATING RESULTS
The national trend toward increased conservation and technological
advances, including installation of improved insulation and the development of
more efficient furnaces and other heating devices, has decreased the demand for
propane by retail customers. Stricter conservation measures in the future or
technological advances in heating, conservation, energy generation or other
devices could adversely affect our operations.
OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION MAY BE ADVERSELY
AFFECTED BY GOVERNMENTAL REGULATION AND ASSOCIATED ENVIRONMENTAL AND REGULATORY
COSTS
The propane business is subject to a wide range of federal and state
laws and regulations related to environmental and other matters. We may have
higher costs in the future due to stricter pollution control requirements or
liabilities resulting from non-compliance with operating or other regulatory
permits. New environmental regulations might adversely impact our operations, as
well as the regulations relating to the storage and transportation of propane.
TERRORIST ATTACKS AIMED AT OUR FACILITIES OR OTHER ENERGY ASSETS COULD
ADVERSELY AFFECT OUR BUSINESS
Since the September 11, 2001 terrorist attacks on the United States,
the United States government has issued warnings that energy assets, including
our nation's production facilities, processing plants, refineries and pipeline
infrastructure, may be the future targets of terrorist organizations. Any
terrorist attack on our facilities,
5
those of our customers and suppliers or, in some cases, on those of our industry
participants, could have a material adverse effect on our business. An
escalation of political tensions in the Middle East and elsewhere could result
in increased volatility in the world's energy markets and result in a material
adverse effect on our business. Furthermore, as a result of the impact September
11, 2001 had on insurance carriers, it has been more difficult and expensive for
us to obtain certain types of insurance.
DUE TO OUR LACK OF ASSET DIVERSIFICATION, ADVERSE DEVELOPMENTS IN OUR
PROPANE BUSINESS WOULD REDUCE OUR ABILITY TO MAKE DISTRIBUTIONS TO OUR
UNITHOLDERS
We rely exclusively on the revenues generated from our propane
business. Due to our lack of asset diversification, an adverse development in
this business would have a significantly greater impact on our financial
condition and results of operations than if we maintained more diverse assets.
RISKS INHERENT IN AN INVESTMENT IN US
CASH DISTRIBUTIONS ARE NOT GUARANTEED AND MAY FLUCTUATE WITH OUR
PERFORMANCE AND OTHER EXTERNAL FACTORS
The amount of cash we can distribute on our common units or other
partnership securities depends upon the amount of cash we generate from our
operations. The amount of cash we generate from our operations will fluctuate
from quarter to quarter and will depend upon, among other things:
- the weather in our operating areas;
- the cost to us of the propane we buy for resale and the prices
we receive for our propane;
- the level of competition from other propane companies and
other energy providers; and
- prevailing economic conditions.
In addition, the actual amount of cash available for distribution will
also depend on other factors, such as:
- the level of capital expenditures we make;
- debt service requirements;
- fluctuations in working capital needs;
- our ability to borrow under our working capital facility to
make distributions; and
- the amount, if any, of cash reserves established by the
general partner in its discretion for the proper conduct of
our business.
Because of all these factors, we may not have sufficient available cash
each quarter to be able to pay the minimum quarterly distribution, as defined in
our partnership agreement.
Furthermore, you should be aware that the amount of cash we have
available for distribution depends primarily upon our cash flow, including cash
flow from financial reserves and working capital borrowings, and is not solely a
function of profitability, which will be affected by non-cash items. As a
result, we may make cash distributions during periods when we record net losses
and may not make cash distributions during periods when we record net income.
6
WE MAY SELL ADDITIONAL LIMITED PARTNER INTERESTS, DILUTING EXISTING
INTERESTS OF UNITHOLDERS
Our partnership agreement allows us to issue an unlimited number of
additional limited partner interests, including securities senior to the common
units, without the approval of the unitholders. The issuance of additional
common units or other equity securities will have the following effects:
- the proportionate ownership interest of our unitholders in us
will decrease;
- the amount of cash available for distribution on each common
unit or partnership security may decrease;
- the relative voting strength of each previously outstanding
common unit may be diminished; and
- the market price of the common units or partnership securities
may decline.
OUR DEBT AGREEMENTS MAY LIMIT OUR ABILITY TO MAKE DISTRIBUTIONS TO
UNITHOLDERS AND OUR FINANCIAL FLEXIBILITY
As of May 31, 2003, we had outstanding $365.1 million in senior secured
debt with insurance companies and $24.1 million in secured debt under our bank
credit facility. Our leverage may adversely affect our ability to finance future
operations and capital needs, limit our ability to pursue acquisitions and other
business opportunities and make our results of operations more susceptible to
adverse economic conditions. We may in the future incur additional debt to
finance acquisitions or for general business purposes, which could result in a
significant increase in our leverage. The payment of principal and interest on
our debt will reduce the cash available to make distributions on the common
units. We will not be able to make any distributions to our unitholders if there
is or will be an event of default under our debt agreements. Our ability to make
principal and interest payments depends on future performance, which is subject
to many factors, several of which will be outside our control. We have granted
liens on substantially all of our personal property (other than vehicles) to
secure our existing debt. If an event of default occurs, the secured lenders can
foreclose on the collateral.
The notes and the bank credit facility contain provisions relating to
changes in ownership and changes of our general partner. If these provisions are
triggered, the outstanding debt may become due. If that happens, we cannot
guarantee that we would be able to pay the debt. The general partner and its
partners are not prohibited from entering into a transaction that would trigger
these change-in-ownership provisions. The notes and the bank credit facility
also contain restrictive covenants that limit our ability to incur additional
debt and to engage in certain transactions. This could reduce our ability to
capitalize on business opportunities that arise. Any new indebtedness could be
reasonably expected to have similar or greater restrictions.
Our ability to access the capital markets for future offerings may be
limited by adverse market conditions resulting from, among other things, general
economic conditions, contingencies and uncertainties that are difficult to
predict and beyond our control. If we are unable to access the capital markets
for future offerings, we might be forced to seek extensions for some of our
short-term maturities or to refinance some of our debt obligations through bank
credit, as opposed to long-term public or private debt securities or equity
securities. The price and terms upon which we might receive such extensions or
additional bank credit could be more onerous than those contained in our
existing debt agreements. Any such arrangements could, in turn, increase the
risk that our leverage may adversely affect our future financial and operating
flexibility.
THE GENERAL PARTNER IS NOT ELECTED BY THE UNITHOLDERS AND CANNOT BE
REMOVED WITHOUT ITS CONSENT
Unlike the holders of common stock in a corporation, unitholders have
only limited voting rights on matters affecting our business, and therefore
limited ability to influence management's decisions regarding our business.
Unitholders did not elect our general partner and will have no right to elect
our general partner on an annual or other continuing basis. Although our general
partner has a fiduciary duty to manage us in a manner beneficial to Heritage
Propane Partners, L.P. and the unitholders, the directors of our general partner
and its general partner, U.S. Propane, L.L.C., have a fiduciary duty to manage
the general partner and its general partner in a manner beneficial to the owners
of those entities.
7
Furthermore, if the unitholders are dissatisfied with the performance
of our general partner, they will have little ability to remove our general
partner. The general partner generally may not be removed except upon the vote
of the holders of 66 2/3% of the outstanding units voting together as a single
class, including units owned by the general partner and its affiliates. Because
the general partner and its affiliates currently hold approximately 25.7% of all
the units, with an additional 11.0% of units held by our officers and directors,
it will be difficult to remove the general partner without the consent of the
general partner and our affiliates.
Furthermore, unitholders' voting rights are further restricted by the
partnership agreement provision providing that any units held by a person that
owns 20% or more of any class of units then outstanding, other than the general
partner and its affiliates, cannot be voted on any matter.
THE CONTROL OF OUR GENERAL PARTNER MAY BE TRANSFERRED TO A THIRD PARTY
WITHOUT UNITHOLDER CONSENT
The general partner may transfer its general partner interest to a
third party in a merger or in a sale of all or substantially all of its assets
without the consent of the unitholders. Furthermore, there is no restriction in
the partnership agreement on the ability of the general partner of our general
partner from transferring its general partner interest in our general partner to
a third party. Any new owner of the general partner would be in a position to
replace the officers of the general partner with its own choices and to control
the decisions taken by such officers.
UNITHOLDERS MAY BE REQUIRED TO SELL THEIR UNITS TO THE GENERAL PARTNER
AT AN UNDESIRABLE TIME OR PRICE
If at any time less than 20% of the outstanding units of any class are
held by persons other than the general partner and its affiliates, the general
partner will have the right to acquire all, but not less than all, of those
units at a price no less than their then-current market price. As a consequence,
a unitholder may be required to sell his common units at an undesirable time or
price. The general partner may assign this purchase right to any of its
affiliates or to us.
COST REIMBURSEMENTS DUE OUR GENERAL PARTNER MAY BE SUBSTANTIAL AND
REDUCE OUR ABILITY TO PAY THE DISTRIBUTIONS TO UNITHOLDERS
Prior to making any distributions on the units, we will reimburse our
general partner for all expenses it has incurred on our behalf. In addition, our
general partner and its affiliates may provide us with services for which we
will be charged reasonable fees as determined by the general partner. The
reimbursement of these expenses and the payment of these fees could adversely
affect our ability to make distributions to the unitholders. Our general partner
has sole discretion to determine the amount of these expenses and fees.
UNITHOLDERS MAY HAVE LIABILITY TO REPAY DISTRIBUTIONS
Under certain circumstances unitholders may have to repay us amounts
wrongfully returned or distributed to them. Under Delaware law, we may not make
a distribution to you if the distribution causes our liabilities to exceed the
fair value of our assets. Liabilities to partners on account of their
partnership interests and non-recourse liabilities are not counted for purposes
of determining whether a distribution is permitted. Delaware law provides that a
limited partner who receives such a distribution and knew at the time of the
distribution that the distribution violated Delaware law will be liable to the
limited partnership for the distribution amount for three years from the
distribution date. Under Delaware law, an assignee who becomes a substituted
limited partner of a limited partnership is liable for the obligations of the
assignor to make contributions to the partnership. However, such an assignee is
not obligated for liabilities unknown to him at the time he or she became a
limited partner if the liabilities could not be determined from the partnership
agreement.
OUR PARTNERSHIP AGREEMENT LIMITS OUR GENERAL PARTNER'S FIDUCIARY DUTIES
TO OUR UNITHOLDERS AND RESTRICTS THE REMEDIES AVAILABLE TO UNITHOLDERS FOR
ACTIONS TAKEN BY OUR GENERAL PARTNER THAT MIGHT OTHERWISE CONSTITUTE BREACHES OF
FIDUCIARY DUTY
Our partnership agreement contains provisions that waive or consent to
conduct by our general partner and its affiliates that reduce the obligations to
which our general partner would otherwise be held by state-law fiduciary duty
standards. For example, our partnership agreement:
- permits our general partner to make a number of decisions in
its "sole discretion." This entitles our general partner to
consider only the interests and factors that it desires, and
it has no duty or obligation to give any consideration to any
interest of, or factors affecting, us, our affiliates or any
limited partner;
8
- provides that our general partner is entitled to make other
decisions in its "reasonable discretion";
- generally provides that affiliated transactions and
resolutions of conflicts of interest not involving a required
vote of unitholders must be "fair and reasonable" to us and
that, in determining whether a transaction or resolution is
"fair and reasonable," our general partner may consider the
interests of all parties involved, including its own; and
- provides that our general partner and its officers and
directors will not be liable for monetary damages to us, our
limited partners or assignees for errors of judgment or for
any acts or omissions if our general partner and those other
persons acted in good faith.
In order to become a limited partner of our partnership, a common
unitholder is required to agree to be bound by the provisions in the partnership
agreement, including the provisions discussed above.
THE GENERAL PARTNER'S ABSOLUTE DISCRETION IN DETERMINING THE LEVEL OF
CASH RESERVES MAY ADVERSELY AFFECT OUR ABILITY TO MAKE CASH DISTRIBUTIONS TO OUR
UNITHOLDERS
Our partnership agreement requires the general partner to deduct from
operating surplus cash reserves that in its reasonable discretion are necessary
to fund our future operating expenditures. In addition, the partnership
agreement permits the general partner to reduce available cash by establishing
cash reserves for the proper conduct of our business, to comply with applicable
law or agreements to which we are a party or to provide funds for future
distributions to partners. These cash reserves will affect the amount of cash
available for distribution to unitholders.
OUR GENERAL PARTNER HAS CONFLICTS OF INTEREST AND LIMITED FIDUCIARY
RESPONSIBILITIES, WHICH MAY PERMIT OUR GENERAL PARTNER TO FAVOR ITS OWN
INTERESTS TO THE DETRIMENT OF UNITHOLDERS
Our general partner and its affiliates directly and indirectly own an
aggregate limited partner interest of approximately 25.2% and our officers and
directors own approximately 10.8% of the limited partner interests in us.
Conflicts of interest could arise in the future as a result of relationships
between our general partner and its affiliates, on the one hand, and us, on the
other hand. As a result of these conflicts our general partner may favor its own
interests and those of its affiliates over the interests of the unitholders. The
nature of these conflicts includes the following considerations:
- Our general partner may limit its liability and reduce its
fiduciary duties, while also restricting the remedies
available to unitholders for actions that might, without the
limitations, constitute breaches of fiduciary duty.
Unitholders are deemed to have consented to some actions and
conflicts of interest that might otherwise be deemed a breach
of fiduciary or other duties under applicable state law.
- Our general partner is allowed to take into account the
interests of parties in addition to us in resolving conflicts
of interest, thereby limiting its fiduciary duties to the
unitholders.
- Our general partner's affiliates are not prohibited from
engaging in other businesses or activities, including those in
direct competition with us.
- Our general partner determines the amount and timing of asset
purchases and sales, capital expenditures, borrowings and
reserves, each of which can affect the amount of cash that is
distributed to unitholders.
- Our general partner determines whether to issue additional
units or other equity securities of us.
- Our general partner determines which costs are reimbursable by
us.
- Our general partner controls the enforcement of obligations
owed to us by it.
- Our general partner decides whether to retain separate
counsel, accountants or others to perform services for us.
9
- Our general partner is not restricted from causing us to pay
it or its affiliates for any services rendered on terms that
are fair and reasonable to us or entering into additional
contractual arrangements with any of these entities on our
behalf.
- In some instances our general partner may borrow funds in
order to permit the payment of distributions, even if the
purpose or effect of the borrowing is to make incentive
distributions.
TAX RISKS
For a general discussion of the expected federal income tax
consequences of owning and disposing of common units, see "Material Tax
Considerations."
THE IRS COULD TREAT US AS A CORPORATION FOR TAX PURPOSES, WHICH WOULD
SUBSTANTIALLY REDUCE THE CASH AVAILABLE FOR DISTRIBUTION TO UNITHOLDERS
The anticipated after-tax economic benefit of an investment in our
common units depends largely on our being treated as a partnership for federal
income tax purposes. We have not requested, and do not plan to request, a ruling
from the IRS on this or any other matter affecting us.
If we were treated as a corporation for federal income tax purposes, we
would pay federal income tax on our income at the corporate tax rate, which is
currently a maximum of 35% and we would likely pay state taxes as well.
Distributions to unitholders would generally be taxed again as corporate
distributions, and none of our income, gains, losses or deductions would flow
through to unitholders. Because a tax would be imposed upon us as a corporation,
our cash available for distribution to unitholders would be substantially
reduced. Therefore, our treatment as a corporation would result in a material
reduction in the after-tax return to the unitholders, likely causing a
substantial reduction in the value of our common units.
A change in current law or a change in our business could cause us to
be treated as a corporation for federal income tax purposes or otherwise subject
us to entity-level taxation. Our partnership agreement provides that, if a law
is enacted or existing law is modified or interpreted in a manner that causes us
to be treated as a corporation or otherwise subjects us to entity-level taxation
for federal, state or local income tax purposes, then the minimum quarterly
distribution and the target distribution levels will be adjusted to reflect that
impact on us.
A SUCCESSFUL IRS CONTEST OF THE FEDERAL INCOME TAX POSITIONS WE TAKE
MAY ADVERSELY AFFECT THE MARKET FOR COMMON UNITS AND THE COSTS OF ANY CONTEST
WILL BE BORNE BY OUR UNITHOLDERS AND OUR GENERAL PARTNER
We have not requested a ruling from the IRS with respect to any matter
affecting us. The IRS may adopt positions that differ from the conclusions of
our counsel expressed in this prospectus or from the positions we take. It may
be necessary to resort to administrative or court proceedings to sustain our
counsel's conclusions or the positions we take. A court may not concur with some
or all of our counsel's conclusions or the positions we take. Any contest with
the IRS may materially and adversely affect the market for our common units and
the price at which they trade. In addition, the costs of any contest with the
IRS, principally legal, accounting and related fees, will be indirectly borne by
our unitholders and our general partner since such costs will reduce the amount
of cash available for distribution.
UNITHOLDERS MAY BE REQUIRED TO PAY TAXES ON THEIR SHARE OF OUR INCOME
EVEN IF THEY DO NOT RECEIVE ANY CASH DISTRIBUTIONS FROM US
Unitholders will be required to pay federal income taxes and, in some
cases, state and local income taxes on their share of our taxable income even if
they do not receive any cash distributions from us. Unitholders may not receive
cash distributions from us equal to their share of our taxable income or even
equal to the actual tax liability that results from the taxation of their share
of our taxable income.
ONLY CALENDAR YEAR TAXPAYERS MAY BECOME PARTNERS
Only calendar year taxpayers may purchase common units. Any unitholder
who is not a calendar year taxpayer will not be admitted to Heritage Propane
Partners, L.P. as a partner, will not be entitled to receive distributions or
federal income tax allocations from Heritage Propane Partners, L.P. and may only
transfer these common units to a purchaser or other transferee.
10
TAX GAIN OR LOSS ON DISPOSITION OF COMMON UNITS COULD BE DIFFERENT THAN
EXPECTED
Unitholders who sell common units will recognize gain or loss equal to
the difference between the amount realized and their tax basis in those common
units. Prior distributions in excess of the total net taxable income allocated
for a common unit that decreased a unitholder's tax basis in that common unit
will, in effect, become taxable income to the unitholder if the common unit is
sold at a price greater than the unitholder's tax basis in that common unit,
even if the price is less than his original cost. A substantial portion of the
amount the unitholder realizes, whether or not representing gain, will likely be
ordinary income to the unitholder. Should the IRS successfully contest some
positions we take, a unitholder could recognize more gain on the sale of common
units than would be the case under those positions, without the benefit of
decreased income in prior years. Also, unitholders who sell common units may
incur a tax liability in excess of the amount of cash they receive from the
sale.
TAX-EXEMPT ENTITIES, REGULATED INVESTMENT COMPANIES AND FOREIGN PERSONS
FACE UNIQUE TAX ISSUES FROM OWNING COMMON UNITS WHICH MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THEM
Investment in common units by tax-exempt entities, including employee
benefit plans and individual retirement accounts (known as IRAs), regulated
investment companies (known as mutual funds) and non-U.S. persons raises issues
unique to them. For example, virtually all of our income allocated to
unitholders who are organizations exempt from federal income tax, may be
unrelated business taxable income and will be taxable to them. Very little of
our income will be qualifying income to a regulated investment company.
Distributions to non-U.S. persons will be reduced by withholding taxes, at the
highest effective tax rate applicable to individuals, and non-U.S. persons will
be required to file federal income tax returns and generally pay tax on their
share of our taxable income.
OUR REGISTRATION AS A "TAX SHELTER" MAY INCREASE THE RISK OF AN IRS
AUDIT OF US OR A UNITHOLDER
We are registered with the IRS as a "tax shelter." Our tax shelter
registration number is 96234000014. As a result, we may be audited by the IRS
and tax adjustments could be made. Any unitholder owning less than a 1% profits
interest in us has very limited rights to participate in the income tax audit
process. Further, any adjustments in our tax returns will lead to adjustments in
the unitholders' tax returns and may lead to audits of the unitholders' tax
returns and adjustments of items unrelated to us. Unitholders will bear the cost
of any expense incurred in connection with an examination of their personal tax
returns and will indirectly bear a portion of the cost of an audit of us.
WE WILL TREAT EACH PURCHASER OF COMMON UNITS AS HAVING THE SAME TAX
BENEFITS WITHOUT REGARD TO THE UNITS PURCHASED. THE IRS MAY CHALLENGE THIS
TREATMENT, WHICH COULD ADVERSELY AFFECT THE VALUE OF THE UNITS
Because we cannot match transferors and transferees of common units, we
will adopt depreciation and amortization positions that do not conform with all
aspects of existing Treasury regulations. A successful IRS challenge to those
positions could adversely affect the amount of tax benefits available to you. It
also could affect the timing of these tax benefits or the amount of gain from
the unitholder's sale of common units and could have a negative impact on the
value of the common units or result in audit adjustments to the unitholder's tax
returns.
UNITHOLDERS LIKELY WILL BE SUBJECT TO STATE AND LOCAL TAXES IN STATES
WHERE THEY DO NOT LIVE AS A RESULT OF AN INVESTMENT IN THE UNITS
In addition to federal income taxes, the unitholders may be subject to
other taxes, including state and local taxes, unincorporated business taxes and
estate, inheritance or intangible taxes that are imposed by the various
jurisdictions in which we do business or own property now or in the future, even
if they do not live in any of those jurisdictions. We presently conduct business
in 29 states. In the future, we may acquire property or do business in other
states or in foreign jurisdictions. Unitholders may be required to file state
and local income tax returns and pay state and local income taxes in some or all
of the jurisdictions. Further, unitholders may be subject to penalties for
failure to comply with those requirements. It is the responsibility of each
unitholder to file all federal, state and local tax returns. Our counsel has not
rendered an opinion on the state or local tax consequences of an investment in
us.
RISKS RELATING TO THE DEBT SECURITIES
References in these "Risks Relating to the Debt Securities" to "we,"
"us," and "our" means Heritage Propane Partners, L.P. and Heritage Operating,
L.P.
11
HERITAGE PROPANE PARTNERS, L.P. IS A HOLDING COMPANY AND CONDUCTS ITS
OPERATIONS THROUGH ITS SUBSIDIARIES AND DEPENDS ON CASH FLOW FROM ITS
SUBSIDIARIES TO SERVICE ANY OF ITS DEBT OBLIGATIONS
Heritage Propane Partners, L.P. conducts all of its operations through
its subsidiaries and owns no significant assets other than the ownership
interests in these subsidiaries. Therefore, the ability of Heritage Propane
Partners, L.P. to make required payments on any debt securities it issues will
depend on the performance of Heritage Operating, L.P. and its subsidiaries and
their ability to distribute funds to Heritage Propane Partners, L.P. The ability
of these subsidiaries to make such distributions may be restricted by, among
other things, their debt agreements and applicable state partnership laws and
other laws and regulations. If Heritage Propane Partners, L.P. is unable to
obtain the funds necessary to pay the principal amount at maturity of its debt
securities, or to repurchase its debt securities upon the occurrence of a change
of control, Heritage Propane Partners, L.P. may be required to adopt one or more
alternatives, such as a refinancing of the debt securities. We cannot assure you
that Heritage Propane Partners, L.P. would be able to so refinance its debt
securities.
YOUR RIGHT TO RECEIVE PAYMENTS ON THE SECURITIES IS UNSECURED AND WILL
BE EFFECTIVELY SUBORDINATED TO OUR EXISTING AND FUTURE SECURED INDEBTEDNESS AND
TO INDEBTEDNESS OF ANY OF OUR SUBSIDIARIES WHO DO NOT GUARANTEE THE SECURITIES
Any debt securities, including any guarantees, issued by Heritage
Propane Partners, L.P., Heritage Operating, L.P. or the Subsidiary Guarantors
will be effectively subordinated to the claims of our secured creditors. In the
event of the insolvency, bankruptcy, liquidation, reorganization, dissolution or
winding up of the business of Heritage Propane Partners, L.P., Heritage
Operating, L.P. or any Subsidiary Guarantors, their secured creditors would
generally have the right to be paid in full before any distribution is made to
the holders of the debt securities. Furthermore, if any of our subsidiaries do
not guarantee the debt securities, the debt securities will be effectively
subordinated to the claims of all creditors, including trade creditors and tort
claimants, of those subsidiaries. In the event of the insolvency, bankruptcy,
liquidation, reorganization, dissolution or winding up of the business of a
subsidiary that is not a guarantor, creditors of that subsidiary would generally
have the right to be paid in full before any distribution is made to the issuer
of the debt securities or the holders of the debt securities.
A SUBSIDIARY GUARANTEE COULD BE DEEMED TO BE A FRAUDULENT CONVEYANCE
UNDER CERTAIN CIRCUMSTANCES, AND A COURT MAY TRY TO SUBORDINATE OR VOID THE
SUBSIDIARY GUARANTEES
Under federal bankruptcy laws and comparable provisions of state
fraudulent transfer laws, a guarantee by a subsidiary could be voided, or claims
in respect of a guarantee could be subordinated to all other debts of that
guarantor if, among other things, the guarantor, at the time it incurred the
indebtedness evidenced by its guarantee, received less than reasonably
equivalent fair value or fair consideration for the incurrence of such
guarantee, and
- was insolvent or rendered insolvent by reason of such
incurrence;
- was engaged in a business or transaction for which the
guarantor's remaining assets constituted unreasonably small
capital; or
- intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they mature.
In addition, any payment by that subsidiary guarantor pursuant to its
guarantee could be voided and required to be returned to the guarantor, or to a
fund for the benefit of the creditors of the guarantor. The measures of
insolvency for purposes of these fraudulent transfer laws will vary depending
upon the law applied in any proceeding to determine whether a fraudulent
transfer has occurred. Generally, however, a guarantor would be considered
insolvent if:
- the sum of its assets, including contingent liabilities, were
greater than the fair saleable value of all of its assets;
- the present fair saleable value of its assets were less than
the amount that would be required to pay its procurable
liability, including contingent liabilities, on its existing
debts, as they become absolute or mature; or
- it could not pay its debts as they become due.
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HERITAGE PROPANE PARTNERS, L.P. AND HERITAGE OPERATING, L.P. ARE
REQUIRED TO DISTRIBUTE ALL OF THEIR AVAILABLE CASH TO THEIR UNITHOLDERS AND ARE
NOT REQUIRED TO ACCUMULATE CASH FOR THE PURPOSE OF MEETING THEIR FUTURE
OBLIGATIONS TO HOLDERS OF THEIR DEBT SECURITIES, WHICH MAY LIMIT THE CASH
AVAILABLE TO SERVICE THOSE DEBT SECURITIES
The partnership agreements of Heritage Propane Partners, L.P. and
Heritage Operating, L.P. require us to distribute all of our available cash each
fiscal quarter to our partners. Available cash is generally defined to mean all
cash on hand at the end of the quarter, plus certain working capital borrowings
after the end of the quarter, less reserves established by the general partner
in its sole discretion to provide for the proper conduct of our business
(including reserves for future capital expenditures), to comply with applicable
law or agreements, including debt agreements, or to provide funds for future
distributions to partners. Depending on the timing and amount of our cash
distributions to unitholders and because we are not required to accumulate cash
for the purpose of meeting obligations to holders of any debt securities, such
distributions could significantly reduce the cash available to us in subsequent
periods to make payments on any debt securities.
13
FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus, any prospectus
supplement and the documents we incorporate by reference contain
"forward-looking" statements. These statements discuss goals, intentions and
expectations as to future trends, plans, events, results of operations or
financial condition, or state other information relating to us, based on the
current beliefs of our management as well as assumptions made by, and
information currently available to, management. Words such as "may," "will,"
"anticipate," "believe," "expect," "estimate," "intend," "project" and other
similar phrases or expressions identify forward-looking statements. When
considering forward-looking statements, you should keep in mind the risk factors
and other cautionary statements in this prospectus, any prospectus supplement
and the documents we have incorporated by reference.
Although we believe these forward-looking statements to be reasonable,
they are based upon a number of assumptions, any or all of which ultimately may
prove to be inaccurate. These statements are subject to numerous assumptions,
uncertainties and risks including, but not limited to, the following:
- the general economic conditions in the United States of
America as well as the general economic conditions and
currencies in foreign countries;
- the political and economic stability of petroleum producing
nations;
- the effect of weather conditions on demand for propane;
- the effectiveness of risk-management policies and procedures
and the ability of our liquids marketing counterparties to
satisfy their financial commitments;
- energy prices generally and specifically, and the price of
propane to the consumer compared to the price of alternative
and competing fuels;
- the general level of petroleum product demand and the
availability and price of propane supplies;
- our ability to obtain adequate supplies of propane for retail
sale in the event of an interruption in supply or
transportation and the availability of capacity to transport
propane to market areas;
- hazards or operating risks incidental to transporting, storing
and distributing propane that may not be fully covered by
insurance;
- the maturity of the propane industry and competition from
other propane distributors;
- energy efficiencies and technological trends;
- loss of key personnel;
- the availability and cost of capital and our ability to access
certain capital sources;
- changes in laws and regulations to which we are subject,
including tax, environmental, transportation and employment
regulations;
- the costs and effects of legal and administrative proceedings;
and
- our ability to successfully identify and consummate strategic
acquisitions at purchase prices that are accretive to our
financial results.
These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expressed in any of
our forward-looking statements. Our future results will depend upon various
other risks and uncertainties, including, but not limited to, those detailed in
our other filings with the SEC. For additional information, please read our
other current filings with the SEC under the Exchange Act and the Securities
Act. Other unknown or unpredictable factors also could have material adverse
effects on our future results. You should not put undue reliance on any
future-looking statements. When considering forward-looking statements, please
review the risk factors described under "Risk Factors" beginning on page 3 of
this prospectus.
14
USE OF PROCEEDS
Unless we specify otherwise in any prospectus supplement, we will use
the net proceeds (after the payment of offering expenses and underwriting
discounts and commissions) from the sale of securities for general partnership
purposes, which may include, among other things:
- paying or refinancing all or a portion of our indebtedness
outstanding at the time; and
- funding working capital, capital expenditures or acquisitions.
The actual application of proceeds from the sale of any particular
offering of securities using this prospectus will be described in the applicable
prospectus supplement relating to such offering. The precise amount and timing
of the application of these proceeds will depend upon our funding requirements
and the availability and cost of other funds.
Unless otherwise provided in a prospectus supplement, we will not
receive any of the proceeds from any sale of common units by the selling
unitholders.
RATIO OF EARNINGS TO FIXED CHARGES
In August 2000, Heritage Propane Partners, L.P. acquired all of the
propane operations of U.S. Propane, L.P., an entity that was formed when TECO
Energy, Inc., AGL Resources, Inc., Piedmont Natural Gas Company, Inc., and Atmos
Energy Corporation contributed each company's propane operations, Peoples Gas
Company, AGL Propane, Inc., Piedmont Propane Company, and United Cities Propane
Gas, Inc., respectively, to U.S. Propane, L.P. in exchange for equity interests
in U.S. Propane, L.P. Simultaneously with the transaction, U.S. Propane, L.P.
acquired all of the outstanding common stock of our former general partner,
Heritage Holdings, Inc., thereby acquiring control of us. The transaction was
accounted for as an acquisition using the purchase method of accounting with
Peoples Gas Company being treated as the acquiror for accounting purposes as a
result of Peoples Gas Company being the acquiror in the transaction that formed
U.S. Propane, L.P. However, Heritage Propane Partners, L.P. is the surviving
entity for legal purposes.
Because the fiscal year of Heritage Propane Partners, L.P. ended on
August 31 and Peoples Gas Company had a fiscal year-end of December 31, the
eight-month period ended August 31, 2000 was treated as a transition period
under the rules of the Securities and Exchange Commission and is presented
separately below. However, we continue to have an August 31 fiscal year-end.
The table below sets forth the ratio of earnings to fixed charges of
Heritage Propane Partners, L.P. and subsidiaries on a consolidated basis for the
periods indicated. The ratio of earnings to fixed charges presented below for
the years ending December 31, 1997, 1998 and 1999 includes information with
respect to Heritage Propane Partners, L.P. (formerly Peoples Gas). The ratio of
earnings to fixed charges presented below for the eight months ended August 31,
2000 includes information with respect to Heritage Propane Partners, L.P.
(formerly Peoples Gas), and beginning August 10, 2000 the propane operations of
U.S. Propane, L.P. and Heritage Propane Partners, L.P. (Predecessor Heritage).
RATIO OF EARNINGS TO FIXED CHARGES (formerly Peoples Gas):
EIGHT NINE
MONTHS MONTHS
ENDED YEAR ENDED ENDED
YEAR ENDED DECEMBER 31, AUGUST 31, AUGUST 31, MAY 31,
--------------------------- ---------- ------------- -------
1997 1998 1999 2000 2001 2002 2003
------ ------- ------- ---- ----- ----- -----
Ratio of Earnings to Fixed Charges 76.38x 436.37x 242.25x (A) 1.53x 1.12x 2.73x
(A) Earnings for the eight months ended August 31, 2000, were insufficient
to cover fixed charges by $3.5 million.
15
The table below sets forth the ratio of earnings to fixed charges of Heritage
Propane Partners, L.P. and subsidiaries (Predecessor Heritage) on a consolidated
basis for the periods indicated and does not include information with respect to
Peoples Gas or the propane operations of U.S. Propane, L.P. during those periods
(which were prior to the acquisition of U.S. Propane, L.P., by Heritage Propane
Partners, L.P.).
RATIO OF EARNINGS TO FIXED CHARGES (Predecessor Heritage):
PERIOD
ENDED
YEAR ENDED AUGUST 31, AUGUST 9,
--------------------- ---------
1998 1999 2000
----- ----- -----
Ratio of Earnings to Fixed Charges 1.57x 1.58x 1.35x
For these ratios, "earnings" is the amount resulting from adding the
following items:
- pre-tax income from continuing operations, before minority
interest and equity in earnings of affiliates;
- distributed income of equity investees; and
- fixed charges.
The term "fixed charges" means the sum of the following:
- interest expensed;
- amortized debt issuance costs; and
- estimated interest element of rentals.
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DESCRIPTION OF THE COMMON UNITS
References in this "Description of the Common Units" to "we," "us" and
"our" mean Heritage Propane Partners, L.P.
NUMBER OF UNITS
We currently have 17,947,111 common units outstanding, of which
11,333,448 are held by the public, 4,606,944 are held by our general partner or
its affiliates, and 2,006,719 are held by our officers and directors. The common
units represent an aggregate 98.0% limited partner interest. Our general partner
owns an aggregate 2.0% general partner interest in Heritage Propane Partners,
L.P. and Heritage Operating, L.P.
Our common units represent limited partner interests in us and entitle
the holders thereof to participate in distributions and exercise the rights and
privileges available to our limited partners under our partnership agreement. A
copy of the partnership agreement of Heritage Propane Partners, L.P. is filed as
an exhibit to this registration statement of which this prospectus is a part.
ISSUANCE OF ADDITIONAL SECURITIES
Our partnership agreement authorizes us to issue an unlimited number of
additional partnership securities and rights to buy partnership securities for
the consideration and on the terms and conditions established by our general
partner in its sole discretion, without the approval of the unitholders. Any
such additional partnership securities may be senior to the common units.
It is possible that we will fund acquisitions through the issuance of
additional common units or other equity securities. Holders of any additional
common units we issue will be entitled to share equally with the then-existing
holders of common units in our distributions of available cash. In addition, the
issuance of additional partnership interests may dilute the value of the
interests of the then-existing holders of common units in our net assets.
In accordance with Delaware law and the provisions of our partnership
agreement, we may also issue additional partnership securities that, in the sole
discretion of the general partner, have special voting rights to which the
common units are not entitled.
Upon issuance of additional partnership securities, our general partner
will be required to make additional capital contributions to the extent
necessary to maintain its 2.0% general partner interest in us. Moreover, our
general partner will have the right, which it may from time to time assign in
whole or in part to any of its affiliates, to purchase common units or other
equity securities whenever, and on the same terms that, we issue those
securities to persons other than the general partner and its affiliates, to the
extent necessary to maintain its percentage interest, including its interest
represented by common units, that existed immediately prior to each issuance.
The holders of common units will not have preemptive rights to acquire
additional common units or other partnership securities.
VOTING
Our general partner manages and operates us. Unlike the holders of
common stock in a corporation, the holders of our units have only limited voting
rights on matters affecting our business. They have no right to elect our
general partner, or the directors of our general partner or its general partner,
on an annual or other continuing basis. On those matters that are submitted to a
vote of unitholders, each record holder of a unit has a vote according to his
percentage interest in us, although additional limited partner interests having
special voting rights could be issued. However, if at any time any person or
group, other than the general partner and its affiliates, owns, in the
aggregate, beneficial ownership of 20% or more of the common units then
outstanding, that person or group will lose voting rights on all of its common
units and its common units may not be voted on any matter and will not be
considered to be outstanding when sending notices of a meeting of unitholders,
calculating required votes, determining the presence of a quorum or for other
similar purposes.
The following matters require the approval of the majority of the
outstanding common units, including the common units owned by the general
partner and its affiliates:
- a merger of our partnership;
- a sale or exchange of all or substantially all of our assets;
- dissolution or reconstitution of our partnership upon
dissolution;
- certain amendments to the partnership agreement;
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- the transfer to another person of our general partner interest
before June 30, 2006 or the incentive distribution rights at
any time, except for transfers to affiliates of the general
partner or transfers in connection with the general partner's
merger or consolidation with or into, or sale of all or
substantially all of its assets to, another person; and
- the withdrawal of the general partner prior to June 30, 2006
in a manner that would cause the dissolution of our
partnership.
The removal of our general partner requires the approval of not less
than 66 2/3% of all outstanding units, including units held by our general
partner and its affiliates. Any removal is subject to the election of a
successor general partner by the holders of a majority of the outstanding common
units, including units held by our general partner and its affiliates.
AMENDMENTS TO OUR PARTNERSHIP AGREEMENT
Amendments to our partnership agreement may be proposed only by our
general partner. Certain amendments require the approval of a majority of the
outstanding common units, including common units owned by the general partner
and its affiliates. Any amendment that materially and adversely affects the
rights or preferences of any class of partnership interests in relation to other
classes of partnership interests will require the approval of at least a
majority of the class of partnership interests so affected. Our general partner
may make amendments to the partnership agreement without unitholder approval in
certain circumstances, including amendments that do not adversely affected the
limited partners in any material respect.
LIMITED CALL RIGHT
If at any time less than 20% of the outstanding common units of any
class are held by persons other than our general partner and its affiliates, our
general partner will have the right to acquire all, but not less than all, of
those common units at a price no less than their then-current market price. As a
consequence, a unitholder may be required to sell his common units at an
undesirable time or price. Our general partner may assign this purchase right to
any of its affiliates or us.
LISTING
Our outstanding common units are listed on the New York Stock Exchange
(NYSE) under the symbol "HPG." Any additional common units we issue also will be
listed on the NYSE.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common units is American Stock
Transfer & Trust Company.
TRANSFER OF COMMON UNITS
Each purchaser of common units offered by this prospectus must execute
a transfer application. By executing and delivering a transfer application, the
purchaser of common units:
- becomes the record holder of the common units and is an
assignee until admitted into our partnership as a substituted
limited partner;
- automatically requests admission as a substituted limited
partner in our partnership;
- agrees to be bound by the terms and conditions of, and
executes, our partnership agreement;
- represents that such person has the capacity, power and
authority to enter into the partnership agreement;
- grants powers of attorney to officers of the general partner
and any liquidator of our partnership, as specified in the
partnership agreement; and
- makes the consents and waivers contained in the partnership
agreement.
An assignee will become a substituted limited partner of our
partnership for the transferred common units upon the consent of our general
partner and the recording of the name of the assignee on our books and records.
The general partner may withhold its consent in its sole discretion.
Transfer applications may be completed, executed and delivered by a
purchaser's broker, agent or nominee. We are entitled to treat the nominee
holder of a common unit as the absolute owner. In that case, the beneficial
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holders' rights are limited solely to those that it has against the nominee
holder as a result of any agreement between the beneficial owner and the nominee
holder.
Common units are securities and are transferable according to the laws
governing transfer of securities. In addition to other rights acquired, the
purchaser has the right to request admission as a substituted limited partner in
our partnership for the purchased common units. A purchaser of common units who
does not execute and deliver a transfer application obtains only:
- the right to assign the common unit to a purchaser or
transferee; and
- the right to transfer the right to seek admission as a
substituted limited partner in our partnership for the
purchased common units.
Thus, a purchaser of common units who does not execute and deliver a
transfer application:
- will not receive cash distributions or federal income tax
allocations, unless the common units are held in a nominee or
"street name" account and the nominee or broker has executed
and delivered a transfer application; and
- may not receive some federal income tax information or reports
furnished to record holders of common units.
Until a common unit has been transferred on our books, we and the
transfer agent, notwithstanding any notice to the contrary, may treat the record
holder of the unit as the absolute owner for all purposes, except as otherwise
required by law or NYSE regulations.
STATUS AS LIMITED PARTNER OR ASSIGNEE
Except as described under "--Limited Liability," the common units will
be fully paid, and the unitholders will not be required to make additional
capital contributions to us.
LIMITED LIABILITY
Assuming that a limited partner does not participate in the control of
our business within the meaning of the Delaware Revised Uniform Limited
Partnership Act (the "Delaware Act") and that he otherwise acts in conformity
with the provisions of our partnership agreement, his liability under the
Delaware Act will be limited, subject to possible exceptions, to the amount of
capital he is obligated to contribute to us for his common units plus his share
of any undistributed profits and assets. If it were determined, however, that
the right or exercise of the right by the limited partners as a group:
- to remove or replace the general partner;
- to approve some amendments to our partnership agreement; or
- to take other action under our partnership agreement;
constituted "participation in the control" of our business for the purposes of
the Delaware Act, then the limited partners could be held personally liable for
our obligations under Delaware law, to the same extent as the general partner.
This liability would extend to persons who transact business with us and who
reasonably believe that the limited partner is a general partner. Neither our
partnership agreement nor the Delaware Act specifically provides for legal
recourse against our general partner if a limited partner were to lose limited
liability through any fault of the general partner. While this does not mean
that a limited partner could not seek legal recourse, we have found no precedent
for this type of a claim in Delaware case law.
Under the Delaware Act, a limited partnership may not make a
distribution to a partner if after the distribution all liabilities of the
limited partnership, other than liabilities to partners on account of their
partnership interests and liabilities for which the recourse of creditors is
limited to specific property of our partnership, exceed the fair value of the
assets of the limited partnership. For the purpose of determining the fair value
of the assets of a limited partnership, the Delaware Act provides that the fair
value of property subject to liability for which recourse of creditors is
limited shall be included in the assets of the limited partnership only to the
extent that the fair value of that property exceeds the nonrecourse liability.
The Delaware Act provides that a limited partner who receives a distribution and
knew at the time of the distribution that the distribution was in violation of
the Delaware Act shall be liable to the limited partnership for the amount of
the distribution for three years. Under the Delaware Act, an assignee who
becomes a substituted limited partner of a limited partnership is liable for the
obligations of his
19
assignor to make contributions to our partnership, except the assignee is not
obligated for liabilities unknown to him at the time he became a limited partner
and which could not be ascertained from our partnership agreement.
Our subsidiaries currently conduct business in 29 states: Alabama,
Arizona, California, Colorado, Delaware, Florida, Georgia, Idaho, Kentucky,
Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey,
New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Carolina,
Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wyoming. To maintain
the limited liability for Heritage Propane Partners, L.P., as the holder of a
98.9899% limited partner interest in Heritage Operating, L.P., we may be
required to comply with legal requirements in the jurisdictions in which
Heritage Operating, L.P. conducts business, including qualifying our
subsidiaries to do business there. Limitations on the liability of limited
partners for the obligations of a limited partnership have not been clearly
established in many jurisdictions. If it were determined that we were, by virtue
of our limited partner interest in Heritage Operating, L.P. or otherwise,
conducting business in any state without compliance with the applicable limited
partnership statute, or that our right or the exercise of our right to remove or
replace Heritage Operating, L.P.'s general partner, to approve some amendments
to Heritage Operating, L.P.'s partnership agreement, or to take other action
under Heritage Operating, L.P.'s partnership agreement constituted
"participation in the control" of Heritage Operating, L.P.'s business for
purposes of the statutes of any relevant jurisdiction, then we could be held
personally liable for Heritage Operating, L.P.'s obligations under the law of
that jurisdiction to the same extent as our general partner under the
circumstances. We will operate in a manner as our general partner considers
reasonable and necessary or appropriate to preserve our limited liability.
MEETINGS; VOTING
Except as described below regarding a person or group owning 20% or
more of any class of units then outstanding, unitholders or assignees who are
record holders of units on the record date will be entitled to notice of, and to
vote at, meetings of our limited partners and to act upon matters for which
approvals may be solicited. Common units that are owned by an assignee who is a
record holder, but who has not yet been admitted as a limited partner, shall be
voted by our general partner at the written direction of the record holder.
Absent direction of this kind, the common units will not be voted, except that,
in the case of common units held by our general partner on behalf of non-citizen
assignees, our general partner shall distribute the votes on those common units
in the same ratios as the votes of limited partners on other units are cast.
Our general partner does not anticipate that any meeting of unitholders
will be called in the foreseeable future. Any action that is required or
permitted to be taken by the unitholders may be taken either at a meeting of the
unitholders or without a meeting if consents in writing describing the action so
taken are signed by holders of the number of units as would be necessary to
authorize or take that action at a meeting. Meetings of the unitholders may be
called by our general partner or by unitholders owning at least 20% of the
outstanding units of the class for which a meeting is proposed. Unitholders may
vote either in person or by proxy at meetings. The holders of a majority of the
outstanding units of the class or classes for which a meeting has been called
represented in person or by proxy shall constitute a quorum unless any action by
the unitholders requires approval by holders of a greater percentage of the
units, in which case the quorum shall be the greater percentage.
Each record holder of a unit has a vote according to his percentage
interest in us, although additional limited partner interests having special
voting rights could be issued. However, if at any time any person or group,
other than our general partner and its affiliates, owns, in the aggregate,
beneficial ownership of 20% or more of the common units then outstanding, the
person or group will lose voting rights on all of its common units and its
common units may not be voted on any matter and will not be considered to be
outstanding when sending notices of a meeting of unitholders, calculating
required votes, determining the presence of a quorum or for other similar
purposes. Common units held in nominee or street name account will be voted by
the broker or other nominee in accordance with the instruction of the beneficial
owner unless the arrangement between the beneficial owner and his nominee
provides otherwise.
Any notice, demand, request, report or proxy material required or
permitted to be given or made to record holders of common units under our
partnership agreement will be delivered to the record holder by us or by the
transfer agent.
20
BOOKS AND REPORTS
Our general partner is required to keep appropriate books of our
business at our principal offices. The books will be maintained for both tax and
financial reporting purposes on an accrual basis. Reporting for tax purposes is
done on a calendar year basis.
We will furnish or make available to record holders of common units,
within 120 days after the close of each fiscal year, an annual report containing
audited financial statements and a report on those financial statements by our
independent public accountants. Except for our fourth quarter, we will also
furnish or make available summary financial information within 90 days after the
close of each quarter.
We will furnish each record holder of a unit with information
reasonably required for tax reporting purposes within 90 days after the close of
each calendar year. This information is expected to be furnished in summary form
so that some complex calculations normally required of partners can be avoided.
Our ability to furnish this summary information to unitholders will depend on
the cooperation of unitholders in supplying us with specific information. Every
unitholder will receive information to assist him in determining his federal and
state tax liability and filing his federal and state income tax returns,
regardless of whether he supplies us with information.
Our partnership agreement provides that a limited partner can, for a
purpose reasonably related to his interest as a limited partner, upon reasonable
demand and at his own expense, have furnished to him:
- a current list of the name and last known address of each
partner;
- a copy of our tax returns;
- information as to the amount of cash, and a description and
statement of the agreed value of any other property or
services, contributed or to be contributed by each partner and
the date on which each became a partner;
- copies of our partnership agreement, the certificate of
limited partnership of the partnership, related amendments and
powers of attorney under which they have been executed;
- information regarding the status of our business and financial
condition; and
- any other information regarding our affairs as is just and
reasonable.
Our general partner may, and intends to, keep confidential from the
limited partners trade secrets or other information the disclosure of which our
general partner believes in good faith is not in our best interests or that we
are required by law or by agreements with third parties to keep confidential.
CASH DISTRIBUTION POLICY
DISTRIBUTIONS OF AVAILABLE CASH
References in this "Cash Distribution Policy" to "we," "us" and "our"
mean Heritage Propane Partners, L.P.
General. We will distribute all of our "available cash" to our
unitholders and our general partner within 45 days following the end of each
fiscal quarter.
Definition of Available Cash. Available cash is defined in our
partnership agreement and generally means, with respect to any calendar quarter,
all cash on hand at the end of such quarter:
- less the amount of cash reserves that are necessary or
appropriate in the reasonable discretion of the general
partner to:
- provide for the proper conduct of our business;
- comply with applicable law or any debt instrument or other
agreement (including reserves for future capital expenditures
and for our future credit needs); or
- provide funds for distributions to unitholders and our general
partner in respect of any one or more of the next four
quarters;
- plus all cash on hand on the date of determination of
available cash for the quarter resulting from working capital
borrowings made after the end of the quarter. Working capital
borrowings are
21
generally borrowings that are made under our credit facilities
and in all cases are used solely for working capital purposes
or to pay distributions to partners.
OPERATING SURPLUS AND CAPITAL SURPLUS
General. All cash distributed to unitholders will be characterized as
either "operating surplus" or "capital surplus." We distribute available cash
from operating surplus differently than available cash from capital surplus.
Definition of Operating Surplus. Operating surplus for any period
generally means:
- our cash balance on the closing date of our initial public
offering; plus
- $10.0 million (as described below); plus
- all of our cash receipts since the closing of our initial
public offering, excluding cash from interim capital
transactions such as borrowings that are not working capital
borrowings, sales of equity and debt securities and sales or
other dispositions of assets outside the ordinary course of
business; plus
- working capital borrowings made after the end of a quarter but
before the date of determination of operating surplus for the
quarter; less
- all of our operating expenditures after the closing of our
initial public offering, including the repayment of working
capital borrowings, but not the repayment of other borrowings,
and including maintenance capital expenditures; less
- the amount of cash reserves that the general partner deems
necessary or advisable to provide funds for future operating
expenditures.
Definition of Capital Surplus. Generally, capital surplus will be
generated only by:
- borrowings other than working capital borrowings;
- sales of debt and equity securities; and
- sales or other disposition of assets for cash, other than
inventory, accounts receivable and other current assets sold
in the ordinary course of business or as part of normal
retirements or replacements of assets.
Characterization of Cash Distributions. We will treat all available
cash distributed as coming from operating surplus until the sum of all available
cash distributed since we began operations equals the operating surplus as of
the most recent date of determination of available cash. We will treat any
amount distributed in excess of operating surplus, regardless of its source, as
capital surplus. As reflected above, operating surplus includes $10.0 million in
addition to our cash balance on the closing date of our initial public offering,
cash receipts from our operations and cash from working capital borrowings. This
amount does not reflect actual cash on hand that is available for distribution
to our unitholders. Rather, it is a provision that will enable us, if we choose,
to distribute as operating surplus up to $10.0 million of cash we receive in the
future from non-operating sources, such as asset sales, issuances of securities,
and long-term borrowings, that would otherwise be distributed as capital
surplus. We do not anticipate that we will make any distributions from capital
surplus.
DISTRIBUTIONS OF AVAILABLE CASH
We will make distributions of available cash from operating surplus for
any quarter in the following manner:
- First, 98% to all unitholders, pro rata, and 2% to the general
partner, until all unitholders have received $0.50 per unit
for such quarter (the "minimum quarterly distribution");
- Second, 98% to all unitholders, pro rata, and 2% to the
general partner, until all unitholders have received $0.55 per
unit for such quarter (the "first target distribution");
- Third, 85% to all unitholders, pro rata, 13% to the holders of
incentive distribution rights, pro rata, and 2% to the general
partner, until all unitholders have received $0.635 per unit
for such quarter (the "second target distribution");
22
- Fourth, 75% to all unitholders, pro rata, 23% to the holders
of incentive distribution rights, pro rata, and 2% to the
general partner, until all unitholders have received $0.825
per unit for such quarter (the "third target distribution");
and
- Fifth, thereafter, 50% to all unitholders, pro rata, 48% to
the holders of incentive distribution rights, pro rata, and 2%
to the general partner.
DISTRIBUTIONS FROM CAPITAL SURPLUS
We will make distributions of available cash from capital surplus, if
any, in the following manner:
- First, 98% to all unitholders, pro rata, and 2% to the general
partner, until we distribute for each common unit, an amount
of available cash from capital surplus equal to the initial
public offering price;
- Thereafter, we will make all distributions of available cash
from capital surplus as if they were from operating surplus.
Our partnership agreement treats a distribution of capital surplus as
the repayment of the initial unit price from the initial public offering, which
is a return of capital. The initial public offering price less any distributions
of capital surplus per unit is referred to as the "unrecovered capital." Each
time a distribution of capital surplus is made, the minimum quarterly
distribution and the target distribution levels will be reduced in the same
proportion as the corresponding reduction in the unrecovered capital. Because
distributions of capital surplus will reduce the minimum quarterly distribution,
after any of these distributions are made, it may be easier for the general
partner to receive incentive distributions. However, any distribution of capital
surplus before the unrecovered capital is reduced to zero cannot be applied to
the payment of the minimum quarterly distribution.
Once we distribute capital surplus on a unit in an amount equal to the
initial unit price, we will reduce the minimum quarterly distribution and the
target distribution levels to zero. We will then make all future distributions
from operating surplus, with 50% being paid to the holders of units, 48% to the
holders of the incentive distribution rights and 2% to the general partner.
ADJUSTMENT TO THE MINIMUM QUARTERLY DISTRIBUTION AND TARGET DISTRIBUTION LEVELS
In addition to adjusting the minimum quarterly distribution and target
distribution levels to reflect a distribution of capital surplus, if we combine
our units into fewer units or subdivide our units into a greater number of
units, we will proportionately adjust:
- the minimum quarterly distribution;
- the target distribution levels; and
- unrecovered capital.
For example, if a two-for-one split of the common units should occur,
the minimum quarterly distribution, the target distribution levels and the
unrecovered capital would each be reduced to 50% of its initial level. We will
not make any adjustment by reason of the issuance of additional units for cash
or property.
In addition, if legislation is enacted or if existing law is modified
or interpreted in a manner that causes us to become taxable as a corporation or
otherwise subject to taxation as an entity for federal, state or local income
tax purposes, we will reduce the minimum quarterly distribution and the target
distribution levels by multiplying the same by one minus the sum of the highest
marginal federal corporate income tax rate that could apply and any increase in
the effective overall state and local income tax rates.
DISTRIBUTIONS OF CASH UPON LIQUIDATION
General. If we dissolve in accordance with our partnership agreement,
we will sell or otherwise dispose of our assets in a process called liquidation.
We will first apply the proceeds of liquidation to the payment of our creditors.
We will distribute any remaining proceeds to the unitholders and the general
partner, in accordance with their capital account balances, as adjusted to
reflect any gain or loss upon the sale or other disposition of our assets in
liquidation.
Any further net gain recognized upon liquidation will be allocated in a
manner that takes into account the incentive distribution rights of the general
partner.
23
Manner of Adjustments for Gain. The manner of the adjustment for gain
is set forth in our partnership agreement in the following manner:
- First, to the general partner and the holders of units who
have negative balances in their capital accounts to the extent
of and in proportion to those negative balances;
- Second, 98% to the common unitholders, pro rata, and 2% to the
general partner, until the capital account for each common
unit is equal to the sum of:
- the unrecovered capital; and
- the amount of the minimum quarterly distribution for the
quarter during which our liquidation occurs;
- Third, 98% to all unitholders, pro rata, and 2% to the general
partner, until we allocate under this paragraph an amount per
unit equal to:
- the sum of the excess of the first target distribution per
unit over the minimum quarterly distribution per unit for each
quarter of our existence; less
- the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the minimum
quarterly distribution per unit that we distributed 98% to the
unitholders, pro rata, and 2% to the general partner, for each
quarter of our existence;
- Fourth, 85% to all unitholders, pro rata, 13% to the holders
of the incentive distribution rights, pro rata, and 2% to the
general partner, until we allocate under this paragraph an
amount per unit equal to:
- the sum of the excess of the second target distribution per
unit over the first target distribution per unit for each
quarter of our existence; less
- the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the first
target distribution per unit that we distributed 85% to the
unitholders, pro rata, 13% to the holders of the incentive
distribution rights, pro rata, and 2% to the general partner
for each quarter of our existence;
- Fifth, 75% to all unitholders, pro rata, 23% to the holders of
the incentive distribution rights, pro rata, and 2% to the
general partner, until we allocate under this paragraph an
amount per unit equal to:
- the sum of the excess of the third target distribution per
unit over the second target distribution per unit for each
quarter of our existence; less
- the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the second
target distribution per unit that we distributed 75% to the
unitholders, pro rata, 23% to the holders of the incentive
distribution rights, pro rata, and 2% to the general partner
for each quarter of our existence; and
- Sixth, thereafter, 50% to all unitholders, pro rata, 48% to
the holders of the incentive distribution rights, pro rata,
and 2% to the general partner.
Manner of Adjustments for Losses. Upon our liquidation, we will
generally allocate any loss to the general partner and the unitholders in the
following manner:
- First, 98% to the holders of common units in proportion to the
positive balances in their capital accounts and 2% to the
general partner, until the capital accounts of the common
unitholders have been reduced to zero; and
- Second, thereafter, 100% to the general partner.
Adjustments to Capital Accounts upon the Issuance of Additional Units.
We will make adjustments to capital accounts upon the issuance of additional
units. In doing so, we will allocate any unrealized and, for tax purposes,
unrecognized gain or loss resulting from the adjustments to the unitholders and
the general partner in the same manner as we allocate gain or loss upon
liquidation. In the event that we make positive adjustments to the capital
accounts upon the issuance of additional units, we will allocate any later
negative adjustments to the capital accounts resulting from the issuance of
additional units or upon our liquidation in a manner which results, to the
24
extent possible, in the general partner's capital account balances equaling the
amount which they would have been if no earlier positive adjustments to the
capital accounts had been made.
25
DESCRIPTION OF THE DEBT SECURITIES
Heritage Propane Partners, L.P. may issue senior debt securities on a
senior unsecured basis under an indenture among Heritage Propane Partners, L.P.,
as issuer, the Subsidiary Guarantors, if any, and a trustee that we will name in
the related prospectus supplement. We refer to this indenture as the Heritage
Propane senior indenture. Heritage Propane Partners, L.P. may also issue
subordinated debt securities under an indenture to be entered into among
Heritage Propane Partners, L.P., the Subsidiary Guarantors, if any, and the
trustee. We refer to this indenture as the Heritage Propane subordinated
indenture.
Heritage Operating, L.P. may issue senior debt securities on a senior
unsecured basis under an indenture among Heritage Operating, L.P., as issuer,
Heritage Propane Partners, L.P., as Guarantor, the Subsidiary Guarantors, if
any, and a trustee that we will name in the related prospectus supplement. We
refer to this indenture as the Heritage Operating senior indenture. Heritage
Operating, L.P. may also issue subordinated debt securities under an indenture
to be entered into among Heritage Operating, L.P., the Guarantor, the Subsidiary
Guarantors, if any, and the trustee. We refer to this indenture as the Heritage
Operating subordinated indenture.
We refer to the Heritage Propane senior indenture, the Heritage
Operating senior indenture, the Heritage Propane subordinated indenture and the
Heritage Operating subordinated indenture collectively as the indentures. The
debt securities will be governed by the provisions of the related indenture and
those made part of the indenture by reference to the Trust Indenture Act.
We have summarized material provisions of the indentures, the debt
securities and the guarantees below. This summary is not complete. We have filed
the form of senior indentures and the form of subordinated indentures with the
SEC as exhibits to the registration statement, and you should read the
indentures for provisions that may be important to you.
References in this "Description of the Debt Securities" to "we," "us"
and "our" mean Heritage Propane Partners, L.P. and Heritage Operating, L.P.
References in this prospectus to an "indenture" refer to the particular
indenture under which we issue a series of debt securities.
PROVISIONS APPLICABLE TO EACH INDENTURE
General. Any series of debt securities:
- will be general obligations of the issuer;
- will be general obligations of the Guarantor if they are
guaranteed by the Guarantor;
- will be general obligations of the Subsidiary Guarantors if
they are guaranteed by the Subsidiary Guarantors; and
- may be subordinated to the Senior Indebtedness of Heritage
Propane Partners, L.P., Heritage Operating, L.P. and the
Subsidiary Guarantors.
The indentures do not limit the amount of debt securities that may be
issued under any indenture, and do not limit the amount of other unsecured debt
or securities that we may issue. We may issue debt securities under the
indentures from time to time in one or more series, each in an amount authorized
prior to issuance.
No indenture contains any covenants or other provisions designed to
protect holders of the debt securities in the event we participate in a highly
leveraged transaction or upon a change of control. The indentures also do not
contain provisions that give holders the right to require us to repurchase their
securities in the event of a decline in our credit ratings for any reason,
including as a result of a takeover, recapitalization or similar restructuring
or otherwise.
Terms. We will prepare a prospectus supplement and either a
supplemental indenture, or authorizing resolutions of the board of directors of
our general partner's general partner, accompanied by an officers' certificate,
relating to any series of debt securities that we offer, which will include
specific terms relating to some or all of the following:
- whether the debt securities will be senior or subordinated
debt securities;
- the form and title of the debt securities of that series;
- the total principal amount of the debt securities of that
series;
26
- whether the debt securities will be issued in individual
certificates to each holder or in the form of temporary or
permanent global securities held by a depositary on behalf of
holders;
- the date or dates on which the principal of and any premium on
the debt securities of that series will be payable;
- any interest rate which the debt securities of that series
will bear, the date from which interest will accrue, interest
payment dates and record dates for interest payments;
- any right to extend or defer the interest payment periods and
the duration of the extension;
- whether and under what circumstances any additional amounts
with respect to the debt securities will be payable;
- whether debt securities are entitled to the benefits of any
guarantee of any Subsidiary Guarantor;
- the place or places where payments on the debt securities of
that series will be payable;
- any provisions for optional redemption or early repayment;
- any provisions that would require the redemption, purchase or
repayment of debt securities;
- the denominations in which the debt securities will be issued;
- whether payments on the debt securities will be payable in
foreign currency or currency units or another form and whether
payments will be payable by reference to any index or formula;
- the portion of the principal amount of debt securities that
will be payable if the maturity is accelerated, if other than
the entire principal amount;
- any additional means of defeasance of the debt securities, any
additional conditions or limitations to defeasance of the debt
securities or any changes to those conditions or limitations;
- any changes or additions to the events of default or covenants
described in this prospectus;
- any restrictions or other provisions relating to the transfer
or exchange of debt securities;
- any terms for the conversion or exchange of the debt
securities for our other securities or securities of any other
entity;
- any changes to the subordination provisions for the
subordinated debt securities; and
- any other terms of the debt securities of that series.
This description of debt securities will be deemed modified, amended or
supplemented by any description of any series of debt securities set forth in a
prospectus supplement related to that series.
We may sell the debt securities at a discount, which may be
substantial, below their stated principal amount. These debt securities may bear
no interest or interest at a rate that at the time of issuance is below market
rates. If we sell these debt securities, we will describe in the prospectus
supplement any material United States federal income tax consequences and other
special considerations.
If we sell any of the debt securities for any foreign currency or
currency unit or if payments on the debt securities are payable in any foreign
currency or currency unit, we will describe in the prospectus supplement the
restrictions, elections, tax consequences, specific terms and other information
relating to those debt securities and the foreign currency or currency unit.
Guarantee of Heritage Propane Partners, L.P. Heritage Propane Partners,
L.P. will fully, irrevocably and unconditionally guarantee on an unsecured basis
all series of debt securities of Heritage Operating, L.P., and will execute a
notation of guarantee as further evidence of its guarantee. As used in this
prospectus, the term "Guarantor" means Heritage Propane Partners, L.P. in its
role as guarantor of the debt securities of Heritage Operating, L.P. The
applicable prospectus supplement will describe the terms of any guarantee by
Heritage Propane Partners, L.P.
27
If a series of senior debt securities of Heritage Operating, L.P. is so
guaranteed, Heritage Propane Partners, L.P.'s guarantee of the senior debt
securities will be Heritage Propane Partners, L.P.'s unsecured and
unsubordinated general obligation, and will rank on a parity with all of
Heritage Propane Partners, L.P.'s other unsecured and unsubordinated
indebtedness. If a series of subordinated debt securities of Heritage Operating,
L.P. is so guaranteed, Heritage Propane Partners, L.P.'s guarantee of the
subordinated debt securities will be Heritage Propane Partners, L.P.'s unsecured
general obligation and will be subordinated to all of Heritage Propane Partners,
L.P.'s other unsecured and unsubordinated indebtedness.
The Subsidiary Guarantees. The Subsidiary Guarantors may fully,
irrevocably and unconditionally guarantee on an unsecured basis all series of
debt securities of Heritage Propane Partners, L.P. or Heritage Operating, L.P.,
and will execute a notation of guarantee as further evidence of their guarantee.
The term "Subsidiary Guarantors" means Heritage Service Corp., Heritage-Bi
State, L.L.C. and Heritage Energy Resources, L.L.C. and also includes Heritage
Operating, L.P. when discussing subsidiary guarantees of the debt securities of
Heritage Propane Partners, L.P. The applicable prospectus supplement will
describe the terms of any guarantee by the Subsidiary Guarantors.
If a series of senior debt securities of Heritage Propane Partners,
L.P. or Heritage Operating, L.P. is so guaranteed, the Subsidiary Guarantors'
guarantee of the senior debt securities will be the Subsidiary Guarantors'
unsecured and unsubordinated general obligation, and will rank on a parity with
all of the Subsidiary Guarantors' other unsecured and unsubordinated
indebtedness. If a series of subordinated debt securities of Heritage Propane
Partners, L.P. or Heritage Operating, L.P. is so guaranteed, the Subsidiary
Guarantors' guarantee of the subordinated debt securities will be the Subsidiary
Guarantors' unsecured general obligation and will be subordinated to all of the
Subsidiary Guarantors' other unsecured and unsubordinated indebtedness.
The obligations of each Subsidiary Guarantor under its guarantee of the
debt securities will be limited to the maximum amount that will not result in
the obligations of the Subsidiary Guarantor under the guarantee constituting a
fraudulent conveyance or fraudulent transfer under federal or state law, after
giving effect to:
- all other contingent and fixed liabilities of the Subsidiary
Guarantor; and
- any collections from or payments made by or on behalf of any
other Subsidiary Guarantors in respect of the obligations of
the Subsidiary Guarantor under its guarantee.
The guarantee of any Subsidiary Guarantor may be released under certain
circumstances. If we exercise our legal or covenant defeasance option with
respect to debt securities of a particular series as described below in
"--Defeasance," then any Subsidiary Guarantor will be released with respect to
that series. Further, if no default has occurred and is continuing under the
indentures, and to the extent not otherwise prohibited by the indentures, a
Subsidiary Guarantor will be unconditionally released and discharged from the
guarantee:
- automatically upon any sale, exchange or transfer, whether by
way of merger or otherwise, to any person that is not our
affiliate, of all of our direct or indirect limited
partnership or other equity interests in the Subsidiary
Guarantor;
- automatically upon the merger of the Subsidiary Guarantor into
us or any other Subsidiary Guarantor or the liquidation and
dissolution of the Subsidiary Guarantor; or
- following delivery of a written notice by us to the trustee,
upon the release of all guarantees by the Subsidiary Guarantor
of any debt of ours for borrowed money for a purchase money
obligation or for a guarantee of either, except for any series
of debt securities.
Consolidation, Merger and Sale of Assets. The indentures generally
permit a consolidation or merger involving Heritage Propane Partners, L.P.,
Heritage Operating, L.P. or the Subsidiary Guarantors. They also permit Heritage
Propane Partners, L.P., Heritage Operating, L.P. or the Subsidiary Guarantors,
as applicable, to lease, transfer or dispose of all or substantially all of its
assets. Each of Heritage Propane Partners, L.P., Heritage Operating, L.P. and
the Subsidiary Guarantors has agreed, however, that it will not consolidate with
or merge into any entity (other than Heritage Propane Partners, L.P., Heritage
Operating, L.P. or a Subsidiary Guarantor, as applicable) or lease, transfer or
dispose of all or substantially all of its assets to any entity (other than
Heritage Propane Partners, L.P., Heritage Operating, L.P. or a Subsidiary
Guarantor, as applicable) unless:
- it is the continuing entity; or
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- if it is not the continuing entity, the resulting entity or
transferee is organized and existing under the laws of any
United States jurisdiction and assumes the performance of its
covenants and obligations under the indentures; and
- in either case, immediately after giving effect to the
transaction, no default or event of default would occur and be
continuing or would result from the transaction.
Upon any such consolidation, merger or asset lease, transfer or
disposition involving Heritage Propane Partners, L.P., Heritage Operating, L.P.
or the Subsidiary Guarantors, the resulting entity or transferee will be
substituted for Heritage Propane Partners, L.P., Heritage Operating, L.P. or the
Subsidiary Guarantors, as applicable, under the applicable indenture and debt
securities. In the case of an asset transfer or disposition other than a lease,
Heritage Propane Partners, L.P. or the Subsidiary Guarantors, as applicable,
will be released from the applicable indenture.
Events of Default. Unless we inform you otherwise in the applicable
prospectus supplement, the following are events of default with respect to a
series of debt securities:
- failure to pay interest on that series of debt securities for
30 days when due;
- default in the payment of principal of or premium, if any, on
any debt securities of that series when due at its stated
maturity, upon redemption, upon required repurchase or
otherwise;
- default in the payment of any sinking fund payment on any debt
securities of that series when due;
- failure by us or, if the series of debt securities is
guaranteed by the Guarantor or any Subsidiary Guarantors, by
such Guarantor or Subsidiary Guarantor, to comply for 60 days
after notice with the other agreements contained in the
indentures, any supplement to the indentures or any board
resolution authorizing the issuance of that series;
- failure to comply with any covenant or agreement in that
series of debt securities or the applicable indenture for 60
days after written notice by the trustee or by the holders of
at least 25% in principal amount of the outstanding debt
securities issued under that indenture that are affected by
that failure;
- certain events of bankruptcy, insolvency or reorganization of
us or, if the series of debt securities is guaranteed by the
Guarantor or any Subsidiary Guarantor, of the Guarantor and/or
any such Subsidiary Guarantor;
- if the series of debt securities is guaranteed by the
Guarantor and/or any Subsidiary Guarantor:
- any of the guarantees ceases to be in full force and
effect, except as otherwise provided in the
indentures;
- any of the guarantees is declared null and void in a
judicial proceeding; or
- the Guarantor or any Subsidiary Guarantor denies or
disaffirms its obligations under the indentures or
its guarantee; and
- any other event of default provided for in that series of debt
securities.
A default under one series of debt securities will not necessarily be a
default under another series. The trustee may withhold notice to the holders of
the debt securities of any default or event of default (except in any payment on
the debt securities) if the trustee considers it in the interest of the holders
of the debt securities to do so.
If an event of default for any series of debt securities occurs and is
continuing, the trustee or the holders of at least 25% in principal amount of
the outstanding debt securities of the series affected by the default (or, in
some cases, 25% in principal amount of all debt securities issued under the
applicable indenture that are affected, voting as one class) may declare the
principal of and all accrued and unpaid interest on those debt securities to be
due and payable. If an event of default relating to certain events of
bankruptcy, insolvency or reorganization occurs, the principal of and interest
on all the debt securities issued under the applicable indenture will become
immediately due and payable without any action on the part of the trustee or any
holder. The holders of a majority in principal amount of the outstanding debt
securities of the series affected by the default (or, in some cases, of all debt
securities
29
issued under the applicable indenture that are affected, voting as one class)
may in some cases rescind this accelerated payment requirement.
A holder of a debt security of any series issued under each indenture
may pursue any remedy under that indenture only if:
- the holder gives the trustee written notice of a continuing
event of default for that series;
- the holders of at least 25% in principal amount of the
outstanding debt securities of that series make a written
request to the trustee to pursue the remedy;
- the holders offer to the trustee indemnity satisfactory to the
trustee;
- the trustee fails to act for a period of 60 days after receipt
of the request and offer of indemnity; and
- during that 60-day period, the holders of a majority in
principal amount of the debt securities of that series do not
give the trustee a direction inconsistent with the request.
This provision does not, however, affect the right of a holder of a debt
security to sue for enforcement of any overdue payment.
In most cases, holders of a majority in principal amount of the
outstanding debt securities of a series (or of all debt securities issued under
the applicable indenture that are affected, voting as one class) may direct the
time, method and place of:
- conducting any proceeding for any remedy available to the
trustee; and
- exercising any trust or power conferred upon the trustee
relating to or arising as a result of an event of default.
Under each of the indentures we are required to file each year with the
trustee a written statement as to their compliance with the covenants contained
in the applicable indenture.
Modification and Waiver. Each indenture may be amended or supplemented
if the holders of a majority in principal amount of the outstanding debt
securities of all series issued under that indenture that are affected by the
amendment or supplement (acting as one class) consent to it. Without the consent
of the holder of each debt security affected, however, no modification may:
- reduce the amount of debt securities whose holders must
consent to an amendment, a supplement or a waiver;
- reduce the rate of or change the time for payment of interest
on the debt security;
- reduce the principal of the debt security or change its stated
maturity;
- reduce any premium payable on the redemption of the debt
security or change the time at which the debt security may or
must be redeemed;
- change any obligation to pay additional amounts on the debt
security;
- make payments on the debt security payable in currency other
than as originally stated in the debt security;
- impair the holder's right to institute suit for the
enforcement of any payment on or with respect to the debt
security;
- make any change in the percentage of principal amount of debt
securities necessary to waive compliance with certain
provisions of the indenture or to make any change in the
provision related to modification;
- modify the provisions relating to the subordination of any
subordinated debt security in a manner adverse to the holder
of that security;
- waive a continuing default or event of default regarding any
payment on the debt securities; or
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- release the Guarantor, or any Subsidiary Guarantor, or modify
the guarantee of the Guarantor or any Subsidiary Guarantor in
any manner adverse to the holders.
Each indenture may be amended or supplemented or any provision of that
indenture may be waived without the consent of any holders of debt securities
issued under that indenture in certain circumstances, including:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption of our obligations under the
indentures by a successor upon any merger, consolidation or
asset transfer permitted under the indenture;
- to provide for uncertificated debt securities in addition to
or in place of certificated debt securities or to provide for
bearer debt securities;
- to provide any security for, any guarantees of or any
additional obligors on any series of debt securities or, with
respect to the senior indentures, the related guarantees;
- to comply with any requirement to effect or maintain the
qualification of that indenture under the Trust Indenture Act
of 1939;
- to add covenants that would benefit the holders of any debt
securities or to surrender any rights we have under the
indentures;
- to add events of default with respect to any debt securities;
and
- to make any change that does not adversely affect any
outstanding debt securities of any series issued under that
indenture in any material respect.
The holders of a majority in principal amount of the outstanding debt
securities of any series (or, in some cases, of all debt securities issued under
the applicable indenture that are affected, voting as one class) may waive any
existing or past default or event of default with respect to those debt
securities. Those holders may not, however, waive any default or event of
default in any payment on any debt security or compliance with a provision that
cannot be amended or supplemented without the consent of each holder affected.
Defeasance. When we use the term defeasance, we mean discharge from
some or all of our obligations under the indentures. If any combination of funds
or government securities are deposited with the trustee under an indenture
sufficient to make payments on the debt securities of a series issued under that
indenture on the dates those payments are due and payable, then, at our option,
either of the following will occur:
- we will be discharged from our or their obligations with
respect to the debt securities of that series and, if
applicable, the related guarantees ("legal defeasance"); or
- we will no longer have any obligation to comply with the
restrictive covenants, the merger covenant and other specified
covenants under the applicable indenture, and the related
events of default will no longer apply ("covenant
defeasance").
If a series of debt securities is defeased, the holders of the debt
securities of the series affected will not be entitled to the benefits of the
applicable indenture, except for obligations to register the transfer or
exchange of debt securities, replace stolen, lost or mutilated debt securities
or maintain paying agencies and hold moneys for payment in trust. In the case of
covenant defeasance, our obligation to pay principal, premium and interest on
the debt securities and, if applicable, guarantees of the payments will also
survive.
Unless we inform you otherwise in the prospectus supplement, we will be
required to deliver to the trustee an opinion of counsel that the deposit and
related defeasance would not cause the holders of the debt securities to
recognize income, gain or loss for U.S. federal income tax purposes. If we elect
legal defeasance, that opinion of counsel must be based upon a ruling from the
U.S. Internal Revenue Service or a change in law to that effect.
No Personal Liability of General Partner. U.S. Propane, L.P., our
general partner, and its directors, officers, employees, incorporators and
partners, as such, will not be liable for:
- any of Heritage Propane Partners, L.P.'s, Heritage Operating,
L.P.'s or Subsidiary Guarantors' obligations under the debt
securities, the indentures or the guarantees; or
31
- any claim based on, in respect of, or by reason of, such
obligations or their creation.
By accepting a debt security, each holder will be deemed to have waived
and released all such liability. This waiver and release are part of the
consideration for our issuance of the debt securities. This waiver may not be
effective, however, to waive liabilities under the federal securities laws, and
it is the view of the SEC that such a waiver is against public policy.
Governing Law. New York law will govern the indentures and the debt
securities.
Trustee. We may appoint a separate trustee for any series of debt
securities. We use the term "trustee" to refer to the trustee appointed with
respect to any such series of debt securities. We may maintain banking and other
commercial relationships with the trustee and its affiliates in the ordinary
course of business, and the trustee may own debt securities.
Form, Exchange, Registration and Transfer. The debt securities will be
issued in registered form, without interest coupons. There will be no service
charge for any registration of transfer or exchange of the debt securities.
However, payment of any transfer tax or similar governmental charge payable for
that registration may be required.
Debt securities of any series will be exchangeable for other debt
securities of the same series, the same total principal amount and the same
terms but in different authorized denominations in accordance with the
applicable indenture. Holders may present debt securities for registration of
transfer at the office of the security registrar or any transfer agent we
designate. The security registrar or transfer agent will effect the transfer or
exchange if its requirements and the requirements of the applicable indenture
are met.
The trustee will be appointed as security registrar for the debt
securities. If a prospectus supplement refers to any transfer agents we
initially designate, we may at any time rescind that designation or approve a
change in the location through which any transfer agent acts. We are required to
maintain an office or agency for transfers and exchanges in each place of
payment. We may at any time designate additional transfer agents for any series
of debt securities.
In the case of any redemption, we will not be required to register the
transfer or exchange of:
- any debt security during a period beginning 15 business days
prior to the mailing of the relevant notice of redemption and
ending on the close of business on the day of mailing of such
notice; or
- any debt security that has been called for redemption in whole
or in part, except the unredeemed portion of any debt security
being redeemed in part.
Payment and Paying Agents. Unless we inform you otherwise in a
prospectus supplement, payments on the debt securities will be made in U.S.
dollars at the office of the trustee and any paying agent. At our option,
however, payments may be made by wire transfer for global debt securities or by
check mailed to the address of the person entitled to the payment as it appears
in the security register. Unless we inform you otherwise in a prospectus
supplement, interest payments may be made to the person in whose name the debt
security is registered at the close of business on the record date for the
interest payment.
Unless we inform you otherwise in a prospectus supplement, the trustee
under the applicable indenture will be designated as the paying agent for
payments on debt securities issued under that indenture. We may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts.
If the principal of or any premium or interest on debt securities of a
series is payable on a day that is not a business day, the payment will be made
on the following business day. For these purposes, unless we inform you
otherwise in a prospectus supplement, a "business day" is any day that is not a
Saturday, a Sunday or a day on which banking institutions in New York, New York
or a place of payment on the debt securities of that series is authorized or
obligated by law, regulation or executive order to remain closed.
Subject to the requirements of any applicable abandoned property laws,
the trustee and paying agent will pay to us upon written request any money held
by them for payments on the debt securities that remains unclaimed for two years
after the date upon which that payment has become due. After payment to us,
holders entitled to the money must look to us for payment. In that case, all
liability of the trustee or paying agent with respect to that money will cease.
32
Book-Entry Debt Securities. The debt securities of a series may be
issued in the form of one or more global debt securities that would be deposited
with a depositary or its nominee identified in the prospectus supplement. Global
debt securities may be issued in either temporary or permanent form. We will
describe in the prospectus supplement the terms of any depositary arrangement
and the rights and limitations of owners of beneficial interests in any global
debt security.
PROVISIONS APPLICABLE SOLELY TO THE HERITAGE PROPANE AND HERITAGE OPERATING
SUBORDINATED INDENTURES
Subordination. Debt securities of a series may be subordinated to our
"Senior Indebtedness," which we define generally to include any obligation
created or assumed by us (or, if the series is guaranteed, the Guarantor and any
Subsidiary Guarantors) for the repayment of borrowed money, any purchase money
obligation created or assumed by us, and any guarantee therefor, whether
outstanding or hereafter issued, unless, by the terms of the instrument creating
or evidencing such obligation, it is provided that such obligation is
subordinate or not superior in right of payment to the debt securities (or, if
the series is guaranteed, the guarantee of the Guarantor or any Subsidiary
Guarantor), or to other obligations which are pari passu with or subordinated to
the debt securities (or, if the series is guaranteed, the guarantee of the
Guarantor or any Subsidiary Guarantor). Subordinated debt securities will be
subordinated in right of payment, to the extent and in the manner set forth in
the subordinated indentures and the prospectus supplement relating to such
series, to the prior payment of all of our indebtedness and that of the
Guarantor or any Subsidiary Guarantor that is designated as "Senior
Indebtedness" with respect to the series.
The holders of Senior Indebtedness of ours or, if applicable, the
Guarantor or a Subsidiary Guarantor, will receive payment in full of the Senior
Indebtedness before holders of subordinated debt securities will receive any
payment of principal, premium or interest with respect to the subordinated debt
securities upon any payment or distribution of our assets or, if applicable to
any series of outstanding debt securities, the Subsidiary Guarantors' assets, to
creditors:
- upon a liquidation or dissolution of us or, if applicable to
any series of outstanding debt securities, the Subsidiary
Guarantors; or
- in a bankruptcy, receivership or similar proceeding relating
to us or, if applicable to any series of outstanding debt
securities, to the Subsidiary Guarantors.
Until the Senior Indebtedness is paid in full, any distribution to
which holders of subordinated debt securities would otherwise be entitled will
be made to the holders of Senior Indebtedness, except that the holders of
subordinated debt securities may receive units representing limited partner
interests and any debt securities that are subordinated to Senior Indebtedness
to at least the same extent as the subordinated debt securities.
If we do not pay any principal, premium or interest with respect to
Senior Indebtedness within any applicable grace period (including at maturity),
or any other default on Senior Indebtedness occurs and the maturity of the
Senior Indebtedness is accelerated in accordance with its terms, we may not:
- make any payments of principal, premium, if any, or interest
with respect to subordinated debt securities;
- make any deposit for the purpose of defeasance of the
subordinated debt securities; or
- repurchase, redeem or otherwise retire any subordinated debt
securities, except that in the case of subordinated debt
securities that provide for a mandatory sinking fund, we may
deliver subordinated debt securities to the trustee in
satisfaction of our sinking fund obligation,
unless, in either case,
- the default has been cured or waived and any declaration of
acceleration has been rescinded;
- the Senior Indebtedness has been paid in full in cash; or
- we and the trustee receive written notice approving the
payment from the representatives of each issue of "Designated
Senior Indebtedness."
Generally, "Designated Senior Indebtedness" will include:
- any specified issue of Senior Indebtedness of at least $100
million; and
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- any other Senior Indebtedness that we may designate in respect
of any series of subordinated debt securities.
During the continuance of any default, other than a default described
in the immediately preceding paragraph, that may cause the maturity of any
Designated Senior Indebtedness to be accelerated immediately without further
notice, other than any notice required to effect such acceleration, or the
expiration of any applicable grace periods, we may not pay the subordinated debt
securities for a period called the "Payment Blockage Period." A Payment Blockage
Period will commence on the receipt by us and the trustee of written notice of
the default, called a "Blockage Notice," from the representative of any
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and will end 179 days thereafter.
The Payment Blockage Period may be terminated before its expiration:
- by written notice from the person or persons who gave the
Blockage Notice;
- by repayment in full in cash of the Designated Senior
Indebtedness with respect to which the Blockage Notice was
given; or
- if the default giving rise to the Payment Blockage Period is
no longer continuing.
Unless the holders of the Designated Senior Indebtedness have
accelerated the maturity of the Designated Senior Indebtedness, we may resume
payments on the subordinated debt securities after the expiration of the Payment
Blockage Period.
Generally, not more than one Blockage Notice may be given in any period
of 360 consecutive days. The total number of days during which any one or more
Payment Blockage Periods are in effect, however, may not exceed an aggregate of
179 days during any period of 360 consecutive days.
After all Senior Indebtedness is paid in full and until the
subordinated debt securities are paid in full, holders of the subordinated debt
securities shall be subrogated to the rights of holders of Senior Indebtedness
to receive distributions applicable to Senior Indebtedness.
As a result of the subordination provisions described above, in the
event of insolvency, the holders of Senior Indebtedness, as well as certain of
our general creditors, may recover more, ratably, than the holders of the
subordinated debt securities.
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SELLING UNITHOLDERS
In addition to covering our offering of securities, this prospectus
covers the offering for resale of up to 6,415,762 common units by selling
unitholders. The following table sets forth information relating to the selling
unitholders' beneficial ownership of our common units as of the date of this
prospectus.
NAME OF SELLING UNITHOLDER NUMBER OF COMMON UNITS AVAILABLE FOR RESALE
- -------------------------- -------------------------------------------
U.S. Propane, L.P. 180,028
Heritage Holdings, Inc. 4,426,916
James E. Bertelsmeyer 1,027,946
H. Michael Krimbill 292,059
R.C. Mills 305,509
Bill W. Byrne 64,157
J. Charles Sawyer 64,157
Mark A. Darr 18,330
Thomas H. Rose 18,330
Curtis L. Weishahn 18,330
The applicable prospectus supplement will set forth, with respect to
the selling unitholders:
- the name of the selling unitholders in that offering;
- the nature of the position, office or other material
relationship which the selling unitholders will have had
within the prior three years with us or any of our affiliates;
- the number of common units owned by the selling unitholders
prior to the offering;
- the number of common units to be offered for the selling
unitholders' account; and
- the number and (if one percent or more) the percentage of
common units to be owned by the selling unitholders after the
completion of the offering.
All expenses incurred with the registration of the common units owned
by the selling unitholders, excluding any separate legal fees and expenses of
the selling unitholders, will be borne by us.
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MATERIAL TAX CONSIDERATIONS
This section is a summary of the material tax consequences that may be
relevant to prospective unitholders who are individual citizens or residents of
the United States and, unless otherwise noted in the following discussion, is
the opinion of Baker Botts L.L.P., special counsel to our general partner and
us, insofar as it relates to matters of United States federal income tax law and
legal conclusions with respect to those matters. This section is based upon
current provisions of the Internal Revenue Code, existing and proposed
regulations and current administrative rulings and court decisions, all of which
are subject to change. Later changes in these authorities may cause the tax
consequences to vary substantially from the consequences described below. Unless
the context otherwise requires, references in this section to "us" or "we" are
references to Heritage Propane Partners, L.P. and Heritage Operating, L.P.
No attempt has been made in this section to comment on all federal
income tax matters affecting us or the unitholders. Moreover, the discussion
focuses on unitholders who are individual citizens or residents of the United
States and has only limited application to corporations, estates, trusts,
nonresident aliens or other unitholders subject to specialized tax treatment,
such as tax-exempt institutions, foreign persons, individual retirement accounts
(IRAs), real estate investment trusts (REITs) or mutual funds. Accordingly, we
recommend that you consult, and depend on, your own tax advisor in analyzing the
federal, state, local and foreign tax consequences particular to you of an
investment in, or the disposition of, our securities.
All statements as to matters of law and legal conclusions, but not as
to factual matters, contained in this section, unless otherwise noted, are the
opinion of counsel, and some are based on the accuracy of the representations we
make.
No ruling has been or will be requested from the IRS regarding any
matter affecting us or prospective unitholders. An opinion of counsel represents
only that counsel's best legal judgment and does not bind the IRS or the courts.
Accordingly, the opinions and statements made here may not be sustained by a
court if contested by the IRS. Any contest of this sort with the IRS may
materially and adversely impact the market for the common units and the prices
at which common units trade. In addition, the costs of any contest with the IRS
will be borne directly or indirectly by the unitholders and the general partner.
Furthermore, the tax treatment of us or of an investment in us, may be
significantly modified by future legislative or administrative changes or court
decisions. Any modifications may or may not be retroactively applied.
For the reasons described below, counsel has not rendered an opinion
with respect to the following specific federal income tax issues:
(a) the treatment of a unitholder whose common units are
loaned to a short seller to cover a short sale of common units (please
read "--Tax Consequences of Unit Ownership--Treatment of Short Sales");
(b) whether our monthly convention for allocating taxable
income and losses is permitted by existing Treasury regulations (please
read "--Disposition of Common Units--Allocations Between Transferors
and Transferees"); and
(c) whether our method for depreciating Section 743
adjustments is sustainable (please read "--Tax Consequences of Unit
Ownership--Section 754 Election").
PARTNERSHIP STATUS
A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner of a partnership is required to take into
account his allocable share of items of income, gain, loss and deduction of the
partnership in computing his federal income tax liability, regardless of whether
cash distributions are made to him by the partnership. Distributions of cash by
a partnership to a partner generally are not taxable unless the amount of cash
distributed is in excess of the partner's adjusted basis in his partnership
interest.
No ruling has been or will be sought from the IRS and the IRS has made
no determination as to the status of Heritage Propane Partners, L.P. as a
partnership for federal income tax purposes or whether our operations generate
"qualifying income" under Section 7704 of the Code, or any other matter
affecting our prospective unitholders. Instead, we have relied on the opinion of
Baker Botts L.L.P. that, based upon the Internal Revenue Code, its regulations,
published revenue rulings and court decisions and the representations described
below,
36
Heritage Propane Partners, L.P. has been, is, and will continue to be,
classified as a partnership for federal income tax purposes.
In rendering its opinion, Baker Botts L.L.P. has relied on factual
representations made by us and our general partner. The representations made by
us and our general partner upon which counsel has relied are:
(a) Neither we nor Heritage Operating, L.P. has elected
or will elect to be treated as a corporation;
(b) Heritage Propane Partners, L.P. and Heritage
Operating, L.P. have been and will be operated in accordance with
applicable partnership statutes, the applicable partnership agreement
and in the manner described in this prospectus; and
(c) For each taxable year, more than 90% of our gross
income has been and will be income that our counsel has opined or will
opine is "qualifying income" within the meaning of Section 7704(d) of
the Internal Revenue Code.
Section 7704 of the Internal Revenue Code provides that publicly-traded
partnerships will, as a general rule, be taxed as corporations. However, an
exception, referred to as the "Qualifying Income Exception," exists with respect
to publicly-traded partnerships of which 90% or more of the gross income for
every taxable year consists of "qualifying income." Qualifying income includes
income and gains derived from the processing, transportation and marketing of
crude oil, natural gas and products thereof, including the retail and wholesale
marketing of propane, certain hedging activities and the transportation of
propane and natural gas liquids. Other types of qualifying income include
interest other than from a financial business, dividends, gains from the sale of
real property and gains from the sale or other disposition of assets held for
the production of income that otherwise constitutes qualifying income. We
estimate that approximately seven percent of our current gross income is not
qualifying income; however, this estimate could change from time to time. Based
upon and subject to this estimate, the factual representations made by us and
the general partner and a review of the applicable legal authorities, Baker
Botts L.L.P. is of the opinion that at least 90% of our current gross income
constitutes qualifying income.
If we fail to meet the Qualifying Income Exception, other than a
failure which is determined by the IRS to be inadvertent and which is cured
within a reasonable time after discovery, we will be treated as if we had
transferred all of our assets, subject to liabilities, to a newly formed
corporation, on the first day of the year in which we fail to meet the
Qualifying Income Exception, in return for stock in that corporation, and then
distributed that stock to the unitholders in liquidation of their interests in
us. This contribution and liquidation should be tax-free to unitholders and us
so long as we, at that time, do not have liabilities in excess of the tax basis
of our assets. Thereafter, we would be treated as a corporation for federal
income tax purposes.
If we were treated as an association taxable as a corporation in any
taxable year, either as a result of a failure to meet the Qualifying Income
Exception or otherwise, our items of income, gain, loss and deduction would be
reflected only on our separate tax returns rather than being passed through to
the unitholders, and our net income would be taxed to us at corporate rates. In
addition, any distribution made to a unitholder would be treated as either
taxable dividend income, to the extent of Heritage Propane Partners, L.P.'s
current or accumulated earnings and profits, or, in the absence of earnings and
profits, a nontaxable return of capital, to the extent of the unitholder's tax
basis in his common units, or taxable capital gain, after the unitholder's tax
basis in his common units is reduced to zero. Accordingly, taxation as a
corporation would result in a material reduction in a unitholder's cash flow and
after-tax return and thus would likely result in a substantial reduction of the
value of the units.
The remainder of this section is based on Baker Botts L.L.P.'s opinion
that Heritage Propane Partners, L.P. and Heritage Operating, L.P. will be
classified as partnerships for federal income tax purposes.
LIMITED PARTNER STATUS
Unitholders who have become limited partners of Heritage Propane
Partners, L.P. will be treated as partners of Heritage Propane Partners, L.P.
for federal income tax purposes. Also:
(a) assignees who have executed and delivered transfer
applications, and are awaiting admission as limited partners, and
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(b) unitholders whose common units are held in street
name or by a nominee and who have the right to direct the nominee in
the exercise of all substantive rights attendant to the ownership of
their common units,
will be treated as partners of Heritage Propane Partners, L.P. for federal
income tax purposes. As there is no direct authority addressing assignees of
common units who are entitled to execute and deliver transfer applications and
become entitled to direct the exercise of attendant rights, but who fail to
execute and deliver transfer applications, counsel's opinion does not extend to
these persons. Furthermore, a purchaser or other transferee of common units who
does not execute and deliver a transfer application may not receive some federal
income tax information or reports furnished to record holders of common units
unless the common units are held in a nominee or street name account and the
nominee or broker has executed and delivered a transfer application for those
common units.
A beneficial owner of common units whose units have been transferred to
a short seller to complete a short sale would appear to lose his status as a
partner with respect to those units for federal income tax purposes. Please read
"--Tax Consequences of Unit Ownership--Treatment of Short Sales."
Income, gain, deductions or losses would not appear to be reportable by
a unitholder who is not a partner for federal income tax purposes, and any cash
distributions received by a unitholder who is not a partner for federal income
tax purposes would therefore be fully taxable as ordinary income. These holders
should consult their own tax advisors with respect to their status as partners
in Heritage Propane Partners, L.P. for federal income tax purposes.
TAX CONSEQUENCES OF UNIT OWNERSHIP
Flow-through of Taxable Income. We will not pay any federal income tax.
Instead, each unitholder will be required to report on his income tax return his
allocable share of our income, gains, losses and deductions without regard to
whether corresponding cash distributions are received by him. Consequently, we
may allocate income to a unitholder even if he has not received a cash
distribution. Each unitholder will be required to include in income his
allocable share of our income, gains, losses and deductions for our taxable year
ending with or within his taxable year.
Treatment of Distributions. Our distributions to a unitholder generally
will not be taxable to the unitholder for federal income tax purposes to the
extent of his tax basis in his common units immediately before the distribution.
Our cash distributions in excess of a unitholder's tax basis generally will be
considered to be gain from the sale or exchange of the common units, taxable in
accordance with the rules described under "--Disposition of Common Units" below.
Any reduction in a unitholder's share of our liabilities for which no partner,
including the general partner, bears the economic risk of loss, known as
"nonrecourse liabilities," will be treated as a distribution of cash to that
unitholder. To the extent our distributions cause a unitholder's "at risk"
amount to be less than zero at the end of any taxable year, he must recapture
any losses deducted in previous years that are equal to the amount of that
shortfall. Please read "--Limitations on Deductibility of Losses."
A decrease in a unitholder's percentage interest in us because of our
issuance of additional common units will decrease his share of our nonrecourse
liabilities, and thus will result in a corresponding deemed distribution of
cash. A non-pro rata distribution of money or property may result in ordinary
income to a unitholder, regardless of his tax basis in his common units, if that
distribution reduces the unitholder's share of our "unrealized receivables,"
including depreciation recapture, and/or substantially appreciated "inventory
items," both as defined in the Internal Revenue Code, and collectively, "Section
751 Assets."
To that extent, he will be treated as having been distributed his
proportionate share of the Section 751 Assets and having exchanged those assets
with us in return for the non-pro rata portion of the actual distribution made
to him. This latter deemed exchange generally will result in the unitholder's
realization of ordinary income. That income will equal the excess of (1) the
non-pro rata portion of that distribution over (2) the unitholder's tax basis
for the share of Section 751 Assets deemed relinquished in the exchange.
Basis of Common Units. A unitholder's initial tax basis for his common
units will be the amount he paid for the common units plus his share of our
nonrecourse liabilities. That basis will be increased by his share of our income
and by any increases in his share of our nonrecourse liabilities. That basis
will be decreased, but not below zero, by distributions from us, by the
unitholder's share of our losses, by any decreases in his share of our
nonrecourse liabilities and by his share of our expenditures that are not
deductible in computing taxable income and
38
are not required to be capitalized. A limited partner will have no share of our
debt which is recourse to the general partner, but will have a share, generally
based on his share of profits, of our nonrecourse liabilities. Please read
"--Disposition of Common Units--Recognition of Gain or Loss."
Limitations on Deductibility of Losses. The deduction by a unitholder
of his share of our losses will be limited to the tax basis in his units and, in
the case of an individual unitholder or a corporate unitholder that is subject
to the "at risk" rules (for example, if more than 50% of the value of the
corporate unitholder's stock is owned directly or indirectly by five or fewer
individuals or some tax-exempt organizations), to the amount for which the
unitholder is considered to be "at risk" with respect to our activities, if that
is less than his tax basis. A unitholder must recapture losses deducted in
previous years to the extent that distributions cause his at risk amount to be
less than zero at the end of any taxable year. Losses disallowed to a unitholder
or recaptured as a result of these limitations will carry forward and will be
allowable to the extent that his tax basis or at risk amount, whichever is the
limiting factor, is subsequently increased. Upon the taxable disposition of a
common unit, any gain recognized by a unitholder can be offset by losses that
were previously suspended by the at risk limitation but may not be offset by
losses suspended by the basis limitation. Any excess loss above that gain
previously suspended by the at risk or basis limitations is no longer
utilizable.
In general, a unitholder will be at risk to the extent of the tax basis
of his common units, excluding any portion of that basis attributable to his
share of our nonrecourse liabilities, reduced by any amount of money he borrows
to acquire or hold his common units, if the lender of those borrowed funds owns
an interest in us, is related to the unitholder or can look only to the units
for repayment. A unitholder's at risk amount will increase or decrease as the
tax basis of the unitholder's common units increases or decreases, other than
tax basis increases or decreases attributable to increases or decreases in his
share of our nonrecourse liabilities.
The passive loss limitations generally provide that individuals,
estates, trusts and some closely-held corporations and personal service
corporations can deduct losses from passive activities, which are generally
activities in which the taxpayer does not materially participate, only to the
extent of the taxpayer's income from those passive activities. The passive loss
limitations are applied separately with respect to each publicly-traded
partnership. Consequently, any losses we generate will only be available to
offset our passive income generated in the future and will not be available to
offset income from other passive activities or investments, including our
investments or investments in other publicly-traded partnerships, or salary or
active business income. Passive losses that are not deductible because they
exceed a unitholder's share of income we generate may be deducted in full when
he disposes of his entire investment in us in a fully taxable transaction with
an unrelated party. The passive activity loss rules are applied after other
applicable limitations on deductions, including the at risk rules and the basis
limitation.
A unitholder's share of our net income may be offset by any suspended
passive losses, but it may not be offset by any other current or carryover
losses from other passive activities, including those attributable to other
publicly-traded partnerships.
Limitations on Interest Deductions. The deductibility of a
non-corporate taxpayer's "investment interest expense" is generally limited to
the amount of that taxpayer's "net investment income." The IRS has indicated
that net passive income from a publicly-traded partnership constitutes
investment income for purposes of the limitations on the deductibility of
investment interest. In addition, the unitholder's share of our portfolio income
will be treated as investment income. Investment interest expense includes:
(a) interest on indebtedness properly allocable to
property held for investment;
(b) our interest expense attributed to portfolio income;
and
(c) the portion of interest expense incurred to purchase
or carry an interest in a passive activity to the extent attributable
to portfolio income.
The computation of a unitholder's investment interest expense will take
into account interest on any margin account borrowing or other loan incurred to
purchase or carry a unit. Net investment income includes gross income from
property held for investment and amounts treated as portfolio income under the
passive loss rules, less deductible expenses, other than interest, directly
connected with the production of investment income, but generally does not
include gains attributable to the disposition of property held for investment.
39
Entity-Level Collections. If we are required or elect under applicable
law to pay any federal, state or local income tax on behalf of any unitholder or
the general partner or any former unitholder, we are authorized to pay those
taxes from our funds. That payment, if made, will be treated as a distribution
of cash to the partner on whose behalf the payment was made. If the payment is
made on behalf of a person whose identity cannot be determined, we are
authorized to treat the payment as a distribution to all current unitholders. We
are authorized to amend the partnership agreement in the manner necessary to
maintain uniformity of intrinsic tax characteristics of units and to adjust
later distributions, so that after giving effect to these distributions, the
priority and characterization of distributions otherwise applicable under the
partnership agreement is maintained as nearly as is practicable. Payments by us
as described above could give rise to an overpayment of tax on behalf of an
individual partner in which event the partner would be required to file a claim
in order to obtain a credit or refund.
Allocation of Income, Gain, Loss and Deduction. In general, if we have
a net profit, our items of income, gain, loss and deduction will be allocated
among the general partner and the unitholders in accordance with their
percentage interests in us. At any time that incentive distributions are made to
the general partner, gross income will be allocated to the general partner to
the extent of these distributions. If we have a net loss for the entire year,
that loss will be allocated first to the general partner and the unitholders in
accordance with their percentage interests in us to the extent of their positive
capital accounts and, second, to the general partner.
Specified items of our income, gain, loss and deduction will be
allocated to account for the difference between the tax basis and fair market
value of our assets at the time of an offering, referred to in this discussion
as "Contributed Property." The effect of these allocations to a unitholder
purchasing common units in our offering will be essentially the same as if the
tax basis of our assets were equal to their fair market value at the time of the
offering. In addition, items of recapture income will be allocated to the extent
possible to the partner who was allocated the deduction giving rise to the
treatment of that gain as recapture income in order to minimize the recognition
of ordinary income by some unitholders. Finally, although we do not expect that
our operations will result in the creation of negative capital accounts, if
negative capital accounts nevertheless result, items of our income and gain will
be allocated in an amount and manner to eliminate the negative balance as
quickly as possible.
An allocation of items of our income, gain, loss or deduction, other
than an allocation required by the Internal Revenue Code to eliminate the
difference between a partner's "book" capital account, credited with the fair
market value of Contributed Property, and "tax" capital account, credited with
the tax basis of Contributed Property, referred to in this discussion as the
"Book-Tax Disparity," will generally be given effect for federal income tax
purposes in determining a partner's share of an item of income, gain, loss or
deduction only if the allocation has substantial economic effect. In any other
case, a partner's share of an item will be determined on the basis of his
interest in us, which will be determined by taking into account all the facts
and circumstances, including his relative contributions to us, the interests of
all the partners in profits and losses, the interest of all the partners in cash
flow and other nonliquidating distributions and rights of all the partners to
distributions of capital upon liquidation.
Baker Botts L.L.P. is of the opinion that, with the exception of the
issues described in "--Tax Consequences of Unit Ownership--Section 754 Election"
and "--Disposition of Common Units--Allocations Between Transferors and
Transferees," allocations under our partnership agreement will be given effect
for federal income tax purposes in determining a partner's share of an item of
income, gain, loss or deduction.
Treatment of Short Sales. A unitholder whose units are loaned to a
"short seller" to cover a short sale of units may be considered as having
disposed of those units. If so, he would no longer be a partner for those units
during the period of the loan and may recognize gain or loss from the
disposition. As a result, during this period:
(a) any of our income, gain, loss or deduction with
respect to those units would not be reportable by the unitholder;
(b) any cash distributions received by the unitholder as
to those units would be fully taxable; and
(c) all of these distributions would appear to be
ordinary income.
Baker Botts L.L.P. has not rendered an opinion regarding the treatment
of a unitholder where common units are loaned to a short seller to cover a short
sale of common units; therefore, unitholders desiring to assure their status as
partners and avoid the risk of gain recognition from a loan to a short seller
should modify any applicable brokerage account agreements to prohibit their
brokers from borrowing their units. The IRS has announced that it is
40
actively studying issues relating to the tax treatment of short sales of
partnership interests. Please also read "--Disposition of Common Units
- --Recognition of Gain or Loss."
Alternative Minimum Tax. Each unitholder will be required to take into
account his distributive share of any items of our income, gain, loss or
deduction for purposes of the alternative minimum tax. The current minimum tax
rate for noncorporate taxpayers is 26% on the first $175,000 of alternative
minimum taxable income in excess of the exemption amount and 28% on any
additional alternative minimum taxable income. Prospective unitholders should
consult with their tax advisors as to the impact of an investment in units on
their liability for the alternative minimum tax.
Tax Rates. In general, the highest effective United States federal
income tax rate for individuals for 2003 is 35% and the maximum United States
federal income tax rate for net capital gains recognized by an individual after
May 6, 2003 is 20% if the asset disposed of was held for more than 12 months at
the time of disposition.
Section 754 Election. We have made the election permitted by Section
754 of the Internal Revenue Code. That election is irrevocable without the
consent of the IRS. The election will generally permit us to adjust a common
unit purchaser's tax basis in our assets ("inside basis") under Section 743(b)
of the Internal Revenue Code to reflect his purchase price. This election does
not apply to a person who purchases common units directly from us. The Section
743(b) adjustment belongs to the purchaser and not to other partners. For
purposes of this discussion, a partner's inside basis in our assets will be
considered to have two components: (1) his share of our tax basis in our assets
("common basis") and (2) his Section 743(b) adjustment to that basis.
Treasury regulations under Section 743 of the Internal Revenue Code
require, if the remedial allocation method is adopted (which we have adopted), a
portion of the Section 743(b) adjustment attributable to recovery property to be
depreciated over the remaining cost recovery period for the Section 704(c)
built-in gain. Under Treasury Regulation Section 1.167(c)-l(a)(6), a Section
743(b) adjustment attributable to property subject to depreciation under Section
167 of the Internal Revenue Code rather than cost recovery deductions under
Section 168 is generally required to be depreciated using either the
straight-line method or the 150% declining balance method. Under our partnership
agreement, the general partner is authorized to take a position to preserve the
uniformity of units even if that position is not consistent with these Treasury
regulations. Please read "--Uniformity of Units."
Although Baker Botts L.L.P. is unable to opine as to the validity of
this approach because there is no clear authority on this issue, we intend to
depreciate the portion of a Section 743(b) adjustment attributable to unrealized
appreciation in the value of Contributed Property, to the extent of any
unamortized Book-Tax Disparity, using a rate of depreciation or amortization
derived from the depreciation or amortization method and useful life applied to
the common basis of the property, or treat that portion as non-amortizable to
the extent attributable to property the common basis of which is not
amortizable. This method is consistent with the regulations under Section 743
but is arguably inconsistent with Treasury Regulation Section 1.167(c)-1(a)(6),
which is not expected to directly apply to a material portion of our assets. To
the extent this Section 743(b) adjustment is attributable to appreciation in
value in excess of the unamortized Book-Tax Disparity, we will apply the rules
described in the Treasury regulations and legislative history. If we determine
that this position cannot reasonably be taken, we may take a depreciation or
amortization position under which all purchasers acquiring units in the same
month would receive depreciation or amortization, whether attributable to common
basis or a Section 743(b) adjustment, based upon the same applicable rate as if
they had purchased a direct interest in our assets. This kind of aggregate
approach may result in lower annual depreciation or amortization deductions than
would otherwise be allowable to some unitholders. Please read "--Uniformity of
Units."
A Section 754 election is advantageous if the transferee's tax basis in
his units is higher than the units' share of the aggregate tax basis of our
assets immediately prior to the transfer. In that case, as a result of the
election, the transferee would have, among other items, a greater amount of
depreciation and depletion deductions and his share of any gain on a sale of our
assets would be less. Conversely, a Section 754 election is disadvantageous if
the transferee's tax basis in his units is lower than those units' share of the
aggregate tax basis of our assets immediately prior to the transfer. Thus, the
fair market value of the units may be affected either favorably or unfavorably
by the election.
The calculations involved in the Section 754 election are complex and
will be made on the basis of assumptions as to the value of our assets and other
matters. For example, the allocation of the Section 743(b) adjustment among our
assets must be made in accordance with the Internal Revenue Code. The IRS could
seek to reallocate some or all of any Section 743(b) adjustment we allocated to
our tangible assets to goodwill instead.
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Goodwill, as an intangible asset, is generally amortizable over a longer period
of time or under a less accelerated method than our tangible assets. We cannot
assure you that the determinations we make will not be successfully challenged
by the IRS and that the deductions resulting from them will not be reduced or
disallowed altogether. Should the IRS require a different basis adjustment to be
made, and should, in our opinion, the expense of compliance exceed the benefit
of the election, we may seek permission from the IRS to revoke our Section 754
election. If permission is granted, a subsequent purchaser of units may be
allocated more income than he would have been allocated had the election not
been revoked.
TAX TREATMENT OF OPERATIONS
Accounting Method and Taxable Year. We use the year ending December 31
as our taxable year and the accrual method of accounting for federal income tax
purposes. Each unitholder will be required to include in income his share of our
income, gain, loss and deduction for our taxable year ending within or with his
taxable year.
Tax Basis, Depreciation and Amortization. The tax basis of our assets
will be used for purposes of computing depreciation and cost recovery deductions
and, ultimately, gain or loss on the disposition of these assets. The federal
income tax burden associated with the difference between the fair market value
of our assets and their tax basis immediately prior to an offering will be borne
by the general partner, its affiliates and our other unitholders as of that
time. Please read "--Allocation of Income, Gain, Loss and Deduction."
To the extent allowable, we may elect to use the depreciation and cost
recovery methods that will result in the largest deductions being taken in the
early years after assets are placed in service. We are not entitled to any
amortization deductions with respect to any goodwill conveyed to us on
formation. Property we subsequently acquire or construct may be depreciated
using accelerated methods permitted by the Internal Revenue Code.
If we dispose of depreciable property by sale, foreclosure, or
otherwise, all or a portion of any gain, determined by reference to the amount
of depreciation previously deducted and the nature of the property, may be
subject to the recapture rules and taxed as ordinary income rather than capital
gain. Similarly, a partner who has taken cost recovery or depreciation
deductions with respect to property we own will likely be required to recapture
some or all of those deductions as ordinary income upon a sale of his interest
in us. Please read "--Tax Consequences of Unit Ownership--Allocation of Income,
Gain, Loss and Deduction" and "--Disposition of Common Units--Recognition of
Gain or Loss."
The costs incurred in selling our units (called "syndication expenses")
must be capitalized and cannot be deducted currently, ratably or upon our
termination. There are uncertainties regarding the classification of costs as
organization expenses, which we may amortize, and as syndication expenses, which
we may not amortize. The underwriting discounts and commissions we incur will be
treated as syndication expenses.
Valuation and Tax Basis of Our Properties. The federal income tax
consequences of the ownership and disposition of units will depend in part on
our estimates of the relative fair market values, and the initial tax bases, of
our assets. Although we may from time to time consult with professional
appraisers regarding valuation matters, we will make many of the relative fair
market value estimates ourselves. These estimates of basis are subject to
challenge and will not be binding on the IRS or the courts. If the estimates of
fair market value or basis are later found to be incorrect, the character and
amount of items of income, gain, loss or deductions previously reported by
unitholders might change, and unitholders might be required to adjust their tax
liability for prior years and incur interest and penalties with respect to those
adjustments.
DISPOSITION OF COMMON UNITS
Recognition of Gain or Loss. Gain or loss will be recognized on a sale
of units equal to the difference between the amount realized and the
unitholder's tax basis for the units sold. A unitholder's amount realized will
be measured by the sum of the cash or the fair market value of other property he
receives plus his share of our nonrecourse liabilities. Because the amount
realized includes a unitholder's share of our nonrecourse liabilities, the gain
recognized on the sale of units could result in a tax liability in excess of any
cash received from the sale.
Prior distributions from us in excess of cumulative net taxable income
for a common unit that decreased a unitholder's tax basis in that common unit
will, in effect, become taxable income if the common unit is sold at a price
greater than the unitholder's tax basis in that common unit, even if the price
received is less than his original cost.
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Except as noted below, gain or loss recognized by a unitholder, other
than a "dealer" in units, on the sale or exchange of a unit held for more than
one year will generally be taxable as capital gain or loss. Capital gain
recognized by an individual on the sale of units held more than 12 months will
generally be taxed at a maximum rate of 15%. A portion of this gain or loss,
which will likely be substantial, however, will be separately computed and taxed
as ordinary income or loss under Section 751 of the Internal Revenue Code to the
extent attributable to assets giving rise to depreciation recapture or other
"unrealized receivables" or to "inventory items" we own. The term "unrealized
receivables" includes potential recapture items, including depreciation
recapture. Ordinary income attributable to unrealized receivables, inventory
items and depreciation recapture may exceed net taxable gain realized upon the
sale of a unit and may be recognized even if there is a net taxable loss
realized on the sale of a unit. Thus, a unitholder may recognize both ordinary
income and a capital loss upon a sale of units. Net capital loss may offset
capital gains and no more than $3,000 of ordinary income, in the case of
individuals, and may only be used to offset capital gain in the case of
corporations.
The IRS has ruled that a partner who acquires interests in a
partnership in separate transactions must combine those interests and maintain a
single adjusted tax basis for all those interests. Upon a sale or other
disposition of less than all of those interests, a portion of that tax basis
must be allocated to the interests sold using an "equitable apportionment"
method. Treasury regulations allow a selling unitholder who can identify common
units transferred with an ascertainable holding period to elect to use the
actual holding period of the common units transferred. Thus, according to the
ruling, a common unitholder will be unable to select high or low basis common
units to sell as would be the case with corporate stock, but, according to the
regulations, may designate specific common units sold for purposes of
determining the holding period of units transferred. A unitholder electing to
use the actual holding period of common units transferred must consistently use
that identification method for all subsequent sales or exchanges of common
units. A unitholder considering the purchase of additional units or a sale of
common units purchased in separate transactions should consult his tax advisor
as to the possible consequences of this ruling and application of the Treasury
regulations.
Specific provisions of the Internal Revenue Code affect the taxation of
some financial products and securities, including partnership interests, by
treating a taxpayer as having sold an "appreciated" partnership interest, one in
which gain would be recognized if it were sold, assigned or terminated at its
fair market value, if the taxpayer or related persons enter(s) into:
(a) a short sale;
(b) an offsetting notional principal contract; or
(c) a futures or forward contract with respect to the
partnership interest or substantially identical property.
Moreover, if a taxpayer has previously entered into a short sale, an
offsetting notional principal contract or a futures or forward contract with
respect to the partnership interest, the taxpayer will be treated as having sold
that position if the taxpayer or a related person then acquires the partnership
interest or substantially identical property. The Secretary of Treasury is also
authorized to issue regulations that treat a taxpayer that enters into
transactions or positions that have substantially the same effect as the
preceding transactions as having constructively sold the financial position.
Allocations Between Transferors and Transferees. In general, our
taxable income and losses will be determined annually, will be prorated on a
monthly basis and will be subsequently apportioned among the unitholders in
proportion to the number of units owned by each of them as of the opening of the
applicable exchange on the first business day of the month (the "Allocation
Date"). However, gain or loss realized on a sale or other disposition of our
assets other than in the ordinary course of business will be allocated among the
unitholders on the Allocation Date in the month in which that gain or loss is
recognized. As a result, a unitholder transferring units may be allocated
income, gain, loss and deduction realized after the date of transfer.
The use of this method may not be permitted under existing Treasury
regulations. Accordingly, Baker Botts L.L.P. is unable to opine on the validity
of this method of allocating income and deductions between unitholders. If this
method is not allowed under the Treasury regulations, or only applies to
transfers of less than all of the unitholder's interest, our taxable income or
losses might be reallocated among the unitholders. We are authorized to
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revise our method of allocation between unitholders to conform to a method
permitted under future Treasury regulations.
A unitholder who owns units at any time during a quarter and who
disposes of them prior to the record date set for a cash distribution for that
quarter will be allocated items of our income, gain, loss and deductions
attributable to that quarter but will not be entitled to receive that cash
distribution.
Notification Requirements. A purchaser of units from another unitholder
is required to notify us in writing of that purchase within 30 days after the
purchase. We are required to notify the IRS of that transaction and to furnish
specified information to the transferor and transferee. However, these reporting
requirements do not apply to a sale by an individual who is a citizen of the
United States and who effects the sale or exchange through a broker.
Additionally, a transferor and a transferee of a unit will be required to
furnish statements to the IRS, filed with their income tax returns for the
taxable year in which the sale or exchange occurred, that describe the amount of
the consideration received for the unit that is allocated to our goodwill or
going concern value.
Constructive Termination. We will be considered to have been terminated
for tax purposes if there is a sale or exchange of 50% or more of the total
interests in our capital and profits within a 12-month period. A constructive
termination results in the closing of our taxable year for all unitholders. We
would be required to make new tax elections after a termination, including a new
election under Section 754 of the Internal Revenue Code, and a termination would
result in a deferral of our deductions for depreciation. A termination could
also result in penalties if we were unable to determine that the termination had
occurred. Moreover, a termination might either accelerate the application of, or
subject us to, any tax legislation enacted before the termination.
UNIFORMITY OF UNITS
Because we cannot match transferors and transferees of units, we must
maintain uniformity of the economic and tax characteristics of the units to a
purchaser of these units. In the absence of uniformity, we may be unable to
completely comply with a number of federal income tax requirements, both
statutory and regulatory. A lack of uniformity can result from a literal
application of Treasury Regulation Section 1.167(c)-1(a)(6). Any non-uniformity
could have a negative impact on the value of the units. Please read "--Tax
Consequences of Unit Ownership --Section 754 Election."
We intend to depreciate the portion of a Section 743(b) adjustment
attributable to unrealized appreciation in the value of Contributed Property, to
the extent of any unamortized Book-Tax Disparity, using a rate of depreciation
or amortization derived from the depreciation or amortization method and useful
life applied to the common basis of that property, or treat that portion as
nonamortizable, to the extent attributable to property the common basis of which
is not amortizable, consistent with the regulations under Section 743, even
though that position may be inconsistent with Treasury Regulation Section
1.167(c)-1(a)(6) which is not expected to directly apply to a material portion
of our assets. Please read "--Tax Consequences of Unit Ownership --Section 754
Election." To the extent that the Section 743(b) adjustment is attributable to
appreciation in value in excess of the unamortized Book-Tax Disparity, we will
apply the rules described in the Treasury regulations and legislative history.
If we determine that this position cannot reasonably be taken, we may adopt a
depreciation and amortization position under which all purchasers acquiring
units in the same month would receive depreciation and amortization deductions,
whether attributable to a common basis or Section 743(b) adjustment, based upon
the same applicable rate as if they had purchased a direct interest in our
property. If this position is adopted, it may result in lower annual
depreciation and amortization deductions than would otherwise be allowable to
some unitholders and risk the loss of depreciation and amortization deductions
not taken in the year that these deductions are otherwise allowable. This
position will not be adopted if we determine that the loss of depreciation and
amortization deductions will have a material adverse effect on the unitholders.
If we choose not to utilize this aggregate method, we may use any other
reasonable depreciation and amortization method to preserve the uniformity of
the intrinsic tax characteristics of any units that would not have a material
adverse effect on the unitholders. The IRS may challenge any method of
depreciating the Section 743(b) adjustment described in this paragraph. If this
challenge were sustained, the uniformity of units might be affected, and the
gain from the sale of units might be increased without the benefit of additional
deductions. Please read "--Disposition of Common Units --Recognition of Gain or
Loss."
TAX-EXEMPT ORGANIZATIONS AND OTHER INVESTORS
Ownership of units by employee benefit plans, other tax-exempt
organizations, non-resident aliens, foreign corporations, other foreign persons
and regulated investment companies raises issues unique to those investors and,
as described below, may have substantially adverse tax consequences to them.
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Employee benefit plans and most other organizations exempt from federal
income tax, including individual retirement accounts and other retirement plans,
are subject to federal income tax on unrelated business taxable income.
Virtually all of our income allocated to a unitholder which is a tax-exempt
organization will be unrelated business taxable income and will be taxable to
them.
A regulated investment company or "mutual fund" is required to derive
90% or more of its gross income from interest, dividends and gains from the sale
of stocks or securities or foreign currency or specified related sources. It is
not anticipated that any significant amount of our gross income will include
that type of income.
Non-resident aliens and foreign corporations, trusts or estates that
own units will be considered to be engaged in business in the United States
because of the ownership of units. As a consequence they will be required to
file federal tax returns to report their share of our income, gain, loss or
deduction and pay federal income tax at regular rates on their share of our net
income or gain. And, under rules applicable to publicly traded partnerships, we
will withhold tax, at the highest effective rate applicable to individuals, from
cash distributions made quarterly to foreign unitholders. Each foreign
unitholder must obtain a taxpayer identification number from the IRS and submit
that number to our transfer agent on a Form W-8 BEN or applicable substitute
form in order to obtain credit for these withholding taxes.
In addition, because a foreign corporation that owns units will be
treated as engaged in a United States trade or business, that corporation may be
subject to the United States branch profits tax at a rate of 30%, in addition to
regular federal income tax, on its share of our income and gain, as adjusted for
changes in the foreign corporation's "U.S. net equity," which are effectively
connected with the conduct of a United States trade or business. That tax may be
reduced or eliminated by an income tax treaty between the United States and the
country in which the foreign corporate unitholder is a "qualified resident." In
addition, this type of unitholder is subject to special information reporting
requirements under Section 6038C of the Internal Revenue Code.
Under a ruling of the IRS, a foreign unitholder who sells or otherwise
disposes of a unit will be subject to federal income tax on gain realized on the
sale or disposition of that unit to the extent that this gain is effectively
connected with a United States trade or business of the foreign unitholder.
Apart from the ruling, a foreign unitholder will not be taxed or subject to
withholding upon the sale or disposition of a unit if he has owned less than 5%
in value of the units during the five-year period ending on the date of the
disposition and if the units are regularly traded on an established securities
market at the time of the sale or disposition.
ADMINISTRATIVE MATTERS
Information Returns and Audit Procedures. We intend to furnish to each
unitholder, within 90 days after the close of each calendar year, specific tax
information, including a Schedule K-1, which describes his share of our income,
gain, loss and deduction for our preceding taxable year. In preparing this
information, which will not be reviewed by counsel, we will take various
accounting and reporting positions, some of which have been mentioned earlier,
to determine his share of income, gain, loss and deduction. We cannot assure you
that those positions will yield a result that conforms to the requirements of
the Internal Revenue Code, regulations or administrative interpretations of the
IRS. Neither we nor counsel can assure prospective unitholders that the IRS will
not successfully contend in court that those positions are impermissible. Any
challenge by the IRS could negatively affect the value of the units.
The IRS may audit our federal income tax information returns.
Adjustments resulting from an IRS audit may require each unitholder to adjust a
prior year's tax liability, and possibly may result in an audit of his own
return. Any audit of a unitholder's return could result in adjustments not
related to our returns as well as those related to our returns.
Partnerships generally are treated as separate entities for purposes of
federal tax audits, judicial review of administrative adjustments by the IRS and
tax settlement proceedings. The tax treatment of partnership items of income,
gain, loss and deduction are determined in a partnership proceeding rather than
in separate proceedings with the partners. The Internal Revenue Code requires
that one partner be designated as the "Tax Matters Partner" for these purposes.
The partnership agreement names the general partner as our Tax Matters Partner.
The Tax Matters Partner will make some elections on our behalf and on
behalf of unitholders. In addition, the Tax Matters Partner can extend the
statute of limitations for assessment of tax deficiencies against unitholders
for items in our returns. The Tax Matters Partner may bind a unitholder with
less than a 1% profits interest in us to a settlement with the IRS unless that
unitholder elects, by filing a statement with the IRS, not to give that
authority to
45
the Tax Matters Partner. The Tax Matters Partner may seek judicial review, by
which all the unitholders are bound, of a final partnership administrative
adjustment and, if the Tax Matters Partner fails to seek judicial review,
judicial review may be sought by any unitholder having at least a 1% interest in
profits or by any group of unitholders having in the aggregate at least a 5%
interest in profits. However, only one action for judicial review will go
forward, and each unitholder with an interest in the outcome may participate.
A unitholder must file a statement with the IRS identifying the
treatment of any item on his federal income tax return that is not consistent
with the treatment of the item on our return. Intentional or negligent disregard
of this consistency requirement may subject a unitholder to substantial
penalties.
Nominee Reporting. Persons who hold an interest in us as a nominee for
another person are required to furnish to us:
(a) the name, address and taxpayer identification number
of the beneficial owner and the nominee;
(b) whether the beneficial owner is
(i) a person that is not a United States person,
(ii) a foreign government, an international
organization or any wholly owned agency or
instrumentality of either of the foregoing,
or
(iii) a tax-exempt entity;
(c) the amount and description of units held, acquired or
transferred for the beneficial owner; and
(d) specific information including the dates of
acquisitions and transfers, means of acquisitions and transfers, and
acquisition cost for purchases, as well as the amount of net proceeds
from sales.
Brokers and financial institutions are required to furnish additional
information, including whether they are United States persons and specific
information on units they acquire, hold or transfer for their own account. A
penalty of $50 per failure, up to a maximum of $100,000 per calendar year, is
imposed by the Internal Revenue Code for failure to report that information to
us. The nominee is required to supply the beneficial owner of the units with the
information furnished to us.
Registration as a Tax Shelter. The Internal Revenue Code requires that
"tax shelters" be registered with the Secretary of the Treasury. The temporary
Treasury regulations interpreting the tax shelter registration provisions of the
Internal Revenue Code are extremely broad. It is arguable that we are not
subject to the registration requirement on the basis that we will not constitute
a tax shelter. However, we have registered as a tax shelter with the Secretary
of Treasury in the absence of assurance that we will not be subject to tax
shelter registration and in light of the substantial penalties which might be
imposed if registration is required and not undertaken.
OUR TAX SHELTER REGISTRATION NUMBER IS 96234000014.
ISSUANCE OF THIS REGISTRATION NUMBER DOES NOT INDICATE THAT INVESTMENT IN US OR
THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS.
A unitholder who sells or otherwise transfers a unit in a later
transaction must furnish the registration number to the transferee. The penalty
for failure of the transferor of a unit to furnish the registration number to
the transferee is $100 for each failure. The unitholders must disclose our tax
shelter registration number on Form 8271 to be attached to the tax return on
which any deduction, loss or other benefit we generate is claimed or on which
any of our income is included. A unitholder who fails to disclose the tax
shelter registration number on his return, without reasonable cause for that
failure, will be subject to a $250 penalty for each failure. Any penalties
discussed are not deductible for federal income tax purposes.
46
Accuracy-related Penalties. An additional tax equal to 20% of the
amount of any portion of an underpayment of tax that is attributable to one or
more specified causes, including negligence or disregard of rules or
regulations, substantial understatements of income tax and substantial valuation
misstatements, is imposed by the Internal Revenue Code. No penalty will be
imposed, however, for any portion of an underpayment if it is shown that there
was a reasonable cause for that portion and that the taxpayer acted in good
faith regarding that portion.
A substantial understatement of income tax in any taxable year exists
if the amount of the understatement exceeds the greater of 10% of the tax
required to be shown on the return for the taxable year or $5,000 ($10,000 for
most corporations). The amount of any understatement subject to penalty
generally is reduced if any portion is attributable to a position adopted on the
return:
(a) for which there is, or was, "substantial authority,"
or
(b) as to which there is a reasonable basis and the
pertinent facts of that position are disclosed on the return.
More stringent rules apply to "tax shelters," a term that in this
context does not appear to include us. If any item of income, gain, loss or
deduction included in the distributive shares of unitholders might result in
that kind of an "understatement" of income for which no "substantial authority"
exists, we must disclose the pertinent facts on our return. In addition, we will
make a reasonable effort to furnish sufficient information for unitholders to
make adequate disclosure on their returns to avoid liability for this penalty.
A substantial valuation misstatement exists if the value of any
property, or the adjusted basis of any property, claimed on a tax return is 200%
or more of the amount determined to be the correct amount of the valuation or
adjusted basis. No penalty is imposed unless the portion of the underpayment
attributable to a substantial valuation misstatement exceeds $5,000 ($10,000 for
most corporations). If the valuation claimed on a return is 400% or more than
the correct valuation, the penalty imposed increases to 40%.
STATE, LOCAL AND OTHER TAX CONSIDERATIONS
In addition to federal income taxes, you will be subject to other
taxes, including state and local income taxes, unincorporated business taxes,
and estate, inheritance or intangible taxes that may be imposed by the various
jurisdictions in which we do business or own property or in which you are a
resident. We currently do business or own property in 29 states, most of which
impose income taxes. We may also own property or do business in other states or
foreign jurisdictions in the future. Although an analysis of those various taxes
is not presented here, each prospective unitholder should consider their
potential impact on his investment in us. You may not be required to file a
return and pay taxes in some states because your income from that state falls
below the filing and payment requirement. You will be required, however, to file
state income tax returns and to pay state income taxes in many of the states in
which we do business or own property, and you may be subject to penalties for
failure to comply with those requirements. In some states, tax losses may not
produce a tax benefit in the year incurred and also may not be available to
offset income in subsequent taxable years. Some of the states may require us, or
we may elect, to withhold a percentage of income from amounts to be distributed
to a unitholder who is not a resident of the state. Withholding, the amount of
which may be greater or less than a particular unitholder's income tax liability
to the state, generally does not relieve a nonresident unitholder from the
obligation to file an income tax return. Amounts withheld may be treated as if
distributed to unitholders for purposes of determining the amounts distributed
by us. Please read "--Tax Consequences of Unit Ownership --Entity-Level
Collections." Based on current law and our estimate of our future operations,
the general partner anticipates that any amounts required to be withheld will
not be material.
IT IS THE RESPONSIBILITY OF EACH UNITHOLDER TO INVESTIGATE THE LEGAL
AND TAX CONSEQUENCES, UNDER THE LAWS OF PERTINENT STATES AND LOCALITIES, OF HIS
INVESTMENT IN US. ACCORDINGLY, EACH PROSPECTIVE UNITHOLDER SHOULD CONSULT, AND
MUST DEPEND UPON, HIS OWN TAX COUNSEL OR OTHER ADVISOR WITH REGARD TO THOSE
MATTERS. FURTHER, IT IS THE RESPONSIBILITY OF EACH UNITHOLDER TO FILE ALL STATE
AND LOCAL, AS WELL AS UNITED STATES FEDERAL TAX RETURNS, THAT MAY BE REQUIRED OF
HIM. BAKER BOTTS L.L.P. HAS NOT RENDERED AN OPINION ON THE STATE OR LOCAL TAX
CONSEQUENCES OF AN INVESTMENT IN US.
TAX CONSEQUENCES OF OWNERSHIP OF DEBT SECURITIES
A description of the material federal income tax consequences of the
acquisition, ownership and disposition of debt securities will be set forth on
the prospectus supplement relating to the offering of debt securities.
47
INVESTMENT IN US BY EMPLOYEE BENEFIT PLANS
An investment in us by an employee benefit plan is subject to certain
additional considerations because the investments of such plans are subject to
the fiduciary responsibility and prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
restrictions imposed by Section 4975 of the Internal Revenue Code. As used
herein, the term "employee benefit plan" includes, but is not limited to,
qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified
employee pension plans and tax deferred annuities or IRAs established or
maintained by an employer or employee organization. Among other things,
consideration should be given to (a) whether such investment is prudent under
Section 404(a)(1)(B) of ERISA; (b) whether in making such investment, such plan
will satisfy the diversification requirement of Section 404(a)(1)(C) of ERISA;
and (c) whether such investment will result in recognition of unrelated business
taxable income by such plan and, if so, the potential after-tax investment
return. Please read "Tax Considerations--Tax-Exempt Organizations and Other
Investors." The person with investment discretion with respect to the assets of
an employee benefit plan (a "fiduciary") should determine whether an investment
in us is authorized by the appropriate governing instrument and is a proper
investment for such plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code
(which also applies to IRAs that are not considered part of an employee benefit
plan) prohibit an employee benefit plan from engaging in certain transactions
involving "plan assets" with parties that are "parties in interest" under ERISA
or "disqualified persons" under the Internal Revenue Code with respect to the
plan.
In addition to considering whether the purchase of limited partnership
units is a prohibited transaction, a fiduciary of an employee benefit plan
should consider whether such plan will, by investing in us, be deemed to own an
undivided interest in our assets, with the result that our general partner also
would be a fiduciary of such plan and our operations would be subject to the
regulatory restrictions of ERISA, including its prohibited transaction rules, as
well as the prohibited transaction rules of the Internal Revenue Code.
The Department of Labor regulations provide guidance with respect to
whether the assets of an entity in which employee benefit plans acquire equity
interests would be deemed "plan assets" under certain circumstances. Pursuant to
these regulations, an entity's assets would not be considered to be "plan
assets" if, among other things, (a) the equity interest acquired by employee
benefit plans are publicly offered securities --i.e., the equity interests are
widely held by 100 or more investors independent of the issuer and each other,
freely transferable and registered pursuant to certain provisions of the federal
securities laws, (b) the entity is an "Operating Partnership"--i.e., it is
primarily engaged in the production or sale of a product or service other than
the investment of capital either directly or through a majority owned subsidiary
or subsidiaries, or (c) there is no significant investment by benefit plan
investors, which is defined to mean that less than 25% of the value of each
class of equity interest (disregarding certain interests held by our general
partner, its affiliates and certain other persons) is held by the employee
benefit plans referred to above, IRAs and other employee benefit plans not
subject to ERISA (such as governmental plans). Our assets should not be
considered "plan assets" under these regulations because it is expected that the
investment will satisfy the requirements in (a) and (b) above and may also
satisfy the requirements in (c) above.
Plan fiduciaries contemplating a purchase of limited partnership units
should consult with their own counsel regarding the consequences under ERISA and
the Internal Revenue Code in light of the serious penalties imposed on persons
who engage in prohibited transactions or other violations.
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PLAN OF DISTRIBUTION
We may sell the securities being offered hereby directly to purchasers,
through agents, through underwriters or through dealers.
We, or agents designated by us, may directly solicit, from time to
time, offers to purchase the securities. Any such agent may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933. We will name
the agents involved in the offer or sale of the securities and describe any
commissions payable by us to these agents in the prospectus supplement. Unless
otherwise indicated in the prospectus supplement, these agents will be acting on
a best efforts basis for the period of their appointment. The agents may be
entitled under agreements which may be entered into with us to indemnification
by us against specific civil liabilities, including liabilities under the
Securities Act of 1933. The agents may also be our customers or may engage in
transactions with or perform services for us in the ordinary course of business.
If we utilize any underwriters in the sale of the securities in respect
of which this prospectus is delivered, we will enter into an underwriting
agreement with those underwriters at the time of sale to them. We will set forth
the names of these underwriters and the terms of the transaction in the
prospectus supplement, which will be used by the underwriters to make resales of
the securities in respect of which this prospectus is delivered to the public.
We may indemnify the underwriters under the relevant underwriting agreement to
indemnification by us against specific liabilities, including liabilities under
the Securities Act. The underwriters may also be our customers or may engage in
transactions with or perform services for us in the ordinary course of business.
If we utilize a dealer in the sale of the securities in respect of
which this prospectus is delivered, we will sell those securities to the dealer,
as principal. The dealer may then resell those securities to the public at
varying prices to be determined by the dealer at the time of resale. We may
indemnify the dealers against specific liabilities, including liabilities under
the Securities Act. The dealers may also be our customers or may engage in
transactions with, or perform services for us in the ordinary course of
business.
Common units and debt securities may also be sold directly by us. In
this case, no underwriters or agents would be involved. We may use electronic
media, including the Internet, to sell offered securities directly.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. The place and
time of delivery for the securities in respect of which this prospectus is
delivered are set forth in the accompanying prospectus supplement.
DISTRIBUTION BY SELLING UNITHOLDERS
Distribution of any common units to be offered by one or more of the
selling unitholders may be effected from time to time in one or more
transactions (which may involve block transactions) (1) on the New York Stock
Exchange, (2) in the over-the-counter market, (3) in underwritten transactions,
(4) in transactions otherwise than on the New York Stock Exchange or in the
over-the-counter market or (5) in a combination of any of these transactions.
The transactions may be effected by the selling unitholders at market prices
prevailing at the time of sale, at prices related to the prevailing market
prices, at negotiated prices or at fixed prices. The selling unitholders may
offer their shares through underwriters, brokers, dealers or agents, who may
receive compensation in the form of underwriting discounts, commissions or
concessions from the selling unitholders and/or the purchasers of the shares for
whom they act as agent. The selling unitholders may engage in short sales, short
sales against the box, puts and calls and other transactions in our securities,
or derivatives thereof, and may sell and deliver their common units in
connection therewith. In addition, the selling unitholders may from time to time
sell their common units in transactions permitted by Rule 144 under the
Securities Act.
As of the date of this prospectus, we have not engaged any underwriter,
broker, dealer or agent in connection with the distribution of common units
pursuant to this prospectus by the selling unitholders. To the extent required,
the number of common units to be sold, the purchase price, the name of any
applicable agent, broker, dealer or underwriter and any applicable commissions
with respect to a particular offer will be set forth in the applicable
prospectus supplement. The aggregate net proceeds to the selling unitholders
from the sale of their common units offered hereby will be the sale price of
those shares, less any commissions, if any, and other expenses of issuance and
distribution not borne by us.
The selling unitholders and any brokers, dealers, agents or
underwriters that participate with the selling unitholders in the distribution
of shares may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any discounts, concessions and commissions
received by such brokers, dealers, agents or
49
underwriters and any profit on the resale of the shares purchased by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The applicable prospectus supplement will set forth the extent to which
we will have agreed to bear fees and expenses of the selling unitholders in
connection with the registration of the common units being offered hereby by
them. We may, if so indicated in the applicable prospectus supplement, agree to
indemnify selling unitholders against certain civil liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the securities offered in this prospectus will be
passed upon for us by Baker Botts L.L.P., Houston, Texas and Doerner, Saunders,
Daniel & Anderson, L.L.P., Tulsa, Oklahoma. Baker Botts L.L.P. will also render
an opinion on the material federal income tax considerations regarding the
securities. If certain legal matters in connection with an offering of the
securities made by this prospectus and a related prospectus supplement are
passed on by counsel for the underwriters of such offering, that counsel will be
named in the applicable prospectus supplement related to that offering.
EXPERTS
The consolidated financial statements of Heritage Propane Partners,
L.P. as of August 31, 2002 and 2001, and for the years then ended, the financial
statements of Bi-State Propane as of August 31, 2002 and for the year then
ended, and the consolidated balance sheet of U.S. Propane, L.P., the general
partner of Heritage Propane Partners, L.P., as of August 31, 2002, incorporated
by reference in this prospectus and elsewhere in the registration statement of
which this prospectus is a part, have been audited by Grant Thornton LLP,
independent certified public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving such reports.
The combined financial statements of V-1 Oil Co. and V-1 Gas Co. as of
December 31, 2001 and 2000, and for each of the three years in the period ended
December 31, 2001, incorporated by reference in this prospectus and elsewhere in
the registration statement of which this prospectus is a part, have been audited
by Grant Thornton LLP, independent certified public accountants, as indicated in
their report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving such reports.
The consolidated financial statements of Heritage Propane Partners,
L.P. for the eight months ended August 31, 2000, the period ended August 9,
2000, and the year ended December 31, 1999, incorporated by reference in the
accompanying prospectus and elsewhere in the registration statement of which the
accompanying prospectus is a part, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving such reports. Arthur Andersen LLP has not
consented to the incorporation by reference of their reports in this prospectus,
and we have dispensed with the requirement to file their consent in reliance
upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen LLP has
not consented to the incorporation by reference of their reports in this
prospectus, you will not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act of 1933 for any untrue statements of a material
fact contained in the financial statements audited by Arthur Andersen LLP or any
omissions to state a material fact required to be stated therein.
50
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are the expenses (other than underwriting discounts and
commissions) expected to be incurred in connection with the issuance and
distribution of the securities registered hereby. With the exception of the
Securities and Exchange Commission registration fee, the amounts set forth below
are estimates:
Securities and Exchange Commission registration fee $ 78,949
Legal fees and expenses $ 75,000
Accounting fees and expenses $ 30,000
Printing and engraving expenses $ 10,000
Trustee's fees $ 15,000
Miscellaneous $ 5,000
--------
TOTAL $213,949
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Heritage Propane Partners, L.P. and Heritage Operating, L.P.
The partnership agreements of each of Heritage Propane Partners, L.P.
and Heritage Operating, L.P. provide that each partnership, as applicable, will
indemnify (i) its respective general partner, any departing partner (as defined
therein), any person who is or was an affiliate of its respective general
partner or any departing partner, (ii) any person who is or was a director,
officer, employee, agent or trustee of the partnerships, (iii) any person who is
or was an officer, director, employee, agent or trustee of its respective
general partner or any departing partner or any affiliate of its respective
general partner or any departing partner, or (iv) any person who is or was
serving at the request of its respective general partner or any departing
partner or any affiliate of its respective general partner or any departing
partner as an officer, director, employee, partner, agent, fiduciary or trustee
of another person (each, an "Indemnitee"), to the fullest extent permitted by
law, from and against any and all losses, claims, damages, liabilities (joint
and several), expenses (including, without limitation, legal fees and expenses),
judgments, fines, penalties, interest, settlements and other amounts arising
from any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as any of the foregoing; provided that in each case the Indemnitee
acted in good faith and in a manner that such Indemnitee reasonably believed to
be in or not opposed to the best interests of each partnership and, with respect
to any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful. Any indemnification under these provisions will be only out of the
assets of each of the partnerships, and the respective general partner shall not
be personally liable for, or have any obligation to contribute or loan funds or
assets to each applicable partnership to enable it to effectuate, such
indemnification. Each partnership is authorized to purchase (or to reimburse the
general partner or its affiliates for the cost of) insurance against liabilities
asserted against and expenses incurred by such persons in connection with each
of the partnerships' activities, regardless of whether each of the partnerships
would have the power to indemnify such person against such liabilities under the
provisions described above.
Heritage Service Corp.
Delaware law permits a corporation to adopt a provision in its
certificate of incorporation eliminating or limiting the personal liability of a
director, but not an officer in his or her capacity as such, to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except that such provision shall not limit the liability of a director
for (i) any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) liability under
section 174 of the Delaware General Corporation Law for unlawful payment of
dividends or stock purchases or redemptions, or (iv) any transaction from which
the director derived an improper personal benefit. Heritage Service Corp.'s
Certificate of Incorporation provides that, to the fullest extent of Delaware
law, no Heritage Service Corp. director shall be liable to Heritage Service
Corp. or Heritage Service Corp. stockholders for monetary damages for breach of
fiduciary duty as a director.
II-1
Under Delaware law, a corporation may indemnify any individual made a
party or threatened to be made a party to any type of proceeding, other than an
action by or in the right of the corporation, because he or she is or was an
officer, director, employee or agent of the corporation or was serving at the
request of the corporation as an officer, director, employee or agent of another
corporation or entity against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such proceeding:
(i) if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation; or
(ii) in the case of a criminal proceeding, he or she had no reasonable cause to
believe that his or her conduct was unlawful. A corporation may indemnify any
individual made a party or threatened to be made a party to any threatened,
pending or completed action or suit brought by or in the right of the
corporation because he or she was an officer, director, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or other entity,
against expenses actually and reasonably incurred in connection with such action
or suit if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation,
provided that such indemnification will be denied if the individual is found
liable to the corporation unless, in such a case, the court determines the
person is nonetheless entitled to indemnification for such expenses. A
corporation must indemnify a present or former director or officer who
successfully defends himself or herself in a proceeding to which he or she was a
party because he or she was a director or officer of the corporation against
expenses actually and reasonably incurred by him or her. Expenses incurred by an
officer or director, or any employees or agents as deemed appropriate by the
board of directors, in defending civil or criminal proceedings may be paid by
the corporation in advance of the final disposition of such proceedings upon
receipt of an undertaking by or on behalf of such director, officer, employee or
agent to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the corporation. The Delaware law regarding
indemnification and expense advancement is not exclusive of any other rights
which may be granted by Heritage Service Corp.'s Certificate of Incorporation or
Bylaws, a vote of stockholders or disinterested directors, agreement or
otherwise.
Under the Delaware General Corporation Law, termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that such person is prohibited from
being indemnified.
The Bylaws of Heritage Service Corp. provide for the indemnification
and advancement of expenses of any individual made, or threatened to be made, a
party to an action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he or she is or was a director or
officer of Heritage Service Corp. or is or was a director or officer of Heritage
Service Corp. serving as an officer or director, employee or agent of any other
enterprise at the request of Heritage Service Corp. Heritage Service Corp.'s
bylaws provide for such indemnification and advancement of expenses if such
officer or director acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of Heritage Service Corp.
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his or her conduct was unlawful.
II-2
Heritage-Bi State, L.L.C.
Under the Delaware Limited Liability Company Act, a limited liability
company may, and shall have the power to, indemnify and hold harmless any member
or manager or other person from and against any and all claims and demands
whatsoever.
The Amended and Restated Agreement of Limited Liability Company of
Heritage-Bi State, L.L.C. provides that a member shall not be liable to
Heritage-Bi State, L.L.C. for any act or omission based upon errors of judgment
in connection with the business or affairs of Heritage-Bi State, L.L.C. if such
member's conduct does not constitute gross negligence or willful misconduct.
Furthermore, the Amended and Restated Agreement of Limited Liability Company of
Heritage-Bi State, L.L.C. provides that a member shall be indemnified by
Heritage-Bi State, L.L.C., to the fullest extent permitted by law, from and
against any and all losses, claims, damages and settlements arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which the member is involved, as a party or
otherwise, by reason of the management of the affairs of Heritage-Bi State,
L.L.C. or the fact that such member is or was an agent of Heritage-Bi State,
L.L.C., provided that no member shall be entitled to indemnification for such
losses, claims, damages and settlements arising as a result of the gross
negligence or willful misconduct of such member.
Heritage Energy Resources, L.L.C.
Under the Oklahoma Limited Liability Company Act, a limited liability
company may (i) limit or eliminate the personal liability of a manager for
monetary damages for breach of any duty under the Oklahoma Limited Liability
Company Act or (ii) provide for indemnification of a manager for judgments,
settlements, penalties, fines or expenses incurred in any proceeding because
such manager is or was a manager of the limited liability company, except, in
either case, for any breach of a manager's duty of loyalty or any acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law.
The Operating Agreement of Heritage Energy Resources, L.L.C. provides
indemnification and eliminates liability for each manager or officer of Heritage
Energy Resources, L.L.C. from any and all monetary damages, claims, demands and
actions of every kind and nature whatsoever which may arise by reason of a
manager's or officer's performance of his or her duties and responsibilities,
except (i) for liabilities arising as a result of a breach of the manager's or
officer's duty of loyalty to Heritage Energy Resources, L.L.C. or its members,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) for any transaction from
which the manager or officer derived an improper personal benefit and (iv) with
respect to indemnification, a breach of any provision of Heritage Energy
Resources, L.L.C.'s Operating Agreement.
Any underwriting agreement entered into in connection with the sale of
the securities offered pursuant to this registration statement will provide for
indemnification of officers, directors, members or managers of the general
partner, Heritage Service Corp., Heritage-Bi State, L.L.C. and Heritage Energy
Resources, L.L.C., including liabilities under the Securities Act.
II-3
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits. The following documents are filed as
exhibits to this registration:
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.1* Form of Underwriting Agreement.
4.1 Amended and Restated Agreement of Limited Partnership of Heritage Propane Partners, L.P.
(incorporated by reference to Exhibit 3.1 to Heritage Propane Partners, L.P.'s Registration
Statement on Form S-1, filed on June 21, 1996).
4.2 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.1 to Heritage Propane Partners, L.P.'s
Current Report on Form 8-K dated August 23, 2000).
4.3 Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.2 to Heritage Propane Partners, L.P.'s
Annual Report on Form 10-K for the year ended August 31, 2001).
4.4 Amendment No. 3 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.3 to Heritage Propane Partners, L.P.'s
Quarterly Report on Form 10-Q for the quarter ended May 31, 2002).
4.5 Amendment No. 4 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.4 to Heritage Propane Partners, L.P.'s
Quarterly Report on Form 10-Q for the quarter ended May 31, 2002).
4.6 Amended and Restated Agreement of Limited Partnership of Heritage Operating, L.P. (incorporated
by reference to Exhibit 3.2 to Heritage Propane Partners, L.P.'s Registration Statement on Form
S-1, filed on June 21, 1996).
4.7 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Heritage Operating,
L.P. (incorporated by reference to Exhibit 3.2.1 to Heritage Propane Partners, L.P.'s Annual
Report on Form 10-K for the year ended August 31, 2000).
4.8 Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Heritage Operating,
L.P. (incorporated by reference to Exhibit 3.2.2 to Heritage Propane Partners, L.P.'s Quarterly
Report on Form 10-Q for the quarter ended May 31, 2002).
4.9** Form of Senior Indenture of Heritage Propane Partners, L.P.
4.10** Form of Subordinated Indenture of Heritage Propane Partners, L.P.
4.11** Form of Senior Indenture of Heritage Operating, L.P.
4.12** Form of Subordinated Indenture of Heritage Operating, L.P.
5.1** Opinion of Baker Botts L.L.P. as to the legality of the securities registered hereby.
5.2** Opinion of Doerner, Saunders, Daniel & Anderson, L.L.P. as to the legality of the securities
registered hereby.
8.1** Opinion of Baker Botts L.L.P. as to tax matters.
12.1** Computation of ratio of earnings to fixed charges.
23.1** Consent of Baker Botts L.L.P. (included in Exhibits 5.1 and 8.1).
23.2** Consent of Doerner, Saunders, Daniel & Anderson, L.L.P. (included in Exhibit 5.2).
23.3** Consent of Grant Thornton LLP.
24.1** Power of Attorney (included on the signature page to this Registration Statement).
II-4
25.1* Form T-1 Statement of Eligibility and Qualification respecting the Senior Indenture of Heritage
Propane Partners, L.P.
25.2* Form T-1 Statement of Eligibility and Qualification respecting the Subordinated Indenture of
Heritage Propane Partners, L.P.
25.3* Form T-1 Statement of Eligibility and Qualification respecting the Senior Indenture of Heritage
Operating, L.P.
25.4* Form T-1 Statement of Eligibility and Qualification respecting the Subordinated Indenture of
Heritage Operating, L.P.
99.1 Balance sheet of U.S. Propane, L.P. (incorporated by reference to Exhibit 99.1 to Heritage
Propane Partners, L.P.'s Annual Report on Form 10-K for the year ended August 31, 2002).
- ------------------
* To be filed by a post-effective amendment to this registration
statement or as an exhibit to a current report on Form 8-K.
** Filed herewith.
(b) Financial Statement Schedules
No financial statement schedules are included herein. All other
schedules for which provision is made in the applicable accounting regulations
of the Securities and Exchange Commission are not required under the related
instructions, are inapplicable, or the information is included in the
consolidated financial statements, and have therefore been omitted.
(c) Reports, Opinions, and Appraisals
The following reports, opinions, and appraisals are included herein:
None.
ITEM 17. UNDERTAKINGS
I. Each of the undersigned registrants hereby undertakes:
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a) and (b) above do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-5
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. Each undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
III. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of any registrant pursuant to the provisions described in Item 15 above,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 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, each 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 of 1933 and will be governed by the final adjudication of such
issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the registrants certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Tulsa, State of Oklahoma, on July 25, 2003.
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. PROPANE, L.P.
its General Partner
By: U.S. PROPANE, L.L.C.
its General Partner
By: /s/ Michael L. Greenwood
------------------------------
Name: Michael L. Greenwood
Title: Vice President and
Chief Financial Officer
HERITAGE OPERATING, L.P.
By: U.S. PROPANE, L.P.
its General Partner
By: U.S. PROPANE, L.L.C.
its General Partner
By: /s/ Michael L. Greenwood
------------------------------
Name: Michael L. Greenwood
Title: Vice President and
Chief Financial Officer
HERITAGE SERVICE CORP.
By: /s/ Michael L. Greenwood
------------------------------
Name: Michael L. Greenwood
Title: Vice President and
Chief Financial Officer
HERITAGE-BI STATE, L.L.C.
By: /s/ Michael L. Greenwood
------------------------------
Name: Michael L. Greenwood
Title: Vice President and
Chief Financial Officer
HERITAGE ENERGY RESOURCES, L.L.C.
By: /s/ Michael L. Greenwood
------------------------------
Name: Michael L. Greenwood
Title: Vice President and
Chief Financial Officer
II-7
POWER OF ATTORNEY
Each person whose signature appears below appoints H. Michael Krimbill
and Michael L. Greenwood, and each of them, any of whom may act without the
joinder of the other, as his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement and any Registration Statement (including any amendment thereto) for
this offering that is to be effective upon filing pursuant to Rule 462(b) under
the Securities Act of 1933, as amended, and to file the same, with all exhibits
thereto, and all other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he or she might or
would do in person, hereby ratifying and confirming all that said attorneys-in
fact and agents or any of them or their or his or her substitute and
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated below.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ H. Michael Krimbill (i) President and Chief Executive
- --------------------------------------- Officer (Principal Executive Officer)
H. Michael Krimbill of U.S. Propane, L.L.C., Heritage
Service Corp., Heritage-Bi State, July 25, 2003
L.L.C. and Heritage Energy Resources,
L.L.C., (ii) Director of U.S. Propane
L.L.C. and Heritage Service Corp. and
(iii) Manager of Heritage Energy
Resources, L.L.C.
/s/ James E. Bertelsmeyer Chairman of the Board and July 25, 2003
- --------------------------------------- Director of U.S. Propane, L.L.C.
James E. Bertelsmeyer
/s/ Michael L. Greenwood (i) Vice President and Chief
- --------------------------------------- Financial Officer (Principal
Michael L. Greenwood Financial and Accounting Officer) of
U.S. Propane, L.L.C., Heritage
Service Corp., Heritage-Bi State, July 25, 2003
L.L.C. and Heritage Energy Resources,
L.L.C. and (ii) Manager of Heritage
Energy Resources, L.L.C.
/s/ Bill W. Byrne Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
Bill W. Byrne
/s/ J. Charles Sawyer Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
J. Charles Sawyer
/s/ Stephen L. Cropper Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
Stephen L. Cropper
/s/ J. Patrick Reddy Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
J. Patrick Reddy
/s/ Royston K. Eustace Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
Royston K. Eustace
II-8
/s/ William N. Cantrell Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
William N. Cantrell
/s/ Kevin M. O'Hara Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
Kevin M. O'Hara
/s/ Andrew W. Evans Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
Andrew W. Evans
/s/ Richard T. O'Brien Director of U.S. Propane, L.L.C. July 25, 2003
- ---------------------------------------
Richard T. O'Brien
U.S. Propane, L.L.C. is the general partner of U.S. Propane, L.P., the
general partner of each of Heritage Propane Partners, L.P. and Heritage
Operating, L.P. Heritage Propane Partners, L.P. and Heritage Operating, L.P. are
the only members of Heritage-Bi State, L.L.C.
II-9
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.1* Form of Underwriting Agreement.
4.1 Amended and Restated Agreement of Limited Partnership of Heritage Propane Partners, L.P.
(incorporated by reference to Exhibit 3.1 to Heritage Propane Partners, L.P.'s Registration
Statement on Form S-1, filed on June 21, 1996).
4.2 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.1 to Heritage Propane Partners,
L.P.'s Current Report on Form 8-K dated August 23, 2000).
4.3 Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.2 to Heritage Propane Partners,
L.P.'s Annual Report on Form 10-K for the year ended August 31, 2001).
4.4 Amendment No. 3 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.3 to Heritage Propane Partners,
L.P.'s Quarterly Report on Form 10-Q for the quarter ended May 31, 2002).
4.5 Amendment No. 4 to Amended and Restated Agreement of Limited Partnership of Heritage Propane
Partners, L.P. (incorporated by reference to Exhibit 3.1.4 to Heritage Propane Partners,
L.P.'s Quarterly Report on Form 10-Q for the quarter ended May 31, 2002).
4.6 Amended and Restated Agreement of Limited Partnership of Heritage Operating, L.P.
(incorporated by reference to Exhibit 3.2 to Heritage Propane Partners, L.P.'s Registration
Statement on Form S-1, filed on June 21, 1996).
4.7 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Heritage
Operating, L.P. (incorporated by reference to Exhibit 3.2.1 to Heritage Propane Partners,
L.P.'s Annual Report on Form 10-K for the year ended August 31, 2000).
4.8 Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Heritage
Operating, L.P. (incorporated by reference to Exhibit 3.2.2 to Heritage Propane Partners,
L.P.'s Quarterly Report on Form 10-Q for the quarter ended May 31, 2002).
4.9** Form of Senior Indenture of Heritage Propane Partners, L.P.
4.10** Form of Subordinated Indenture of Heritage Propane Partners, L.P.
4.11** Form of Senior Indenture of Heritage Operating, L.P.
4.12** Form of Subordinated Indenture of Heritage Operating, L.P.
5.1** Opinion of Baker Botts L.L.P. as to the legality of the securities registered hereby.
5.2** Opinion of Doerner, Saunders, Daniel & Anderson, L.L.P. as to the legality of the securities
registered hereby.
8.1** Opinion of Baker Botts L.L.P. as to tax matters.
12.1** Computation of ratio of earnings to fixed charges.
23.1** Consent of Baker Botts L.L.P. (included in Exhibits 5.1 and 8.1).
23.2** Consent of Doerner, Saunders, Daniel & Anderson, L.L.P. (included in Exhibit 5.2).
23.3** Consent of Grant Thornton LLP.
24.1** Power of Attorney (included on the signature page to this Registration Statement).
25.1* Form T-1 Statement of Eligibility and Qualification respecting the Senior Indenture of
Heritage Propane Partners, L.P.
25.2* Form T-1 Statement of Eligibility and Qualification respecting the Subordinated Indenture of
Heritage Propane Partners, L.P.
II-10
25.3* Form T-1 Statement of Eligibility and Qualification respecting the Senior Indenture of
Heritage Operating, L.P.
25.4* Form T-1 Statement of Eligibility and Qualification respecting the Subordinated Indenture of
Heritage Operating, L.P.
99.1 Balance sheet of U.S. Propane, L.P. (incorporated by reference to Exhibit 99.1 to Heritage
Propane Partners, L.P.'s Annual Report on Form 10-K for the year ended August 31, 2002).
- ------------------
* To be filed by a post-effective amendment to this registration
statement or as an exhibit to a current report on Form 8-K.
** Filed herewith.
II-11
EXHIBIT 4.9
================================================================================
HERITAGE PROPANE PARTNERS, L.P.
as Issuer
and
HERITAGE OPERATING, L.P.
and
HERITAGE SERVICE CORP.
and
HERITAGE-BI STATE, L.L.C.
and
HERITAGE ENERGY RESOURCES, L.L.C.
as Subsidiary Guarantors
and
[ ]
as Trustee
---------------------------------
Indenture
Dated as of _________________, 2003
---------------------------------
Debt Securities
================================================================================
HERITAGE PROPANE PARTNERS, L.P.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF _____________, 2003
Section of
Trust Indenture Section(s) of
Act of 1939 Indenture
- --------------- -------------
Section 310 (a)(1)....................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... Not Applicable
(a)(4)....................................................................... Not Applicable
(a)(5)....................................................................... 7.10
(b).......................................................................... 7.08, 7.10
Section 311 (a).......................................................................... 7.11
(b).......................................................................... 7.11
(c).......................................................................... Not Applicable
Section 312 (a).......................................................................... 2.07
(b).......................................................................... 11.03
(c).......................................................................... 11.03
Section 313 (a).......................................................................... 7.06
(b).......................................................................... 7.06
(c).......................................................................... 7.06
(d).......................................................................... 7.06
Section 314 (a).......................................................................... 4.03, 4.04
(b).......................................................................... Not Applicable
(c)(1)....................................................................... 11.04
(c)(2)....................................................................... 11.04
(c)(3)....................................................................... Not Applicable
(d).......................................................................... Not Applicable
(e).......................................................................... 11.05
Section 315 (a).......................................................................... 7.01(b)
(b).......................................................................... 7.05
(c).......................................................................... 7.01(a)
(d).......................................................................... 7.01(c)
(d)(1)....................................................................... 7.01(c)(1)
(d)(2)....................................................................... 7.01(c)(2)
(d)(3)....................................................................... 7.01(c)(3)
(e).......................................................................... 6.11
Section 316 (a)(1)(A).................................................................... 6.05
(a)(1)(B).................................................................... 6.04
(a)(2)....................................................................... Not Applicable
(a)(last sentence)........................................................... 2.11
(b).......................................................................... 6.07
Section 317 (a)(1)....................................................................... 6.08
(a)(2)....................................................................... 6.09
(b).......................................................................... 2.06
Section 318 (a).......................................................................... 11.01
- ------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
i
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE............................................................. 1
SECTION 1.01 Definitions........................................................................... 1
SECTION 1.02 Other Definitions..................................................................... 6
SECTION 1.03 Incorporation by Reference of Trust Indenture Act..................................... 6
SECTION 1.04 Rules of Construction................................................................. 6
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of Officers,
Directors, Employees or Partners...................................................... 7
ARTICLE II THE SECURITIES........................................................................................ 7
SECTION 2.01 Amount Unlimited; Issuable in Series.................................................. 7
SECTION 2.02 Denominations......................................................................... 10
SECTION 2.03 Forms Generally....................................................................... 10
SECTION 2.04 Execution, Authentication, Delivery and Dating........................................ 11
SECTION 2.05 Registrar and Paying Agent............................................................ 13
SECTION 2.06 Paying Agent to Hold Money in Trust................................................... 13
SECTION 2.07 Holder Lists.......................................................................... 13
SECTION 2.08 Transfer and Exchange................................................................. 14
SECTION 2.09 Replacement Securities................................................................ 14
SECTION 2.10 Outstanding Securities................................................................ 15
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury Securities......... 15
SECTION 2.12 Temporary Securities.................................................................. 15
SECTION 2.13 Cancellation.......................................................................... 16
SECTION 2.14 Payments; Defaulted Interest.......................................................... 16
SECTION 2.15 Persons Deemed Owners................................................................. 17
SECTION 2.16 Computation of Interest............................................................... 17
SECTION 2.17 Global Securities; Book-Entry Provisions.............................................. 17
ARTICLE III REDEMPTION........................................................................................... 19
SECTION 3.01 Applicability of Article.............................................................. 19
SECTION 3.02 Notice to the Trustee................................................................. 19
SECTION 3.03 Selection of Securities To Be Redeemed................................................ 19
SECTION 3.04 Notice of Redemption.................................................................. 20
SECTION 3.05 Effect of Notice of Redemption........................................................ 21
SECTION 3.06 Deposit of Redemption Price........................................................... 21
SECTION 3.07 Securities Redeemed or Purchased in Part.............................................. 21
SECTION 3.08 Purchase of Securities................................................................ 22
SECTION 3.09 Mandatory and Optional Sinking Funds.................................................. 22
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities................................. 22
SECTION 3.11 Redemption of Securities for Sinking Fund............................................. 22
ii
ARTICLE IV COVENANTS............................................................................................. 23
SECTION 4.01 Payment of Securities................................................................. 23
SECTION 4.02 Maintenance of Office or Agency....................................................... 23
SECTION 4.03 SEC Reports; Financial Statements..................................................... 24
SECTION 4.04 Compliance Certificate................................................................ 24
SECTION 4.05 Existence............................................................................. 25
SECTION 4.06 Waiver of Stay, Extension or Usury Laws............................................... 25
SECTION 4.07 Additional Amounts.................................................................... 25
ARTICLE V SUCCESSORS............................................................................................. 26
SECTION 5.01 Limitations on Mergers and Consolidations............................................. 26
SECTION 5.02 Successor Person Substituted.......................................................... 26
ARTICLE VI DEFAULTS AND REMEDIES................................................................................. 27
SECTION 6.01 Events of Default..................................................................... 27
SECTION 6.02 Acceleration.......................................................................... 29
SECTION 6.03 Other Remedies........................................................................ 30
SECTION 6.04 Waiver of Defaults.................................................................... 30
SECTION 6.05 Control by Majority................................................................... 30
SECTION 6.06 Limitations on Suits.................................................................. 31
SECTION 6.07 Rights of Holders to Receive Payment.................................................. 31
SECTION 6.08 Collection Suit by Trustee............................................................ 31
SECTION 6.09 Trustee May File Proofs of Claim...................................................... 32
SECTION 6.10 Priorities............................................................................ 32
SECTION 6.11 Undertaking for Costs................................................................. 33
ARTICLE VII TRUSTEE.............................................................................................. 33
SECTION 7.01 Duties of Trustee..................................................................... 33
SECTION 7.02 Rights of Trustee..................................................................... 34
SECTION 7.03 May Hold Securities................................................................... 35
SECTION 7.04 Trustee's Disclaimer.................................................................. 35
SECTION 7.05 Notice of Defaults.................................................................... 36
SECTION 7.06 Reports by Trustee to Holders......................................................... 36
SECTION 7.07 Compensation and Indemnity............................................................ 36
SECTION 7.08 Replacement of Trustee................................................................ 37
SECTION 7.09 Successor Trustee by Merger, etc...................................................... 39
SECTION 7.10 Eligibility; Disqualification......................................................... 39
SECTION 7.11 Preferential Collection of Claims Against the Partnership or a Subsidiary Guarantor... 39
ARTICLE VIII DISCHARGE OF INDENTURE.............................................................................. 40
SECTION 8.01 Termination of the Partnership's and the Subsidiary Guarantors' Obligations........... 40
SECTION 8.02 Application of Trust Money............................................................ 43
SECTION 8.03 Repayment to Partnership or Subsidiary Guarantor...................................... 44
iii
SECTION 8.04 Reinstatement......................................................................... 44
ARTICLE IX SUPPLEMENTAL INDENTURES AND AMENDMENTS................................................................ 44
SECTION 9.01 Without Consent of Holders............................................................ 44
SECTION 9.02 With Consent of Holders............................................................... 46
SECTION 9.03 Compliance with Trust Indenture Act................................................... 47
SECTION 9.04 Revocation and Effect of Consents..................................................... 48
SECTION 9.05 Notation on or Exchange of Securities................................................. 48
SECTION 9.06 Trustee to Sign Amendments, etc....................................................... 49
ARTICLE X GUARANTEE.............................................................................................. 49
SECTION 10.01 Guarantee............................................................................. 49
SECTION 10.02 Execution and Delivery of Guarantee................................................... 51
SECTION 10.03 Limitation on Liability of the Subsidiary Guarantors.................................. 51
SECTION 10.04 Release of Subsidiary Guarantors from Guarantee....................................... 52
SECTION 10.05 Contribution.......................................................................... 52
ARTICLE XI MISCELLANEOUS......................................................................................... 52
SECTION 11.01 Trust Indenture Act Controls.......................................................... 52
SECTION 11.02 Notices............................................................................... 53
SECTION 11.03 Communication by Holders with Other Holders........................................... 54
SECTION 11.04 Certificate and Opinion as to Conditions Precedent.................................... 54
SECTION 11.05 Statements Required in Certificate or Opinion......................................... 54
SECTION 11.06 Rules by Trustee and Agents........................................................... 55
SECTION 11.07 Legal Holidays........................................................................ 55
SECTION 11.08 No Recourse Against Others............................................................ 55
SECTION 11.09 Governing Law......................................................................... 55
SECTION 11.10 No Adverse Interpretation of Other Agreements......................................... 55
SECTION 11.11 Successors............................................................................ 55
SECTION 11.12 Severability.......................................................................... 55
SECTION 11.13 Counterpart Originals................................................................. 56
SECTION 11.14 Table of Contents, Headings, etc...................................................... 56
iv
INDENTURE dated as of _____________, 2003 among Heritage
Propane Partners, L.P., a Delaware limited partnership (the "Partnership"),
Heritage Operating, L.P., a Delaware limited partnership, Heritage Service
Corp., a Delaware corporation, Heritage-Bi State, L.L.C., a Delaware limited
liability company and Heritage Energy Resources, L.L.C., an Oklahoma limited
liability company (collectively, the "Subsidiary Guarantors"), and [ ],
a ___________, as trustee (the "Trustee").
The Partnership and the Subsidiary Guarantors have duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Partnership's debentures, notes, bonds or
other evidences of indebtedness to be issued in one or more series unlimited as
to principal amount (herein called the "Securities"), and the Guarantee by each
of the Subsidiary Guarantors of the Securities, as in this Indenture provided.
The Partnership and the Subsidiary Guarantors are members of
the same consolidated group of companies. The Subsidiary Guarantors will derive
direct and indirect economic benefit from the issuance of the Securities.
Accordingly, each Subsidiary Guarantor has duly authorized the execution and
delivery of this Indenture to provide for its full, unconditional and joint and
several guarantee of the Securities to the extent provided in or pursuant to
this Indenture.
All things necessary to make this Indenture a valid agreement
of the Partnership, in accordance with its terms, have been done.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Additional Amounts" means any additional amounts required by
the express terms of a Security or by or pursuant to a Board Resolution, under
circumstances specified therein or pursuant thereto, to be paid by the
Partnership or any Subsidiary Guarantor, as the case may be, with respect to
certain taxes, assessments or other governmental charges imposed on certain
Holders and that are owing to such Holders.
"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 purposes of this definition,
"control" of a Person shall mean 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" shall have meanings correlative to the foregoing.
"Agent" means any Registrar or Paying Agent.
"Bankruptcy Law" means Title 11 of the United States Code or
any similar federal, state or foreign law for the relief of debtors.
"Board of Directors," means the Board of Directors of U.S.
Propane, L.L.C., the general partner of the General Partner or any authorized
committee of the Board of Directors of
1
U.S. Propane, L.L.C. or any directors and/or officers of U.S. Propane, L.L.C. to
whom such Board of Directors or such committee shall have duly delegated its
authority to act hereunder.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the U.S. Propane, L.L.C. to have been
duly adopted by the Board of Directors of U.S. Propane, L.L.C. and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Corporate Trust Office of the Trustee" means the office of
the Trustee located at ________________________________, Attention:
____________________, and as may be located at such other address as the Trustee
may give notice to the Partnership and the Subsidiary Guarantors.
"Debt" of any Person at any date means any obligation created
or assumed by such Person for the repayment of borrowed money and any guarantee
thereof.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in global form, the Person
specified pursuant to Section 2.01 hereof as the initial Depositary with respect
to the Securities of such series, until a successor shall have been appointed
and become such pursuant to the applicable provision of this Indenture, and
thereafter "Depositary" shall mean or include such successor.
"Dollar" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be legal tender
for the payment of public and private debt.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"GAAP" means generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States, as in effect from
time to time.
"General Partner" means U.S. Propane, L.P., a Delaware limited
partnership.
"Global Security" means a Security that is issued in global
form in the name of the Depositary with respect thereto or its nominee.
"Government Obligations" means, with respect to a series of
Securities, direct obligations of the government that issues the currency in
which the Securities of the series are payable for the payment of which the full
faith and credit of such government is pledged, or
2
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of such government, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by such government.
"Guarantee" shall mean the guarantee of the Partnership's
obligations under the Securities by a Subsidiary Guarantor as provided in
Article X.
"Holder" means a Person in whose name a Security is
registered.
"Indenture" means this Indenture as amended or supplemented
from time to time pursuant to the provisions hereof, and includes the terms of a
particular series of Securities established as contemplated by Section 2.01.
"interest" means, with respect to an Original Issue Discount
Security that by its terms bears interest only after Maturity, interest payable
after Maturity.
"Interest Payment Date," when used with respect to any
Security, shall have the meaning assigned to such term in the Security as
contemplated by Section 2.01.
"Issue Date" means, with respect to Securities of a series,
the date on which the Securities of such series are originally issued under this
Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in any of The City of New York, New York or a Place of
Payment are authorized or obligated by law, regulation or executive order to
remain closed.
"Maturity" means, with respect to any Security, 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
thereof, or by declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, the President, any
Vice Chairman of the Board, any Vice President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of a Person.
"Officers' Certificate" means a certificate signed by two
Officers of a Person.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Partnership, a Subsidiary Guarantor or the Trustee.
"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 6.02.
"Partnership" means the Person named as the "Partnership" in
the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Partnership" shall mean such successor Person;
3
provided, however, that for purposes of any provision contained herein which is
required by the TIA, "Partnership" shall also mean each other obligor (if any),
other than a Subsidiary Guarantor, on the Securities of a series.
"Partnership Order" and "Partnership Request" mean,
respectively, a written order or request signed in the name of the Partnership
or each Subsidiary Guarantor by two Officers of U.S. Propane, L.L.C. and
delivered to the Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or other agency, instrumentality or political subdivision thereof or
other entity of any kind.
"Place of Payment" means, with respect to the Securities of
any series, the place or places where the principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of that
series are payable as specified in accordance with Section 2.01 subject to the
provisions of Section 4.02.
"principal" of a Security means the principal of the Security
plus, when appropriate, the premium, if any, on the Security.
"Redemption Date" means, with respect to any Security to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
"Responsible Officer" means any officer within the corporate
trust department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"Rule 144A Securities" means Securities of a series designated
pursuant to Section 2.01 as entitled to the benefits of Section 4.03(b).
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the preamble of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Custodian" means, with respect to Securities of a
series issued in global form, the Trustee for Securities of such series, as
custodian with respect to the Securities of such series, or any successor entity
thereto.
4
"Stated Maturity" means, when used with respect to any
Security or any installment of principal thereof or interest thereon, 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" of any Person means:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of
equity interests entitled, without regard to the
occurrence of any contingency, to vote in the
election of directors, managers, trustees or
equivalent Persons thereof is at the time of
determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof; or
(2) in the case of a partnership, more than 50% of the
partners' equity interests, considering all partners'
equity interests as a single class, is at such time
of determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof.
"Subsidiary Guarantors" means the Person or Persons named as
the "Subsidiary Guarantors" in the first paragraph of this instrument until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Subsidiary Guarantors" shall mean
such successor Person or Persons, and any other Subsidiary of the Partnership
who may execute this Indenture, or a supplement thereto, for the purpose of
providing a Guarantee of Securities pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended, as in
effect on the date hereof.
"Trustee" means the Person named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter "Trustee" means 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 means the Trustee with respect
to Securities of that series.
"United States" means the United States of America (including
the States and the District of Columbia) and its territories and possessions,
which include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands.
"U.S. Government Obligations" means Government Obligations
with respect to Securities payable in Dollars.
"U.S. Propane, L.L.C." means U.S. Propane, L.L.C., a Delaware
limited liability company.
5
SECTION 1.02 Other Definitions.
DEFINED
TERM IN SECTION
- ---- ----------
"Bankruptcy Custodian"....................................................................... 6.01
"Conversion Event"........................................................................... 6.01
"covenant defeasance"........................................................................ 8.01
"Event of Default"........................................................................... 6.01
"Exchange Rate".............................................................................. 2.11
"Funding Guarantor".......................................................................... 10.05
"Judgment Currency".......................................................................... 6.10
"legal defeasance"........................................................................... 8.01
"mandatory sinking fund payment"............................................................. 3.09
"optional sinking fund payment".............................................................. 3.09
"Paying Agent"............................................................................... 2.05
"Registrar".................................................................................. 2.05
"Required Currency".......................................................................... 6.10
"Successor".................................................................................. 5.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture (and
if the Indenture is not qualified under the TIA at that time, as if it were so
qualified unless otherwise provided). The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Partnership,
any Subsidiary Guarantor or any other obligor on the Securities.
All terms used in this Indenture that are defined by the TIA,
defined by a TIA reference to another statute or defined by an SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
6
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) all references in this instrument to Articles and
Sections are references to the corresponding Articles
and Sections in and of this instrument.
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners.
Obligations of the Partnership and a Subsidiary Guarantor
under this Indenture and the Securities hereunder are non-recourse to the
General Partner, and its respective Affiliates (other than the Partnership and a
Subsidiary Guarantor), and payable only out of cash flow and assets of the
Partnership and a Subsidiary Guarantor. The Trustee, and each Holder of a
Security by its acceptance thereof, will be deemed to have agreed in this
Indenture that (1) neither the General Partner nor its assets (nor any of its
respective Affiliates other than the Partnership and a Subsidiary Guarantor, nor
its respective assets) shall be liable for any of the obligations of the
Partnership and a Subsidiary Guarantor under this Indenture or such Securities,
and (2) no director, officer, employee, partner or unitholder, as such, of the
Partnership and a Subsidiary Guarantor, the Trustee, the General Partner or any
Affiliate of any of the foregoing entities shall have any personal liability in
respect of the obligations of the Partnership and a Subsidiary Guarantor under
this Indenture or such Securities by reason of his, her or its status.
ARTICLE II
THE SECURITIES
SECTION 2.01 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and set forth, or
determined in the manner provided, in an Officers' Certificate of U.S. Propane,
L.L.C. or in a Partnership Order, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from the Securities of
all other series);
(2) if there is to be a limit, the limit upon the
aggregate principal amount of the Securities of the series that may be
authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in
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exchange for, or in lieu of, other Securities of the series pursuant to
Section 2.08, 2.09, 2.12, 2.17, 3.07 or 9.05 and except for any
Securities which, pursuant to Section 2.04 or 2.17, are deemed never to
have been authenticated and delivered hereunder); provided, however,
that unless otherwise provided in the terms of the series, the
authorized aggregate principal amount of such series may be increased
before or after the issuance of any Securities of the series by a Board
Resolution (or action pursuant to a Board Resolution) to such effect;
(3) whether any Securities of the series are to be
issuable initially in temporary global form and whether any Securities
of the series are to be issuable in permanent global form, as Global
Securities or otherwise, and, if so, whether beneficial owners of
interests in any such Global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 2.17, and the
initial Depositary and Security Custodian, if any, for any Global
Security or Securities of such series;
(4) the manner in which any interest payable on a
temporary Global Security on any Interest Payment Date will be paid if
other than in the manner provided in Section 2.14;
(5) the date or dates on which the principal of and
premium (if any) on the Securities of the series is payable or the
method of determination thereof;
(6) the rate or rates, or the method of determination
thereof, at which the Securities of the series shall bear interest, if
any, whether and under what circumstances Additional Amounts with
respect to such Securities shall be payable, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which
such interest shall be payable and the record date for the interest
payable on any Securities on any Interest Payment Date, or if other
than provided herein, the Person to whom any interest on Securities of
the series shall be payable;
(7) the place or places where, subject to the provisions
of Section 4.02, the principal of, premium (if any) and interest on and
any Additional Amounts with respect to the Securities of the series
shall be payable;
(8) the period or periods within which, the price or
prices (whether denominated in cash, securities or otherwise) at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership, if the
Partnership is to have that option, and the manner in which the
Partnership must exercise any such option, if different from those set
forth herein;
(9) whether Securities of the series are entitled to the
benefits of any Guarantee of any Subsidiary Guarantor pursuant to this
Indenture;
(10) the obligation, if any, of the Partnership to redeem,
purchase or repay Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices
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(whether denominated in cash, securities or otherwise) at which and the
terms and conditions upon which Securities of the series shall be
redeemed, purchased or repaid in whole or in part pursuant to such
obligation;
(11) if other than denominations of $1,000 and any
integral multiple thereof, the denomination in which any Securities of
that series shall be issuable;
(12) if other than Dollars, the currency or currencies
(including composite currencies) or the form, including equity
securities, other debt securities (including Securities), warrants or
any other securities or property of the Partnership, any Subsidiary
Guarantor or any other Person, in which payment of the principal of,
premium (if any) and interest on and any Additional Amounts with
respect to the Securities of the series shall be payable;
(13) if the principal of, premium (if any) or interest on
or any Additional Amounts with respect to the Securities of the series
are to be payable, at the election of the Partnership or a Holder
thereof, in a currency or currencies (including composite currencies)
other than that in which the Securities are stated to be payable, the
currency or currencies (including composite currencies) in which
payment of the principal of, premium (if any) and interest on and any
Additional Amounts with respect to Securities of such series as to
which such election is made shall be payable, and the periods within
which and the terms and conditions upon which such election is to be
made;
(14) if the amount of payments of principal of, premium
(if any) and interest on and any Additional Amounts with respect to the
Securities of the series may be determined with reference to any
commodities, currencies or indices, values, rates or prices or any
other index or formula, the manner in which such amounts shall be
determined;
(15) if other than the entire principal amount thereof,
the portion of the principal amount of Securities of the series that
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 6.02;
(16) any additional means of satisfaction and discharge of
this Indenture and any additional conditions or limitations to
discharge with respect to Securities of the series and the related
Guarantees pursuant to Article VIII or any modifications of or
deletions from such conditions or limitations;
(17) any deletions or modifications of or additions to the
Events of Default set forth in Section 6.01 or covenants of the
Partnership or any Subsidiary Guarantor set forth in Article IV
pertaining to the Securities of the series;
(18) any restrictions or other provisions with respect to
the transfer or exchange of Securities of the series, which may amend,
supplement, modify or supersede those contained in this Article II;
(19) if the Securities of the series are to be convertible
into or exchangeable for capital stock, other debt securities
(including Securities), warrants, other equity securities
9
or any other securities or property of the Partnership, any Subsidiary
Guarantor or any other Person, at the option of the Partnership or the
Holder or upon the occurrence of any condition or event, the terms and
conditions for such conversion or exchange;
(20) whether the Securities of the series are to be
entitled to the benefit of Section 4.03(b) (and accordingly constitute
Rule 144A Securities); and
(21) any other terms of the series (which terms shall not
be prohibited by the provisions of this Indenture).
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
2.03) set forth, or determined in the manner provided, in the Officers'
Certificate or Partnership Order 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, together with such Board Resolution, shall be set forth in an Officers'
Certificate or certified by the Secretary or an Assistant Secretary of U.S.
Propane, L.L.C. and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate or Partnership Order setting forth the terms of the
series.
SECTION 2.02 Denominations.
The Securities of each series shall be issuable in such
denominations as shall be specified as contemplated by Section 2.01. In the
absence of any such provisions with respect to the Securities of any series, the
Securities of such series denominated in Dollars shall be issuable in
denominations of $1,000 and any integral multiples thereof.
SECTION 2.03 Forms Generally.
The Securities of each series shall be in fully registered
form and in substantially such form or forms (including temporary or permanent
global form) established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto. The Securities may have notations, legends or
endorsements required by law, securities exchange rule, the Partnership's
certificate of limited partnership, agreement of limited partnership or other
similar governing documents, agreements to which the Partnership is subject, if
any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Partnership). A copy of the Board Resolution establishing
the form or forms of Securities of any series shall be delivered to the Trustee
at or prior to the delivery of the Partnership Order contemplated by Section
2.04 for the authentication and delivery of such Securities.
The definitive Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the Officers executing such Securities, as
evidenced by their execution thereof.
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The Trustee's certificate 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 Signatory".
SECTION 2.04 Execution, Authentication, Delivery and Dating.
Two Officers of U.S. Propane, L.L.C. shall sign the Securities
on behalf of the Partnership and, with respect to the Guarantees of the
Securities, two Officers of U.S. Propane, L.L.C. shall sign the Securities on
behalf of such Subsidiary Guarantor, in each case by manual or facsimile
signature.
If an Officer of U.S. Propane, L.L.C. whose signature is on a
Security no longer holds that office at the time the Security is authenticated,
the Security shall be valid nevertheless.
A Security shall not be entitled to any benefit under this
Indenture or the related Guarantees or be valid or obligatory for any purpose
until authenticated by the manual signature of an authorized signatory of the
Trustee, which signature shall be conclusive evidence that the Security has been
authenticated under this Indenture. Notwithstanding the foregoing, if any
Security has been authenticated and delivered hereunder but never issued and
sold by the Partnership, and the Partnership delivers such Security to the
Trustee for cancellation as provided in Section 2.13, together with a written
statement (which need not comply with Section 11.05 and need not be accompanied
by an Opinion of Counsel) stating that such Security has never been issued and
sold by the Partnership, 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 or the related Guarantees.
At any time and from time to time after the execution and
delivery of this Indenture, the Partnership may deliver Securities of any series
executed by the Partnership and each Subsidiary Guarantor to the Trustee for
authentication, and the Trustee shall authenticate and deliver such Securities
for original issue upon a Partnership Order for the authentication and delivery
of such Securities or pursuant to such procedures acceptable to the Trustee as
may be specified from time to time by Partnership Order. Such order shall
specify the amount of the Securities to be authenticated, the date on which the
original issue of Securities is to be authenticated, the name or names of the
initial Holder or Holders and any other terms of the Securities of such series
not otherwise determined. If provided for in such procedures, such Partnership
Order may authorize (1) authentication and delivery of Securities of such series
for original issue from time to time, with certain terms (including, without
limitation, the Maturity dates or dates, original issue date or dates and
interest rate or rates) that differ from Security to Security and (2) may
authorize authentication and delivery pursuant to oral or electronic
instructions from the Partnership or its duly authorized agent, which
instructions shall be promptly confirmed in writing.
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If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Section 2.01, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive (in addition to the Partnership Order
referred to above and the other documents required by Section 11.04), and
(subject to Section 7.01) shall be fully protected in relying upon:
(a) an Officers' Certificate setting forth the Board
Resolution and, if applicable, an appropriate record of any action
taken pursuant thereto, as contemplated by the last paragraph of
Section 2.01; and
(b) an Opinion of Counsel to the effect that:
(i) the form of such Securities has been
established in conformity with the provisions of this
Indenture;
(ii) the terms of such Securities have been
established in conformity with the provisions of this
Indenture; and
(iii) that, when authenticated and delivered by
the Trustee and issued by the Partnership in the manner and
subject to any conditions specified in such Opinion of
Counsel, such Securities and the related Guarantees will
constitute valid and binding obligations of the Partnership
and the Subsidiary Guarantors, respectively, enforceable
against the Partnership and the Subsidiary Guarantors,
respectively, in accordance with their respective terms,
except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws in effect from
time to time affecting the rights of creditors generally, and
the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
If all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate and
Opinion of Counsel at the time of issuance of each such Security, but such
Officers' Certificate and Opinion of Counsel shall be delivered at or before the
time of issuance of the first Security of the series to be issued.
The Trustee shall not be required to authenticate such
Securities if the issuance of such Securities pursuant to this Indenture would
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner not reasonably acceptable to the
Trustee.
The Trustee may appoint an authenticating agent acceptable to
the Partnership to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Partnership, any Subsidiary Guarantor
or an Affiliate of the Partnership or any Subsidiary Guarantor.
12
Each Security shall be dated the date of its authentication.
SECTION 2.05 Registrar and Paying Agent.
The Partnership shall maintain an office or agency for each
series of Securities where Securities of such series may be presented for
registration of transfer or exchange ("Registrar") and an office or agency where
Securities of such series may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Securities of such series and of their
transfer and exchange. The Partnership may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Partnership shall enter into an appropriate agency
agreement with any Registrar or Paying Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Partnership shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. The Partnership may change any Paying Agent
or Registrar without notice to any Holder. If the Partnership fails to appoint
or maintain another entity as Registrar or Paying Agent, the Trustee shall act
as such. The Partnership, any Subsidiary Guarantor or any Subsidiary may act as
Paying Agent or Registrar.
The Partnership initially appoints the Trustee as Registrar
and Paying Agent.
SECTION 2.06 Paying Agent to Hold Money in Trust.
The Partnership shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest on or any Additional
Amounts with respect to Securities and will notify the Trustee of any default by
the Partnership in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed. The Partnership at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed. Upon payment over to the Trustee and upon accounting
for any funds disbursed, the Paying Agent (if other than the Partnership, a
Subsidiary Guarantor or a Subsidiary) shall have no further liability for the
money. If the Partnership, a Subsidiary Guarantor or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Each Paying Agent shall
otherwise comply with TIA Section 317(b).
SECTION 2.07 Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar with respect to a series of Securities, the
Partnership shall furnish to the Trustee at least five Business Days before each
Interest Payment Date with respect to such series of Securities, and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Holders of such series, and the Partnership shall otherwise comply with TIA
Section 312(a).
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SECTION 2.08 Transfer and Exchange.
Except as set forth in Section 2.17 or as may be provided
pursuant to Section 2.01:
When Securities of any series are presented to the Registrar
with the request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of the same series of
like tenor and of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements and the
requirements of this Indenture for such transactions are met; provided, however,
that the Securities presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form reasonably satisfactory to the Registrar duly executed by the
Holder thereof or by his attorney, duly authorized in writing, on which
instruction the Registrar can rely.
To permit registrations of transfers and exchanges, the
Partnership and the Subsidiary Guarantors shall execute and the Trustee shall
authenticate Securities at the Registrar's written request and submission of the
Securities or Global Securities. No service charge shall be made to a Holder for
any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Partnership may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than such transfer tax or similar governmental charge payable
upon exchanges pursuant to Section 2.12, 3.07 or 9.05). The Trustee shall
authenticate Securities in accordance with the provisions of Section 2.04.
Notwithstanding any other provisions of this Indenture to the contrary, the
Partnership shall not be required to register the transfer or exchange of (a)
any Security selected for redemption in whole or in part pursuant to Article
III, except the unredeemed portion of any Security being redeemed in part, or
(b) any Security during the period beginning 15 Business Days prior to the
mailing of notice of any offer to repurchase Securities of the series required
pursuant to the terms thereof or of redemption of Securities of a series to be
redeemed and ending at the close of business on the day of mailing.
SECTION 2.09 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or if
the Holder of a Security claims that the Security has been destroyed, lost or
stolen and the Partnership and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of such Security, the Partnership
shall issue, and the Subsidiary Guarantors shall execute and the Trustee shall
authenticate a replacement Security of the same series if the Trustee's
requirements are met. If any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Partnership in its
discretion may, instead of issuing a new Security, pay such Security. If
required by the Trustee, any Subsidiary Guarantor or the Partnership, such
Holder must furnish an indemnity bond that is sufficient in the judgment of the
Trustee and the Partnership to protect the Partnership, each Subsidiary
Guarantor, the Trustee, any Agent or any authenticating agent from any loss that
any of them may suffer if a Security is replaced. The Partnership and the
Trustee may charge a Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Partnership.
14
SECTION 2.10 Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.10 as
not outstanding.
If a Security is replaced pursuant to Section 2.09, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid
under Section 4.01, it ceases to be outstanding and interest on it ceases to
accrue.
A Security does not cease to be outstanding because the
Partnership, a Subsidiary Guarantor or an Affiliate of the Partnership or a
Subsidiary Guarantor holds the Security.
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury
Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, (a) the principal amount of an Original Issue Discount
Security shall be the principal amount thereof that would be due and payable as
of the date of such determination upon acceleration of the Maturity thereof
pursuant to Section 6.02, (b) the principal amount of a Security denominated in
a foreign currency shall be the Dollar equivalent, as determined by the
Partnership by reference to the noon buying rate in The City of New York for
cable transfers for such currency, as such rate is certified for customs
purposes by the Federal Reserve Bank of New York (the "Exchange Rate") on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the Dollar equivalent, as
determined by the Partnership by reference to the Exchange Rate on the date of
original issuance of such Security, of the amount determined as provided in (a)
above), of such Security and (c) Securities owned by the Partnership, a
Subsidiary Guarantor or any other obligor upon the Securities or any Affiliate
of the Partnership, of a Subsidiary Guarantor or of such other obligor shall be
disregarded, except that, for the purpose of determining whether the Trustee
shall be protected in relying upon any such direction, amendment, supplement,
waiver or consent, only Securities that a Responsible Officer of the Trustee
actually knows are so owned shall be so disregarded.
SECTION 2.12 Temporary Securities.
Until definitive Securities of any series are ready for
delivery, the Partnership may prepare, and the Subsidiary Guarantors shall
execute and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities, but may
have variations that the Partnership considers appropriate for temporary
15
Securities. Without unreasonable delay, the Partnership shall prepare, and the
Subsidiary Guarantors shall execute and the Trustee shall authenticate
definitive Securities in exchange for temporary Securities. Until so exchanged,
the temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 2.13 Cancellation.
The Partnership or any Subsidiary Guarantor at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange, payment or redemption or for credit against
any sinking fund payment. The Trustee shall cancel all Securities surrendered
for registration of transfer, exchange, payment, redemption, replacement or
cancellation or for credit against any sinking fund. Unless the Partnership
shall direct in writing that canceled Securities be returned to it, after
written notice to the Partnership all canceled Securities held by the Trustee
shall be disposed of in accordance with the usual disposal procedures of the
Trustee, and the Trustee shall maintain a record of their disposal. The
Partnership may not issue new Securities to replace Securities that have been
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.14 Payments; Defaulted Interest.
Unless otherwise provided as contemplated by Section 2.01,
interest (except defaulted interest) on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Persons who are registered Holders of that Security at the close of
business on the record date next preceding such Interest Payment Date, even if
such Securities are canceled after such record date and on or before such
Interest Payment Date. The Holder must surrender a Security to a Paying Agent to
collect principal payments. Unless otherwise provided with respect to the
Securities of any series, the Partnership will pay the principal of, premium (if
any) and interest on and any Additional Amounts with respect to the Securities
in Dollars. Such amounts shall be payable at the offices of the Trustee or any
Paying Agent, provided that at the option of the Partnership, the Partnership
may pay such amounts (1) by wire transfer with respect to Global Securities or
(2) by check payable in such money mailed to a Holder's registered address with
respect to any Securities.
If the Partnership defaults in a payment of interest on the
Securities of any series, the Partnership shall pay the defaulted interest in
any lawful manner plus, to the extent lawful, interest on the defaulted
interest, in each case at the rate provided in the Securities of such series and
in Section 4.01. The Partnership may pay the defaulted interest to the Persons
who are Holders on a subsequent special record date. At least 15 days before any
special record date selected by the Partnership, the Partnership (or the
Trustee, in the name of and at the expense of the Partnership upon 20 days'
prior written notice from the Partnership setting forth such special record date
and the interest amount to be paid) shall mail to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
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SECTION 2.15 Persons Deemed Owners.
The Partnership, the Subsidiary Guarantors, the Trustee, any
Agent and any authenticating agent may treat the Person in whose name any
Security is registered as the owner of such Security for the purpose of
receiving payments of principal of, premium (if any) or interest on or any
Additional Amounts with respect to such Security and for all other purposes.
None of the Partnership, any Subsidiary Guarantor, the Trustee, any Agent or any
authenticating agent shall be affected by any notice to the contrary.
SECTION 2.16 Computation of Interest.
Except as otherwise specified as contemplated by Section 2.01
for Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year comprising twelve 30-day months.
SECTION 2.17 Global Securities; Book-Entry Provisions.
If Securities of a series are issuable in global form as a
Global Security, as contemplated by Section 2.01, then, notwithstanding clause
(11) of Section 2.01 and the provisions of Section 2.02, any such Global
Security shall represent such of the outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges, transfers or
redemptions. Any endorsement of a Global Security to reflect the amount, or any
increase or decrease in the amount, of outstanding Securities represented
thereby shall be made by the Trustee (i) in such manner and upon instructions
given by such Person or Persons as shall be specified in such Security or in a
Partnership Order to be delivered to the Trustee pursuant to Section 2.04 or
(ii) otherwise in accordance with written instructions or such other written
form of instructions as is customary for the Depositary for such Security, from
such Depositary or its nominee on behalf of any Person having a beneficial
interest in such Global Security. Subject to the provisions of Section 2.04 and,
if applicable, Section 2.12, the Trustee shall deliver and redeliver any
Security in permanent global form in the manner and upon instructions given by
the Person or Persons specified in such Security or in the applicable
Partnership Order. With respect to the Securities of any series that are
represented by a Global Security, the Partnership and the Subsidiary Guarantors
authorize the execution and delivery by the Trustee of a letter of
representations or other similar agreement or instrument in the form customarily
provided for by the Depositary appointed with respect to such Global Security.
Any Global Security may be deposited with the Depositary or its nominee, or may
remain in the custody of the Trustee or the Security Custodian therefor pursuant
to a FAST Balance Certificate Agreement or similar agreement between the Trustee
and the Depositary. If a Partnership Order has been, or simultaneously is,
delivered, any instructions by the Partnership with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 11.05 and need not be accompanied by an Opinion of
Counsel.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the
17
Depositary, or the Trustee or the Security Custodian as its custodian, or under
such Global Security, and the Depositary may be treated by the Partnership, any
Subsidiary Guarantor, the Trustee or the Security Custodian and any agent of the
Partnership, any Subsidiary Guarantor, the Trustee or the Security Custodian as
the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, (i) the registered holder of a Global Security of
a series may grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any
action that a Holder of Securities of such series is entitled to take under this
Indenture or the Securities of such series and (ii) nothing herein shall prevent
the Partnership, any Subsidiary Guarantor, the Trustee or the Security
Custodian, or any agent of the Partnership, any Subsidiary Guarantor, the
Trustee or the Security Custodian, from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or shall
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Security.
Notwithstanding Section 2.08, and except as otherwise provided
pursuant to Section 2.01: Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary. Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Security if, and only if,
either (1) the Depositary notifies the Partnership that it is unwilling or
unable to continue as Depositary for the Global Security and a successor
Depositary is not appointed by the Partnership within 90 days of such notice,
(2) an Event of Default has occurred with respect to such series and is
continuing and the Registrar has received a request from the Depositary to issue
Securities in lieu of all or a portion of the Global Security (in which case the
Partnership shall deliver Securities within 30 days of such request) or (3) the
Partnership determines not to have the Securities represented by a Global
Security.
In connection with any transfer of a portion of the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Security in an amount equal to
the principal amount of the beneficial interests in the Global Security to be
transferred, and the Partnership and the Subsidiary Guarantors shall execute,
and the Trustee upon receipt of a Partnership Order for the authentication and
delivery of Securities shall authenticate and deliver, one or more Securities of
the same series of like tenor and amount.
In connection with the transfer of all the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Partnership and the Subsidiary Guarantors shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depositary in exchange for its beneficial interests in the
Global Security, an equal aggregate principal amount of Securities of authorized
denominations.
Neither the Partnership, any Subsidiary Guarantor nor the
Trustee will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, Securities by the Depositary, or
for maintaining, supervising or reviewing any records of the
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Depositary relating to such Securities. Neither the Partnership, any Subsidiary
Guarantor nor the Trustee shall be liable for any delay by the related Global
Security Holder or the Depositary in identifying the beneficial owners, and each
such Person may conclusively rely on, and shall be protected in relying on,
instructions from such Global Security Holder or the Depositary for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the Securities to be issued).
The provisions of the last sentence of the third paragraph of
Section 2.04 shall apply to any Global Security if such Global Security was
never issued and sold by the Partnership and the Partnership or a Subsidiary
Guarantor delivers to the Trustee the Global Security together with written
instructions (which need not comply with Section 11.05 and need not be
accompanied by an Opinion of Counsel) with regard to the cancellation or
reduction in the principal amount of Securities represented thereby, together
with the written statement contemplated by the last sentence of the third
paragraph of Section 2.04.
Notwithstanding the provisions of Sections 2.03 and 2.14,
unless otherwise specified as contemplated by Section 2.01, payment of principal
of, premium (if any) and interest on and any Additional Amounts with respect to
any Global Security shall be made to the Person or Persons specified therein.
ARTICLE III
REDEMPTION
SECTION 3.01 Applicability of Article.
Securities of any series that are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 2.01 for Securities of any
series) in accordance with this Article III.
SECTION 3.02 Notice to the Trustee.
If the Partnership elects to redeem Securities of any series
pursuant to this Indenture, it shall notify the Trustee of the Redemption Date
and the principal amount of Securities of such series to be redeemed. The
Partnership shall so notify the Trustee at least 45 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee) by
delivering to the Trustee an Officers' Certificate stating that such redemption
will comply with the provisions of this Indenture and of the Securities of such
series. Any such notice may be canceled at any time prior to the mailing of such
notice of such redemption to any Holder and shall thereupon be void and of no
effect.
SECTION 3.03 Selection of Securities To Be Redeemed.
If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series of a specified tenor are
to be redeemed), 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 tenor) not previously called for
redemption, either pro rata, by lot or by such other method as the Trustee shall
deem fair and appropriate and that may provide for the selection for redemption
of portions (equal to the minimum authorized
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denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series or of the
principal amount of Global Securities of such series.
The Trustee shall promptly notify the Partnership and the
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any of the Securities redeemed or to be redeemed only in part, to
the portion of the principal amount thereof which has been or is to be redeemed.
SECTION 3.04 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 the address of
such Holder appearing in the register of Securities maintained by the Registrar.
All notices of redemption shall identify the Securities to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) that, unless the Partnership and the Subsidiary
Guarantors default in making the redemption payment, interest on
Securities called for redemption ceases to accrue on and after the
Redemption Date, and the only remaining right of the Holders of such
Securities is to receive payment of the Redemption Price upon surrender
to the Paying Agent of the Securities redeemed;
(4) if any Security is to be redeemed in part, the
portion of the principal amount thereof to be redeemed and that on and
after the Redemption Date, upon surrender for cancellation of such
Security to the Paying Agent, a new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will
be issued without charge to the Holder;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price and the
name and address of the Paying Agent;
(6) that the redemption is for a sinking or analogous
fund, if such is the case; and
(7) the CUSIP number, if any, relating to such
Securities.
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Notice of redemption of Securities to be redeemed at the
election of the Partnership shall be given by the Partnership or, at the
Partnership's written request, by the Trustee in the name and at the expense of
the Partnership.
SECTION 3.05 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, but interest installments whose maturity
is on or prior to such Redemption Date will be payable on the relevant Interest
Payment Dates to the Holders of record at the close of business on the relevant
record dates specified pursuant to Section 2.01.
SECTION 3.06 Deposit of Redemption Price.
On or prior to 11:00 a.m., New York City time, on any
Redemption Date, the Partnership or a Subsidiary Guarantor shall deposit with
the Trustee or the Paying Agent (or, if the Partnership or such Subsidiary
Guarantor is acting as the Paying Agent, segregate and hold in trust as provided
in Section 2.06) an amount of money in same day funds sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on and any Additional Amounts with respect to,
the Securities or portions thereof which are to be redeemed on that date, other
than Securities or portions thereof called for redemption on that date which
have been delivered by the Partnership or a Subsidiary Guarantor to the Trustee
for cancellation.
If the Partnership or a Subsidiary Guarantor complies with the
preceding paragraph, then, unless the Partnership and the Subsidiary Guarantors
default in the payment of such Redemption Price, interest on the Securities to
be redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Securities are presented for payment, and the Holders of
such Securities shall have no further rights with respect to such Securities
except for the right to receive the Redemption Price upon surrender of such
Securities. If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal, premium, if any, any Additional
Amounts, and, to the extent lawful, accrued interest thereon shall, until paid,
bear interest from the Redemption Date at the rate specified pursuant to Section
2.01 or provided in the Securities or, in the case of Original Issue Discount
Securities, such Securities' yield to maturity.
SECTION 3.07 Securities Redeemed or Purchased in Part.
Upon surrender to the Paying Agent of a Security to be
redeemed in part, the Partnership and the Subsidiary Guarantors 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
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 that is not redeemed.
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SECTION 3.08 Purchase of Securities.
Unless otherwise specified as contemplated by Section 2.01,
the Partnership, any Subsidiary Guarantor and any Affiliate of the Partnership
or any Subsidiary Guarantor may, subject to applicable law, at any time purchase
or otherwise acquire Securities in the open market or by private agreement. Any
such acquisition shall not operate as or be deemed for any purpose to be a
redemption of the indebtedness represented by such Securities. Any Securities
purchased or acquired by the Partnership or a Subsidiary Guarantor may be
delivered to the Trustee and, upon such delivery, the indebtedness represented
thereby shall be deemed to be satisfied. Section 2.13 shall apply to all
Securities so delivered.
SECTION 3.09 Mandatory and Optional Sinking Funds.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment." Unless otherwise provided by the terms of
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 3.10. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series and by this Article III.
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities.
The Partnership or a Subsidiary Guarantor may deliver
outstanding Securities of a series (other than any previously called for
redemption) and may apply as a credit Securities of a series that have been
redeemed either at the election of the Partnership pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of
such series required to be made pursuant to the terms of such series of
Securities; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
SECTION 3.11 Redemption of Securities for Sinking Fund.
Not less than 45 days prior (unless a shorter period shall be
satisfactory to the Trustee) to each sinking fund payment date for any series of
Securities, the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, 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 delivery of or by crediting Securities of that series pursuant to
Section 3.10 and will also deliver or cause to be delivered to the Trustee any
Securities to be so delivered. Failure of the Partnership to timely deliver or
cause to be delivered such Officers' Certificate and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute the
election of the Partnership (i) that the mandatory sinking fund payment for such
series due on the next
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succeeding sinking fund payment date shall be paid entirely in cash without the
option to deliver or credit Securities of such series in respect thereof and
(ii) that the Partnership will make no optional sinking fund payment with
respect to such series as provided in this Section 3.11.
If the sinking fund payment or payments (mandatory or optional
or both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $100,000 (or the Dollar equivalent thereof based on the applicable
Exchange Rate on the date of original issue of the applicable Securities) or a
lesser sum if the Partnership shall so request with respect to the Securities of
any particular series, such cash shall be applied on the next succeeding sinking
fund payment date to the redemption of Securities of such series at the sinking
fund redemption price together with accrued interest to the date fixed for
redemption. If such amount shall be $100,000 (or the Dollar equivalent thereof
as aforesaid) or less and the Partnership makes no such request then it shall be
carried over until a sum in excess of $100,000 (or the Dollar equivalent thereof
as aforesaid) is available. Not less than 30 days before each such sinking fund
payment date, the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.03 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 3.04. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 3.05, 3.06 and 3.07.
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Securities.
The Partnership shall pay the principal of, premium (if any)
and interest on and any Additional Amounts with respect to the Securities of
each series on the dates and in the manner provided in the Securities of such
series and in this Indenture. Principal, premium, interest and any Additional
Amounts shall be considered paid on the date due if the Paying Agent (other than
the Partnership, a Subsidiary Guarantor or a Subsidiary) holds on that date
money deposited by the Partnership or a Subsidiary Guarantor designated for and
sufficient to pay all principal, premium, interest and any Additional Amounts
then due.
The Partnership shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium (if any), at a rate equal to the then applicable interest rate on the
Securities to the extent lawful; and it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and any Additional Amount (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02 Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any
series of Securities an office or agency (which may be an office of the Trustee,
the Registrar or the Paying Agent) where Securities of that series may be
presented for registration of transfer or exchange, where Securities of that
series may be presented for payment and where notices and demands to
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or upon the Partnership or a Subsidiary Guarantor in respect of the Securities
of that series and this Indenture may be served. Unless otherwise designated by
the Partnership by written notice to the Trustee and the Subsidiary Guarantors,
such office or agency shall be the office of the Trustee in The City of New
York, which on the date hereof is located at ______________________________. The
Partnership will give prompt written notice to the Trustee and the Subsidiary
Guarantors of the location, and any change in the location, of such office or
agency. If at any time the Partnership shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee and the Subsidiary
Guarantors with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Partnership may also from time to time designate one or
more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Partnership of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Partnership will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 4.03 SEC Reports; Financial Statements.
(a) If the Partnership or a Subsidiary Guarantor is
subject to the requirements of Section 13 or 15(d) of the Exchange Act, the
Partnership or such Subsidiary Guarantor, as the case may be, shall file with
the Trustee, within 15 days after it files the same with the SEC, copies of the
annual reports and the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Partnership or such Subsidiary Guarantor is required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If this
Indenture is qualified under the TIA, but not otherwise, the Partnership and the
Subsidiary Guarantors shall also comply with the provisions of TIA Section
314(a). Delivery of such reports, information and documents to the Trustee shall
be for informational purposes only, and the Trustee's receipt thereof shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Partnership's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates or certificates delivered
pursuant to Section 4.04).
(b) If neither the Partnership nor any Subsidiary
Guarantor is subject to the requirements of Section 13 or 15(d) of the Exchange
Act, the Partnership and the Subsidiary Guarantors shall furnish to all Holders
of Rule 144A Securities and prospective purchasers of Rule 144A Securities
designated by the Holders of Rule 144A Securities, promptly upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) promulgated
under the Securities Act of 1933, as amended.
SECTION 4.04 Compliance Certificate.
(a) Each of the Partnership and the Subsidiary Guarantors
shall deliver to the Trustee, within 120 days after the end of each fiscal year,
a statement signed by an Officer of U.S. Propane, L.L.C., which need not
constitute an Officers' Certificate, complying with TIA Section
24
314(a)(4) and stating that in the course of performance by the signing Officer
of his duties as such Officer of U.S. Propane, L.L.C., he would normally obtain
knowledge of the keeping, observing, performing and fulfilling by the
Partnership or such Subsidiary Guarantor, as the case may be, of its obligations
under this Indenture, and further stating that to the best of his knowledge the
Partnership or such Subsidiary Guarantor, as the case may be, has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
such Officer may have knowledge and what action the Partnership or such
Subsidiary Guarantor, as the case may be, is taking or proposes to take with
respect thereto).
(b) The Partnership or any Subsidiary Guarantor shall, so
long as Securities of any series are outstanding, deliver to the Trustee,
forthwith upon any Officer of U.S. Propane, L.L.C., becoming aware of any
Default or Event of Default under this Indenture, an Officers' Certificate
specifying such Default or Event of Default and what action the Partnership or
such Subsidiary Guarantor, as the case may be, is taking or proposes to take
with respect thereto.
SECTION 4.05 Existence.
Subject to Article V, each of the Partnership and the
Subsidiary Guarantors shall do or cause to be done all things necessary to
preserve and keep in full force and effect its existence.
SECTION 4.06 Waiver of Stay, Extension or Usury Laws.
Each of the Partnership and the Subsidiary Guarantors
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 stay or extension law or any usury law or other law
that would prohibit or forgive it from paying all or any portion of the
principal of or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each of the Partnership and the Subsidiary Guarantors 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.
SECTION 4.07 Additional Amounts.
If the Securities of a series expressly provide for the
payment of Additional Amounts, the Partnership will pay to the Holder of any
Security of such series Additional Amounts as expressly provided therein.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of or any premium or interest on, or in respect of, any Security
of any series or the net proceeds received from the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this Section 4.07 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to the provisions of this Section 4.07 and express
mention of the payment of Additional Amounts (if applicable) in any
25
provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made.
ARTICLE V
SUCCESSORS
SECTION 5.01 Limitations on Mergers and Consolidations.
Neither the Partnership nor any Subsidiary Guarantor shall, in
any transaction or series of transactions, consolidate with or merge into any
Person, or sell, lease, convey, transfer or otherwise dispose of all or
substantially all of its assets to any Person (other than a consolidation or
merger of the Partnership and a Subsidiary Guarantor or of the Subsidiary
Guarantors, or a sale, lease, conveyance, transfer or other disposition of all
or substantially all of the assets of the Partnership to a Subsidiary Guarantor,
a Subsidiary Guarantor to the Partnership or of a Subsidiary Guarantor to
another Subsidiary Guarantor), unless:
(1) either (a) the Partnership or such Subsidiary
Guarantor, as the case may be, shall be the continuing Person or (b)
the Person (if other than the Partnership or such Subsidiary Guarantor)
formed by such consolidation or into which the Partnership or such
Subsidiary Guarantor is merged, or to which such sale, lease,
conveyance, transfer or other disposition shall be made (collectively,
the "Successor"), is organized and validly existing under the laws of
the United States, any political subdivision thereof or any State
thereof or the District of Columbia, and expressly assumes by
supplemental indenture, in the case of the Partnership, the due and
punctual payment of the principal of, premium (if any) and interest on
and any Additional Amounts with respect to all the Securities and the
performance of the Partnership's covenants and obligations under this
Indenture and the Securities, or, in the case of such Subsidiary
Guarantor, the performance of the Guarantee and such Subsidiary
Guarantor's covenants and obligations under this Indenture and the
Securities;
(2) immediately after giving effect to such transaction
or series of transactions, no Default or Event of Default shall have
occurred and be continuing or would result therefrom; and
(3) the Partnership or such Subsidiary Guarantor, as the
case may be, delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that the transaction and such
supplemental indenture comply with this Indenture.
SECTION 5.02 Successor Person Substituted.
Upon any consolidation or merger of the Partnership or a
Subsidiary Guarantor, as the case may be, or any sale, lease, conveyance,
transfer or other disposition of all or substantially all of the assets of the
Partnership or such Subsidiary Guarantor in accordance with Section 5.01, the
Successor formed by such consolidation or into or with which the Partnership or
such Subsidiary Guarantor is merged or to which such sale, lease, conveyance,
transfer or other disposition is made shall succeed to, and be substituted for,
and may exercise every right and power of the Partnership or such Subsidiary
Guarantor, as the case may be, under this Indenture and the Securities with the
same effect as if such Successor had been named as the
26
Partnership or such Subsidiary Guarantor, as the case may be, herein and the
predecessor Partnership or Subsidiary Guarantor, in the case of a sale,
conveyance, transfer or other disposition, shall be released from all
obligations under this Indenture, the Securities and, in the case of a
Subsidiary Guarantor, the Guarantee.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
Unless either inapplicable to a particular series or
specifically deleted or modified in or pursuant to the supplemental indenture or
Board Resolution establishing such series of Securities or in the form of
Security for such series, an "Event of Default," wherever used herein with
respect to Securities of any series, occurs if:
(1) there is a default in the payment of
interest on or any Additional Amounts with respect to any Security of
that series when the same becomes due and payable and such default
continues for a period of 30 days;
(2) there is a default in the payment of the
principal of or premium, if any, on any Securities of that series as
and when the same shall become due and payable, whether at Stated
Maturity, upon redemption, by declaration, upon required repurchase or
otherwise;
(3) there is a default in the payment of any
sinking fund payment with respect to any Securities of that series as
and when the same shall become due and payable;
(4) there is a failure on the part of the
Partnership, or if any series of Securities outstanding under this
Indenture is entitled to the benefits of a Guarantee by the Subsidiary
Guarantors, any of the Subsidiary Guarantors, duly to observe or
perform any other of the covenants or agreements on the part of the
Partnership, or if applicable, any of the Subsidiary Guarantors, in the
Securities of that series, in any resolution of the Board of Directors
authorizing the issuance of that series of Securities, in this
Indenture with respect to such series or in any supplemental Indenture
with respect to such series (other than a default in the performance of
a covenant which is specifically dealt with elsewhere in this Section
6.01), continuing for a period of 60 days after the date on which
written notice specifying such failure and requiring the Partnership,
or if applicable, the Subsidiary Guarantors, to remedy the same shall
have been given, by registered or certified mail, to the Partnership,
or if applicable, the Subsidiary Guarantors, by the Trustee or to the
Partnership, or if applicable, the Subsidiary Guarantors, and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities of that series at the time outstanding;
(5) the Partnership, or if any series of
Securities outstanding under this Indenture is entitled to the benefits
of a Guarantee by the Subsidiary Guarantors, any of the Subsidiary
Guarantors, pursuant to or within the meaning of any Bankruptcy Law:
27
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Bankruptcy
Custodian of it or for all or substantially all of its
property, or
(D) makes a general assignment for the benefit
of its creditors;
(6) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that remains unstayed and in
effect for 60 days and that:
(A) is for relief against the Partnership or any
Subsidiary Guarantor as debtor in an involuntary case,
(B) appoints a Bankruptcy Custodian of the
Partnership or any Subsidiary Guarantor or a Bankruptcy
Custodian for all or substantially all of the property of the
Partnership or any Subsidiary Guarantor, or
(C) orders the liquidation of the Partnership or
any Subsidiary Guarantor;
(7) if any series of Securities outstanding
under this Indenture is entitled to the benefits of a
Guarantee by the Subsidiary Guarantors, any of the Subsidiary
Guarantors ceases to be in full force and effect with respect
to Securities of that series (except as otherwise provided in
this Indenture) or is declared null and void in a judicial
proceeding or any of the Subsidiary Guarantors (if applicable)
denies or disaffirms its obligations under this Indenture or
such Guarantee; or
(8) any other Event of Default provided with
respect to Securities of that series occurs.
The term "Bankruptcy Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know or have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Default or Event of Default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Securities and this
Indenture.
When a Default is cured, it ceases.
Notwithstanding the foregoing provisions of this Section 6.01,
if the principal of, premium (if any) or interest on or Additional Amounts with
respect to any Security is payable in a currency or currencies (including a
composite currency) other than Dollars and such currency
28
or currencies are not available to the Partnership or a Subsidiary Guarantor for
making payment thereof due to the imposition of exchange controls or other
circumstances beyond the control of the Partnership or such Subsidiary Guarantor
(a "Conversion Event"), each of the Partnership and the Subsidiary Guarantors
will be entitled to satisfy its obligations to Holders of the Securities by
making such payment in Dollars in an amount equal to the Dollar equivalent of
the amount payable in such other currency, as determined by the Partnership or
the Subsidiary Guarantor making such payment, as the case may be, by reference
to the Exchange Rate on the date of such payment, or, if such rate is not then
available, on the basis of the most recently available Exchange Rate.
Notwithstanding the foregoing provisions of this Section 6.01, any payment made
under such circumstances in Dollars where the required payment is in a currency
other than Dollars will not constitute an Event of Default under this Indenture.
Promptly after the occurrence of a Conversion Event, the
Partnership or a Subsidiary Guarantor shall give written notice thereof to the
Trustee; and the Trustee, promptly after receipt of such notice, shall give
notice thereof in the manner provided in Section 11.02 to the Holders. Promptly
after the making of any payment in Dollars as a result of a Conversion Event,
the Partnership or the Subsidiary Guarantor making such payment, as the case may
be, shall give notice in the manner provided in Section 11.02 to the Holders,
setting forth the applicable Exchange Rate and describing the calculation of
such payments.
A Default under clause (4) or (8) of this Section 6.01 is not
an Event of Default until the Trustee notifies the Partnership and the
Subsidiary Guarantors, or the Holders of at least 25% in principal amount of the
then outstanding Securities of the series affected by such Default (or, in the
case of a Default under clause (4) of this Section 6.01, if outstanding
Securities of other series are affected by such Default, then at least 25% in
principal amount of the then outstanding Securities so affected) notify the
Partnership, the Subsidiary Guarantors and the Trustee, of the Default, and the
Partnership or the applicable Subsidiary Guarantor, as the case may be, fails to
cure the Default within 60 days after receipt of the notice. The notice must
specify the Default, demand that it be remedied and state that the notice is a
"Notice of Default."
SECTION 6.02 Acceleration.
If an Event of Default with respect to any Securities of any
series at the time outstanding (other than an Event of Default specified in
clause (5) or (6) of Section 6.01) occurs and is continuing, the Trustee by
notice to the Partnership and the Subsidiary Guarantors, or the Holders of at
least 25% in principal amount of the then outstanding Securities of the series
affected by such Event of Default (or, in the case of an Event of Default
described in clause (4) of Section 6.01, if outstanding Securities of other
series are affected by such Event of Default, then at least 25% in principal
amount of the then outstanding Securities so affected) by notice to the
Partnership, the Subsidiary Guarantors and the Trustee, may declare the
principal of (or, if any such Securities are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of that
series) and all accrued and unpaid interest on all then outstanding Securities
of such series or of all series, as the case may be, to be due and payable. Upon
any such declaration, the amounts due and payable on the Securities shall be due
and payable immediately. If an Event of Default specified in clause (5) or (6)
of Section 6.01 hereof occurs, such amounts shall ipso facto become and be
immediately due and payable without any declaration, notice or other act on the
part of the Trustee or any Holder. The Holders of a
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majority in principal amount of the then outstanding Securities of the series
affected by such Event of Default or all series, as the case may be, by written
notice to the Trustee may rescind an acceleration and its consequences (other
than nonpayment of principal of or premium or interest on or any Additional
Amounts with respect to the Securities) if the rescission would not conflict
with any judgment or decree and if all existing Events of Default with respect
to Securities of that series (or of all series, as the case may be) have been
cured or waived, except nonpayment of principal, premium, interest or any
Additional Amounts that has become due solely because of the acceleration.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of, or
premium, if any, or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a majority
in principal amount of the then outstanding Securities of any series or of all
series (acting as one class) by notice to the Trustee may waive an existing or
past Default or Event of Default with respect to such series or all series, as
the case may be, and its consequences (including waivers obtained in connection
with a tender offer or exchange offer for Securities of such series or all
series or a solicitation of consents in respect of Securities of such series or
all series, provided that in each case such offer or solicitation is made to all
Holders of then outstanding Securities of such series or all series (but the
terms of such offer or solicitation may vary from series to series)), except (1)
a continuing Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on or any Additional Amounts with respect to any
Security or (2) a continued Default in respect of a provision that under Section
9.02 cannot be amended or supplemented without the consent of each Holder
affected. Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05 Control by Majority.
With respect to Securities of any series, the Holders of a
majority in principal amount of the then outstanding Securities of such series
may direct in writing the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it relating to or arising under an Event of Default described in
clause (1), (2), (3) or (7) of Section 6.01, and with respect to all Securities,
the Holders of a majority in principal amount of all the then outstanding
Securities affected may direct in writing
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the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on it not relating to
or arising under such an Event of Default. However, the Trustee may refuse to
follow any direction that conflicts with applicable law or this Indenture, that
the Trustee determines may be unduly prejudicial to the rights of other Holders,
or that may involve the Trustee in personal liability; provided, however, that
the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction. Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion from Holders directing the Trustee against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06 Limitations on Suits.
Subject to Section 6.07 hereof, a Holder of a Security of any
series may pursue a remedy with respect to this Indenture or the Securities of
such series only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default with respect to such series;
(2) the Holders of at least 25% in principal amount of
the then outstanding Securities of such series make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority
in principal amount of the Securities of that series do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal of and
premium, if any, and interest on and any Additional Amounts with respect to the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default specified in clause (1) or (2) of
Section 6.01 hereof occurs and is continuing, the Trustee is authorized to
recover judgment in its own name and as trustee of an express trust against the
Partnership or a Subsidiary Guarantor for the amount of principal,
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premium (if any), interest and any Additional Amounts remaining unpaid on the
Securities of the series affected by the Event of Default, and interest on
overdue principal and premium, if any, and, to the extent lawful, interest on
overdue interest, and 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.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents and to take such actions, including participating as a
member, voting or otherwise, of any committee of creditors, as may be necessary
or advisable to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Partnership or a Subsidiary Guarantor or their respective
creditors or properties and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable on any such
claims and any Bankruptcy Custodian 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 to 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 7.07. To the
extent that the payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties which the Holders of the Securities may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained 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.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article VI,
it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the
Securities in respect of which or for the benefit of which such money
has been collected, for principal, premium (if any), interest and any
Additional Amounts ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium (if any), interest and any Additional Amounts,
respectively; and
Third: to the Partnership.
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The Trustee, upon prior written notice to the Partnership, may
fix record dates and payment dates for any payment to Holders pursuant to this
Article VI.
To the fullest extent allowed under applicable law, if for the
purpose of obtaining a judgment against the Partnership or a Subsidiary
Guarantor in any court it is necessary to convert the sum due in respect of the
principal of, premium (if any) or interest on or Additional Amounts with respect
to the Securities of any series (the "Required Currency") into a currency in
which a judgment will be rendered (the "Judgment Currency"), the rate of
exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the Business Day in The City of New York
next preceding that on which final judgment is given. Neither the Partnership,
any Subsidiary Guarantor nor the Trustee shall be liable for any shortfall nor
shall it benefit from any windfall in payments to Holders of Securities under
this Section 6.10 caused by a change in exchange rates between the time the
amount of a judgment against it is calculated as above and the time the Trustee
converts the Judgment Currency into the Required Currency to make payments under
this Section 6.10 to Holders of Securities, but payment of such judgment shall
discharge all amounts owed by the Partnership and the Subsidiary Guarantors on
the claim or claims underlying such judgment.
SECTION 6.11 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 or
omitted by it as a trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in principal amount of the then outstanding Securities of any series.
ARTICLE VII
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If 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 such
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default
with respect to the Securities of any series:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
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(2) 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. However, the Trustee shall examine such certificates
and opinions to determine whether, on their face, they appear to
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of Section
7.01(b);
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
the provisions of this Section 7.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Partnership and the Subsidiary Guarantors. Money held in trust by the Trustee
need not be segregated from other funds except to the extent required by law.
All money received by the Trustee shall, until applied as herein provided, be
held in trust for the payment of the principal of, premium (if any) and interest
on and Additional Amounts with respect to the Securities.
SECTION 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely on any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require instruction, an Officers' Certificate or an Opinion of Counsel or
both to be provided. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such instruction, Officers'
Certificate or Opinion of Counsel. The Trustee may consult at the Partnership's
expense with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
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(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Partnership or any
Subsidiary Guarantor shall be sufficient if signed by an Officer of U.S. Propane
L.L.C.
(f) The Trustee shall not be obligated 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.
(g) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder.
(h) The Trustee may request that the Partnership deliver
an Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 7.03 May Hold Securities.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Partnership,
any Subsidiary Guarantor or any of their respective Affiliates with the same
rights it would have if it were not Trustee. Any Agent may do the same with like
rights and duties. However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Partnership's use of the proceeds from the Securities or any money paid to
the Partnership or any Subsidiary Guarantor or upon the Partnership's or such
Subsidiary Guarantor's direction under any provision hereof, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee and it shall not be responsible for any statement or
recital herein or any statement in the Securities other than its certificate of
authentication.
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SECTION 7.05 Notice of Defaults.
If a Default or Event of Default with respect to the
Securities of any series occurs and is continuing and it is known to the
Trustee, the Trustee shall mail to Holders of Securities of such series a notice
of the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium (if
any) and interest on and Additional Amounts or any sinking fund installment with
respect to the Securities of such series, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Holders of Securities of such
series.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each September 15 of each year after the
execution of this Indenture, the Trustee shall mail to Holders of a series, the
Subsidiary Guarantors and the Partnership a brief report dated as of such
reporting date that complies with TIA Section 313(a); provided, however, that if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date with respect to a series, no report need be
transmitted to Holders of such series. The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports if and as
required by TIA Sections 313(c) and 313(d).
A copy of each report at the time of its mailing to Holders of
a series of Securities shall be filed by the Partnership or a Subsidiary
Guarantor with the SEC and each securities exchange, if any, on which the
Securities of such series are listed. The Partnership shall notify the Trustee
if and when any series of Securities is listed on any securities exchange.
SECTION 7.07 Compensation and Indemnity.
The Partnership agrees to pay to the Trustee for its
acceptance of this Indenture and services hereunder such compensation as the
Partnership and the Trustee shall from time to time agree in writing. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Partnership agrees to reimburse the Trustee
upon request for all reasonable disbursements, advances and expenses incurred by
it. Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Partnership hereby indemnifies the Trustee and any
predecessor Trustee against any and all loss, liability, damage, claim or
expense, including taxes (other than taxes based upon, measured by or determined
by the income of the Trustee), incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture, except
as set forth in the next following paragraph. The Trustee shall notify the
Partnership and the Subsidiary Guarantors promptly of any claim for which it may
seek indemnity. The Partnership shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Partnership shall pay the reasonable fees and expenses of such counsel. The
Partnership need not pay for any settlement made without its consent.
The Partnership shall not be obligated to reimburse any
expense or indemnify against any loss or liability incurred by the Trustee
through the Trustee's negligence or bad faith.
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To secure the payment obligations of the Partnership in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
principal of, premium (if any) and interest on and any Additional Amounts with
respect to Securities of any series. Such lien and the Partnership's obligations
under this Section 7.07 shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(5) or (6) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign and be discharged at any time with
respect to the Securities of one or more series by so notifying the Partnership
and the Subsidiary Guarantors. The Holders of a majority in principal amount of
the then outstanding Securities of any series may remove the Trustee with
respect to the Securities of such series by so notifying the Trustee, the
Partnership and the Subsidiary Guarantors. The Partnership may remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Bankruptcy Custodian or public officer takes charge
of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, with respect to the Securities of one or
more series, the Partnership 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).
Within one year after the successor Trustee with respect to the Securities of
any series takes office, the Holders of a majority in principal amount of the
Securities of such series then outstanding may appoint a successor Trustee to
replace the successor Trustee appointed by the Partnership.
If a successor Trustee with respect to the Securities of any
series does not take office within 30 days after the retiring or removed Trustee
resigns or is removed, the retiring or removed Trustee (at the expense of the
Partnership), the Partnership, any Subsidiary Guarantor or the Holders of at
least 10% in principal amount of the then outstanding Securities of such
37
series may petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
If the Trustee with respect to the Securities of a series
fails to comply with Section 7.10, any Holder of Securities of such series may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee with respect to the Securities of such
series.
In case of the appointment of a successor Trustee with respect
to all Securities, each such successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee, to the Partnership and to
the Subsidiary Guarantors. Thereupon the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the retiring Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07.
In case of the appointment of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Partnership, the
Subsidiary Guarantors, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more (but not all) series shall execute and
deliver an indenture supplemental hereto in which each successor Trustee shall
accept such appointment and that (1) shall confer to each successor Trustee all
the rights, powers 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 confirm that all the rights, powers and duties of the retiring
Trustee with respect to the Securities of that or those series as to which the
retiring Trustee is not retiring shall continue to be vested in the retiring
Trustee and (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. Nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust, and 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. Upon the execution and delivery of such supplemental indenture,
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee shall have all the
rights, powers 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. On request of the Partnership or any successor Trustee, such retiring
Trustee shall transfer to such successor Trustee all property held by such
retiring Trustee as Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates. Such retiring
Trustee shall, however, have the right to deduct its unpaid fees and expenses,
including attorneys' fees.
Notwithstanding replacement of the Trustee or Trustees
pursuant to this Section 7.08, the obligations of the Partnership under Section
7.07 shall continue for the benefit of the retiring Trustee or Trustees.
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SECTION 7.09 Successor Trustee by Merger, etc.
Subject to Section 7.10, if the Trustee consolidates, merges
or converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, however, that in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation, the transferee corporation expressly assumes all of the Trustee's
liabilities hereunder.
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; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be
a corporation or banking association organized and doing business under the laws
of the United States, any State thereof or the District of Columbia and
authorized under such laws to exercise corporate trust power, shall be subject
to supervision or examination by federal or state (or the District of Columbia)
authority and shall have, or be a subsidiary of a bank or bank holding company
having, a combined capital and surplus of at least $50 million as set forth in
its most recent published annual report of condition.
The Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA Section 310(b) during the
period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b).
SECTION 7.11 Preferential Collection of Claims Against the Partnership or a
Subsidiary Guarantor.
The Trustee is subject to and shall comply with the provisions
of TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
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ARTICLE VIII
DISCHARGE OF INDENTURE
SECTION 8.01 Termination of the Partnership's and the Subsidiary Guarantors'
Obligations.
(a) This Indenture shall cease to be of further effect
with respect to the Securities of a series (except that the Partnership's
obligations under Section 7.07, the Trustee's and Paying Agent's obligations
under Section 8.03 and the rights, powers, protections and privileges accorded
the Trustee under Article VII shall survive), and the Trustee and the Subsidiary
Guarantors, on demand of the Partnership, shall execute proper instruments
acknowledging the satisfaction and discharge of this Indenture with respect to
the Securities of such series, when:
(1) either:
(A) all outstanding Securities of such series
theretofore authenticated and issued (other than destroyed,
lost or stolen Securities that have been replaced or paid)
have been delivered to the Trustee for cancellation; or
(B) all outstanding Securities of such series
not theretofore delivered to the Trustee for cancellation:
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one
year, or
(iii) are to be called for redemption
within one year under arrangements
satisfactory to the Trustee for the
giving of notice of redemption by
the Trustee in the name, and at the
expense, of the Partnership,
and, in the case of clause (i), (ii) or (iii) above, the
Partnership or a Subsidiary Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as funds
(immediately available to the Holders in the case of clause
(i)) in trust for such purpose (x) cash in an amount, or (y)
Government Obligations, maturing as to principal and interest
at such times and in such amounts as will ensure the
availability of cash in an amount or (z) a combination
thereof, which will be sufficient, in the opinion (in the case
of clauses (y) and (z)) of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge the entire indebtedness on the Securities of such
series for principal and interest to the date of such deposit
(in the case of Securities which have become due and payable)
or for principal, premium, if any, and interest to the Stated
Maturity or Redemption Date, as the case may be; or
40
(C) the Partnership and the Subsidiary
Guarantors have properly fulfilled such other means of
satisfaction and discharge as is specified, as contemplated by
Section 2.01, to be applicable to the Securities of such
series;
(2) the Partnership or a Subsidiary Guarantor has paid or
caused to be paid all other sums payable by them hereunder with respect
to the Securities of such series; and
(3) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, together with an
Opinion of Counsel to the same effect.
(b) Unless this Section 8.01(b) is specified as not being
applicable to Securities of a series as contemplated by Section 2.01, the
Partnership may, at its option, terminate certain of its and the Subsidiary
Guarantors' respective obligations under this Indenture ("covenant defeasance")
with respect to the Securities of a series if:
(1) the Partnership or a Subsidiary Guarantor has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for and dedicated solely to
the benefit of the Holders of Securities of such series, (i) money in
the currency in which payment of the Securities of such series is to be
made in an amount, or (ii) Government Obligations with respect to such
series, maturing as to principal and interest at such times and in such
amounts as will ensure the availability of money in the currency in
which payment of the Securities of such series is to be made in an
amount or (iii) a combination thereof, that is sufficient, in the
opinion (in the case of clauses (ii) and (iii)) of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay the
principal of and premium (if any) and interest on all Securities of
such series on each date that such principal, premium (if any) or
interest is due and payable and (at the Stated Maturity thereof or upon
redemption as provided in Section 8.01(e)) to pay all other sums
payable by it hereunder; provided that the Trustee shall have been
irrevocably instructed to apply such money and/or the proceeds of such
Government Obligations to the payment of said principal, premium (if
any) and interest with respect to the Securities of such series as the
same shall become due;
(2) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, and an Opinion of
Counsel to the same effect;
(3) no Default or Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the
date of such deposit;
(4) the Partnership shall have delivered to the Trustee
an Opinion of Counsel from a nationally recognized counsel acceptable
to the Trustee or a tax ruling to the effect that the Holders will not
recognize income, gain or loss for U.S. Federal income tax
41
purposes as a result of the Partnership's exercise of its option under
this Section 8.01(b) and will be subject to U.S. Federal income tax on
the same amount and in the same manner and at the same times as would
have been the case if such option had not been exercised;
(5) the Partnership and the Subsidiary Guarantors have
complied with any additional conditions specified pursuant to Section
2.01 to be applicable to the discharge of Securities of such series
pursuant to this Section 8.01; and
(6) such deposit and discharge shall not cause the
Trustee to have a conflicting interest as defined in TIA Section
310(b).
In such event, this Indenture shall cease to be of further
effect (except as set forth in this paragraph), and the Trustee and the
Subsidiary Guarantors, on demand of the Partnership, shall execute proper
instruments acknowledging satisfaction and discharge under this Indenture.
However, the Partnership's and the Subsidiary Guarantors' respective obligations
in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 4.02, 7.07, 7.08, 8.04 and
10.01, the Trustee's and Paying Agent's obligations in Section 8.03 and the
rights, powers, protections and privileges accorded the Trustee under Article
VII shall survive until all Securities of such series are no longer outstanding.
Thereafter, only the Partnership's obligations in Section 7.07 and the Trustee's
and Paying Agent's obligations in Section 8.03 shall survive with respect to
Securities of such series.
After such irrevocable deposit made pursuant to this Section
8.01(b) and satisfaction of the other conditions set forth herein, the Trustee
upon request shall acknowledge in writing the discharge of the Partnership's and
the Subsidiary Guarantors' obligations under this Indenture with respect to the
Securities of such series except for those surviving obligations specified
above.
In order to have money available on a payment date to pay
principal of or premium (if any) or interest on the Securities, the Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. Government
Obligations shall not be callable at the issuer's option.
(c) If the Partnership and the Subsidiary Guarantors have
previously complied or are concurrently complying with Section 8.01(b) (other
than any additional conditions specified pursuant to Section 2.01 that are
expressly applicable only to covenant defeasance) with respect to Securities of
a series, then, unless this Section 8.01(c) is specified as not being applicable
to Securities of such series as contemplated by Section 2.01, the Partnership
may elect that its and the Subsidiary Guarantors' respective obligations to make
payments with respect to Securities of such series be discharged ("legal
defeasance"), if:
(1) no Default or Event of Default under clauses (5) and
(6) of Section 6.01 hereof shall have occurred at any time during the
period ending on the 91st day after the date of deposit contemplated by
Section 8.01(b) (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(2) unless otherwise specified with respect to Securities
of such series as contemplated by Section 2.01, the Partnership has
delivered to the Trustee an Opinion of
42
Counsel from a nationally recognized counsel acceptable to the Trustee
to the effect referred to in Section 8.01(b)(4) with respect to such
legal defeasance, which opinion is based on (i) a private ruling of the
Internal Revenue Service addressed to the Partnership, (ii) a published
ruling of the Internal Revenue Service pertaining to a comparable form
of transaction or (iii) a change in the applicable federal income tax
law (including regulations) after the date of this Indenture;
(3) the Partnership and the Subsidiary Guarantors have
complied with any other conditions specified pursuant to Section 2.01
to be applicable to the legal defeasance of Securities of such series
pursuant to this Section 8.01(c); and
(4) the Partnership has delivered to the Trustee a
Partnership Request requesting such legal defeasance of the Securities
of such series and an Officers' Certificate stating that all conditions
precedent with respect to such legal defeasance of the Securities of
such series have been complied with, together with an Opinion of
Counsel to the same effect.
In such event, the Partnership and the Subsidiary Guarantors
will be discharged from their respective obligations under this Indenture and
the Securities of such series to pay principal of, premium (if any) and interest
on, and any Additional Amounts with respect to, Securities of such series, the
Partnership's and the Subsidiary Guarantors' respective obligations under
Sections 4.01, 4.02 and 10.01 shall terminate with respect to such Securities,
and the entire indebtedness of the Partnership evidenced by such Securities and
of the Subsidiary Guarantors evidenced by the related Guarantees shall be deemed
paid and discharged.
(d) If and to the extent additional or alternative means
of satisfaction, discharge or defeasance of Securities of a series are specified
to be applicable to such series as contemplated by Section 2.01, each of the
Partnership and the Subsidiary Guarantors may terminate any or all of its
obligations under this Indenture with respect to Securities of a series and any
or all of its obligations under the Securities of such series if it fulfills
such other means of satisfaction and discharge as may be so specified, as
contemplated by Section 2.01, to be applicable to the Securities of such series.
(e) If Securities of any series subject to subsections
(a), (b), (c) or (d) of this Section 8.01 are to be redeemed prior to their
Stated Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory or optional sinking fund provisions, the terms of
the applicable trust arrangement shall provide for such redemption, and the
Partnership shall make such arrangements as are reasonably satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Partnership.
SECTION 8.02 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the
Partnership shall hold in trust money or Government Obligations deposited with
it pursuant to Section 8.01 hereof. It shall apply the deposited money and the
money from Government Obligations through the Paying Agent and in accordance
with this Indenture to the payment of principal of, premium (if
43
any) and interest on and any Additional Amounts with respect to the Securities
of the series with respect to which the deposit was made.
SECTION 8.03 Repayment to Partnership or Subsidiary Guarantor.
The Trustee and the Paying Agent shall promptly pay to the
Partnership or any Subsidiary Guarantor any excess money or Government
Obligations (or proceeds therefrom) held by them at any time upon the written
request of the Partnership.
Subject to the requirements of any applicable abandoned
property laws, the Trustee and the Paying Agent shall pay to the Partnership
upon written request any money held by them for the payment of principal,
premium (if any), interest or any Additional Amounts that remain unclaimed for
two years after the date upon which such payment shall have become due. After
payment to the Partnership, Holders entitled to the money must look to the
Partnership for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee and the
Paying Agent with respect to such money shall cease.
SECTION 8.04 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money or Government Obligations deposited with respect to Securities of any
series in accordance with Section 8.01 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the
obligations of the Partnership and the Subsidiary Guarantors under this
Indenture with respect to the Securities of such series and under the Securities
of such series shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 until such time as the Trustee or the Paying Agent is
permitted to apply all such money or Government Obligations in accordance with
Section 8.01; provided, however, that if the Partnership or any Subsidiary
Guarantor has made any payment of principal of, premium (if any) or interest on
or any Additional Amounts with respect to any Securities because of the
reinstatement of its obligations, the Partnership or such Subsidiary Guarantor,
as the case may be, shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or Government Obligations held
by the Trustee or the Paying Agent.
ARTICLE IX
SUPPLEMENTAL INDENTURES AND AMENDMENTS
SECTION 9.01 Without Consent of Holders.
The Partnership, the Subsidiary Guarantors and the Trustee may
amend or supplement this Indenture or the Securities or waive any provision
hereof or thereof without the consent of any Holder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Section 5.01;
44
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities, or to provide for the
issuance of bearer Securities (with or without coupons);
(4) to provide any security for, or to add any guarantees
of or additional obligors on, any series of Securities or the related
Guarantees;
(5) to comply with any requirement in order to effect or
maintain the qualification of this Indenture under the TIA;
(6) to add to the covenants of the Partnership or any
Subsidiary Guarantor 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 Partnership or
any Subsidiary Guarantor;
(7) to add any additional Events of Default with respect
to all or any series of the Securities (and, if any Event of Default is
applicable to less than all series of Securities, specifying the series
to which such Event of Default is applicable);
(8) to change or eliminate any of the provisions of this
Indenture; provided that any such change or elimination shall become
effective only when there is no outstanding Security of any series
created prior to the execution of such amendment or supplemental
indenture that is adversely affected in any material respect by such
change in or elimination of such provision;
(9) to establish the form or terms of Securities of any
series as permitted by Section 2.01;
(10) to supplement any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Section 8.01; provided, however, that any such action shall not
adversely affect the interest of the Holders of Securities of such
series or any other series of Securities in any material respect; or
(11) 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 7.08.
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon receipt by the Trustee of the documents described in
Section 9.06, the Trustee shall, subject to Section 9.06, join with the
Partnership and the Subsidiary Guarantors in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and make any
further appropriate agreements and stipulations that may be therein contained.
45
SECTION 9.02 With Consent of Holders.
Except as provided below in this Section 9.02, the
Partnership, the Subsidiary Guarantors and the Trustee may amend or supplement
this Indenture with the written consent (including consents obtained in
connection with a tender offer or exchange offer for Securities of any one or
more series or all series or a solicitation of consents in respect of Securities
of any one or more series or all series, provided that in each case such offer
or solicitation is made to all Holders of then outstanding Securities of each
such series (but the terms of such offer or solicitation may vary from series to
series)) of the Holders of at least a majority in principal amount of the then
outstanding Securities of all series affected by such amendment or supplement
(acting as one class).
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon the filing with the Trustee of evidence of the consent of
the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 9.06, the Trustee shall, subject to Section 9.06, join with
the Partnership and the Subsidiary Guarantors in the execution of such amendment
or supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
The Holders of a majority in principal amount of the then
outstanding Securities of one or more series or of all series may waive
compliance in a particular instance by the Partnership or any Subsidiary
Guarantor with any provision of this Indenture with respect to Securities of
such series (including waivers obtained in connection with a tender offer or
exchange offer for Securities of such series or a solicitation of consents in
respect of Securities of such series, provided that in each case such offer or
solicitation is made to all Holders of then outstanding Securities of such
series (but the terms of such offer or solicitation may vary from series to
series)).
However, without the consent of each Holder affected, an
amendment, supplement or waiver under this Section 9.02 may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Security;
(3) reduce the principal of, any premium on or any
mandatory sinking fund payment with respect to, or change the Stated
Maturity of, any Security or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
6.02;
(4) reduce the premium, if any, payable upon the
redemption of any Security or change the time at which any Security may
or shall be redeemed;
46
(5) change any obligation of the Partnership or any
Subsidiary Guarantor to pay Additional Amounts with respect to any
Security;
(6) change the coin or currency or currencies (including
composite currencies) in which any Security or any premium, interest or
Additional Amounts with respect thereto are payable;
(7) impair the right to institute suit for the
enforcement of any payment of principal of, premium (if any) or
interest on or any Additional Amounts with respect to any Security
pursuant to Sections 6.07 and 6.08, except as limited by Section 6.06;
(8) make any change in the percentage of principal amount
of Securities necessary to waive compliance with certain provisions of
this Indenture pursuant to Section 6.04 or 6.07 or make any change in
this sentence of Section 9.02;
(9) waive a continuing Default or Event of Default in the
payment of principal of, premium (if any) or interest on or Additional
Amounts with respect to the Securities; or
(10) release any Subsidiary Guarantors or modify the
Guarantee in any manner adverse to the Holders.
A supplemental indenture that 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.
The right of any Holder to participate in any consent required
or sought pursuant to any provision of this Indenture (and the obligation of the
Partnership or any Subsidiary Guarantor to obtain any such consent otherwise
required from such Holder) may be subject to the requirement that such Holder
shall have been the Holder of record of any Securities with respect to which
such consent is required or sought as of a date identified by the Partnership or
such Subsidiary Guarantor in a notice furnished to Holders in accordance with
the terms of this Indenture.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Partnership shall mail to the Holders of each
Security affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Partnership to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such amendment, supplement or waiver.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the
Securities shall comply in form and substance with the TIA as then in effect.
47
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his or her Security or portion of a Security if the Trustee
receives written notice of revocation before a date and time therefor identified
by the Partnership or any Subsidiary Guarantor in a notice furnished to such
Holder in accordance with the terms of this Indenture or, if no such date and
time shall be identified, the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
The Partnership or any Subsidiary Guarantor may, but shall not
be obligated to, fix a record date (which need not comply with TIA Section
316(c)) for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver or to take any other action under this
Indenture. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No consent shall be valid or effective for more than 90
days after such record date unless consents from Holders of the principal amount
of Securities required hereunder for such amendment or waiver to be effective
shall have also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it is of the type described in any of clauses
(1) through (9) of Section 9.02 hereof. In such case, the amendment, supplement
or waiver shall bind each Holder who has consented to it and every subsequent
Holder that evidences the same debt as the consenting Holder's Security.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment or supplement changes the terms of an
outstanding Security, the Partnership may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security at the request of the Partnership regarding the changed terms and
return it to the Holder. Alternatively, if the Partnership so determines, the
Partnership in exchange for the Security shall issue, and the Subsidiary
Guarantors shall execute and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to issue
a new Security shall not affect the validity of such amendment or supplement.
Securities of any series authenticated and delivered after the
execution of any amendment or supplement 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 amendment or supplement.
48
SECTION 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized
pursuant to this Article if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplement, the Trustee shall be entitled to receive, and, subject
to Section 7.01 hereof, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel provided at the expense of the Partnership
or a Subsidiary Guarantor as conclusive evidence that such amendment or
supplement is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the
Partnership and the Subsidiary Guarantors in accordance with its terms.
ARTICLE X
GUARANTEE
SECTION 10.01 Guarantee.
(a) Notwithstanding any provision of this Article X to
the contrary, the provisions of this Article X relating to the Subsidiary
Guarantors shall be applicable only to, and inure solely to the benefit of, the
Securities of any series designated, pursuant to Section 2.01, as entitled to
the benefits of the Guarantee of each of the Subsidiary Guarantors.
(b) For value received, each of the Subsidiary Guarantors
hereby fully, unconditionally and absolutely guarantees (the "Guarantee") to the
Holders and to the Trustee the due and punctual payment of the principal of, and
premium, if any, and interest on the Securities and all other amounts due and
payable under this Indenture and the Securities by the Partnership, when and as
such principal, premium, if any, and interest shall become due and payable,
whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise, according to the terms of the Securities and this
Indenture, subject to the limitations set forth in Section 10.03.
(c) Failing payment when due of any amount guaranteed
pursuant to the Guarantee, for whatever reason, each of the Subsidiary
Guarantors will be jointly and severally obligated to pay the same immediately.
The Guarantee hereunder is intended to be a general, unsecured, senior
obligation of each of the Subsidiary Guarantors and will rank pari passu in
right of payment with all Debt of such Subsidiary Guarantor that is not, by its
terms, expressly subordinated in right of payment to the Guarantee. Each of the
Subsidiary Guarantors hereby agrees that its obligations hereunder shall be
full, unconditional and absolute, irrespective of the validity, regularity or
enforceability of the Securities, the Guarantee (including the Guarantee of any
Subsidiary Guarantor) or this Indenture, the absence of any action to enforce
the same, any waiver or consent by any Holder of the Securities with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Partnership or any Subsidiary Guarantor, or any action to enforce the same or
any other circumstances which might otherwise constitute a legal or equitable
discharge or defense of the Subsidiary Guarantors. Each of the Subsidiary
Guarantors hereby agrees that in the event of a default in payment of the
principal of, or premium, if any, or interest on the Securities, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise, legal proceedings may be instituted by the Trustee
49
on behalf of the Holders or, subject to Section 6.06, by the Holders, on the
terms and conditions set forth in this Indenture, directly against such
Subsidiary Guarantor to enforce the Guarantee without first proceeding against
the Partnership or any other Subsidiary Guarantor.
(d) The obligations of each of the Subsidiary Guarantors
under this Article X shall be as aforesaid full, unconditional and absolute and
shall not be impaired, modified, released or limited by any occurrence or
condition whatsoever, including, without limitation, (i) any compromise,
settlement, release, waiver, renewal, extension, indulgence or modification of,
or any change in, any of the obligations and liabilities of the Partnership or
any of the Subsidiary Guarantors contained in the Securities or this Indenture,
(ii) any impairment, modification, release or limitation of the liability of the
Partnership, any of the Subsidiary Guarantors or any of their estates in
bankruptcy, or any remedy for the enforcement thereof, resulting from the
operation of any present or future provision of any applicable Bankruptcy Law,
as amended, or other statute or from the decision of any court, (iii) the
assertion or exercise by the Partnership, any of the Subsidiary Guarantors or
the Trustee of any rights or remedies under the Securities or this Indenture or
their delay in or failure to assert or exercise any such rights or remedies,
(iv) the assignment or the purported assignment of any property as security for
the Securities, including all or any part of the rights of the Partnership or
any of the Subsidiary Guarantors under this Indenture, (v) the extension of the
time for payment by the Partnership or any of the Subsidiary Guarantors of any
payments or other sums or any part thereof owing or payable under any of the
terms and provisions of the Securities or this Indenture or of the time for
performance by the Partnership or any of the Subsidiary Guarantors of any other
obligations under or arising out of any such terms and provisions or the
extension or the renewal of any thereof, (vi) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Partnership or any of the Subsidiary Guarantors set forth in this Indenture,
(vii) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all of the assets, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceeding affecting, the Partnership or any of the Subsidiary
Guarantors or any of their respective assets, or the disaffirmance of the
Securities, the Guarantee or this Indenture in any such proceeding, (viii) the
release or discharge of the Partnership or any of the Subsidiary Guarantors from
the performance or observance of any agreement, covenant, term or condition
contained in any of such instruments by operation of law, (ix) the
unenforceability of the Securities, the Guarantee or this Indenture or (x) any
other circumstances (other than payment in full or discharge of all amounts
guaranteed pursuant to the Guarantee) which might otherwise constitute a legal
or equitable discharge of a surety or guarantor.
(e) Each of the Subsidiary Guarantors hereby (i) waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of the merger, insolvency or bankruptcy of the Partnership or any of the
Subsidiary Guarantors, and all demands whatsoever, (ii) acknowledges that any
agreement, instrument or document evidencing the Guarantee may be transferred
and that the benefit of its obligations hereunder shall extend to each holder of
any agreement, instrument or document evidencing the Guarantee without notice to
it and (iii) covenants that the Guarantee will not be discharged except by
complete performance of the Guarantee. Each of the Subsidiary Guarantors further
agrees that if at any time all or any part of any payment theretofore applied by
any Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including without limitation, the
50
insolvency, bankruptcy or reorganization of the Partnership or any of the
Subsidiary Guarantors, the Guarantee shall, to the extent that such payment is
or must be rescinded or returned, be deemed to have continued in existence
notwithstanding such application, and the Guarantee shall continue to be
effective or be reinstated, as the case may be, as though such application had
not been made.
(f) Each of the Subsidiary Guarantors shall be subrogated
to all rights of the Holders and the Trustee against the Partnership in respect
of any amounts paid by such Subsidiary Guarantor pursuant to the provisions of
this Indenture, provided, however, that such Subsidiary Guarantor, shall not be
entitled to enforce or to receive any payments arising out of, or based upon,
such right of subrogation until all of the Securities and the Guarantee shall
have been paid in full or discharged.
SECTION 10.02 Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 10.01,
each of the Subsidiary Guarantors hereby agrees that a notation relating to such
Guarantee, substantially in the form attached hereto as Annex A, shall be
endorsed on each Security entitled to the benefits of the Guarantee
authenticated and delivered by the Trustee and executed by either manual or
facsimile signature of an Officer of U.S. Propane, L.L.C. Each of the Subsidiary
Guarantors hereby agrees that the Guarantee set forth in Section 10.01 shall
remain in full force and effect notwithstanding any failure to endorse on each
Security a notation relating to the Guarantee. If any Officer of U.S. Propane,
L.L.C., whose signature is on this Indenture or a Security no longer holds that
office at the time the Trustee authenticates such Security or at any time
thereafter, the Guarantee of such Security shall be valid nevertheless. The
delivery of any Security by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Subsidiary Guarantors.
The Trustee hereby accepts the trusts in this Indenture upon
the terms and conditions herein set forth.
SECTION 10.03 Limitation on Liability of the Subsidiary Guarantors.
Each Subsidiary Guarantor and by its acceptance hereof each
Holder of a Security entitled to the benefits of the Guarantee hereby confirm
that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any federal or state law. To effectuate
the foregoing intention, the Holders of a Security entitled to the benefits of
the Guarantee and the Subsidiary Guarantors hereby irrevocably agree that the
obligations of each Subsidiary Guarantor under its Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor and to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Guarantee, result
in the obligations of such Subsidiary Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law.
51
SECTION 10.04 Release of Subsidiary Guarantors from Guarantee.
(a) Notwithstanding any other provisions of this
Indenture, the Guarantee of any Subsidiary Guarantor may be released upon the
terms and subject to the conditions set forth in this Section 10.04. Provided
that no Default shall have occurred and shall be continuing under this
Indenture, any Guarantee incurred by a Subsidiary Guarantor pursuant to this
Article X shall be unconditionally released and discharged (i) automatically
upon (A) any sale, exchange or transfer, whether by way of merger or otherwise,
to any Person that is not an Affiliate of the Partnership, of all of the
Partnership's direct or indirect equity interests in such Subsidiary Guarantor
(provided such sale, exchange or transfer is not prohibited by this Indenture)
or (B) the merger of such Subsidiary Guarantor into the Partnership or any other
Subsidiary Guarantor or the liquidation and dissolution of such Subsidiary
Guarantor (in each case to the extent not prohibited by this Indenture) or (ii)
following delivery of a written notice of such release or discharge by the
Partnership, the Trustee, upon the release or discharge of all guarantees by
such Subsidiary Guarantor of any Debt of the Partnership other than obligations
arising under this Indenture and any Securities issued hereunder, except a
discharge or release by or as a result of payment under such guarantees.
(b) The Trustee shall deliver an appropriate instrument
evidencing any release of a Subsidiary Guarantor from the Guarantee upon receipt
of a written request of the Partnership accompanied by an Officers' Certificate
and an Opinion of Counsel that the Subsidiary Guarantor is entitled to such
release in accordance with the provisions of this Indenture. Any Subsidiary
Guarantor not so released remains liable for the full amount of principal of
(and premium, if any, on) and interest on the Securities entitled to the
benefits of such Guarantee as provided in this Indenture, subject to the
limitations of Section 10.03.
SECTION 10.05 Contribution.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors hereby agree, inter se,
that in the event any payment or distribution is made by any Subsidiary
Guarantor (a "Funding Guarantor") under its Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (as
applicable) in a pro rata amount based on the net assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Partnership's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to its Guarantee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of TIA Section 318(c), the
imposed duties shall control.
52
SECTION 11.02 Notices.
Any notice or communication by the Partnership, any Subsidiary
Guarantor or the Trustee to the others is duly given if in writing and delivered
in person or mailed by first-class mail (registered or certified, return receipt
requested), telex, facsimile or overnight air courier guaranteeing next day
delivery, to the other's address:
If to the Partnership or the Subsidiary Guarantors:
Heritage Propane Partners, L.P.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Attn: Michael L. Greenwood
Telephone: (918) 492-7272
Facsimile: (918) 493-7290
If to the Trustee:
Attn:
Telephone:
Facsimile:
The Partnership, any Subsidiary Guarantor or the Trustee by
notice to the others may designate additional or different addresses for
subsequent notices or communications.
All notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if by facsimile; and
the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, postage prepaid, to the Holder's address shown on the register
kept by the Registrar. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it, except in the case of notice to the Trustee, it is duly given only
when received.
If the Partnership or a Subsidiary Guarantor mails a notice or
communication to Holders, it shall mail a copy to the others and to the Trustee
and each Agent at the same time.
All notices or communications, including without limitation
notices to the Trustee, the Partnership or a Subsidiary Guarantor by Holders,
shall be in writing, except as otherwise set forth herein.
53
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
SECTION 11.03 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Partnership, the Subsidiary Guarantors, the Trustee, the
Registrar and anyone else shall have the protection of TIA Section 312(c).
SECTION 11.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Partnership or a
Subsidiary Guarantor to the Trustee to take any action under this Indenture, the
Partnership or such Subsidiary Guarantor, as the case may be, shall, if
requested by the Trustee, furnish to the Trustee at the expense of the
Partnership or such Subsidiary Guarantor, as the case may be:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 11.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been complied with.
SECTION 11.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(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 such Person, he
or she has made such examination or investigation as is necessary to
enable him or her 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 or not, in the opinion of
such Person, such condition or covenant has been complied with.
54
SECTION 11.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or the Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 11.07 Legal Holidays.
If a payment date is a Legal Holiday at a Place of Payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 11.08 No Recourse Against Others.
A director, officer, employee, stockholder, partner or other
owner of the Partnership, a Subsidiary Guarantor or the Trustee, as such, shall
not have any liability for any obligations of the Partnership under the
Securities, for any obligations of any Subsidiary Guarantor under the Guarantee,
or for any obligations of the Partnership, any Subsidiary Guarantor or the
Trustee under this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release shall be
part of the consideration for the issue of Securities.
SECTION 11.09 Governing Law.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE
EXTENT THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Partnership, any Subsidiary Guarantor or any
Subsidiary. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.11 Successors.
All agreements of the Partnership and the Subsidiary
Guarantors in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12 Severability.
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, to the fullest extent
permitted by applicable law, not in any way be affected or impaired thereby.
55
SECTION 11.13 Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 11.14 Table of Contents, Headings, etc.
The table of contents, cross-reference table and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
56
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:___________________________________________
Name:
Title:
HERITAGE OPERATING, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:__________________________________________
Name:
Title:
HERITAGE SERVICE CORP.
By:__________________________________________
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By:__________________________________________
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By:__________________________________________
Name:
Title:
[ ], as Trustee
By:__________________________________________
Name:
Title:
ANNEX A
NOTATION OF GUARANTEE
Each of the Subsidiary Guarantors (which term includes any
successor Person under the Indenture), has fully, unconditionally and absolutely
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture, the due and punctual payment of the principal of,
and premium, if any, and interest on the Securities and all other amounts due
and payable under the Indenture and the Securities by the Partnership.
The obligations of the Subsidiary Guarantors to the Holders of
Securities and to the Trustee pursuant to the Guarantee and the Indenture are
expressly set forth in Article X of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Guarantee.
HERITAGE OPERATING, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By: ____________________________________________
Name:
Title:
HERITAGE SERVICE CORP.
By: ____________________________________________
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By: ____________________________________________
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By: ____________________________________________
Name:
Title:
EXHIBIT 4.10
================================================================================
HERITAGE PROPANE PARTNERS, L.P.
as Issuer
and
HERITAGE OPERATING, L.P.
and
HERITAGE SERVICE CORP.
and
HERITAGE-BI STATE, L.L.C.
and
HERITAGE ENERGY RESOURCES, L.L.C.
as Subsidiary Guarantors
and
[ ]
as Trustee
---------------------------------
Indenture
Dated as of _________________, 2003
---------------------------------
Subordinated Debt Securities
================================================================================
HERITAGE PROPANE PARTNERS, L.P.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF _____________, 2003
Section of
Trust Indenture Section(s) of
Act of 1939 Indenture
----------- ---------
Section 310 (a)(1)....................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... Not Applicable
(a)(4)....................................................................... Not Applicable
(a)(5)....................................................................... 7.10
(b).......................................................................... 7.08, 7.10
Section 311 (a).......................................................................... 7.11
(b).......................................................................... 7.11
(c).......................................................................... Not Applicable
Section 312 (a).......................................................................... 2.07
(b).......................................................................... 12.03
(c).......................................................................... 12.03
Section 313 (a).......................................................................... 7.06
(b).......................................................................... 7.06
(c).......................................................................... 7.06
(d).......................................................................... 7.06
Section 314 (a).......................................................................... 4.03, 4.04
(b).......................................................................... Not Applicable
(c)(1)....................................................................... 12.04
(c)(2)....................................................................... 12.04
(c)(3)....................................................................... Not Applicable
(d).......................................................................... Not Applicable
(e).......................................................................... 12.05
Section 315 (a).......................................................................... 7.01(b)
(b).......................................................................... 7.05
(c).......................................................................... 7.01(a)
(d).......................................................................... 7.01(c)
(d)(1)....................................................................... 7.01(c)(1)
(d)(2)....................................................................... 7.01(c)(2)
(d)(3)....................................................................... 7.01(c)(3)
(e).......................................................................... 6.11
Section 316 (a)(1)(A).................................................................... 6.05
(a)(1)(B).................................................................... 6.04
(a)(2)....................................................................... Not Applicable
(a)(last sentence)........................................................... 2.11
(b).......................................................................... 6.07
Section 317 (a)(1)....................................................................... 6.08
(a)(2)....................................................................... 6.09
(b).......................................................................... 2.06
Section 318 (a).......................................................................... 12.01
- ------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
i
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE............................................................. 1
SECTION 1.01 Definitions........................................................................... 1
SECTION 1.02 Other Definitions..................................................................... 6
SECTION 1.03 Incorporation by Reference of Trust Indenture Act..................................... 7
SECTION 1.04 Rules of Construction................................................................. 7
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of Officers, Directors,
Employees or Partners................................................................. 7
ARTICLE II THE SECURITIES........................................................................................ 8
SECTION 2.01 Amount Unlimited; Issuable in Series.................................................. 8
SECTION 2.02 Denominations......................................................................... 11
SECTION 2.03 Forms Generally....................................................................... 11
SECTION 2.04 Execution, Authentication, Delivery and Dating........................................ 11
SECTION 2.05 Registrar and Paying Agent............................................................ 13
SECTION 2.06 Paying Agent to Hold Money in Trust................................................... 14
SECTION 2.07 Holder Lists.......................................................................... 14
SECTION 2.08 Transfer and Exchange................................................................. 14
SECTION 2.09 Replacement Securities................................................................ 15
SECTION 2.10 Outstanding Securities................................................................ 15
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury Securities......... 16
SECTION 2.12 Temporary Securities.................................................................. 16
SECTION 2.13 Cancellation.......................................................................... 16
SECTION 2.14 Payments; Defaulted Interest.......................................................... 17
SECTION 2.15 Persons Deemed Owners................................................................. 17
SECTION 2.16 Computation of Interest............................................................... 17
SECTION 2.17 Global Securities; Book-Entry Provisions.............................................. 18
ARTICLE III REDEMPTION........................................................................................... 20
SECTION 3.01 Applicability of Article.............................................................. 20
SECTION 3.02 Notice to the Trustee................................................................. 20
SECTION 3.03 Selection of Securities To Be Redeemed................................................ 20
SECTION 3.04 Notice of Redemption.................................................................. 21
SECTION 3.05 Effect of Notice of Redemption........................................................ 21
SECTION 3.06 Deposit of Redemption Price........................................................... 22
SECTION 3.07 Securities Redeemed or Purchased in Part.............................................. 22
SECTION 3.08 Purchase of Securities................................................................ 22
SECTION 3.09 Mandatory and Optional Sinking Funds.................................................. 22
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities................................. 23
SECTION 3.11 Redemption of Securities for Sinking Fund............................................. 23
ii
ARTICLE IV COVENANTS............................................................................................. 24
SECTION 4.01 Payment of Securities................................................................. 24
SECTION 4.02 Maintenance of Office or Agency....................................................... 24
SECTION 4.03 SEC Reports; Financial Statements..................................................... 25
SECTION 4.04 Compliance Certificate................................................................ 25
SECTION 4.05 Existence............................................................................. 26
SECTION 4.06 Waiver of Stay, Extension or Usury Laws............................................... 26
SECTION 4.07 Additional Amounts.................................................................... 26
ARTICLE V SUCCESSORS............................................................................................. 26
SECTION 5.01 Limitations on Mergers and Consolidations............................................. 26
SECTION 5.02 Successor Person Substituted.......................................................... 27
ARTICLE VI DEFAULTS AND REMEDIES................................................................................. 27
SECTION 6.01 Events of Default..................................................................... 27
SECTION 6.02 Acceleration.......................................................................... 30
SECTION 6.03 Other Remedies........................................................................ 30
SECTION 6.04 Waiver of Defaults.................................................................... 31
SECTION 6.05 Control by Majority................................................................... 31
SECTION 6.06 Limitations on Suits.................................................................. 31
SECTION 6.07 Rights of Holders to Receive Payment.................................................. 32
SECTION 6.08 Collection Suit by Trustee............................................................ 32
SECTION 6.09 Trustee May File Proofs of Claim...................................................... 32
SECTION 6.10 Priorities............................................................................ 33
SECTION 6.11 Undertaking for Costs................................................................. 34
ARTICLE VII TRUSTEE.............................................................................................. 34
SECTION 7.01 Duties of Trustee..................................................................... 34
SECTION 7.02 Rights of Trustee..................................................................... 35
SECTION 7.03 May Hold Securities................................................................... 36
SECTION 7.04 Trustee's Disclaimer.................................................................. 36
SECTION 7.05 Notice of Defaults.................................................................... 36
SECTION 7.06 Reports by Trustee to Holders......................................................... 37
SECTION 7.07 Compensation and Indemnity............................................................ 37
SECTION 7.08 Replacement of Trustee................................................................ 38
SECTION 7.09 Successor Trustee by Merger, etc...................................................... 39
SECTION 7.10 Eligibility; Disqualification......................................................... 40
SECTION 7.11 Preferential Collection of Claims Against the Partnership or a Subsidiary Guarantor... 40
ARTICLE VIII DISCHARGE OF INDENTURE.............................................................................. 40
SECTION 8.01 Termination of the Partnership's and the Subsidiary Guarantors' Obligations........... 40
SECTION 8.02 Application of Trust Money............................................................ 44
SECTION 8.03 Repayment to Partnership or Subsidiary Guarantor...................................... 44
iii
SECTION 8.04 Reinstatement......................................................................... 45
ARTICLE IX SUPPLEMENTAL INDENTURES AND AMENDMENTS................................................................ 45
SECTION 9.01 Without Consent of Holders............................................................ 45
SECTION 9.02 With Consent of Holders............................................................... 46
SECTION 9.03 Compliance with Trust Indenture Act................................................... 48
SECTION 9.04 Revocation and Effect of Consents..................................................... 48
SECTION 9.05 Notation on or Exchange of Securities................................................. 49
SECTION 9.06 Trustee to Sign Amendments, etc....................................................... 49
ARTICLE X SUBORDINATION OF SECURITIES AND GUARANTEE.............................................................. 50
SECTION 10.01 Applicability of Article; Agreement To Subordinate.................................... 50
SECTION 10.02 Liquidation, Dissolution, Bankruptcy.................................................. 50
SECTION 10.03 Default on Senior Indebtedness........................................................ 50
SECTION 10.04 Acceleration of Payment of Securities................................................. 51
SECTION 10.05 When Distribution Must Be Paid Over................................................... 52
SECTION 10.06 Subrogation........................................................................... 52
SECTION 10.07 Relative Rights....................................................................... 52
SECTION 10.08 Subordination May Not Be Impaired by Partnership...................................... 52
SECTION 10.09 Rights of Trustee and Paying Agent.................................................... 52
SECTION 10.10 Distribution or Notice to Representative.............................................. 53
SECTION 10.11 Article X Not to Prevent Defaults or Limit Right to Accelerate........................ 53
SECTION 10.12 Trust Moneys Not Subordinated......................................................... 53
SECTION 10.13 Trustee Entitled to Rely.............................................................. 53
SECTION 10.14 Trustee to Effectuate Subordination................................................... 54
SECTION 10.15 Trustee Not Fiduciary for Holders of Senior Indebtedness.............................. 54
SECTION 10.16 Reliance by Holders of Senior Indebtedness on Subordination Provisions................ 54
ARTICLE XI GUARANTEE ............................................................................................ 54
SECTION 11.01 Unconditional Guarantee............................................................... 54
SECTION 11.02 Execution and Delivery of Guarantee................................................... 56
SECTION 11.03 Limitation on Liability of the Subsidiary Guarantors.................................. 57
SECTION 11.04 Release of Subsidiary Guarantors from Guarantee....................................... 57
SECTION 11.05 Contribution.......................................................................... 58
ARTICLE XII MISCELLANEOUS ....................................................................................... 58
SECTION 12.01 Trust Indenture Act Controls.......................................................... 58
SECTION 12.02 Notices............................................................................... 58
SECTION 12.03 Communication by Holders with Other Holders........................................... 59
SECTION 12.04 Certificate and Opinion as to Conditions Precedent.................................... 59
SECTION 12.05 Statements Required in Certificate or Opinion......................................... 60
SECTION 12.06 Rules by Trustee and Agents........................................................... 60
SECTION 12.07 Legal Holidays........................................................................ 60
SECTION 12.08 No Recourse Against Others............................................................ 60
SECTION 12.09 Governing Law......................................................................... 60
iv
SECTION 12.10 No Adverse Interpretation of Other Agreements......................................... 61
SECTION 12.11 Successors............................................................................ 61
SECTION 12.12 Severability.......................................................................... 61
SECTION 12.13 Counterpart Originals................................................................. 61
SECTION 12.14 Table of Contents, Headings, etc...................................................... 61
v
INDENTURE dated as of _____________, 2003 among Heritage
Propane Partners, L.P., a Delaware limited partnership (the "Partnership"),
Heritage Operating, L.P., a Delaware limited partnership, Heritage Service
Corp., a Delaware corporation, Heritage-Bi State, L.L.C., a Delaware limited
liability company and Heritage Energy Resources, L.L.C., an Oklahoma limited
liability company (collectively, the "Subsidiary Guarantors"), and [ ], a
___________, as trustee (the "Trustee").
The Partnership and the Subsidiary Guarantors have duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Partnership's debentures, notes, bonds or
other evidences of indebtedness to be issued in one or more series unlimited as
to principal amount (herein called the "Securities"), and the Guarantee by each
of the Subsidiary Guarantors of the Securities, as in this Indenture provided.
The Partnership and the Subsidiary Guarantors are members of
the same consolidated group of companies. The Subsidiary Guarantors will derive
direct and indirect economic benefit from the issuance of the Securities.
Accordingly, each Subsidiary Guarantor has duly authorized the execution and
delivery of this Indenture to provide for its full, unconditional and joint and
several guarantee of the Securities to the extent provided in or pursuant to
this Indenture.
All things necessary to make this Indenture a valid agreement
of the Partnership, in accordance with its terms, have been done.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Additional Amounts" means any additional amounts required by
the express terms of a Security or by or pursuant to a Board Resolution, under
circumstances specified therein or pursuant thereto, to be paid by the
Partnership or any Subsidiary Guarantor, as the case may be, with respect to
certain taxes, assessments or other governmental charges imposed on certain
Holders and that are owing to such Holders.
"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 purposes of this definition,
"control" of a Person shall mean 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" shall have meanings correlative to the foregoing.
"Agent" means any Registrar or Paying Agent.
"Bankruptcy Law" means Title 11 of the United States Code or
any similar federal, state or foreign law for the relief of debtors.
"Board of Directors," means the Board of Directors of U.S.
Propane, L.L.C., the general partner of the General Partner or any authorized
committee of the Board of Directors of
1
U.S. Propane, L.L.C. or any directors and/or officers of U.S. Propane, L.L.C. to
whom such Board of Directors or such committee shall have duly delegated its
authority to act hereunder.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the U.S. Propane, L.L.C. to have been
duly adopted by the Board of Directors of U.S. Propane, L.L.C. and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Corporate Trust Office of the Trustee" means the office of
the Trustee located at ________________________________, Attention:
____________________, and as may be located at such other address as the Trustee
may give notice to the Partnership and the Subsidiary Guarantors.
"Debt" of any Person at any date means any obligation created
or assumed by such Person for the repayment of borrowed money and any guarantee
thereof.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in global form, the Person
specified pursuant to Section 2.01 hereof as the initial Depositary with respect
to the Securities of such series, until a successor shall have been appointed
and become such pursuant to the applicable provision of this Indenture, and
thereafter "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means (i) any Senior
Indebtedness which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $100 million and (ii) any other
Senior Indebtedness designated, as provided in Section 2.01, in respect of any
series of Securities.
"Dollar" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be legal tender
for the payment of public and private debt.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"GAAP" means generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States, as in effect from
time to time.
"General Partner" means U.S. Propane, L.P., a Delaware limited
partnership.
2
"Global Security" means a Security that is issued in global
form in the name of the Depositary with respect thereto or its nominee.
"Government Obligations" means, with respect to a series of
Securities, direct obligations of the government that issues the currency in
which the Securities of the series are payable for the payment of which the full
faith and credit of such government is pledged, or obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of such
government, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by such government.
"Guarantee" shall mean the guarantee of the Partnership's
obligations under the Securities by a Subsidiary Guarantor as provided in
Article XI.
"Holder" means a Person in whose name a Security is
registered.
"Indenture" means this Indenture as amended or supplemented
from time to time pursuant to the provisions hereof, and includes the terms of a
particular series of Securities established as contemplated by Section 2.01.
"interest" means, with respect to an Original Issue Discount
Security that by its terms bears interest only after Maturity, interest payable
after Maturity.
"Interest Payment Date," when used with respect to any
Security, shall have the meaning assigned to such term in the Security as
contemplated by Section 2.01.
"Issue Date" means, with respect to Securities of a series,
the date on which the Securities of such series are originally issued under this
Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in any of The City of New York, New York or a Place of
Payment are authorized or obligated by law, regulation or executive order to
remain closed.
"Maturity" means, with respect to any Security, 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
thereof, or by declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, the President, any
Vice Chairman of the Board, any Vice President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of a Person.
"Officers' Certificate" means a certificate signed by two
Officers of a Person.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Partnership, a Subsidiary Guarantor or the Trustee.
3
"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 6.02.
"Partnership" means the Person named as the "Partnership" in
the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Partnership" shall mean such successor Person; provided, however,
that for purposes of any provision contained herein which is required by the
TIA, "Partnership" shall also mean each other obligor (if any), other than a
Subsidiary Guarantor, on the Securities of a series.
"Partnership Order" and "Partnership Request" mean,
respectively, a written order or request signed in the name of the Partnership
or each Subsidiary Guarantor by two Officers of U.S. Propane, L.L.C. and
delivered to the Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or other agency, instrumentality or political subdivision thereof or
other entity of any kind.
"Place of Payment" means, with respect to the Securities of
any series, the place or places where the principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of that
series are payable as specified in accordance with Section 2.01 subject to the
provisions of Section 4.02.
"principal" of a Security means the principal of the Security
plus, when appropriate, the premium, if any, on the Security.
"Redemption Date" means, with respect to any Security to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Indebtedness.
"Responsible Officer" means any officer within the corporate
trust department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"Rule 144A Securities" means Securities of a series designated
pursuant to Section 2.01 as entitled to the benefits of Section 4.03(b).
4
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the preamble of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Custodian" means, with respect to Securities of a
series issued in global form, the Trustee for Securities of such series, as
custodian with respect to the Securities of such series, or any successor entity
thereto.
"Senior Indebtedness," unless otherwise provided with respect
to the Securities of a series as contemplated by Section 2.01, means (1) all
Debt of the Subsidiary Guarantors or the Partnership, whether currently
outstanding or hereafter issued, unless, by the terms of the instrument creating
or evidencing such Debt, it is provided that such Debt is not superior in right
of payment to the Securities, in the case of the Partnership, or the Guarantee,
in the case of the Subsidiary Guarantors, or to other Debt which is pari passu
with or subordinated to the Securities, in the case of the Partnership, or the
Guarantee, in the case of the Subsidiary Guarantors, and (2) any modifications,
refunding, deferrals, renewals, or extensions of any such Debt or securities,
notes or other evidence of Debt issued in exchange for such Debt; provided that
in no event shall "Senior Indebtedness" include (a) Debt evidenced by the
Securities or any Guarantee, (b) Debt of any of the Subsidiary Guarantors or the
Partnership owed or owing to any Subsidiary of the Partnership, (c) Debt of any
of the Subsidiary Guarantors owed or owing to the Partnership, (d) Debt to trade
creditors, (e) any liability for taxes owed or owing by the Subsidiary
Guarantors or the Partnership or (f) Debt of any Subsidiary Guarantor in the
event there is no series of Securities outstanding that is entitled to the
benefits of a Guarantee.
"Stated Maturity" means, when used with respect to any
Security or any installment of principal thereof or interest thereon, 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" of any Person means:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of
equity interests entitled, without regard to the
occurrence of any contingency, to vote in the
election of directors, managers, trustees or
equivalent Persons thereof is at the time of
determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof; or
(2) in the case of a partnership, more than 50% of the
partners' equity interests, considering all partners'
equity interests as a single class, is at such time
of determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof.
"Subsidiary Guarantors" means the Person or Persons named as
the "Subsidiary Guarantors" in the first paragraph of this instrument until a
successor Person or Persons shall
5
have become such pursuant to the applicable provisions of this Indenture, and
thereafter "Subsidiary Guarantors" shall mean such successor Person or Persons,
and any other Subsidiary of the Partnership who may execute this Indenture, or a
supplement thereto, for the purpose of providing a Guarantee of Securities
pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended, as in
effect on the date hereof.
"Trustee" means the Person named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter "Trustee" means 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 means the Trustee with respect
to Securities of that series.
"United States" means the United States of America (including
the States and the District of Columbia) and its territories and possessions,
which include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands.
"U.S. Government Obligations" means Government Obligations
with respect to Securities payable in Dollars.
"U.S. Propane, L.L.C." means U.S. Propane, L.L.C., a Delaware
limited liability company.
SECTION 1.02 Other Definitions.
DEFINED
TERM IN SECTION
- ---- ----------
"Bankruptcy Custodian"....................................................................... 6.01
"Conversion Event"........................................................................... 6.01
"covenant defeasance"........................................................................ 8.01
"Event of Default"........................................................................... 6.01
"Exchange Rate".............................................................................. 2.11
"Funding Guarantor".......................................................................... 11.05
"Judgment Currency".......................................................................... 6.10
"legal defeasance"........................................................................... 8.01
"mandatory sinking fund payment"............................................................. 3.09
"optional sinking fund payment".............................................................. 3.09
"Paying Agent"............................................................................... 2.05
"Registrar".................................................................................. 2.05
"Required Currency".......................................................................... 6.10
"Successor".................................................................................. 5.01
"Subordinated Securities".................................................................... 10.01
6
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture (and
if the Indenture is not qualified under the TIA at that time, as if it were so
qualified unless otherwise provided). The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Partnership,
any Subsidiary Guarantor or any other obligor on the Securities.
All terms used in this Indenture that are defined by the TIA,
defined by a TIA reference to another statute or defined by an SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) all references in this instrument to Articles and
Sections are references to the corresponding Articles
and Sections in and of this instrument.
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners.
Obligations of the Partnership and a Subsidiary Guarantor
under this Indenture and the Securities hereunder are non-recourse to the
General Partner, and its respective Affiliates (other than the Partnership and a
Subsidiary Guarantor), and payable only out of cash flow and
7
assets of the Partnership and a Subsidiary Guarantor. The Trustee, and each
Holder of a Security by its acceptance thereof, will be deemed to have agreed in
this Indenture that (1) neither the General Partner nor its assets (nor any of
its respective Affiliates other than the Partnership and a Subsidiary Guarantor,
nor its respective assets) shall be liable for any of the obligations of the
Partnership and a Subsidiary Guarantor under this Indenture or such Securities,
and (2) no director, officer, employee, partner or unitholder, as such, of the
Partnership and a Subsidiary Guarantor, the Trustee, the General Partner or any
Affiliate of any of the foregoing entities shall have any personal liability in
respect of the obligations of the Partnership and a Subsidiary Guarantor under
this Indenture or such Securities by reason of his, her or its status.
ARTICLE II
THE SECURITIES
SECTION 2.01 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and set forth, or
determined in the manner provided, in an Officers' Certificate of U.S. Propane,
L.L.C. or in a Partnership Order, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from the Securities of
all other series);
(2) if there is to be a limit, the limit upon the
aggregate principal amount of the Securities of the series that 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 2.08, 2.09, 2.12, 2.17, 3.07 or 9.05 and except for any
Securities which, pursuant to Section 2.04 or 2.17, are deemed never to
have been authenticated and delivered hereunder); provided, however,
that unless otherwise provided in the terms of the series, the
authorized aggregate principal amount of such series may be increased
before or after the issuance of any Securities of the series by a Board
Resolution (or action pursuant to a Board Resolution) to such effect;
(3) whether any Securities of the series are to be
issuable initially in temporary global form and whether any Securities
of the series are to be issuable in permanent global form, as Global
Securities or otherwise, and, if so, whether beneficial owners of
interests in any such Global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 2.17, and the
initial Depositary and Security Custodian, if any, for any Global
Security or Securities of such series;
8
(4) the manner in which any interest payable on a
temporary Global Security on any Interest Payment Date will be paid if
other than in the manner provided in Section 2.14;
(5) the date or dates on which the principal of and
premium (if any) on the Securities of the series is payable or the
method of determination thereof;
(6) the rate or rates, or the method of determination
thereof, at which the Securities of the series shall bear interest, if
any, whether and under what circumstances Additional Amounts with
respect to such Securities shall be payable, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which
such interest shall be payable and the record date for the interest
payable on any Securities on any Interest Payment Date, or if other
than provided herein, the Person to whom any interest on Securities of
the series shall be payable;
(7) the place or places where, subject to the provisions
of Section 4.02, the principal of, premium (if any) and interest on and
any Additional Amounts with respect to the Securities of the series
shall be payable;
(8) the period or periods within which, the price or
prices (whether denominated in cash, securities or otherwise) at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership, if the
Partnership is to have that option, and the manner in which the
Partnership must exercise any such option, if different from those set
forth herein;
(9) whether Securities of the series are entitled to the
benefits of any Guarantee of any Subsidiary Guarantor pursuant to this
Indenture;
(10) the obligation, if any, of the Partnership to redeem,
purchase or repay Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices (whether
denominated in cash, securities or otherwise) at which and the terms
and conditions upon which Securities of the series shall be redeemed,
purchased or repaid in whole or in part pursuant to such obligation;
(11) if other than denominations of $1,000 and any
integral multiple thereof, the denomination in which any Securities of
that series shall be issuable;
(12) if other than Dollars, the currency or currencies
(including composite currencies) or the form, including equity
securities, other debt securities (including Securities), warrants or
any other securities or property of the Partnership, any Subsidiary
Guarantor or any other Person, in which payment of the principal of,
premium (if any) and interest on and any Additional Amounts with
respect to the Securities of the series shall be payable;
(13) if the principal of, premium (if any) or interest on
or any Additional Amounts with respect to the Securities of the series
are to be payable, at the election of the Partnership or a Holder
thereof, in a currency or currencies (including composite
9
currencies) other than that in which the Securities are stated to be
payable, the currency or currencies (including composite currencies) in
which payment of the principal of, premium (if any) and interest on and
any Additional Amounts with respect to Securities of such series as to
which such election is made shall be payable, and the periods within
which and the terms and conditions upon which such election is to be
made;
(14) if the amount of payments of principal of, premium
(if any) and interest on and any Additional Amounts with respect to the
Securities of the series may be determined with reference to any
commodities, currencies or indices, values, rates or prices or any
other index or formula, the manner in which such amounts shall be
determined;
(15) if other than the entire principal amount thereof,
the portion of the principal amount of Securities of the series that
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 6.02;
(16) any additional means of satisfaction and discharge of
this Indenture and any additional conditions or limitations to
discharge with respect to Securities of the series and the related
Guarantees pursuant to Article VIII or any modifications of or
deletions from such conditions or limitations;
(17) any deletions or modifications of or additions to the
Events of Default set forth in Section 6.01 or covenants of the
Partnership or any Subsidiary Guarantor set forth in Article IV
pertaining to the Securities of the series;
(18) any restrictions or other provisions with respect to
the transfer or exchange of Securities of the series, which may amend,
supplement, modify or supersede those contained in this Article II;
(19) if the Securities of the series are to be convertible
into or exchangeable for capital stock, other debt securities
(including Securities), warrants, other equity securities or any other
securities or property of the Partnership, any Subsidiary Guarantor or
any other Person, at the option of the Partnership or the Holder or
upon the occurrence of any condition or event, the terms and conditions
for such conversion or exchange;
(20) the subordination, if any, of the Securities of the
series pursuant to Article X and any changes or additions to Article X
or designation of any Designated Senior Indebtedness;
(21) whether the Securities of the series are to be
entitled to the benefit of Section 4.03(b) (and accordingly constitute
Rule 144A Securities); and
(22) any other terms of the series (which terms shall not
be prohibited by the provisions of this Indenture).
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
2.03) set forth, or determined in the manner provided,
10
in the Officers' Certificate or Partnership Order 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, together with such Board Resolution, shall be set forth in an Officers'
Certificate or certified by the Secretary or an Assistant Secretary of U.S.
Propane, L.L.C. and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate or Partnership Order setting forth the terms of the
series.
SECTION 2.02 Denominations.
The Securities of each series shall be issuable in such
denominations as shall be specified as contemplated by Section 2.01. In the
absence of any such provisions with respect to the Securities of any series, the
Securities of such series denominated in Dollars shall be issuable in
denominations of $1,000 and any integral multiples thereof.
SECTION 2.03 Forms Generally.
The Securities of each series shall be in fully registered
form and in substantially such form or forms (including temporary or permanent
global form) established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto. The Securities may have notations, legends or
endorsements required by law, securities exchange rule, the Partnership's
certificate of limited partnership, agreement of limited partnership or other
similar governing documents, agreements to which the Partnership is subject, if
any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Partnership). A copy of the Board Resolution establishing
the form or forms of Securities of any series shall be delivered to the Trustee
at or prior to the delivery of the Partnership Order contemplated by Section
2.04 for the authentication and delivery of such Securities.
The definitive Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the Officers executing such Securities, as
evidenced by their execution thereof.
The Trustee's certificate 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 Signatory".
SECTION 2.04 Execution, Authentication, Delivery and Dating.
Two Officers of U.S. Propane, L.L.C. shall sign the Securities
on behalf of the Partnership and, with respect to the Guarantees of the
Securities, two Officers of U.S. Propane,
11
L.L.C. shall sign the Securities on behalf of such Subsidiary Guarantor, in each
case by manual or facsimile signature.
If an Officer of U.S. Propane, L.L.C. whose signature is on a
Security no longer holds that office at the time the Security is authenticated,
the Security shall be valid nevertheless.
A Security shall not be entitled to any benefit under this
Indenture or the related Guarantees or be valid or obligatory for any purpose
until authenticated by the manual signature of an authorized signatory of the
Trustee, which signature shall be conclusive evidence that the Security has been
authenticated under this Indenture. Notwithstanding the foregoing, if any
Security has been authenticated and delivered hereunder but never issued and
sold by the Partnership, and the Partnership delivers such Security to the
Trustee for cancellation as provided in Section 2.13, together with a written
statement (which need not comply with Section 12.05 and need not be accompanied
by an Opinion of Counsel) stating that such Security has never been issued and
sold by the Partnership, 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 or the related Guarantees.
At any time and from time to time after the execution and
delivery of this Indenture, the Partnership may deliver Securities of any series
executed by the Partnership and each Subsidiary Guarantor to the Trustee for
authentication, and the Trustee shall authenticate and deliver such Securities
for original issue upon a Partnership Order for the authentication and delivery
of such Securities or pursuant to such procedures acceptable to the Trustee as
may be specified from time to time by Partnership Order. Such order shall
specify the amount of the Securities to be authenticated, the date on which the
original issue of Securities is to be authenticated, the name or names of the
initial Holder or Holders and any other terms of the Securities of such series
not otherwise determined. If provided for in such procedures, such Partnership
Order may authorize (1) authentication and delivery of Securities of such series
for original issue from time to time, with certain terms (including, without
limitation, the Maturity dates or dates, original issue date or dates and
interest rate or rates) that differ from Security to Security and (2) may
authorize authentication and delivery pursuant to oral or electronic
instructions from the Partnership or its duly authorized agent, which
instructions shall be promptly confirmed in writing.
If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Section 2.01, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive (in addition to the Partnership Order
referred to above and the other documents required by Section 12.04), and
(subject to Section 7.01) shall be fully protected in relying upon:
(a) an Officers' Certificate setting forth the Board
Resolution and, if applicable, an appropriate record of any action
taken pursuant thereto, as contemplated by the last paragraph of
Section 2.01; and
(b) an Opinion of Counsel to the effect that:
12
(i) the form of such Securities has been
established in conformity with the provisions of this
Indenture;
(ii) the terms of such Securities have been
established in conformity with the provisions of this
Indenture; and
(iii) that, when authenticated and delivered by
the Trustee and issued by the Partnership in the manner and
subject to any conditions specified in such Opinion of
Counsel, such Securities and the related Guarantees will
constitute valid and binding obligations of the Partnership
and the Subsidiary Guarantors, respectively, enforceable
against the Partnership and the Subsidiary Guarantors,
respectively, in accordance with their respective terms,
except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws in effect from
time to time affecting the rights of creditors generally, and
the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
If all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate and
Opinion of Counsel at the time of issuance of each such Security, but such
Officers' Certificate and Opinion of Counsel shall be delivered at or before the
time of issuance of the first Security of the series to be issued.
The Trustee shall not be required to authenticate such
Securities if the issuance of such Securities pursuant to this Indenture would
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner not reasonably acceptable to the
Trustee.
The Trustee may appoint an authenticating agent acceptable to
the Partnership to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Partnership, any Subsidiary Guarantor
or an Affiliate of the Partnership or any Subsidiary Guarantor.
Each Security shall be dated the date of its authentication.
SECTION 2.05 Registrar and Paying Agent.
The Partnership shall maintain an office or agency for each
series of Securities where Securities of such series may be presented for
registration of transfer or exchange ("Registrar") and an office or agency where
Securities of such series may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Securities of such series and of their
transfer and exchange. The Partnership may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
13
The Partnership shall enter into an appropriate agency
agreement with any Registrar or Paying Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Partnership shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. The Partnership may change any Paying Agent
or Registrar without notice to any Holder. If the Partnership fails to appoint
or maintain another entity as Registrar or Paying Agent, the Trustee shall act
as such. The Partnership, any Subsidiary Guarantor or any Subsidiary may act as
Paying Agent or Registrar.
The Partnership initially appoints the Trustee as Registrar
and Paying Agent.
SECTION 2.06 Paying Agent to Hold Money in Trust.
The Partnership shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest on or any Additional
Amounts with respect to Securities and will notify the Trustee of any default by
the Partnership in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed. The Partnership at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed. Upon payment over to the Trustee and upon accounting
for any funds disbursed, the Paying Agent (if other than the Partnership, a
Subsidiary Guarantor or a Subsidiary) shall have no further liability for the
money. If the Partnership, a Subsidiary Guarantor or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Each Paying Agent shall
otherwise comply with TIA Section 317(b).
SECTION 2.07 Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar with respect to a series of Securities, the
Partnership shall furnish to the Trustee at least five Business Days before each
Interest Payment Date with respect to such series of Securities, and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Holders of such series, and the Partnership shall otherwise comply with TIA
Section 312(a).
SECTION 2.08 Transfer and Exchange.
Except as set forth in Section 2.17 or as may be provided
pursuant to Section 2.01:
When Securities of any series are presented to the Registrar
with the request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of the same series of
like tenor and of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements and the
requirements of this Indenture for such transactions are met; provided, however,
that the Securities presented or surrendered for registration of transfer or
exchange shall be duly
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endorsed or accompanied by a written instruction of transfer in form reasonably
satisfactory to the Registrar duly executed by the Holder thereof or by his
attorney, duly authorized in writing, on which instruction the Registrar can
rely.
To permit registrations of transfers and exchanges, the
Partnership and the Subsidiary Guarantors shall execute and the Trustee shall
authenticate Securities at the Registrar's written request and submission of the
Securities or Global Securities. No service charge shall be made to a Holder for
any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Partnership may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than such transfer tax or similar governmental charge payable
upon exchanges pursuant to Section 2.12, 3.07 or 9.05). The Trustee shall
authenticate Securities in accordance with the provisions of Section 2.04.
Notwithstanding any other provisions of this Indenture to the contrary, the
Partnership shall not be required to register the transfer or exchange of (a)
any Security selected for redemption in whole or in part pursuant to Article
III, except the unredeemed portion of any Security being redeemed in part, or
(b) any Security during the period beginning 15 Business Days prior to the
mailing of notice of any offer to repurchase Securities of the series required
pursuant to the terms thereof or of redemption of Securities of a series to be
redeemed and ending at the close of business on the day of mailing.
SECTION 2.09 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or if
the Holder of a Security claims that the Security has been destroyed, lost or
stolen and the Partnership and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of such Security, the Partnership
shall issue, and the Subsidiary Guarantors shall execute and the Trustee shall
authenticate a replacement Security of the same series if the Trustee's
requirements are met. If any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Partnership in its
discretion may, instead of issuing a new Security, pay such Security. If
required by the Trustee, any Subsidiary Guarantor or the Partnership, such
Holder must furnish an indemnity bond that is sufficient in the judgment of the
Trustee and the Partnership to protect the Partnership, each Subsidiary
Guarantor, the Trustee, any Agent or any authenticating agent from any loss that
any of them may suffer if a Security is replaced. The Partnership and the
Trustee may charge a Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Partnership.
SECTION 2.10 Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.10 as
not outstanding.
If a Security is replaced pursuant to Section 2.09, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
15
If the principal amount of any Security is considered paid
under Section 4.01, it ceases to be outstanding and interest on it ceases to
accrue.
A Security does not cease to be outstanding because the
Partnership, a Subsidiary Guarantor or an Affiliate of the Partnership or a
Subsidiary Guarantor holds the Security.
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury
Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, (a) the principal amount of an Original Issue Discount
Security shall be the principal amount thereof that would be due and payable as
of the date of such determination upon acceleration of the Maturity thereof
pursuant to Section 6.02, (b) the principal amount of a Security denominated in
a foreign currency shall be the Dollar equivalent, as determined by the
Partnership by reference to the noon buying rate in The City of New York for
cable transfers for such currency, as such rate is certified for customs
purposes by the Federal Reserve Bank of New York (the "Exchange Rate") on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the Dollar equivalent, as
determined by the Partnership by reference to the Exchange Rate on the date of
original issuance of such Security, of the amount determined as provided in (a)
above), of such Security and (c) Securities owned by the Partnership, a
Subsidiary Guarantor or any other obligor upon the Securities or any Affiliate
of the Partnership, of a Subsidiary Guarantor or of such other obligor shall be
disregarded, except that, for the purpose of determining whether the Trustee
shall be protected in relying upon any such direction, amendment, supplement,
waiver or consent, only Securities that a Responsible Officer of the Trustee
actually knows are so owned shall be so disregarded.
SECTION 2.12 Temporary Securities.
Until definitive Securities of any series are ready for
delivery, the Partnership may prepare, and the Subsidiary Guarantors shall
execute and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities, but may
have variations that the Partnership considers appropriate for temporary
Securities. Without unreasonable delay, the Partnership shall prepare, and the
Subsidiary Guarantors shall execute and the Trustee shall authenticate
definitive Securities in exchange for temporary Securities. Until so exchanged,
the temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 2.13 Cancellation.
The Partnership or any Subsidiary Guarantor at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange, payment or redemption or for credit against
any sinking fund payment. The Trustee shall cancel all Securities surrendered
for registration of transfer, exchange, payment, redemption, replacement or
cancellation or for credit against any sinking fund. Unless the Partnership
shall direct in writing that canceled Securities be returned to it, after
written notice to the Partnership all canceled
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Securities held by the Trustee shall be disposed of in accordance with the usual
disposal procedures of the Trustee, and the Trustee shall maintain a record of
their disposal. The Partnership may not issue new Securities to replace
Securities that have been paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.14 Payments; Defaulted Interest.
Unless otherwise provided as contemplated by Section 2.01,
interest (except defaulted interest) on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Persons who are registered Holders of that Security at the close of
business on the record date next preceding such Interest Payment Date, even if
such Securities are canceled after such record date and on or before such
Interest Payment Date. The Holder must surrender a Security to a Paying Agent to
collect principal payments. Unless otherwise provided with respect to the
Securities of any series, the Partnership will pay the principal of, premium (if
any) and interest on and any Additional Amounts with respect to the Securities
in Dollars. Such amounts shall be payable at the offices of the Trustee or any
Paying Agent, provided that at the option of the Partnership, the Partnership
may pay such amounts (1) by wire transfer with respect to Global Securities or
(2) by check payable in such money mailed to a Holder's registered address with
respect to any Securities.
If the Partnership defaults in a payment of interest on the
Securities of any series, the Partnership shall pay the defaulted interest in
any lawful manner plus, to the extent lawful, interest on the defaulted
interest, in each case at the rate provided in the Securities of such series and
in Section 4.01. The Partnership may pay the defaulted interest to the Persons
who are Holders on a subsequent special record date. At least 15 days before any
special record date selected by the Partnership, the Partnership (or the
Trustee, in the name of and at the expense of the Partnership upon 20 days'
prior written notice from the Partnership setting forth such special record date
and the interest amount to be paid) shall mail to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.15 Persons Deemed Owners.
The Partnership, the Subsidiary Guarantors, the Trustee, any
Agent and any authenticating agent may treat the Person in whose name any
Security is registered as the owner of such Security for the purpose of
receiving payments of principal of, premium (if any) or interest on or any
Additional Amounts with respect to such Security and for all other purposes.
None of the Partnership, any Subsidiary Guarantor, the Trustee, any Agent or any
authenticating agent shall be affected by any notice to the contrary.
SECTION 2.16 Computation of Interest.
Except as otherwise specified as contemplated by Section 2.01
for Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year comprising twelve 30-day months.
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SECTION 2.17 Global Securities; Book-Entry Provisions.
If Securities of a series are issuable in global form as a
Global Security, as contemplated by Section 2.01, then, notwithstanding clause
(11) of Section 2.01 and the provisions of Section 2.02, any such Global
Security shall represent such of the outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges, transfers or
redemptions. Any endorsement of a Global Security to reflect the amount, or any
increase or decrease in the amount, of outstanding Securities represented
thereby shall be made by the Trustee (i) in such manner and upon instructions
given by such Person or Persons as shall be specified in such Security or in a
Partnership Order to be delivered to the Trustee pursuant to Section 2.04 or
(ii) otherwise in accordance with written instructions or such other written
form of instructions as is customary for the Depositary for such Security, from
such Depositary or its nominee on behalf of any Person having a beneficial
interest in such Global Security. Subject to the provisions of Section 2.04 and,
if applicable, Section 2.12, the Trustee shall deliver and redeliver any
Security in permanent global form in the manner and upon instructions given by
the Person or Persons specified in such Security or in the applicable
Partnership Order. With respect to the Securities of any series that are
represented by a Global Security, the Partnership and the Subsidiary Guarantors
authorize the execution and delivery by the Trustee of a letter of
representations or other similar agreement or instrument in the form customarily
provided for by the Depositary appointed with respect to such Global Security.
Any Global Security may be deposited with the Depositary or its nominee, or may
remain in the custody of the Trustee or the Security Custodian therefor pursuant
to a FAST Balance Certificate Agreement or similar agreement between the Trustee
and the Depositary. If a Partnership Order has been, or simultaneously is,
delivered, any instructions by the Partnership with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 12.05 and need not be accompanied by an Opinion of
Counsel.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee or the Security
Custodian as its custodian, or under such Global Security, and the Depositary
may be treated by the Partnership, any Subsidiary Guarantor, the Trustee or the
Security Custodian and any agent of the Partnership, any Subsidiary Guarantor,
the Trustee or the Security Custodian as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, (i) the
registered holder of a Global Security of a series may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action that a Holder of
Securities of such series is entitled to take under this Indenture or the
Securities of such series and (ii) nothing herein shall prevent the Partnership,
any Subsidiary Guarantor, the Trustee or the Security Custodian, or any agent of
the Partnership, any Subsidiary Guarantor, the Trustee or the Security
Custodian, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a beneficial owner of any Security.
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Notwithstanding Section 2.08, and except as otherwise provided
pursuant to Section 2.01: Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary. Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Security if, and only if,
either (1) the Depositary notifies the Partnership that it is unwilling or
unable to continue as Depositary for the Global Security and a successor
Depositary is not appointed by the Partnership within 90 days of such notice,
(2) an Event of Default has occurred with respect to such series and is
continuing and the Registrar has received a request from the Depositary to issue
Securities in lieu of all or a portion of the Global Security (in which case the
Partnership shall deliver Securities within 30 days of such request) or (3) the
Partnership determines not to have the Securities represented by a Global
Security.
In connection with any transfer of a portion of the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Security in an amount equal to
the principal amount of the beneficial interests in the Global Security to be
transferred, and the Partnership and the Subsidiary Guarantors shall execute,
and the Trustee upon receipt of a Partnership Order for the authentication and
delivery of Securities shall authenticate and deliver, one or more Securities of
the same series of like tenor and amount.
In connection with the transfer of all the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Partnership and the Subsidiary Guarantors shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depositary in exchange for its beneficial interests in the
Global Security, an equal aggregate principal amount of Securities of authorized
denominations.
Neither the Partnership, any Subsidiary Guarantor nor the
Trustee will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, Securities by the Depositary, or
for maintaining, supervising or reviewing any records of the Depositary relating
to such Securities. Neither the Partnership, any Subsidiary Guarantor nor the
Trustee shall be liable for any delay by the related Global Security Holder or
the Depositary in identifying the beneficial owners, and each such Person may
conclusively rely on, and shall be protected in relying on, instructions from
such Global Security Holder or the Depositary for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Securities to be issued).
The provisions of the last sentence of the third paragraph of
Section 2.04 shall apply to any Global Security if such Global Security was
never issued and sold by the Partnership and the Partnership or a Subsidiary
Guarantor delivers to the Trustee the Global Security together with written
instructions (which need not comply with Section 12.05 and need not be
accompanied by an Opinion of Counsel) with regard to the cancellation or
reduction in the principal amount of Securities represented thereby, together
with the written statement contemplated by the last sentence of the third
paragraph of Section 2.04.
19
Notwithstanding the provisions of Sections 2.03 and 2.14,
unless otherwise specified as contemplated by Section 2.01, payment of principal
of, premium (if any) and interest on and any Additional Amounts with respect to
any Global Security shall be made to the Person or Persons specified therein.
ARTICLE III
REDEMPTION
SECTION 3.01 Applicability of Article.
Securities of any series that are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 2.01 for Securities of any
series) in accordance with this Article III.
SECTION 3.02 Notice to the Trustee.
If the Partnership elects to redeem Securities of any series
pursuant to this Indenture, it shall notify the Trustee of the Redemption Date
and the principal amount of Securities of such series to be redeemed. The
Partnership shall so notify the Trustee at least 45 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee) by
delivering to the Trustee an Officers' Certificate stating that such redemption
will comply with the provisions of this Indenture and of the Securities of such
series. Any such notice may be canceled at any time prior to the mailing of such
notice of such redemption to any Holder and shall thereupon be void and of no
effect.
SECTION 3.03 Selection of Securities To Be Redeemed.
If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series of a specified tenor are
to be redeemed), 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 tenor) not previously called for
redemption, either pro rata, by lot or by such other method as the Trustee shall
deem fair and appropriate and that may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series or of the principal amount of Global Securities of
such series.
The Trustee shall promptly notify the Partnership and the
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any of the Securities redeemed or to be redeemed only in part, to
the portion of the principal amount thereof which has been or is to be redeemed.
20
SECTION 3.04 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 the address of
such Holder appearing in the register of Securities maintained by the Registrar.
All notices of redemption shall identify the Securities to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) that, unless the Partnership and the Subsidiary
Guarantors default in making the redemption payment, interest on
Securities called for redemption ceases to accrue on and after the
Redemption Date, and the only remaining right of the Holders of such
Securities is to receive payment of the Redemption Price upon surrender
to the Paying Agent of the Securities redeemed;
(4) if any Security is to be redeemed in part, the
portion of the principal amount thereof to be redeemed and that on and
after the Redemption Date, upon surrender for cancellation of such
Security to the Paying Agent, a new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will
be issued without charge to the Holder;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price and the
name and address of the Paying Agent;
(6) that the redemption is for a sinking or analogous
fund, if such is the case; and
(7) the CUSIP number, if any, relating to such
Securities.
Notice of redemption of Securities to be redeemed at the
election of the Partnership shall be given by the Partnership or, at the
Partnership's written request, by the Trustee in the name and at the expense of
the Partnership.
SECTION 3.05 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, but interest installments whose maturity
is on or prior to such Redemption Date will be payable on the relevant Interest
Payment Dates to the Holders of record at the close of business on the relevant
record dates specified pursuant to Section 2.01.
21
SECTION 3.06 Deposit of Redemption Price.
On or prior to 11:00 a.m., New York City time, on any
Redemption Date, the Partnership or a Subsidiary Guarantor shall deposit with
the Trustee or the Paying Agent (or, if the Partnership or such Subsidiary
Guarantor is acting as the Paying Agent, segregate and hold in trust as provided
in Section 2.06) an amount of money in same day funds sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on and any Additional Amounts with respect to,
the Securities or portions thereof which are to be redeemed on that date, other
than Securities or portions thereof called for redemption on that date which
have been delivered by the Partnership or a Subsidiary Guarantor to the Trustee
for cancellation.
If the Partnership or a Subsidiary Guarantor complies with the
preceding paragraph, then, unless the Partnership and the Subsidiary Guarantors
default in the payment of such Redemption Price, interest on the Securities to
be redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Securities are presented for payment, and the Holders of
such Securities shall have no further rights with respect to such Securities
except for the right to receive the Redemption Price upon surrender of such
Securities. If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal, premium, if any, any Additional
Amounts, and, to the extent lawful, accrued interest thereon shall, until paid,
bear interest from the Redemption Date at the rate specified pursuant to Section
2.01 or provided in the Securities or, in the case of Original Issue Discount
Securities, such Securities' yield to maturity.
SECTION 3.07 Securities Redeemed or Purchased in Part.
Upon surrender to the Paying Agent of a Security to be
redeemed in part, the Partnership and the Subsidiary Guarantors 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
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 that is not redeemed.
SECTION 3.08 Purchase of Securities.
Unless otherwise specified as contemplated by Section 2.01,
the Partnership, any Subsidiary Guarantor and any Affiliate of the Partnership
or any Subsidiary Guarantor may, subject to applicable law, at any time purchase
or otherwise acquire Securities in the open market or by private agreement. Any
such acquisition shall not operate as or be deemed for any purpose to be a
redemption of the indebtedness represented by such Securities. Any Securities
purchased or acquired by the Partnership or a Subsidiary Guarantor may be
delivered to the Trustee and, upon such delivery, the indebtedness represented
thereby shall be deemed to be satisfied. Section 2.13 shall apply to all
Securities so delivered.
SECTION 3.09 Mandatory and Optional Sinking Funds.
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
22
payment in excess of such minimum amount provided for by the terms of Securities
of any series is herein referred to as an "optional sinking fund payment."
Unless otherwise provided by the terms of Securities of any series, the cash
amount of any sinking fund payment may be subject to reduction as provided in
Section 3.10. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series and by this Article III.
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities.
The Partnership or a Subsidiary Guarantor may deliver
outstanding Securities of a series (other than any previously called for
redemption) and may apply as a credit Securities of a series that have been
redeemed either at the election of the Partnership pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of
such series required to be made pursuant to the terms of such series of
Securities; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
SECTION 3.11 Redemption of Securities for Sinking Fund.
Not less than 45 days prior (unless a shorter period shall be
satisfactory to the Trustee) to each sinking fund payment date for any series of
Securities, the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, 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 delivery of or by crediting Securities of that series pursuant to
Section 3.10 and will also deliver or cause to be delivered to the Trustee any
Securities to be so delivered. Failure of the Partnership to timely deliver or
cause to be delivered such Officers' Certificate and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute the
election of the Partnership (i) that the mandatory sinking fund payment for such
series due on the next succeeding sinking fund payment date shall be paid
entirely in cash without the option to deliver or credit Securities of such
series in respect thereof and (ii) that the Partnership will make no optional
sinking fund payment with respect to such series as provided in this Section
3.11.
If the sinking fund payment or payments (mandatory or optional
or both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $100,000 (or the Dollar equivalent thereof based on the applicable
Exchange Rate on the date of original issue of the applicable Securities) or a
lesser sum if the Partnership shall so request with respect to the Securities of
any particular series, such cash shall be applied on the next succeeding sinking
fund payment date to the redemption of Securities of such series at the sinking
fund redemption price together with accrued interest to the date fixed for
redemption. If such amount shall be $100,000 (or the Dollar equivalent thereof
as aforesaid) or less and the Partnership makes no such request then it shall be
carried over until a sum in excess of $100,000 (or the Dollar equivalent thereof
as aforesaid) is available. Not less than 30 days before each such sinking fund
payment date, the
23
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 3.03 and cause notice of the
redemption thereof to be given in the name of and at the expense of the
Partnership in the manner provided in Section 3.04. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 3.05, 3.06 and 3.07.
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Securities.
The Partnership shall pay the principal of, premium (if any)
and interest on and any Additional Amounts with respect to the Securities of
each series on the dates and in the manner provided in the Securities of such
series and in this Indenture. Principal, premium, interest and any Additional
Amounts shall be considered paid on the date due if the Paying Agent (other than
the Partnership, a Subsidiary Guarantor or a Subsidiary) holds on that date
money deposited by the Partnership or a Subsidiary Guarantor designated for and
sufficient to pay all principal, premium, interest and any Additional Amounts
then due.
The Partnership shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium (if any), at a rate equal to the then applicable interest rate on the
Securities to the extent lawful; and it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and any Additional Amount (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02 Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any
series of Securities an office or agency (which may be an office of the Trustee,
the Registrar or the Paying Agent) where Securities of that series may be
presented for registration of transfer or exchange, where Securities of that
series may be presented for payment and where notices and demands to or upon the
Partnership or a Subsidiary Guarantor in respect of the Securities of that
series and this Indenture may be served. Unless otherwise designated by the
Partnership by written notice to the Trustee and the Subsidiary Guarantors, such
office or agency shall be the office of the Trustee in The City of New York,
which on the date hereof is located at ______________________________. The
Partnership will give prompt written notice to the Trustee and the Subsidiary
Guarantors of the location, and any change in the location, of such office or
agency. If at any time the Partnership shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee and the Subsidiary
Guarantors with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Partnership may also from time to time designate one or
more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Partnership of its obligation to
24
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Partnership will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 4.03 SEC Reports; Financial Statements.
(a) If the Partnership or a Subsidiary Guarantor is
subject to the requirements of Section 13 or 15(d) of the Exchange Act, the
Partnership or such Subsidiary Guarantor, as the case may be, shall file with
the Trustee, within 15 days after it files the same with the SEC, copies of the
annual reports and the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Partnership or such Subsidiary Guarantor is required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If this
Indenture is qualified under the TIA, but not otherwise, the Partnership and the
Subsidiary Guarantors shall also comply with the provisions of TIA Section
314(a). Delivery of such reports, information and documents to the Trustee shall
be for informational purposes only, and the Trustee's receipt thereof shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Partnership's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates or certificates delivered
pursuant to Section 4.04).
(b) If neither the Partnership nor any Subsidiary
Guarantor is subject to the requirements of Section 13 or 15(d) of the Exchange
Act, the Partnership and the Subsidiary Guarantors shall furnish to all Holders
of Rule 144A Securities and prospective purchasers of Rule 144A Securities
designated by the Holders of Rule 144A Securities, promptly upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) promulgated
under the Securities Act of 1933, as amended.
SECTION 4.04 Compliance Certificate.
(a) Each of the Partnership and the Subsidiary Guarantors
shall deliver to the Trustee, within 120 days after the end of each fiscal year,
a statement signed by an Officer of U.S. Propane, L.L.C., which need not
constitute an Officers' Certificate, complying with TIA Section 314(a)(4) and
stating that in the course of performance by the signing Officer of his duties
as such Officer of U.S. Propane, L.L.C., he would normally obtain knowledge of
the keeping, observing, performing and fulfilling by the Partnership or such
Subsidiary Guarantor, as the case may be, of its obligations under this
Indenture, and further stating that to the best of his knowledge the Partnership
or such Subsidiary Guarantor, as the case may be, has kept, observed, performed
and fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which such Officer may have
knowledge and what action the Partnership or such Subsidiary Guarantor, as the
case may be, is taking or proposes to take with respect thereto).
(b) The Partnership or any Subsidiary Guarantor shall, so
long as Securities of any series are outstanding, deliver to the Trustee,
forthwith upon any Officer of U.S. Propane, L.L.C., becoming aware of any
Default or Event of Default under this Indenture, an Officers'
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Certificate specifying such Default or Event of Default and what action the
Partnership or such Subsidiary Guarantor, as the case may be, is taking or
proposes to take with respect thereto.
SECTION 4.05 Existence.
Subject to Article V, each of the Partnership and the
Subsidiary Guarantors shall do or cause to be done all things necessary to
preserve and keep in full force and effect its existence.
SECTION 4.06 Waiver of Stay, Extension or Usury Laws.
Each of the Partnership and the Subsidiary Guarantors
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 stay or extension law or any usury law or other law
that would prohibit or forgive it from paying all or any portion of the
principal of or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each of the Partnership and the Subsidiary Guarantors 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.
SECTION 4.07 Additional Amounts.
If the Securities of a series expressly provide for the
payment of Additional Amounts, the Partnership will pay to the Holder of any
Security of such series Additional Amounts as expressly provided therein.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of or any premium or interest on, or in respect of, any Security
of any series or the net proceeds received from the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this Section 4.07 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to the provisions of this Section 4.07 and express
mention of the payment of Additional Amounts (if applicable) in any provisions
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
ARTICLE V
SUCCESSORS
SECTION 5.01 Limitations on Mergers and Consolidations.
Neither the Partnership nor any Subsidiary Guarantor shall, in
any transaction or series of transactions, consolidate with or merge into any
Person, or sell, lease, convey, transfer or otherwise dispose of all or
substantially all of its assets to any Person (other than a consolidation or
merger of the Partnership and a Subsidiary Guarantor or of the Subsidiary
Guarantors, or a sale, lease, conveyance, transfer or other disposition of all
or substantially all of the assets of the Partnership to a Subsidiary Guarantor,
a Subsidiary Guarantor to the Partnership or of a Subsidiary Guarantor to
another Subsidiary Guarantor), unless:
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(1) either (a) the Partnership or such Subsidiary
Guarantor, as the case may be, shall be the continuing Person or (b)
the Person (if other than the Partnership or such Subsidiary Guarantor)
formed by such consolidation or into which the Partnership or such
Subsidiary Guarantor is merged, or to which such sale, lease,
conveyance, transfer or other disposition shall be made (collectively,
the "Successor"), is organized and validly existing under the laws of
the United States, any political subdivision thereof or any State
thereof or the District of Columbia, and expressly assumes by
supplemental indenture, in the case of the Partnership, the due and
punctual payment of the principal of, premium (if any) and interest on
and any Additional Amounts with respect to all the Securities and the
performance of the Partnership's covenants and obligations under this
Indenture and the Securities, or, in the case of such Subsidiary
Guarantor, the performance of the Guarantee and such Subsidiary
Guarantor's covenants and obligations under this Indenture and the
Securities;
(2) immediately after giving effect to such transaction
or series of transactions, no Default or Event of Default shall have
occurred and be continuing or would result therefrom; and
(3) the Partnership or such Subsidiary Guarantor, as the
case may be, delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that the transaction and such
supplemental indenture comply with this Indenture.
SECTION 5.02 Successor Person Substituted.
Upon any consolidation or merger of the Partnership or a
Subsidiary Guarantor, as the case may be, or any sale, lease, conveyance,
transfer or other disposition of all or substantially all of the assets of the
Partnership or such Subsidiary Guarantor in accordance with Section 5.01, the
Successor formed by such consolidation or into or with which the Partnership or
such Subsidiary Guarantor is merged or to which such sale, lease, conveyance,
transfer or other disposition is made shall succeed to, and be substituted for,
and may exercise every right and power of the Partnership or such Subsidiary
Guarantor, as the case may be, under this Indenture and the Securities with the
same effect as if such Successor had been named as the Partnership or such
Subsidiary Guarantor, as the case may be, herein and the predecessor Partnership
or Subsidiary Guarantor, in the case of a sale, conveyance, transfer or other
disposition, shall be released from all obligations under this Indenture, the
Securities and, in the case of a Subsidiary Guarantor, the Guarantee.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
Unless either inapplicable to a particular series or
specifically deleted or modified in or pursuant to the supplemental indenture or
Board Resolution establishing such series of Securities or in the form of
Security for such series, an "Event of Default," wherever used herein with
respect to Securities of any series, occurs if:
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(1) there is a default in the payment of
interest on or any Additional Amounts with respect to any Security of
that series when the same becomes due and payable and such default
continues for a period of 30 days;
(2) there is a default in the payment of the
principal of or premium, if any, on any Securities of that series as
and when the same shall become due and payable, whether at Stated
Maturity, upon redemption, by declaration, upon required repurchase or
otherwise;
(3) there is a default in the payment of any
sinking fund payment with respect to any Securities of that series as
and when the same shall become due and payable;
(4) there is a failure on the part of the
Partnership, or if any series of Securities outstanding under this
Indenture is entitled to the benefits of a Guarantee by the Subsidiary
Guarantors, any of the Subsidiary Guarantors, duly to observe or
perform any other of the covenants or agreements on the part of the
Partnership, or if applicable, any of the Subsidiary Guarantors, in the
Securities of that series, in any resolution of the Board of Directors
authorizing the issuance of that series of Securities, in this
Indenture with respect to such series or in any supplemental Indenture
with respect to such series (other than a default in the performance of
a covenant which is specifically dealt with elsewhere in this Section
6.01), continuing for a period of 60 days after the date on which
written notice specifying such failure and requiring the Partnership,
or if applicable, the Subsidiary Guarantors, to remedy the same shall
have been given, by registered or certified mail, to the Partnership,
or if applicable, the Subsidiary Guarantors, by the Trustee or to the
Partnership, or if applicable, the Subsidiary Guarantors, and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities of that series at the time outstanding;
(5) the Partnership, or if any series of
Securities outstanding under this Indenture is entitled to the benefits
of a Guarantee by the Subsidiary Guarantors, any of the Subsidiary
Guarantors, pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Bankruptcy
Custodian of it or for all or substantially all of its
property, or
(D) makes a general assignment for the benefit
of its creditors;
(6) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that remains unstayed and in
effect for 60 days and that:
(A) is for relief against the Partnership or any
Subsidiary Guarantor as debtor in an involuntary case,
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(B) appoints a Bankruptcy Custodian of the
Partnership or any Subsidiary Guarantor or a Bankruptcy
Custodian for all or substantially all of the property of the
Partnership or any Subsidiary Guarantor, or
(C) orders the liquidation of the Partnership or
any Subsidiary Guarantor;
(7) if any series of Securities outstanding
under this Indenture is entitled to the benefits of a
Guarantee by the Subsidiary Guarantors, any of the Subsidiary
Guarantors ceases to be in full force and effect with respect
to Securities of that series (except as otherwise provided in
this Indenture) or is declared null and void in a judicial
proceeding or any of the Subsidiary Guarantors (if applicable)
denies or disaffirms its obligations under this Indenture or
such Guarantee; or
(8) any other Event of Default provided with
respect to Securities of that series occurs.
The term "Bankruptcy Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know or have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Default or Event of Default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Securities and this
Indenture.
When a Default is cured, it ceases.
Notwithstanding the foregoing provisions of this Section 6.01,
if the principal of, premium (if any) or interest on or Additional Amounts with
respect to any Security is payable in a currency or currencies (including a
composite currency) other than Dollars and such currency or currencies are not
available to the Partnership or a Subsidiary Guarantor for making payment
thereof due to the imposition of exchange controls or other circumstances beyond
the control of the Partnership or such Subsidiary Guarantor (a "Conversion
Event"), each of the Partnership and the Subsidiary Guarantors will be entitled
to satisfy its obligations to Holders of the Securities by making such payment
in Dollars in an amount equal to the Dollar equivalent of the amount payable in
such other currency, as determined by the Partnership or the Subsidiary
Guarantor making such payment, as the case may be, by reference to the Exchange
Rate on the date of such payment, or, if such rate is not then available, on the
basis of the most recently available Exchange Rate. Notwithstanding the
foregoing provisions of this Section 6.01, any payment made under such
circumstances in Dollars where the required payment is in a currency other than
Dollars will not constitute an Event of Default under this Indenture.
Promptly after the occurrence of a Conversion Event, the
Partnership or a Subsidiary Guarantor shall give written notice thereof to the
Trustee; and the Trustee, promptly after receipt of such notice, shall give
notice thereof in the manner provided in Section 12.02 to the Holders. Promptly
after the making of any payment in Dollars as a result of a Conversion
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Event, the Partnership or the Subsidiary Guarantor making such payment, as the
case may be, shall give notice in the manner provided in Section 12.02 to the
Holders, setting forth the applicable Exchange Rate and describing the
calculation of such payments.
A Default under clause (4) or (8) of this Section 6.01 is not
an Event of Default until the Trustee notifies the Partnership and the
Subsidiary Guarantors, or the Holders of at least 25% in principal amount of the
then outstanding Securities of the series affected by such Default (or, in the
case of a Default under clause (4) of this Section 6.01, if outstanding
Securities of other series are affected by such Default, then at least 25% in
principal amount of the then outstanding Securities so affected) notify the
Partnership, the Subsidiary Guarantors and the Trustee, of the Default, and the
Partnership or the applicable Subsidiary Guarantor, as the case may be, fails to
cure the Default within 60 days after receipt of the notice. The notice must
specify the Default, demand that it be remedied and state that the notice is a
"Notice of Default."
SECTION 6.02 Acceleration.
If an Event of Default with respect to any Securities of any
series at the time outstanding (other than an Event of Default specified in
clause (5) or (6) of Section 6.01) occurs and is continuing, the Trustee by
notice to the Partnership and the Subsidiary Guarantors, or the Holders of at
least 25% in principal amount of the then outstanding Securities of the series
affected by such Event of Default (or, in the case of an Event of Default
described in clause (4) of Section 6.01, if outstanding Securities of other
series are affected by such Event of Default, then at least 25% in principal
amount of the then outstanding Securities so affected) by notice to the
Partnership, the Subsidiary Guarantors and the Trustee, may declare the
principal of (or, if any such Securities are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of that
series) and all accrued and unpaid interest on all then outstanding Securities
of such series or of all series, as the case may be, to be due and payable. Upon
any such declaration, the amounts due and payable on the Securities shall be due
and payable immediately. If an Event of Default specified in clause (5) or (6)
of Section 6.01 hereof occurs, such amounts shall ipso facto become and be
immediately due and payable without any declaration, notice or other act on the
part of the Trustee or any Holder. The Holders of a majority in principal amount
of the then outstanding Securities of the series affected by such Event of
Default or all series, as the case may be, by written notice to the Trustee may
rescind an acceleration and its consequences (other than nonpayment of principal
of or premium or interest on or any Additional Amounts with respect to the
Securities) if the rescission would not conflict with any judgment or decree and
if all existing Events of Default with respect to Securities of that series (or
of all series, as the case may be) have been cured or waived, except nonpayment
of principal, premium, interest or any Additional Amounts that has become due
solely because of the acceleration.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of, or
premium, if any, or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
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The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a majority
in principal amount of the then outstanding Securities of any series or of all
series (acting as one class) by notice to the Trustee may waive an existing or
past Default or Event of Default with respect to such series or all series, as
the case may be, and its consequences (including waivers obtained in connection
with a tender offer or exchange offer for Securities of such series or all
series or a solicitation of consents in respect of Securities of such series or
all series, provided that in each case such offer or solicitation is made to all
Holders of then outstanding Securities of such series or all series (but the
terms of such offer or solicitation may vary from series to series)), except (1)
a continuing Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on or any Additional Amounts with respect to any
Security or (2) a continued Default in respect of a provision that under Section
9.02 cannot be amended or supplemented without the consent of each Holder
affected. Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05 Control by Majority.
With respect to Securities of any series, the Holders of a
majority in principal amount of the then outstanding Securities of such series
may direct in writing the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it relating to or arising under an Event of Default described in
clause (1), (2), (3) or (7) of Section 6.01, and with respect to all Securities,
the Holders of a majority in principal amount of all the then outstanding
Securities affected may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it not relating to or arising under such an
Event of Default. However, the Trustee may refuse to follow any direction that
conflicts with applicable law or this Indenture, that the Trustee determines may
be unduly prejudicial to the rights of other Holders, or that may involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion from Holders
directing the Trustee against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06 Limitations on Suits.
Subject to Section 6.07 hereof, a Holder of a Security of any
series may pursue a remedy with respect to this Indenture or the Securities of
such series only if:
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(1) the Holder gives to the Trustee written notice of a
continuing Event of Default with respect to such series;
(2) the Holders of at least 25% in principal amount of
the then outstanding Securities of such series make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority
in principal amount of the Securities of that series do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal of and
premium, if any, and interest on and any Additional Amounts with respect to the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default specified in clause (1) or (2) of
Section 6.01 hereof occurs and is continuing, the Trustee is authorized to
recover judgment in its own name and as trustee of an express trust against the
Partnership or a Subsidiary Guarantor for the amount of principal, premium (if
any), interest and any Additional Amounts remaining unpaid on the Securities of
the series affected by the Event of Default, and interest on overdue principal
and premium, if any, and, to the extent lawful, interest on overdue interest,
and 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.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents and to take such actions, including participating as a
member, voting or otherwise, of any committee of creditors, as may be necessary
or advisable to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Partnership or a Subsidiary Guarantor or their respective
creditors or properties and shall be entitled and empowered to collect, receive
and distribute any money or other property payable
32
or deliverable on any such claims and any Bankruptcy Custodian 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 to
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 7.07. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the Holders of the Securities may
be entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
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.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article VI,
it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the
Securities in respect of which or for the benefit of which such money
has been collected, for principal, premium (if any), interest and any
Additional Amounts ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium (if any), interest and any Additional Amounts,
respectively; and
Third: to the Partnership.
The Trustee, upon prior written notice to the Partnership, may
fix record dates and payment dates for any payment to Holders pursuant to this
Article VI.
To the fullest extent allowed under applicable law, if for the
purpose of obtaining a judgment against the Partnership or a Subsidiary
Guarantor in any court it is necessary to convert the sum due in respect of the
principal of, premium (if any) or interest on or Additional Amounts with respect
to the Securities of any series (the "Required Currency") into a currency in
which a judgment will be rendered (the "Judgment Currency"), the rate of
exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the Business Day in The City of New York
next preceding that on which final judgment is given. Neither the Partnership,
any Subsidiary Guarantor nor the Trustee shall be liable for any shortfall nor
shall it benefit from any windfall in payments to Holders of Securities under
this Section 6.10 caused by a change in exchange rates between the time the
amount of a judgment against it is calculated as above and the time the Trustee
converts the Judgment Currency into the Required Currency to
33
make payments under this Section 6.10 to Holders of Securities, but payment of
such judgment shall discharge all amounts owed by the Partnership and the
Subsidiary Guarantors on the claim or claims underlying such judgment.
SECTION 6.11 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 or
omitted by it as a trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in principal amount of the then outstanding Securities of any series.
ARTICLE VII
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If 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 such
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default
with respect to the Securities of any series:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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. However, the Trustee shall examine such certificates
and opinions to determine whether, on their face, they appear to
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of Section
7.01(b);
34
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
the provisions of this Section 7.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Partnership and the Subsidiary Guarantors. Money held in trust by the Trustee
need not be segregated from other funds except to the extent required by law.
All money received by the Trustee shall, until applied as herein provided, be
held in trust for the payment of the principal of, premium (if any) and interest
on and Additional Amounts with respect to the Securities.
SECTION 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely on any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require instruction, an Officers' Certificate or an Opinion of Counsel or
both to be provided. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such instruction, Officers'
Certificate or Opinion of Counsel. The Trustee may consult at the Partnership's
expense with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Partnership or any
Subsidiary Guarantor shall be sufficient if signed by an Officer of U.S. Propane
L.L.C.
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(f) The Trustee shall not be obligated 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.
(g) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder.
(h) The Trustee may request that the Partnership deliver
an Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 7.03 May Hold Securities.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Partnership,
any Subsidiary Guarantor or any of their respective Affiliates with the same
rights it would have if it were not Trustee. Any Agent may do the same with like
rights and duties. However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Partnership's use of the proceeds from the Securities or any money paid to
the Partnership or any Subsidiary Guarantor or upon the Partnership's or such
Subsidiary Guarantor's direction under any provision hereof, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee and it shall not be responsible for any statement or
recital herein or any statement in the Securities other than its certificate of
authentication.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default with respect to the
Securities of any series occurs and is continuing and it is known to the
Trustee, the Trustee shall mail to Holders of Securities of such series a notice
of the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium (if
any) and interest on and Additional Amounts or any sinking fund installment with
respect to the Securities of such series, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Holders of Securities of such
series.
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SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each September 15 of each year after the
execution of this Indenture, the Trustee shall mail to Holders of a series, the
Subsidiary Guarantors and the Partnership a brief report dated as of such
reporting date that complies with TIA Section 313(a); provided, however, that if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date with respect to a series, no report need be
transmitted to Holders of such series. The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports if and as
required by TIA Sections 313(c) and 313(d).
A copy of each report at the time of its mailing to Holders of
a series of Securities shall be filed by the Partnership or a Subsidiary
Guarantor with the SEC and each securities exchange, if any, on which the
Securities of such series are listed. The Partnership shall notify the Trustee
if and when any series of Securities is listed on any securities exchange.
SECTION 7.07 Compensation and Indemnity.
The Partnership agrees to pay to the Trustee for its
acceptance of this Indenture and services hereunder such compensation as the
Partnership and the Trustee shall from time to time agree in writing. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Partnership agrees to reimburse the Trustee
upon request for all reasonable disbursements, advances and expenses incurred by
it. Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Partnership hereby indemnifies the Trustee and any
predecessor Trustee against any and all loss, liability, damage, claim or
expense, including taxes (other than taxes based upon, measured by or determined
by the income of the Trustee), incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture, except
as set forth in the next following paragraph. The Trustee shall notify the
Partnership and the Subsidiary Guarantors promptly of any claim for which it may
seek indemnity. The Partnership shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Partnership shall pay the reasonable fees and expenses of such counsel. The
Partnership need not pay for any settlement made without its consent.
The Partnership shall not be obligated to reimburse any
expense or indemnify against any loss or liability incurred by the Trustee
through the Trustee's negligence or bad faith.
To secure the payment obligations of the Partnership in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
principal of, premium (if any) and interest on and any Additional Amounts with
respect to Securities of any series. Such lien and the Partnership's obligations
under this Section 7.07 shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(5) or (6) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
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SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign and be discharged at any time with
respect to the Securities of one or more series by so notifying the Partnership
and the Subsidiary Guarantors. The Holders of a majority in principal amount of
the then outstanding Securities of any series may remove the Trustee with
respect to the Securities of such series by so notifying the Trustee, the
Partnership and the Subsidiary Guarantors. The Partnership may remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Bankruptcy Custodian or public officer takes charge
of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, with respect to the Securities of one or
more series, the Partnership 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).
Within one year after the successor Trustee with respect to the Securities of
any series takes office, the Holders of a majority in principal amount of the
Securities of such series then outstanding may appoint a successor Trustee to
replace the successor Trustee appointed by the Partnership.
If a successor Trustee with respect to the Securities of any
series does not take office within 30 days after the retiring or removed Trustee
resigns or is removed, the retiring or removed Trustee (at the expense of the
Partnership), the Partnership, any Subsidiary Guarantor or the Holders of at
least 10% in principal amount of the then outstanding Securities of such series
may petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
If the Trustee with respect to the Securities of a series
fails to comply with Section 7.10, any Holder of Securities of such series may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee with respect to the Securities of such
series.
In case of the appointment of a successor Trustee with respect
to all Securities, each such successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee, to the Partnership and to
the Subsidiary Guarantors. Thereupon the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all
38
the rights, powers and duties of the retiring Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07.
In case of the appointment of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Partnership, the
Subsidiary Guarantors, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more (but not all) series shall execute and
deliver an indenture supplemental hereto in which each successor Trustee shall
accept such appointment and that (1) shall confer to each successor Trustee all
the rights, powers 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 confirm that all the rights, powers and duties of the retiring
Trustee with respect to the Securities of that or those series as to which the
retiring Trustee is not retiring shall continue to be vested in the retiring
Trustee and (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. Nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust, and 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. Upon the execution and delivery of such supplemental indenture,
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee shall have all the
rights, powers 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. On request of the Partnership or any successor Trustee, such retiring
Trustee shall transfer to such successor Trustee all property held by such
retiring Trustee as Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates. Such retiring
Trustee shall, however, have the right to deduct its unpaid fees and expenses,
including attorneys' fees.
Notwithstanding replacement of the Trustee or Trustees
pursuant to this Section 7.08, the obligations of the Partnership under Section
7.07 shall continue for the benefit of the retiring Trustee or Trustees.
SECTION 7.09 Successor Trustee by Merger, etc.
Subject to Section 7.10, if the Trustee consolidates, merges
or converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, however, that in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation, the transferee corporation expressly assumes all of the Trustee's
liabilities hereunder.
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; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
39
in the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be
a corporation or banking association organized and doing business under the laws
of the United States, any State thereof or the District of Columbia and
authorized under such laws to exercise corporate trust power, shall be subject
to supervision or examination by federal or state (or the District of Columbia)
authority and shall have, or be a subsidiary of a bank or bank holding company
having, a combined capital and surplus of at least $50 million as set forth in
its most recent published annual report of condition.
The Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA Section 310(b) during the
period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b).
SECTION 7.11 Preferential Collection of Claims Against the Partnership or a
Subsidiary Guarantor.
The Trustee is subject to and shall comply with the provisions
of TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE OF INDENTURE
SECTION 8.01 Termination of the Partnership's and the Subsidiary Guarantors'
Obligations.
(a) This Indenture shall cease to be of further effect
with respect to the Securities of a series (except that the Partnership's
obligations under Section 7.07, the Trustee's and Paying Agent's obligations
under Section 8.03 and the rights, powers, protections and privileges accorded
the Trustee under Article VII shall survive), and the Trustee and the Subsidiary
Guarantors, on demand of the Partnership, shall execute proper instruments
acknowledging the satisfaction and discharge of this Indenture with respect to
the Securities of such series, when:
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(1) either:
(A) all outstanding Securities of such series
theretofore authenticated and issued (other than destroyed,
lost or stolen Securities that have been replaced or paid)
have been delivered to the Trustee for cancellation; or
(B) all outstanding Securities of such series
not theretofore delivered to the Trustee for cancellation:
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one
year, or
(iii) are to be called for redemption
within one year under arrangements
satisfactory to the Trustee for the
giving of notice of redemption by
the Trustee in the name, and at the
expense, of the Partnership,
and, in the case of clause (i), (ii) or (iii) above, the
Partnership or a Subsidiary Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as funds
(immediately available to the Holders in the case of clause
(i)) in trust for such purpose (x) cash in an amount, or (y)
Government Obligations, maturing as to principal and interest
at such times and in such amounts as will ensure the
availability of cash in an amount or (z) a combination
thereof, which will be sufficient, in the opinion (in the case
of clauses (y) and (z)) of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge the entire indebtedness on the Securities of such
series for principal and interest to the date of such deposit
(in the case of Securities which have become due and payable)
or for principal, premium, if any, and interest to the Stated
Maturity or Redemption Date, as the case may be; or
(C) the Partnership and the Subsidiary
Guarantors have properly fulfilled such other means of
satisfaction and discharge as is specified, as contemplated by
Section 2.01, to be applicable to the Securities of such
series;
(2) the Partnership or a Subsidiary Guarantor has paid or
caused to be paid all other sums payable by them hereunder with respect
to the Securities of such series; and
(3) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, together with an
Opinion of Counsel to the same effect.
(b) Unless this Section 8.01(b) is specified as not being
applicable to Securities of a series as contemplated by Section 2.01, the
Partnership may, at its option,
41
terminate certain of its and the Subsidiary Guarantors' respective obligations
under this Indenture ("covenant defeasance") with respect to the Securities of a
series if:
(1) the Partnership or a Subsidiary Guarantor has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for and dedicated solely to
the benefit of the Holders of Securities of such series, (i) money in
the currency in which payment of the Securities of such series is to be
made in an amount, or (ii) Government Obligations with respect to such
series, maturing as to principal and interest at such times and in such
amounts as will ensure the availability of money in the currency in
which payment of the Securities of such series is to be made in an
amount or (iii) a combination thereof, that is sufficient, in the
opinion (in the case of clauses (ii) and (iii)) of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay the
principal of and premium (if any) and interest on all Securities of
such series on each date that such principal, premium (if any) or
interest is due and payable and (at the Stated Maturity thereof or upon
redemption as provided in Section 8.01(e)) to pay all other sums
payable by it hereunder; provided that the Trustee shall have been
irrevocably instructed to apply such money and/or the proceeds of such
Government Obligations to the payment of said principal, premium (if
any) and interest with respect to the Securities of such series as the
same shall become due;
(2) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, and an Opinion of
Counsel to the same effect;
(3) no Default or Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the
date of such deposit;
(4) the Partnership shall have delivered to the Trustee
an Opinion of Counsel from a nationally recognized counsel acceptable
to the Trustee or a tax ruling to the effect that the Holders will not
recognize income, gain or loss for U.S. Federal income tax purposes as
a result of the Partnership's exercise of its option under this Section
8.01(b) and will be subject to U.S. Federal income tax on the same
amount and in the same manner and at the same times as would have been
the case if such option had not been exercised;
(5) the Partnership and the Subsidiary Guarantors have
complied with any additional conditions specified pursuant to Section
2.01 to be applicable to the discharge of Securities of such series
pursuant to this Section 8.01; and
(6) such deposit and discharge shall not cause the
Trustee to have a conflicting interest as defined in TIA Section
310(b).
In such event, this Indenture shall cease to be of further
effect (except as set forth in this paragraph), and the Trustee and the
Subsidiary Guarantors, on demand of the Partnership,
42
shall execute proper instruments acknowledging satisfaction and discharge under
this Indenture. However, the Partnership's and the Subsidiary Guarantors'
respective obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 4.02,
7.07, 7.08, 8.04 and 11.01, the Trustee's and Paying Agent's obligations in
Section 8.03 and the rights, powers, protections and privileges accorded the
Trustee under Article VII shall survive until all Securities of such series are
no longer outstanding. Thereafter, only the Partnership's obligations in Section
7.07 and the Trustee's and Paying Agent's obligations in Section 8.03 shall
survive with respect to Securities of such series.
After such irrevocable deposit made pursuant to this Section
8.01(b) and satisfaction of the other conditions set forth herein, the Trustee
upon request shall acknowledge in writing the discharge of the Partnership's and
the Subsidiary Guarantors' obligations under this Indenture with respect to the
Securities of such series except for those surviving obligations specified
above.
In order to have money available on a payment date to pay
principal of or premium (if any) or interest on the Securities, the Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. Government
Obligations shall not be callable at the issuer's option.
(c) If the Partnership and the Subsidiary Guarantors have
previously complied or are concurrently complying with Section 8.01(b) (other
than any additional conditions specified pursuant to Section 2.01 that are
expressly applicable only to covenant defeasance) with respect to Securities of
a series, then, unless this Section 8.01(c) is specified as not being applicable
to Securities of such series as contemplated by Section 2.01, the Partnership
may elect that its and the Subsidiary Guarantors' respective obligations to make
payments with respect to Securities of such series be discharged ("legal
defeasance"), if:
(1) no Default or Event of Default under clauses (5) and
(6) of Section 6.01 hereof shall have occurred at any time during the
period ending on the 91st day after the date of deposit contemplated by
Section 8.01(b) (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(2) unless otherwise specified with respect to Securities
of such series as contemplated by Section 2.01, the Partnership has
delivered to the Trustee an Opinion of Counsel from a nationally
recognized counsel acceptable to the Trustee to the effect referred to
in Section 8.01(b)(4) with respect to such legal defeasance, which
opinion is based on (i) a private ruling of the Internal Revenue
Service addressed to the Partnership, (ii) a published ruling of the
Internal Revenue Service pertaining to a comparable form of transaction
or (iii) a change in the applicable federal income tax law (including
regulations) after the date of this Indenture;
(3) the Partnership and the Subsidiary Guarantors have
complied with any other conditions specified pursuant to Section 2.01
to be applicable to the legal defeasance of Securities of such series
pursuant to this Section 8.01(c); and
(4) the Partnership has delivered to the Trustee a
Partnership Request requesting such legal defeasance of the Securities
of such series and an Officers'
43
Certificate stating that all conditions precedent with respect to such
legal defeasance of the Securities of such series have been complied
with, together with an Opinion of Counsel to the same effect.
In such event, the Partnership and the Subsidiary Guarantors
will be discharged from their respective obligations under this Indenture and
the Securities of such series to pay principal of, premium (if any) and interest
on, and any Additional Amounts with respect to, Securities of such series, the
Partnership's and the Subsidiary Guarantors' respective obligations under
Sections 4.01, 4.02 and 11.01 shall terminate with respect to such Securities,
and the entire indebtedness of the Partnership evidenced by such Securities and
of the Subsidiary Guarantors evidenced by the related Guarantees shall be deemed
paid and discharged.
(d) If and to the extent additional or alternative means
of satisfaction, discharge or defeasance of Securities of a series are specified
to be applicable to such series as contemplated by Section 2.01, each of the
Partnership and the Subsidiary Guarantors may terminate any or all of its
obligations under this Indenture with respect to Securities of a series and any
or all of its obligations under the Securities of such series if it fulfills
such other means of satisfaction and discharge as may be so specified, as
contemplated by Section 2.01, to be applicable to the Securities of such series.
(e) If Securities of any series subject to subsections
(a), (b), (c) or (d) of this Section 8.01 are to be redeemed prior to their
Stated Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory or optional sinking fund provisions, the terms of
the applicable trust arrangement shall provide for such redemption, and the
Partnership shall make such arrangements as are reasonably satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Partnership.
SECTION 8.02 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the
Partnership shall hold in trust money or Government Obligations deposited with
it pursuant to Section 8.01 hereof. It shall apply the deposited money and the
money from Government Obligations through the Paying Agent and in accordance
with this Indenture to the payment of principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of the
series with respect to which the deposit was made.
SECTION 8.03 Repayment to Partnership or Subsidiary Guarantor.
The Trustee and the Paying Agent shall promptly pay to the
Partnership or any Subsidiary Guarantor any excess money or Government
Obligations (or proceeds therefrom) held by them at any time upon the written
request of the Partnership.
Subject to the requirements of any applicable abandoned
property laws, the Trustee and the Paying Agent shall pay to the Partnership
upon written request any money held by them for the payment of principal,
premium (if any), interest or any Additional Amounts that remain unclaimed for
two years after the date upon which such payment shall have become due. After
payment to the Partnership, Holders entitled to the money must look to the
Partnership for payment as general creditors unless an applicable abandoned
property law designates another
44
Person, and all liability of the Trustee and the Paying Agent with respect to
such money shall cease.
SECTION 8.04 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money or Government Obligations deposited with respect to Securities of any
series in accordance with Section 8.01 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the
obligations of the Partnership and the Subsidiary Guarantors under this
Indenture with respect to the Securities of such series and under the Securities
of such series shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 until such time as the Trustee or the Paying Agent is
permitted to apply all such money or Government Obligations in accordance with
Section 8.01; provided, however, that if the Partnership or any Subsidiary
Guarantor has made any payment of principal of, premium (if any) or interest on
or any Additional Amounts with respect to any Securities because of the
reinstatement of its obligations, the Partnership or such Subsidiary Guarantor,
as the case may be, shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or Government Obligations held
by the Trustee or the Paying Agent.
ARTICLE IX
SUPPLEMENTAL INDENTURES AND AMENDMENTS
SECTION 9.01 Without Consent of Holders.
The Partnership, the Subsidiary Guarantors and the Trustee may
amend or supplement this Indenture or the Securities or waive any provision
hereof or thereof without the consent of any Holder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Section 5.01;
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities, or to provide for the
issuance of bearer Securities (with or without coupons);
(4) to provide any security for, or to add any guarantees
of or additional obligors on, any series of Securities or the related
Guarantees;
(5) to comply with any requirement in order to effect or
maintain the qualification of this Indenture under the TIA;
(6) to add to the covenants of the Partnership or any
Subsidiary Guarantor 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 Partnership or
any Subsidiary Guarantor;
45
(7) to add any additional Events of Default with respect
to all or any series of the Securities (and, if any Event of Default is
applicable to less than all series of Securities, specifying the series
to which such Event of Default is applicable);
(8) to change or eliminate any of the provisions of this
Indenture; provided that any such change or elimination shall become
effective only when there is no outstanding Security of any series
created prior to the execution of such amendment or supplemental
indenture that is adversely affected in any material respect by such
change in or elimination of such provision;
(9) to establish the form or terms of Securities of any
series as permitted by Section 2.01;
(10) to supplement any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Section 8.01; provided, however, that any such action shall not
adversely affect the interest of the Holders of Securities of such
series or any other series of Securities in any material respect; or
(11) 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 7.08.
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon receipt by the Trustee of the documents described in
Section 9.06, the Trustee shall, subject to Section 9.06, join with the
Partnership and the Subsidiary Guarantors in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and make any
further appropriate agreements and stipulations that may be therein contained.
SECTION 9.02 With Consent of Holders.
Except as provided below in this Section 9.02, the
Partnership, the Subsidiary Guarantors and the Trustee may amend or supplement
this Indenture with the written consent (including consents obtained in
connection with a tender offer or exchange offer for Securities of any one or
more series or all series or a solicitation of consents in respect of Securities
of any one or more series or all series, provided that in each case such offer
or solicitation is made to all Holders of then outstanding Securities of each
such series (but the terms of such offer or solicitation may vary from series to
series)) of the Holders of at least a majority in principal amount of the then
outstanding Securities of all series affected by such amendment or supplement
(acting as one class).
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon the filing with the Trustee of evidence of the consent of
the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 9.06, the Trustee shall, subject to Section 9.06, join with
the Partnership and the Subsidiary Guarantors in the execution of such amendment
or supplemental indenture.
46
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
The Holders of a majority in principal amount of the then
outstanding Securities of one or more series or of all series may waive
compliance in a particular instance by the Partnership or any Subsidiary
Guarantor with any provision of this Indenture with respect to Securities of
such series (including waivers obtained in connection with a tender offer or
exchange offer for Securities of such series or a solicitation of consents in
respect of Securities of such series, provided that in each case such offer or
solicitation is made to all Holders of then outstanding Securities of such
series (but the terms of such offer or solicitation may vary from series to
series)).
However, without the consent of each Holder affected, an
amendment, supplement or waiver under this Section 9.02 may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Security;
(3) reduce the principal of, any premium on or any
mandatory sinking fund payment with respect to, or change the Stated
Maturity of, any Security or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
6.02;
(4) reduce the premium, if any, payable upon the
redemption of any Security or change the time at which any Security may
or shall be redeemed;
(5) change any obligation of the Partnership or any
Subsidiary Guarantor to pay Additional Amounts with respect to any
Security;
(6) change the coin or currency or currencies (including
composite currencies) in which any Security or any premium, interest or
Additional Amounts with respect thereto are payable;
(7) impair the right to institute suit for the
enforcement of any payment of principal of, premium (if any) or
interest on or any Additional Amounts with respect to any Security
pursuant to Sections 6.07 and 6.08, except as limited by Section 6.06;
(8) make any change in the percentage of principal amount
of Securities necessary to waive compliance with certain provisions of
this Indenture pursuant to Section 6.04 or 6.07 or make any change in
this sentence of Section 9.02;
(9) modify the provisions of this Indenture with respect
to the subordination of any Security and any related Guarantee in a
manner adverse to the Holder thereof;
47
(10) waive a continuing Default or Event of Default in the
payment of principal of, premium (if any) or interest on or Additional
Amounts with respect to the Securities; or
(11) except as provided in Section 11.04, release any
Subsidiary Guarantors or modify the Guarantee in any manner adverse to
the Holders.
An amendment under this Section 9.02 may not make any change
that adversely affects the rights under Article X of any holder of an issue of
Senior Indebtedness unless the holders of the issue pursuant to its terms
consent to the change.
A supplemental indenture that 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.
The right of any Holder to participate in any consent required
or sought pursuant to any provision of this Indenture (and the obligation of the
Partnership or any Subsidiary Guarantor to obtain any such consent otherwise
required from such Holder) may be subject to the requirement that such Holder
shall have been the Holder of record of any Securities with respect to which
such consent is required or sought as of a date identified by the Partnership or
such Subsidiary Guarantor in a notice furnished to Holders in accordance with
the terms of this Indenture.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Partnership shall mail to the Holders of each
Security affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Partnership to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such amendment, supplement or waiver.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the
Securities shall comply in form and substance with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his or her Security or portion of a Security if the Trustee
receives written notice of revocation before a date and time therefor identified
by the Partnership or any Subsidiary Guarantor in a notice furnished to such
Holder in accordance with the terms of this Indenture or, if no such date and
time shall be identified, the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
48
The Partnership or any Subsidiary Guarantor may, but shall not
be obligated to, fix a record date (which need not comply with TIA Section
316(c)) for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver or to take any other action under this
Indenture. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No consent shall be valid or effective for more than 90
days after such record date unless consents from Holders of the principal amount
of Securities required hereunder for such amendment or waiver to be effective
shall have also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it is of the type described in any of clauses
(1) through (9) of Section 9.02 hereof. In such case, the amendment, supplement
or waiver shall bind each Holder who has consented to it and every subsequent
Holder that evidences the same debt as the consenting Holder's Security.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment or supplement changes the terms of an
outstanding Security, the Partnership may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security at the request of the Partnership regarding the changed terms and
return it to the Holder. Alternatively, if the Partnership so determines, the
Partnership in exchange for the Security shall issue, and the Subsidiary
Guarantors shall execute and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to issue
a new Security shall not affect the validity of such amendment or supplement.
Securities of any series authenticated and delivered after the
execution of any amendment or supplement 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 amendment or supplement.
SECTION 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized
pursuant to this Article if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplement, the Trustee shall be entitled to receive, and, subject
to Section 7.01 hereof, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel provided at the expense of the Partnership
or a Subsidiary Guarantor as conclusive evidence that such amendment or
supplement is authorized or permitted by this Indenture, that it is not
inconsistent herewith, and that it will be valid and binding upon the
Partnership and the Subsidiary Guarantors in accordance with its terms.
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ARTICLE X
SUBORDINATION OF SECURITIES AND GUARANTEE
SECTION 10.01 Applicability of Article; Agreement To Subordinate.
The provisions of this Article X shall only be applicable to
the Securities of any series (Securities of such series referred to in this
Article X as "Subordinated Securities") designated, pursuant to Section 2.01, as
subordinated to Senior Indebtedness and any related Guarantee of such
Subordinated Securities. Each Holder by accepting a Subordinated Security agrees
that the Debt evidenced by such Subordinated Security and any related Guarantee
of such Subordinated Security is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable by
the holders of Indebtedness. All provisions of this Article X shall be subject
to Section 10.12.
SECTION 10.02 Liquidation, Dissolution, Bankruptcy.
Upon any payment or distribution of the assets of the
Partnership or the Subsidiary Guarantors, as the case may be, to creditors, upon
a liquidation or a dissolution of the Partnership or the Subsidiary Guarantors,
as the case may be, or in a bankruptcy, reorganization, insolvency, receivership
or similar proceeding relating to the Partnership or the Subsidiary Guarantors,
as the case may be, or their respective property:
(a) holders of Senior Indebtedness of the Partnership or
any Subsidiary Guarantor, as the case may be, shall be entitled to receive
payment in full in cash of such Senior Indebtedness of such Person (including
interest (if any), accruing on or after the commencement of a proceeding in
bankruptcy, whether or not allowed as a claim against the Partnership or the
Subsidiary Guarantors, as the case may be, in such bankruptcy proceeding) before
Holders of Subordinated Securities and any related Guarantee shall be entitled
to receive any payment of principal of, or premium, if any, or interest on, the
Subordinated Securities from the Partnership, or any payment in respect of any
Guarantee from the Subsidiary Guarantors; and
(b) until the Senior Indebtedness of the Partnership or
any Subsidiary Guarantor, as the case may be, is paid in full, any distribution
to which Holders of Subordinated Securities and any related Guarantee would be
entitled but for this Article X shall be made to holders of Senior Indebtedness
of the Partnership or the Subsidiary Guarantors, as the case may be, as their
interests may appear, except that such Holders may receive capital stock and any
debt securities that are subordinated to Senior Indebtedness of the Partnership
or the Subsidiary Guarantors, as the case may be, to at least the same extent as
the Subordinated Securities of the Partnership or the related Guarantee of any
Subsidiary Guarantor, respectively.
SECTION 10.03 Default on Senior Indebtedness.
The Partnership and the Subsidiary Guarantors may not pay the
principal of, or premium, if any, or interest on, the Subordinated Securities or
any related Guarantee or make any deposit pursuant to Article VIII and may not
repurchase, redeem or otherwise retire (except, in the case of Subordinated
Securities that provide for a mandatory sinking fund pursuant to Section 3.11,
by the delivery of Subordinated Securities by the Partnership to the Trustee
pursuant to the
50
first paragraph of Section 3.11) any Subordinated Securities (collectively, "pay
the Subordinated Securities") if any principal, premium or interest in respect
of Senior Indebtedness of such Person is not paid within any applicable grace
period (including at maturity) or any other default on Senior Indebtedness of
such Person occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, the default has been cured
or waived and any such acceleration has been rescinded or such Senior
Indebtedness has been paid in full in cash; provided, however, that the
Partnership and the Subsidiary Guarantors may make payments on the Subordinated
Securities or any related Guarantee without regard to the foregoing if the
Partnership and the Trustee receive written notice approving such payment from
the Representative of each issue of Designated Senior Indebtedness. During the
continuance of any other default with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Partnership and the Subsidiary Guarantors may not make payments on the
Subordinated Securities or any related Guarantee for a period (a "Payment
Blockage Period") commencing upon the receipt by the Partnership and the Trustee
(and if such Designated Senior Indebtedness is Debt of a Subsidiary Guarantor,
the Subsidiary Guarantor) of written notice of such default from the
Representative of any Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period (a "Blockage Notice") and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated by written
notice to the Trustee and the Partnership (and if such Designated Senior
Indebtedness is Debt of a Subsidiary Guarantor, the Subsidiary Guarantor) from
the Person or Persons who gave such Blockage Notice, by repayment in full in
cash of such Designated Senior Indebtedness or because the default giving rise
to such Blockage Notice is no longer continuing). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in Section 10.02 and the first sentence of this Section 10.03), unless
the holders of such Designated Senior Indebtedness or the Representative of such
holders shall have accelerated the maturity of such Designated Senior
Indebtedness, the Partnership and the Subsidiary Guarantors may resume payments
on the Subordinated Securities and related Guarantees after such Payment
Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to any number of issues of Designated Senior Indebtedness during such period,
unless otherwise specified pursuant to Section 2.01 for the Subordinated
Securities of a series; provided, however, that in no event may the total number
of days during which any Payment Blockage Period or Periods is in effect exceed
179 days in the aggregate during any 360 consecutive day period. For purposes of
this Section 10.03, no default or event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or be made, the basis of the commencement of a subsequent
Payment Blockage Period by the Representative of such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such default or event of default shall have been cured or waived for a period of
not less than 90 consecutive days.
SECTION 10.04 Acceleration of Payment of Securities.
If payment of the Subordinated Securities is accelerated
because of an Event of Default, the Partnership shall promptly notify the
holders of the Designated Senior Indebtedness (or their Representatives) of the
acceleration.
51
SECTION 10.05 When Distribution Must Be Paid Over.
If a distribution is made to Holders of Subordinated
Securities or a related Guarantee that because of this Article X should not have
been made to them, the Holders who receive such distribution shall hold it in
trust for holders of Senior Indebtedness and pay it over to them as their
interests may appear.
SECTION 10.06 Subrogation.
After all Senior Indebtedness is paid in full and until the
Subordinated Securities are paid in full, Holders thereof shall be subrogated to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness. A distribution made under this Article X to holders of
Senior Indebtedness which otherwise would have been made to Holders of
Subordinated Securities is not, as between the Partnership or the Subsidiary
Guarantors, as the case may be, and such Holders, a payment by the Partnership
or the Subsidiary Guarantors, as the case may be, on Senior Indebtedness.
SECTION 10.07 Relative Rights.
This Article X defines the relative rights of Holders of
Subordinated Securities and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(a) impair, as between the Partnership or the Subsidiary
Guarantors, as the case may be, and Holders of either Subordinated Securities or
Securities, the obligation of the Partnership or the Subsidiary Guarantors, as
the case may be, which is absolute and unconditional, to pay principal of, and
premium, if any, and interest on, the Subordinated Securities and the Securities
in accordance with their terms; or
(b) prevent the Trustee or any Holder of either
Subordinated Securities or Securities from exercising its available remedies
upon an Event of Default, subject to the rights of holders of Senior
Indebtedness to receive distributions otherwise payable to Holders of
Subordinated Securities.
SECTION 10.08 Subordination May Not Be Impaired by Partnership.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Debt evidenced by the Subordinated Securities and the
Guarantee in respect thereof shall be impaired by any act or failure to act by
the Partnership or the Subsidiary Guarantors or by its failure to comply with
this Indenture.
SECTION 10.09 Rights of Trustee and Paying Agent.
Notwithstanding Sections 10.02 and 10.03, the Trustee or any
paying agent may continue to make payments on Subordinated Securities and shall
not be charged with knowledge of the existence of facts that would prohibit the
making of any such payments unless, not less than two Business Days prior to the
date of such payment, a responsible officer of the Trustee receives notice
satisfactory to it that payments may not be made under this Article X. The
Partnership, the Registrar, any paying agent, a Representative or a holder of
Senior Indebtedness
52
may give the notice; provided, however, that, if an issue of Senior Indebtedness
has a Representative, only the Representative may give the notice on behalf of
the Holders of the Senior Indebtedness of that issue.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and any paying agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article X with respect to
any Senior Indebtedness which may at any time be held by it, to the same extent
as any other holder of Senior Indebtedness; and nothing in Article VII shall
deprive the Trustee of any of its rights as such holder. Nothing in this Article
X shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 7.07.
SECTION 10.10 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative (if any).
SECTION 10.11 Article X Not to Prevent Defaults or Limit Right to Accelerate.
The failure to make a payment pursuant to the Subordinated
Securities, whether directly or pursuant to the Guarantee, by reason of any
provision in this Article X shall not be construed as preventing the occurrence
of a Default. Nothing in this Article X shall have any effect on the right of
the Holders or the Trustee to accelerate the maturity of either the Subordinated
Securities or the Securities, as the case may be.
SECTION 10.12 Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary,
payments from money or the proceeds of U.S. Government Obligations held in trust
under Article VIII by the Trustee for the payment of principal of, and premium,
if any, and interest on, the Subordinated Securities or the Securities shall not
be subordinated to the prior payment of any Senior Indebtedness or subject to
the restrictions set forth in this Article X, and none of the Holders thereof
shall be obligated to pay over any such amount to the Partnership, the
Subsidiary Guarantors or any holder of Senior Indebtedness of the Partnership or
the Subsidiary Guarantors or any other creditor of the Partnership or the
Subsidiary Guarantors.
SECTION 10.13 Trustee Entitled to Rely.
Upon any payment or distribution pursuant to this Article X,
the Trustee and the Holders shall be entitled to rely upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 10.02 are pending, upon a certificate of the liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or to such Holders or upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other Debt of the Partnership or the Subsidiary Guarantors, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article X. In the event that the
Trustee determines, in good faith, that evidence is required with respect to the
right of any Person as a
53
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article X, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14 Trustee to Effectuate Subordination.
Each Holder by accepting a Subordinated Security authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination between the Holders
of Subordinated Securities and the holders of Senior Indebtedness as provided in
this Article X and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 10.15 Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such holders
if it shall mistakenly pay over or distribute to Holders of Subordinated
Securities or the Partnership or the Subsidiary Guarantors or any other Person,
money or assets to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article X or otherwise.
SECTION 10.16 Reliance by Holders of Senior Indebtedness on Subordination
Provisions.
Each Holder by accepting a Subordinated Security acknowledges
and agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Subordinated Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XI
GUARANTEE
SECTION 11.01 Unconditional Guarantee.
(a) Notwithstanding any provision of this Article XI to
the contrary, the provisions of this Article XI relating to the Subsidiary
Guarantors shall be applicable only to, and inure solely to the benefit of, the
Securities of any series designated, pursuant to Section 2.01 as entitled to the
benefits of the Guarantee of each of the Subsidiary Guarantors.
(b) For value received, each of the Subsidiary Guarantors
hereby fully, unconditionally and absolutely guarantees (the "Guarantee") to the
Holders and to the Trustee the due and punctual payment of the principal of, and
premium, if any, and interest on the
54
Securities and all other amounts due and payable under this Indenture and the
Securities by the Partnership, when and as such principal, premium, if any, and
interest shall become due and payable, whether at the stated maturity or by
declaration of acceleration, call for redemption or otherwise, according to the
terms of the Securities and this Indenture, subject to the limitations set forth
in Section 11.03 and (ii) in the case of the Guarantee of the Subordinated
Securities, to the subordination provisions contained in Article X.
(c) Failing payment when due of any amount guaranteed
pursuant to the Guarantee, for whatever reason, each of the Subsidiary
Guarantors will be jointly and severally obligated to pay the same immediately,
subject, in the case of the Guarantee of the Subordinated Securities, to the
subordination provisions contained in Article X. The Guarantee hereunder (other
than the Guarantee of Subordinated Securities) is intended to be a general,
unsecured, senior obligation of each of the Subsidiary Guarantors and will rank
pari passu in right of payment with all Debt of such Subsidiary Guarantor that
is not, by its terms, expressly subordinated in right of payment to the
Guarantee. Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be full, unconditional and absolute, irrespective of the
validity, regularity or enforceability of the Securities, the Guarantee
(including the Guarantee of any Subsidiary Guarantor) or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Securities with respect to any provisions hereof or thereof, the recovery
of any judgment against the Partnership or any Subsidiary Guarantor, or any
action to enforce the same or any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of the Subsidiary
Guarantors. Each of the Subsidiary Guarantors hereby agrees that in the event of
a default in payment of the principal of, or premium, if any, or interest on the
Securities, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise, legal proceedings may be instituted by the
Trustee on behalf of the Holders or, subject to Section 6.06, by the Holders, on
the terms and conditions set forth in this Indenture, directly against such
Subsidiary Guarantor to enforce the Guarantee without first proceeding against
the Partnership or any other Subsidiary Guarantor.
(d) The obligations of each of the Subsidiary Guarantors
under this Article XI shall be as aforesaid full, unconditional and absolute and
shall not be impaired, modified, released or limited by any occurrence or
condition whatsoever, including, without limitation, (i) any compromise,
settlement, release, waiver, renewal, extension, indulgence or modification of,
or any change in, any of the obligations and liabilities of the Partnership or
any of the Subsidiary Guarantors contained in the Securities or this Indenture,
(ii) any impairment, modification, release or limitation of the liability of the
Partnership, any of the Subsidiary Guarantors or any of their estates in
bankruptcy, or any remedy for the enforcement thereof, resulting from the
operation of any present or future provision of any applicable Bankruptcy Law,
as amended, or other statute or from the decision of any court, (iii) the
assertion or exercise by the Partnership, any of the Subsidiary Guarantors or
the Trustee of any rights or remedies under the Securities or this Indenture or
their delay in or failure to assert or exercise any such rights or remedies,
(iv) the assignment or the purported assignment of any property as security for
the Securities, including all or any part of the rights of the Partnership or
any of the Subsidiary Guarantors under this Indenture, (v) the extension of the
time for payment by the Partnership or any of the Subsidiary Guarantors of any
payments or other sums or any part thereof owing or payable under any of the
terms and provisions of the Securities or this Indenture or of the time for
performance by the Partnership or any of the Subsidiary Guarantors of any other
obligations under or arising out of
55
any such terms and provisions or the extension or the renewal of any thereof,
(vi) the modification or amendment (whether material or otherwise) of any duty,
agreement or obligation of the Partnership or any of the Subsidiary Guarantors
set forth in this Indenture, (vii) the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshaling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceeding
affecting, the Partnership or any of the Subsidiary Guarantors or any of their
respective assets, or the disaffirmance of the Securities, the Guarantee or this
Indenture in any such proceeding, (viii) the release or discharge of the
Partnership or any of the Subsidiary Guarantors from the performance or
observance of any agreement, covenant, term or condition contained in any of
such instruments by operation of law, (ix) the unenforceability of the
Securities, the Guarantee or this Indenture or (x) any other circumstances
(other than payment in full or discharge of all amounts guaranteed pursuant to
the Guarantee) which might otherwise constitute a legal or equitable discharge
of a surety or guarantor.
(e) Each of the Subsidiary Guarantors hereby (i) waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of the merger, insolvency or bankruptcy of the Partnership or any of the
Subsidiary Guarantors, and all demands whatsoever, (ii) acknowledges that any
agreement, instrument or document evidencing the Guarantee may be transferred
and that the benefit of its obligations hereunder shall extend to each holder of
any agreement, instrument or document evidencing the Guarantee without notice to
it and (iii) covenants that the Guarantee will not be discharged except by
complete performance of the Guarantee. Each of the Subsidiary Guarantors further
agrees that if at any time all or any part of any payment theretofore applied by
any Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including without limitation, the insolvency, bankruptcy or
reorganization of the Partnership or any of the Subsidiary Guarantors, the
Guarantee shall, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence notwithstanding such
application, and the Guarantee shall continue to be effective or be reinstated,
as the case may be, as though such application had not been made.
(f) Each of the Subsidiary Guarantors shall be subrogated
to all rights of the Holders and the Trustee against the Partnership in respect
of any amounts paid by such Subsidiary Guarantor pursuant to the provisions of
this Indenture, provided, however, that such Subsidiary Guarantor, shall not be
entitled to enforce or to receive any payments arising out of, or based upon,
such right of subrogation until all of the Securities and the Guarantee shall
have been paid in full or discharged.
SECTION 11.02 Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 11.01,
each of the Subsidiary Guarantors hereby agrees that a notation relating to such
Guarantee, substantially in the form attached hereto as Annex A, shall be
endorsed on each Security entitled to the benefits of the Guarantee
authenticated and delivered by the Trustee and executed by either manual or
facsimile signature of an Officer of U.S. Propane, L.L.C. Each of the Subsidiary
Guarantors hereby agrees that the Guarantee set forth in Section 11.01 shall
remain in full force and effect notwithstanding any failure to endorse on each
Security a notation relating to the Guarantee. If
56
any Officer of U.S. Propane, L.L.C., whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, the Guarantee of such Security shall be
valid nevertheless. The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Subsidiary Guarantors.
The Trustee hereby accepts the trusts in this Indenture upon
the terms and conditions herein set forth.
SECTION 11.03 Limitation on Liability of the Subsidiary Guarantors.
Each Subsidiary Guarantor and by its acceptance hereof each
Holder of a Security entitled to the benefits of the Guarantee hereby confirm
that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any federal or state law. To effectuate
the foregoing intention, the Holders of a Security entitled to the benefits of
the Guarantee and the Subsidiary Guarantors hereby irrevocably agree that the
obligations of each Subsidiary Guarantor under its Guarantee shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor and to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Guarantee, result
in the obligations of such Subsidiary Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law.
SECTION 11.04 Release of Subsidiary Guarantors from Guarantee.
(a) Notwithstanding any other provisions of this
Indenture, the Guarantee of any Subsidiary Guarantor may be released upon the
terms and subject to the conditions set forth in this Section 11.04. Provided
that no Default shall have occurred and shall be continuing under this
Indenture, any Guarantee incurred by a Subsidiary Guarantor pursuant to this
Article XI shall be unconditionally released and discharged (i) automatically
upon (A) any sale, exchange or transfer, whether by way of merger or otherwise,
to any Person that is not an Affiliate of the Partnership, of all of the
Partnership's direct or indirect equity interests in such Subsidiary Guarantor
(provided such sale, exchange or transfer is not prohibited by this Indenture)
or (B) the merger of such Subsidiary Guarantor into the Partnership or any other
Subsidiary Guarantor or the liquidation and dissolution of such Subsidiary
Guarantor (in each case to the extent not prohibited by this Indenture) or (ii)
following delivery of a written notice of such release or discharge by the
Partnership, the Trustee, upon the release or discharge of all guarantees by
such Subsidiary Guarantor of any Debt of the Partnership other than obligations
arising under this Indenture and any Securities issued hereunder, except a
discharge or release by or as a result of payment under such guarantees.
(b) The Trustee shall deliver an appropriate instrument
evidencing any release of a Subsidiary Guarantor from the Guarantee upon receipt
of a written request of the Partnership accompanied by an Officers' Certificate
and an Opinion of Counsel that the Subsidiary Guarantor is entitled to such
release in accordance with the provisions of this Indenture. Any Subsidiary
Guarantor not so released remains liable for the full amount of principal of
(and
57
premium, if any, on) and interest on the Securities entitled to the benefits of
such Guarantee as provided in this Indenture, subject to the limitations of
Section 11.03.
SECTION 11.05 Contribution.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors hereby agree, inter se,
that in the event any payment or distribution is made by any Subsidiary
Guarantor (a "Funding Guarantor") under its Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (as
applicable) in a pro rata amount based on the net assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Partnership's
obligations with respect to the Securities or any other Subsidiary Guarantor's
obligations with respect to its Guarantee.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of TIA Section 318(c), the
imposed duties shall control.
SECTION 12.02 Notices.
Any notice or communication by the Partnership, any Subsidiary
Guarantor or the Trustee to the others is duly given if in writing and delivered
in person or mailed by first-class mail (registered or certified, return receipt
requested), telex, facsimile or overnight air courier guaranteeing next day
delivery, to the other's address:
If to the Partnership or the Subsidiary Guarantors:
Heritage Propane Partners, L.P.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Attn: Michael L. Greenwood
Telephone: (918) 492-7272
Facsimile: (918) 493-7290
If to the Trustee:
Attn:
Telephone:
Facsimile:
The Partnership, any Subsidiary Guarantor or the Trustee by
notice to the others may designate additional or different addresses for
subsequent notices or communications.
58
All notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if by facsimile; and
the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, postage prepaid, to the Holder's address shown on the register
kept by the Registrar. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it, except in the case of notice to the Trustee, it is duly given only
when received.
If the Partnership or a Subsidiary Guarantor mails a notice or
communication to Holders, it shall mail a copy to the others and to the Trustee
and each Agent at the same time.
All notices or communications, including without limitation
notices to the Trustee, the Partnership or a Subsidiary Guarantor by Holders,
shall be in writing, except as otherwise set forth herein.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
SECTION 12.03 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Partnership, the Subsidiary Guarantors, the Trustee, the
Registrar and anyone else shall have the protection of TIA Section 312(c).
SECTION 12.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Partnership or a
Subsidiary Guarantor to the Trustee to take any action under this Indenture, the
Partnership or such Subsidiary Guarantor, as the case may be, shall, if
requested by the Trustee, furnish to the Trustee at the expense of the
Partnership or such Subsidiary Guarantor, as the case may be:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 12.05) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 12.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been complied with.
59
SECTION 12.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(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 such Person, he
or she has made such examination or investigation as is necessary to
enable him or her 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 or not, in the opinion of
such Person, such condition or covenant has been complied with.
SECTION 12.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or the Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 12.07 Legal Holidays.
If a payment date is a Legal Holiday at a Place of Payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 12.08 No Recourse Against Others.
A director, officer, employee, stockholder, partner or other
owner of the Partnership, a Subsidiary Guarantor or the Trustee, as such, shall
not have any liability for any obligations of the Partnership under the
Securities, for any obligations of any Subsidiary Guarantor under the Guarantee,
or for any obligations of the Partnership, any Subsidiary Guarantor or the
Trustee under this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release shall be
part of the consideration for the issue of Securities.
SECTION 12.09 Governing Law.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO APPLICABLE
60
PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
SECTION 12.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Partnership, any Subsidiary Guarantor or any
Subsidiary. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 12.11 Successors.
All agreements of the Partnership and the Subsidiary
Guarantors in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.12 Severability.
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, to the fullest extent
permitted by applicable law, not in any way be affected or impaired thereby.
SECTION 12.13 Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 12.14 Table of Contents, Headings, etc.
The table of contents, cross-reference table and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
61
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:___________________________________________
Name:
Title:
HERITAGE OPERATING, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:___________________________________________
Name:
Title:
HERITAGE SERVICE CORP.
By:___________________________________________
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By:___________________________________________
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By:___________________________________________
Name:
Title:
[ ], as Trustee
By:___________________________________________
Name:
Title:
ANNEX A
NOTATION OF GUARANTEE
Each of the Subsidiary Guarantors (which term includes any
successor Person under the Indenture), has fully, unconditionally and absolutely
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture, the due and punctual payment of the principal of,
and premium, if any, and interest on the Securities and all other amounts due
and payable under the Indenture and the Securities by the Partnership.
The obligations of the Subsidiary Guarantors to the Holders of
Securities and to the Trustee pursuant to the Guarantee and the Indenture are
expressly set forth in Articles X and XI of the Indenture and reference is
hereby made to the Indenture for the precise terms of the Guarantee.
HERITAGE OPERATING, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By: __________________________________________
Name:
Title:
HERITAGE SERVICE CORP.
By: __________________________________________
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By: __________________________________________
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By: __________________________________________
Name:
Title:
EXHIBIT 4.11
===============================================================================
HERITAGE OPERATING, L.P.
as Issuer
HERITAGE PROPANE PARTNERS, L.P.
as Guarantor
and
HERITAGE SERVICE CORP.
and
HERITAGE-BI STATE, L.L.C.
and
HERITAGE ENERGY RESOURCES, L.L.C.
as Subsidiary Guarantors
and
[ ]
as Trustee
___________________________________
Indenture
Dated as of _________________, 2003
___________________________________
Debt Securities
================================================================================
HERITAGE OPERATING, L.P.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF _____________, 2003
Section of
Trust Indenture Section(s) of
Act of 1939 Indenture
- -------------- -------------
Section 310 (a)(1)....................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... Not Applicable
(a)(4)....................................................................... Not Applicable
(a)(5)....................................................................... 7.10
(b).......................................................................... 7.08, 7.10
Section 311 (a).......................................................................... 7.11
(b).......................................................................... 7.11
(c).......................................................................... Not Applicable
Section 312 (a).......................................................................... 2.07
(b).......................................................................... 11.03
(c).......................................................................... 11.03
Section 313 (a).......................................................................... 7.06
(b).......................................................................... 7.06
(c).......................................................................... 7.06
(d).......................................................................... 7.06
Section 314 (a).......................................................................... 4.03, 4.04
(b).......................................................................... Not Applicable
(c)(1)....................................................................... 11.04
(c)(2)....................................................................... 11.04
(c)(3)....................................................................... Not Applicable
(d).......................................................................... Not Applicable
(e).......................................................................... 11.05
Section 315 (a).......................................................................... 7.01(b)
(b).......................................................................... 7.05
(c).......................................................................... 7.01(a)
(d).......................................................................... 7.01(c)
(d)(1)....................................................................... 7.01(c)(1)
(d)(2)....................................................................... 7.01(c)(2)
(d)(3)....................................................................... 7.01(c)(3)
(e).......................................................................... 6.11
Section 316 (a)(1)(A).................................................................... 6.05
(a)(1)(B).................................................................... 6.04
(a)(2)....................................................................... Not Applicable
(a)(last sentence)........................................................... 2.11
(b).......................................................................... 6.07
Section 317 (a)(1)....................................................................... 6.08
(a)(2)....................................................................... 6.09
(b).......................................................................... 2.06
Section 318 (a).......................................................................... 11.01
- -------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
i
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE............................................................. 1
SECTION 1.01 Definitions........................................................................... 1
SECTION 1.02 Other Definitions..................................................................... 6
SECTION 1.03 Incorporation by Reference of Trust Indenture Act..................................... 6
SECTION 1.04 Rules of Construction................................................................. 7
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of Officers,
Directors, Employees or Partners...................................................... 7
ARTICLE II THE SECURITIES........................................................................................ 7
SECTION 2.01 Amount Unlimited; Issuable in Series.................................................. 7
SECTION 2.02 Denominations......................................................................... 10
SECTION 2.03 Forms Generally....................................................................... 10
SECTION 2.04 Execution, Authentication, Delivery and Dating........................................ 11
SECTION 2.05 Registrar and Paying Agent............................................................ 13
SECTION 2.06 Paying Agent to Hold Money in Trust................................................... 13
SECTION 2.07 Holder Lists.......................................................................... 14
SECTION 2.08 Transfer and Exchange................................................................. 14
SECTION 2.09 Replacement Securities................................................................ 14
SECTION 2.10 Outstanding Securities................................................................ 15
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury
Securities............................................................................ 15
SECTION 2.12 Temporary Securities.................................................................. 16
SECTION 2.13 Cancellation.......................................................................... 16
SECTION 2.14 Payments; Defaulted Interest.......................................................... 16
SECTION 2.15 Persons Deemed Owners................................................................. 17
SECTION 2.16 Computation of Interest............................................................... 17
SECTION 2.17 Global Securities; Book-Entry Provisions.............................................. 17
ARTICLE III REDEMPTION........................................................................................... 19
SECTION 3.01 Applicability of Article.............................................................. 19
SECTION 3.02 Notice to the Trustee................................................................. 19
SECTION 3.03 Selection of Securities To Be Redeemed................................................ 20
SECTION 3.04 Notice of Redemption.................................................................. 20
SECTION 3.05 Effect of Notice of Redemption........................................................ 21
SECTION 3.06 Deposit of Redemption Price........................................................... 21
SECTION 3.07 Securities Redeemed or Purchased in Part.............................................. 22
SECTION 3.08 Purchase of Securities................................................................ 22
SECTION 3.09 Mandatory and Optional Sinking Funds.................................................. 22
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities................................. 22
SECTION 3.11 Redemption of Securities for Sinking Fund............................................. 23
ii
ARTICLE IV COVENANTS............................................................................................. 23
SECTION 4.01 Payment of Securities................................................................. 23
SECTION 4.02 Maintenance of Office or Agency....................................................... 24
SECTION 4.03 SEC Reports; Financial Statements..................................................... 24
SECTION 4.04 Compliance Certificate................................................................ 25
SECTION 4.05 Existence............................................................................. 25
SECTION 4.06 Waiver of Stay, Extension or Usury Laws............................................... 25
SECTION 4.07 Additional Amounts.................................................................... 26
ARTICLE V SUCCESSORS............................................................................................. 26
SECTION 5.01 Limitations on Mergers and Consolidations............................................. 26
SECTION 5.02 Successor Person Substituted.......................................................... 27
ARTICLE VI DEFAULTS AND REMEDIES................................................................................. 27
SECTION 6.01 Events of Default..................................................................... 27
SECTION 6.02 Acceleration.......................................................................... 30
SECTION 6.03 Other Remedies........................................................................ 30
SECTION 6.04 Waiver of Defaults.................................................................... 31
SECTION 6.05 Control by Majority................................................................... 31
SECTION 6.06 Limitations on Suits.................................................................. 31
SECTION 6.07 Rights of Holders to Receive Payment.................................................. 32
SECTION 6.08 Collection Suit by Trustee............................................................ 32
SECTION 6.09 Trustee May File Proofs of Claim...................................................... 32
SECTION 6.10 Priorities............................................................................ 33
SECTION 6.11 Undertaking for Costs................................................................. 34
ARTICLE VII TRUSTEE.............................................................................................. 34
SECTION 7.01 Duties of Trustee..................................................................... 34
SECTION 7.02 Rights of Trustee..................................................................... 35
SECTION 7.03 May Hold Securities................................................................... 36
SECTION 7.04 Trustee's Disclaimer.................................................................. 36
SECTION 7.05 Notice of Defaults.................................................................... 36
SECTION 7.06 Reports by Trustee to Holders......................................................... 37
SECTION 7.07 Compensation and Indemnity............................................................ 37
SECTION 7.08 Replacement of Trustee................................................................ 38
SECTION 7.09 Successor Trustee by Merger, etc...................................................... 39
SECTION 7.10 Eligibility; Disqualification......................................................... 40
SECTION 7.11 Preferential Collection of Claims Against the Partnership, the Guarantor or
a Subsidiary Guarantor................................................................ 40
ARTICLE VIII DISCHARGE OF INDENTURE.............................................................................. 40
SECTION 8.01 Termination of the Partnership's, the Guarantor's and the Subsidiary
Guarantors' Obligations............................................................... 40
SECTION 8.02 Application of Trust Money............................................................ 44
SECTION 8.03 Repayment to Partnership, Guarantor or Subsidiary Guarantor........................... 44
iii
SECTION 8.04 Reinstatement......................................................................... 45
ARTICLE IX SUPPLEMENTAL INDENTURES AND AMENDMENTS................................................................ 45
SECTION 9.01 Without Consent of Holders............................................................ 45
SECTION 9.02 With Consent of Holders............................................................... 46
SECTION 9.03 Compliance with Trust Indenture Act................................................... 48
SECTION 9.04 Revocation and Effect of Consents..................................................... 48
SECTION 9.05 Notation on or Exchange of Securities................................................. 49
SECTION 9.06 Trustee to Sign Amendments, etc....................................................... 49
ARTICLE X GUARANTEE.............................................................................................. 50
SECTION 10.01 Guarantee............................................................................. 50
SECTION 10.02 Execution and Delivery of Guarantee................................................... 52
SECTION 10.03 Limitation on Liability of the Guarantor and the Subsidiary Guarantors................ 52
SECTION 10.04 Release of Guarantor or Subsidiary Guarantors from Guarantee.......................... 53
SECTION 10.05 Contribution.......................................................................... 53
ARTICLE XI MISCELLANEOUS......................................................................................... 54
SECTION 11.01 Trust Indenture Act Controls.......................................................... 54
SECTION 11.02 Notices............................................................................... 54
SECTION 11.03 Communication by Holders with Other Holders........................................... 55
SECTION 11.04 Certificate and Opinion as to Conditions Precedent.................................... 55
SECTION 11.05 Statements Required in Certificate or Opinion......................................... 55
SECTION 11.06 Rules by Trustee and Agents........................................................... 56
SECTION 11.07 Legal Holidays........................................................................ 56
SECTION 11.08 No Recourse Against Others............................................................ 56
SECTION 11.09 Governing Law......................................................................... 56
SECTION 11.10 No Adverse Interpretation of Other Agreements......................................... 57
SECTION 11.11 Successors............................................................................ 57
SECTION 11.12 Severability.......................................................................... 57
SECTION 11.13 Counterpart Originals................................................................. 57
SECTION 11.14 Table of Contents, Headings, etc...................................................... 57
iv
INDENTURE dated as of _____________, 2003 among Heritage
Operating, L.P., a Delaware limited partnership (the "Partnership"), Heritage
Propane Partners, L.P., a Delaware limited partnership (the "Guarantor"),
Heritage Service Corp., a Delaware corporation, Heritage-Bi State, L.L.C., a
Delaware limited liability company and Heritage Energy Resources, L.L.C., an
Oklahoma limited liability company (collectively, the "Subsidiary Guarantors"),
and [ ], a ___________, as trustee (the "Trustee").
The Partnership, the Guarantor and the Subsidiary Guarantors
have duly authorized the execution and delivery of this Indenture to provide for
the issuance from time to time of the Partnership's debentures, notes, bonds or
other evidences of indebtedness to be issued in one or more series unlimited as
to principal amount (herein called the "Securities"), and the Guarantee by the
Guarantor and each of the Subsidiary Guarantors of the Securities, as in this
Indenture provided.
The Partnership, the Guarantor and the Subsidiary Guarantors
are members of the same consolidated group of companies. The Guarantor and the
Subsidiary Guarantors will derive direct and indirect economic benefit from the
issuance of the Securities. Accordingly, the Guarantor and each Subsidiary
Guarantor has duly authorized the execution and delivery of this Indenture to
provide for its full, unconditional and joint and several guarantee of the
Securities to the extent provided in or pursuant to this Indenture.
All things necessary to make this Indenture a valid agreement
of the Partnership, in accordance with its terms, have been done.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Additional Amounts" means any additional amounts required by
the express terms of a Security or by or pursuant to a Board Resolution, under
circumstances specified therein or pursuant thereto, to be paid by the
Partnership, the Guarantor or any Subsidiary Guarantor, as the case may be, with
respect to certain taxes, assessments or other governmental charges imposed on
certain Holders and that are owing to such Holders.
"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 purposes of this definition,
"control" of a Person shall mean 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" shall have meanings correlative to the foregoing.
"Agent" means any Registrar or Paying Agent.
"Bankruptcy Law" means Title 11 of the United States Code or
any similar federal, state or foreign law for the relief of debtors.
1
"Board of Directors," means the Board of Directors of U.S.
Propane, L.L.C., the general partner of the General Partner or any authorized
committee of the Board of Directors of U.S. Propane, L.L.C. or any directors
and/or officers of U.S. Propane, L.L.C. to whom such Board of Directors or such
committee shall have duly delegated its authority to act hereunder.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the U.S. Propane, L.L.C. to have been
duly adopted by the Board of Directors of U.S. Propane, L.L.C. and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Corporate Trust Office of the Trustee" means the office of
the Trustee located at ________________________________, Attention:
____________________, and as may be located at such other address as the Trustee
may give notice to the Partnership, the Guarantor and the Subsidiary Guarantors.
"Debt" of any Person at any date means any obligation created
or assumed by such Person for the repayment of borrowed money and any guarantee
thereof.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in global form, the Person
specified pursuant to Section 2.01 hereof as the initial Depositary with respect
to the Securities of such series, until a successor shall have been appointed
and become such pursuant to the applicable provision of this Indenture, and
thereafter "Depositary" shall mean or include such successor.
"Dollar" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be legal tender
for the payment of public and private debt.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"GAAP" means generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States, as in effect from
time to time.
"General Partner" means U.S. Propane, L.P., a Delaware limited
partnership.
"Global Security" means a Security that is issued in global
form in the name of the Depositary with respect thereto or its nominee.
2
"Government Obligations" means, with respect to a series of
Securities, direct obligations of the government that issues the currency in
which the Securities of the series are payable for the payment of which the full
faith and credit of such government is pledged, or obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of such
government, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by such government.
"Guarantee" shall mean the guarantee of the Partnership's
obligations under the Securities by the Guarantor or a Subsidiary Guarantor as
provided in Article X.
"Guarantor" means each Person named as the "Guarantor" in the
first paragraph of this instrument, in each case until a successor to such
Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Guarantor" shall mean such successor Person.
"Holder" means a Person in whose name a Security is
registered.
"Indenture" means this Indenture as amended or supplemented
from time to time pursuant to the provisions hereof, and includes the terms of a
particular series of Securities established as contemplated by Section 2.01.
"interest" means, with respect to an Original Issue Discount
Security that by its terms bears interest only after Maturity, interest payable
after Maturity.
"Interest Payment Date," when used with respect to any
Security, shall have the meaning assigned to such term in the Security as
contemplated by Section 2.01.
"Issue Date" means, with respect to Securities of a series,
the date on which the Securities of such series are originally issued under this
Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in any of The City of New York, New York or a Place of
Payment are authorized or obligated by law, regulation or executive order to
remain closed.
"Maturity" means, with respect to any Security, 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
thereof, or by declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, the President, any
Vice Chairman of the Board, any Vice President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of a Person.
"Officers' Certificate" means a certificate signed by two
Officers of a Person.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Partnership, the Guarantor, a Subsidiary Guarantor or the
Trustee.
3
"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 6.02.
"Partnership" means the Person named as the "Partnership" in
the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Partnership" shall mean such successor Person; provided, however,
that for purposes of any provision contained herein which is required by the
TIA, "Partnership" shall also mean each other obligor (if any), other than the
Guarantor or a Subsidiary Guarantor, on the Securities of a series.
"Partnership Order" and "Partnership Request" mean,
respectively, a written order or request signed in the name of the Partnership,
the Guarantor or each Subsidiary Guarantor by two Officers of U.S. Propane,
L.L.C. and delivered to the Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or other agency, instrumentality or political subdivision thereof or
other entity of any kind.
"Place of Payment" means, with respect to the Securities of
any series, the place or places where the principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of that
series are payable as specified in accordance with Section 2.01 subject to the
provisions of Section 4.02.
"principal" of a Security means the principal of the Security
plus, when appropriate, the premium, if any, on the Security.
"Redemption Date" means, with respect to any Security to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
"Responsible Officer" means any officer within the corporate
trust department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"Rule 144A Securities" means Securities of a series designated
pursuant to Section 2.01 as entitled to the benefits of Section 4.03(b).
"SEC" means the Securities and Exchange Commission.
4
"Securities" has the meaning stated in the preamble of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Custodian" means, with respect to Securities of a
series issued in global form, the Trustee for Securities of such series, as
custodian with respect to the Securities of such series, or any successor entity
thereto.
"Stated Maturity" means, when used with respect to any
Security or any installment of principal thereof or interest thereon, 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" of any Person means:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of
equity interests entitled, without regard to the
occurrence of any contingency, to vote in the
election of directors, managers, trustees or
equivalent Persons thereof is at the time of
determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof; or
(2) in the case of a partnership, more than 50% of the
partners' equity interests, considering all partners'
equity interests as a single class, is at such time
of determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof.
"Subsidiary Guarantors" means the Person or Persons named as
the "Subsidiary Guarantors" in the first paragraph of this instrument until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Subsidiary Guarantors" shall mean
such successor Person or Persons, and any other Subsidiary of the Partnership
who may execute this Indenture, or a supplement thereto, for the purpose of
providing a Guarantee of Securities pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended, as in
effect on the date hereof.
"Trustee" means the Person named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter "Trustee" means 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 means the Trustee with respect
to Securities of that series.
"United States" means the United States of America (including
the States and the District of Columbia) and its territories and possessions,
which include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands.
5
"U.S. Government Obligations" means Government Obligations
with respect to Securities payable in Dollars.
"U.S. Propane, L.L.C." means U.S. Propane, L.L.C., a
Delaware limited liability company.
SECTION 1.02 Other Definitions.
DEFINED
TERM IN SECTION
- ---- ----------
"Bankruptcy Custodian"....................................................................... 6.01
"Conversion Event"........................................................................... 6.01
"covenant defeasance"........................................................................ 8.01
"Event of Default"........................................................................... 6.01
"Exchange Rate".............................................................................. 2.11
"Funding Guarantor".......................................................................... 10.05
"Judgment Currency".......................................................................... 6.10
"legal defeasance"........................................................................... 8.01
"mandatory sinking fund payment"............................................................. 3.09
"optional sinking fund payment".............................................................. 3.09
"Paying Agent"............................................................................... 2.05
"Registrar".................................................................................. 2.05
"Required Currency".......................................................................... 6.10
"Successor".................................................................................. 5.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture (and
if the Indenture is not qualified under the TIA at that time, as if it were so
qualified unless otherwise provided). The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Partnership,
the Guarantor, any Subsidiary Guarantor or any other obligor on the Securities.
All terms used in this Indenture that are defined by the TIA,
defined by a TIA reference to another statute or defined by an SEC rule under
the TIA have the meanings so assigned to them.
6
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) all references in this instrument to Articles and
Sections are references to the corresponding Articles
and Sections in and of this instrument.
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners.
Obligations of the Partnership, the Guarantor and a Subsidiary
Guarantor under this Indenture and the Securities hereunder are non-recourse to
the General Partner, and its respective Affiliates (other than the Partnership,
the Guarantor and a Subsidiary Guarantor), and payable only out of cash flow and
assets of the Partnership, the Guarantor and a Subsidiary Guarantor. The
Trustee, and each Holder of a Security by its acceptance thereof, will be deemed
to have agreed in this Indenture that (1) neither the General Partner nor its
assets (nor any of its respective Affiliates other than the Partnership, the
Guarantor and a Subsidiary Guarantor, nor its respective assets) shall be liable
for any of the obligations of the Partnership, the Guarantor and a Subsidiary
Guarantor under this Indenture or such Securities, and (2) no director, officer,
employee, partner or unitholder, as such, of the Partnership, the Guarantor and
a Subsidiary Guarantor, the Trustee, the General Partner or any Affiliate of any
of the foregoing entities shall have any personal liability in respect of the
obligations of the Partnership, the Guarantor and a Subsidiary Guarantor under
this Indenture or such Securities by reason of his, her or its status.
ARTICLE II
THE SECURITIES
SECTION 2.01 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and set forth, or
determined in the manner provided, in an Officers' Certificate of U.S. Propane,
L.L.C. or in a Partnership Order, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
7
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from the Securities of
all other series);
(2) if there is to be a limit, the limit upon the
aggregate principal amount of the Securities of the series that 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 2.08, 2.09, 2.12, 2.17, 3.07 or 9.05 and except for any
Securities which, pursuant to Section 2.04 or 2.17, are deemed never to
have been authenticated and delivered hereunder); provided, however,
that unless otherwise provided in the terms of the series, the
authorized aggregate principal amount of such series may be increased
before or after the issuance of any Securities of the series by a Board
Resolution (or action pursuant to a Board Resolution) to such effect;
(3) whether any Securities of the series are to be
issuable initially in temporary global form and whether any Securities
of the series are to be issuable in permanent global form, as Global
Securities or otherwise, and, if so, whether beneficial owners of
interests in any such Global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 2.17, and the
initial Depositary and Security Custodian, if any, for any Global
Security or Securities of such series;
(4) the manner in which any interest payable on a
temporary Global Security on any Interest Payment Date will be paid if
other than in the manner provided in Section 2.14;
(5) the date or dates on which the principal of and
premium (if any) on the Securities of the series is payable or the
method of determination thereof;
(6) the rate or rates, or the method of determination
thereof, at which the Securities of the series shall bear interest, if
any, whether and under what circumstances Additional Amounts with
respect to such Securities shall be payable, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which
such interest shall be payable and the record date for the interest
payable on any Securities on any Interest Payment Date, or if other
than provided herein, the Person to whom any interest on Securities of
the series shall be payable;
(7) the place or places where, subject to the provisions
of Section 4.02, the principal of, premium (if any) and interest on and
any Additional Amounts with respect to the Securities of the series
shall be payable;
(8) the period or periods within which, the price or
prices (whether denominated in cash, securities or otherwise) at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership, if the
Partnership is to have that option, and the manner in which the
Partnership must exercise any such option, if different from those set
forth herein;
8
(9) whether Securities of the series are entitled to the
benefits of any Guarantee of any Subsidiary Guarantor pursuant to this
Indenture;
(10) the obligation, if any, of the Partnership to redeem,
purchase or repay Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices (whether
denominated in cash, securities or otherwise) at which and the terms
and conditions upon which Securities of the series shall be redeemed,
purchased or repaid in whole or in part pursuant to such obligation;
(11) if other than denominations of $1,000 and any
integral multiple thereof, the denomination in which any Securities of
that series shall be issuable;
(12) if other than Dollars, the currency or currencies
(including composite currencies) or the form, including equity
securities, other debt securities (including Securities), warrants or
any other securities or property of the Partnership, the Guarantor, any
Subsidiary Guarantor or any other Person, in which payment of the
principal of, premium (if any) and interest on and any Additional
Amounts with respect to the Securities of the series shall be payable;
(13) if the principal of, premium (if any) or interest on
or any Additional Amounts with respect to the Securities of the series
are to be payable, at the election of the Partnership or a Holder
thereof, in a currency or currencies (including composite currencies)
other than that in which the Securities are stated to be payable, the
currency or currencies (including composite currencies) in which
payment of the principal of, premium (if any) and interest on and any
Additional Amounts with respect to Securities of such series as to
which such election is made shall be payable, and the periods within
which and the terms and conditions upon which such election is to be
made;
(14) if the amount of payments of principal of, premium
(if any) and interest on and any Additional Amounts with respect to the
Securities of the series may be determined with reference to any
commodities, currencies or indices, values, rates or prices or any
other index or formula, the manner in which such amounts shall be
determined;
(15) if other than the entire principal amount thereof,
the portion of the principal amount of Securities of the series that
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 6.02;
(16) any additional means of satisfaction and discharge of
this Indenture and any additional conditions or limitations to
discharge with respect to Securities of the series and the related
Guarantees pursuant to Article VIII or any modifications of or
deletions from such conditions or limitations;
(17) any deletions or modifications of or additions to the
Events of Default set forth in Section 6.01 or covenants of the
Partnership, the Guarantor or any Subsidiary Guarantor set forth in
Article IV pertaining to the Securities of the series;
9
(18) any restrictions or other provisions with respect to
the transfer or exchange of Securities of the series, which may amend,
supplement, modify or supersede those contained in this Article II;
(19) if the Securities of the series are to be convertible
into or exchangeable for capital stock, other debt securities
(including Securities), warrants, other equity securities or any other
securities or property of the Partnership, the Guarantor, any
Subsidiary Guarantor or any other Person, at the option of the
Partnership or the Holder or upon the occurrence of any condition or
event, the terms and conditions for such conversion or exchange;
(20) whether the Securities of the series are to be
entitled to the benefit of Section 4.03(b) (and accordingly constitute
Rule 144A Securities); and
(21) any other terms of the series (which terms shall not
be prohibited by the provisions of this Indenture).
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
2.03) set forth, or determined in the manner provided, in the Officers'
Certificate or Partnership Order 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, together with such Board Resolution, shall be set forth in an Officers'
Certificate or certified by the Secretary or an Assistant Secretary of U.S.
Propane, L.L.C. and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate or Partnership Order setting forth the terms of the
series.
SECTION 2.02 Denominations.
The Securities of each series shall be issuable in such
denominations as shall be specified as contemplated by Section 2.01. In the
absence of any such provisions with respect to the Securities of any series, the
Securities of such series denominated in Dollars shall be issuable in
denominations of $1,000 and any integral multiples thereof.
SECTION 2.03 Forms Generally.
The Securities of each series shall be in fully registered
form and in substantially such form or forms (including temporary or permanent
global form) established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto. The Securities may have notations, legends or
endorsements required by law, securities exchange rule, the Partnership's
certificate of limited partnership, agreement of limited partnership or other
similar governing documents, agreements to which the Partnership is subject, if
any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Partnership). A copy of the Board Resolution establishing
the form or forms of Securities of any series shall be delivered to
10
the Trustee at or prior to the delivery of the Partnership Order contemplated by
Section 2.04 for the authentication and delivery of such Securities.
The definitive Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the Officers executing such Securities, as
evidenced by their execution thereof.
The Trustee's certificate 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 Signatory".
SECTION 2.04 Execution, Authentication, Delivery and Dating.
Two Officers of U.S. Propane, L.L.C. shall sign the Securities
on behalf of the Partnership and, with respect to the Guarantees of the
Securities, two Officers of U.S. Propane, L.L.C. shall sign the Securities on
behalf of the Guarantor or such Subsidiary Guarantor, in each case by manual or
facsimile signature.
If an Officer of U.S. Propane, L.L.C. whose signature is on a
Security no longer holds that office at the time the Security is authenticated,
the Security shall be valid nevertheless.
A Security shall not be entitled to any benefit under this
Indenture or the related Guarantees or be valid or obligatory for any purpose
until authenticated by the manual signature of an authorized signatory of the
Trustee, which signature shall be conclusive evidence that the Security has been
authenticated under this Indenture. Notwithstanding the foregoing, if any
Security has been authenticated and delivered hereunder but never issued and
sold by the Partnership, and the Partnership delivers such Security to the
Trustee for cancellation as provided in Section 2.13, together with a written
statement (which need not comply with Section 11.05 and need not be accompanied
by an Opinion of Counsel) stating that such Security has never been issued and
sold by the Partnership, 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 or the related Guarantees.
At any time and from time to time after the execution and
delivery of this Indenture, the Partnership may deliver Securities of any series
executed by the Partnership, the Guarantor and each Subsidiary Guarantor to the
Trustee for authentication, and the Trustee shall authenticate and deliver such
Securities for original issue upon a Partnership Order for the authentication
and delivery of such Securities or pursuant to such procedures acceptable to the
Trustee as may be specified from time to time by Partnership Order. Such order
shall specify the amount of the Securities to be authenticated, the date on
which the original issue of Securities is to be authenticated, the name or names
of the initial Holder or Holders and any other terms of the
11
Securities of such series not otherwise determined. If provided for in such
procedures, such Partnership Order may authorize (1) authentication and delivery
of Securities of such series for original issue from time to time, with certain
terms (including, without limitation, the Maturity dates or dates, original
issue date or dates and interest rate or rates) that differ from Security to
Security and (2) may authorize authentication and delivery pursuant to oral or
electronic instructions from the Partnership or its duly authorized agent, which
instructions shall be promptly confirmed in writing.
If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Section 2.01, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive (in addition to the Partnership Order
referred to above and the other documents required by Section 11.04), and
(subject to Section 7.01) shall be fully protected in relying upon:
(a) an Officers' Certificate setting forth the Board
Resolution and, if applicable, an appropriate record of any action
taken pursuant thereto, as contemplated by the last paragraph of
Section 2.01; and
(b) an Opinion of Counsel to the effect that:
(i) the form of such Securities has been
established in conformity with the provisions of this
Indenture;
(ii) the terms of such Securities have been
established in conformity with the provisions of this
Indenture; and
(iii) that, when authenticated and delivered by
the Trustee and issued by the Partnership in the manner and
subject to any conditions specified in such Opinion of
Counsel, such Securities and the related Guarantees will
constitute valid and binding obligations of the Partnership,
the Guarantor and the Subsidiary Guarantors, respectively,
enforceable against the Partnership, the Guarantor and the
Subsidiary Guarantors, respectively, in accordance with their
respective terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws in
effect from time to time affecting the rights of creditors
generally, and the application of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
If all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate and
Opinion of Counsel at the time of issuance of each such Security, but such
Officers' Certificate and Opinion of Counsel shall be delivered at or before the
time of issuance of the first Security of the series to be issued.
The Trustee shall not be required to authenticate such
Securities if the issuance of such Securities pursuant to this Indenture would
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner not reasonably acceptable to the
Trustee.
12
The Trustee may appoint an authenticating agent acceptable to
the Partnership to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Partnership, the Guarantor, any
Subsidiary Guarantor or an Affiliate of the Partnership, the Guarantor or any
Subsidiary Guarantor.
Each Security shall be dated the date of its authentication.
SECTION 2.05 Registrar and Paying Agent.
The Partnership shall maintain an office or agency for each
series of Securities where Securities of such series may be presented for
registration of transfer or exchange ("Registrar") and an office or agency where
Securities of such series may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Securities of such series and of their
transfer and exchange. The Partnership may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Partnership shall enter into an appropriate agency
agreement with any Registrar or Paying Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Partnership shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. The Partnership may change any Paying Agent
or Registrar without notice to any Holder. If the Partnership fails to appoint
or maintain another entity as Registrar or Paying Agent, the Trustee shall act
as such. The Partnership, the Guarantor, any Subsidiary Guarantor or any
Subsidiary may act as Paying Agent or Registrar.
The Partnership initially appoints the Trustee as Registrar
and Paying Agent.
SECTION 2.06 Paying Agent to Hold Money in Trust.
The Partnership shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest on or any Additional
Amounts with respect to Securities and will notify the Trustee of any default by
the Partnership in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed. The Partnership at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed. Upon payment over to the Trustee and upon accounting
for any funds disbursed, the Paying Agent (if other than the Partnership, the
Guarantor, a Subsidiary Guarantor or a Subsidiary) shall have no further
liability for the money. If the Partnership, the Guarantor, a Subsidiary
Guarantor or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Each Paying Agent shall otherwise comply with TIA Section 317(b).
13
SECTION 2.07 Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar with respect to a series of Securities, the
Partnership shall furnish to the Trustee at least five Business Days before each
Interest Payment Date with respect to such series of Securities, and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Holders of such series, and the Partnership shall otherwise comply with TIA
Section 312(a).
SECTION 2.08 Transfer and Exchange.
Except as set forth in Section 2.17 or as may be provided
pursuant to Section 2.01:
When Securities of any series are presented to the Registrar
with the request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of the same series of
like tenor and of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements and the
requirements of this Indenture for such transactions are met; provided, however,
that the Securities presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form reasonably satisfactory to the Registrar duly executed by the
Holder thereof or by his attorney, duly authorized in writing, on which
instruction the Registrar can rely.
To permit registrations of transfers and exchanges, the
Partnership, the Guarantor and the Subsidiary Guarantors shall execute and the
Trustee shall authenticate Securities at the Registrar's written request and
submission of the Securities or Global Securities. No service charge shall be
made to a Holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Partnership may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than such transfer tax or similar
governmental charge payable upon exchanges pursuant to Section 2.12, 3.07 or
9.05). The Trustee shall authenticate Securities in accordance with the
provisions of Section 2.04. Notwithstanding any other provisions of this
Indenture to the contrary, the Partnership shall not be required to register the
transfer or exchange of (a) any Security selected for redemption in whole or in
part pursuant to Article III, except the unredeemed portion of any Security
being redeemed in part, or (b) any Security during the period beginning 15
Business Days prior to the mailing of notice of any offer to repurchase
Securities of the series required pursuant to the terms thereof or of redemption
of Securities of a series to be redeemed and ending at the close of business on
the day of mailing.
SECTION 2.09 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or if
the Holder of a Security claims that the Security has been destroyed, lost or
stolen and the Partnership and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of such Security, the
14
Partnership shall issue, the Guarantor and the Subsidiary Guarantors shall
execute and the Trustee shall authenticate a replacement Security of the same
series if the Trustee's requirements are met. If any such mutilated, destroyed,
lost or stolen Security has become or is about to become due and payable, the
Partnership in its discretion may, instead of issuing a new Security, pay such
Security. If required by the Trustee, the Guarantor, any Subsidiary Guarantor or
the Partnership, such Holder must furnish an indemnity bond that is sufficient
in the judgment of the Trustee and the Partnership to protect the Partnership,
the Guarantor, each Subsidiary Guarantor, the Trustee, any Agent or any
authenticating agent from any loss that any of them may suffer if a Security is
replaced. The Partnership and the Trustee may charge a Holder for their expenses
in replacing a Security.
Every replacement Security is an additional obligation of the
Partnership.
SECTION 2.10 Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.10 as
not outstanding.
If a Security is replaced pursuant to Section 2.09, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid
under Section 4.01, it ceases to be outstanding and interest on it ceases to
accrue.
A Security does not cease to be outstanding because the
Partnership, the Guarantor, a Subsidiary Guarantor or an Affiliate of the
Partnership, the Guarantor or a Subsidiary Guarantor holds the Security.
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury
Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, (a) the principal amount of an Original Issue Discount
Security shall be the principal amount thereof that would be due and payable as
of the date of such determination upon acceleration of the Maturity thereof
pursuant to Section 6.02, (b) the principal amount of a Security denominated in
a foreign currency shall be the Dollar equivalent, as determined by the
Partnership by reference to the noon buying rate in The City of New York for
cable transfers for such currency, as such rate is certified for customs
purposes by the Federal Reserve Bank of New York (the "Exchange Rate") on the
date of original issuance of such Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the Dollar equivalent, as
determined by the Partnership by reference to the Exchange Rate on the date of
original issuance of such Security, of the amount determined as provided in (a)
above), of such Security and (c) Securities owned by the Partnership, the
Guarantor, a Subsidiary Guarantor or any other obligor upon the Securities or
any Affiliate of the Partnership, of the Guarantor, of a Subsidiary Guarantor or
of such other
15
obligor shall be disregarded, except that, for the purpose of determining
whether the Trustee shall be protected in relying upon any such direction,
amendment, supplement, waiver or consent, only Securities that a Responsible
Officer of the Trustee actually knows are so owned shall be so disregarded.
SECTION 2.12 Temporary Securities.
Until definitive Securities of any series are ready for
delivery, the Partnership may prepare, the Guarantor and the Subsidiary
Guarantors shall execute and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities, but may have variations that the Partnership considers
appropriate for temporary Securities. Without unreasonable delay, the
Partnership shall prepare, the Guarantor and the Subsidiary Guarantors shall
execute and the Trustee shall authenticate definitive Securities in exchange for
temporary Securities. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 2.13 Cancellation.
The Partnership, the Guarantor or any Subsidiary Guarantor at
any time may deliver Securities to the Trustee for cancellation. The Registrar
and the Paying Agent shall forward to the Trustee any Securities surrendered to
them for registration of transfer, exchange, payment or redemption or for credit
against any sinking fund payment. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, redemption,
replacement or cancellation or for credit against any sinking fund. Unless the
Partnership shall direct in writing that canceled Securities be returned to it,
after written notice to the Partnership all canceled Securities held by the
Trustee shall be disposed of in accordance with the usual disposal procedures of
the Trustee, and the Trustee shall maintain a record of their disposal. The
Partnership may not issue new Securities to replace Securities that have been
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.14 Payments; Defaulted Interest.
Unless otherwise provided as contemplated by Section 2.01,
interest (except defaulted interest) on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Persons who are registered Holders of that Security at the close of
business on the record date next preceding such Interest Payment Date, even if
such Securities are canceled after such record date and on or before such
Interest Payment Date. The Holder must surrender a Security to a Paying Agent to
collect principal payments. Unless otherwise provided with respect to the
Securities of any series, the Partnership will pay the principal of, premium (if
any) and interest on and any Additional Amounts with respect to the Securities
in Dollars. Such amounts shall be payable at the offices of the Trustee or any
Paying Agent, provided that at the option of the Partnership, the Partnership
may pay such amounts (1) by wire transfer with respect to Global Securities or
(2) by check payable in such money mailed to a Holder's registered address with
respect to any Securities.
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If the Partnership defaults in a payment of interest on the
Securities of any series, the Partnership shall pay the defaulted interest in
any lawful manner plus, to the extent lawful, interest on the defaulted
interest, in each case at the rate provided in the Securities of such series and
in Section 4.01. The Partnership may pay the defaulted interest to the Persons
who are Holders on a subsequent special record date. At least 15 days before any
special record date selected by the Partnership, the Partnership (or the
Trustee, in the name of and at the expense of the Partnership upon 20 days'
prior written notice from the Partnership setting forth such special record date
and the interest amount to be paid) shall mail to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.15 Persons Deemed Owners.
The Partnership, the Guarantor, the Subsidiary Guarantors, the
Trustee, any Agent and any authenticating agent may treat the Person in whose
name any Security is registered as the owner of such Security for the purpose of
receiving payments of principal of, premium (if any) or interest on or any
Additional Amounts with respect to such Security and for all other purposes.
None of the Partnership, the Guarantor, any Subsidiary Guarantor, the Trustee,
any Agent or any authenticating agent shall be affected by any notice to the
contrary.
SECTION 2.16 Computation of Interest.
Except as otherwise specified as contemplated by Section 2.01
for Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year comprising twelve 30-day months.
SECTION 2.17 Global Securities; Book-Entry Provisions.
If Securities of a series are issuable in global form as a
Global Security, as contemplated by Section 2.01, then, notwithstanding clause
(11) of Section 2.01 and the provisions of Section 2.02, any such Global
Security shall represent such of the outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges, transfers or
redemptions. Any endorsement of a Global Security to reflect the amount, or any
increase or decrease in the amount, of outstanding Securities represented
thereby shall be made by the Trustee (i) in such manner and upon instructions
given by such Person or Persons as shall be specified in such Security or in a
Partnership Order to be delivered to the Trustee pursuant to Section 2.04 or
(ii) otherwise in accordance with written instructions or such other written
form of instructions as is customary for the Depositary for such Security, from
such Depositary or its nominee on behalf of any Person having a beneficial
interest in such Global Security. Subject to the provisions of Section 2.04 and,
if applicable, Section 2.12, the Trustee shall deliver and redeliver any
Security in permanent global form in the manner and upon instructions given by
the Person or Persons specified in such Security or in the applicable
Partnership Order. With respect to the Securities of any series that are
represented by a Global Security, the Partnership and the Guarantor and the
Subsidiary Guarantors authorize the execution and delivery by the Trustee of a
letter of representations or other similar agreement or instrument in the form
customarily provided for by
17
the Depositary appointed with respect to such Global Security. Any Global
Security may be deposited with the Depositary or its nominee, or may remain in
the custody of the Trustee or the Security Custodian therefor pursuant to a FAST
Balance Certificate Agreement or similar agreement between the Trustee and the
Depositary. If a Partnership Order has been, or simultaneously is, delivered,
any instructions by the Partnership with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not comply
with Section 11.05 and need not be accompanied by an Opinion of Counsel.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee or the Security
Custodian as its custodian, or under such Global Security, and the Depositary
may be treated by the Partnership, the Guarantor, any Subsidiary Guarantor, the
Trustee or the Security Custodian and any agent of the Partnership, the
Guarantor, any Subsidiary Guarantor, the Trustee or the Security Custodian as
the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, (i) the registered holder of a Global Security of
a series may grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any
action that a Holder of Securities of such series is entitled to take under this
Indenture or the Securities of such series and (ii) nothing herein shall prevent
the Partnership, the Guarantor, any Subsidiary Guarantor, the Trustee or the
Security Custodian, or any agent of the Partnership, the Guarantor, any
Subsidiary Guarantor, the Trustee or the Security Custodian, from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or shall impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
beneficial owner of any Security.
Notwithstanding Section 2.08, and except as otherwise provided
pursuant to Section 2.01: Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary. Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Security if, and only if,
either (1) the Depositary notifies the Partnership that it is unwilling or
unable to continue as Depositary for the Global Security and a successor
Depositary is not appointed by the Partnership within 90 days of such notice,
(2) an Event of Default has occurred with respect to such series and is
continuing and the Registrar has received a request from the Depositary to issue
Securities in lieu of all or a portion of the Global Security (in which case the
Partnership shall deliver Securities within 30 days of such request) or (3) the
Partnership determines not to have the Securities represented by a Global
Security.
In connection with any transfer of a portion of the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Security in an amount equal to
the principal amount of the beneficial interests in the Global Security to be
transferred, and the Partnership, the Guarantor and the Subsidiary Guarantors
shall execute, and the Trustee upon receipt of a Partnership Order for the
authentication and delivery of Securities shall authenticate and deliver, one or
more Securities of the same series of like tenor and amount.
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In connection with the transfer of all the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Partnership, the Guarantor and the Subsidiary Guarantors
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interests in the Global Security, an equal aggregate principal amount of
Securities of authorized denominations.
Neither the Partnership, the Guarantor, any Subsidiary
Guarantor nor the Trustee will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, Securities by
the Depositary, or for maintaining, supervising or reviewing any records of the
Depositary relating to such Securities. Neither the Partnership, the Guarantor,
any Subsidiary Guarantor nor the Trustee shall be liable for any delay by the
related Global Security Holder or the Depositary in identifying the beneficial
owners, and each such Person may conclusively rely on, and shall be protected in
relying on, instructions from such Global Security Holder or the Depositary for
all purposes (including with respect to the registration and delivery, and the
respective principal amounts, of the Securities to be issued).
The provisions of the last sentence of the third paragraph of
Section 2.04 shall apply to any Global Security if such Global Security was
never issued and sold by the Partnership and the Partnership, the Guarantor or a
Subsidiary Guarantor delivers to the Trustee the Global Security together with
written instructions (which need not comply with Section 11.05 and need not be
accompanied by an Opinion of Counsel) with regard to the cancellation or
reduction in the principal amount of Securities represented thereby, together
with the written statement contemplated by the last sentence of the third
paragraph of Section 2.04.
Notwithstanding the provisions of Sections 2.03 and 2.14,
unless otherwise specified as contemplated by Section 2.01, payment of principal
of, premium (if any) and interest on and any Additional Amounts with respect to
any Global Security shall be made to the Person or Persons specified therein.
ARTICLE III
REDEMPTION
SECTION 3.01 Applicability of Article.
Securities of any series that are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 2.01 for Securities of any
series) in accordance with this Article III.
SECTION 3.02 Notice to the Trustee.
If the Partnership elects to redeem Securities of any series
pursuant to this Indenture, it shall notify the Trustee of the Redemption Date
and the principal amount of Securities of such series to be redeemed. The
Partnership shall so notify the Trustee at least 45 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee) by
delivering to the Trustee an Officers' Certificate stating that such redemption
will comply with
19
the provisions of this Indenture and of the Securities of such series. Any such
notice may be canceled at any time prior to the mailing of such notice of such
redemption to any Holder and shall thereupon be void and of no effect.
SECTION 3.03 Selection of Securities To Be Redeemed.
If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series of a specified tenor are
to be redeemed), 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 tenor) not previously called for
redemption, either pro rata, by lot or by such other method as the Trustee shall
deem fair and appropriate and that may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series or of the principal amount of Global Securities of
such series.
The Trustee shall promptly notify the Partnership and the
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any of the Securities redeemed or to be redeemed only in part, to
the portion of the principal amount thereof which has been or is to be redeemed.
SECTION 3.04 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 the address of
such Holder appearing in the register of Securities maintained by the Registrar.
All notices of redemption shall identify the Securities to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) that, unless the Partnership, the Guarantor and the
Subsidiary Guarantors default in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities redeemed;
(4) if any Security is to be redeemed in part, the
portion of the principal amount thereof to be redeemed and that on and
after the Redemption Date, upon
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surrender for cancellation of such Security to the Paying Agent, a new
Security or Securities in the aggregate principal amount equal to the
unredeemed portion thereof will be issued without charge to the Holder;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price and the
name and address of the Paying Agent;
(6) that the redemption is for a sinking or analogous
fund, if such is the case; and
(7) the CUSIP number, if any, relating to such
Securities.
Notice of redemption of Securities to be redeemed at the
election of the Partnership shall be given by the Partnership or, at the
Partnership's written request, by the Trustee in the name and at the expense of
the Partnership.
SECTION 3.05 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, but interest installments whose maturity
is on or prior to such Redemption Date will be payable on the relevant Interest
Payment Dates to the Holders of record at the close of business on the relevant
record dates specified pursuant to Section 2.01.
SECTION 3.06 Deposit of Redemption Price.
On or prior to 11:00 a.m., New York City time, on any
Redemption Date, the Partnership, the Guarantor or a Subsidiary Guarantor shall
deposit with the Trustee or the Paying Agent (or, if the Partnership, the
Guarantor or such Subsidiary Guarantor is acting as the Paying Agent, segregate
and hold in trust as provided in Section 2.06) an amount of money in same day
funds sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on and any Additional
Amounts with respect to, the Securities or portions thereof which are to be
redeemed on that date, other than Securities or portions thereof called for
redemption on that date which have been delivered by the Partnership, the
Guarantor or a Subsidiary Guarantor to the Trustee for cancellation.
If the Partnership, the Guarantor or a Subsidiary Guarantor
complies with the preceding paragraph, then, unless the Partnership, the
Guarantor and the Subsidiary Guarantors default in the payment of such
Redemption Price, interest on the Securities to be redeemed will cease to accrue
on and after the applicable Redemption Date, whether or not such Securities are
presented for payment, and the Holders of such Securities shall have no further
rights with respect to such Securities except for the right to receive the
Redemption Price upon surrender of such Securities. If any Security called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal, premium, if any, any Additional Amounts, and, to the extent lawful,
accrued interest thereon shall, until paid, bear interest from the Redemption
Date at the rate specified pursuant to Section 2.01 or provided in the
Securities or, in the case of Original Issue Discount Securities, such
Securities' yield to maturity.
21
SECTION 3.07 Securities Redeemed or Purchased in Part.
Upon surrender to the Paying Agent of a Security to be
redeemed in part, the Partnership, the Guarantor and the Subsidiary Guarantors
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 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 that is not redeemed.
SECTION 3.08 Purchase of Securities.
Unless otherwise specified as contemplated by Section 2.01,
the Partnership, the Guarantor, any Subsidiary Guarantor and any Affiliate of
the Partnership, the Guarantor or any Subsidiary Guarantor may, subject to
applicable law, at any time purchase or otherwise acquire Securities in the open
market or by private agreement. Any such acquisition shall not operate as or be
deemed for any purpose to be a redemption of the indebtedness represented by
such Securities. Any Securities purchased or acquired by the Partnership, the
Guarantor or a Subsidiary Guarantor may be delivered to the Trustee and, upon
such delivery, the indebtedness represented thereby shall be deemed to be
satisfied. Section 2.13 shall apply to all Securities so delivered.
SECTION 3.09 Mandatory and Optional Sinking Funds.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment." Unless otherwise provided by the terms of
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 3.10. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series and by this Article III.
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities.
The Partnership, the Guarantor or a Subsidiary Guarantor may
deliver outstanding Securities of a series (other than any previously called for
redemption) and may apply as a credit Securities of a series that have been
redeemed either at the election of the Partnership pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of
such series required to be made pursuant to the terms of such series of
Securities; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
22
SECTION 3.11 Redemption of Securities for Sinking Fund.
Not less than 45 days prior (unless a shorter period shall be
satisfactory to the Trustee) to each sinking fund payment date for any series of
Securities, the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, 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 delivery of or by crediting Securities of that series pursuant to
Section 3.10 and will also deliver or cause to be delivered to the Trustee any
Securities to be so delivered. Failure of the Partnership to timely deliver or
cause to be delivered such Officers' Certificate and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute the
election of the Partnership (i) that the mandatory sinking fund payment for such
series due on the next succeeding sinking fund payment date shall be paid
entirely in cash without the option to deliver or credit Securities of such
series in respect thereof and (ii) that the Partnership will make no optional
sinking fund payment with respect to such series as provided in this Section
3.11.
If the sinking fund payment or payments (mandatory or optional
or both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $100,000 (or the Dollar equivalent thereof based on the applicable
Exchange Rate on the date of original issue of the applicable Securities) or a
lesser sum if the Partnership shall so request with respect to the Securities of
any particular series, such cash shall be applied on the next succeeding sinking
fund payment date to the redemption of Securities of such series at the sinking
fund redemption price together with accrued interest to the date fixed for
redemption. If such amount shall be $100,000 (or the Dollar equivalent thereof
as aforesaid) or less and the Partnership makes no such request then it shall be
carried over until a sum in excess of $100,000 (or the Dollar equivalent thereof
as aforesaid) is available. Not less than 30 days before each such sinking fund
payment date, the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.03 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 3.04. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 3.05, 3.06 and 3.07.
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Securities.
The Partnership shall pay the principal of, premium (if any)
and interest on and any Additional Amounts with respect to the Securities of
each series on the dates and in the manner provided in the Securities of such
series and in this Indenture. Principal, premium, interest and any Additional
Amounts shall be considered paid on the date due if the Paying Agent (other than
the Partnership, the Guarantor, a Subsidiary Guarantor or a Subsidiary) holds on
that date money deposited by the Partnership, the Guarantor or a Subsidiary
Guarantor designated for and sufficient to pay all principal, premium, interest
and any Additional Amounts then due.
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The Partnership shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium (if any), at a rate equal to the then applicable interest rate on the
Securities to the extent lawful; and it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and any Additional Amount (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02 Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any
series of Securities an office or agency (which may be an office of the Trustee,
the Registrar or the Paying Agent) where Securities of that series may be
presented for registration of transfer or exchange, where Securities of that
series may be presented for payment and where notices and demands to or upon the
Partnership, the Guarantor or a Subsidiary Guarantor in respect of the
Securities of that series and this Indenture may be served. Unless otherwise
designated by the Partnership by written notice to the Trustee, the Guarantor
and the Subsidiary Guarantors, such office or agency shall be the office of the
Trustee in The City of New York, which on the date hereof is located at
______________________________. The Partnership will give prompt written notice
to the Trustee, the Guarantor and the Subsidiary Guarantors of the location, and
any change in the location, of such office or agency. If at any time the
Partnership shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee, the Guarantor and the Subsidiary Guarantors with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee.
The Partnership may also from time to time designate one or
more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Partnership of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Partnership will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 4.03 SEC Reports; Financial Statements.
(a) If the Partnership, the Guarantor or a Subsidiary
Guarantor is subject to the requirements of Section 13 or 15(d) of the Exchange
Act, the Partnership, the Guarantor or such Subsidiary Guarantor, as the case
may be, shall file with the Trustee, within 15 days after it files the same with
the SEC, copies of the annual reports and the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) that the Partnership, the Guarantor or such
Subsidiary Guarantor is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act. If this Indenture is qualified under the TIA, but not
otherwise, the Partnership, the Guarantor and the Subsidiary Guarantors shall
also comply with the provisions of TIA Section 314(a). Delivery of such reports,
information and documents to the Trustee shall be for informational purposes
only, and the Trustee's receipt thereof shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Partnership's
24
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates or certificates delivered
pursuant to Section 4.04).
(b) If neither the Partnership, the Guarantor nor any
Subsidiary Guarantor is subject to the requirements of Section 13 or 15(d) of
the Exchange Act, the Partnership, the Guarantor and the Subsidiary Guarantors
shall furnish to all Holders of Rule 144A Securities and prospective purchasers
of Rule 144A Securities designated by the Holders of Rule 144A Securities,
promptly upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) promulgated under the Securities Act of 1933, as amended.
SECTION 4.04 Compliance Certificate.
(a) Each of the Partnership, the Guarantor and the
Subsidiary Guarantors shall deliver to the Trustee, within 120 days after the
end of each fiscal year, a statement signed by an Officer of U.S. Propane,
L.L.C., which need not constitute an Officers' Certificate, complying with TIA
Section 314(a)(4) and stating that in the course of performance by the signing
Officer of his duties as such Officer of U.S. Propane, L.L.C., he would normally
obtain knowledge of the keeping, observing, performing and fulfilling by the
Partnership, the Guarantor or such Subsidiary Guarantor, as the case may be, of
its obligations under this Indenture, and further stating that to the best of
his knowledge the Partnership, the Guarantor or such Subsidiary Guarantor, as
the case may be, has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which such Officer may have knowledge and what action the
Partnership, the Guarantor or such Subsidiary Guarantor, as the case may be, is
taking or proposes to take with respect thereto).
(b) The Partnership, the Guarantor or any Subsidiary
Guarantor shall, so long as Securities of any series are outstanding, deliver to
the Trustee, forthwith upon any Officer of U.S. Propane, L.L.C., becoming aware
of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Partnership, the Guarantor or such Subsidiary Guarantor, as the case may be, is
taking or proposes to take with respect thereto.
SECTION 4.05 Existence.
Subject to Article V, each of the Partnership, the Guarantor
and the Subsidiary Guarantors shall do or cause to be done all things necessary
to preserve and keep in full force and effect its existence.
SECTION 4.06 Waiver of Stay, Extension or Usury Laws.
Each of the Partnership, the Guarantor and the Subsidiary
Guarantors 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 stay or extension law or any usury law or other law
that would prohibit or forgive it from paying all or any portion of the
principal of or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture;
25
and (to the extent that it may lawfully do so) each of the Partnership, the
Guarantor and the Subsidiary Guarantors 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.
SECTION 4.07 Additional Amounts.
If the Securities of a series expressly provide for the
payment of Additional Amounts, the Partnership will pay to the Holder of any
Security of such series Additional Amounts as expressly provided therein.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of or any premium or interest on, or in respect of, any Security
of any series or the net proceeds received from the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this Section 4.07 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to the provisions of this Section 4.07 and express
mention of the payment of Additional Amounts (if applicable) in any provisions
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
ARTICLE V
SUCCESSORS
SECTION 5.01 Limitations on Mergers and Consolidations.
Neither the Partnership, the Guarantor nor any Subsidiary
Guarantor shall, in any transaction or series of transactions, consolidate with
or merge into any Person, or sell, lease, convey, transfer or otherwise dispose
of all or substantially all of its assets to any Person (other than a
consolidation or merger of the Partnership and the Guarantor, the Partnership
and a Subsidiary Guarantor, the Guarantor and a Subsidiary Guarantor or of the
Subsidiary Guarantors, or a sale, lease, conveyance, transfer or other
disposition of all or substantially all of the assets of the Partnership to the
Guarantor, the Guarantor to the Partnership, the Partnership to a Subsidiary
Guarantor, a Subsidiary Guarantor to the Partnership, the Guarantor to a
Subsidiary Guarantor, a Subsidiary Guarantor to the Guarantor or of a Subsidiary
Guarantor to the other Subsidiary Guarantor), unless:
(1) either (a) the Partnership, the Guarantor or such
Subsidiary Guarantor, as the case may be, shall be the continuing
Person or (b) the Person (if other than the Partnership, the Guarantor
or such Subsidiary Guarantor) formed by such consolidation or into
which the Partnership, the Guarantor or such Subsidiary Guarantor is
merged, or to which such sale, lease, conveyance, transfer or other
disposition shall be made (collectively, the "Successor"), is organized
and validly existing under the laws of the United States, any political
subdivision thereof or any State thereof or the District of Columbia,
and expressly assumes by supplemental indenture, in the case of the
Partnership, the due and punctual payment of the principal of, premium
(if any) and interest on and any Additional Amounts with respect to all
the Securities and the performance of the Partnership's covenants and
obligations under this Indenture and the
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Securities, or, in the case of the Guarantor or such Subsidiary
Guarantor, the performance of the Guarantee and the Guarantor's or such
Subsidiary Guarantor's covenants and obligations under this Indenture
and the Securities;
(2) immediately after giving effect to such transaction
or series of transactions, no Default or Event of Default shall have
occurred and be continuing or would result therefrom; and
(3) the Partnership, the Guarantor or such Subsidiary
Guarantor, as the case may be, delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the
transaction and such supplemental indenture comply with this Indenture.
SECTION 5.02 Successor Person Substituted.
Upon any consolidation or merger of the Partnership, the
Guarantor or a Subsidiary Guarantor, as the case may be, or any sale, lease,
conveyance, transfer or other disposition of all or substantially all of the
assets of the Partnership, the Guarantor or such Subsidiary Guarantor in
accordance with Section 5.01, the Successor formed by such consolidation or into
or with which the Partnership, the Guarantor or such Subsidiary Guarantor is
merged or to which such sale, lease, conveyance, transfer or other disposition
is made shall succeed to, and be substituted for, and may exercise every right
and power of the Partnership, the Guarantor or such Subsidiary Guarantor, as the
case may be, under this Indenture and the Securities with the same effect as if
such Successor had been named as the Partnership, the Guarantor or such
Subsidiary Guarantor, as the case may be, herein and the predecessor
Partnership, Guarantor or Subsidiary Guarantor, in the case of a sale,
conveyance, transfer or other disposition, shall be released from all
obligations under this Indenture, the Securities and, in the case of the
Guarantor and a Subsidiary Guarantor, the Guarantee.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
Unless either inapplicable to a particular series or
specifically deleted or modified in or pursuant to the supplemental indenture or
Board Resolution establishing such series of Securities or in the form of
Security for such series, an "Event of Default," wherever used herein with
respect to Securities of any series, occurs if:
(1) there is a default in the payment of
interest on or any Additional Amounts with respect to any Security of
that series when the same becomes due and payable and such default
continues for a period of 30 days;
(2) there is a default in the payment of the
principal of or premium, if any, on any Securities of that series as
and when the same shall become due and payable, whether at Stated
Maturity, upon redemption, by declaration, upon required repurchase or
otherwise;
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(3) there is a default in the payment of any
sinking fund payment with respect to any Securities of that series as
and when the same shall become due and payable;
(4) there is a failure on the part of the
Partnership or the Guarantor, or if any series of Securities
outstanding under this Indenture is entitled to the benefits of a
Guarantee by the Subsidiary Guarantors, any of the Subsidiary
Guarantors, duly to observe or perform any other of the covenants or
agreements on the part of the Partnership, the Guarantor, or if
applicable, any of the Subsidiary Guarantors, in the Securities of that
series, in any resolution of the Board of Directors authorizing the
issuance of that series of Securities, in this Indenture with respect
to such series or in any supplemental Indenture with respect to such
series (other than a default in the performance of a covenant which is
specifically dealt with elsewhere in this Section 6.01), continuing for
a period of 60 days after the date on which written notice specifying
such failure and requiring the Partnership, the Guarantor, or if
applicable, the Subsidiary Guarantors, to remedy the same shall have
been given, by registered or certified mail, to the Partnership, the
Guarantor, or if applicable, the Subsidiary Guarantors, by the Trustee
or to the Partnership, the Guarantor, or if applicable, the Subsidiary
Guarantors, and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Securities of that series at the time
outstanding;
(5) the Partnership or the Guarantor, or if any
series of Securities outstanding under this Indenture is entitled to
the benefits of a Guarantee by the Subsidiary Guarantors, any of the
Subsidiary Guarantors, pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Bankruptcy
Custodian of it or for all or substantially all of its
property, or
(D) makes a general assignment for the benefit
of its creditors;
(6) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that remains unstayed and in
effect for 60 days and that:
(A) is for relief against the Partnership, the
Guarantor or any Subsidiary Guarantor as debtor in an
involuntary case,
(B) appoints a Bankruptcy Custodian of the
Partnership, the Guarantor or any Subsidiary Guarantor or a
Bankruptcy Custodian for all or substantially all of the
property of the Partnership, the Guarantor or any Subsidiary
Guarantor, or
(C) orders the liquidation of the Partnership,
the Guarantor or any Subsidiary Guarantor;
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(7) the Guarantee of the Guarantor or, if any
series of Securities outstanding under this Indenture is
entitled to the benefits of a Guarantee by the Subsidiary
Guarantors, any of the Subsidiary Guarantors ceases to be in
full force and effect with respect to Securities of that
series (except as otherwise provided in this Indenture) or is
declared null and void in a judicial proceeding or the
Guarantor or any of the Subsidiary Guarantors (if applicable)
denies or disaffirms its obligations under this Indenture or
such Guarantee; or
(8) any other Event of Default provided with
respect to Securities of that series occurs.
The term "Bankruptcy Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know or have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Default or Event of Default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Securities and this
Indenture.
When a Default is cured, it ceases.
Notwithstanding the foregoing provisions of this Section 6.01,
if the principal of, premium (if any) or interest on or Additional Amounts with
respect to any Security is payable in a currency or currencies (including a
composite currency) other than Dollars and such currency or currencies are not
available to the Partnership, the Guarantor or a Subsidiary Guarantor for making
payment thereof due to the imposition of exchange controls or other
circumstances beyond the control of the Partnership, the Guarantor or such
Subsidiary Guarantor (a "Conversion Event"), each of the Partnership, the
Guarantor and the Subsidiary Guarantors will be entitled to satisfy its
obligations to Holders of the Securities by making such payment in Dollars in an
amount equal to the Dollar equivalent of the amount payable in such other
currency, as determined by the Partnership, the Guarantor or the Subsidiary
Guarantor making such payment, as the case may be, by reference to the Exchange
Rate on the date of such payment, or, if such rate is not then available, on the
basis of the most recently available Exchange Rate. Notwithstanding the
foregoing provisions of this Section 6.01, any payment made under such
circumstances in Dollars where the required payment is in a currency other than
Dollars will not constitute an Event of Default under this Indenture.
Promptly after the occurrence of a Conversion Event, the
Partnership, the Guarantor or a Subsidiary Guarantor shall give written notice
thereof to the Trustee; and the Trustee, promptly after receipt of such notice,
shall give notice thereof in the manner provided in Section 11.02 to the
Holders. Promptly after the making of any payment in Dollars as a result of a
Conversion Event, the Partnership, the Guarantor or the Subsidiary Guarantor
making such payment, as the case may be, shall give notice in the manner
provided in Section 11.02 to the Holders, setting forth the applicable Exchange
Rate and describing the calculation of such payments.
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A Default under clause (4) or (8) of this Section 6.01 is not
an Event of Default until the Trustee notifies the Partnership, the Guarantor
and the Subsidiary Guarantors, or the Holders of at least 25% in principal
amount of the then outstanding Securities of the series affected by such Default
(or, in the case of a Default under clause (4) of this Section 6.01, if
outstanding Securities of other series are affected by such Default, then at
least 25% in principal amount of the then outstanding Securities so affected)
notify the Partnership, the Guarantor, the Subsidiary Guarantors and the
Trustee, of the Default, and the Partnership, the Guarantor or the applicable
Subsidiary Guarantor, as the case may be, fails to cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
SECTION 6.02 Acceleration.
If an Event of Default with respect to any Securities of any
series at the time outstanding (other than an Event of Default specified in
clause (5) or (6) of Section 6.01) occurs and is continuing, the Trustee by
notice to the Partnership, the Guarantor and the Subsidiary Guarantors, or the
Holders of at least 25% in principal amount of the then outstanding Securities
of the series affected by such Event of Default (or, in the case of an Event of
Default described in clause (4) of Section 6.01, if outstanding Securities of
other series are affected by such Event of Default, then at least 25% in
principal amount of the then outstanding Securities so affected) by notice to
the Partnership, the Guarantor, the Subsidiary Guarantors and the Trustee, may
declare the principal of (or, if any such Securities are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) and all accrued and unpaid interest on all then
outstanding Securities of such series or of all series, as the case may be, to
be due and payable. Upon any such declaration, the amounts due and payable on
the Securities shall be due and payable immediately. If an Event of Default
specified in clause (5) or (6) of Section 6.01 hereof occurs, such amounts shall
ipso facto become and be immediately due and payable without any declaration,
notice or other act on the part of the Trustee or any Holder. The Holders of a
majority in principal amount of the then outstanding Securities of the series
affected by such Event of Default or all series, as the case may be, by written
notice to the Trustee may rescind an acceleration and its consequences (other
than nonpayment of principal of or premium or interest on or any Additional
Amounts with respect to the Securities) if the rescission would not conflict
with any judgment or decree and if all existing Events of Default with respect
to Securities of that series (or of all series, as the case may be) have been
cured or waived, except nonpayment of principal, premium, interest or any
Additional Amounts that has become due solely because of the acceleration.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of, or
premium, if any, or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall
30
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a majority
in principal amount of the then outstanding Securities of any series or of all
series (acting as one class) by notice to the Trustee may waive an existing or
past Default or Event of Default with respect to such series or all series, as
the case may be, and its consequences (including waivers obtained in connection
with a tender offer or exchange offer for Securities of such series or all
series or a solicitation of consents in respect of Securities of such series or
all series, provided that in each case such offer or solicitation is made to all
Holders of then outstanding Securities of such series or all series (but the
terms of such offer or solicitation may vary from series to series)), except (1)
a continuing Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on or any Additional Amounts with respect to any
Security or (2) a continued Default in respect of a provision that under Section
9.02 cannot be amended or supplemented without the consent of each Holder
affected. Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05 Control by Majority.
With respect to Securities of any series, the Holders of a
majority in principal amount of the then outstanding Securities of such series
may direct in writing the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it relating to or arising under an Event of Default described in
clause (1), (2), (3) or (7) of Section 6.01, and with respect to all Securities,
the Holders of a majority in principal amount of all the then outstanding
Securities affected may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it not relating to or arising under such an
Event of Default. However, the Trustee may refuse to follow any direction that
conflicts with applicable law or this Indenture, that the Trustee determines may
be unduly prejudicial to the rights of other Holders, or that may involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion from Holders
directing the Trustee against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06 Limitations on Suits.
Subject to Section 6.07 hereof, a Holder of a Security of any
series may pursue a remedy with respect to this Indenture or the Securities of
such series only if:
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(1) the Holder gives to the Trustee written notice of a
continuing Event of Default with respect to such series;
(2) the Holders of at least 25% in principal amount of
the then outstanding Securities of such series make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority
in principal amount of the Securities of that series do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal of and
premium, if any, and interest on and any Additional Amounts with respect to the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default specified in clause (1) or (2) of
Section 6.01 hereof occurs and is continuing, the Trustee is authorized to
recover judgment in its own name and as trustee of an express trust against the
Partnership, the Guarantor or a Subsidiary Guarantor for the amount of
principal, premium (if any), interest and any Additional Amounts remaining
unpaid on the Securities of the series affected by the Event of Default, and
interest on overdue principal and premium, if any, and, to the extent lawful,
interest on overdue interest, and 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.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents and to take such actions, including participating as a
member, voting or otherwise, of any committee of creditors, as may be necessary
or advisable to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Partnership, the Guarantor or a Subsidiary Guarantor or their
respective creditors or properties and shall be entitled and empowered to
collect, receive and distribute any money or
32
other property payable or deliverable on any such claims and any Bankruptcy
Custodian 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 to 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 7.07. To the extent that the payment of
any such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07 out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Holders of the Securities may be entitled to receive in such proceeding whether
in liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained 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.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article VI,
it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the
Securities in respect of which or for the benefit of which such money has been
collected, for principal, premium (if any), interest and any Additional Amounts
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Securities for principal, premium (if any), interest and
any Additional Amounts, respectively; and
Third: to the Partnership.
The Trustee, upon prior written notice to the Partnership, may
fix record dates and payment dates for any payment to Holders pursuant to this
Article VI.
To the fullest extent allowed under applicable law, if for the
purpose of obtaining a judgment against the Partnership, the Guarantor or a
Subsidiary Guarantor in any court it is necessary to convert the sum due in
respect of the principal of, premium (if any) or interest on or Additional
Amounts with respect to the Securities of any series (the "Required Currency")
into a currency in which a judgment will be rendered (the "Judgment Currency"),
the rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the Business Day in The City of
New York next preceding that on which final judgment is given. Neither the
Partnership, the Guarantor, any Subsidiary Guarantor nor the Trustee shall be
liable for any shortfall nor shall it benefit from any windfall in payments to
Holders of Securities under this Section 6.10 caused by a change in exchange
rates between the time the amount of a judgment against it is calculated as
above and the time the Trustee converts the Judgment
33
Currency into the Required Currency to make payments under this Section 6.10 to
Holders of Securities, but payment of such judgment shall discharge all amounts
owed by the Partnership, the Guarantor and the Subsidiary Guarantors on the
claim or claims underlying such judgment.
SECTION 6.11 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 or
omitted by it as a trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in principal amount of the then outstanding Securities of any series.
ARTICLE VII
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If 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 such
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default
with respect to the Securities of any series:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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. However, the Trustee shall examine such certificates
and opinions to determine whether, on their face, they appear to
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of Section
7.01(b);
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
34
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
the provisions of this Section 7.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Partnership, the Guarantor and the Subsidiary Guarantors. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law. All money received by the Trustee shall, until applied as
herein provided, be held in trust for the payment of the principal of, premium
(if any) and interest on and Additional Amounts with respect to the Securities.
SECTION 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely on any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require instruction, an Officers' Certificate or an Opinion of Counsel or
both to be provided. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such instruction, Officers'
Certificate or Opinion of Counsel. The Trustee may consult at the Partnership's
expense with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Partnership, the
Guarantor or any Subsidiary Guarantor shall be sufficient if signed by an
Officer of U.S. Propane L.L.C.
(f) The Trustee shall not be obligated 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.
35
(g) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder.
(h) The Trustee may request that the Partnership deliver
an Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 7.03 May Hold Securities.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Partnership,
the Guarantor, any Subsidiary Guarantor or any of their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights and duties. However, the Trustee is subject to Sections
7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Partnership's use of the proceeds from the Securities or any money paid to
the Partnership, the Guarantor or any Subsidiary Guarantor or upon the
Partnership's, the Guarantor's or such Subsidiary Guarantor's direction under
any provision hereof, it shall not be responsible for the use or application of
any money received by any Paying Agent other than the Trustee and it shall not
be responsible for any statement or recital herein or any statement in the
Securities other than its certificate of authentication.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default with respect to the
Securities of any series occurs and is continuing and it is known to the
Trustee, the Trustee shall mail to Holders of Securities of such series a notice
of the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium (if
any) and interest on and Additional Amounts or any sinking fund installment with
respect to the Securities of such series, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Holders of Securities of such
series.
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SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each September 15 of each year after the
execution of this Indenture, the Trustee shall mail to Holders of a series, the
Guarantor, the Subsidiary Guarantors and the Partnership a brief report dated as
of such reporting date that complies with TIA Section 313(a); provided, however,
that if no event described in TIA Section 313(a) has occurred within the twelve
months preceding the reporting date with respect to a series, no report need be
transmitted to Holders of such series. The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports if and as
required by TIA Sections 313(c) and 313(d).
A copy of each report at the time of its mailing to Holders of
a series of Securities shall be filed by the Partnership, the Guarantor or a
Subsidiary Guarantor with the SEC and each securities exchange, if any, on which
the Securities of such series are listed. The Partnership shall notify the
Trustee if and when any series of Securities is listed on any securities
exchange.
SECTION 7.07 Compensation and Indemnity.
The Partnership agrees to pay to the Trustee for its
acceptance of this Indenture and services hereunder such compensation as the
Partnership and the Trustee shall from time to time agree in writing. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Partnership agrees to reimburse the Trustee
upon request for all reasonable disbursements, advances and expenses incurred by
it. Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Partnership hereby indemnifies the Trustee and any
predecessor Trustee against any and all loss, liability, damage, claim or
expense, including taxes (other than taxes based upon, measured by or determined
by the income of the Trustee), incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture, except
as set forth in the next following paragraph. The Trustee shall notify the
Partnership, the Guarantor and the Subsidiary Guarantors promptly of any claim
for which it may seek indemnity. The Partnership shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Partnership shall pay the reasonable fees and expenses of such counsel.
The Partnership need not pay for any settlement made without its consent.
The Partnership shall not be obligated to reimburse any
expense or indemnify against any loss or liability incurred by the Trustee
through the Trustee's negligence or bad faith.
To secure the payment obligations of the Partnership in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
principal of, premium (if any) and interest on and any Additional Amounts with
respect to Securities of any series. Such lien and the Partnership's obligations
under this Section 7.07 shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(5) or (6) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
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SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign and be discharged at any time with
respect to the Securities of one or more series by so notifying the Partnership,
the Guarantor and the Subsidiary Guarantors. The Holders of a majority in
principal amount of the then outstanding Securities of any series may remove the
Trustee with respect to the Securities of such series by so notifying the
Trustee, the Partnership, the Guarantor and the Subsidiary Guarantors. The
Partnership may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Bankruptcy Custodian or public officer takes charge
of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, with respect to the Securities of one or
more series, the Partnership 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).
Within one year after the successor Trustee with respect to the Securities of
any series takes office, the Holders of a majority in principal amount of the
Securities of such series then outstanding may appoint a successor Trustee to
replace the successor Trustee appointed by the Partnership.
If a successor Trustee with respect to the Securities of any
series does not take office within 30 days after the retiring or removed Trustee
resigns or is removed, the retiring or removed Trustee (at the expense of the
Partnership), the Partnership, the Guarantor, any Subsidiary Guarantor or the
Holders of at least 10% in principal amount of the then outstanding Securities
of such series may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
If the Trustee with respect to the Securities of a series
fails to comply with Section 7.10, any Holder of Securities of such series may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee with respect to the Securities of such
series.
In case of the appointment of a successor Trustee with respect
to all Securities, each such successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee, to the Partnership, to
the Guarantor and to the Subsidiary Guarantors. Thereupon the
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resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the retiring
Trustee under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.
In case of the appointment of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Partnership, the
Guarantor, the Subsidiary Guarantors, the retiring Trustee and each successor
Trustee with respect to the Securities of one or more (but not all) series shall
execute and deliver an indenture supplemental hereto in which each successor
Trustee shall accept such appointment and that (1) shall confer to each
successor Trustee all the rights, powers 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 confirm that all the rights, powers and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee and (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. Nothing herein
or in such supplemental indenture shall constitute such Trustees co-trustees of
the same trust, and 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. Upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee shall
have all the rights, powers 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. On request of the Partnership or any successor
Trustee, such retiring Trustee shall transfer to such successor Trustee all
property held by such retiring Trustee as Trustee with respect to the Securities
of that or those series to which the appointment of such successor Trustee
relates. Such retiring Trustee shall, however, have the right to deduct its
unpaid fees and expenses, including attorneys' fees.
Notwithstanding replacement of the Trustee or Trustees
pursuant to this Section 7.08, the obligations of the Partnership under Section
7.07 shall continue for the benefit of the retiring Trustee or Trustees.
SECTION 7.09 Successor Trustee by Merger, etc.
Subject to Section 7.10, if the Trustee consolidates, merges
or converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, however, that in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation, the transferee corporation expressly assumes all of the Trustee's
liabilities hereunder.
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; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor to
39
the Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be
a corporation or banking association organized and doing business under the laws
of the United States, any State thereof or the District of Columbia and
authorized under such laws to exercise corporate trust power, shall be subject
to supervision or examination by federal or state (or the District of Columbia)
authority and shall have, or be a subsidiary of a bank or bank holding company
having, a combined capital and surplus of at least $50 million as set forth in
its most recent published annual report of condition.
The Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA Section 310(b) during the
period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b).
SECTION 7.11 Preferential Collection of Claims Against the Partnership, the
Guarantor or a Subsidiary Guarantor.
The Trustee is subject to and shall comply with the provisions
of TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE OF INDENTURE
SECTION 8.01 Termination of the Partnership's, the Guarantor's and the
Subsidiary Guarantors' Obligations.
(a) This Indenture shall cease to be of further effect
with respect to the Securities of a series (except that the Partnership's
obligations under Section 7.07, the Trustee's and Paying Agent's obligations
under Section 8.03 and the rights, powers, protections and privileges accorded
the Trustee under Article VII shall survive), and the Trustee, the Guarantor and
the Subsidiary Guarantors, on demand of the Partnership, shall execute proper
instruments acknowledging the satisfaction and discharge of this Indenture with
respect to the Securities of such series, when:
(1) either:
(A) all outstanding Securities of such series
theretofore authenticated and issued (other than destroyed,
lost or stolen Securities that have been replaced or paid)
have been delivered to the Trustee for cancellation; or
40
(B) all outstanding Securities of such series
not theretofore delivered to the Trustee for cancellation:
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one
year, or
(iii) are to be called for redemption
within one year under arrangements
satisfactory to the Trustee for the
giving of notice of redemption by
the Trustee in the name, and at the
expense, of the Partnership,
and, in the case of clause (i), (ii) or (iii) above, the
Partnership, the Guarantor or a Subsidiary Guarantor has
irrevocably deposited or caused to be deposited with the
Trustee as funds (immediately available to the Holders in the
case of clause (i)) in trust for such purpose (x) cash in an
amount, or (y) Government Obligations, maturing as to
principal and interest at such times and in such amounts as
will ensure the availability of cash in an amount or (z) a
combination thereof, which will be sufficient, in the opinion
(in the case of clauses (y) and (z)) of a nationally
recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to
pay and discharge the entire indebtedness on the Securities of
such series for principal and interest to the date of such
deposit (in the case of Securities which have become due and
payable) or for principal, premium, if any, and interest to
the Stated Maturity or Redemption Date, as the case may be; or
(C) the Partnership, the Guarantor and the
Subsidiary Guarantors have properly fulfilled such other means
of satisfaction and discharge as is specified, as contemplated
by Section 2.01, to be applicable to the Securities of such
series;
(2) the Partnership, the Guarantor or a Subsidiary
Guarantor has paid or caused to be paid all other sums payable by them
hereunder with respect to the Securities of such series; and
(3) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, together with an
Opinion of Counsel to the same effect.
(b) Unless this Section 8.01(b) is specified as not being
applicable to Securities of a series as contemplated by Section 2.01, the
Partnership may, at its option, terminate certain of its, the Guarantor's and
the Subsidiary Guarantors' respective obligations under this Indenture
("covenant defeasance") with respect to the Securities of a series if:
(1) the Partnership, the Guarantor or a Subsidiary
Guarantor has irrevocably deposited or caused to be irrevocably
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for and
41
dedicated solely to the benefit of the Holders of Securities of such
series, (i) money in the currency in which payment of the Securities of
such series is to be made in an amount, or (ii) Government Obligations
with respect to such series, maturing as to principal and interest at
such times and in such amounts as will ensure the availability of money
in the currency in which payment of the Securities of such series is to
be made in an amount or (iii) a combination thereof, that is
sufficient, in the opinion (in the case of clauses (ii) and (iii)) of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay the
principal of and premium (if any) and interest on all Securities of
such series on each date that such principal, premium (if any) or
interest is due and payable and (at the Stated Maturity thereof or upon
redemption as provided in Section 8.01(e)) to pay all other sums
payable by it hereunder; provided that the Trustee shall have been
irrevocably instructed to apply such money and/or the proceeds of such
Government Obligations to the payment of said principal, premium (if
any) and interest with respect to the Securities of such series as the
same shall become due;
(2) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, and an Opinion of
Counsel to the same effect;
(3) no Default or Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the
date of such deposit;
(4) the Partnership shall have delivered to the Trustee
an Opinion of Counsel from a nationally recognized counsel acceptable
to the Trustee or a tax ruling to the effect that the Holders will not
recognize income, gain or loss for U.S. Federal income tax purposes as
a result of the Partnership's exercise of its option under this Section
8.01(b) and will be subject to U.S. Federal income tax on the same
amount and in the same manner and at the same times as would have been
the case if such option had not been exercised;
(5) the Partnership, the Guarantor and the Subsidiary
Guarantors have complied with any additional conditions specified
pursuant to Section 2.01 to be applicable to the discharge of
Securities of such series pursuant to this Section 8.01; and
(6) such deposit and discharge shall not cause the
Trustee to have a conflicting interest as defined in TIA Section
310(b).
In such event, this Indenture shall cease to be of further
effect (except as set forth in this paragraph), and the Trustee and the
Guarantor and the Subsidiary Guarantors, on demand of the Partnership, shall
execute proper instruments acknowledging satisfaction and discharge under this
Indenture. However, the Partnership's, the Guarantor's and the Subsidiary
Guarantors' respective obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09,
4.01, 4.02, 7.07, 7.08, 8.04 and 10.01, the Trustee's and Paying Agent's
obligations in Section 8.03 and the rights, powers, protections and privileges
accorded the Trustee under Article VII shall survive until all Securities of
such series are no longer outstanding. Thereafter, only the Partnership's
obligations
42
in Section 7.07 and the Trustee's and Paying Agent's obligations in Section 8.03
shall survive with respect to Securities of such series.
After such irrevocable deposit made pursuant to this Section
8.01(b) and satisfaction of the other conditions set forth herein, the Trustee
upon request shall acknowledge in writing the discharge of the Partnership's,
the Guarantor's and the Subsidiary Guarantors' obligations under this Indenture
with respect to the Securities of such series except for those surviving
obligations specified above.
In order to have money available on a payment date to pay
principal of or premium (if any) or interest on the Securities, the Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. Government
Obligations shall not be callable at the issuer's option.
(c) If the Partnership, the Guarantor and the Subsidiary
Guarantors have previously complied or are concurrently complying with Section
8.01(b) (other than any additional conditions specified pursuant to Section 2.01
that are expressly applicable only to covenant defeasance) with respect to
Securities of a series, then, unless this Section 8.01(c) is specified as not
being applicable to Securities of such series as contemplated by Section 2.01,
the Partnership may elect that its, the Guarantor's and the Subsidiary
Guarantors' respective obligations to make payments with respect to Securities
of such series be discharged ("legal defeasance"), if:
(1) no Default or Event of Default under clauses (5) and
(6) of Section 6.01 hereof shall have occurred at any time during the
period ending on the 91st day after the date of deposit contemplated by
Section 8.01(b) (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(2) unless otherwise specified with respect to Securities
of such series as contemplated by Section 2.01, the Partnership has
delivered to the Trustee an Opinion of Counsel from a nationally
recognized counsel acceptable to the Trustee to the effect referred to
in Section 8.01(b)(4) with respect to such legal defeasance, which
opinion is based on (i) a private ruling of the Internal Revenue
Service addressed to the Partnership, (ii) a published ruling of the
Internal Revenue Service pertaining to a comparable form of transaction
or (iii) a change in the applicable federal income tax law (including
regulations) after the date of this Indenture;
(3) the Partnership, the Guarantor and the Subsidiary
Guarantors have complied with any other conditions specified pursuant
to Section 2.01 to be applicable to the legal defeasance of Securities
of such series pursuant to this Section 8.01(c); and
(4) the Partnership has delivered to the Trustee a
Partnership Request requesting such legal defeasance of the Securities
of such series and an Officers' Certificate stating that all conditions
precedent with respect to such legal defeasance of the Securities of
such series have been complied with, together with an Opinion of
Counsel to the same effect.
43
In such event, the Partnership, the Guarantor and the
Subsidiary Guarantors will be discharged from their respective obligations under
this Indenture and the Securities of such series to pay principal of, premium
(if any) and interest on, and any Additional Amounts with respect to, Securities
of such series, the Partnership's, the Guarantor's and the Subsidiary
Guarantors' respective obligations under Sections 4.01, 4.02 and 10.01 shall
terminate with respect to such Securities, and the entire indebtedness of the
Partnership evidenced by such Securities and of the Guarantor and of the
Subsidiary Guarantors evidenced by the related Guarantees shall be deemed paid
and discharged.
(d) If and to the extent additional or alternative means
of satisfaction, discharge or defeasance of Securities of a series are specified
to be applicable to such series as contemplated by Section 2.01, each of the
Partnership, the Guarantor and the Subsidiary Guarantors may terminate any or
all of its obligations under this Indenture with respect to Securities of a
series and any or all of its obligations under the Securities of such series if
it fulfills such other means of satisfaction and discharge as may be so
specified, as contemplated by Section 2.01, to be applicable to the Securities
of such series.
(e) If Securities of any series subject to subsections
(a), (b), (c) or (d) of this Section 8.01 are to be redeemed prior to their
Stated Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory or optional sinking fund provisions, the terms of
the applicable trust arrangement shall provide for such redemption, and the
Partnership shall make such arrangements as are reasonably satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Partnership.
SECTION 8.02 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the
Partnership shall hold in trust money or Government Obligations deposited with
it pursuant to Section 8.01 hereof. It shall apply the deposited money and the
money from Government Obligations through the Paying Agent and in accordance
with this Indenture to the payment of principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of the
series with respect to which the deposit was made.
SECTION 8.03 Repayment to Partnership, Guarantor or Subsidiary Guarantor.
The Trustee and the Paying Agent shall promptly pay to the
Partnership, the Guarantor or any Subsidiary Guarantor any excess money or
Government Obligations (or proceeds therefrom) held by them at any time upon the
written request of the Partnership.
Subject to the requirements of any applicable abandoned
property laws, the Trustee and the Paying Agent shall pay to the Partnership
upon written request any money held by them for the payment of principal,
premium (if any), interest or any Additional Amounts that remain unclaimed for
two years after the date upon which such payment shall have become due. After
payment to the Partnership, Holders entitled to the money must look to the
Partnership for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee and the
Paying Agent with respect to such money shall cease.
44
SECTION 8.04 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money or Government Obligations deposited with respect to Securities of any
series in accordance with Section 8.01 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the
obligations of the Partnership, the Guarantor and the Subsidiary Guarantors
under this Indenture with respect to the Securities of such series and under the
Securities of such series shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.01 until such time as the Trustee or the
Paying Agent is permitted to apply all such money or Government Obligations in
accordance with Section 8.01; provided, however, that if the Partnership, the
Guarantor or any Subsidiary Guarantor has made any payment of principal of,
premium (if any) or interest on or any Additional Amounts with respect to any
Securities because of the reinstatement of its obligations, the Partnership, the
Guarantor or such Subsidiary Guarantor, as the case may be, shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or Government Obligations held by the Trustee or the Paying Agent.
ARTICLE IX
SUPPLEMENTAL INDENTURES AND AMENDMENTS
SECTION 9.01 Without Consent of Holders.
The Partnership, the Guarantor, the Subsidiary Guarantors and
the Trustee may amend or supplement this Indenture or the Securities or waive
any provision hereof or thereof without the consent of any Holder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Section 5.01;
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities, or to provide for the
issuance of bearer Securities (with or without coupons);
(4) to provide any security for, or to add any guarantees
of or additional obligors on, any series of Securities or the related
Guarantees;
(5) to comply with any requirement in order to effect or
maintain the qualification of this Indenture under the TIA;
(6) to add to the covenants of the Partnership, the
Guarantor or any Subsidiary Guarantor 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
Partnership, the Guarantor or any Subsidiary Guarantor;
45
(7) to add any additional Events of Default with respect
to all or any series of the Securities (and, if any Event of Default is
applicable to less than all series of Securities, specifying the series
to which such Event of Default is applicable);
(8) to change or eliminate any of the provisions of this
Indenture; provided that any such change or elimination shall become
effective only when there is no outstanding Security of any series
created prior to the execution of such amendment or supplemental
indenture that is adversely affected in any material respect by such
change in or elimination of such provision;
(9) to establish the form or terms of Securities of any
series as permitted by Section 2.01;
(10) to supplement any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Section 8.01; provided, however, that any such action shall not
adversely affect the interest of the Holders of Securities of such
series or any other series of Securities in any material respect; or
(11) 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 7.08.
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon receipt by the Trustee of the documents described in
Section 9.06, the Trustee shall, subject to Section 9.06, join with the
Partnership, the Guarantor and the Subsidiary Guarantors in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture
and make any further appropriate agreements and stipulations that may be therein
contained.
SECTION 9.02 With Consent of Holders.
Except as provided below in this Section 9.02, the
Partnership, the Guarantor, the Subsidiary Guarantors and the Trustee may amend
or supplement this Indenture with the written consent (including consents
obtained in connection with a tender offer or exchange offer for Securities of
any one or more series or all series or a solicitation of consents in respect of
Securities of any one or more series or all series, provided that in each case
such offer or solicitation is made to all Holders of then outstanding Securities
of each such series (but the terms of such offer or solicitation may vary from
series to series)) of the Holders of at least a majority in principal amount of
the then outstanding Securities of all series affected by such amendment or
supplement (acting as one class).
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon the filing with the Trustee of evidence of the consent of
the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 9.06, the Trustee shall, subject to Section 9.06, join with
the Partnership, the Guarantor and the Subsidiary Guarantors in the execution of
such amendment or supplemental indenture.
46
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
The Holders of a majority in principal amount of the then
outstanding Securities of one or more series or of all series may waive
compliance in a particular instance by the Partnership, the Guarantor or any
Subsidiary Guarantor with any provision of this Indenture with respect to
Securities of such series (including waivers obtained in connection with a
tender offer or exchange offer for Securities of such series or a solicitation
of consents in respect of Securities of such series, provided that in each case
such offer or solicitation is made to all Holders of then outstanding Securities
of such series (but the terms of such offer or solicitation may vary from series
to series)).
However, without the consent of each Holder affected, an
amendment, supplement or waiver under this Section 9.02 may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Security;
(3) reduce the principal of, any premium on or any
mandatory sinking fund payment with respect to, or change the Stated
Maturity of, any Security or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
6.02;
(4) reduce the premium, if any, payable upon the
redemption of any Security or change the time at which any Security may
or shall be redeemed;
(5) change any obligation of the Partnership, the
Guarantor or any Subsidiary Guarantor to pay Additional Amounts with
respect to any Security;
(6) change the coin or currency or currencies (including
composite currencies) in which any Security or any premium, interest or
Additional Amounts with respect thereto are payable;
(7) impair the right to institute suit for the
enforcement of any payment of principal of, premium (if any) or
interest on or any Additional Amounts with respect to any Security
pursuant to Sections 6.07 and 6.08, except as limited by Section 6.06;
(8) make any change in the percentage of principal amount
of Securities necessary to waive compliance with certain provisions of
this Indenture pursuant to Section 6.04 or 6.07 or make any change in
this sentence of Section 9.02;
47
(9) waive a continuing Default or Event of Default in the
payment of principal of, premium (if any) or interest on or Additional
Amounts with respect to the Securities; or
(10) release the Guarantor or any Subsidiary Guarantors or
modify the Guarantee in any manner adverse to the Holders.
A supplemental indenture that 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.
The right of any Holder to participate in any consent required
or sought pursuant to any provision of this Indenture (and the obligation of the
Partnership, the Guarantor or any Subsidiary Guarantor to obtain any such
consent otherwise required from such Holder) may be subject to the requirement
that such Holder shall have been the Holder of record of any Securities with
respect to which such consent is required or sought as of a date identified by
the Partnership, the Guarantor or such Subsidiary Guarantor in a notice
furnished to Holders in accordance with the terms of this Indenture.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Partnership shall mail to the Holders of each
Security affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Partnership to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such amendment, supplement or waiver.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the
Securities shall comply in form and substance with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his or her Security or portion of a Security if the Trustee
receives written notice of revocation before a date and time therefor identified
by the Partnership, the Guarantor or any Subsidiary Guarantor in a notice
furnished to such Holder in accordance with the terms of this Indenture or, if
no such date and time shall be identified, the date the amendment, supplement or
waiver becomes effective. An amendment, supplement or waiver becomes effective
in accordance with its terms and thereafter binds every Holder.
The Partnership, the Guarantor or any Subsidiary Guarantor
may, but shall not be obligated to, fix a record date (which need not comply
with TIA Section 316(c)) for the purpose of determining the Holders entitled to
consent to any amendment, supplement or waiver or to take
48
any other action under this Indenture. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date. No consent shall be
valid or effective for more than 90 days after such record date unless consents
from Holders of the principal amount of Securities required hereunder for such
amendment or waiver to be effective shall have also been given and not revoked
within such 90-day period.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it is of the type described in any of clauses
(1) through (9) of Section 9.02 hereof. In such case, the amendment, supplement
or waiver shall bind each Holder who has consented to it and every subsequent
Holder that evidences the same debt as the consenting Holder's Security.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment or supplement changes the terms of an
outstanding Security, the Partnership may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security at the request of the Partnership regarding the changed terms and
return it to the Holder. Alternatively, if the Partnership so determines, the
Partnership in exchange for the Security shall issue, the Guarantor and the
Subsidiary Guarantors shall execute and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment or supplement.
Securities of any series authenticated and delivered after the
execution of any amendment or supplement 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 amendment or supplement.
SECTION 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized
pursuant to this Article if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplement, the Trustee shall be entitled to receive, and, subject
to Section 7.01 hereof, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel provided at the expense of the
Partnership, the Guarantor or a Subsidiary Guarantor as conclusive evidence that
such amendment or supplement is authorized or permitted by this Indenture, that
it is not inconsistent herewith, and that it will be valid and binding upon the
Partnership, the Guarantor and the Subsidiary Guarantors in accordance with its
terms.
49
ARTICLE X
GUARANTEE
SECTION 10.01 Guarantee.
(a) Notwithstanding any provision of this Article X to
the contrary, the provisions of this Article X relating to the Subsidiary
Guarantors shall be applicable only to, and inure solely to the benefit of, the
Securities of any series designated, pursuant to Section 2.01, as entitled to
the benefits of the Guarantee of each of the Subsidiary Guarantors.
(b) For value received, the Guarantor and each of the
Subsidiary Guarantors hereby fully, unconditionally and absolutely guarantees
(the "Guarantee") to the Holders and to the Trustee the due and punctual payment
of the principal of, and premium, if any, and interest on the Securities and all
other amounts due and payable under this Indenture and the Securities by the
Partnership, when and as such principal, premium, if any, and interest shall
become due and payable, whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise, according to the terms of the
Securities and this Indenture, subject to the limitations set forth in Section
10.03.
(c) Failing payment when due of any amount guaranteed
pursuant to the Guarantee, for whatever reason, the Guarantor and each of the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately. The Guarantee hereunder is intended to be a general, unsecured,
senior obligation of the Guarantor and each of the Subsidiary Guarantors and
will rank pari passu in right of payment with all Debt of the Guarantor and such
Subsidiary Guarantor that is not, by its terms, expressly subordinated in right
of payment to the Guarantee. The Guarantor and each of the Subsidiary Guarantors
hereby agrees that its obligations hereunder shall be full, unconditional and
absolute, irrespective of the validity, regularity or enforceability of the
Securities, the Guarantee (including the Guarantee of the Guarantor and any
Subsidiary Guarantor) or this Indenture, the absence of any action to enforce
the same, any waiver or consent by any Holder of the Securities with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Partnership, the Guarantor or any Subsidiary Guarantor, or any action to enforce
the same or any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of the Guarantor or the Subsidiary Guarantors.
The Guarantor and each of the Subsidiary Guarantors hereby agrees that in the
event of a default in payment of the principal of, or premium, if any, or
interest on the Securities, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise, legal proceedings may be
instituted by the Trustee on behalf of the Holders or, subject to Section 6.06,
by the Holders, on the terms and conditions set forth in this Indenture,
directly against the Guarantor and such Subsidiary Guarantor to enforce the
Guarantee without first proceeding against the Partnership or any other
Subsidiary Guarantor.
(d) The obligations of the Guarantor and each of the
Subsidiary Guarantors under this Article X shall be as aforesaid full,
unconditional and absolute and shall not be impaired, modified, released or
limited by any occurrence or condition whatsoever, including, without
limitation, (i) any compromise, settlement, release, waiver, renewal, extension,
indulgence or modification of, or any change in, any of the obligations and
liabilities of the Partnership, the Guarantor or any of the Subsidiary
Guarantors contained in the Securities or this
50
Indenture, (ii) any impairment, modification, release or limitation of the
liability of the Partnership, the Guarantor, any of the Subsidiary Guarantors or
any of their estates in bankruptcy, or any remedy for the enforcement thereof,
resulting from the operation of any present or future provision of any
applicable Bankruptcy Law, as amended, or other statute or from the decision of
any court, (iii) the assertion or exercise by the Partnership, the Guarantor,
any of the Subsidiary Guarantors or the Trustee of any rights or remedies under
the Securities or this Indenture or their delay in or failure to assert or
exercise any such rights or remedies, (iv) the assignment or the purported
assignment of any property as security for the Securities, including all or any
part of the rights of the Partnership, the Guarantor or any of the Subsidiary
Guarantors under this Indenture, (v) the extension of the time for payment by
the Partnership, the Guarantor or any of the Subsidiary Guarantors of any
payments or other sums or any part thereof owing or payable under any of the
terms and provisions of the Securities or this Indenture or of the time for
performance by the Partnership, the Guarantor or any of the Subsidiary
Guarantors of any other obligations under or arising out of any such terms and
provisions or the extension or the renewal of any thereof, (vi) the modification
or amendment (whether material or otherwise) of any duty, agreement or
obligation of the Partnership, the Guarantor or any of the Subsidiary Guarantors
set forth in this Indenture, (vii) the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshaling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceeding
affecting, the Partnership, the Guarantor or any of the Subsidiary Guarantors or
any of their respective assets, or the disaffirmance of the Securities, the
Guarantee or this Indenture in any such proceeding, (viii) the release or
discharge of the Partnership, the Guarantor or any of the Subsidiary Guarantors
from the performance or observance of any agreement, covenant, term or condition
contained in any of such instruments by operation of law, (ix) the
unenforceability of the Securities, the Guarantee or this Indenture or (x) any
other circumstances (other than payment in full or discharge of all amounts
guaranteed pursuant to the Guarantee) which might otherwise constitute a legal
or equitable discharge of a surety or guarantor.
(e) The Guarantor and each of the Subsidiary Guarantors
hereby (i) waives diligence, presentment, demand of payment, filing of claims
with a court in the event of the merger, insolvency or bankruptcy of the
Partnership, the Guarantor or any of the Subsidiary Guarantors, and all demands
whatsoever, (ii) acknowledges that any agreement, instrument or document
evidencing the Guarantee may be transferred and that the benefit of its
obligations hereunder shall extend to each holder of any agreement, instrument
or document evidencing the Guarantee without notice to it and (iii) covenants
that the Guarantee will not be discharged except by complete performance of the
Guarantee. The Guarantor and each of the Subsidiary Guarantors further agrees
that if at any time all or any part of any payment theretofore applied by any
Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including without limitation, the insolvency, bankruptcy or
reorganization of the Partnership, the Guarantor or any of the Subsidiary
Guarantors, the Guarantee shall, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence notwithstanding
such application, and the Guarantee shall continue to be effective or be
reinstated, as the case may be, as though such application had not been made.
(f) The Guarantor and each of the Subsidiary Guarantors
shall be subrogated to all rights of the Holders and the Trustee against the
Partnership in respect of any amounts paid
51
by the Guarantor or such Subsidiary Guarantor pursuant to the provisions of this
Indenture, provided, however, that the Guarantor or such Subsidiary Guarantor,
shall not be entitled to enforce or to receive any payments arising out of, or
based upon, such right of subrogation until all of the Securities and the
Guarantee shall have been paid in full or discharged.
SECTION 10.02 Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 10.01,
the Guarantor and each of the Subsidiary Guarantors hereby agrees that a
notation relating to such Guarantee, substantially in the form attached hereto
as Annex A, shall be endorsed on each Security entitled to the benefits of the
Guarantee authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of an Officer of U.S. Propane, L.L.C. The
Guarantor and each of the Subsidiary Guarantors hereby agrees that the Guarantee
set forth in Section 10.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Security a notation relating to the Guarantee. If
any Officer of U.S. Propane, L.L.C., whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, the Guarantee of such Security shall be
valid nevertheless. The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Guarantor and the Subsidiary
Guarantors.
The Trustee hereby accepts the trusts in this Indenture upon
the terms and conditions herein set forth.
SECTION 10.03 Limitation on Liability of the Guarantor and the Subsidiary
Guarantors.
The Guarantor and by its acceptance hereof each Holder of a
Security entitled to the benefits of the Guarantee hereby confirm that it is the
intention of all such parties that the guarantee by the Guarantor pursuant to
its Guarantee not constitute a fraudulent transfer or conveyance for purposes of
any federal or state law. To effectuate the foregoing intention, the Holders of
a Security entitled to the benefits of the Guarantee and the Guarantor and the
Subsidiary Guarantors hereby irrevocably agree that the obligations of the
Guarantor under its Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of the
Guarantor and to any collections from or payments made by or on behalf of any
Subsidiary Guarantor in respect of the obligations of such Subsidiary Guarantor
under its Guarantee, result in the obligations of the Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law.
Each Subsidiary Guarantor and by its acceptance hereof each
Holder of a Security entitled to the benefits of the Guarantee hereby confirm
that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any federal or state law. To effectuate
the foregoing intention, the Holders of a Security entitled to the benefits of
the Guarantee and the Guarantor and the Subsidiary Guarantors hereby irrevocably
agree that the obligations of each Subsidiary Guarantor under its Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and to any
collections from or payments made by or on behalf of the Guarantor or any other
Subsidiary
52
Guarantor in respect of the obligations of the Guarantor or such other
Subsidiary Guarantor under its Guarantee, result in the obligations of such
Subsidiary Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.
SECTION 10.04 Release of Guarantor or Subsidiary Guarantors from Guarantee.
(a) Notwithstanding any other provisions of this
Indenture, the Guarantee of the Guarantor or any Subsidiary Guarantor may be
released upon the terms and subject to the conditions set forth in this Section
10.04. Provided that no Default shall have occurred and shall be continuing
under this Indenture, any Guarantee incurred by the Guarantor or a Subsidiary
Guarantor pursuant to this Article X shall be unconditionally released and
discharged (i) in the case of a Subsidiary Guarantor, automatically upon (A) any
sale, exchange or transfer, whether by way of merger or otherwise, to any Person
that is not an Affiliate of the Partnership, of all of the Partnership's direct
or indirect equity interests in such Subsidiary Guarantor (provided such sale,
exchange or transfer is not prohibited by this Indenture) or (B) the merger of
such Subsidiary Guarantor into the Partnership, the Guarantor or any other
Subsidiary Guarantor or the liquidation and dissolution of such Subsidiary
Guarantor (in each case to the extent not prohibited by this Indenture) or (ii)
in the case of the Guarantor, automatically upon the merger of the Guarantor
into the Partnership or any Subsidiary Guarantor or the liquidation or
dissolution of the Guarantor (in each case to the extent not prohibited by this
Indenture) or (iii) in the case of the Guarantor or a Subsidiary Guarantor,
following delivery of a written notice of such release or discharge by the
Partnership, the Trustee, upon the release or discharge of all guarantees by the
Guarantor or such Subsidiary Guarantor of any Debt of the Partnership other than
obligations arising under this Indenture and any Securities issued hereunder,
except a discharge or release by or as a result of payment under such
guarantees.
(b) The Trustee shall deliver an appropriate instrument
evidencing any release of the Guarantor or a Subsidiary Guarantor from the
Guarantee upon receipt of a written request of the Partnership accompanied by an
Officers' Certificate and an Opinion of Counsel that the Guarantor or the
Subsidiary Guarantor, as the case may be, is entitled to such release in
accordance with the provisions of this Indenture. The Guarantor or any
Subsidiary Guarantor not so released remains liable for the full amount of
principal of (and premium, if any, on) and interest on the Securities entitled
to the benefits of such Guarantee as provided in this Indenture, subject to the
limitations of Section 10.03.
SECTION 10.05 Contribution.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors and the Guarantor, the Subsidiary Guarantors and the
Guarantor hereby agree, inter se, that in the event any payment or distribution
is made by the Guarantor or any Subsidiary Guarantor (a "Funding Guarantor")
under its Guarantee, such Funding Guarantor shall be entitled to a contribution
from the Guarantor and each other Subsidiary Guarantor (as applicable) in a pro
rata amount based on the net assets of the Guarantor and each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Partnership's
obligations with respect to the Securities or any other Subsidiary Guarantor's
or the Guarantor's obligations with respect to its Guarantee.
53
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of TIA Section 318(c), the
imposed duties shall control.
SECTION 11.02 Notices.
Any notice or communication by the Partnership, the Guarantor,
any Subsidiary Guarantor or the Trustee to the others is duly given if in
writing and delivered in person or mailed by first-class mail (registered or
certified, return receipt requested), telex, facsimile or overnight air courier
guaranteeing next day delivery, to the other's address:
If to the Partnership, the Guarantor or the Subsidiary
Guarantors:
Heritage Propane Partners, L.P.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Attn: Michael L. Greenwood
Telephone: (918) 492-7272
Facsimile: (918) 493-7290
If to the Trustee:
Attn:
Telephone:
Facsimile:
The Partnership, the Guarantor, any Subsidiary Guarantor or
the Trustee by notice to the others may designate additional or different
addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if by facsimile; and
the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, postage prepaid, to the Holder's address shown on the register
kept by the Registrar. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
54
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it, except in the case of notice to the Trustee, it is duly given only
when received.
If the Partnership, the Guarantor or a Subsidiary Guarantor
mails a notice or communication to Holders, it shall mail a copy to the others
and to the Trustee and each Agent at the same time.
All notices or communications, including without limitation
notices to the Trustee, the Partnership, the Guarantor or a Subsidiary Guarantor
by Holders, shall be in writing, except as otherwise set forth herein.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
SECTION 11.03 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Partnership, the Guarantor, the Subsidiary Guarantors, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 11.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Partnership, the
Guarantor or a Subsidiary Guarantor to the Trustee to take any action under this
Indenture, the Partnership, the Guarantor or such Subsidiary Guarantor, as the
case may be, shall, if requested by the Trustee, furnish to the Trustee at the
expense of the Partnership, the Guarantor or such Subsidiary Guarantor, as the
case may be:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 11.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been complied with.
SECTION 11.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
55
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(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 such Person, he
or she has made such examination or investigation as is necessary to
enable him or her 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 or not, in the opinion of
such Person, such condition or covenant has been complied with.
SECTION 11.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or the Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 11.07 Legal Holidays.
If a payment date is a Legal Holiday at a Place of Payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 11.08 No Recourse Against Others.
A director, officer, employee, stockholder, partner or other
owner of the Partnership, the Guarantor, a Subsidiary Guarantor or the Trustee,
as such, shall not have any liability for any obligations of the Partnership
under the Securities, for any obligations of the Guarantor or any Subsidiary
Guarantor under the Guarantee, or for any obligations of the Partnership, the
Guarantor, any Subsidiary Guarantor or the Trustee under this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issue of Securities.
SECTION 11.09 Governing Law.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE
EXTENT THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
56
SECTION 11.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Partnership, the Guarantor, any Subsidiary
Guarantor or any Subsidiary. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture.
SECTION 11.11 Successors.
All agreements of the Partnership, the Guarantor and the
Subsidiary Guarantors in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.12 Severability.
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, to the fullest extent
permitted by applicable law, not in any way be affected or impaired thereby.
SECTION 11.13 Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 11.14 Table of Contents, Headings, etc.
The table of contents, cross-reference table and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
57
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
HERITAGE OPERATING, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:____________________________________________
Name:
Title:
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:____________________________________________
Name:
Title:
HERITAGE SERVICE CORP.
By:____________________________________________
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By:____________________________________________
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By:____________________________________________
Name:
Title:
[ ], as Trustee
By:____________________________________________
Name:
Title:
ANNEX A
NOTATION OF GUARANTEE
The Guarantor and each of the Subsidiary Guarantors (which
term includes any successor Person under the Indenture), has fully,
unconditionally and absolutely guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture, the due and punctual
payment of the principal of, and premium, if any, and interest on the Securities
and all other amounts due and payable under the Indenture and the Securities by
the Partnership.
The obligations of the Guarantor and the Subsidiary Guarantors
to the Holders of Securities and to the Trustee pursuant to the Guarantee and
the Indenture are expressly set forth in Article X of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee.
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:____________________________________________
Name:
Title:
HERITAGE SERVICE CORP.
By:____________________________________________
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By:____________________________________________
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By:____________________________________________
Name:
Title:
EXHIBIT 4.12
================================================================================
HERITAGE OPERATING, L.P.
as Issuer
HERITAGE PROPANE PARTNERS, L.P.
as Guarantor
and
HERITAGE SERVICE CORP.
and
HERITAGE-BI STATE, L.L.C.
and
HERITAGE ENERGY RESOURCES, L.L.C.
as Subsidiary Guarantors
and
[ ]
as Trustee
---------------------------------
Indenture
Dated as of _________________, 2003
---------------------------------
Subordinated Debt Securities
================================================================================
HERITAGE OPERATING, L.P.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF _____________, 2003
Section of
Trust Indenture Section(s) of
Act of 1939 Indenture
- --------------- ----------------
Section 310 (a)(1)....................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... Not Applicable
(a)(4)....................................................................... Not Applicable
(a)(5)....................................................................... 7.10
(b).......................................................................... 7.08, 7.10
Section 311 (a).......................................................................... 7.11
(b).......................................................................... 7.11
(c).......................................................................... Not Applicable
Section 312 (a).......................................................................... 2.07
(b).......................................................................... 12.03
(c).......................................................................... 12.03
Section 313 (a).......................................................................... 7.06
(b).......................................................................... 7.06
(c).......................................................................... 7.06
(d).......................................................................... 7.06
Section 314 (a).......................................................................... 4.03, 4.04
(b).......................................................................... Not Applicable
(c)(1)....................................................................... 12.04
(c)(2)....................................................................... 12.04
(c)(3)....................................................................... Not Applicable
(d).......................................................................... Not Applicable
(e).......................................................................... 12.05
Section 315 (a).......................................................................... 7.01(b)
(b).......................................................................... 7.05
(c).......................................................................... 7.01(a)
(d).......................................................................... 7.01(c)
(d)(1)....................................................................... 7.01(c)(1)
(d)(2)....................................................................... 7.01(c)(2)
(d)(3)....................................................................... 7.01(c)(3)
(e).......................................................................... 6.11
Section 316 (a)(1)(A).................................................................... 6.05
(a)(1)(B).................................................................... 6.04
(a)(2)....................................................................... Not Applicable
(a)(last sentence)........................................................... 2.11
(b).......................................................................... 6.07
Section 317 (a)(1)....................................................................... 6.08
(a)(2)....................................................................... 6.09
(b).......................................................................... 2.06
Section 318 (a).......................................................................... 12.01
- ---------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
i
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.............................................. 1
SECTION 1.01 Definitions...................................................................... 1
SECTION 1.02 Other Definitions................................................................ 7
SECTION 1.03 Incorporation by Reference of Trust Indenture Act................................ 7
SECTION 1.04 Rules of Construction............................................................ 7
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of Officers,
Directors, Employees or Partners................................................. 8
ARTICLE II THE SECURITIES ........................................................................ 8
SECTION 2.01 Amount Unlimited; Issuable in Series............................................. 8
SECTION 2.02 Denominations.................................................................... 11
SECTION 2.03 Forms Generally.................................................................. 12
SECTION 2.04 Execution, Authentication, Delivery and Dating................................... 12
SECTION 2.05 Registrar and Paying Agent....................................................... 14
SECTION 2.06 Paying Agent to Hold Money in Trust.............................................. 14
SECTION 2.07 Holder Lists..................................................................... 15
SECTION 2.08 Transfer and Exchange............................................................ 15
SECTION 2.09 Replacement Securities........................................................... 16
SECTION 2.10 Outstanding Securities........................................................... 16
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury Securities.... 16
SECTION 2.12 Temporary Securities............................................................. 17
SECTION 2.13 Cancellation..................................................................... 17
SECTION 2.14 Payments; Defaulted Interest..................................................... 17
SECTION 2.15 Persons Deemed Owners............................................................ 18
SECTION 2.16 Computation of Interest.......................................................... 18
SECTION 2.17 Global Securities; Book-Entry Provisions......................................... 18
ARTICLE III REDEMPTION ........................................................................... 21
SECTION 3.01 Applicability of Article......................................................... 21
SECTION 3.02 Notice to the Trustee............................................................ 21
SECTION 3.03 Selection of Securities To Be Redeemed........................................... 21
SECTION 3.04 Notice of Redemption............................................................. 21
SECTION 3.05 Effect of Notice of Redemption................................................... 22
SECTION 3.06 Deposit of Redemption Price...................................................... 22
SECTION 3.07 Securities Redeemed or Purchased in Part......................................... 23
SECTION 3.08 Purchase of Securities........................................................... 23
SECTION 3.09 Mandatory and Optional Sinking Funds............................................. 23
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities............................ 24
SECTION 3.11 Redemption of Securities for Sinking Fund........................................ 24
ii
ARTICLE IV COVENANTS ............................................................................. 25
SECTION 4.01 Payment of Securities............................................................ 25
SECTION 4.02 Maintenance of Office or Agency.................................................. 25
SECTION 4.03 SEC Reports; Financial Statements................................................ 26
SECTION 4.04 Compliance Certificate........................................................... 26
SECTION 4.05 Existence........................................................................ 27
SECTION 4.06 Waiver of Stay, Extension or Usury Laws.......................................... 27
SECTION 4.07 Additional Amounts............................................................... 27
ARTICLE V SUCCESSORS ............................................................................. 27
SECTION 5.01 Limitations on Mergers and Consolidations........................................ 27
SECTION 5.02 Successor Person Substituted..................................................... 28
ARTICLE VI DEFAULTS AND REMEDIES.................................................................. 29
SECTION 6.01 Events of Default................................................................ 29
SECTION 6.02 Acceleration..................................................................... 31
SECTION 6.03 Other Remedies................................................................... 32
SECTION 6.04 Waiver of Defaults............................................................... 32
SECTION 6.05 Control by Majority.............................................................. 32
SECTION 6.06 Limitations on Suits............................................................. 33
SECTION 6.07 Rights of Holders to Receive Payment............................................. 33
SECTION 6.08 Collection Suit by Trustee....................................................... 34
SECTION 6.09 Trustee May File Proofs of Claim................................................. 34
SECTION 6.10 Priorities....................................................................... 34
SECTION 6.11 Undertaking for Costs............................................................ 35
ARTICLE VII TRUSTEE .............................................................................. 35
SECTION 7.01 Duties of Trustee................................................................ 35
SECTION 7.02 Rights of Trustee................................................................ 36
SECTION 7.03 May Hold Securities.............................................................. 37
SECTION 7.04 Trustee's Disclaimer............................................................. 37
SECTION 7.05 Notice of Defaults............................................................... 38
SECTION 7.06 Reports by Trustee to Holders.................................................... 38
SECTION 7.07 Compensation and Indemnity....................................................... 38
SECTION 7.08 Replacement of Trustee........................................................... 39
SECTION 7.09 Successor Trustee by Merger, etc................................................. 41
SECTION 7.10 Eligibility; Disqualification.................................................... 41
SECTION 7.11 Preferential Collection of Claims Against the Partnership, the Guarantor or
a Subsidiary Guarantor .......................................................... 42
ARTICLE VIII DISCHARGE OF INDENTURE............................................................... 42
SECTION 8.01 Termination of the Partnership's, the Guarantor's and the Subsidiary
Guarantors' Obligations ......................................................... 42
SECTION 8.02 Application of Trust Money....................................................... 46
SECTION 8.03 Repayment to Partnership, Guarantor or Subsidiary Guarantor...................... 46
iii
SECTION 8.04 Reinstatement.................................................................... 46
ARTICLE IX SUPPLEMENTAL INDENTURES AND AMENDMENTS................................................. 47
SECTION 9.01 Without Consent of Holders....................................................... 47
SECTION 9.02 With Consent of Holders.......................................................... 48
SECTION 9.03 Compliance with Trust Indenture Act.............................................. 50
SECTION 9.04 Revocation and Effect of Consents................................................ 50
SECTION 9.05 Notation on or Exchange of Securities............................................ 51
SECTION 9.06 Trustee to Sign Amendments, etc.................................................. 51
ARTICLE X SUBORDINATION OF SECURITIES AND GUARANTEE............................................... 51
SECTION 10.01 Applicability of Article; Agreement To Subordinate............................... 51
SECTION 10.02 Liquidation, Dissolution, Bankruptcy............................................. 52
SECTION 10.03 Default on Senior Indebtedness................................................... 52
SECTION 10.04 Acceleration of Payment of Securities............................................ 53
SECTION 10.05 When Distribution Must Be Paid Over.............................................. 53
SECTION 10.06 Subrogation...................................................................... 54
SECTION 10.07 Relative Rights.................................................................. 54
SECTION 10.08 Subordination May Not Be Impaired by Partnership................................. 54
SECTION 10.09 Rights of Trustee and Paying Agent............................................... 54
SECTION 10.10 Distribution or Notice to Representative......................................... 55
SECTION 10.11 Article X Not to Prevent Defaults or Limit Right to Accelerate................... 55
SECTION 10.12 Trust Moneys Not Subordinated.................................................... 55
SECTION 10.13 Trustee Entitled to Rely......................................................... 55
SECTION 10.14 Trustee to Effectuate Subordination.............................................. 56
SECTION 10.15 Trustee Not Fiduciary for Holders of Senior Indebtedness......................... 56
SECTION 10.16 Reliance by Holders of Senior Indebtedness on Subordination Provisions........... 56
ARTICLE XI GUARANTEE ............................................................................. 56
SECTION 11.01 Unconditional Guarantee.......................................................... 56
SECTION 11.02 Execution and Delivery of Guarantee.............................................. 58
SECTION 11.03 Limitation on Liability of the Guarantor and the Subsidiary Guarantors........... 59
SECTION 11.04 Release of Guarantor or Subsidiary Guarantors from Guarantee..................... 59
SECTION 11.05 Contribution..................................................................... 60
ARTICLE XII MISCELLANEOUS ........................................................................ 60
SECTION 12.01 Trust Indenture Act Controls..................................................... 60
SECTION 12.02 Notices.......................................................................... 60
SECTION 12.03 Communication by Holders with Other Holders...................................... 62
SECTION 12.04 Certificate and Opinion as to Conditions Precedent............................... 62
SECTION 12.05 Statements Required in Certificate or Opinion.................................... 62
SECTION 12.06 Rules by Trustee and Agents...................................................... 63
SECTION 12.07 Legal Holidays................................................................... 63
SECTION 12.08 No Recourse Against Others....................................................... 63
SECTION 12.09 Governing Law.................................................................... 63
iv
SECTION 12.10 No Adverse Interpretation of Other Agreements.................................... 63
SECTION 12.11 Successors....................................................................... 63
SECTION 12.12 Severability..................................................................... 63
SECTION 12.13 Counterpart Originals............................................................ 64
SECTION 12.14 Table of Contents, Headings, etc................................................. 64
v
INDENTURE dated as of _____________, 2003 among Heritage
Operating, L.P., a Delaware limited partnership (the "Partnership"), Heritage
Propane Partners, L.P., a Delaware limited partnership (the "Guarantor"),
Heritage Service Corp., a Delaware corporation, Heritage-Bi State, L.L.C., a
Delaware limited liability company and Heritage Energy Resources, L.L.C., an
Oklahoma limited liability company (collectively, the "Subsidiary Guarantors"),
and [ ], a ___________, as trustee (the "Trustee").
The Partnership, the Guarantor and the Subsidiary Guarantors
have duly authorized the execution and delivery of this Indenture to provide for
the issuance from time to time of the Partnership's debentures, notes, bonds or
other evidences of indebtedness to be issued in one or more series unlimited as
to principal amount (herein called the "Securities"), and the Guarantee by the
Guarantor and each of the Subsidiary Guarantors of the Securities, as in this
Indenture provided.
The Partnership, the Guarantor and the Subsidiary Guarantors
are members of the same consolidated group of companies. The Guarantor and the
Subsidiary Guarantors will derive direct and indirect economic benefit from the
issuance of the Securities. Accordingly, the Guarantor and each Subsidiary
Guarantor has duly authorized the execution and delivery of this Indenture to
provide for its full, unconditional and joint and several guarantee of the
Securities to the extent provided in or pursuant to this Indenture.
All things necessary to make this Indenture a valid agreement
of the Partnership, in accordance with its terms, have been done.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Additional Amounts" means any additional amounts required by
the express terms of a Security or by or pursuant to a Board Resolution, under
circumstances specified therein or pursuant thereto, to be paid by the
Partnership, the Guarantor or any Subsidiary Guarantor, as the case may be, with
respect to certain taxes, assessments or other governmental charges imposed on
certain Holders and that are owing to such Holders.
"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 purposes of this definition,
"control" of a Person shall mean 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" shall have meanings correlative to the foregoing.
"Agent" means any Registrar or Paying Agent.
"Bankruptcy Law" means Title 11 of the United States Code or
any similar federal, state or foreign law for the relief of debtors.
1
"Board of Directors," means the Board of Directors of U.S.
Propane, L.L.C., the general partner of the General Partner or any authorized
committee of the Board of Directors of U.S. Propane, L.L.C. or any directors
and/or officers of U.S. Propane, L.L.C. to whom such Board of Directors or such
committee shall have duly delegated its authority to act hereunder.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the U.S. Propane, L.L.C. to have been
duly adopted by the Board of Directors of U.S. Propane, L.L.C. and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Corporate Trust Office of the Trustee" means the office of
the Trustee located at ________________________________, Attention:
____________________, and as may be located at such other address as the Trustee
may give notice to the Partnership, the Guarantor and the Subsidiary Guarantors.
"Debt" of any Person at any date means any obligation created
or assumed by such Person for the repayment of borrowed money and any guarantee
thereof.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in global form, the Person
specified pursuant to Section 2.01 hereof as the initial Depositary with respect
to the Securities of such series, until a successor shall have been appointed
and become such pursuant to the applicable provision of this Indenture, and
thereafter "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means (i) any Senior
Indebtedness which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $100 million and (ii) any other
Senior Indebtedness designated, as provided in Section 2.01, in respect of any
series of Securities.
"Dollar" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be legal tender
for the payment of public and private debt.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"GAAP" means generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States, as in effect from
time to time.
2
"General Partner" means U.S. Propane, L.P., a Delaware limited
partnership.
"Global Security" means a Security that is issued in global
form in the name of the Depositary with respect thereto or its nominee.
"Government Obligations" means, with respect to a series of
Securities, direct obligations of the government that issues the currency in
which the Securities of the series are payable for the payment of which the full
faith and credit of such government is pledged, or obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of such
government, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by such government.
"Guarantee" shall mean the guarantee of the Partnership's
obligations under the Securities by the Guarantor or a Subsidiary Guarantor as
provided in Article XI.
"Guarantor" means each Person named as the "Guarantor" in the
first paragraph of this instrument, in each case until a successor to such
Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Guarantor" shall mean such successor Person.
"Holder" means a Person in whose name a Security is
registered.
"Indenture" means this Indenture as amended or supplemented
from time to time pursuant to the provisions hereof, and includes the terms of a
particular series of Securities established as contemplated by Section 2.01.
"interest" means, with respect to an Original Issue Discount
Security that by its terms bears interest only after Maturity, interest payable
after Maturity.
"Interest Payment Date," when used with respect to any
Security, shall have the meaning assigned to such term in the Security as
contemplated by Section 2.01.
"Issue Date" means, with respect to Securities of a series,
the date on which the Securities of such series are originally issued under this
Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in any of The City of New York, New York or a Place of
Payment are authorized or obligated by law, regulation or executive order to
remain closed.
"Maturity" means, with respect to any Security, 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
thereof, or by declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, the President, any
Vice Chairman of the Board, any Vice President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of a Person.
3
"Officers' Certificate" means a certificate signed by two
Officers of a Person.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Partnership, the Guarantor, a Subsidiary Guarantor or the
Trustee.
"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 6.02.
"Partnership" means the Person named as the "Partnership" in
the first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Partnership" shall mean such successor Person; provided, however,
that for purposes of any provision contained herein which is required by the
TIA, "Partnership" shall also mean each other obligor (if any), other than the
Guarantor or a Subsidiary Guarantor, on the Securities of a series.
"Partnership Order" and "Partnership Request" mean,
respectively, a written order or request signed in the name of the Partnership,
the Guarantor or each Subsidiary Guarantor by two Officers of U.S. Propane,
L.L.C. and delivered to the Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or other agency, instrumentality or political subdivision thereof or
other entity of any kind.
"Place of Payment" means, with respect to the Securities of
any series, the place or places where the principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of that
series are payable as specified in accordance with Section 2.01 subject to the
provisions of Section 4.02.
"principal" of a Security means the principal of the Security
plus, when appropriate, the premium, if any, on the Security.
"Redemption Date" means, with respect to any Security to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Indebtedness.
"Responsible Officer" means any officer within the corporate
trust department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and
4
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.
"Rule 144A Securities" means Securities of a series designated
pursuant to Section 2.01 as entitled to the benefits of Section 4.03(b).
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the preamble of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Custodian" means, with respect to Securities of a
series issued in global form, the Trustee for Securities of such series, as
custodian with respect to the Securities of such series, or any successor entity
thereto.
"Senior Indebtedness," unless otherwise provided with respect
to the Securities of a series as contemplated by Section 2.01, means (1) all
Debt of the Guarantor, Subsidiary Guarantors or the Partnership, whether
currently outstanding or hereafter issued, unless, by the terms of the
instrument creating or evidencing such Debt, it is provided that such Debt is
not superior in right of payment to the Securities, in the case of the
Partnership, or the Guarantee, in the case of the Guarantor or the Subsidiary
Guarantors, or to other Debt which is pari passu with or subordinated to the
Securities, in the case of the Partnership, or the Guarantee, in the case of the
Guarantor or the Subsidiary Guarantors, and (2) any modifications, refunding,
deferrals, renewals, or extensions of any such Debt or securities, notes or
other evidence of Debt issued in exchange for such Debt; provided that in no
event shall "Senior Indebtedness" include (a) Debt evidenced by the Securities
or any Guarantee, (b) Debt of any of the Guarantor, the Subsidiary Guarantors or
the Partnership owed or owing to any Subsidiary of the Partnership, (c) Debt of
any of the Guarantor or the Subsidiary Guarantors owed or owing to the
Partnership, (d) Debt to trade creditors, (e) any liability for taxes owed or
owing by the Guarantor, the Subsidiary Guarantors or the Partnership or (f) Debt
of the Guarantor or any Subsidiary Guarantor in the event there is no series of
Securities outstanding that is entitled to the benefits of a Guarantee.
"Stated Maturity" means, when used with respect to any
Security or any installment of principal thereof or interest thereon, 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" of any Person means:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of
equity interests entitled, without regard to the
occurrence of any contingency, to vote in the
election of directors, managers, trustees or
equivalent Persons thereof is at the time of
determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof; or
5
(2) in the case of a partnership, more than 50% of the
partners' equity interests, considering all partners'
equity interests as a single class, is at such time
of determination owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of such Person or combination
thereof.
"Subsidiary Guarantors" means the Person or Persons named as
the "Subsidiary Guarantors" in the first paragraph of this instrument until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Subsidiary Guarantors" shall mean
such successor Person or Persons, and any other Subsidiary of the Partnership
who may execute this Indenture, or a supplement thereto, for the purpose of
providing a Guarantee of Securities pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended, as in
effect on the date hereof.
"Trustee" means the Person named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter "Trustee" means 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 means the Trustee with respect
to Securities of that series.
"United States" means the United States of America (including
the States and the District of Columbia) and its territories and possessions,
which include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands.
"U.S. Government Obligations" means Government Obligations
with respect to Securities payable in Dollars.
"U.S. Propane, L.L.C." means U.S. Propane, L.L.C., a Delaware
limited liability company.
6
SECTION 1.02 Other Definitions.
DEFINED
TERM IN SECTION
- ---- ----------
"Bankruptcy Custodian"....................................................................... 6.01
"Conversion Event"........................................................................... 6.01
"covenant defeasance"........................................................................ 8.01
"Event of Default"........................................................................... 6.01
"Exchange Rate".............................................................................. 2.11
"Funding Guarantor".......................................................................... 11.05
"Judgment Currency".......................................................................... 6.10
"legal defeasance"........................................................................... 8.01
"mandatory sinking fund payment"............................................................. 3.09
"optional sinking fund payment".............................................................. 3.09
"Paying Agent"............................................................................... 2.05
"Registrar".................................................................................. 2.05
"Required Currency".......................................................................... 6.10
"Successor".................................................................................. 5.01
"Subordinated Securities".................................................................... 10.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture (and
if the Indenture is not qualified under the TIA at that time, as if it were so
qualified unless otherwise provided). The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Partnership,
the Guarantor, any Subsidiary Guarantor or any other obligor on the Securities.
All terms used in this Indenture that are defined by the TIA,
defined by a TIA reference to another statute or defined by an SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
7
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) all references in this instrument to Articles and
Sections are references to the corresponding Articles
and Sections in and of this instrument.
SECTION 1.05 Non-Recourse to the General Partner; No Personal Liability of
Officers, Directors, Employees or Partners.
Obligations of the Partnership, the Guarantor and a Subsidiary
Guarantor under this Indenture and the Securities hereunder are non-recourse to
the General Partner, and its respective Affiliates (other than the Partnership,
the Guarantor and a Subsidiary Guarantor), and payable only out of cash flow and
assets of the Partnership, the Guarantor and a Subsidiary Guarantor. The
Trustee, and each Holder of a Security by its acceptance thereof, will be deemed
to have agreed in this Indenture that (1) neither the General Partner nor its
assets (nor any of its respective Affiliates other than the Partnership, the
Guarantor and a Subsidiary Guarantor, nor its respective assets) shall be liable
for any of the obligations of the Partnership, the Guarantor and a Subsidiary
Guarantor under this Indenture or such Securities, and (2) no director, officer,
employee, partner or unitholder, as such, of the Partnership, the Guarantor and
a Subsidiary Guarantor, the Trustee, the General Partner or any Affiliate of any
of the foregoing entities shall have any personal liability in respect of the
obligations of the Partnership, the Guarantor and a Subsidiary Guarantor under
this Indenture or such Securities by reason of his, her or its status.
ARTICLE II
THE SECURITIES
SECTION 2.01 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited.
8
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and set forth, or
determined in the manner provided, in an Officers' Certificate of U.S. Propane,
L.L.C. or in a Partnership Order, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from the Securities of
all other series);
(2) if there is to be a limit, the limit upon the
aggregate principal amount of the Securities of the series that 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 2.08, 2.09, 2.12, 2.17, 3.07 or 9.05 and except for any
Securities which, pursuant to Section 2.04 or 2.17, are deemed never to
have been authenticated and delivered hereunder); provided, however,
that unless otherwise provided in the terms of the series, the
authorized aggregate principal amount of such series may be increased
before or after the issuance of any Securities of the series by a Board
Resolution (or action pursuant to a Board Resolution) to such effect;
(3) whether any Securities of the series are to be
issuable initially in temporary global form and whether any Securities
of the series are to be issuable in permanent global form, as Global
Securities or otherwise, and, if so, whether beneficial owners of
interests in any such Global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 2.17, and the
initial Depositary and Security Custodian, if any, for any Global
Security or Securities of such series;
(4) the manner in which any interest payable on a
temporary Global Security on any Interest Payment Date will be paid if
other than in the manner provided in Section 2.14;
(5) the date or dates on which the principal of and
premium (if any) on the Securities of the series is payable or the
method of determination thereof;
(6) the rate or rates, or the method of determination
thereof, at which the Securities of the series shall bear interest, if
any, whether and under what circumstances Additional Amounts with
respect to such Securities shall be payable, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which
such interest shall be payable and the record date for the interest
payable on any Securities on any Interest Payment Date, or if other
than provided herein, the Person to whom any interest on Securities of
the series shall be payable;
(7) the place or places where, subject to the provisions
of Section 4.02, the principal of, premium (if any) and interest on and
any Additional Amounts with respect to the Securities of the series
shall be payable;
9
(8) the period or periods within which, the price or
prices (whether denominated in cash, securities or otherwise) at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Partnership, if the
Partnership is to have that option, and the manner in which the
Partnership must exercise any such option, if different from those set
forth herein;
(9) whether Securities of the series are entitled to the
benefits of any Guarantee of any Subsidiary Guarantor pursuant to this
Indenture;
(10) the obligation, if any, of the Partnership to redeem,
purchase or repay Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices (whether
denominated in cash, securities or otherwise) at which and the terms
and conditions upon which Securities of the series shall be redeemed,
purchased or repaid in whole or in part pursuant to such obligation;
(11) if other than denominations of $1,000 and any
integral multiple thereof, the denomination in which any Securities of
that series shall be issuable;
(12) if other than Dollars, the currency or currencies
(including composite currencies) or the form, including equity
securities, other debt securities (including Securities), warrants or
any other securities or property of the Partnership, the Guarantor, any
Subsidiary Guarantor or any other Person, in which payment of the
principal of, premium (if any) and interest on and any Additional
Amounts with respect to the Securities of the series shall be payable;
(13) if the principal of, premium (if any) or interest on
or any Additional Amounts with respect to the Securities of the series
are to be payable, at the election of the Partnership or a Holder
thereof, in a currency or currencies (including composite currencies)
other than that in which the Securities are stated to be payable, the
currency or currencies (including composite currencies) in which
payment of the principal of, premium (if any) and interest on and any
Additional Amounts with respect to Securities of such series as to
which such election is made shall be payable, and the periods within
which and the terms and conditions upon which such election is to be
made;
(14) if the amount of payments of principal of, premium
(if any) and interest on and any Additional Amounts with respect to the
Securities of the series may be determined with reference to any
commodities, currencies or indices, values, rates or prices or any
other index or formula, the manner in which such amounts shall be
determined;
(15) if other than the entire principal amount thereof,
the portion of the principal amount of Securities of the series that
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 6.02;
(16) any additional means of satisfaction and discharge of
this Indenture and any additional conditions or limitations to
discharge with respect to Securities of the
10
series and the related Guarantees pursuant to Article VIII or any
modifications of or deletions from such conditions or limitations;
(17) any deletions or modifications of or additions to the
Events of Default set forth in Section 6.01 or covenants of the
Partnership, the Guarantor or any Subsidiary Guarantor set forth in
Article IV pertaining to the Securities of the series;
(18) any restrictions or other provisions with respect to
the transfer or exchange of Securities of the series, which may amend,
supplement, modify or supersede those contained in this Article II;
(19) if the Securities of the series are to be convertible
into or exchangeable for capital stock, other debt securities
(including Securities), warrants, other equity securities or any other
securities or property of the Partnership, the Guarantor, any
Subsidiary Guarantor or any other Person, at the option of the
Partnership or the Holder or upon the occurrence of any condition or
event, the terms and conditions for such conversion or exchange;
(20) the subordination, if any, of the Securities of the
series pursuant to Article X and any changes or additions to Article X
or designation of any Designated Senior Indebtedness;
(21) whether the Securities of the series are to be
entitled to the benefit of Section 4.03(b) (and accordingly constitute
Rule 144A Securities); and
(22) any other terms of the series (which terms shall not
be prohibited by the provisions of this Indenture).
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
2.03) set forth, or determined in the manner provided, in the Officers'
Certificate or Partnership Order 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, together with such Board Resolution, shall be set forth in an Officers'
Certificate or certified by the Secretary or an Assistant Secretary of U.S.
Propane, L.L.C. and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate or Partnership Order setting forth the terms of the
series.
SECTION 2.02 Denominations.
The Securities of each series shall be issuable in such
denominations as shall be specified as contemplated by Section 2.01. In the
absence of any such provisions with respect to the Securities of any series, the
Securities of such series denominated in Dollars shall be issuable in
denominations of $1,000 and any integral multiples thereof.
11
SECTION 2.03 Forms Generally.
The Securities of each series shall be in fully registered
form and in substantially such form or forms (including temporary or permanent
global form) established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto. The Securities may have notations, legends or
endorsements required by law, securities exchange rule, the Partnership's
certificate of limited partnership, agreement of limited partnership or other
similar governing documents, agreements to which the Partnership is subject, if
any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Partnership). A copy of the Board Resolution establishing
the form or forms of Securities of any series shall be delivered to the Trustee
at or prior to the delivery of the Partnership Order contemplated by Section
2.04 for the authentication and delivery of such Securities.
The definitive Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the Officers executing such Securities, as
evidenced by their execution thereof.
The Trustee's certificate 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 Signatory".
SECTION 2.04 Execution, Authentication, Delivery and Dating.
Two Officers of U.S. Propane, L.L.C. shall sign the Securities
on behalf of the Partnership and, with respect to the Guarantees of the
Securities, two Officers of U.S. Propane, L.L.C. shall sign the Securities on
behalf of the Guarantor or such Subsidiary Guarantor, in each case by manual or
facsimile signature.
If an Officer of U.S. Propane, L.L.C. whose signature is on a
Security no longer holds that office at the time the Security is authenticated,
the Security shall be valid nevertheless.
A Security shall not be entitled to any benefit under this
Indenture or the related Guarantees or be valid or obligatory for any purpose
until authenticated by the manual signature of an authorized signatory of the
Trustee, which signature shall be conclusive evidence that the Security has been
authenticated under this Indenture. Notwithstanding the foregoing, if any
Security has been authenticated and delivered hereunder but never issued and
sold by the Partnership, and the Partnership delivers such Security to the
Trustee for cancellation as provided in Section 2.13, together with a written
statement (which need not comply with Section 12.05 and need not be accompanied
by an Opinion of Counsel) stating that such Security has never been issued and
sold by the Partnership, for all purposes of this Indenture such Security shall
be
12
deemed never to have been authenticated and delivered hereunder and shall never
be entitled to the benefits of this Indenture or the related Guarantees.
At any time and from time to time after the execution and
delivery of this Indenture, the Partnership may deliver Securities of any series
executed by the Partnership, the Guarantor and each Subsidiary Guarantor to the
Trustee for authentication, and the Trustee shall authenticate and deliver such
Securities for original issue upon a Partnership Order for the authentication
and delivery of such Securities or pursuant to such procedures acceptable to the
Trustee as may be specified from time to time by Partnership Order. Such order
shall specify the amount of the Securities to be authenticated, the date on
which the original issue of Securities is to be authenticated, the name or names
of the initial Holder or Holders and any other terms of the Securities of such
series not otherwise determined. If provided for in such procedures, such
Partnership Order may authorize (1) authentication and delivery of Securities of
such series for original issue from time to time, with certain terms (including,
without limitation, the Maturity dates or dates, original issue date or dates
and interest rate or rates) that differ from Security to Security and (2) may
authorize authentication and delivery pursuant to oral or electronic
instructions from the Partnership or its duly authorized agent, which
instructions shall be promptly confirmed in writing.
If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Section 2.01, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive (in addition to the Partnership Order
referred to above and the other documents required by Section 12.04), and
(subject to Section 7.01) shall be fully protected in relying upon:
(a) an Officers' Certificate setting forth the Board
Resolution and, if applicable, an appropriate record of any action
taken pursuant thereto, as contemplated by the last paragraph of
Section 2.01; and
(b) an Opinion of Counsel to the effect that:
(i) the form of such Securities has been
established in conformity with the provisions of this
Indenture;
(ii) the terms of such Securities have been
established in conformity with the provisions of this
Indenture; and
(iii) that, when authenticated and delivered by
the Trustee and issued by the Partnership in the manner and
subject to any conditions specified in such Opinion of
Counsel, such Securities and the related Guarantees will
constitute valid and binding obligations of the Partnership,
the Guarantor and the Subsidiary Guarantors, respectively,
enforceable against the Partnership, the Guarantor and the
Subsidiary Guarantors, respectively, in accordance with their
respective terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws in
effect from time to time affecting the rights of creditors
generally, and the
13
application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
If all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Officers' Certificate and
Opinion of Counsel at the time of issuance of each such Security, but such
Officers' Certificate and Opinion of Counsel shall be delivered at or before the
time of issuance of the first Security of the series to be issued.
The Trustee shall not be required to authenticate such
Securities if the issuance of such Securities pursuant to this Indenture would
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner not reasonably acceptable to the
Trustee.
The Trustee may appoint an authenticating agent acceptable to
the Partnership to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Partnership, the Guarantor, any
Subsidiary Guarantor or an Affiliate of the Partnership, the Guarantor or any
Subsidiary Guarantor.
Each Security shall be dated the date of its authentication.
SECTION 2.05 Registrar and Paying Agent.
The Partnership shall maintain an office or agency for each
series of Securities where Securities of such series may be presented for
registration of transfer or exchange ("Registrar") and an office or agency where
Securities of such series may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Securities of such series and of their
transfer and exchange. The Partnership may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Partnership shall enter into an appropriate agency
agreement with any Registrar or Paying Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Partnership shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. The Partnership may change any Paying Agent
or Registrar without notice to any Holder. If the Partnership fails to appoint
or maintain another entity as Registrar or Paying Agent, the Trustee shall act
as such. The Partnership, the Guarantor, any Subsidiary Guarantor or any
Subsidiary may act as Paying Agent or Registrar.
The Partnership initially appoints the Trustee as Registrar
and Paying Agent.
SECTION 2.06 Paying Agent to Hold Money in Trust.
The Partnership shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest on
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or any Additional Amounts with respect to Securities and will notify the Trustee
of any default by the Partnership in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed. The Partnership at
any time may require a Paying Agent to pay all money held by it to the Trustee
and to account for any funds disbursed. Upon payment over to the Trustee and
upon accounting for any funds disbursed, the Paying Agent (if other than the
Partnership, the Guarantor, a Subsidiary Guarantor or a Subsidiary) shall have
no further liability for the money. If the Partnership, the Guarantor, a
Subsidiary Guarantor or a Subsidiary acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent. Each Paying Agent shall otherwise comply with TIA
Section 317(b).
SECTION 2.07 Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar with respect to a series of Securities, the
Partnership shall furnish to the Trustee at least five Business Days before each
Interest Payment Date with respect to such series of Securities, and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Holders of such series, and the Partnership shall otherwise comply with TIA
Section 312(a).
SECTION 2.08 Transfer and Exchange.
Except as set forth in Section 2.17 or as may be provided
pursuant to Section 2.01:
When Securities of any series are presented to the Registrar
with the request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of the same series of
like tenor and of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements and the
requirements of this Indenture for such transactions are met; provided, however,
that the Securities presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form reasonably satisfactory to the Registrar duly executed by the
Holder thereof or by his attorney, duly authorized in writing, on which
instruction the Registrar can rely.
To permit registrations of transfers and exchanges, the
Partnership, the Guarantor and the Subsidiary Guarantors shall execute and the
Trustee shall authenticate Securities at the Registrar's written request and
submission of the Securities or Global Securities. No service charge shall be
made to a Holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Partnership may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than such transfer tax or similar
governmental charge payable upon exchanges pursuant to Section 2.12, 3.07 or
9.05). The Trustee shall authenticate Securities in accordance with the
provisions of Section 2.04. Notwithstanding any other provisions of this
Indenture to the contrary, the Partnership shall not be required to register the
transfer or exchange of (a) any Security selected
15
for redemption in whole or in part pursuant to Article III, except the
unredeemed portion of any Security being redeemed in part, or (b) any Security
during the period beginning 15 Business Days prior to the mailing of notice of
any offer to repurchase Securities of the series required pursuant to the terms
thereof or of redemption of Securities of a series to be redeemed and ending at
the close of business on the day of mailing.
SECTION 2.09 Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or if
the Holder of a Security claims that the Security has been destroyed, lost or
stolen and the Partnership and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of such Security, the Partnership
shall issue, the Guarantor and the Subsidiary Guarantors shall execute and the
Trustee shall authenticate a replacement Security of the same series if the
Trustee's requirements are met. If any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Partnership in
its discretion may, instead of issuing a new Security, pay such Security. If
required by the Trustee, the Guarantor, any Subsidiary Guarantor or the
Partnership, such Holder must furnish an indemnity bond that is sufficient in
the judgment of the Trustee and the Partnership to protect the Partnership, the
Guarantor, each Subsidiary Guarantor, the Trustee, any Agent or any
authenticating agent from any loss that any of them may suffer if a Security is
replaced. The Partnership and the Trustee may charge a Holder for their expenses
in replacing a Security.
Every replacement Security is an additional obligation of the
Partnership.
SECTION 2.10 Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Security
effected by the Trustee hereunder and those described in this Section 2.10 as
not outstanding.
If a Security is replaced pursuant to Section 2.09, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid
under Section 4.01, it ceases to be outstanding and interest on it ceases to
accrue.
A Security does not cease to be outstanding because the
Partnership, the Guarantor, a Subsidiary Guarantor or an Affiliate of the
Partnership, the Guarantor or a Subsidiary Guarantor holds the Security.
SECTION 2.11 Original Issue Discount, Foreign-Currency Denominated and Treasury
Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, (a) the principal amount of an Original Issue Discount
Security shall be the principal amount thereof that would
16
be due and payable as of the date of such determination upon acceleration of the
Maturity thereof pursuant to Section 6.02, (b) the principal amount of a
Security denominated in a foreign currency shall be the Dollar equivalent, as
determined by the Partnership by reference to the noon buying rate in The City
of New York for cable transfers for such currency, as such rate is certified for
customs purposes by the Federal Reserve Bank of New York (the "Exchange Rate")
on the date of original issuance of such Security, of the principal amount (or,
in the case of an Original Issue Discount Security, the Dollar equivalent, as
determined by the Partnership by reference to the Exchange Rate on the date of
original issuance of such Security, of the amount determined as provided in (a)
above), of such Security and (c) Securities owned by the Partnership, the
Guarantor, a Subsidiary Guarantor or any other obligor upon the Securities or
any Affiliate of the Partnership, of the Guarantor, of a Subsidiary Guarantor or
of such other obligor shall be disregarded, except that, for the purpose of
determining whether the Trustee shall be protected in relying upon any such
direction, amendment, supplement, waiver or consent, only Securities that a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded.
SECTION 2.12 Temporary Securities.
Until definitive Securities of any series are ready for
delivery, the Partnership may prepare, the Guarantor and the Subsidiary
Guarantors shall execute and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities, but may have variations that the Partnership considers
appropriate for temporary Securities. Without unreasonable delay, the
Partnership shall prepare, the Guarantor and the Subsidiary Guarantors shall
execute and the Trustee shall authenticate definitive Securities in exchange for
temporary Securities. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 2.13 Cancellation.
The Partnership, the Guarantor or any Subsidiary Guarantor at
any time may deliver Securities to the Trustee for cancellation. The Registrar
and the Paying Agent shall forward to the Trustee any Securities surrendered to
them for registration of transfer, exchange, payment or redemption or for credit
against any sinking fund payment. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, redemption,
replacement or cancellation or for credit against any sinking fund. Unless the
Partnership shall direct in writing that canceled Securities be returned to it,
after written notice to the Partnership all canceled Securities held by the
Trustee shall be disposed of in accordance with the usual disposal procedures of
the Trustee, and the Trustee shall maintain a record of their disposal. The
Partnership may not issue new Securities to replace Securities that have been
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.14 Payments; Defaulted Interest.
Unless otherwise provided as contemplated by Section 2.01,
interest (except defaulted interest) on any Security that is payable, and is
punctually paid or duly provided for, on
17
any Interest Payment Date shall be paid to the Persons who are registered
Holders of that Security at the close of business on the record date next
preceding such Interest Payment Date, even if such Securities are canceled after
such record date and on or before such Interest Payment Date. The Holder must
surrender a Security to a Paying Agent to collect principal payments. Unless
otherwise provided with respect to the Securities of any series, the Partnership
will pay the principal of, premium (if any) and interest on and any Additional
Amounts with respect to the Securities in Dollars. Such amounts shall be payable
at the offices of the Trustee or any Paying Agent, provided that at the option
of the Partnership, the Partnership may pay such amounts (1) by wire transfer
with respect to Global Securities or (2) by check payable in such money mailed
to a Holder's registered address with respect to any Securities.
If the Partnership defaults in a payment of interest on the
Securities of any series, the Partnership shall pay the defaulted interest in
any lawful manner plus, to the extent lawful, interest on the defaulted
interest, in each case at the rate provided in the Securities of such series and
in Section 4.01. The Partnership may pay the defaulted interest to the Persons
who are Holders on a subsequent special record date. At least 15 days before any
special record date selected by the Partnership, the Partnership (or the
Trustee, in the name of and at the expense of the Partnership upon 20 days'
prior written notice from the Partnership setting forth such special record date
and the interest amount to be paid) shall mail to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.15 Persons Deemed Owners.
The Partnership, the Guarantor, the Subsidiary Guarantors, the
Trustee, any Agent and any authenticating agent may treat the Person in whose
name any Security is registered as the owner of such Security for the purpose of
receiving payments of principal of, premium (if any) or interest on or any
Additional Amounts with respect to such Security and for all other purposes.
None of the Partnership, the Guarantor, any Subsidiary Guarantor, the Trustee,
any Agent or any authenticating agent shall be affected by any notice to the
contrary.
SECTION 2.16 Computation of Interest.
Except as otherwise specified as contemplated by Section 2.01
for Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year comprising twelve 30-day months.
SECTION 2.17 Global Securities; Book-Entry Provisions.
If Securities of a series are issuable in global form as a
Global Security, as contemplated by Section 2.01, then, notwithstanding clause
(11) of Section 2.01 and the provisions of Section 2.02, any such Global
Security shall represent such of the outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges, transfers or
redemptions. Any endorsement of a Global Security to reflect the amount, or any
increase or decrease in the amount, of outstanding Securities represented
thereby shall be made by the Trustee (i) in such
18
manner and upon instructions given by such Person or Persons as shall be
specified in such Security or in a Partnership Order to be delivered to the
Trustee pursuant to Section 2.04 or (ii) otherwise in accordance with written
instructions or such other written form of instructions as is customary for the
Depositary for such Security, from such Depositary or its nominee on behalf of
any Person having a beneficial interest in such Global Security. Subject to the
provisions of Section 2.04 and, if applicable, Section 2.12, the Trustee shall
deliver and redeliver any Security in permanent global form in the manner and
upon instructions given by the Person or Persons specified in such Security or
in the applicable Partnership Order. With respect to the Securities of any
series that are represented by a Global Security, the Partnership and the
Guarantor and the Subsidiary Guarantors authorize the execution and delivery by
the Trustee of a letter of representations or other similar agreement or
instrument in the form customarily provided for by the Depositary appointed with
respect to such Global Security. Any Global Security may be deposited with the
Depositary or its nominee, or may remain in the custody of the Trustee or the
Security Custodian therefor pursuant to a FAST Balance Certificate Agreement or
similar agreement between the Trustee and the Depositary. If a Partnership Order
has been, or simultaneously is, delivered, any instructions by the Partnership
with respect to endorsement or delivery or redelivery of a Security in global
form shall be in writing but need not comply with Section 12.05 and need not be
accompanied by an Opinion of Counsel.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee or the Security
Custodian as its custodian, or under such Global Security, and the Depositary
may be treated by the Partnership, the Guarantor, any Subsidiary Guarantor, the
Trustee or the Security Custodian and any agent of the Partnership, the
Guarantor, any Subsidiary Guarantor, the Trustee or the Security Custodian as
the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, (i) the registered holder of a Global Security of
a series may grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any
action that a Holder of Securities of such series is entitled to take under this
Indenture or the Securities of such series and (ii) nothing herein shall prevent
the Partnership, the Guarantor, any Subsidiary Guarantor, the Trustee or the
Security Custodian, or any agent of the Partnership, the Guarantor, any
Subsidiary Guarantor, the Trustee or the Security Custodian, from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or shall impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
beneficial owner of any Security.
Notwithstanding Section 2.08, and except as otherwise provided
pursuant to Section 2.01: Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the Depositary,
its successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary. Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Security if, and only if,
either (1) the Depositary notifies the Partnership that it is unwilling or
unable to continue as Depositary for the Global Security and a successor
Depositary is not appointed by the Partnership within 90 days of such notice,
(2) an Event of Default has occurred with respect to such series and is
continuing and the Registrar has received a request from the Depositary to issue
Securities in lieu of all or a portion of the Global Security (in which case the
Partnership shall deliver Securities within 30 days of such
19
request) or (3) the Partnership determines not to have the Securities
represented by a Global Security.
In connection with any transfer of a portion of the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of the Global Security in an amount equal to
the principal amount of the beneficial interests in the Global Security to be
transferred, and the Partnership, the Guarantor and the Subsidiary Guarantors
shall execute, and the Trustee upon receipt of a Partnership Order for the
authentication and delivery of Securities shall authenticate and deliver, one or
more Securities of the same series of like tenor and amount.
In connection with the transfer of all the beneficial
interests in a Global Security to beneficial owners pursuant to this Section
2.17, the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Partnership, the Guarantor and the Subsidiary Guarantors
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interests in the Global Security, an equal aggregate principal amount of
Securities of authorized denominations.
Neither the Partnership, the Guarantor, any Subsidiary
Guarantor nor the Trustee will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, Securities by
the Depositary, or for maintaining, supervising or reviewing any records of the
Depositary relating to such Securities. Neither the Partnership, the Guarantor,
any Subsidiary Guarantor nor the Trustee shall be liable for any delay by the
related Global Security Holder or the Depositary in identifying the beneficial
owners, and each such Person may conclusively rely on, and shall be protected in
relying on, instructions from such Global Security Holder or the Depositary for
all purposes (including with respect to the registration and delivery, and the
respective principal amounts, of the Securities to be issued).
The provisions of the last sentence of the third paragraph of
Section 2.04 shall apply to any Global Security if such Global Security was
never issued and sold by the Partnership and the Partnership, the Guarantor or a
Subsidiary Guarantor delivers to the Trustee the Global Security together with
written instructions (which need not comply with Section 12.05 and need not be
accompanied by an Opinion of Counsel) with regard to the cancellation or
reduction in the principal amount of Securities represented thereby, together
with the written statement contemplated by the last sentence of the third
paragraph of Section 2.04.
Notwithstanding the provisions of Sections 2.03 and 2.14,
unless otherwise specified as contemplated by Section 2.01, payment of principal
of, premium (if any) and interest on and any Additional Amounts with respect to
any Global Security shall be made to the Person or Persons specified therein.
20
ARTICLE III
REDEMPTION
SECTION 3.01 Applicability of Article.
Securities of any series that are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 2.01 for Securities of any
series) in accordance with this Article III.
SECTION 3.02 Notice to the Trustee.
If the Partnership elects to redeem Securities of any series
pursuant to this Indenture, it shall notify the Trustee of the Redemption Date
and the principal amount of Securities of such series to be redeemed. The
Partnership shall so notify the Trustee at least 45 days before the Redemption
Date (unless a shorter notice shall be satisfactory to the Trustee) by
delivering to the Trustee an Officers' Certificate stating that such redemption
will comply with the provisions of this Indenture and of the Securities of such
series. Any such notice may be canceled at any time prior to the mailing of such
notice of such redemption to any Holder and shall thereupon be void and of no
effect.
SECTION 3.03 Selection of Securities To Be Redeemed.
If less than all the Securities of any series are to be
redeemed (unless all of the Securities of such series of a specified tenor are
to be redeemed), 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 tenor) not previously called for
redemption, either pro rata, by lot or by such other method as the Trustee shall
deem fair and appropriate and that may provide for the selection for redemption
of portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series or of the principal amount of Global Securities of
such series.
The Trustee shall promptly notify the Partnership and the
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any of the Securities redeemed or to be redeemed only in part, to
the portion of the principal amount thereof which has been or is to be redeemed.
SECTION 3.04 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
21
Securities to be redeemed, at the address of such Holder appearing in the
register of Securities maintained by the Registrar.
All notices of redemption shall identify the Securities to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) that, unless the Partnership, the Guarantor and the
Subsidiary Guarantors default in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders
of such Securities is to receive payment of the Redemption Price upon
surrender to the Paying Agent of the Securities redeemed;
(4) if any Security is to be redeemed in part, the
portion of the principal amount thereof to be redeemed and that on and
after the Redemption Date, upon surrender for cancellation of such
Security to the Paying Agent, a new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will
be issued without charge to the Holder;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price and the
name and address of the Paying Agent;
(6) that the redemption is for a sinking or analogous
fund, if such is the case; and
(7) the CUSIP number, if any, relating to such
Securities.
Notice of redemption of Securities to be redeemed at the
election of the Partnership shall be given by the Partnership or, at the
Partnership's written request, by the Trustee in the name and at the expense of
the Partnership.
SECTION 3.05 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, but interest installments whose maturity
is on or prior to such Redemption Date will be payable on the relevant Interest
Payment Dates to the Holders of record at the close of business on the relevant
record dates specified pursuant to Section 2.01.
SECTION 3.06 Deposit of Redemption Price.
On or prior to 11:00 a.m., New York City time, on any
Redemption Date, the Partnership, the Guarantor or a Subsidiary Guarantor shall
deposit with the Trustee or the Paying Agent (or, if the Partnership, the
Guarantor or such Subsidiary Guarantor is acting as the Paying
22
Agent, segregate and hold in trust as provided in Section 2.06) an amount of
money in same day funds sufficient to pay the Redemption Price of, and (except
if the Redemption Date shall be an Interest Payment Date) accrued interest on
and any Additional Amounts with respect to, the Securities or portions thereof
which are to be redeemed on that date, other than Securities or portions thereof
called for redemption on that date which have been delivered by the Partnership,
the Guarantor or a Subsidiary Guarantor to the Trustee for cancellation.
If the Partnership, the Guarantor or a Subsidiary Guarantor
complies with the preceding paragraph, then, unless the Partnership, the
Guarantor and the Subsidiary Guarantors default in the payment of such
Redemption Price, interest on the Securities to be redeemed will cease to accrue
on and after the applicable Redemption Date, whether or not such Securities are
presented for payment, and the Holders of such Securities shall have no further
rights with respect to such Securities except for the right to receive the
Redemption Price upon surrender of such Securities. If any Security called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal, premium, if any, any Additional Amounts, and, to the extent lawful,
accrued interest thereon shall, until paid, bear interest from the Redemption
Date at the rate specified pursuant to Section 2.01 or provided in the
Securities or, in the case of Original Issue Discount Securities, such
Securities' yield to maturity.
SECTION 3.07 Securities Redeemed or Purchased in Part.
Upon surrender to the Paying Agent of a Security to be
redeemed in part, the Partnership, the Guarantor and the Subsidiary Guarantors
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 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 that is not redeemed.
SECTION 3.08 Purchase of Securities.
Unless otherwise specified as contemplated by Section 2.01,
the Partnership, the Guarantor, any Subsidiary Guarantor and any Affiliate of
the Partnership, the Guarantor or any Subsidiary Guarantor may, subject to
applicable law, at any time purchase or otherwise acquire Securities in the open
market or by private agreement. Any such acquisition shall not operate as or be
deemed for any purpose to be a redemption of the indebtedness represented by
such Securities. Any Securities purchased or acquired by the Partnership, the
Guarantor or a Subsidiary Guarantor may be delivered to the Trustee and, upon
such delivery, the indebtedness represented thereby shall be deemed to be
satisfied. Section 2.13 shall apply to all Securities so delivered.
SECTION 3.09 Mandatory and Optional Sinking Funds.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment." Unless otherwise provided by the terms of
Securities of any series, the cash amount of any sinking fund payment may be
subject to
23
reduction as provided in Section 3.10. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series and by this Article III.
SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities.
The Partnership, the Guarantor or a Subsidiary Guarantor may
deliver outstanding Securities of a series (other than any previously called for
redemption) and may apply as a credit Securities of a series that have been
redeemed either at the election of the Partnership pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, in each case in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of
such series required to be made pursuant to the terms of such series of
Securities; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
SECTION 3.11 Redemption of Securities for Sinking Fund.
Not less than 45 days prior (unless a shorter period shall be
satisfactory to the Trustee) to each sinking fund payment date for any series of
Securities, the Partnership will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, 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 delivery of or by crediting Securities of that series pursuant to
Section 3.10 and will also deliver or cause to be delivered to the Trustee any
Securities to be so delivered. Failure of the Partnership to timely deliver or
cause to be delivered such Officers' Certificate and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute the
election of the Partnership (i) that the mandatory sinking fund payment for such
series due on the next succeeding sinking fund payment date shall be paid
entirely in cash without the option to deliver or credit Securities of such
series in respect thereof and (ii) that the Partnership will make no optional
sinking fund payment with respect to such series as provided in this Section
3.11.
If the sinking fund payment or payments (mandatory or optional
or both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $100,000 (or the Dollar equivalent thereof based on the applicable
Exchange Rate on the date of original issue of the applicable Securities) or a
lesser sum if the Partnership shall so request with respect to the Securities of
any particular series, such cash shall be applied on the next succeeding sinking
fund payment date to the redemption of Securities of such series at the sinking
fund redemption price together with accrued interest to the date fixed for
redemption. If such amount shall be $100,000 (or the Dollar equivalent thereof
as aforesaid) or less and the Partnership makes no such request then it shall be
carried over until a sum in excess of $100,000 (or the Dollar equivalent thereof
as aforesaid) is available. Not less than 30 days before each such sinking fund
payment date, the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.03 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Partnership in the manner provided in Section 3.04. Such
24
notice having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 3.05, 3.06 and 3.07.
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Securities.
The Partnership shall pay the principal of, premium (if any)
and interest on and any Additional Amounts with respect to the Securities of
each series on the dates and in the manner provided in the Securities of such
series and in this Indenture. Principal, premium, interest and any Additional
Amounts shall be considered paid on the date due if the Paying Agent (other than
the Partnership, the Guarantor, a Subsidiary Guarantor or a Subsidiary) holds on
that date money deposited by the Partnership, the Guarantor or a Subsidiary
Guarantor designated for and sufficient to pay all principal, premium, interest
and any Additional Amounts then due.
The Partnership shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium (if any), at a rate equal to the then applicable interest rate on the
Securities to the extent lawful; and it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and any Additional Amount (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02 Maintenance of Office or Agency.
The Partnership will maintain in each Place of Payment for any
series of Securities an office or agency (which may be an office of the Trustee,
the Registrar or the Paying Agent) where Securities of that series may be
presented for registration of transfer or exchange, where Securities of that
series may be presented for payment and where notices and demands to or upon the
Partnership, the Guarantor or a Subsidiary Guarantor in respect of the
Securities of that series and this Indenture may be served. Unless otherwise
designated by the Partnership by written notice to the Trustee, the Guarantor
and the Subsidiary Guarantors, such office or agency shall be the office of the
Trustee in The City of New York, which on the date hereof is located at
______________________________. The Partnership will give prompt written notice
to the Trustee, the Guarantor and the Subsidiary Guarantors of the location, and
any change in the location, of such office or agency. If at any time the
Partnership shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee, the Guarantor and the Subsidiary Guarantors with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee.
The Partnership may also from time to time designate one or
more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Partnership of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such
25
purposes. The Partnership will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 4.03 SEC Reports; Financial Statements.
(a) If the Partnership, the Guarantor or a Subsidiary
Guarantor is subject to the requirements of Section 13 or 15(d) of the Exchange
Act, the Partnership, the Guarantor or such Subsidiary Guarantor, as the case
may be, shall file with the Trustee, within 15 days after it files the same with
the SEC, copies of the annual reports and the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) that the Partnership, the Guarantor or such
Subsidiary Guarantor is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act. If this Indenture is qualified under the TIA, but not
otherwise, the Partnership, the Guarantor and the Subsidiary Guarantors shall
also comply with the provisions of TIA Section 314(a). Delivery of such
reports, information and documents to the Trustee shall be for informational
purposes only, and the Trustee's receipt thereof shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Partnership's compliance with any
of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates or certificates delivered pursuant to
Section 4.04).
(b) If neither the Partnership, the Guarantor nor any
Subsidiary Guarantor is subject to the requirements of Section 13 or 15(d) of
the Exchange Act, the Partnership, the Guarantor and the Subsidiary Guarantors
shall furnish to all Holders of Rule 144A Securities and prospective purchasers
of Rule 144A Securities designated by the Holders of Rule 144A Securities,
promptly upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) promulgated under the Securities Act of 1933, as amended.
SECTION 4.04 Compliance Certificate.
(a) Each of the Partnership, the Guarantor and the
Subsidiary Guarantors shall deliver to the Trustee, within 120 days after the
end of each fiscal year, a statement signed by an Officer of U.S. Propane,
L.L.C., which need not constitute an Officers' Certificate, complying with TIA
Section 314(a)(4) and stating that in the course of performance by the signing
Officer of his duties as such Officer of U.S. Propane, L.L.C., he would normally
obtain knowledge of the keeping, observing, performing and fulfilling by the
Partnership, the Guarantor or such Subsidiary Guarantor, as the case may be, of
its obligations under this Indenture, and further stating that to the best of
his knowledge the Partnership, the Guarantor or such Subsidiary Guarantor, as
the case may be, has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which such Officer may have knowledge and what action the
Partnership, the Guarantor or such Subsidiary Guarantor, as the case may be, is
taking or proposes to take with respect thereto).
(b) The Partnership, the Guarantor or any Subsidiary
Guarantor shall, so long as Securities of any series are outstanding, deliver to
the Trustee, forthwith upon any Officer of U.S. Propane, L.L.C., becoming aware
of any Default or Event of Default under this Indenture,
26
an Officers' Certificate specifying such Default or Event of Default and what
action the Partnership, the Guarantor or such Subsidiary Guarantor, as the case
may be, is taking or proposes to take with respect thereto.
SECTION 4.05 Existence.
Subject to Article V, each of the Partnership, the Guarantor
and the Subsidiary Guarantors shall do or cause to be done all things necessary
to preserve and keep in full force and effect its existence.
SECTION 4.06 Waiver of Stay, Extension or Usury Laws.
Each of the Partnership, the Guarantor and the Subsidiary
Guarantors 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 stay or extension law or any usury law or other law
that would prohibit or forgive it from paying all or any portion of the
principal of or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each of the Partnership, the Guarantor and the Subsidiary
Guarantors 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.
SECTION 4.07 Additional Amounts.
If the Securities of a series expressly provide for the
payment of Additional Amounts, the Partnership will pay to the Holder of any
Security of such series Additional Amounts as expressly provided therein.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of or any premium or interest on, or in respect of, any Security
of any series or the net proceeds received from the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this Section 4.07 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to the provisions of this Section 4.07 and express
mention of the payment of Additional Amounts (if applicable) in any provisions
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
ARTICLE V
SUCCESSORS
SECTION 5.01 Limitations on Mergers and Consolidations.
Neither the Partnership, the Guarantor nor any Subsidiary
Guarantor shall, in any transaction or series of transactions, consolidate with
or merge into any Person, or sell, lease, convey, transfer or otherwise dispose
of all or substantially all of its assets to any Person (other than a
consolidation or merger of the Partnership and the Guarantor, the Partnership
and a Subsidiary Guarantor, the Guarantor and a Subsidiary Guarantor or of the
Subsidiary Guarantors,
27
or a sale, lease, conveyance, transfer or other disposition of all or
substantially all of the assets of the Partnership to the Guarantor, the
Guarantor to the Partnership, the Partnership to a Subsidiary Guarantor, a
Subsidiary Guarantor to the Partnership, the Guarantor to a Subsidiary
Guarantor, a Subsidiary Guarantor to the Guarantor or of a Subsidiary Guarantor
to the other Subsidiary Guarantor), unless:
(1) either (a) the Partnership, the Guarantor or such
Subsidiary Guarantor, as the case may be, shall be the continuing
Person or (b) the Person (if other than the Partnership, the Guarantor
or such Subsidiary Guarantor) formed by such consolidation or into
which the Partnership, the Guarantor or such Subsidiary Guarantor is
merged, or to which such sale, lease, conveyance, transfer or other
disposition shall be made (collectively, the "Successor"), is organized
and validly existing under the laws of the United States, any political
subdivision thereof or any State thereof or the District of Columbia,
and expressly assumes by supplemental indenture, in the case of the
Partnership, the due and punctual payment of the principal of, premium
(if any) and interest on and any Additional Amounts with respect to all
the Securities and the performance of the Partnership's covenants and
obligations under this Indenture and the Securities, or, in the case of
the Guarantor or such Subsidiary Guarantor, the performance of the
Guarantee and the Guarantor's or such Subsidiary Guarantor's covenants
and obligations under this Indenture and the Securities;
(2) immediately after giving effect to such transaction
or series of transactions, no Default or Event of Default shall have
occurred and be continuing or would result therefrom; and
(3) the Partnership, the Guarantor or such Subsidiary
Guarantor, as the case may be, delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the
transaction and such supplemental indenture comply with this Indenture.
SECTION 5.02 Successor Person Substituted.
Upon any consolidation or merger of the Partnership, the
Guarantor or a Subsidiary Guarantor, as the case may be, or any sale, lease,
conveyance, transfer or other disposition of all or substantially all of the
assets of the Partnership, the Guarantor or such Subsidiary Guarantor in
accordance with Section 5.01, the Successor formed by such consolidation or into
or with which the Partnership, the Guarantor or such Subsidiary Guarantor is
merged or to which such sale, lease, conveyance, transfer or other disposition
is made shall succeed to, and be substituted for, and may exercise every right
and power of the Partnership, the Guarantor or such Subsidiary Guarantor, as the
case may be, under this Indenture and the Securities with the same effect as if
such Successor had been named as the Partnership, the Guarantor or such
Subsidiary Guarantor, as the case may be, herein and the predecessor
Partnership, Guarantor or Subsidiary Guarantor, in the case of a sale,
conveyance, transfer or other disposition, shall be released from all
obligations under this Indenture, the Securities and, in the case of the
Guarantor and a Subsidiary Guarantor, the Guarantee.
28
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
Unless either inapplicable to a particular series or
specifically deleted or modified in or pursuant to the supplemental indenture or
Board Resolution establishing such series of Securities or in the form of
Security for such series, an "Event of Default," wherever used herein with
respect to Securities of any series, occurs if:
(1) there is a default in the payment of
interest on or any Additional Amounts with respect to any Security of
that series when the same becomes due and payable and such default
continues for a period of 30 days;
(2) there is a default in the payment of the
principal of or premium, if any, on any Securities of that series as
and when the same shall become due and payable, whether at Stated
Maturity, upon redemption, by declaration, upon required repurchase or
otherwise;
(3) there is a default in the payment of any
sinking fund payment with respect to any Securities of that series as
and when the same shall become due and payable;
(4) there is a failure on the part of the
Partnership or the Guarantor, or if any series of Securities
outstanding under this Indenture is entitled to the benefits of a
Guarantee by the Subsidiary Guarantors, any of the Subsidiary
Guarantors, duly to observe or perform any other of the covenants or
agreements on the part of the Partnership, the Guarantor, or if
applicable, any of the Subsidiary Guarantors, in the Securities of that
series, in any resolution of the Board of Directors authorizing the
issuance of that series of Securities, in this Indenture with respect
to such series or in any supplemental Indenture with respect to such
series (other than a default in the performance of a covenant which is
specifically dealt with elsewhere in this Section 6.01), continuing for
a period of 60 days after the date on which written notice specifying
such failure and requiring the Partnership, the Guarantor, or if
applicable, the Subsidiary Guarantors, to remedy the same shall have
been given, by registered or certified mail, to the Partnership, the
Guarantor, or if applicable, the Subsidiary Guarantors, by the Trustee
or to the Partnership, the Guarantor, or if applicable, the Subsidiary
Guarantors, and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Securities of that series at the time
outstanding;
(5) the Partnership or the Guarantor, or if any
series of Securities outstanding under this Indenture is entitled to
the benefits of a Guarantee by the Subsidiary Guarantors, any of the
Subsidiary Guarantors, pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
29
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Bankruptcy
Custodian of it or for all or substantially all of its
property, or
(D) makes a general assignment for the benefit
of its creditors;
(6) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that remains unstayed and in
effect for 60 days and that:
(A) is for relief against the Partnership, the
Guarantor or any Subsidiary Guarantor as debtor in an
involuntary case,
(B) appoints a Bankruptcy Custodian of the
Partnership, the Guarantor or any Subsidiary Guarantor or a
Bankruptcy Custodian for all or substantially all of the
property of the Partnership, the Guarantor or any Subsidiary
Guarantor, or
(C) orders the liquidation of the Partnership,
the Guarantor or any Subsidiary Guarantor;
(7) the Guarantee of the Guarantor or, if any
series of Securities outstanding under this Indenture is
entitled to the benefits of a Guarantee by the Subsidiary
Guarantors, any of the Subsidiary Guarantors ceases to be in
full force and effect with respect to Securities of that
series (except as otherwise provided in this Indenture) or is
declared null and void in a judicial proceeding or the
Guarantor or any of the Subsidiary Guarantors (if applicable)
denies or disaffirms its obligations under this Indenture or
such Guarantee; or
(8) any other Event of Default provided with
respect to Securities of that series occurs.
The term "Bankruptcy Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
The Trustee shall not be deemed to know or have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Default or Event of Default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Securities and this
Indenture.
When a Default is cured, it ceases.
Notwithstanding the foregoing provisions of this Section 6.01,
if the principal of, premium (if any) or interest on or Additional Amounts with
respect to any Security is payable in a currency or currencies (including a
composite currency) other than Dollars and such currency or currencies are not
available to the Partnership, the Guarantor or a Subsidiary Guarantor for making
payment thereof due to the imposition of exchange controls or other
circumstances
30
beyond the control of the Partnership, the Guarantor or such Subsidiary
Guarantor (a "Conversion Event"), each of the Partnership, the Guarantor and the
Subsidiary Guarantors will be entitled to satisfy its obligations to Holders of
the Securities by making such payment in Dollars in an amount equal to the
Dollar equivalent of the amount payable in such other currency, as determined by
the Partnership, the Guarantor or the Subsidiary Guarantor making such payment,
as the case may be, by reference to the Exchange Rate on the date of such
payment, or, if such rate is not then available, on the basis of the most
recently available Exchange Rate. Notwithstanding the foregoing provisions of
this Section 6.01, any payment made under such circumstances in Dollars where
the required payment is in a currency other than Dollars will not constitute an
Event of Default under this Indenture.
Promptly after the occurrence of a Conversion Event, the
Partnership, the Guarantor or a Subsidiary Guarantor shall give written notice
thereof to the Trustee; and the Trustee, promptly after receipt of such notice,
shall give notice thereof in the manner provided in Section 12.02 to the
Holders. Promptly after the making of any payment in Dollars as a result of a
Conversion Event, the Partnership, the Guarantor or the Subsidiary Guarantor
making such payment, as the case may be, shall give notice in the manner
provided in Section 12.02 to the Holders, setting forth the applicable Exchange
Rate and describing the calculation of such payments.
A Default under clause (4) or (8) of this Section 6.01 is not
an Event of Default until the Trustee notifies the Partnership, the Guarantor
and the Subsidiary Guarantors, or the Holders of at least 25% in principal
amount of the then outstanding Securities of the series affected by such Default
(or, in the case of a Default under clause (4) of this Section 6.01, if
outstanding Securities of other series are affected by such Default, then at
least 25% in principal amount of the then outstanding Securities so affected)
notify the Partnership, the Guarantor, the Subsidiary Guarantors and the
Trustee, of the Default, and the Partnership, the Guarantor or the applicable
Subsidiary Guarantor, as the case may be, fails to cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
SECTION 6.02 Acceleration.
If an Event of Default with respect to any Securities of any
series at the time outstanding (other than an Event of Default specified in
clause (5) or (6) of Section 6.01) occurs and is continuing, the Trustee by
notice to the Partnership, the Guarantor and the Subsidiary Guarantors, or the
Holders of at least 25% in principal amount of the then outstanding Securities
of the series affected by such Event of Default (or, in the case of an Event of
Default described in clause (4) of Section 6.01, if outstanding Securities of
other series are affected by such Event of Default, then at least 25% in
principal amount of the then outstanding Securities so affected) by notice to
the Partnership, the Guarantor, the Subsidiary Guarantors and the Trustee, may
declare the principal of (or, if any such Securities are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) and all accrued and unpaid interest on all then
outstanding Securities of such series or of all series, as the case may be, to
be due and payable. Upon any such declaration, the amounts due and payable on
the Securities shall be due and payable immediately. If an Event of Default
specified in clause (5) or (6) of Section 6.01 hereof occurs, such amounts shall
ipso facto become and be immediately due and
31
payable without any declaration, notice or other act on the part of the Trustee
or any Holder. The Holders of a majority in principal amount of the then
outstanding Securities of the series affected by such Event of Default or all
series, as the case may be, by written notice to the Trustee may rescind an
acceleration and its consequences (other than nonpayment of principal of or
premium or interest on or any Additional Amounts with respect to the Securities)
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default with respect to Securities of that series (or of all
series, as the case may be) have been cured or waived, except nonpayment of
principal, premium, interest or any Additional Amounts that has become due
solely because of the acceleration.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of, or
premium, if any, or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a majority
in principal amount of the then outstanding Securities of any series or of all
series (acting as one class) by notice to the Trustee may waive an existing or
past Default or Event of Default with respect to such series or all series, as
the case may be, and its consequences (including waivers obtained in connection
with a tender offer or exchange offer for Securities of such series or all
series or a solicitation of consents in respect of Securities of such series or
all series, provided that in each case such offer or solicitation is made to all
Holders of then outstanding Securities of such series or all series (but the
terms of such offer or solicitation may vary from series to series)), except (1)
a continuing Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on or any Additional Amounts with respect to any
Security or (2) a continued Default in respect of a provision that under Section
9.02 cannot be amended or supplemented without the consent of each Holder
affected. Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05 Control by Majority.
With respect to Securities of any series, the Holders of a
majority in principal amount of the then outstanding Securities of such series
may direct in writing the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it relating to or arising under an Event of Default described in
clause (1), (2), (3) or (7) of Section 6.01, and with respect to all Securities,
the Holders of a
32
majority in principal amount of all the then outstanding Securities affected may
direct in writing the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on it not relating to or arising under such an Event of Default. However, the
Trustee may refuse to follow any direction that conflicts with applicable law or
this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of other Holders, or that may involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemnification satisfactory
to it in its sole discretion from Holders directing the Trustee against all
losses and expenses caused by taking or not taking such action.
SECTION 6.06 Limitations on Suits.
Subject to Section 6.07 hereof, a Holder of a Security of any
series may pursue a remedy with respect to this Indenture or the Securities of
such series only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default with respect to such series;
(2) the Holders of at least 25% in principal amount of
the then outstanding Securities of such series make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority
in principal amount of the Securities of that series do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal of and
premium, if any, and interest on and any Additional Amounts with respect to the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
33
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default specified in clause (1) or (2) of
Section 6.01 hereof occurs and is continuing, the Trustee is authorized to
recover judgment in its own name and as trustee of an express trust against the
Partnership, the Guarantor or a Subsidiary Guarantor for the amount of
principal, premium (if any), interest and any Additional Amounts remaining
unpaid on the Securities of the series affected by the Event of Default, and
interest on overdue principal and premium, if any, and, to the extent lawful,
interest on overdue interest, and 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.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents and to take such actions, including participating as a
member, voting or otherwise, of any committee of creditors, as may be necessary
or advisable to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Partnership, the Guarantor or a Subsidiary Guarantor or their
respective creditors or properties and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any Bankruptcy Custodian 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 to 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 7.07. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the Holders of the Securities may
be entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
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.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article VI,
it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the
Securities in respect of which or for the benefit of which such money
has been collected, for principal, premium (if any), interest and any
Additional Amounts ratably, without preference or priority of
34
any kind, according to the amounts due and payable on such Securities
for principal, premium (if any), interest and any Additional Amounts,
respectively; and
Third: to the Partnership.
The Trustee, upon prior written notice to the Partnership, may
fix record dates and payment dates for any payment to Holders pursuant to this
Article VI.
To the fullest extent allowed under applicable law, if for the
purpose of obtaining a judgment against the Partnership, the Guarantor or a
Subsidiary Guarantor in any court it is necessary to convert the sum due in
respect of the principal of, premium (if any) or interest on or Additional
Amounts with respect to the Securities of any series (the "Required Currency")
into a currency in which a judgment will be rendered (the "Judgment Currency"),
the rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the Business Day in The City of
New York next preceding that on which final judgment is given. Neither the
Partnership, the Guarantor, any Subsidiary Guarantor nor the Trustee shall be
liable for any shortfall nor shall it benefit from any windfall in payments to
Holders of Securities under this Section 6.10 caused by a change in exchange
rates between the time the amount of a judgment against it is calculated as
above and the time the Trustee converts the Judgment Currency into the Required
Currency to make payments under this Section 6.10 to Holders of Securities, but
payment of such judgment shall discharge all amounts owed by the Partnership,
the Guarantor and the Subsidiary Guarantors on the claim or claims underlying
such judgment.
SECTION 6.11 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 or
omitted by it as a trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in principal amount of the then outstanding Securities of any series.
ARTICLE VII
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If 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 such
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default
with respect to the Securities of any series:
35
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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. However, the Trustee shall examine such certificates
and opinions to determine whether, on their face, they appear to
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of Section
7.01(b);
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
the provisions of this Section 7.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Partnership, the Guarantor and the Subsidiary Guarantors. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law. All money received by the Trustee shall, until applied as
herein provided, be held in trust for the payment of the principal of, premium
(if any) and interest on and Additional Amounts with respect to the Securities.
SECTION 7.02 Rights of Trustee.
(a) The Trustee may conclusively rely on any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require instruction, an Officers' Certificate or an Opinion of Counsel or
both to be provided. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such instruction, Officers'
Certificate or Opinion of Counsel. The Trustee may consult at the Partnership's
36
expense with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Partnership, the
Guarantor or any Subsidiary Guarantor shall be sufficient if signed by an
Officer of U.S. Propane L.L.C.
(f) The Trustee shall not be obligated 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.
(g) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder.
(h) The Trustee may request that the Partnership deliver
an Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
SECTION 7.03 May Hold Securities.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Partnership,
the Guarantor, any Subsidiary Guarantor or any of their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights and duties. However, the Trustee is subject to Sections
7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Partnership's use of the proceeds from the Securities or any money paid to
the Partnership, the Guarantor or any Subsidiary
37
Guarantor or upon the Partnership's, the Guarantor's or such Subsidiary
Guarantor's direction under any provision hereof, it shall not be responsible
for the use or application of any money received by any Paying Agent other than
the Trustee and it shall not be responsible for any statement or recital herein
or any statement in the Securities other than its certificate of authentication.
SECTION 7.05 Notice of Defaults.
If a Default or Event of Default with respect to the
Securities of any series occurs and is continuing and it is known to the
Trustee, the Trustee shall mail to Holders of Securities of such series a notice
of the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium (if
any) and interest on and Additional Amounts or any sinking fund installment with
respect to the Securities of such series, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Holders of Securities of such
series.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each September 15 of each year after the
execution of this Indenture, the Trustee shall mail to Holders of a series, the
Guarantor, the Subsidiary Guarantors and the Partnership a brief report dated as
of such reporting date that complies with TIA Section 313(a); provided, however,
that if no event described in TIA Section 313(a) has occurred within the twelve
months preceding the reporting date with respect to a series, no report need be
transmitted to Holders of such series. The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports if and as
required by TIA Sections 313(c) and 313(d).
A copy of each report at the time of its mailing to Holders of
a series of Securities shall be filed by the Partnership, the Guarantor or a
Subsidiary Guarantor with the SEC and each securities exchange, if any, on which
the Securities of such series are listed. The Partnership shall notify the
Trustee if and when any series of Securities is listed on any securities
exchange.
SECTION 7.07 Compensation and Indemnity.
The Partnership agrees to pay to the Trustee for its
acceptance of this Indenture and services hereunder such compensation as the
Partnership and the Trustee shall from time to time agree in writing. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Partnership agrees to reimburse the Trustee
upon request for all reasonable disbursements, advances and expenses incurred by
it. Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
The Partnership hereby indemnifies the Trustee and any
predecessor Trustee against any and all loss, liability, damage, claim or
expense, including taxes (other than taxes
38
based upon, measured by or determined by the income of the Trustee), incurred by
it arising out of or in connection with the acceptance or administration of its
duties under this Indenture, except as set forth in the next following
paragraph. The Trustee shall notify the Partnership, the Guarantor and the
Subsidiary Guarantors promptly of any claim for which it may seek indemnity. The
Partnership shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Partnership shall pay the
reasonable fees and expenses of such counsel. The Partnership need not pay for
any settlement made without its consent.
The Partnership shall not be obligated to reimburse any
expense or indemnify against any loss or liability incurred by the Trustee
through the Trustee's negligence or bad faith.
To secure the payment obligations of the Partnership in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
principal of, premium (if any) and interest on and any Additional Amounts with
respect to Securities of any series. Such lien and the Partnership's obligations
under this Section 7.07 shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(5) or (6) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign and be discharged at any time with
respect to the Securities of one or more series by so notifying the Partnership,
the Guarantor and the Subsidiary Guarantors. The Holders of a majority in
principal amount of the then outstanding Securities of any series may remove the
Trustee with respect to the Securities of such series by so notifying the
Trustee, the Partnership, the Guarantor and the Subsidiary Guarantors. The
Partnership may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Bankruptcy Custodian or public officer takes charge
of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, with respect to the Securities of one or
more series, the Partnership shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those
39
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). Within one year after the successor Trustee with respect to
the Securities of any series takes office, the Holders of a majority in
principal amount of the Securities of such series then outstanding may appoint a
successor Trustee to replace the successor Trustee appointed by the Partnership.
If a successor Trustee with respect to the Securities of any
series does not take office within 30 days after the retiring or removed Trustee
resigns or is removed, the retiring or removed Trustee (at the expense of the
Partnership), the Partnership, the Guarantor, any Subsidiary Guarantor or the
Holders of at least 10% in principal amount of the then outstanding Securities
of such series may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
If the Trustee with respect to the Securities of a series
fails to comply with Section 7.10, any Holder of Securities of such series may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee with respect to the Securities of such
series.
In case of the appointment of a successor Trustee with respect
to all Securities, each such successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee, to the Partnership, to
the Guarantor and to the Subsidiary Guarantors. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the retiring Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.
In case of the appointment of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Partnership, the
Guarantor, the Subsidiary Guarantors, the retiring Trustee and each successor
Trustee with respect to the Securities of one or more (but not all) series shall
execute and deliver an indenture supplemental hereto in which each successor
Trustee shall accept such appointment and that (1) shall confer to each
successor Trustee all the rights, powers 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 confirm that all the rights, powers and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee and (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. Nothing herein
or in such supplemental indenture shall constitute such Trustees co-trustees of
the same trust, and 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. Upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee shall
have all the rights, powers 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. On request of the Partnership or any successor
40
Trustee, such retiring Trustee shall transfer to such successor Trustee all
property held by such retiring Trustee as Trustee with respect to the Securities
of that or those series to which the appointment of such successor Trustee
relates. Such retiring Trustee shall, however, have the right to deduct its
unpaid fees and expenses, including attorneys' fees.
Notwithstanding replacement of the Trustee or Trustees
pursuant to this Section 7.08, the obligations of the Partnership under Section
7.07 shall continue for the benefit of the retiring Trustee or Trustees.
SECTION 7.09 Successor Trustee by Merger, etc.
Subject to Section 7.10, if the Trustee consolidates, merges
or converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, however, that in the case of a
transfer of all or substantially all of its corporate trust business to another
corporation, the transferee corporation expressly assumes all of the Trustee's
liabilities hereunder.
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; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be
a corporation or banking association organized and doing business under the laws
of the United States, any State thereof or the District of Columbia and
authorized under such laws to exercise corporate trust power, shall be subject
to supervision or examination by federal or state (or the District of Columbia)
authority and shall have, or be a subsidiary of a bank or bank holding company
having, a combined capital and surplus of at least $50 million as set forth in
its most recent published annual report of condition.
The Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA Section 310(b) during the
period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the
penultimate paragraph of TIA Section 310(b).
41
SECTION 7.11 Preferential Collection of Claims Against the Partnership, the
Guarantor or a Subsidiary Guarantor.
The Trustee is subject to and shall comply with the provisions
of TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE OF INDENTURE
SECTION 8.01 Termination of the Partnership's, the Guarantor's and the
Subsidiary Guarantors' Obligations.
(a) This Indenture shall cease to be of further effect
with respect to the Securities of a series (except that the Partnership's
obligations under Section 7.07, the Trustee's and Paying Agent's obligations
under Section 8.03 and the rights, powers, protections and privileges accorded
the Trustee under Article VII shall survive), and the Trustee, the Guarantor and
the Subsidiary Guarantors, on demand of the Partnership, shall execute proper
instruments acknowledging the satisfaction and discharge of this Indenture with
respect to the Securities of such series, when:
(1) either:
(A) all outstanding Securities of such series
theretofore authenticated and issued (other than destroyed,
lost or stolen Securities that have been replaced or paid)
have been delivered to the Trustee for cancellation; or
(B) all outstanding Securities of such series
not theretofore delivered to the Trustee for cancellation:
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one
year, or
(iii) are to be called for redemption
within one year under arrangements
satisfactory to the Trustee for the
giving of notice of redemption by
the Trustee in the name, and at the
expense, of the Partnership,
and, in the case of clause (i), (ii) or (iii) above, the
Partnership, the Guarantor or a Subsidiary Guarantor has
irrevocably deposited or caused to be deposited with the
Trustee as funds (immediately available to the Holders in the
case of clause (i)) in trust for such purpose (x) cash in an
amount, or (y) Government Obligations, maturing as to
principal and interest at such times and in such amounts as
will ensure the availability of cash in an amount or (z) a
combination thereof, which will be sufficient, in the opinion
(in the case of clauses (y) and (z)) of a nationally
recognized firm of independent public accountants expressed in
a written
42
certification thereof delivered to the Trustee, to pay and
discharge the entire indebtedness on the Securities of such
series for principal and interest to the date of such deposit
(in the case of Securities which have become due and payable)
or for principal, premium, if any, and interest to the Stated
Maturity or Redemption Date, as the case may be; or
(C) the Partnership, the Guarantor and the
Subsidiary Guarantors have properly fulfilled such other means
of satisfaction and discharge as is specified, as contemplated
by Section 2.01, to be applicable to the Securities of such
series;
(2) the Partnership, the Guarantor or a Subsidiary
Guarantor has paid or caused to be paid all other sums payable by them
hereunder with respect to the Securities of such series; and
(3) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, together with an
Opinion of Counsel to the same effect.
(b) Unless this Section 8.01(b) is specified as not being
applicable to Securities of a series as contemplated by Section 2.01, the
Partnership may, at its option, terminate certain of its, the Guarantor's and
the Subsidiary Guarantors' respective obligations under this Indenture
("covenant defeasance") with respect to the Securities of a series if:
(1) the Partnership, the Guarantor or a Subsidiary
Guarantor has irrevocably deposited or caused to be irrevocably
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for and
dedicated solely to the benefit of the Holders of Securities of such
series, (i) money in the currency in which payment of the Securities of
such series is to be made in an amount, or (ii) Government Obligations
with respect to such series, maturing as to principal and interest at
such times and in such amounts as will ensure the availability of money
in the currency in which payment of the Securities of such series is to
be made in an amount or (iii) a combination thereof, that is
sufficient, in the opinion (in the case of clauses (ii) and (iii)) of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay the
principal of and premium (if any) and interest on all Securities of
such series on each date that such principal, premium (if any) or
interest is due and payable and (at the Stated Maturity thereof or upon
redemption as provided in Section 8.01(e)) to pay all other sums
payable by it hereunder; provided that the Trustee shall have been
irrevocably instructed to apply such money and/or the proceeds of such
Government Obligations to the payment of said principal, premium (if
any) and interest with respect to the Securities of such series as the
same shall become due;
(2) the Partnership has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent to
satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, and an Opinion of
Counsel to the same effect;
43
(3) no Default or Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the
date of such deposit;
(4) the Partnership shall have delivered to the Trustee
an Opinion of Counsel from a nationally recognized counsel acceptable
to the Trustee or a tax ruling to the effect that the Holders will not
recognize income, gain or loss for U.S. Federal income tax purposes as
a result of the Partnership's exercise of its option under this Section
8.01(b) and will be subject to U.S. Federal income tax on the same
amount and in the same manner and at the same times as would have been
the case if such option had not been exercised;
(5) the Partnership, the Guarantor and the Subsidiary
Guarantors have complied with any additional conditions specified
pursuant to Section 2.01 to be applicable to the discharge of
Securities of such series pursuant to this Section 8.01; and
(6) such deposit and discharge shall not cause the
Trustee to have a conflicting interest as defined in TIA Section
310(b).
In such event, this Indenture shall cease to be of further
effect (except as set forth in this paragraph), and the Trustee and the
Guarantor and the Subsidiary Guarantors, on demand of the Partnership, shall
execute proper instruments acknowledging satisfaction and discharge under this
Indenture. However, the Partnership's, the Guarantor's and the Subsidiary
Guarantors' respective obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09,
4.01, 4.02, 7.07, 7.08, 8.04 and 11.01, the Trustee's and Paying Agent's
obligations in Section 8.03 and the rights, powers, protections and privileges
accorded the Trustee under Article VII shall survive until all Securities of
such series are no longer outstanding. Thereafter, only the Partnership's
obligations in Section 7.07 and the Trustee's and Paying Agent's obligations in
Section 8.03 shall survive with respect to Securities of such series.
After such irrevocable deposit made pursuant to this Section
8.01(b) and satisfaction of the other conditions set forth herein, the Trustee
upon request shall acknowledge in writing the discharge of the Partnership's,
the Guarantor's and the Subsidiary Guarantors' obligations under this Indenture
with respect to the Securities of such series except for those surviving
obligations specified above.
In order to have money available on a payment date to pay
principal of or premium (if any) or interest on the Securities, the Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. Government
Obligations shall not be callable at the issuer's option.
(c) If the Partnership, the Guarantor and the Subsidiary
Guarantors have previously complied or are concurrently complying with Section
8.01(b) (other than any additional conditions specified pursuant to Section 2.01
that are expressly applicable only to covenant defeasance) with respect to
Securities of a series, then, unless this Section 8.01(c) is specified as not
being applicable to Securities of such series as contemplated by Section 2.01,
the Partnership may elect that its, the Guarantor's and the Subsidiary
Guarantors' respective
44
obligations to make payments with respect to Securities of such series be
discharged ("legal defeasance"), if:
(1) no Default or Event of Default under clauses (5) and
(6) of Section 6.01 hereof shall have occurred at any time during the
period ending on the 91st day after the date of deposit contemplated by
Section 8.01(b) (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(2) unless otherwise specified with respect to Securities
of such series as contemplated by Section 2.01, the Partnership has
delivered to the Trustee an Opinion of Counsel from a nationally
recognized counsel acceptable to the Trustee to the effect referred to
in Section 8.01(b)(4) with respect to such legal defeasance, which
opinion is based on (i) a private ruling of the Internal Revenue
Service addressed to the Partnership, (ii) a published ruling of the
Internal Revenue Service pertaining to a comparable form of transaction
or (iii) a change in the applicable federal income tax law (including
regulations) after the date of this Indenture;
(3) the Partnership, the Guarantor and the Subsidiary
Guarantors have complied with any other conditions specified pursuant
to Section 2.01 to be applicable to the legal defeasance of Securities
of such series pursuant to this Section 8.01(c); and
(4) the Partnership has delivered to the Trustee a
Partnership Request requesting such legal defeasance of the Securities
of such series and an Officers' Certificate stating that all conditions
precedent with respect to such legal defeasance of the Securities of
such series have been complied with, together with an Opinion of
Counsel to the same effect.
In such event, the Partnership, the Guarantor and the
Subsidiary Guarantors will be discharged from their respective obligations under
this Indenture and the Securities of such series to pay principal of, premium
(if any) and interest on, and any Additional Amounts with respect to, Securities
of such series, the Partnership's, the Guarantor's and the Subsidiary
Guarantors' respective obligations under Sections 4.01, 4.02 and 11.01 shall
terminate with respect to such Securities, and the entire indebtedness of the
Partnership evidenced by such Securities and of the Guarantor and of the
Subsidiary Guarantors evidenced by the related Guarantees shall be deemed paid
and discharged.
(d) If and to the extent additional or alternative means
of satisfaction, discharge or defeasance of Securities of a series are specified
to be applicable to such series as contemplated by Section 2.01, each of the
Partnership, the Guarantor and the Subsidiary Guarantors may terminate any or
all of its obligations under this Indenture with respect to Securities of a
series and any or all of its obligations under the Securities of such series if
it fulfills such other means of satisfaction and discharge as may be so
specified, as contemplated by Section 2.01, to be applicable to the Securities
of such series.
(e) If Securities of any series subject to subsections
(a), (b), (c) or (d) of this Section 8.01 are to be redeemed prior to their
Stated Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory or optional sinking fund provisions,
45
the terms of the applicable trust arrangement shall provide for such redemption,
and the Partnership shall make such arrangements as are reasonably satisfactory
to the Trustee for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Partnership.
SECTION 8.02 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the
Partnership shall hold in trust money or Government Obligations deposited with
it pursuant to Section 8.01 hereof. It shall apply the deposited money and the
money from Government Obligations through the Paying Agent and in accordance
with this Indenture to the payment of principal of, premium (if any) and
interest on and any Additional Amounts with respect to the Securities of the
series with respect to which the deposit was made.
SECTION 8.03 Repayment to Partnership, Guarantor or Subsidiary Guarantor.
The Trustee and the Paying Agent shall promptly pay to the
Partnership, the Guarantor or any Subsidiary Guarantor any excess money or
Government Obligations (or proceeds therefrom) held by them at any time upon the
written request of the Partnership.
Subject to the requirements of any applicable abandoned
property laws, the Trustee and the Paying Agent shall pay to the Partnership
upon written request any money held by them for the payment of principal,
premium (if any), interest or any Additional Amounts that remain unclaimed for
two years after the date upon which such payment shall have become due. After
payment to the Partnership, Holders entitled to the money must look to the
Partnership for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee and the
Paying Agent with respect to such money shall cease.
SECTION 8.04 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money or Government Obligations deposited with respect to Securities of any
series in accordance with Section 8.01 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the
obligations of the Partnership, the Guarantor and the Subsidiary Guarantors
under this Indenture with respect to the Securities of such series and under the
Securities of such series shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.01 until such time as the Trustee or the
Paying Agent is permitted to apply all such money or Government Obligations in
accordance with Section 8.01; provided, however, that if the Partnership, the
Guarantor or any Subsidiary Guarantor has made any payment of principal of,
premium (if any) or interest on or any Additional Amounts with respect to any
Securities because of the reinstatement of its obligations, the Partnership, the
Guarantor or such Subsidiary Guarantor, as the case may be, shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or Government Obligations held by the Trustee or the Paying Agent.
46
ARTICLE IX
SUPPLEMENTAL INDENTURES AND AMENDMENTS
SECTION 9.01 Without Consent of Holders.
The Partnership, the Guarantor, the Subsidiary Guarantors and
the Trustee may amend or supplement this Indenture or the Securities or waive
any provision hereof or thereof without the consent of any Holder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Section 5.01;
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities, or to provide for the
issuance of bearer Securities (with or without coupons);
(4) to provide any security for, or to add any guarantees
of or additional obligors on, any series of Securities or the related
Guarantees;
(5) to comply with any requirement in order to effect or
maintain the qualification of this Indenture under the TIA;
(6) to add to the covenants of the Partnership, the
Guarantor or any Subsidiary Guarantor 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
Partnership, the Guarantor or any Subsidiary Guarantor;
(7) to add any additional Events of Default with respect
to all or any series of the Securities (and, if any Event of Default is
applicable to less than all series of Securities, specifying the series
to which such Event of Default is applicable);
(8) to change or eliminate any of the provisions of this
Indenture; provided that any such change or elimination shall become
effective only when there is no outstanding Security of any series
created prior to the execution of such amendment or supplemental
indenture that is adversely affected in any material respect by such
change in or elimination of such provision;
(9) to establish the form or terms of Securities of any
series as permitted by Section 2.01;
(10) to supplement any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Section 8.01; provided, however, that any such action shall not
adversely affect the interest of the Holders of Securities of such
series or any other series of Securities in any material respect; or
47
(11) 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 7.08.
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon receipt by the Trustee of the documents described in
Section 9.06, the Trustee shall, subject to Section 9.06, join with the
Partnership, the Guarantor and the Subsidiary Guarantors in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture
and make any further appropriate agreements and stipulations that may be therein
contained.
SECTION 9.02 With Consent of Holders.
Except as provided below in this Section 9.02, the
Partnership, the Guarantor, the Subsidiary Guarantors and the Trustee may amend
or supplement this Indenture with the written consent (including consents
obtained in connection with a tender offer or exchange offer for Securities of
any one or more series or all series or a solicitation of consents in respect of
Securities of any one or more series or all series, provided that in each case
such offer or solicitation is made to all Holders of then outstanding Securities
of each such series (but the terms of such offer or solicitation may vary from
series to series)) of the Holders of at least a majority in principal amount of
the then outstanding Securities of all series affected by such amendment or
supplement (acting as one class).
Upon the request of the Partnership, accompanied by a Board
Resolution, and upon the filing with the Trustee of evidence of the consent of
the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 9.06, the Trustee shall, subject to Section 9.06, join with
the Partnership, the Guarantor and the Subsidiary Guarantors in the execution of
such amendment or supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
The Holders of a majority in principal amount of the then
outstanding Securities of one or more series or of all series may waive
compliance in a particular instance by the Partnership, the Guarantor or any
Subsidiary Guarantor with any provision of this Indenture with respect to
Securities of such series (including waivers obtained in connection with a
tender offer or exchange offer for Securities of such series or a solicitation
of consents in respect of Securities of such series, provided that in each case
such offer or solicitation is made to all Holders of then outstanding Securities
of such series (but the terms of such offer or solicitation may vary from series
to series)).
However, without the consent of each Holder affected, an
amendment, supplement or waiver under this Section 9.02 may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
48
(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Security;
(3) reduce the principal of, any premium on or any
mandatory sinking fund payment with respect to, or change the Stated
Maturity of, any Security or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
6.02;
(4) reduce the premium, if any, payable upon the
redemption of any Security or change the time at which any Security may
or shall be redeemed;
(5) change any obligation of the Partnership, the
Guarantor or any Subsidiary Guarantor to pay Additional Amounts with
respect to any Security;
(6) change the coin or currency or currencies (including
composite currencies) in which any Security or any premium, interest or
Additional Amounts with respect thereto are payable;
(7) impair the right to institute suit for the
enforcement of any payment of principal of, premium (if any) or
interest on or any Additional Amounts with respect to any Security
pursuant to Sections 6.07 and 6.08, except as limited by Section 6.06;
(8) make any change in the percentage of principal amount
of Securities necessary to waive compliance with certain provisions of
this Indenture pursuant to Section 6.04 or 6.07 or make any change in
this sentence of Section 9.02;
(9) modify the provisions of this Indenture with respect
to the subordination of any Security and any related Guarantee in a
manner adverse to the Holder thereof;
(10) waive a continuing Default or Event of Default in the
payment of principal of, premium (if any) or interest on or Additional
Amounts with respect to the Securities; or
(11) except as provided in Section 11.04, release the
Guarantor or any Subsidiary Guarantors or modify the Guarantee in any
manner adverse to the Holders.
An amendment under this Section 9.02 may not make any change
that adversely affects the rights under Article X of any holder of an issue of
Senior Indebtedness unless the holders of the issue pursuant to its terms
consent to the change.
A supplemental indenture that 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.
49
The right of any Holder to participate in any consent required
or sought pursuant to any provision of this Indenture (and the obligation of the
Partnership, the Guarantor or any Subsidiary Guarantor to obtain any such
consent otherwise required from such Holder) may be subject to the requirement
that such Holder shall have been the Holder of record of any Securities with
respect to which such consent is required or sought as of a date identified by
the Partnership, the Guarantor or such Subsidiary Guarantor in a notice
furnished to Holders in accordance with the terms of this Indenture.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Partnership shall mail to the Holders of each
Security affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Partnership to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such amendment, supplement or waiver.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the
Securities shall comply in form and substance with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his or her Security or portion of a Security if the Trustee
receives written notice of revocation before a date and time therefor identified
by the Partnership, the Guarantor or any Subsidiary Guarantor in a notice
furnished to such Holder in accordance with the terms of this Indenture or, if
no such date and time shall be identified, the date the amendment, supplement or
waiver becomes effective. An amendment, supplement or waiver becomes effective
in accordance with its terms and thereafter binds every Holder.
The Partnership, the Guarantor or any Subsidiary Guarantor
may, but shall not be obligated to, fix a record date (which need not comply
with TIA Section 316(c)) for the purpose of determining the Holders entitled to
consent to any amendment, supplement or waiver or to take any other action under
this Indenture. If a record date is fixed, then notwithstanding the provisions
of the immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No consent shall be valid or effective for more than 90
days after such record date unless consents from Holders of the principal amount
of Securities required hereunder for such amendment or waiver to be effective
shall have also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it is of the type described in any of clauses
(1) through (9) of Section 9.02 hereof.
50
In such case, the amendment, supplement or waiver shall bind each Holder who has
consented to it and every subsequent Holder that evidences the same debt as the
consenting Holder's Security.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment or supplement changes the terms of an
outstanding Security, the Partnership may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security at the request of the Partnership regarding the changed terms and
return it to the Holder. Alternatively, if the Partnership so determines, the
Partnership in exchange for the Security shall issue, the Guarantor and the
Subsidiary Guarantors shall execute and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment or supplement.
Securities of any series authenticated and delivered after the
execution of any amendment or supplement 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 amendment or supplement.
SECTION 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized
pursuant to this Article if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplement, the Trustee shall be entitled to receive, and, subject
to Section 7.01 hereof, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel provided at the expense of the
Partnership, the Guarantor or a Subsidiary Guarantor as conclusive evidence that
such amendment or supplement is authorized or permitted by this Indenture, that
it is not inconsistent herewith, and that it will be valid and binding upon the
Partnership, the Guarantor and the Subsidiary Guarantors in accordance with its
terms.
ARTICLE X
SUBORDINATION OF SECURITIES AND GUARANTEE
SECTION 10.01 Applicability of Article; Agreement To Subordinate.
The provisions of this Article X shall only be applicable to
the Securities of any series (Securities of such series referred to in this
Article X as "Subordinated Securities") designated, pursuant to Section 2.01, as
subordinated to Senior Indebtedness and any related Guarantee of such
Subordinated Securities. Each Holder by accepting a Subordinated Security agrees
that the Debt evidenced by such Subordinated Security and any related Guarantee
of such Subordinated Security is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable by
the holders of Indebtedness. All provisions of this Article X shall be subject
to Section 10.12.
51
SECTION 10.02 Liquidation, Dissolution, Bankruptcy.
Upon any payment or distribution of the assets of the
Partnership, the Guarantor or the Subsidiary Guarantors, as the case may be, to
creditors, upon a liquidation or a dissolution of the Partnership, the Guarantor
or the Subsidiary Guarantors, as the case may be, or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Partnership, the Guarantor or the Subsidiary Guarantors, as the case may be, or
their respective property:
(a) holders of Senior Indebtedness of the Partnership,
the Guarantor or any Subsidiary Guarantor, as the case may be, shall be entitled
to receive payment in full in cash of such Senior Indebtedness of such Person
(including interest (if any), accruing on or after the commencement of a
proceeding in bankruptcy, whether or not allowed as a claim against the
Partnership, the Guarantor or the Subsidiary Guarantors, as the case may be, in
such bankruptcy proceeding) before Holders of Subordinated Securities and any
related Guarantee shall be entitled to receive any payment of principal of, or
premium, if any, or interest on, the Subordinated Securities from the
Partnership, or any payment in respect of any Guarantee from the Guarantor or
the Subsidiary Guarantors; and
(b) until the Senior Indebtedness of the Partnership, the
Guarantor or any Subsidiary Guarantor, as the case may be, is paid in full, any
distribution to which Holders of Subordinated Securities and any related
Guarantee would be entitled but for this Article X shall be made to holders of
Senior Indebtedness of the Partnership, the Guarantor or the Subsidiary
Guarantors, as the case may be, as their interests may appear, except that such
Holders may receive capital stock and any debt securities that are subordinated
to Senior Indebtedness of the Partnership, the Guarantor or the Subsidiary
Guarantors, as the case may be, to at least the same extent as the Subordinated
Securities of the Partnership or the related Guarantee of the Guarantor or any
Subsidiary Guarantor, respectively.
SECTION 10.03 Default on Senior Indebtedness.
The Partnership, the Guarantor and the Subsidiary Guarantors
may not pay the principal of, or premium, if any, or interest on, the
Subordinated Securities or any related Guarantee or make any deposit pursuant to
Article VIII and may not repurchase, redeem or otherwise retire (except, in the
case of Subordinated Securities that provide for a mandatory sinking fund
pursuant to Section 3.11, by the delivery of Subordinated Securities by the
Partnership to the Trustee pursuant to the first paragraph of Section 3.11) any
Subordinated Securities (collectively, "pay the Subordinated Securities") if any
principal, premium or interest in respect of Senior Indebtedness of such Person
is not paid within any applicable grace period (including at maturity) or any
other default on Senior Indebtedness of such Person occurs and the maturity of
such Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, the default has been cured or waived and any such acceleration has
been rescinded or such Senior Indebtedness has been paid in full in cash;
provided, however, that the Partnership, the Guarantor and the Subsidiary
Guarantors may make payments on the Subordinated Securities or any related
Guarantee without regard to the foregoing if the Partnership and the Trustee
receive written notice approving such payment from the Representative of each
issue of Designated Senior Indebtedness. During the continuance of any other
default with respect to any Designated
52
Senior Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Partnership, the Guarantor and the Subsidiary Guarantors may not make payments
on the Subordinated Securities or any related Guarantee for a period (a "Payment
Blockage Period") commencing upon the receipt by the Partnership and the Trustee
(and if such Designated Senior Indebtedness is Debt of the Guarantor or a
Subsidiary Guarantor, the Guarantor or the Subsidiary Guarantor) of written
notice of such default from the Representative of any Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period (a
"Blockage Notice") and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated by written notice to the Trustee and the
Partnership (and if such Designated Senior Indebtedness is Debt of a Subsidiary
Guarantor, the Subsidiary Guarantor) from the Person or Persons who gave such
Blockage Notice, by repayment in full in cash of such Designated Senior
Indebtedness or because the default giving rise to such Blockage Notice is no
longer continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in Section 10.02 and
the first sentence of this Section 10.03), unless the holders of such Designated
Senior Indebtedness or the Representative of such holders shall have accelerated
the maturity of such Designated Senior Indebtedness, the Partnership, the
Guarantor and the Subsidiary Guarantors may resume payments on the Subordinated
Securities and related Guarantees after such Payment Blockage Period. Not more
than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to any number of issues of
Designated Senior Indebtedness during such period, unless otherwise specified
pursuant to Section 2.01 for the Subordinated Securities of a series; provided,
however, that in no event may the total number of days during which any Payment
Blockage Period or Periods is in effect exceed 179 days in the aggregate during
any 360 consecutive day period. For purposes of this Section 10.03, no default
or event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 10.04 Acceleration of Payment of Securities.
If payment of the Subordinated Securities is accelerated
because of an Event of Default, the Partnership shall promptly notify the
holders of the Designated Senior Indebtedness (or their Representatives) of the
acceleration.
SECTION 10.05 When Distribution Must Be Paid Over.
If a distribution is made to Holders of Subordinated
Securities or a related Guarantee that because of this Article X should not have
been made to them, the Holders who receive such distribution shall hold it in
trust for holders of Senior Indebtedness and pay it over to them as their
interests may appear.
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SECTION 10.06 Subrogation.
After all Senior Indebtedness is paid in full and until the
Subordinated Securities are paid in full, Holders thereof shall be subrogated to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness. A distribution made under this Article X to holders of
Senior Indebtedness which otherwise would have been made to Holders of
Subordinated Securities is not, as between the Partnership, the Guarantor or the
Subsidiary Guarantors, as the case may be, and such Holders, a payment by the
Partnership, the Guarantor or the Subsidiary Guarantors, as the case may be, on
Senior Indebtedness.
SECTION 10.07 Relative Rights.
This Article X defines the relative rights of Holders of
Subordinated Securities and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(a) impair, as between the Partnership, the Guarantor or
the Subsidiary Guarantors, as the case may be, and Holders of either
Subordinated Securities or Securities, the obligation of the Partnership, the
Guarantor or the Subsidiary Guarantors, as the case may be, which is absolute
and unconditional, to pay principal of, and premium, if any, and interest on,
the Subordinated Securities and the Securities in accordance with their terms;
or
(b) prevent the Trustee or any Holder of either
Subordinated Securities or Securities from exercising its available remedies
upon an Event of Default, subject to the rights of holders of Senior
Indebtedness to receive distributions otherwise payable to Holders of
Subordinated Securities.
SECTION 10.08 Subordination May Not Be Impaired by Partnership.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Debt evidenced by the Subordinated Securities and the
Guarantee in respect thereof shall be impaired by any act or failure to act by
the Partnership, the Guarantor or the Subsidiary Guarantors or by its failure to
comply with this Indenture.
SECTION 10.09 Rights of Trustee and Paying Agent.
Notwithstanding Sections 10.02 and 10.03, the Trustee or any
paying agent may continue to make payments on Subordinated Securities and shall
not be charged with knowledge of the existence of facts that would prohibit the
making of any such payments unless, not less than two Business Days prior to the
date of such payment, a responsible officer of the Trustee receives notice
satisfactory to it that payments may not be made under this Article X. The
Partnership, the Registrar, any paying agent, a Representative or a holder of
Senior Indebtedness may give the notice; provided, however, that, if an issue of
Senior Indebtedness has a Representative, only the Representative may give the
notice on behalf of the Holders of the Senior Indebtedness of that issue.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and any paying agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this
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Article X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 10.10 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative (if any).
SECTION 10.11 Article X Not to Prevent Defaults or Limit Right to Accelerate.
The failure to make a payment pursuant to the Subordinated
Securities, whether directly or pursuant to the Guarantee, by reason of any
provision in this Article X shall not be construed as preventing the occurrence
of a Default. Nothing in this Article X shall have any effect on the right of
the Holders or the Trustee to accelerate the maturity of either the Subordinated
Securities or the Securities, as the case may be.
SECTION 10.12 Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary,
payments from money or the proceeds of U.S. Government Obligations held in trust
under Article VIII by the Trustee for the payment of principal of, and premium,
if any, and interest on, the Subordinated Securities or the Securities shall not
be subordinated to the prior payment of any Senior Indebtedness or subject to
the restrictions set forth in this Article X, and none of the Holders thereof
shall be obligated to pay over any such amount to the Partnership, the
Guarantor, the Subsidiary Guarantors or any holder of Senior Indebtedness of the
Partnership, the Guarantor or the Subsidiary Guarantors or any other creditor of
the Partnership, the Guarantor or the Subsidiary Guarantors.
SECTION 10.13 Trustee Entitled to Rely.
Upon any payment or distribution pursuant to this Article X,
the Trustee and the Holders shall be entitled to rely upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 10.02 are pending, upon a certificate of the liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or to such Holders or upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other Debt of the Partnership, the Guarantor or the Subsidiary Guarantors, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article X. In the event
that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article X, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article X, and, if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial determination as
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to the right of such Person to receive such payment. The provisions of Sections
7.01 and 7.02 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article X.
SECTION 10.14 Trustee to Effectuate Subordination.
Each Holder by accepting a Subordinated Security authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination between the Holders
of Subordinated Securities and the holders of Senior Indebtedness as provided in
this Article X and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 10.15 Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such holders
if it shall mistakenly pay over or distribute to Holders of Subordinated
Securities or the Partnership, the Guarantor or the Subsidiary Guarantors or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article X or otherwise.
SECTION 10.16 Reliance by Holders of Senior Indebtedness on Subordination
Provisions.
Each Holder by accepting a Subordinated Security acknowledges
and agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Subordinated Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XI
GUARANTEE
SECTION 11.01 Unconditional Guarantee.
(a) Notwithstanding any provision of this Article XI to
the contrary, the provisions of this Article XI relating to the Subsidiary
Guarantors shall be applicable only to, and inure solely to the benefit of, the
Securities of any series designated, pursuant to Section 2.01 as entitled to the
benefits of the Guarantee of each of the Subsidiary Guarantors.
(b) For value received, the Guarantor and each of the
Subsidiary Guarantors hereby fully, unconditionally and absolutely guarantees
(the "Guarantee") to the Holders and to the Trustee the due and punctual payment
of the principal of, and premium, if any, and interest on the Securities and all
other amounts due and payable under this Indenture and the Securities by the
Partnership, when and as such principal, premium, if any, and interest shall
become due and payable, whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise, according to the terms of the
Securities and this Indenture, subject to the limitations set forth in Section
11.03 and (ii) in the case of the Guarantee of the Subordinated Securities, to
the subordination provisions contained in Article X.
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(c) Failing payment when due of any amount guaranteed
pursuant to the Guarantee, for whatever reason, the Guarantor and each of the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately, subject, in the case of the Guarantee of the Subordinated
Securities, to the subordination provisions contained in Article X. The
Guarantee hereunder (other than the Guarantee of Subordinated Securities) is
intended to be a general, unsecured, senior obligation of the Guarantor and each
of the Subsidiary Guarantors and will rank pari passu in right of payment with
all Debt of the Guarantor and such Subsidiary Guarantor that is not, by its
terms, expressly subordinated in right of payment to the Guarantee. The
Guarantor and each of the Subsidiary Guarantors hereby agrees that its
obligations hereunder shall be full, unconditional and absolute, irrespective of
the validity, regularity or enforceability of the Securities, the Guarantee
(including the Guarantee of the Guarantor and any Subsidiary Guarantor) or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Securities with respect to any provisions hereof or
thereof, the recovery of any judgment against the Partnership, the Guarantor or
any Subsidiary Guarantor, or any action to enforce the same or any other
circumstances which might otherwise constitute a legal or equitable discharge or
defense of the Guarantor or the Subsidiary Guarantors. The Guarantor and each of
the Subsidiary Guarantors hereby agrees that in the event of a default in
payment of the principal of, or premium, if any, or interest on the Securities,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise, legal proceedings may be instituted by the Trustee on
behalf of the Holders or, subject to Section 6.06, by the Holders, on the terms
and conditions set forth in this Indenture, directly against the Guarantor and
such Subsidiary Guarantor to enforce the Guarantee without first proceeding
against the Partnership or any other Subsidiary Guarantor.
(d) The obligations of the Guarantor and each of the
Subsidiary Guarantors under this Article XI shall be as aforesaid full,
unconditional and absolute and shall not be impaired, modified, released or
limited by any occurrence or condition whatsoever, including, without
limitation, (i) any compromise, settlement, release, waiver, renewal, extension,
indulgence or modification of, or any change in, any of the obligations and
liabilities of the Partnership, the Guarantor or any of the Subsidiary
Guarantors contained in the Securities or this Indenture, (ii) any impairment,
modification, release or limitation of the liability of the Partnership, the
Guarantor, any of the Subsidiary Guarantors or any of their estates in
bankruptcy, or any remedy for the enforcement thereof, resulting from the
operation of any present or future provision of any applicable Bankruptcy Law,
as amended, or other statute or from the decision of any court, (iii) the
assertion or exercise by the Partnership, the Guarantor, any of the Subsidiary
Guarantors or the Trustee of any rights or remedies under the Securities or this
Indenture or their delay in or failure to assert or exercise any such rights or
remedies, (iv) the assignment or the purported assignment of any property as
security for the Securities, including all or any part of the rights of the
Partnership, the Guarantor or any of the Subsidiary Guarantors under this
Indenture, (v) the extension of the time for payment by the Partnership, the
Guarantor or any of the Subsidiary Guarantors of any payments or other sums or
any part thereof owing or payable under any of the terms and provisions of the
Securities or this Indenture or of the time for performance by the Partnership,
the Guarantor or any of the Subsidiary Guarantors of any other obligations under
or arising out of any such terms and provisions or the extension or the renewal
of any thereof, (vi) the modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of the Partnership, the
Guarantor or any of the Subsidiary Guarantors set forth in this Indenture, (vii)
the voluntary or involuntary liquidation, dissolution,
57
sale or other disposition of all or substantially all of the assets, marshaling
of assets and liabilities, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceeding affecting, the Partnership, the
Guarantor or any of the Subsidiary Guarantors or any of their respective assets,
or the disaffirmance of the Securities, the Guarantee or this Indenture in any
such proceeding, (viii) the release or discharge of the Partnership, the
Guarantor or any of the Subsidiary Guarantors from the performance or observance
of any agreement, covenant, term or condition contained in any of such
instruments by operation of law, (ix) the unenforceability of the Securities,
the Guarantee or this Indenture or (x) any other circumstances (other than
payment in full or discharge of all amounts guaranteed pursuant to the
Guarantee) which might otherwise constitute a legal or equitable discharge of a
surety or guarantor.
(e) The Guarantor and each of the Subsidiary Guarantors
hereby (i) waives diligence, presentment, demand of payment, filing of claims
with a court in the event of the merger, insolvency or bankruptcy of the
Partnership, the Guarantor or any of the Subsidiary Guarantors, and all demands
whatsoever, (ii) acknowledges that any agreement, instrument or document
evidencing the Guarantee may be transferred and that the benefit of its
obligations hereunder shall extend to each holder of any agreement, instrument
or document evidencing the Guarantee without notice to it and (iii) covenants
that the Guarantee will not be discharged except by complete performance of the
Guarantee. The Guarantor and each of the Subsidiary Guarantors further agrees
that if at any time all or any part of any payment theretofore applied by any
Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including without limitation, the insolvency, bankruptcy or
reorganization of the Partnership, the Guarantor or any of the Subsidiary
Guarantors, the Guarantee shall, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence notwithstanding
such application, and the Guarantee shall continue to be effective or be
reinstated, as the case may be, as though such application had not been made.
(f) The Guarantor and each of the Subsidiary Guarantors
shall be subrogated to all rights of the Holders and the Trustee against the
Partnership in respect of any amounts paid by the Guarantor or such Subsidiary
Guarantor pursuant to the provisions of this Indenture, provided, however, that
the Guarantor or such Subsidiary Guarantor, shall not be entitled to enforce or
to receive any payments arising out of, or based upon, such right of subrogation
until all of the Securities and the Guarantee shall have been paid in full or
discharged.
SECTION 11.02 Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 11.01,
the Guarantor and each of the Subsidiary Guarantors hereby agrees that a
notation relating to such Guarantee, substantially in the form attached hereto
as Annex A, shall be endorsed on each Security entitled to the benefits of the
Guarantee authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of an Officer of U.S. Propane, L.L.C. The
Guarantor and each of the Subsidiary Guarantors hereby agrees that the Guarantee
set forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Security a notation relating to the Guarantee. If
any Officer of U.S. Propane, L.L.C., whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, the Guarantee of such Security shall be
valid nevertheless. The
58
delivery of any Security by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Guarantor and the Subsidiary Guarantors.
The Trustee hereby accepts the trusts in this Indenture upon
the terms and conditions herein set forth.
SECTION 11.03 Limitation on Liability of the Guarantor and the Subsidiary
Guarantors.
The Guarantor and by its acceptance hereof each Holder of a
Security entitled to the benefits of the Guarantee hereby confirm that it is the
intention of all such parties that the guarantee by the Guarantor pursuant to
its Guarantee not constitute a fraudulent transfer or conveyance for purposes of
any federal or state law. To effectuate the foregoing intention, the Holders of
a Security entitled to the benefits of the Guarantee and the Guarantor and the
Subsidiary Guarantors hereby irrevocably agree that the obligations of the
Guarantor under its Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of the
Guarantor and to any collections from or payments made by or on behalf of any
Subsidiary Guarantor in respect of the obligations of such Subsidiary Guarantor
under its Guarantee, result in the obligations of the Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law.
Each Subsidiary Guarantor and by its acceptance hereof each
Holder of a Security entitled to the benefits of the Guarantee hereby confirm
that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any federal or state law. To effectuate
the foregoing intention, the Holders of a Security entitled to the benefits of
the Guarantee and the Guarantor and the Subsidiary Guarantors hereby irrevocably
agree that the obligations of each Subsidiary Guarantor under its Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and to any
collections from or payments made by or on behalf of the Guarantor or any other
Subsidiary Guarantor in respect of the obligations of the Guarantor or such
other Subsidiary Guarantor under its Guarantee, result in the obligations of
such Subsidiary Guarantor under the Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.
SECTION 11.04 Release of Guarantor or Subsidiary Guarantors from Guarantee.
(a) Notwithstanding any other provisions of this
Indenture, the Guarantee of the Guarantor or any Subsidiary Guarantor may be
released upon the terms and subject to the conditions set forth in this Section
11.04. Provided that no Default shall have occurred and shall be continuing
under this Indenture, any Guarantee incurred by the Guarantor or a Subsidiary
Guarantor pursuant to this Article XI shall be unconditionally released and
discharged (i) in the case of a Subsidiary Guarantor, automatically upon (A) any
sale, exchange or transfer, whether by way of merger or otherwise, to any Person
that is not an Affiliate of the Partnership, of all of the Partnership's direct
or indirect equity interests in such Subsidiary Guarantor (provided such sale,
exchange or transfer is not prohibited by this Indenture) or (B) the merger of
such Subsidiary Guarantor into the Partnership, the Guarantor or any other
Subsidiary Guarantor or the liquidation and dissolution of such Subsidiary
Guarantor (in each case to the extent not
59
prohibited by this Indenture) or (ii) in the case of the Guarantor,
automatically upon the merger of the Guarantor into the Partnership or any
Subsidiary Guarantor or the liquidation or dissolution of the Guarantor (in each
case to the extent not prohibited by this Indenture) or (iii) in the case of the
Guarantor or a Subsidiary Guarantor, following delivery of a written notice of
such release or discharge by the Partnership, the Trustee, upon the release or
discharge of all guarantees by the Guarantor or such Subsidiary Guarantor of any
Debt of the Partnership other than obligations arising under this Indenture and
any Securities issued hereunder, except a discharge or release by or as a result
of payment under such guarantees.
(b) The Trustee shall deliver an appropriate instrument
evidencing any release of the Guarantor or a Subsidiary Guarantor from the
Guarantee upon receipt of a written request of the Partnership accompanied by an
Officers' Certificate and an Opinion of Counsel that the Guarantor or the
Subsidiary Guarantor, as the case may be, is entitled to such release in
accordance with the provisions of this Indenture. The Guarantor or any
Subsidiary Guarantor not so released remains liable for the full amount of
principal of (and premium, if any, on) and interest on the Securities entitled
to the benefits of such Guarantee as provided in this Indenture, subject to the
limitations of Section 11.03.
SECTION 11.05 Contribution.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors and the Guarantor, the Subsidiary Guarantors and the
Guarantor hereby agree, inter se, that in the event any payment or distribution
is made by the Guarantor or any Subsidiary Guarantor (a "Funding Guarantor")
under its Guarantee, such Funding Guarantor shall be entitled to a contribution
from the Guarantor and each other Subsidiary Guarantor (as applicable) in a pro
rata amount based on the net assets of the Guarantor and each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Partnership's
obligations with respect to the Securities or any other Subsidiary Guarantor's
or the Guarantor's obligations with respect to its Guarantee.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of TIA Section 318(c), the
imposed duties shall control.
SECTION 12.02 Notices.
Any notice or communication by the Partnership, the Guarantor,
any Subsidiary Guarantor or the Trustee to the others is duly given if in
writing and delivered in person or mailed by first-class mail (registered or
certified, return receipt requested), telex, facsimile or overnight air courier
guaranteeing next day delivery, to the other's address:
If to the Partnership, the Guarantor or the Subsidiary
Guarantors:
Heritage Propane Partners, L.P.
60
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Attn: Michael L. Greenwood
Telephone: (918) 492-7272
Facsimile: (918) 493-7290
If to the Trustee:
Attn:
Telephone:
Facsimile:
The Partnership, the Guarantor, any Subsidiary Guarantor or
the Trustee by notice to the others may designate additional or different
addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if by facsimile; and
the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, postage prepaid, to the Holder's address shown on the register
kept by the Registrar. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it, except in the case of notice to the Trustee, it is duly given only
when received.
If the Partnership, the Guarantor or a Subsidiary Guarantor
mails a notice or communication to Holders, it shall mail a copy to the others
and to the Trustee and each Agent at the same time.
All notices or communications, including without limitation
notices to the Trustee, the Partnership, the Guarantor or a Subsidiary Guarantor
by Holders, shall be in writing, except as otherwise set forth herein.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
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SECTION 12.03 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Partnership, the Guarantor, the Subsidiary Guarantors, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 12.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Partnership, the
Guarantor or a Subsidiary Guarantor to the Trustee to take any action under this
Indenture, the Partnership, the Guarantor or such Subsidiary Guarantor, as the
case may be, shall, if requested by the Trustee, furnish to the Trustee at the
expense of the Partnership, the Guarantor or such Subsidiary Guarantor, as the
case may be:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 12.05) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 12.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been complied with.
SECTION 12.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(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 such Person, he
or she has made such examination or investigation as is necessary to
enable him or her 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 or not, in the opinion of
such Person, such condition or covenant has been complied with.
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SECTION 12.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or the Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 12.07 Legal Holidays.
If a payment date is a Legal Holiday at a Place of Payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 12.08 No Recourse Against Others.
A director, officer, employee, stockholder, partner or other
owner of the Partnership, the Guarantor, a Subsidiary Guarantor or the Trustee,
as such, shall not have any liability for any obligations of the Partnership
under the Securities, for any obligations of the Guarantor or any Subsidiary
Guarantor under the Guarantee, or for any obligations of the Partnership, the
Guarantor, any Subsidiary Guarantor or the Trustee under this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issue of Securities.
SECTION 12.09 Governing Law.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE
EXTENT THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Partnership, the Guarantor, any Subsidiary
Guarantor or any Subsidiary. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture.
SECTION 12.11 Successors.
All agreements of the Partnership, the Guarantor and the
Subsidiary Guarantors in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 12.12 Severability.
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, to the fullest extent
permitted by applicable law, not in any way be affected or impaired thereby.
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SECTION 12.13 Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 12.14 Table of Contents, Headings, etc.
The table of contents, cross-reference table and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
HERITAGE OPERATING, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:
--------------------------------------------
Name:
Title:
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:
--------------------------------------------
Name:
Title:
HERITAGE SERVICE CORP.
By:
--------------------------------------------
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By:
--------------------------------------------
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By:
--------------------------------------------
Name:
Title:
[ ], as Trustee
By:
--------------------------------------------
Name:
Title:
ANNEX A
NOTATION OF GUARANTEE
The Guarantor and each of the Subsidiary Guarantors (which
term includes any successor Person under the Indenture), has fully,
unconditionally and absolutely guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture, the due and punctual
payment of the principal of, and premium, if any, and interest on the Securities
and all other amounts due and payable under the Indenture and the Securities by
the Partnership.
The obligations of the Guarantor and the Subsidiary Guarantors
to the Holders of Securities and to the Trustee pursuant to the Guarantee and
the Indenture are expressly set forth in Articles X and XI of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee.
HERITAGE PROPANE PARTNERS, L.P.
By: U.S. PROPANE, L.P., its General Partner
By: U.S. PROPANE, L.L.C., its General Partner
By:
--------------------------------------------
Name:
Title:
HERITAGE SERVICE CORP.
By:
--------------------------------------------
Name:
Title:
HERITAGE-BI STATE, L.L.C.
By:
--------------------------------------------
Name:
Title:
HERITAGE ENERGY RESOURCES, L.L.C.
By:
--------------------------------------------
Name:
Title:
EXHIBIT 5.1
[BAKER BOTTS L.L.P. LETTERHEAD]
July 25, 2003
Heritage Propane Partners, L.P.
Heritage Operating, L.P.
Heritage Service Corp.
Heritage-Bi State, L.L.C.
Heritage Energy Resources, L.L.C.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Gentlemen:
We have acted as counsel for Heritage Propane Partners, L.P., a
Delaware limited partnership (the "Partnership"), Heritage Operating, L.P., a
Delaware limited partnership (the "Operating Partnership"), Heritage Service
Corp., a Delaware corporation ("Heritage Service"), Heritage-Bi State, L.LC., a
Delaware limited liability company ("Heritage-Bi State"), and Heritage Energy
Resources, L.L.C., an Oklahoma limited liability company ("Heritage Energy" and,
together with Heritage Service and Heritage-Bi State, the "Subsidiary
Guarantors"), with respect to certain legal matters in connection with the
filing with the Securities and Exchange Commission (the "Commission") of a
registration statement (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), registering (i) securities to be
issued and sold by the Partnership, the Operating Partnership and the Subsidiary
Guarantors from time to time pursuant to Rule 415 under the Securities Act for
an aggregate initial offering price not to exceed $800,000,000 and (ii) the
offer and sale by certain unitholders of the Partnership of up to 6,415,762
common units representing limited partner interests in the Partnership. Such
securities include (i) common units representing limited partner interests in
the Partnership (the "Common Units"); (ii) unsecured debt securities of the
Partnership, in one or more series, consisting of notes, debentures or other
evidences of indebtedness (the "Partnership Debt Securities"); (iii) unsecured
debt securities of the Operating Partnership, in one or more series, consisting
of notes, debentures or other evidences of indebtedness (the "Operating
Partnership Debt Securities" and, together with the Partnership Debt Securities,
the "Debt Securities"); and (iv) guarantees (the "Guarantees") of such Debt
Securities by one or more of the Partnership, the Operating Partnership and the
Subsidiary Guarantors. The Common Units, the Debt Securities and the Guarantees
are collectively referred to herein as the "Securities."
In our capacity as your counsel in the connection referred to above, we
have examined (i) the Amended and Restated Agreement of Limited Partnership of
the Partnership and the Certificate of Limited Partnership of the Partnership,
each as amended to date, (ii) the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership and the Certificate of Limited
Partnership of the Operating Partnership, each as amended to date, (iii) the
Amended and Restated Agreement of Limited Partnership of U.S. Propane, L.P., a
Delaware limited partnership and the general partner of the Partnership and the
Operating Partnership (the "General Partner"), and the Certificate of Limited
Partnership of the General Partner, each as amended to date, (iv) the Amended
and Restated Limited Liability Company Agreement of U.S.
BAKER BOTTS L.L.P.
Heritage Propane Partners, L.P., et al. 2 July 25, 2003
Propane, L.L.C., a Delaware limited liability company and the general partner of
the General Partner, and the Certificate of Formation of U.S. Propane, L.L.C.,
each as amended to date, (v) the Certificate of Incorporation of Heritage
Service and the Bylaws of Heritage Service, each as amended to date, (vi) the
Amended and Restated Agreement of Limited Liability Company of Heritage-Bi State
and the Certificate of Formation of Heritage-Bi State, each as amended to date,
(vii) the forms of each of the Partnership's and the Operating Partnership's
senior and subordinated indentures filed as exhibits to the Registration
Statement (collectively, the "Indentures"), (viii) partnership, corporate and
limited liability company records of the Partnership, the Operating Partnership,
the General Partner, U.S. Propane, L.L.C., Heritage Service and Heritage-Bi
State, including minute books of the General Partner and U.S. Propane, L.L.C. as
furnished to us by the General Partner and U.S. Propane, L.L.C., and (ix) the
originals, or copies certified or otherwise identified, of certificates of
public officials and of representatives of the Partnership, the Operating
Partnership, the General Partner, U.S. Propane, L.L.C., Heritage Service and
Heritage-Bi State, statutes and other instruments and documents as a basis for
the opinions hereafter expressed.
In connection with this opinion, we have assumed that (i) the
Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective; (ii) a prospectus supplement will have
been prepared and filed with the Commission describing the Securities offered
thereby; (iii) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner stated in the
Registration Statement and the appropriate prospectus supplement; (iv) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered will have been duly authorized and validly executed and
delivered by the Partnership, the Operating Partnership, the Subsidiary
Guarantors and the other parties thereto; (v) any securities issuable upon
conversion, redemption, exchange or exercise of any Securities being offered
will be duly authorized, created and, if appropriate, reserved for issuance upon
such conversion, redemption, exchange or exercise; (vi) the certificates for the
Common Units will conform to the specimens thereof examined by us and will have
been duly countersigned by a transfer agent and duly registered by a registrar
of the Common Units; and (vii) each document submitted to us for review is
accurate and complete, each such document that is an original is authentic, each
such document that is a copy conforms to an authentic original and all
signatures on each such document are genuine.
Based upon and subject to the foregoing, we are of the opinion that:
1. With respect to Common Units, when (a) the Partnership has
taken all necessary action to approve the issuance of such Common
Units, the terms of the offering thereof and related matters and (b)
such Common Units have been issued and delivered in accordance with the
terms of the applicable definitive purchase, underwriting or similar
agreement approved by the Partnership upon payment of the consideration
therefor provided for therein, such Common Units will be duly
authorized and validly issued and will be fully paid and nonassessable.
2. With respect to the Debt Securities and the Guarantees to
be issued under the applicable Indenture, when (a) the applicable
Indenture has been duly authorized and validly executed and delivered
by the Partnership, the Operating Partnership, the
BAKER BOTTS L.L.P.
Heritage Propane Partners, L.P., et al. 3 July 25, 2003
Subsidiary Guarantors and the trustee thereunder, (b) the applicable
Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended, (c) the Partnership, the Operating Partnership and
the Subsidiary Guarantors have taken all necessary action to approve
the issuance and terms of such Debt Securities and Guarantees, the
terms of the offering thereof and related matters and (d) such Debt
Securities and Guarantees have been duly executed, authenticated,
issued and delivered in accordance with the terms of the applicable
Indenture and the applicable definitive purchase, underwriting or
similar agreement approved by the Partnership, the Operating
Partnership and the Subsidiary Guarantors upon payment of the
consideration therefor provided for therein, such Debt Securities and
Guarantees will be duly authorized and legally issued and will
constitute valid and legally binding obligations of the Partnership,
the Operating Partnership and the Subsidiary Guarantors, enforceable
against the Partnership, the Operating Partnership and the Subsidiary
Guarantors in accordance with their terms, except as the enforceability
thereof is subject to the effect of (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
relating to or affecting creditors' rights generally, (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or (iii) any implied
covenants of good faith and fair dealing.
The opinions set forth above are limited in all respects to matters of
the contract law of the State of New York, the Delaware Revised Uniform Limited
Partnership Act, the Delaware Limited Liability Company Act, the General
Corporation Law of the State of Delaware and applicable federal law. We hereby
consent to the filing of this opinion of counsel as Exhibit 5.1 to the
Registration Statement. We also consent to the reference to our Firm under the
heading "Legal Matters" in the prospectus forming a part of the Registration
Statement. In giving this consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Baker Botts L.L.P.
JD/PFW
EXHIBIT 5.2
[DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P. LETTERHEAD]
July 25, 2003
Heritage Propane Partners, L.P.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Ladies and Gentlemen:
We have acted as special counsel for Heritage Propane Partners, L.P., a
Delaware limited partnership (the "Partnership"), with respect to certain legal
matters in connection with the filing with the Securities and Exchange
Commission (the "Commission") of a registration statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
registering the offer and sale by certain unitholders of the Partnership of up
to 6,415,762 common units representing limited partner interests in the
Partnership (the "Selling Unitholder Common Units").
In our capacity as your counsel with respect to the matters referred to
above, we have examined (i) the Amended and Restated Agreement of Limited
Partnership of the Partnership and the Certificate of Limited Partnership of the
Partnership, each as amended to date; (ii) the Amended and Restated Agreement of
Limited Partnership of U.S. Propane, L.P., a Delaware limited partnership and
the general partner of the Partnership (the "General Partner") and the
Certificate of Limited Partnership of the General Partner, each as amended to
date; (iii) the Amended and Restated Limited Liability Company Agreement of U.S.
Propane, L.L.C., a Delaware limited liability company and the general partner of
the General Partner, and the Certificate of Formation of U.S. Propane, L.L.C.,
each as amended to date; (iv) partnership and limited liability records of the
Partnership, the General Partner and U.S. Propane, L.L.C., including minute
books of the General Partner and U.S. Propane, L.L.C. as furnished to us by the
General Partner and U.S. Propane, L.L.C.; and (v) such certificates, statutes
and other instruments and documents as we have deemed necessary.
July 25, 2003
Page 2
In rendering this opinion, we have relied in respect of matters of fact
upon the originals, or copies certified or otherwise identified, of certificates
of representatives of the Partnership, the General Partner and U.S. Propane,
L.L.C. and of certificates of public officials. In addition, we have assumed
that each document submitted to us is accurate and complete, that each document
submitted as an original is authentic, that each document submitted as a copy
conforms to an authentic original, and that all signatures on each document
examined by us are genuine.
Based upon the foregoing and subject to the limitations, qualifications
and exceptions set forth herein, we are of the opinion that:
1. The Selling Unitholder Common Units have been duly authorized and
validly issued and are fully paid and nonassessable.
The opinions set forth above are limited in all respects to matters of
the Delaware Revised Uniform Limited Partnership Act, the Delaware Limited
Liability Company Act, the General Corporation Law of the State of Delaware and
applicable federal law. We hereby consent to the filing of this opinion of
counsel as Exhibit 5.2 to the Registration Statement. We also consent to the
reference to our Firm under the heading "Legal Matters" in the prospectus
forming a part of the Registration Statement. In giving this consent, we do not
hereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P.
/s/ DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P.
EXHIBIT 8.1
[BAKER BOTTS L.L.P. LETTERHEAD]
July 25, 2003
Heritage Propane Partners, L.P.
Heritage Operating, L.P.
Heritage Service Corp.
Heritage-Bi State, L.L.C.
Heritage Energy Resources, L.L.C.
8801 South Yale Avenue, Suite 310
Tulsa, Oklahoma 74137
Re: Exhibit 8.1 Opinion
Gentlemen:
We have acted as counsel for Heritage Propane Partners, L.P., a
Delaware limited partnership (the "Partnership"), Heritage Operating, L.P., a
Delaware limited partnership (the "Operating Partnership"), Heritage Service
Corp., a Delaware corporation ("Heritage Service"), Heritage-Bi State, L.LC., a
Delaware limited liability company ("Heritage-Bi State"), and Heritage Energy
Resources, L.L.C., an Oklahoma limited liability company ("Heritage Energy" and,
together with Heritage Service and Heritage-Bi State, the "Subsidiary
Guarantors"), with respect to certain legal matters in connection with the
filing with the Securities and Exchange Commission (the "Commission") of a
registration statement (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), registering (i) securities to be
issued and sold by the Partnership, the Operating Partnership and the Subsidiary
Guarantors from time to time pursuant to Rule 415 under the Securities Act for
an aggregate initial offering price not to exceed $800,000,000 and (ii) the
offer and sale by certain unitholders of the Partnership of up to 6,415,762
common units representing limited partner interests in the Partnership. Such
securities include (i) common units representing limited partner interests in
the Partnership; (ii) unsecured debt securities of the Partnership, in one or
more series, consisting of notes, debentures or other evidences of indebtedness;
(iii) unsecured debt securities of the Operating Partnership, in one or more
series, consisting of notes, debentures or other evidences of indebtedness; and
(iv) guarantees of such debt securities by one or more of the Partnership, the
Operating Partnership and the Subsidiary Guarantors.
In connection therewith, we prepared the discussion set forth under the
caption "Material Tax Considerations" (the "Discussion") in the prospectus
contained in the Registration Statement.
All statements of legal conclusions contained in the Discussion, unless
otherwise noted, are our opinion with respect to the matters set forth therein
as of the effective date of the Registration Statement. In addition, we are of
the opinion that the federal income tax discussion in the Registration Statement
with respect to those matters as to which no legal conclusions are provided is
an accurate discussion of such federal income tax matters (except for the
BAKER BOTTS L.L.P.
Heritage Propane Partners, L.P., et al. 2 July 25, 2003
representations and statements of fact of the Partnership and its general
partner, included in such discussion, as to which we express no opinion).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm and this opinion
contained in the Discussion. In giving this consent, however, we do not hereby
admit that we are within the category of persons whose consent is required under
section 7 of the Securities Act or the rules and regulations of the Commission
thereunder.
Very truly yours,
/s/ Baker Botts L.L.P.
EXHIBIT 12.1
HERITAGE PROPANE PARTNERS, L.P.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)
RATIO OF EARNINGS TO FIXED CHARGES OF HERITAGE PROPANE PARTNERS, L.P. AND
SUBSIDIARIES ON A CONSOLIDATED BASIS FOR THE PERIODS INDICATED (FORMERLY PEOPLES
GAS):
Eight Nine
Months Months
Ended Ended
Years ended December 31, August 31, Years Ended August 31, May 31,
---------------------------------- ---------- ---------------------- --------
1997 1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- -------- --------
Pre-tax income from continuing
operations before minority interest $ 980 $ 3,483 $ 2,895 $ (3,547) $ 20,524 $ 5,476 $ 49,961
Less: Equity in earnings (losses)
of affiliates -- -- -- (67) 1,250 1,338 1,687
Add: Fixed charges 13 8 12 2,817 36,339 38,034 28,068
Distributed income of
equity investees 125 400 303
-------- -------- -------- -------- -------- -------- --------
Total earnings as adjusted 993 3,491 2,907 (663) 55,738 42,572 76,645
-------- -------- -------- -------- -------- -------- --------
Fixed charges:
Interest expensed -- -- -- 2,409 35,567 37,341 27,563
Amortized debt issuance costs -- -- -- 389 636 587 440
Estimated interest element of
rentals 13 8 12 19 136 106 65
-------- -------- -------- -------- -------- -------- --------
Total fixed charges 13 8 12 2,817 36,339 38,034 28,068
-------- -------- -------- -------- -------- -------- --------
RATIO OF EARNINGS TO FIXED CHARGES 76.38x 436.37x 242.25x (A) 1.53x 1.12x 2.73x
- ----------
(A) Earnings for the eight months ended August 31, 2000, were insufficient to
cover fixed charges by $3.5 million.
RATIO OF EARNINGS TO FIXED CHARGES OF HERITAGE PROPANE PARTNERS, L.P. AND
SUBSIDIARIES ON A CONSOLIDATED BASIS FOR THE PERIODS INDICATED (PREDECESSOR
HERITAGE):
Period
Years ended Ended
August 31, August 9,
------------------- ---------
1998 1999 2000
------- ------- ---------
Pre-tax income from continuing
operations before minority interest $ 9,266 $10,116 $ 6,936
Less: Equity in earnings (losses) of affiliates 707 1,005 614
Add: Fixed charges 15,148 16,477 18,352
Distributed income of equity investees 100 470 200
------- ------- -------
Total earnings as adjusted 23,807 26,058 24,874
------- ------- -------
Fixed charges:
Interest expensed 14,599 15,915 17,664
Amortized debt issuance costs 446 465 584
Estimated interest element of rentals 103 97 104
------- ------- -------
Total fixed charges 15,148 16,477 18,352
------- ------- -------
RATIO OF EARNINGS TO FIXED CHARGES 1.57x 1.58x 1.35x
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated October 25, 2002, accompanying the consolidated
financial statements of Heritage Propane Partners, L.P. as of August 31, 2002
and 2001, and for the years then ended, the consolidated balance sheet of U.S.
Propane, L.P. as of August 31, 2002, and the financial statements of Bi-State
Propane as of August 31, 2002 and for the year then ended, included in the
Annual Report on Form 10-K of Heritage Propane Partners, L.P. for the year ended
August 31, 2002, which is incorporated by reference in this Registration
Statement. We have also issued our report dated February 7, 2003, accompanying
the combined financial statements of V-1 Oil Co. and V-1 Gas Co. as of December
31, 2001 and 2000 and for each of the three years in the period ended December
31, 2001, included in Heritage Propane Partners, L.P.'s Current Report on Form
8-K/A dated January 2, 2003, as amended on March 18, 2003, which is incorporated
by reference in this Registration Statement. We consent to the incorporation by
reference in the Registration Statement of the aforementioned reports and to the
use of our name as it appears under the caption "Experts."
/s/ GRANT THORNTON LLP
Tulsa, Oklahoma
July 23, 2003
