S-4
Table of Contents

As filed with the Securities and Exchange Commission on March 5, 2021

Registration No. 333-          

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

ENERGY TRANSFER LP

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware   4922   30-0108820
(State of Incorporation)  

(Primary Standard Industrial

Classification Code Number)

  (IRS Employer Identification No.)

 

 

8111 Westchester Drive, Suite 600

Dallas, Texas 75225

(214) 981-0700

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

 

 

Thomas E. Long

Co-Chief Executive Officer

Energy Transfer LP

8111 Westchester Drive, Suite 600

Dallas, Texas 75225

(214) 981-0700

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

With a copy to:

William N. Finnegan IV

Kevin M. Richardson

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

Phone: (713) 546-5400

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective and upon consummation of the merger described in the enclosed prospectus.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (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 this form is a post-effective amendment filed pursuant to Rule 462(d) 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.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

    

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

    


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CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to Be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

Per Unit

 

Proposed

Maximum
Aggregate

Offering Price(1)

 

Amount of

Registration Fee(3)

6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

  950,000   N/A   $950,000,000   $103,645

6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

  550,000   N/A   $550,000,000   $60,005

7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

  18,000,000   N/A   $450,000,000   $49,095

7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

  17,800,000   N/A   $445,000,000   $48,550

7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

  32,000,000   N/A   $800,000,000   $87,280

6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units

  500,000   N/A   $500,000,000   $54,550

7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units

  1,100,000   N/A   $1,100,000,000   $120,010

 

 

(1)

Represents the maximum number of 6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“ET Series A Preferred Units”), 6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“ET Series B Preferred Units”), 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“ET Series C Preferred Units”), 7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“ET Series D Preferred Units”), 7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“ET Series E Preferred Units”), 6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units (“ET Series F Preferred Units”) and 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units (“ET Series G Preferred Units”) representing limited partner interests in Energy Transfer LP, the registrant, issuable upon completion of the merger with Energy Transfer Operating, L.P. described herein.

(2)

Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (a) with respect to ET Series A Preferred Units, the product of (x) $1,000 (the redemption price of ET Series A Preferred Units) and (y) 950,000 ET Series A Preferred Units, (b) with respect to ET Series B Preferred Units, the product of (x) $1,000 (the redemption price of ET Series B Preferred Units) and (y) 550,000 ET Series B Preferred Units, (c) with respect to ET Series C Preferred Units, the product of (x) $25 (the redemption price of ET Series C Preferred Units) and (y) 18,000,000 ET Series C Preferred Units, (d) with respect to ET Series D Preferred Units, the product of (x) $25 (the redemption price of ET Series D Preferred Units) and (y) 17,800,000 ET Series D Preferred Units, (e) with respect to ET Series E Preferred Units, the product of (x) $25 (the redemption price of ET Series E Preferred Units) and (y) 32,000,000 ET Series E Preferred Units, (f) with respect to ET Series F Preferred Units, the product of (x) $1,000 (the redemption price of ET Series F Preferred Units) and (y) 500,000 ET Series F Preferred Units and (g) with respect to ET Series G Preferred Units, the product of (x) $1,000 (the redemption price of ET Series G Preferred Units) and (y) 1,100,000 ET Series G Preferred Units.

(3)

Calculated by multiplying the proposed maximum aggregate offering price by 0.0001091.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this prospectus may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS—SUBJECT TO COMPLETION—DATED MARCH 5, 2021.

 

 

LOGO

We Are Not Asking You for a Proxy and

You are Requested Not To Send Us a Proxy

On March 5, 2021, Energy Transfer LP, a Delaware limited partnership (“ET”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ETO Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of ET (“Merger Sub”), and Energy Transfer Operating, L.P., a Delaware limited partnership and subsidiary of ET (“ETO”), pursuant to which Merger Sub will merge with and into ETO (the “Merger”), with ETO surviving the merger as a wholly owned subsidiary of ET. As a result of the Merger:

 

   

each 6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $1,000 per unit, representing a limited partner interest in ETO (the “ETO Series A Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued preferred unit representing a limited partner interest in ET designated as a “6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit” and having the same preferences, rights, powers and duties as the ETO Series A Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO) (the “ET Series A Preferred Units”);

 

   

each 6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $1,000 per unit, representing a limited partner interest in ETO (the “ETO Series B Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued preferred unit representing a limited partner interest in ET designated as a “6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit” and having the same preferences, rights, powers and duties as the ETO Series B Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO) (the “ET Series B Preferred Units”);

 

   

each 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $25 per unit, representing a limited partner interest in ETO (the “ETO Series C Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued preferred unit representing a limited partner interest in ET designated as a “7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit” and having the same preferences, rights, powers and duties as the ETO Series C Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO) (the “ET Series C Preferred Units”);

 

   

each 7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $25 per unit, representing a limited partner interest in ETO (the “ETO Series D Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued preferred unit representing a limited partner interest in ET designated as a “7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit” and having the same preferences, rights, powers and duties as the ETO Series D Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO) (the “ET Series D Preferred Units”);

 

   

each 7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $25 per unit, representing a limited partner interest in ETO (the “ETO Series E Preferred Units” and, together with the ETO Series C Preferred Units and the ETO Series D Preferred Units, the “Retail ETO Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued preferred unit representing a limited partner interest in ET designated as a “7.600% Series E Fixed-to-Floating Rate Cumulative


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Redeemable Perpetual Preferred Unit” and having the same preferences, rights, powers and duties as the ETO Series E Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO) (the “ET Series E Preferred Units” and, together with the ET Series C Preferred Units and the ET Series D Preferred Units, the “Retail ET Preferred Units”);

 

   

each 6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $1,000 per unit, representing a limited partner interest in ETO (the “ETO Series F Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued preferred unit representing a limited partner interest in ET designated as a “6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit” and having the same preferences, rights, powers and duties as the ETO Series F Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO) (the “ET Series F Preferred Units”); and

 

   

each 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $1,000 per unit, representing a limited partner interest in ETO (the “ETO Series G Preferred Units” and, together with the ETO Series A Preferred Units, the ETO Series B Preferred Units and the ETO Series F Preferred Units, the “Institutional ETO Preferred Units” and, together with the Retail ETO Preferred Units, the “ETO Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued preferred unit representing a limited partner interest in ET designated as a “7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit” and having the same preferences, rights, powers and duties as the ETO Series G Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO) (the “ET Series G Preferred Units” and, together with the ET Series A Preferred Units, the ET Series B Preferred Units and the ET Series F Preferred Units, the “Institutional ET Preferred Units” and, together with the Retail ET Preferred Units, the “ET Preferred Units”).

ET, in its capacity as the record and beneficial owner of 100% of the common units representing limited partner interests in ETO (“ETO Common Units”), which constitutes a “Unit Majority” (as defined in the Fifth Amended and Restated Agreement of Limited Partnership of ETO, dated as of October 19, 2018 (as amended to date, the “ETO Partnership Agreement”)), has approved, by written consent, the Merger Agreement and the transactions contemplated thereby, including the Merger. ETP Holdco Corporation, a Delaware corporation and wholly owned subsidiary of ETO (“ETP Holdco”), in its capacity as the record and beneficial owner of 100% of the (i) Class K Units representing limited partner interests in ETO (the “ETO Class K Units”), (ii) Class L Units representing limited partner interests in ETO (the “ETO Class L Units”), (iii) Class M Units representing limited partner interests in ETO (the “ETO Class M Units”) and (iv) Class N Units representing limited partner interests in ETO (the “ETO Class N Units” and, together with the ETO Class K Units, the ETO Class L Units and the ETO Class M Units, the “ETO Hook Units”), has approved, by written consent, the Merger Agreement and the transactions contemplated thereby, including the Merger. No further approval of the limited partners of ETO is required in connection with the Merger.

The ETO Series C Preferred Units, ETO Series D Preferred Units and ETO Series E Preferred Units currently trade on the New York Stock Exchange (the “NYSE”) under the symbols “ETPprC,” “ETPprD” and “ETPprE,” respectively. The Institutional ETO Preferred Units are not currently listed on any securities exchange.

ET plans to issue the ET Preferred Units promptly following the closing of the Merger. ET plans to apply to have the Retail ET Preferred Units listed on the NYSE. Currently, there is no public market for the Retail ET Preferred Units. ET does not intend to apply for the listing of the Institutional ET Preferred Units on any securities exchange or for the quotation of the Institutional ET Preferred Units on any automated dealer quotation system.

This represents a prospectus of ET in connection with the offering of the ET Preferred Units issuable in exchange for the ETO Preferred Units in connection with the Merger. ET and ETO encourage you to read the entire document carefully. In particular, please read the section entitled “Risk Factors” beginning on page 10 of this prospectus for a discussion of risks relevant to the Merger and the ET Preferred Units.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE ISSUANCE OF ET PREFERRED UNITS OR ANY OTHER TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROSPECTUS, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This prospectus is dated                 , 2021.


Table of Contents

TABLE OF CONTENTS

 

ABOUT THIS DOCUMENT

     1  

QUESTIONS AND ANSWERS

     2  

SUMMARY

     5  

Information About the Parties

     5  

The Merger and the Merger Agreement

     5  

Required Approval of the Merger by ETO Unitholders

     6  

ET’s Ownership Interest in and Control of ETO

     6  

Reasons for the Merger

     6  

No ET Unitholder Approval Required

     6  

No Appraisal or Dissenters’ Rights

     6  

Regulatory Matters

     6  

Listing of Retail ET Preferred Units; Delisting and Deregistration of Retail ETO Preferred Units

     6  

Comparison of Unitholders’ Rights

     7  

Material U.S. Federal Income Tax Consequences of the Merger

     7  

Risk Factors

     7  

Recent Developments

     8  

Additional Information

     8  

RISK FACTORS

     10  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     15  

INFORMATION ABOUT THE PARTIES

     16  

Energy Transfer LP

     16  

Energy Transfer Operating, L.P.

     16  

ETO Merger Sub, LLC

     16  

THE MERGER

     17  

Transaction Structure

     17  

Reasons for the Merger

     17  

Consideration to ETO Preferred Unitholders

     17  

Treatment of Other Limited Partner Interests in ETO

     17  

Amendment No. 8 to the ET Partnership Agreement

     17  

Listing of Retail ET Preferred Units; Delisting and Deregistration of Retail ETO Preferred Units

     18  

Interests of ET in the Merger

     18  

No Appraisal or Dissenters’ Rights

     18  

No ET Unitholder Approval Required

     18  

Post-Closing Transactions

     19  

Accounting Treatment of the Merger

     19  

THE MERGER AGREEMENT

     20  

Explanatory Note Regarding the Merger Agreement

     20  

The Merger

     20  

Closing and Effective Time of the Merger

     20  

Merger Consideration

     21  

Exchange Procedures

     21  

Termination of the Exchange Fund

     21  

Lost, Stolen or Destroyed Unit Certificates

     22  

Organizational Documents

     22  

Representations and Warranties

     22  

Stock Exchange Listing and Delisting

     22  

Conditions to the Completion of the Merger

     22  

Termination

     22  

Expenses

     23  

Amendment and Waiver

     23  

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     24  

Assumptions Related to the U.S. Federal Income Tax Treatment of the Merger

     24  

U.S. Federal Income Tax Treatment of the Merger

     24  

Tax Consequences of the Merger to ETO

     25  

Tax Consequences of the Merger to ETO Preferred Unitholders

     25  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF ET PREFERRED UNIT OWNERSHIP

     26  

Partnership Status

     27  

Limited Partner Status

     28  

Tax Consequences of ET Preferred Unit Ownership

     29  

Tax Treatment of Operations

     31  

Disposition of ET Preferred Units

     31  

Tax-Exempt Organizations and Other Investors

     32  

Administrative Matters

     34  

Recent Legislative Developments

     36  

State, Local, Foreign and Other Tax Considerations

     37  

COMPARISON OF PREFERRED UNITHOLDERS’ RIGHTS AND DESCRIPTION OF ET PREFERRED UNITS

     38  

Series A Preferred Units

     38  

Series B Preferred Units

     43  

Series C Preferred Units

     48  

Series D Preferred Units

     53  

Series E Preferred Units

     58  

Series F Preferred Units

     62  

Series G Preferred Units

     68  

NO APPRAISAL OR DISSENTERS’ RIGHTS

     74  

BUSINESS

     75  

PROPERTY

     76  

LEGAL PROCEEDINGS

     77  

MARKET FOR REGISTRANT’S COMMON UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     78  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     79  

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     80  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     81  

LEGAL MATTERS

     82  

EXPERTS

     83  

WHERE YOU CAN FIND MORE INFORMATION

     84  

ANNEX A – MERGER AGREEMENT

  

ANNEX B – FORM OF AMENDMENT NO. 8 TO ET PARTNERSHIP AGREEMENT

  

ANNEX C – ANNUAL REPORT ON FORM 10-K OF ENERGY TRANSFER LP FOR THE YEAR ENDED DECEMBER 31, 2020

  

ANNEX D – ANNUAL REPORT ON FORM 10-K OF ENERGY TRANSFER OPERATING, L.P. FOR THE YEAR ENDED DECEMBER 31, 2020

  

 

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ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission (the “SEC”) by ET (File No. 333-             ), constitutes a prospectus of ET under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the ET Preferred Units to be issued pursuant to the terms of the Merger Agreement. ET and ETO file annual, quarterly and current reports and other information with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Copies of ET’s and ETO’s filings with the SEC are available to you without charge upon written or oral request. You can obtain any of these documents by requesting them in writing or by telephone from ET or ETO at: 8111 Westchester Drive, Suite 600, Dallas, TX 75225, Attention: Investor Relations, Email: InvestorRelations@energytransfer.com.

In order to receive timely delivery of the documents in advance of closing of the Merger, your request should be received no later than                     , 2021. If you request any documents, ET or ETO will mail them to you by first class mail, or another equally prompt means, within one business day after receipt of your request.

You should rely only on the information contained in this prospectus, including each of the annexes. No one has been authorized to provide you with information that is different from that contained in this prospectus, including each of the annexes. This prospectus is dated                     , 2021. The information contained in this prospectus is accurate only as of that date or, in the case of information in a document attached as an annex, as of the date of such document, unless the information specifically indicates that another date applies. Neither the mailing of this prospectus to holders of ETO Preferred Units nor the issuance by ET of ET Preferred Units pursuant to the terms of the Merger Agreement will create any implication to the contrary.

This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

The information concerning ET contained in this prospectus has been provided by ET, and the information concerning ETO contained in this prospectus has been provided by ETO.

 

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QUESTIONS AND ANSWERS

The following section provides brief answers to certain questions that you may have regarding the issuance of ET Preferred Units in exchange for the ETO Preferred Units in connection with the Merger pursuant to the terms of the Merger Agreement. Please note that this section does not address all issues that may be important to you as a holder of ETO Preferred Units (“ETO Preferred Unitholder”). Accordingly, you should carefully read this entire prospectus, including each of the annexes.

 

Q:

Why am I receiving this prospectus?

 

A:

ETO Preferred Unitholders are receiving this prospectus in connection with the issuance of the ET Preferred Units in exchange for the ETO Preferred Units pursuant to the terms of the Merger Agreement.

The Merger is part of an internal reorganization that ET is undertaking, whereby each of the ETO Preferred Units will be cancelled and converted into the right to receive one newly issued preferred unit in ET, having the same preferences, rights, powers and duties as the applicable ETO Preferred Unit (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).

 

Q:

What will happen to ETO as a result of the Merger?

 

A:

If the Merger is successfully completed, Merger Sub will be merged with and into ETO, with ETO being the surviving entity. ETO will become a wholly owned subsidiary of ET.

 

Q:

Why are the parties undertaking the Merger?

 

A:

The parties are undertaking the Merger as part of an internal reorganization to simplify the structure and capitalization of ET and its subsidiaries, including ETO.

 

Q:

What will holders of ETO Preferred Units be entitled to receive in the Merger?

 

A:

As a result of the Merger:

 

   

each ETO Series A Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series A Preferred Unit;

 

   

each ETO Series B Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series B Preferred Unit;

 

   

each ETO Series C Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series C Preferred Unit;

 

   

each ETO Series D Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series D Preferred Unit;

 

   

each ETO Series E Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series E Preferred Unit;

 

   

each ETO Series F Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series F Preferred Unit; and

 

   

each ETO Series G Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series G Preferred Unit.

Each series of ET Preferred Units will have the same preferences, rights, powers and duties as the respective series of ETO Preferred Units exchanged therefor (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).

 

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Q:

What will happen to the other partnership interests in ETO as a result of the Merger?

 

A:

As a result of the Merger, (i) the ETO Common Units, all of which are owned by ET, will be unchanged and remain outstanding, (ii) the ETO Hook Units, all of which are owned by ETP Holdco, will be converted into the right to receive 675,625,000 newly issued units representing a limited partner interest in ET designated as a “Class B Unit” (the “ET Class B Units”) in the aggregate and (iii) the General Partner Interest (as defined in the ETO Partnership Agreement), which is owned by Energy Transfer Partners GP, L.P., a Delaware limited partnership and the general partner of ETO (“ETO GP”), will be unchanged and remain outstanding.

 

Q:

Will the preferences, rights, powers and duties of the newly issued ET Preferred Units differ materially from the ETO Preferred Units for which they are exchanged?

 

A:

No, the ET Preferred Units will have the same preferences, rights, powers and duties as the ETO Preferred Units for which they are exchanged, other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO.

 

Q:

Are holders of ETO Preferred Units entitled to vote on the Merger?

 

A:

No. Holders of ETO Preferred Units do not have the right to vote on or approve the Merger under applicable law, the ETO Partnership Agreement or the Merger Agreement. The only limited partner votes necessary to approve the Merger are (i) the approval by a majority of the outstanding ETO Common Units and (ii) the approval by a majority of the outstanding ETO Hook Units, each of which has already been secured.

 

Q:

Where will ETO Retail Preferred Units and ET Retail Preferred Units trade after the Merger?

 

A:

The ETO Retail Preferred Units will no longer be publicly traded following the Merger and will be delisted from the NYSE. The ET Series C Preferred Units, ET Series D Preferred Units and ET Series E Preferred Units are expected to trade on the NYSE under the symbols “            ,” “            “ and “            ,” respectively. ET does not intend to apply for the listing of the Institutional ET Preferred Units on any securities exchange or for the quotation of the Institutional ET Preferred Units on any automated dealer quotation system.

 

Q:

When will the Merger be completed?

 

A:

ET and ETO are working to complete the Merger as soon as possible. A number of conditions must be satisfied before ET and ETO can complete the Merger. ET and ETO expect to complete the Merger on or about April 1, 2021. Please read the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 22.

 

Q:

Are holders of ETO Preferred Units entitled to appraisal or dissenters’ rights?

 

A:

No. Holders of ETO Preferred Units do not have appraisal or dissenters’ rights under applicable law or under the ETO Partnership Agreement or the Merger Agreement.

 

Q:

What are the expected U.S. federal income tax consequences to an ETO Preferred Unitholder as a result of the transactions contemplated by the Merger Agreement?

 

A:

It is anticipated that no gain or loss should be recognized by an ETO Preferred Unitholder solely as a result of the Merger. In addition, it is anticipated that no gain or loss should be recognized by ETO solely as a result of the Merger. For additional information, please see the sections entitled “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to ETO and ETO Preferred Unitholders” and “Risk Factors—Risks Relating to the Merger.

 

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Q:

What are the expected U.S. federal income tax consequences for an ETO Preferred Unitholder of the ownership of ET Preferred Units after the Merger is completed?

 

A:

Distributions on the ET Preferred Units are expected to be treated as guaranteed payments for the use of capital that will generally be taxable to the holders of ET Preferred Units as ordinary income. In addition to U.S. federal income taxes, such a holder will likely be subject to other taxes, including state and local income taxes, unincorporated business taxes, and estate, inheritance or intangibles taxes that may be imposed by the various jurisdictions in which ET conducts business or owns property following the Merger, or in which the unitholder is a resident. Please read the section entitled “Material U.S. Federal Income Tax Consequences of ET Preferred Unit Ownership.

 

Q:

To whom should I direct any questions I may have?

 

A:

Holders of ETO Preferred Units may call or email ETO Investor Relations at (214) 981-0795 or InvestorRelations@energytransfer.com if they have further questions or if they would like additional copies, without charge, of this prospectus.

 

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SUMMARY

This summary highlights selected information included in this prospectus and does not contain all the information that may be important to you. To fully understand the Merger Agreement and the transactions contemplated thereby and for a more complete description of the terms of the Merger Agreement, you should read carefully this entire prospectus, including the annexes. Each item in this summary includes a page reference directing you to a more complete description of that item.

 

Information

About the Parties (page 16)

Energy Transfer LP is a publicly traded limited partnership owning and operating a diversified portfolio of energy assets. ET’s core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (“NGL”) and refined product transportation and terminalling assets; NGL storage and fractionation; and various acquisition and marketing assets. ET, through its ownership of ETO, also owns Lake Charles LNG Company, as well as limited partner interests and the general partner interests of publicly traded master limited partnerships Sunoco LP and USA Compression Partners, LP. The address of ET’s principal executive offices is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

Energy Transfer Operating, L.P. is a Delaware limited partnership and a subsidiary of ET. ETO is engaged in the midstream transportation and storage of natural gas, NGLs, refined products and crude oil, and terminalling services and acquisition and marketing activities, as well as NGL storage and fractionation services. ETO is managed by its general partner, ETO GP, and ETO GP is managed by its general partner, Energy Transfer Partners, L.L.C., a Delaware limited liability company (“ETO Managing GP”). ETO Managing GP is a wholly owned subsidiary of ET. The address of ETO’s principal executive offices is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

ETO Merger Sub LLC is a Delaware limited liability company and wholly owned subsidiary of ET. Merger Sub has not carried on any activities to date, other than activities incidental to its formation or undertaken in connection with the transactions contemplated by the Merger Agreement. The address of Merger Sub’s principal executive offices is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

The Merger and the Merger Agreement (pages 17 and 20)

The terms and conditions of the Merger are contained in the Merger Agreement, which is attached to this document as Annex A. You are encouraged to read the Merger Agreement carefully, as it is the legal document that governs the Merger.

The Merger Agreement provides for the merger of ETO with and into Merger Sub, a wholly owned subsidiary of ET, with ETO continuing as the surviving entity in the Merger as a wholly owned subsidiary of ET. Each ETO Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one ET Preferred Unit with substantially equivalent preferences, rights, powers, duties and obligations as the ETO Preferred Unit for which it is exchanged.

Additionally, (i) the ETO Common Units, all of which are owned by ET, will be unchanged and remain outstanding, (ii) the ETO Hook Units, all of which are owned by ETP Holdco, will be converted into the right to receive 675,625,000 newly issued ET Class B Units in the aggregate and (iii) the General Partner Interest (as defined in the ETO Partnership Agreement), which is owned by ETO GP, will be unchanged and remain outstanding.



 

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Required

Approval of the Merger by ETO Unitholders (page 18)

The approval and adoption of the Merger Agreement and the Merger by ETO requires the affirmative vote or consent of holders of (i) at least a majority of the outstanding ETO Common Units and (ii) at least a majority of the outstanding ETO Hook Units. In connection with the execution of the Merger Agreement, (a) ET, which owns all of the outstanding ETO Common Units, and (b) ETP Holdco, which owns all of the outstanding ETO Hook Units, each delivered a written consent approving and adopting the Merger Agreement and the Merger. The delivery of the written consents by (x) ET with respect to the ETO Common Units it owns and (y) ETP Holdco with respect to the ETO Hook Units it owns is sufficient to adopt the Merger Agreement and thereby approve the Merger. The approval and adoption of the Merger Agreement and the Merger does not require the vote or consent of any other limited partners of ETO pursuant to the terms of the ETO Partnership Agreement.

 

ET’s

Ownership Interest in and Control of ETO (page 18)

ET owns ETO Managing GP, which is the general partner of ETO GP, which is the general partner of ETO, and ET controls ETO through its ownership of these two entities. ET also owns directly all of the outstanding ETO Common Units and indirectly all of the ETO Hook Units through its ownership of ETP Holdco, a wholly owned subsidiary of ETO. ET has different economic interests in the Merger than holders of ETO Preferred Units generally due to, among other things, the fact that ET is the acquiring entity in the Merger.

 

Reasons

for the Merger (page 17)

The parties are undertaking the Merger as part of an internal reorganization to simplify the structure and capitalization of ET and its subsidiaries, including ETO.

No ET Unitholder Approval Required (page 18)

The approval and adoption of the Merger Agreement and the Merger by ET does not require the affirmative vote or consent of any holder of ET units (the “ET Unitholders”).

No Appraisal or Dissenters’ Rights (page 18)

Holders of ETO Preferred Units do not have appraisal or dissenters’ rights under applicable law or contractual appraisal or dissenters’ rights under the ETO Partnership Agreement or the Merger Agreement.

Regulatory Matters (page 18)

In connection with the Merger, ET and ETO intend to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with the NYSE. There are no other approvals or filings applicable to the Merger.

 

Listing

of Retail ET Preferred Units; Delisting and Deregistration of Retail ETO Preferred Units (page 18)

ET expects to seek approval to list the ET Retail Preferred Units to be issued pursuant to the terms of the Merger Agreement on the NYSE. ET Series C Preferred Units, ET Series D Preferred Units and ET Series E Preferred Units are expected to trade on the NYSE under the symbols “            ,” “            “ and “            ,” respectively. ET does not intend to apply for the listing of the Institutional ET Preferred Units on any securities exchange or for the quotation of the Institutional ET Preferred Units on any automated dealer quotation system.



 

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The ETO Series C Preferred Units, ETO Series D Preferred Units and ETO Series E Preferred Units currently trade on the NYSE under the symbols “ETPprC,” “ETPprD” and “ETPprE,” respectively. After the Merger is completed, the Retail ETO Preferred Units will cease to be listed on the NYSE and will be deregistered under the Exchange Act.

 

Comparison

of Unitholders’ Rights (page 38)

Upon completion of the Merger, ETO Preferred Unitholders will become holders of ET Preferred Units (“ET Preferred Unitholders”) and their rights will be governed by the Third Amended Restated Agreement of Limited Partnership of ET, dated February 8, 2006 (as amended to date, the “ET Partnership Agreement”), as amended by Amendment No. 8 to the ET Partnership Agreement. There are certain differences between the current rights of ETO Preferred Unitholders under the ETO Partnership Agreement and the rights to which they will be entitled to as ET Preferred Unitholders under the ET Partnership Agreement. See the section entitled “Comparison of Preferred Unitholders’ Rights and Description of ET Preferred Units”beginning on page 38 for a comparison of preferred unitholder rights under the ETO Partnership Agreement and the ET Partnership Agreement.

Material U.S. Federal Income Tax Consequences of the Merger (page 24)

Tax matters associated with the Merger are complicated. The U.S. federal income tax consequences of the Merger to an ETO Preferred Unitholder will depend, in part, on such unitholder’s own personal tax situation. The tax discussions contained herein focus on the U.S. federal income tax consequences generally applicable to individuals who are residents or citizens of the United States that hold their ETO Preferred Units as capital assets, and these discussions have only limited application to other unitholders, including those subject to special tax treatment. ETO Preferred Unitholders are urged to consult their tax advisors for a full understanding of the U.S. federal, state, local and foreign tax consequences of the Merger that will be applicable to them

The expected U.S. federal income tax consequences of the Merger are dependent upon ET and ETO being treated as partnerships for U.S. federal income tax purposes at the time of the Merger. Whether each of ET and ETO will be treated as partnerships for U.S. federal income tax purposes at the time of the Merger will depend, in part, on whether at least 90% of the gross income of each of them for the calendar year that immediately proceeds the Merger and the calendar year that includes the closing date of the Merger is from sources treated as “qualifying income” within the meaning of Section 7704(d) of the Code. Assuming that each of ET and ETO is properly treated as a partnership for U.S. federal income tax purposes at the time of the Merger, it is anticipated that no gain or loss should be recognized by an ETO Preferred Unitholder solely as a result of the Merger.

Please read “Material U.S. Federal Income Tax Consequences of the Merger” for a more complete discussion of the U.S. federal income tax consequences of the Merger.

Risk Factors (page 10)

In addition to the other information contained herein, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 15, ETO Preferred Unitholders should carefully consider the following risks. ETO Preferred Unitholders should also consider the other information in this prospectus and the other documents provided herewith, particularly the risk factors contained in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex C, and in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex D. See the section entitled “Where You Can Find More Information” beginning on page 84.

 

   

The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.



 

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The expected U.S. federal income tax consequences of the Merger are dependent upon ET and ETO being properly treated as partnerships for U.S. federal income tax purposes.

 

   

Each series of ET Preferred Units becomes redeemable by ET, at ET’s option, following a specified redemption date for each such series of ET Preferred Units; however, holders of each series of ET Preferred Units should not expect ET to exercise its redemption rights.

 

   

ET distributes all of its available cash to its limited partners and is not required to accumulate cash for the purpose of meeting its future obligations to each of the holders of the ET Preferred Units which, along with the agreements governing ET’s indebtedness, may limit the cash available to make distributions on the ET Preferred Units.

 

   

The ET Preferred Units will be subordinated to ET’s existing and future debt obligations, and holders’ interests could be diluted by the issuance by ET of additional equity interests, including ET Common Units, additional ET Preferred Units, and other classes of equity.

 

   

The ET Preferred Units will have extremely limited voting rights.

 

   

Holders’ ability to transfer the ET Preferred Units at a desired time or price may be limited by the absence of an active trading market, which may not develop.

 

   

ET’s ability to issue parity securities in the future could adversely affect the rights of holders of ET Preferred Units.

 

   

None of the ET Preferred Units will be convertible into ET Common Units at any time and will not have any protection in the event of a change of control.

 

   

Certain tax consequences of the ownership of ET Preferred Units, including treatment of distributions as guaranteed payments for the use of capital, are uncertain.

 

   

Our tax treatment of distributions on the ET Preferred Units as guaranteed payments for the use of capital means that such distributions will not be eligible for the 20% deduction for qualified business income.

 

Recent

Developments

On February 16, 2021, ET entered into an Agreement and Plan of Merger (the “Enable Merger Agreement”) with Enable Midstream Partners, LP, a Delaware limited partnership (“Enable”), and the other parties thereto, whereby Enable and its general partner will each merge with and into newly formed merger subsidiaries of ET (the “Enable Merger”). In connection with the Enable Merger, each issued and outstanding Enable common unit will be cancelled and converted into the right to receive 0.8595 ET Common Units. In addition, each outstanding Series A preferred unit representing a limited partner interest in Enable will be exchanged for 0.0265 of an ET Series G Preferred Unit, and ET will make a $10 million cash payment for Enable’s general partner. Subject to the satisfaction of certain closing conditions, ET expects to close the Enable Merger mid-year 2021. However, there is no assurance that the Enable Merger will be completed within the timeframe anticipated or at all. The Merger is not contingent on the completion of the Enable Merger, but the Enable Merger is contingent on the completion of the Merger.

 

Additional

Information

In reliance on the SEC’s amendments to Regulation S-K described in SEC Release Nos. 33-10890; 34-90459; and IC-34100 (November 19, 2020), ET has omitted from this prospectus certain historical financial information regarding ET and ETO.

ET is not required to furnish pro forma financial information with respect to the Enable Merger in this prospectus because Enable would not be considered a “significant subsidiary” under any of the financial conditions specified in Rule 1-02(w) of Regulation S-X, substituting 20% for 10% in each of those conditions in accordance with Rule 11.01(b)(1) of Regulation S-X.



 

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With respect to the Merger, ETO is already reflected as a consolidated subsidiary in ET’s consolidated financial statements. Therefore, the only significant pro forma impacts of the Merger to ET’s consolidated balance sheet and statement of operations for the year ended December 31, 2020 would be as follows:

 

   

ET’s consolidated balance sheet would reflect the reclassification of the book value of the ETO Preferred Units from noncontrolling interest to partners’ capital, with no net impact on ET’s total equity. As of December 31, 2020, the amount that would have been reclassified was $4.76 billion, representing the book value of the ETO Preferred Units on that date; and

 

   

ET’s consolidated statement of operations would reflect the reclassification of income attributable to the ETO Preferred Units from net income attributable to noncontrolling interests to net income attributable to partners, with no impact to net income, common unitholders’ interest in net income (loss), or net income (loss) per common unit. For the year ended December 31, 2020, the amount that would have been reclassified was $329 million, representing the portion of ETO’s net income allocated to the ETO Preferred Unitholders during the period.

This prospectus includes as annexes certain documents that ET and ETO have previously filed with the SEC under the Exchange Act as set forth in the table of contents of this prospectus. Any statement contained in such a document shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in an annex hereto consisting of a document filed with the SEC subsequently to such document modifies or replaces such statement. The information included in the annexes hereto is incorporated into this prospectus except to the extent so modified or superseded.



 

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RISK FACTORS

In addition to the other information contained herein, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 15, investors should carefully consider the following risks. Investors should also consider the other information in this prospectus, including the annexes, particularly the risk factors contained in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex C, and in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex D. See the section entitled “Where You Can Find More Information” beginning on page 84.

Risks Relating to the Merger

The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.

The Merger Agreement is subject to a number of conditions that must be satisfied or waived in order to complete the Merger. Those conditions include, among others: the accuracy of representations and warranties under the Merger Agreement (subject to the materiality standards set forth in the Merger Agreement) and ET’s and ETO’s performance of their respective obligations under the Merger Agreement in all material respects. These conditions to the closing of the Merger may not be fulfilled in a timely manner or at all, and, accordingly, the Merger may be delayed or may not be completed.

In addition, ET and ETO may elect to terminate the Merger Agreement in certain other circumstances. See the section entitled “The Merger Agreement—Termination” beginning on page 22.

ETO Preferred Unitholders will have different rights as ET Preferred Unitholders under the ET Partnership Agreement than they currently have as ETO Preferred Unitholders under the ETO Partnership Agreement.

Upon completion of the Merger, ETO Preferred Unitholders will become ET Preferred Unitholders and their rights will be governed by the ET Partnership Agreement. Although the ET Preferred Units will have the same preferences, rights, powers and duties as the ETO Preferred Units for which they are exchanged, there are certain differences between the current rights of ETO Preferred Unitholders under the ETO Partnership Agreement and the rights to which they will be entitled to as ET Preferred Unitholders under the ET Partnership Agreement. See the section entitled “Comparison of Preferred Unitholders’ Rights and Description of ET Preferred Units” beginning on page 38 for a comparison of unitholder rights under the ETO Partnership Agreement and the ET Partnership Agreement.

The expected U.S. federal income tax consequences of the Merger are dependent upon ET and ETO being properly treated as partnerships for U.S. federal income tax purposes.

If either ET or ETO were to be treated as a corporation for U.S. federal income tax purposes, the consequences of the Merger would be materially different. If ET were to be treated as a corporation for U.S. federal income tax purposes, the Merger would likely be a fully taxable transaction to ETO Preferred Unitholders.

Risks Relating to the ET Preferred Units

Each ET Preferred Unit will represent a perpetual equity interest in ET, and holders should not expect ET to redeem any ET Preferred Units on the date any series of ET Preferred Units become redeemable by ET, at ET’s option, or on any particular date thereafter.

Each of the ET Preferred Units will represent a perpetual equity interest in ET, and they have no maturity or mandatory redemption date and are not redeemable at the option of holders under any circumstances. As a result, none of the ET Preferred Units will give rise to a claim for payment of a principal amount at a particular date.

 

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Instead, the ET Preferred Units may be redeemed by ET at ET’s option pursuant to the terms of the applicable series of ET Preferred Units. Any decision ET makes at any time to redeem ET Preferred Units will depend upon, among other things, ET’s evaluation of its capital position and general market conditions at that time. In addition, the instruments governing ET’s outstanding indebtedness may limit ET’s ability to redeem the ET Preferred Units. As a result, each of the holders of the ET Preferred Units may be required to bear the financial risks of an investment in the ET Preferred Units for an indefinite period of time. Moreover, the ET Preferred Units will rank junior to all of ET’s existing and future indebtedness and other liabilities with respect to assets available to satisfy claims against ET.

ET distributes all of its available cash to its limited partners and is not required to accumulate cash for the purpose of meeting its future obligations to each of the holders of the ET Preferred Units which, along with the agreements governing ET’s indebtedness, may limit the cash available to make distributions on the ET Preferred Units.

Pursuant to the ET Partnership Agreement, ET distributes all of its “available cash” each quarter to its limited partners. The ET Partnership Agreement, as amended by Amendment No. 8 thereto, will define “Available Cash” to generally mean, for each fiscal quarter, all cash and cash equivalents on hand at the end of such quarter and all cash and cash equivalents on hand, less the amount of any cash reserves established by LE GP, LLC, a Delaware limited liability company and the general partner of ET, to:

 

   

provide for the proper conduct of ET’s business, including reserves for future capital expenditures and anticipated future credit needs;

 

   

comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation; or

 

   

provide funds to make distributions on the ET Common Units and the ET Preferred Units.

As a result, ET does not expect to accumulate significant amounts of cash. Depending on the timing and amount of ET’s cash distributions, these distributions could significantly reduce the cash available to ET in subsequent periods to make distributions on the ET Preferred Units.

The ET Preferred Units will be subordinated to ET’s existing and future debt obligations, and holders’ interests could be diluted by the issuance of additional units, including additional ET Preferred Units, and by other transactions.

The ET Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness. As of December 31, 2020, ET’s total debt (including the debt of ET’s subsidiaries) was approximately $51.4 billion. ET may incur additional debt under existing or future debt arrangements. The payment of principal and interest on ET’s debt reduces cash available for distribution to ET’s limited partners, including the holders of the ET Preferred Units.

The issuance of any senior securities or additional parity securities would dilute the interests of each of the holders of the ET Preferred Units and could affect ET’s ability to pay distributions on, redeem, or pay the liquidation preference on the ET Preferred Units. Future issuances and sales of senior securities, parity securities or junior securities, or the perception that such issuances and sales could occur, may cause prevailing market prices for the ET Preferred Units, as applicable, to decline and may adversely affect ET’s ability to raise additional capital in the financial markets at times and prices favorable to ET.

The ET Preferred Units will have extremely limited voting rights.

The voting rights of each of the holders of the ET Preferred Units will be extremely limited. Except as set forth in the ET Partnership Agreement or as otherwise required by Delaware law, holders of the ET Preferred

 

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Units generally will have no voting rights. Although each of the holders of the ET Preferred Units will be entitled to limited protective voting rights with respect to certain matters, the ET Preferred Units will generally vote separately as a class along with each other series of ET Preferred Units and all other series of parity securities that ET may issue upon which like voting rights have been conferred and are exercisable. As a result, the voting rights of holders of ET Preferred Units may be significantly diluted, and the holders of other series of parity securities that ET may issue may be able to control or significantly influence the outcome of any vote.

Holders’ ability to transfer the ET Preferred Units at a desired time or price may be limited by the absence of an active trading market, which may not develop.

Each of the ET Preferred Units are a new class of ET’s securities and do not have an established trading market. In addition, since each of the Institutional ET Preferred Units have no stated maturity date, investors seeking liquidity will be limited to selling their Institutional ET Preferred Units in the secondary market absent redemption by ET.

Although the offer and sale of the ET Preferred Units will be registered under the Securities Act by the registration statement of which this prospectus forms a part, ET does not intend to apply for the listing of the Institutional ET Preferred Units on any securities exchange or for the quotation of either of the Institutional ET Preferred Units on any automated dealer quotation system. An active market for the Institutional ET Preferred Units may not develop or, if developed, may not continue. In the absence of active trading markets, holders of Institutional ET Preferred Units may not be able to transfer the Institutional ET Preferred Units within the time or at the prices desired.

ET intends to apply to list the Retail ET Preferred Units on the NYSE, but there can be no assurance that the NYSE will accept the Retail ET Preferred Units for listing. Even if the Retail ET Preferred Units are approved for listing by the NYSE, an active trading market on the NYSE for the Retail ET Preferred Units may not develop or, even if it develops, may not last, in which case the trading price of the Retail ET Preferred Units could be adversely affected and your ability to transfer your Retail ET Preferred Units will be limited. If an active trading market does develop on the NYSE, the Retail ET Preferred Units may trade at prices lower than the original offering price. The trading prices of the Retail ET Preferred Units would depend on many factors, including: prevailing interest rates; the market for similar securities; general economic and financial market conditions; ET’s issuance of debt or other preferred equity securities; and ET’s financial condition, results of operations and prospects.

ET’s ability to issue parity securities in the future could adversely affect the rights of holders of ET Preferred Units.

ET will be allowed to issue parity securities (including additional ET Preferred Units) without any vote of the holders of ET Preferred Units, except where the cumulative distributions on the ET Preferred Units, or any parity securities are in arrears. The issuance of any parity securities would have the effect of reducing the amounts available to each of the holders of the ET Preferred Units upon ET’s liquidation, dissolution or winding up if ET does not have sufficient funds to pay all liquidation preferences of the ET Preferred Units and parity securities in full. It also would reduce amounts available to make distributions on the ET Preferred Units if ET does not have sufficient funds to pay distributions on all outstanding ET Preferred Units and parity securities. In addition, future issuances and sales of parity securities, or the perception that such issuances and sales could occur, may cause prevailing market prices for the ET Preferred Units to decline and may adversely affect ET’s ability to raise additional capital in the financial markets at times and prices favorable to ET.

None of the ET Preferred Units will be convertible into ET Common Units at any time and will not have any protection in the event of a change of control.

None of the ET Preferred Units are convertible into ET Common Units at any time. In addition, the terms of the ET Preferred Units will not contain any provisions that protect the holders of the ET Preferred Units in the event that ET experiences a change of control.

 

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Tax Risks of Holding ET Preferred Units

Certain tax consequences of the ownership of ET Preferred Units, including treatment of distributions as guaranteed payments for the use of capital, are uncertain.

The tax treatment of distributions on ET Preferred Units is uncertain. We will treat each of the holders of the ET Preferred Units as partners for tax purposes and will treat distributions on the ET Preferred Units as guaranteed payments for the use of capital that will generally be taxable to each of the holders of the ET Preferred Units as ordinary income. Although a holder of ET Preferred Units will recognize taxable income from the accrual of such a guaranteed payment (even in the absence of a contemporaneous cash distribution), we anticipate accruing and making the guaranteed payment distributions semi-annually or quarterly, as applicable. Otherwise, except in the case of our liquidation, the holders of ET Preferred Units are generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to the holders of ET Preferred Units. See the applicable description of “Liquidation Rights” under “Comparison of Preferred Unitholders’ Rights and Description of ET Preferred Units.” If any series of the ET Preferred Units is treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions on such series of ET Preferred Units likely would be treated as payments of interest by us to holders of such series.

A holder of ET Preferred Units will be required to recognize a gain or loss on a sale of ET Preferred Units equal to the difference between the amount realized by such holder and such holder’s tax basis in the ET Preferred Units sold. The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange for such ET Preferred Units. Subject to general rules requiring a blended basis among multiple partnership interests, the tax basis of an ET Preferred Unit will generally be equal to the tax basis in the ETO Preferred Unit exchanged therefor. Gain or loss recognized by a holder of ET Preferred Units on the sale or exchange of an ET Preferred Unit, as applicable, held for more than one year generally will be taxable as long-term capital gain or loss. Because holders of ET Preferred Units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.

Investment in the ET Preferred Units by tax-exempt investors, such as employee benefit plans and individual retirement accounts (“IRAs”), and non-U.S. persons raises issues unique to them. The treatment of guaranteed payments for the use of capital to tax-exempt investors is not certain and such payments may be treated as unrelated business taxable income for federal income tax purposes.

Distributions to non-U.S. holders of ET Preferred Units will be subject to withholding taxes. If the amount of withholding exceeds the amount of U.S. federal income tax actually due, non-U.S. holders of ET Preferred Units may be required to file U.S. federal income tax returns in order to seek a refund of such excess. If you are a tax-exempt entity or a non-U.S. person, you should consult your tax advisor with respect to the consequences of owning the ET Preferred Units.

Our treatment of distributions on the ET Preferred Units as guaranteed payments for the use of capital means that such distributions will not be eligible for the 20% deduction for qualified business income.

For taxable years beginning after December 31, 2017, and ending on or before December 31, 2025, a non-corporate unitholder may be entitled to a deduction equal to 20% of its “qualified business income” attributable to its interest in a partnership, subject to certain limitations. As described above, we will treat distributions on the ET Preferred Units as guaranteed payments for the use of capital, and under the applicable Treasury Regulations, a guaranteed payment for the use of capital will not be taken into account for purposes of computing qualified business income. As a result, distributions received by the holders of the ET Preferred Units will not be eligible for the 20% deduction for qualified business income. Unitholders that receive ET Preferred Units in the Merger should consult their tax advisors regarding the availability of the deduction for qualified business income.

 

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Risks Relating to ET’s Business

You should read and consider risk factors specific to ET’s businesses that will also affect the combined partnership after the completion of the Merger. These risks are described in Part I, Item 1A of ET’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex C. See the section entitled “Where You Can Find More Information” beginning on page 84 for more information.

Risks Relating to ETO’s Business

You should read and consider risk factors specific to ETO’s businesses that will also affect the combined partnership after the completion of the Merger. These risks are described in Part I, Item 1A of ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex D. See the section entitled “Where You Can Find More Information” beginning on page 84 for more information.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes “forward-looking statements” about ET and ETO that are subject to risks and uncertainties. All statements other than statements of historical fact included in this document are forward-looking statements. Statements using words such as “anticipate,” “believe,” “intend,” “project,” “plan,” “expect,” “continue,” “estimate,” “goal,” “forecast,” “may,” “will,” or similar expressions help identify forward-looking statements. ET and ETO caution investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. When considering forward-looking statements, investors should keep in mind the risk factors and other cautionary statements described in the section entitled “Risk Factors” beginning on page 10. Investors are cautioned not to place undue reliance on forward-looking statements. Among the risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

 

   

the risk that the Merger Agreement may be terminated in accordance with its terms and that the Merger may not be completed;

 

   

the possibility that ET and ETO will incur significant transaction and other costs in connection with the Merger, which may be in excess of those anticipated by ET or ETO;

 

   

the risk that ET may fail to realize the benefits expected from the Merger;

 

   

the risk that the Enable Merger Agreement may be terminated in accordance with its terms and that the Enable Merger may not be completed;

 

   

the risk that ET may fail to realize the benefits expected from the Enable Merger; and

 

   

the risks applicable to ETO’s and ET’s operating results and businesses generally.

Such factors are difficult to predict and in many cases may be beyond the control of ET and ETO. ET’s and ETO’s forward-looking statements are based on assumptions that ET and ETO, respectively, believe to be reasonable but that may not prove to be accurate. Consequently, all of the forward-looking statements ET and ETO make in this document are qualified by the information contained herein, including, but not limited to, the information contained under this heading and the information detailed in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex C, and in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex D. See the section entitled “Where You Can Find More Information” beginning on page 84.

ET and ETO undertake no obligation to update any such forward-looking statements to reflect events or circumstances that occur, or which they become aware of, except as required by applicable law or regulation. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based only on information available as of the date hereof.

 

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INFORMATION ABOUT THE PARTIES

Energy Transfer LP

ET is a Delaware limited partnership whose common units are traded on the NYSE under the symbol “ET.” ET’s core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, NGLs and refined product transportation and terminalling assets; NGL storage and fractionation; and various acquisition and marketing assets. ET, through its ownership of ETO, also owns Lake Charles LNG Company, as well as limited partner interests and the general partner interests of publicly traded master limited partnerships Sunoco LP and USA Compression Partners, LP.

The address of ET’s principal executive offices is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

Energy Transfer Operating, L.P.

ETO is a Delaware limited partnership and a subsidiary of ET. ETO is engaged in the midstream transportation and storage of natural gas, NGLs, refined products and crude oil, and terminalling services and acquisition and marketing activities, as well as NGL storage and fractionation services. ETO is managed by its general partner, ETO GP, and ETO GP is managed by its general partner, ETO Managing GP. ETO Managing GP is a wholly owned subsidiary of ET.

The address of ETO’s principal executive offices is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

ETO Merger Sub, LLC

Merger Sub is a Delaware limited liability company and wholly owned subsidiary of ET. Merger Sub has not carried on any activities to date, other than activities incidental to its formation or undertaken in connection with the transactions contemplated by the Merger Agreement.

The address of Merger Sub’s principal executive offices is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

 

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THE MERGER

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this prospectus as Annex A. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Transaction Structure

At the effective time of the Merger, Merger Sub will merge with and into ETO. As a result of the Merger, the separate existence of Merger Sub will cease, and ETO will continue as the surviving entity and a wholly owned subsidiary of ET.

Reasons for the Merger

The parties are undertaking the Merger as part of internal reorganization to simplify the structure and capitalization of ET and its subsidiaries, including ETO.

Consideration to ETO Preferred Unitholders

As a result of the Merger:

 

   

each ETO Series A Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series A Preferred Unit;

 

   

each ETO Series B Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series B Preferred Unit;

 

   

each ETO Series C Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series C Preferred Unit;

 

   

each ETO Series D Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series D Preferred Unit;

 

   

each ETO Series E Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series E Preferred Unit;

 

   

each ETO Series F Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series F Preferred Unit; and

 

   

each ETO Series G Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series G Preferred Unit.

By virtue of the Merger, each ETO Preferred Unit will be cancelled and cease to exist as of the effective time of the Merger.

Treatment of Other Partnership Interests in ETO

As a result of the Merger, (i) the ETO Common Units, all of which are owned by ET, will be unchanged and remain outstanding, (ii) the ETO Hook Units, all of which are owned by ETP Holdco, will be converted into the right to receive 675,625,000 newly issued ET Class B Units in the aggregate and (iii) the General Partner Interest (as defined in the ETO Partnership Agreement), which is owned by ETO GP, will be unchanged and remain outstanding.

Amendment No. 8 to the ET Partnership Agreement

The Merger Agreement provides that, prior to the closing, ET GP and ET will take all actions as are necessary and appropriate to amend the ET Partnership Agreement to allow for the creation and issuance of the

 

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ET Preferred Units. The form of Amendment No. 8 to the ET Partnership Agreement is attached to this prospectus as Annex B. You should read Amendment No. 8 to the ET Partnership Agreement because it, and not this prospectus, is the legal document that, upon its execution and delivery, will govern the rights of ET Preferred Unitholders following the effective time of the Merger. For additional information regarding the ET Partnership Agreement, see “Comparison of Preferred Unitholders’ Rights and Description of ET Preferred Units” beginning on page 38.

Listing of Retail ET Preferred Units; Delisting and Deregistration of Retail ETO Preferred Units

ET expects to seek approval to list the Retail ET Preferred Units to be issued pursuant to the terms of the Merger Agreement on the NYSE. Assuming that such approval is sought and obtained, ET expects the ET Series C Preferred Units, ET Series D Preferred Units and ET Series E Preferred Units to be quoted on the NYSE under the symbols “            ,” “            “ and “            ,” respectively. ET does not intend to apply for the listing of the Institutional ET Preferred Units on any securities exchange or for the quotation of the Institutional ET Preferred Units on any automated dealer quotation system.

The ETO Series C Preferred Units, ETO Series D Preferred Units and ETO Series E Preferred Units currently trade on the NYSE under the symbols “ETPprC,” “ETPprD” and “ETPprE,” respectively. If the Merger is completed, the Retail ETO Preferred Units will cease to be listed on the NYSE and will be deregistered under the Exchange Act.

Interests of ET in the Merger

ET owns ETO Managing GP and ETO GP, and controls ETO through its ownership of these two entities. ET also owns all of the outstanding ETO Common Units and all of the ETO Hook Units through indirect ownership of ETP Holdco, a wholly owned subsidiary of ETO. ET has different economic interests in the Merger than holders of ETO Preferred Units generally due to, among other things, the fact that ET is the acquiring entity in the Merger.

No Appraisal or Dissenters’ Rights

Holders of ETO Preferred Units do not have appraisal or dissenters’ rights under applicable law or contractual appraisal or dissenters’ rights under the ETO Partnership Agreement or the Merger Agreement.

Required Approval of the Merger by ETO Unitholders

The approval and adoption of the Merger Agreement and the Merger by ETO requires the affirmative vote or consent of holders of (i) at least a majority of the outstanding ETO Common Units and (ii) at least a majority of the outstanding ETO Hook Units. In connection with the execution of the Merger Agreement, (a) ET, which owns all of the outstanding ETO Common Units, and (b) ETP Holdco, which owns all of the outstanding ETO Hook Units, each delivered a written consent approving and adopting the Merger Agreement and the Merger. The delivery of the written consents by (x) ET with respect to the ETO Common Units it owns and (y) ETP Holdco with respect to the ETO Hook Units it owns is sufficient to adopt the Merger Agreement and thereby approve the Merger. The approval and adoption of the Merger Agreement and the Merger does not require the vote or consent of any other limited partners of ETO pursuant to the terms of the ETO Partnership Agreement.

No ET Unitholder Approval Required

The approval and adoption of the Merger Agreement and the Merger by ET does not require the affirmative vote or consent of ET Unitholders.

 

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Regulatory Matters

In connection with the Merger, ET and ETO intend to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with the NYSE. There are no other approvals or filings applicable to the Merger.

Post-Closing Transactions

Following the effective time of the Merger, it is anticipated that ETO GP will be dissolved and as a result of such dissolution, ETO GP will withdraw as the general partner of ETO, the General Partner Interest (as defined in the ETO Partnership Agreement) will be distributed to ETO Managing GP, and ETO Managing GP will be admitted as the successor general partner of ETO, with such admission being effective immediately prior to the withdrawal of ETO GP.

Accounting Treatment of the Merger

ET controls ETO through its ownership of ETO Managing GP and ETO GP and therefore currently consolidates the operations of ETO into ET’s financial statements. Subsequent to the Merger, ET will continue to present consolidated financial statements that reflect the historical consolidated financial statements of ETO. The Merger will be accounted for as an equity transaction and will be reflected in ET’s consolidated financial statements as ET’s acquisition of the noncontrolling interest in ETO. The carrying amounts of ET’s and ETO’s assets and liabilities will not be adjusted, nor will a gain or loss be recognized as a result of the Merger.

The ETO Hook Units are currently held by wholly owned subsidiaries of ETO and are eliminated in ET’s consolidated financial statements. Subsequent to the conversion of the ETO Hook Units, the ET Class B Units will be held by wholly owned subsidiaries and will be eliminated in ET’s consolidated financial statements. Therefore, the conversion of the ETO Hook Units will not have an impact on ET’s consolidated financial statements.

 

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THE MERGER AGREEMENT

This section describes the material terms of the Merger Agreement, which was executed on March 5, 2021. The description of the Merger Agreement in this section and elsewhere in this prospectus is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this prospectus. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety, because it is the legal document that governs the Merger.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary are included solely to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about ET, ETO, or any of their respective subsidiaries or affiliates contained in this prospectus, in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex C, or in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex D, update or modify the factual disclosures about ET or ETO, as applicable, contained in the Merger Agreement. The representations, warranties and covenants made in the Merger Agreement by ET, ETO and Merger Sub were made solely for the purposes of the Merger Agreement and as of specific dates and were qualified and subject to important limitations agreed to by ET, ETO and Merger Sub in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right not to complete the Merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this prospectus, may have changed since the date of the Merger Agreement. Investors should not rely on the Merger Agreement representations, warranties, covenants or any descriptions thereof as characterizations of the actual state of facts of ET, ETO, Merger Sub or any of their respective subsidiaries or affiliates.

The Merger

The Merger Agreement provides that, upon the terms and subject to the conditions in the Merger Agreement, and in accordance with the Delaware Revised Uniform Limited Partnership Act, as amended (“DRULPA”), and the Delaware Limited Liability Company Act, as amended, at the effective time of the Merger, Merger Sub will merge with and into ETO. As a result of the Merger, the separate existence of Merger Sub will cease, and ETO will continue as the surviving entity in the Merger and a wholly owned subsidiary of ET.

Closing and Effective Time of the Merger

Unless otherwise mutually agreed to in writing by each of the parties, the closing of the Merger will take place on the second business day after the satisfaction or waiver (to the extent permitted by applicable law) of the conditions to completion of the Merger, described in the section entitled “—Conditions to the Completion of the Merger” beginning on page 22, other than those conditions which by their nature are to be satisfied at the closing of the Merger, but subject to the satisfaction or waiver of such conditions.

Assuming timely satisfaction of the necessary closing conditions, the parties currently expect the closing of the Merger to occur on or about April 1, 2021. The Merger shall become effective at the time when the certificate of merger for the Merger has been duly filed with the secretary of state of the State of Delaware or at such later time as may be agreed by the parties in writing and specified in the certificate of merger for the Merger.

 

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Merger Consideration

As a result of the Merger:

 

   

each ETO Series A Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series A Preferred Unit;

 

   

each ETO Series B Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series B Preferred Unit;

 

   

each ETO Series C Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series C Preferred Unit;

 

   

each ETO Series D Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series D Preferred Unit;

 

   

each ETO Series E Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series E Preferred Unit;

 

   

each ETO Series F Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series F Preferred Unit; and

 

   

each ETO Series G Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive one newly issued ET Series G Preferred Unit.

By virtue of the Merger, each ETO Preferred Unit will be cancelled and cease to exist as of the effective time of the Merger.

In addition, under the terms of the Merger Agreement, (i) each issued and outstanding ETO Common Unit, all of which are owned by ET, will be unchanged and remain outstanding, (ii) the issued and outstanding ETO Hook Units, all of which are owned by ETP Holdco, will be cancelled and converted into the right to receive 675,625,000 ET Class B Units in the aggregate and (iii) the General Partner Interest (as defined in the ETO Partnership Agreement), which is owned by ETO GP, will be unchanged and remain outstanding.

Exchange Procedures

At or prior to the effective time of the Merger, ET will deposit with an exchange agent selected by ET and mutually agreeable to ETO to serve as the exchange agent for the benefit of the holders of the ETO Preferred Units an aggregate number of ET Preferred Units to be issued in uncertificated form or book-entry form. In addition, ET will deposit with the exchange agent, as necessary from time to time after the effective time of the Merger, any distributions, if any, to which the holders of ETO Preferred Units may be entitled.

As soon as reasonably practicable after the effective time of the Merger (and not later than the fifth business day following the effective time), ET shall cause the exchange agent to mail to each holder of ETO Preferred Units, which at the effective time were converted into the right to receive the merger consideration, (i) a letter of transmittal and (ii) instructions for use in effecting the surrender of the ETO Preferred Units in exchange for ET Preferred Units (which will be issued in book-entry form). Such holders will be issued the ET Preferred Units to which they are entitled upon the surrender to the exchange agent of such ETO Preferred Units and a duly completed and validly executed letter of transmittal and any other documents required by the exchange agent.

Termination of the Exchange Fund

Any portion of the exchange fund that remains unclaimed for one year after the effective time of the Merger will be delivered to ET. Thereafter, any holder of ETO Preferred Units will be entitled to look only to ET for delivery of the merger consideration, and payment of any distributions payable or issuable, as contemplated by the Merger Agreement, without any interest thereon. None of the surviving entity in the Merger, ET, the

 

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exchange agent or any other person will be liable to any former holder of ETO Preferred Units or ET Preferred Units for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws. Immediately before any portion of the exchange fund would otherwise escheat to or become the property of any governmental entity, such amount will, to the extent permitted by applicable law, become the property of ET free and clear of all claims or interest of any person previously entitled thereto.

Lost, Stolen or Destroyed Unit Certificates

If a certificate for ETO Preferred Units has been lost, stolen or destroyed, then before the person holding the certificate is entitled to receive the applicable merger consideration, such person will need to make an affidavit of that fact and if required by ET, post a bond, in a reasonable amount as ET may direct, as indemnity against any claim that may be made against ET or the exchange agent with respect to such certificate.

Organizational Documents

At the effective time of the Merger, the certificate of limited partnership of ETO as in effect immediately prior to the effective time of the Merger will be the certificate of limited partnership of the surviving entity in the Merger, and the partnership agreement of ETO as in effect immediately prior to the effective time of the Merger will be the partnership agreement of the surviving entity in the Merger.

Representations and Warranties

The Merger Agreement contains customary representations and warranties by each of the parties to the Merger Agreement that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement. These representations and warranties relate to, among other things, the organization, good standing and qualification to do business, capitalization and the power and authority relating to the execution, delivery and performance of the parties’ respective obligations under the Merger Agreement.

Stock Exchange Listing and Delisting

ET has agreed to cause the Retail ET Preferred Units to be issued in the Merger to be approved for listing on the NYSE subject to official notice of issuance, prior to the closing date of the Merger.

Conditions to the Completion of the Merger

Under the Merger Agreement, the respective obligations of ET, ETO and Merger Sub to complete the Merger are subject to the satisfaction or waiver at or prior to the closing of the following conditions:

 

   

No injunction, order or decree by any court or other governmental entity of competent jurisdiction shall have been entered and shall continue to be in effect, no law shall have been adopted or be effective, and no agreement with any governmental entity shall be in effect, in each case that prohibits, prevents or makes unlawful the consummation of the Merger or the other transactions contemplated by the Merger Agreement;

 

   

The representations and warranties of each party must be true and correct in all material respects both at and as of the date of the Merger Agreement and at and as of the closing date of the Merger as though made at and as of the closing date of the Merger.

 

   

The registration statement of which this prospectus forms a part must have become effective under the Securities Act and must not be the subject of any stop order issued by the SEC or any pending proceedings initiated or threatened by the SEC seeking such a stop order.

Termination

ET and ETO may terminate the Merger Agreement and abandon the Merger at any time prior to the effective time of the Merger by mutual written consent of ET and ETO.

 

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Expenses

Whether or not the Merger is consummated, all costs and expenses incurred in connection with the Merger Agreement will be paid by the party incurring such expenses.

Amendment and Waiver

At any time prior to the effective time of the Merger, the Merger Agreement may be modified or amended by written agreement of each of the parties or, in the case of a waiver, by the party against whom the waiver is to be effective.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a discussion of the material U.S. federal income tax consequences of the Merger that may be relevant to ETO Preferred Unitholders. This discussion is based upon current provisions of the Code, existing and proposed Treasury regulations promulgated under the Code (the “Treasury Regulations”) and current administrative rulings and court decisions, all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below.

This discussion does not purport to be a complete discussion of all U.S. federal income tax consequences of the Merger. Moreover, the discussion focuses on ETO Preferred Unitholders who are individual citizens or residents of the United States (for U.S. federal income tax purposes) and has only limited application to corporations, estates, trusts, nonresident aliens or other unitholders subject to specialized tax treatment, such as tax-exempt institutions, employee benefit plans, foreign persons, financial institutions, insurance companies, real estate investment trusts (REITs), individual retirement accounts (IRAs), mutual funds, traders in securities that elect mark-to-market, persons who hold ETO Preferred Units (who will hold ET Preferred Units after the Merger) as part of a hedge, straddle or conversion transaction, persons who acquired ETO Preferred Units by gift, or directors and employees of ETO that received (or are deemed to receive) ETO Preferred Units as compensation or through the exercise (or deemed exercise) of options, unit appreciation rights, phantom units or restricted units granted under an ETO equity incentive plan. Also, the discussion assumes that the ETO Preferred Units are held as capital assets at the time of the Merger (generally, property held for investment).

Neither ET nor ETO has sought a ruling from the IRS with respect to any of the tax consequences discussed below, and the IRS would not be precluded from taking positions contrary to those described herein. As a result, no assurance can be given that the IRS will agree with all of the tax characterizations and the tax consequences described below. Some tax aspects of the Merger are not certain, and no assurance can be given that the statements contained herein with respect to tax matters would be sustained by a court if contested by the IRS. Furthermore, the tax treatment of the Merger may be significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.

Accordingly, ETO strongly urges each ETO Preferred Unitholder to consult with, and depend upon, such unitholder’s own tax advisor in analyzing the U.S. federal, state, local and foreign tax consequences particular to the unitholder of the Merger.

Assumptions Related to the U.S. Federal Income Tax Treatment of the Merger

The expected U.S. federal income tax consequences of the Merger are dependent upon ET and ETO being treated as partnerships for U.S. federal income tax purposes at the time of the Merger. If ET or ETO were to be treated as a corporation for U.S. federal income tax purposes at the time of the Merger, the consequences of the merger would be materially different. If ET were to be treated as a corporation for U.S. federal income tax purposes, the Merger would likely be a fully taxable transaction to ETO Preferred Unitholders.

The discussion below assumes that each of ET and ETO will be classified as a partnership for U.S. federal income tax purposes at the time of the Merger.

U.S. Federal Income Tax Treatment of the Merger

Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into ETO. As a result of the Merger, the separate existence of Merger Sub will cease, and ETO will continue as the surviving entity in the Merger and a direct, wholly owned subsidiary of ET. For U.S. federal income tax purposes, the Merger is intended to be a “merger” of ET and ETO within the meaning of Treasury Regulations promulgated under Section 708 of the Code, with ET being treated as the resulting partnership and ETO being treated as the terminated partnership. As a result, each holder of ETO Preferred Units will be treated as a partner of ET for U.S. federal income tax purposes following the Merger.

 

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As a result of ET surviving the Merger for U.S. federal income tax purposes, the following transactions will be deemed to occur for U.S. federal income tax purposes: (1) ETO will be deemed to contribute its assets to ET in exchange for (i) the issuance to ETO of ET Preferred Units and ET Class B Units and (ii) the assumption of ETO’s liabilities and (2) ETO will be deemed to liquidate, distributing (i) ET Preferred Units to the ETO Preferred Unitholders in exchange for such ETO Preferred Units and (ii) ET Class B Units to ETP Holdco in exchange for ETO Hook Units (the “Assets-Over Form”).

The remainder of this discussion, except as otherwise noted, assumes that the Merger and the transactions contemplated thereby will be treated for U.S. federal income tax purposes in the manner described above.

Tax Consequences of the Merger to ETO

Under the Assets-Over Form described above, ETO will be deemed to contribute all of its assets to ET in exchange for ET Preferred Units, ET Class B Units and the assumption of ETO’s liabilities. In general, the deemed contribution of assets from ETO to ET in exchange for ET Preferred Units and ET Class B Units is not expected to result in the recognition of gain or loss by ETO.

Further, under the disguised sale rules, a contribution of cash or other property by a partner to a partnership and a transfer of property (other than an interest in such partnership) by the partnership to such partner, may, in certain circumstances, also be characterized, in whole or in part, as a “disguised sale” of property by the partnership to the partner, rather than as a non-taxable distribution of such property by the partnership. Although not contemplated, contributions of cash or other property to ETO after the date of the Merger Agreement and prior to the effective time of the Merger, if any, may be treated as part of a “disguised sale” of a portion of the ET Preferred Units received in the Merger and may result in gain to ETO. Any such taxable gain recognized by ETO as part of a “disguised sale” would be allocated pursuant to the partnership agreement of ETO.

Tax Consequences of the Merger to ETO Preferred Unitholders

Under the Assets-Over Form, ETO Preferred Unitholders will be deemed to receive distributions in liquidation of ETO consisting of ET Preferred Units. In general, the receipt of ET Preferred Units is not expected to result in the recognition of taxable gain or loss to such unitholders.

An ETO Preferred Unitholder has an initial tax basis in its ETO Preferred Units equal to the amount such ETO Preferred Unitholder paid for such ETO Preferred Units. That basis has generally not been and will not be increased or decreased by any allocation of income, gain, loss or deduction by ETO to such ETO Preferred Unitholder or by any distribution to such ETO Preferred Unitholder. As a result, an ETO Preferred Unitholder should have an initial aggregate tax basis in the ET Preferred Units that such ETO Preferred Unitholder receives in the Merger equal to the amount such ETO Preferred Unitholder paid for such ETO Preferred Units.

As a result of the Assets-Over Form, an ETO Preferred Unitholder will have a holding period in the ET Preferred Units received in the Merger that is not determined by reference to its holding period in its ETO Preferred Units exchanged therefor. Instead, such ETO Preferred Unitholder’s holding period in the ET Preferred Units received in the Merger that are attributable to ETO’s capital assets or assets used in its business as defined in Section 1231 of the Code will include ETO’s holding period in those assets. The holding period for ET Preferred Units received by an ETO Preferred Unitholder attributable to other assets of ETO, such as inventory and receivables, will begin on the day following the Merger.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF ET PREFERRED UNIT OWNERSHIP

The tax consequences to you of the ownership of ET Preferred Units received in the Merger will depend in part on your own tax circumstances. This section should be read in conjunction with the risk factors included under the caption “Tax Risks to Unitholders” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, which is attached to this prospectus as Annex C, and under the caption “Tax Risks of Holding ET Preferred Units” in this prospectus. The following discussion is limited as described herein. You are urged to consult with your own tax advisor about the federal, state, local and foreign tax consequences particular to your circumstances.

This section is a summary of the material U.S. federal income tax consequences that may be relevant to individual citizens or residents of the United States owning ET Preferred Units received in the Merger and, unless otherwise noted in the following discussion, is the opinion of Latham & Watkins LLP, counsel to our general partner and us, insofar as it relates to legal conclusions with respect to matters of U.S. federal income tax law. This section is based upon current provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), existing and proposed Treasury regulations promulgated under the Internal Revenue Code (the “Treasury 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 Energy Transfer LP and our operating subsidiaries.

The following discussion does not comment on all federal income tax matters affecting us or holders of ET Preferred Units received in the Merger and does not describe the application of the alternative minimum tax that may be applicable to certain holders of ET Preferred Units received in the Merger. Moreover, the discussion focuses on holders of ET Preferred Units who are individual citizens or residents of the United States and has only limited application to corporations, estates, entities treated as partnerships for U.S. federal income tax purposes, trusts, nonresident aliens, U.S. expatriates and former citizens or long-term residents of the United States or other unitholders subject to specialized tax treatment, such as banks, insurance companies and other financial institutions, tax-exempt institutions, foreign persons (including, without limitation, controlled foreign corporations, passive foreign investment companies and foreign persons eligible for the benefits of an applicable income tax treaty with the United States), individual retirement accounts (IRAs), real estate investment trusts (REITs) or mutual funds, dealers in securities or currencies, traders in securities, U.S. persons whose “functional currency” is not the U.S. dollar, persons holding their ET Preferred Units as part of a “straddle,” “hedge,” “conversion transaction” or other risk reduction transaction, persons subject to special tax accounting rules as a result of any item of gross income with respect to our units being taken into account in an applicable financial statement and persons deemed to sell their ET Preferred Units under the constructive sale provisions of the Internal Revenue Code. In addition, the discussion only comments, to a limited extent, on state, local and foreign tax consequences. Accordingly, we encourage each holder of ET Preferred Units received in the Merger to consult his own tax advisor in analyzing the state, local and foreign tax consequences particular to him of the ownership or disposition of ET Preferred Units and potential changes in applicable laws.

No ruling has been requested from the Internal Revenue Service (the “IRS”) regarding our characterization as a partnership for tax purposes. Instead, we will rely on opinions of Latham & Watkins LLP. Unlike a ruling, 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 herein 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 ET Preferred Units, including the prices at which such units trade. In addition, the costs of any contest with the IRS, principally legal, accounting and related fees, will result in a reduction in cash available for distribution and thus will be borne indirectly by our unitholders (including holders of the ET Preferred Units) and our 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.

 

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All statements as to matters of U.S. federal income tax law and legal conclusions with respect thereto, but not as to factual matters, contained in this section, unless otherwise noted, are the opinion of Latham & Watkins LLP and are based on the accuracy of the representations made by us and our general partner.

Notwithstanding the above, and for the reasons described below, Latham & Watkins LLP has not rendered an opinion with respect to the following specific federal income tax issues: (i) the treatment of a holder of ET Preferred Units whose ET Preferred Units are loaned to a short seller to cover a short sale of ET Preferred Units (see “—Tax Consequences of ET Preferred Unit Ownership—Treatment of Short Sales”); (ii) whether holders of ET Preferred Units will be treated as partners that receive guaranteed payments for the use of capital on their ET Preferred Units (see “—Limited Partner Status”); and (iii) whether distributions with respect to the ET Preferred Units will be treated as unrelated business taxable income (see “—Tax-Exempt Organizations and Other Investors”).

Partnership Status

A partnership is not a taxable entity and incurs no federal income tax liability. Instead, each partner of a partnership is required to take into account his share of items of income, gain, loss and deduction of the partnership in computing his federal income tax liability, regardless of whether cash distributions are made to him by the partnership. Distributions by a partnership to a partner are generally not taxable to the partnership or the partner unless the amount of cash distributed to him is in excess of the partner’s adjusted basis in his partnership interest. 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 transportation and processing of certain minerals and natural resources, including crude oil, natural gas and other products of a type that are produced in a petroleum refinery or natural gas processing plant, the retail and wholesale marketing of propane, the transportation of propane and natural gas liquids, certain related hedging activities, certain activities that are intrinsic to other qualifying activities, and our allocable share of our subsidiaries’ income from these sources. Other types of qualifying income include interest (other than from a financial business), dividends, real property rents, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income. We estimate that less than 3% 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 our general partner and a review of the applicable legal authorities, Latham & Watkins LLP is of the opinion that at least 90% of our current gross income constitutes qualifying income. The portion of our income that is qualifying income may change from time to time.

The IRS has made no determination as to our status or the status of our operating subsidiaries for federal income tax purposes. Instead, we will rely on the opinion of Latham & Watkins LLP on such matters. It is the opinion of Latham & Watkins LLP that, based upon the Internal Revenue Code, its regulations, published revenue rulings and court decisions and the representations described below that:

 

   

We will be classified as a partnership for federal income tax purposes;

 

   

Each of our operating subsidiaries will, except as otherwise identified to Latham & Watkins LLP, be disregarded as an entity separate from us or will be treated as a partnership for federal income tax purposes; and

 

   

Each commodity hedging transaction that we treat as resulting in qualifying income has been and will be appropriately identified as a hedging transaction pursuant to applicable Treasury Regulations, and has been and will be associated with oil, gas or products thereof that are held or to be held by us in activities that Latham & Watkins LLP has opined or will opine result in qualifying income.

 

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In rendering its opinion, Latham & Watkins LLP has relied on factual representations made by us and our general partner. The representations made by us and our general partner upon which Latham & Watkins LLP has relied include:

 

   

Neither we nor any of our partnership or limited liability company subsidiaries, other than those identified as such to Latham & Watkins LLP, have elected or will elect to be treated as a corporation for U.S. federal income tax purposes; and

 

   

For each taxable year, more than 90% of our gross income has been and will be income of the type that Latham & Watkins LLP has opined or will opine is “qualifying income” within the meaning of Section 7704(d) of the Internal Revenue Code.

We believe that these representations have been true in the past, are true as of the date hereof and expect that these representations will continue to be true in the future.

If we fail to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in which case the IRS may also require us to make adjustments with respect to our unitholders or pay other amounts), 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 deemed 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 tax return rather than being passed through to our 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 taxable dividend income, to the extent of our current and 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 ET Preferred Units, or taxable capital gain, after the unitholder’s tax basis in his ET Preferred 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 ET Preferred Units.

The discussion below is based on Latham & Watkins LLP’s opinion that we will be classified as a partnership for federal income tax purposes.

Limited Partner Status

The tax treatment of the ET Preferred Units is uncertain. As such, Latham & Watkins LLP is unable to opine as to the tax treatment of the ET Preferred Units. Although the IRS may disagree with this treatment, we will treat holders of ET Preferred Units as partners entitled to a guaranteed payment for the use of capital on their ET Preferred Units. If the ET Preferred Units are not partnership interests, they would likely constitute indebtedness for federal income tax purposes and distributions on the ET Preferred Units would constitute ordinary interest income to holders of ET Preferred Units. The remainder of this discussion assumes that the ET Preferred Units are partnership interests for federal income tax purposes.

A beneficial owner of ET Preferred Units whose ET Preferred 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 ET Preferred Units for federal income tax purposes. Please read “—Tax Consequences of ET Preferred Unit Ownership—Treatment of Short Sales.”

 

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Tax Consequences of ET Preferred Unit Ownership

Treatment of Distributions on ET Preferred Units

We will treat distributions on the ET Preferred Units as guaranteed payments for the use of capital that will generally be taxable to the holders of ET Preferred Units as ordinary income and will be deductible by us. Although a holder of ET Preferred Units will recognize taxable income from the accrual of such a guaranteed payment (even in the absence of a contemporaneous cash distribution), we anticipate accruing and making the guaranteed payment distributions semi-annually or quarterly, as applicable. Except in the case of our liquidation, the holders of ET Preferred Units are generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to such holders. See the applicable description of “Liquidation Rights” under “Comparison of Preferred Unitholders’ Rights and Description of ET Preferred Units.”

If the distributions on the ET Preferred Units are not respected as guaranteed payments for the use of capital, holders of ET Preferred Units may be treated as receiving an allocable share of our gross income equal to their cash distributions, to the extent we have sufficient gross income to make such allocations of gross income. In the event there is not sufficient gross income to match such distributions, the distributions on the ET Preferred Units would reduce the capital accounts of the ET Preferred Units, requiring a subsequent allocation of income or gain to provide the ET Preferred Units with their liquidation preference, if possible.

Basis of ET Preferred Units

A former holder of ETO Preferred Units will have an initial aggregate tax basis in the ET Preferred Units received in the Merger that is determined in the manner described in “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to ETO Preferred Unitholders.” 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 of those interests.

Allocation of Income, Gain, Loss and Deduction

After giving effect to special allocation provisions with respect to our other classes of units, our items of income, gain, loss and deduction generally will be allocated amongst our common unitholders and our general partner in accordance with their percentage interests in us. If the capital accounts of the common unitholders have been reduced to zero, losses will be allocated to the ET Preferred Units until the capital accounts of the ET Preferred Units are reduced to zero. If ET Preferred Units are allocated losses in any taxable period, net income or, to the extent necessary, gross income from a subsequent taxable period, if any, would be allocated to the ET Preferred Units in a manner designed to provide their liquidation preferences.

Limitations on Deductibility of Losses

Holders of ET Preferred Units will only be allocated loss once the capital accounts of the common unitholders have been reduced to zero. Please read “—Tax Consequences of ET Preferred Unit Ownership—Allocation of Income, Gain, Loss and Deduction.” Although it is not anticipated that a holder of ET Preferred Units would be allocated loss, the deductibility of any such loss allocation may be limited for various reasons. In the event that you are allocated loss as a holder of ET Preferred Units, please consult your tax advisor as to the application of any limitation to the deductibility of that loss.

Entity-Level Collections

If we are required or elect under applicable law to pay any federal, state, local or foreign income tax on behalf of any holder of ET Preferred Units, we are authorized to pay those taxes from our funds. That payment, if made, will be treated as an advance on a guaranteed payment to the holder of ET Preferred Units on whose behalf

 

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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 our 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 our partnership agreement is maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of tax on behalf of an individual unitholder in which event the unitholder would be required to file a claim in order to obtain a credit or refund.

Treatment of Short Sales

A unitholder whose ET Preferred Units are loaned to a “short seller” to cover a short sale of ET Preferred Units may be considered as having disposed of such units. If so, he would no longer be treated for tax purposes as a partner with respect to those ET Preferred Units during the period of the loan and may recognize gain or loss from the disposition.

Because there is no direct or indirect controlling authority on the issue relating to partnership interests, Latham & Watkins LLP has not rendered an opinion regarding the tax treatment of a unitholder whose ET Preferred Units are loaned to a short seller to cover a short sale of ET Preferred Units; therefore, holders of ET Preferred Units desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to modify any applicable brokerage account agreements to prohibit their brokers from borrowing and loaning their ET Preferred Units. The IRS has previously announced that it is studying issues relating to the tax treatment of short sales of partnership interests. Please also read “—Disposition of ET Preferred Units—Recognition of Gain or Loss on Sale.”

Tax Rates

Currently, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 37.0% and the highest marginal U.S. federal income tax rate applicable to long-term capital gains (generally, capital gains on certain assets held for more than twelve months) of individuals is 20%. Such rates are subject to change by new legislation at any time.

In addition, a 3.8% Medicare tax (“NIIT”) is imposed on certain net investment income earned by individuals, estates and trusts. For these purposes, net investment income generally includes guaranteed payments, a unitholder’s allocable share of our income, if any, and gain realized by a unitholder from a sale of units. In the case of an individual, the tax will be imposed on the lesser of (i) the unitholder’s net investment income or (ii) the amount by which the unitholder’s modified adjusted gross income exceeds $250,000 (if the unitholder is married and filing jointly or a surviving spouse), $125,000 (if the unitholder is married and filing separately) or $200,000 (in any other case). In the case of an estate or trust, the tax will be imposed on the lesser of (i) undistributed net investment income, or (ii) the excess adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins for such taxable year. The U.S. Department of the Treasury and the IRS have issued Treasury Regulations that provide guidance regarding the NIIT. Unitholders that receive ET Preferred Units in the Merger are urged to consult with their tax advisors as to the impact of the NIIT on an investment in the ET Preferred Units.

For taxable years beginning after December 31, 2017, and ending on or before December 31, 2025, a non-corporate unitholder may be entitled to a deduction equal to 20% of its “qualified business income” attributable to its interest in a partnership, subject to certain limitations. As described above, we will treat distributions on the ET Preferred Units as guaranteed payments for the use of capital, and under the applicable Treasury Regulations, a guaranteed payment for the use of capital will not be taken into account for purposes of computing qualified business income. As a result, distributions received by the holders of the ET Preferred Units will not be eligible for the 20% deduction for qualified business income. Unitholders that receive ET Preferred Units in the Merger should consult their tax advisors regarding the availability of the deduction for qualified business income.

 

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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 holder of ET Preferred Units will be required to include in its tax return its income from our guaranteed payments for each taxable year ending within or with its taxable year. In addition, a holder of ET Preferred Units who has a taxable year ending on a date other than December 31 and who disposes of all of his ET Preferred Units following the close of our taxable year but before the close of his taxable year will be required to include in income for his taxable year his income from more than one year of guaranteed payments.

Disposition of ET Preferred Units

Recognition of Gain or Loss on Sale

Gain or loss will be recognized on a sale of ET Preferred Units equal to the difference between the amount realized and the tax basis of the holder of ET Preferred Units for the ET Preferred Units sold. Such holder’s amount realized will be measured by the sum of the cash and the fair market value of other property received by him.

Generally, gain or loss recognized by a holder of ET Preferred Units, other than a “dealer” in ET Preferred Units, on the sale or exchange of an ET Preferred Unit will be taxable as capital gain or loss. Capital gain recognized by an individual on the sale of ET Preferred Units held for more than twelve months will generally be taxed at the U.S. federal income tax rate applicable to long-term capital gains. Capital losses 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 gains in the case of corporations. Both ordinary income and capital gain recognized on a sale of ET Preferred Units may be subject to the NIIT in certain circumstances. See “—Tax Consequences of ET Preferred Unit Ownership—Tax Rates.”

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, which generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner’s tax basis in his entire interest in the partnership as the value of the interest sold bears to the value of the partner’s entire interest in the partnership. Treasury Regulations under Section 1223 of the Internal Revenue Code allow a selling unitholder who can identify partnership interests transferred with an ascertainable holding period to elect to use the actual holding period of the partnership interests transferred. Thus, according to the ruling discussed above, a holder of ET Preferred Units will be unable to select high or low basis ET Preferred Units to sell as would be the case with corporate stock, but, according to the Treasury Regulations, he may designate specific ET Preferred Units sold for purposes of determining the holding period of units transferred. A unitholder electing to use the actual holding period of ET Preferred Units transferred must consistently use that identification method for all subsequent sales or exchanges of ET Preferred Units. A holder of ET Preferred Units considering the purchase of additional partnership interests or a sale of partnership interests purchased in separate transactions is urged to 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 short sale;

 

   

an offsetting notional principal contract; or

 

   

a futures or forward contract;

 

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in each case, 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 the Treasury is also authorized to issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial position.

Recognition of Gain or Loss on Redemption

The receipt by a holder of amounts in redemption of his ET Preferred Units generally will result in the recognition of taxable gain to the holder for U.S. federal income tax purposes only if and to the extent the amount of redemption proceeds received exceeds his tax basis in all the units held by him immediately before the redemption. Any such redemption of ET Preferred Units would result in the recognition of taxable loss to the holder for federal income tax purposes only if the holder does not hold any other units immediately after the redemption and the holder’s tax basis in the redeemed ET Preferred Units exceeds the amounts received by the holder in redemption thereof. Any taxable gain or loss recognized under the foregoing rules would be treated in the same manner as taxable gain or loss recognized on a sale of ET Preferred Units as described above in “Disposition of ET Preferred Units—Recognition of Gain or Loss on Sale.”

Allocations Between Transferors and Transferees

Holders of ET Preferred Units owning ET Preferred Units as of the applicable record date with respect to an applicable distribution payment date will be entitled to receive the cash distribution with respect to their ET Preferred Units on such distribution payment date. Purchasers of ET Preferred Units after such applicable record date will therefore not become entitled to receive a cash distribution on their ET Preferred Units until the next applicable record date.

Notification Requirements

A unitholder who sells any of his ET Preferred Units is generally required to notify us in writing of that sale within 30 days after the sale (or, if earlier, January 15 of the year following the sale). A purchaser of units who purchases units from another unitholder is also generally required to notify us in writing of that purchase within 30 days after the purchase. Upon receiving such notifications, we are required to notify the IRS of that transaction and to furnish specified information to the transferor and transferee. Failure to notify us of a purchase may, in some cases, lead to the imposition of penalties. 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 who will satisfy such requirements.

Tax-Exempt Organizations and Other Investors

Ownership of units by employee benefit plans, other tax-exempt organizations, non-resident aliens, foreign corporations and other foreign persons raises issues unique to those investors and, as described below to a limited extent, may have substantially adverse tax consequences to them. If you are a tax-exempt entity or a foreign person, you should consult your tax advisor before investing in the ET Preferred Units.

Employee benefit plans and most other organizations exempt from federal income tax, including IRAs and other retirement plans, are subject to federal income tax on unrelated business taxable income (“UBTI”). We will treat distributions on the ET Preferred Units as guaranteed payments for the use of capital. The treatment of guaranteed payments for the use of capital to tax-exempt investors is not certain. Such payments may be treated as UBTI for federal income tax purposes, and Latham & Watkins LLP is unable to opine with respect to whether

 

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such payments constitute UBTI for federal income tax purposes. If you are a tax-exempt entity, you should consult your tax advisor with respect to the consequences of owning the ET Preferred Units received in the Merger.

Non-resident aliens and foreign corporations, trusts or estates that own units may be considered to be engaged in business in the United States because of the ownership of ET Preferred Units. As a consequence, they will be required to file federal tax returns to report their income from guaranteed payments and pay federal income tax on such income in a manner similar to a taxable U.S. holder. Moreover, under rules applicable to publicly traded partnerships, distributions to foreign unitholders are subject to withholding at the highest applicable effective tax rate. Each foreign holder of ET Preferred Units must obtain a taxpayer identification number from the IRS and submit that number to our transfer agent on a Form W-8BEN, W-8BEN-E or applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change these procedures.

In addition, because a foreign corporation that owns ET Preferred Units will be treated as engaged in a U.S. trade or business, that corporation may be subject to the U.S. branch profits tax at a rate of 30%, in addition to regular federal income tax, on its share of our earnings and profits, as adjusted for changes in the foreign corporation’s “U.S. net equity,” that is effectively connected with the conduct of a U.S. 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 holder is subject to special information reporting requirements under Section 6038C of the Internal Revenue Code.

A foreign unitholder who sells or otherwise disposes of an ET Preferred Unit will be subject to U.S. federal income tax on gain realized from the sale or disposition of that unit to the extent the gain is effectively connected with a U.S. trade or business of the foreign unitholder. Gain on the sale or disposition of an ET Preferred Unit will be treated as effectively connected with a U.S. trade or business to the extent that a foreign unitholder would recognize gain effectively connected with a U.S. trade or business upon the hypothetical sale of our assets at fair market value on the date of the sale or exchange of that ET Preferred Unit. Such gain shall be reduced by certain amounts treated as effectively connected with a U.S. trade or business attributable to certain real property interests, as set forth in the following paragraph.

Under the Foreign Investment in Real Property Tax Act, a foreign holder of ET Preferred Units (other than certain “qualified foreign pension funds” (or an entity all of the interests of which are held by such a qualified foreign pension fund), which generally are entities or arrangements that are established and regulated by foreign law to provide retirement or other pension benefits to employees, do not have a single participant or beneficiary that is entitled to more than 5% of the assets or income of the entity or arrangement and are subject to certain preferential tax treatment under the laws of the applicable foreign country), generally will be subject to U.S. federal income tax upon the sale or disposition of an ET Preferred Unit if (i) he owned (directly or constructively applying certain attribution rules) more than 5% of the applicable series of ET Preferred Units at any time during the five-year period ending on the date of such disposition and (ii) 50% or more of the fair market value of all of our assets consisted of U.S. real property interests at any time during the shorter of the period during which such unitholder held the applicable ET Preferred Units or the five-year period ending on the date of disposition. Currently, more than 50% of our assets consist of U.S. real property interests and we do not expect that to change in the foreseeable future. Therefore, foreign holders of ET Preferred Units may be subject to federal income tax on gain from the sale or disposition of their units.

Upon the sale, exchange or other disposition of an ET Preferred Unit by a foreign unitholder, the transferee is generally required to withhold 10% of the amount realized on such sale, exchange or other disposition if any portion of the gain on such sale, exchange or other disposition would be treated as effectively connected with a U.S. trade or business. The U.S. Department of the Treasury and the IRS have recently issued final regulations providing guidance on the application of these rules for transfers of certain publicly traded partnership interests, including transfers of the ET Preferred Units. Under these regulations, the “amount realized” on a transfer of an

 

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ET Preferred Unit will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and such broker will generally be responsible for the relevant withholding obligations. Distributions made to a holder of an ET Preferred Unit may also be subject to withholding under these rules to the extent a portion of a distribution is attributable to an amount in excess of our cumulative net income that has not previously been distributed. The U.S. Department of the Treasury and the IRS have provided that these rules will generally not apply to transfers of, or distributions on, ET Preferred Units occurring before January 1, 2022. Foreign unitholders that receive ET Preferred Units in the Merger should consult their tax advisors regarding the impact of these rules on an investment in ET Preferred Units.

Additional withholding requirements may also affect certain foreign unitholders. Please read “—Administrative Matters—Additional Withholding Requirements.”

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 each unitholder’s 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, Treasury Regulations or administrative interpretations of the IRS. Neither we nor Latham & Watkins LLP can assure unitholders that receive ET Preferred Units in the Merger 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 ET Preferred 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 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. For taxable years beginning on or before December 31, 2017, the Internal Revenue Code requires that one partner be designated as the “Tax Matters Partner” for these purposes. Our partnership agreement names our general partner as our Tax Matters Partner.

The Tax Matters Partner has made and 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 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.

Pursuant to the Bipartisan Budget Act of 2015, for taxable years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any

 

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applicable penalties and interest) resulting from such audit adjustment directly from us. Similarly, for such taxable years, if the IRS makes audit adjustments to income tax returns filed by an entity in which we are a member or partner, it may assess and collect any taxes (including penalties and interest) resulting from such audit adjustment directly from such entity. Generally, we expect to elect to have our general partner and its unitholders take any such audit adjustment into account in accordance with their interests in us during the tax year under audit, but there can be no assurance that such election will be effective in all circumstances. If we are unable to have our general partner and its unitholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own our units during the tax year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties, and interest, our cash available for distribution to holders of the ET Preferred Units might be substantially reduced.

Additionally, pursuant to the Bipartisan Budget Act of 2015, the Internal Revenue Code will no longer require that we designate a Tax Matters Partner. Instead, for taxable years beginning after December 31, 2017, we will be required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative (“Partnership Representative”). The Partnership Representative will have the sole authority to act on our behalf for purposes of, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS. If we do not make such a designation, the IRS can select any person as the Partnership Representative. We have designated our general partner as the Partnership Representative. Further, any actions taken by us or by the Partnership Representative on our behalf with respect to, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS, will be binding on us and all of the unitholders.

Additional Withholding Requirements

Subject to the proposed Treasury Regulations discussed below, withholding taxes may apply to certain types of payments made to “foreign financial institutions” (as specially defined in the Internal Revenue Code) and certain other foreign entities. Specifically, a 30% withholding tax may be imposed on interest, dividends and other fixed or determinable annual or periodical gains, profits and income from sources within the United States (“FDAP Income”), or gross proceeds from the sale or other disposition of any property of a type that can produce interest or dividends from sources within the United States (“Gross Proceeds”), paid to a foreign financial institution or to a “non-financial foreign entity” (as specially defined in the Internal Revenue Code), unless (i) the foreign financial institution undertakes certain diligence and reporting, (ii) the non-financial foreign entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to noncompliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these requirements may be subject to different rules.

These rules generally apply to payments of FDAP Income currently and, while these rules generally would have applied to payments of relevant Gross Proceeds made on or after January 1, 2019, recently proposed Treasury Regulations eliminate these withholding taxes on payments of Gross Proceeds entirely. Unitholders generally may rely on these proposed Treasury Regulations until the Final Treasury Regulations are issued. Thus, to the extent we have FDAP Income that is not treated as effectively connected with a U.S. trade or business (please read “—Tax-Exempt Organizations and Other Investors”), unitholders who are foreign financial institutions or certain other foreign entities, or persons that hold their ET Preferred Units through such foreign entities, may be subject to withholding on distributions they receive from us, or their distributive share of our income, pursuant to the rules described above.

 

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Unitholders that receive ET Preferred Units in the Merger should consult their own tax advisors regarding the potential application of these withholding provisions to their investment in the ET Preferred Units.

Nominee Reporting

Persons who hold an interest in us as a nominee for another person are required to furnish to us:

 

   

the name, address and taxpayer identification number of the beneficial owner and the nominee;

 

   

whether the beneficial owner is:

 

   

a person that is not a U.S. person;

 

   

a foreign government, an international organization or any wholly owned agency or instrumentality of either of the foregoing; or

 

   

a tax-exempt entity;

 

   

the amount and description of units held, acquired or transferred for the beneficial owner; and

 

   

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 dispositions.

Brokers and financial institutions are required to furnish additional information, including whether they are U.S. persons and specific information on units they acquire, hold or transfer for their own account. A penalty of $280 per failure, up to a maximum of $3,426,000 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.

Accuracy-Related Penalties

Certain penalties may be imposed on taxpayers as a result of an underpayment of tax that is attributable to one or more specified causes, including: (i) negligence or disregard of rules or regulations, (ii) substantial understatements of income tax, (iii) substantial valuation misstatements and (iv) the disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law. Except with respect to the disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, however, no penalty will be imposed for any portion of any such underpayment if it is shown that there was a reasonable cause for the underpayment of that portion and that the taxpayer acted in good faith regarding the underpayment of that portion. With respect to substantial understatements of income tax, the amount of any understatement subject to penalty generally is reduced by that portion of the understatement which 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 relevant facts of that position are adequately disclosed on the return. 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 adequately disclose the relevant 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 and to take other actions as may be appropriate to permit unitholders to avoid liability for this penalty.

Recent Legislative Developments

The present federal income tax treatment of publicly traded partnerships, including us, or an investment in the ET Preferred Units may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time, members of Congress and the President propose and consider substantive changes to the existing federal income tax laws that affect the tax treatment of publicly traded partnerships. Any

 

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modification to the federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible to meet the exception for us to be treated as a partnership for federal income tax purposes. Please read “—Partnership Status.” We are unable to predict whether any such changes will ultimately be enacted. However, it is possible that a change in law could affect us, and any such changes could negatively impact the value of an investment in the ET Preferred Units.

State, Local, Foreign and Other Tax Considerations

In addition to federal income taxes, you will likely be subject to other taxes, such as state, local and foreign income taxes, unincorporated business taxes, and estate, inheritance or intangible taxes that may be imposed by the various jurisdictions in which we do business or own property or in which you are a resident. Although an analysis of those various taxes is not presented here, each unitholder that receives ET Preferred Units in the Merger should consider their potential impact on his investment in us. We currently own property or do business in many states. Several of these states impose a personal income tax on individuals; certain of these states also impose an income tax on corporations and other entities. We may also own property or do business in other jurisdictions in the future. Although you may not be required to file a return and pay taxes in some jurisdictions because your income from that jurisdiction falls below the filing and payment requirement, you will be required to file income tax returns and to pay income taxes in many of these jurisdictions in which we do business or own property and may be subject to penalties for failure to comply with those requirements. In some jurisdictions, tax losses may not produce a tax benefit in the year incurred and may not be available to offset income in subsequent taxable years. Some of the jurisdictions 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 jurisdiction. Withholding, the amount of which may be greater or less than a particular unitholder’s income tax liability to the jurisdiction, generally does not relieve a nonresident unitholder from the obligation to file an income tax return. Amounts withheld will be treated as if distributed to unitholders for purposes of determining the amounts distributed by us. Please read “—Tax Consequences of ET Preferred Unit Ownership—Entity-Level Collections.” Based on current law and our estimate of our future operations, our general partner anticipates that any amounts required to be withheld will not be material.

It is the responsibility of each holder of ET Preferred Units to investigate the legal and tax consequences, under the laws of pertinent states, localities and foreign jurisdictions, of his investment in us. Accordingly, each unitholder that receives ET Preferred Units in the Merger is urged to consult his own tax counsel or other advisor with regard to those matters. Further, it is the responsibility of each holder of ET Preferred Units to file all state, local and foreign, as well as U.S. federal tax returns, that may be required of him. Latham & Watkins LLP has not rendered an opinion on the state tax, local tax, alternative minimum tax or foreign tax consequences of an investment in us.

 

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COMPARISON OF PREFERRED UNITHOLDERS’ RIGHTS AND DESCRIPTION OF ET PREFERRED UNITS

The rights of ETO Preferred Unitholders are currently governed by the ETO Partnership Agreement and the DRULPA. The rights of the ET Preferred Unitholders will be governed by the ET Partnership Agreement, as amended by Amendment No. 8 to the ET Partnership Agreement, a form of which is attached to this prospectus as Annex B, and the DRULPA. Unless the context otherwise requires, the description of the rights of ET Preferred Unitholders appearing in this section describe the rights provided for in the ET Partnership Agreement, as amended by Amendment No. 8 to the ET Partnership Agreement.

Although the preferences, rights, powers, duties and obligations of the ET Preferred Units are intended to be substantially equivalent to the preferences, rights, powers, duties and obligations of the ETO Preferred Units prior to the Merger, there are certain differences between the ET Partnership Agreement and the ETO Partnership Agreement that could affect the rights of the holders of ET Preferred Units. Certain of these differences are described below.

The following description summarizes the material rights of ETO Preferred Unitholders and ET Preferred Unitholders following the effective time of the Merger but does not purport to be a complete statement of all of the provisions of the ETO Partnership Agreement and ET Partnership Agreement relating to the ETO Preferred Units or the ET Preferred Units, or a complete description of the specific provisions referred to in this summary. The identification of specific differences is not intended to indicate that other equally significant or more significant differences do not exist. ETO Preferred Unitholders should read carefully the relevant provisions of Amendment No. 8 to the ET Partnership Agreement, a form of which is attached to this prospectus as Annex B. This summary is qualified in its entirety by reference to the DRULPA, the ETO Partnership Agreement and the ET Partnership Agreement, as amended by Amendment No. 8 to the ET Partnership Agreement. Unless context otherwise requires, references in this section to the “ET Partnership Agreement” refer to the ET Partnership Agreement, as amended by Amendment No. 8 thereto. Capitalized terms used in the table below and not otherwise defined in this prospectus are used as defined in the applicable partnership agreement. Copies of the other documents referred to in this summary may be obtained as described in the section entitled “Where You Can Find More Information” beginning on page 84.

Series A Preferred Units

 

ETO Series A Preferred Unitholders

  

ET Series A Preferred Unitholders

ISSUANCE AND DISTRIBUTIONS
In November 2017, ETO issued and sold 950,000 ETO Series A Preferred Units at a price to the public of $1,000 per unit.    By adoption of Amendment No. 8 to the ET Partnership Agreement, ET will create the ET Series A Preferred Units, which, following the effective time of the Merger, will (i) rank pari passu with the other ET Preferred Units with respect to distributions and rights upon liquidation and (ii) have substantially the same preferences, rights, powers and duties as the ETO Series A Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).
Distributions on the ETO Series A Preferred Units are cumulative from the date of original issue and are payable semi-annually in arrears on the 15th day of February and August of each year up to and including    Distributions on the ET Series A Preferred Units will be cumulative                from                 , 2021 and will be payable semi-annually in arrears on the 15th day of February and August of each year up to and

 

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ET Series A Preferred Unitholders

February 15, 2023. After February 15, 2023, distributions on the ETO Series A Preferred Units will be payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ETO’s general partner.    including February 15, 2023. After February 15, 2023, distributions on the ET Series A Preferred Units will be payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ET’s general partner.
Distributions on the ETO Series A Preferred Units are payable out of amounts legally available therefor from and including the date of original issue to, but excluding February 15, 2023, at a rate of 6.250% per annum of the $1,000 liquidation preference per ETO Series A Preferred Unit (equal to $62.50 per ETO Series A Preferred Unit per annum). On and after February 15, 2023, distributions on the ETO Series A Preferred Units will accumulate for each distribution period at a percentage of the $1,000 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.028% per annum.    Distributions on the ET Series A Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding February 15, 2023, at a rate of 6.250% per annum of the $1,000 liquidation preference per ET Series A Preferred Unit (equal to $62.50 per ET Series A Preferred Unit per annum). On and after February 15, 2023, distributions on the ET Series A Preferred Units will accumulate for each distribution period at a percentage of the $1,000 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.028% per annum.
RANKING
The ETO Series A Preferred Units, with respect to anticipated semi-annual or quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ETO’s affairs, rank:    The ET Series A Preferred Units will, with respect to anticipated semi-annual or quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ET’s affairs, rank:

•  senior to any junior securities (including ETO Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ETO Preferred Units); and

 

•  junior to any senior securities.

  

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

The ETO Series A Preferred Units are subordinated to all of ETO’s and its subsidiaries’ existing and future indebtedness and other liabilities (including indebtedness outstanding under existing credit facilities, ETO’s senior notes, and any other senior securities ETO may issue in the future with respect to assets available to satisfy claims against it).    The ET Series A Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness and other liabilities (including ET’s senior notes, and any other senior securities ET may issue in the future with respect to assets available to satisfy claims against it).
Under the ETO Partnership Agreement, ETO may issue junior securities from time to time in one or more series without the consent of the holders of the ETO Series A Preferred Units. ETO’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the    Under the ET Partnership Agreement, ET may issue junior securities from time to time in one or more series without the consent of the holders of the ET Series A Preferred Units. ET’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such

 

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ETO Series A Preferred Unitholders

  

ET Series A Preferred Unitholders

issuance of any units of that series. ETO’s general partner will also determine the number of units constituting each series of securities. ETO’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”    series before the issuance of any units of that series. ET’s general partner will also determine the number of units constituting each series of securities. ET’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”
RESTRICTIONS ON DISTRIBUTIONS

ETO will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ETO Series A Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ETO’s general partner and paid on any date fixed by ETO’s general partner, whether or not a distribution payment date, to holders of the ETO Series A Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

  

ET will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ET Series A Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ET’s general partner and paid on any date fixed by ET’s general partner, whether or not a distribution payment date, to holders of the ET Series A Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ETO Series A Preferred Units (e.g., quarterly rather than semi-annually), ETO’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ETO’s general partner expects to have sufficient funds to pay the full distribution in respect of the ETO Series A Preferred Units on the next successive distribution payment date.    To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ET Series A Preferred Units (e.g., quarterly rather than semi-annually), ET’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ET’s general partner expects to have sufficient funds to pay the full distribution in respect of the ET Series A Preferred Units on the next successive distribution payment date.
OPTIONAL REDEMPTION
At any time on or after February 15, 2023, ETO may redeem the ETO Series A Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ETO Series A Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series A Rating Event (as defined below), ETO may redeem the ETO Series A Preferred Units, in whole but not in part, out of amounts    At any time on or after February 15, 2023, ET may redeem the ET Series A Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ET Series A Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series A Rating Event (as defined below), ET may redeem the ET Series A Preferred Units, in whole but not in part, out

 

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ETO Series A Preferred Unitholders

  

ET Series A Preferred Unitholders

legally available therefor, at a price of $1,020 per ETO Series A Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ETO’s outstanding indebtedness. ETO must provide not less than 15 days’ and not more than 60 days’ written notice of any such redemption. ETO may undertake multiple partial redemptions.

 

“Series A Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ETO Series A Preferred Units, or (ii) a lower Equity Credit being given to the ETO Series A Preferred Units than the Equity Credit that would have been assigned to the ETO Series A Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ETO Series A Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ETO Series A Preferred Unit assigned to the ETO Series A Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

  

of amounts legally available therefor, at a price of $1,020 per ET Series A Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ET’s outstanding indebtedness. ET must provide not less than 15 days’ and not more than 60 days’ written notice of any such redemption. ET may undertake multiple partial redemptions.

 

“Series A Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ET Series A Preferred Units, or (ii) a lower Equity Credit being given to the ET Series A Preferred Units than the Equity Credit that would have been assigned to the ET Series A Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ET Series A Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ET Series A Preferred Unit assigned to the ET Series A Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

CONVERSION RIGHTS
The ETO Series A Preferred Units are not convertible into or exchangeable for any other securities or property at the option of the holder.    The ET Series A Preferred Units will not be convertible into or exchangeable for any other securities or property at the option of the holder.
LIQUIDATION RIGHTS

If necessary, the holders of outstanding ETO Series A Preferred Units will first be specially allocated items of ETO’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ETO’s affairs, whether voluntary or involuntary, a liquidation preference of $1,000 per ETO Series A Preferred Unit.

 

If the amount of ETO’s gross income and gain available to be specially allocated to the ETO Series A Preferred Units is not sufficient to cause the capital account of such ETO Series A Preferred Unit to equal the

  

If necessary, the holders of outstanding ET Series A Preferred Units will first be specially allocated items of ET’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ET’s affairs, whether voluntary or involuntary, a liquidation preference of $1,000 per ET Series A Preferred Unit.

 

If the amount of ET’s gross income and gain available to be specially allocated to the ET Series A Preferred Units is not sufficient to cause the capital account of such ET Series A Preferred Unit to equal the

 

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ETO Series A Preferred Unitholders

  

ET Series A Preferred Unitholders

liquidation preference of the ETO Series A Preferred Unit, then the amount that a holder of such ETO Series A Preferred Units would receive upon liquidation may be less than the ETO Series A Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ETO Series A Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ETO Series A Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ETO with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ETO’s affairs.    liquidation preference of the ET Series A Preferred Unit, then the amount that a holder of such ET Series A Preferred Units would receive upon liquidation may be less than the ET Series A Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ET Series A Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ET Series A Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ET with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ET’s affairs.
VOTING RIGHTS

Except as described below, holders of the ETO Series A Preferred Units generally have no voting rights.

 

Unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series A Preferred Units, voting as a separate class, ETO may not adopt any amendment to the ETO Partnership Agreement that would have a material adverse effect on the terms of the ETO Series A Preferred Units.

 

In addition, unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series A Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ETO may not (i) create or issue any parity securities (including any additional ETO Series A Preferred Units) if the cumulative distributions payable on then outstanding ETO Series A Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ETO Series A Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ETO Series A Preferred Unit

  

Except as described below, holders of the ET Series A Preferred Units generally will have no voting rights.

 

Unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series A Preferred Units, voting as a separate class, ET may not adopt any amendment to the ET Partnership Agreement that would have a material adverse effect on the terms of the ET Series A Preferred Units.

 

In addition, unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series A Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ET may not (i) create or issue any parity securities (including any additional ET Series A Preferred Units) if the cumulative distributions payable on then outstanding ET Series A Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ET Series A Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ET Series A Preferred Unit

 

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ETO Series A Preferred Unitholders

  

ET Series A Preferred Unitholders

TRANSFER OF UNITS
There is no restriction on the transfer of the ETO Series A Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ETO Partnership Agreement.    There is no restriction on the transfer of the ET Series A Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ET Partnership Agreement.
PREEMPTIVE RIGHTS
No holder of ETO Series A Preferred Units has any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ETO Partnership Agreement.    No holder of ET Series A Preferred Units will have any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ET Partnership Agreement.
RIGHTS UPON A CHANGE OF CONTROL
The holders of ETO Series A Preferred Units do not have any specific rights or protections upon a change of control at ETO.    The holders of ET Series A Preferred Units will not have any specific rights or protections upon a change of control at ET.
NO SINKING FUND
The ETO Series A Preferred Units do not have the benefit of any sinking fund.    The ET Series A Preferred Units will not have the benefit of any sinking fund.

Series B Preferred Units

 

ETO Series B Preferred Unitholders

  

ET Series B Preferred Unitholders

ISSUANCE AND DISTRIBUTIONS
In November 2017, ETO issued and sold 550,000 ETO Series B Preferred Units at a price to the public of $1,000 per unit.    By adoption of Amendment No. 8 to the ET Partnership Agreement, ET will create the ET Series B Preferred Units, which, following the effective time of the Merger, will (i) rank pari passu with the other ET Preferred Units with respect to distributions and rights upon liquidation and (ii) have substantially the same preferences, rights, powers and duties as the ET Series B Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).
Distributions on the ETO Series B Preferred Units are cumulative from the date of original issue and are payable semi-annually in arrears on the 15th day of February and August of each year up to and including February 15, 2028. After February 15, 2028, distributions on the ETO Series B Preferred Units will be payable quarterly in arrears on the 15th day of    Distributions on the ET Series B Preferred Units will be cumulative                from                 , 2021 and will be payable semi-annually in arrears on the 15th day of February and August of each year up to and including February 15, 2028. After February 15, 2028, distributions on the ET Series B Preferred Units will be payable quarterly in arrears on the 15th

 

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ET Series B Preferred Unitholders

February, May, August and November of each year, in each case when, as, and if declared by ETO’s general partner.    day of February, May, August and November of each year, in each case when, as, and if declared by ET’s general partner.
Distributions on the ETO Series B Preferred Units are payable out of amounts legally available therefor from and including the date of original issue to, but excluding February 15, 2028, at a rate of 6.625% per annum of the $1,000 liquidation preference per ETO Series B Preferred Unit (equal to $66.25 per ETO Series B Preferred Unit per annum). On and after February 15, 2028, distributions on the ETO Series B Preferred Units will accumulate for each distribution period at a percentage of the $1,000 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.155% per annum.    Distributions on the ET Series B Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding February 15, 2028, at a rate of 6.625% per annum of the $1,000 liquidation preference per ET Series B Preferred Unit (equal to $66.25 per ET Series B Preferred Unit per annum). On and after February 15, 2028, distributions on the ET Series B Preferred Units will accumulate for each distribution period at a percentage of the $1,000 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.155% per annum.
RANKING
The ETO Series B Preferred Units, with respect to anticipated semi-annual or quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ETO’s affairs, rank:    The ET Series B Preferred Units will, with respect to anticipated semi-annual or quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ET’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

  

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

The ETO Series B Preferred Units are subordinated to all of ETO’s and its subsidiaries’ existing and future indebtedness and other liabilities (including indebtedness outstanding under existing credit facilities, ETO’s senior notes, and any other senior securities ETO may issue in the future with respect to assets available to satisfy claims against it).    The ET Series B Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness and other liabilities (including ET’s senior notes, and any other senior securities ET may issue in the future with respect to assets available to satisfy claims against it).
Under the ETO Partnership Agreement, ETO may issue junior securities from time to time in one or more series without the consent of the holders of the ETO Series B Preferred Units. ETO’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ETO’s general partner will also determine the number of units constituting each series of securities. ETO’s ability to issue additional parity securities in certain    Under the ET Partnership Agreement, ET may issue junior securities from time to time in one or more series without the consent of the holders of the ET Series B Preferred Units. ET’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ET’s general partner will also determine the number of units constituting each series of securities. ET’s ability to issue additional parity securities in certain

 

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ET Series B Preferred Unitholders

circumstances or senior securities is limited as described below under “Voting Rights.”    circumstances or senior securities is limited as described below under “Voting Rights.”
RESTRICTIONS ON DISTRIBUTIONS

ETO will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ETO Series B Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ETO’s general partner and paid on any date fixed by ETO’s general partner, whether or not a distribution payment date, to holders of the ETO Series B Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

  

ET will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ET Series B Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ET’s general partner and paid on any date fixed by ET’s general partner, whether or not a distribution payment date, to holders of the ET Series B Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ETO Series B Preferred Units (e.g., quarterly rather than semi-annually), ETO’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ETO’s general partner expects to have sufficient funds to pay the full distribution in respect of the ETO Series B Preferred Units on the next successive distribution payment date.    To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ET Series B Preferred Units (e.g., quarterly rather than semi-annually), ET’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ET’s general partner expects to have sufficient funds to pay the full distribution in respect of the ET Series B Preferred Units on the next successive distribution payment date.
OPTIONAL REDEMPTION
At any time on or after February 15, 2028, ETO may redeem the ETO Series B Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ETO Series B Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series B Rating Event (as defined below), ETO may redeem the ETO Series B Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $1,020 per ETO Series B Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only    At any time on or after February 15, 2028, ET may redeem the ET Series B Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ET Series B Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series B Rating Event (as defined below), ET may redeem the ET Series B Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $1,020 per ET Series B Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such

 

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ETO Series B Preferred Unitholders

  

ET Series B Preferred Unitholders

out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ETO’s outstanding indebtedness. ETO must provide not less than 15 days’ and not more than 60 days’ written notice of any such redemption. ETO may undertake multiple partial redemptions.

 

“Series B Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ETO Series B Preferred Units, or (ii) a lower Equity Credit being given to the ETO Series B Preferred Units than the Equity Credit that would have been assigned to the ETO Series B Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ETO Series B Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ETO Series B Preferred Unit assigned to the ETO Series B Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

  

redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ET’s outstanding indebtedness. ET must provide not less than 15 days’ and not more than 60 days’ written notice of any such redemption. ET may undertake multiple partial redemptions.

 

“Series B Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ET Series B Preferred Units, or (ii) a lower Equity Credit being given to the ET Series B Preferred Units than the Equity Credit that would have been assigned to the ET Series B Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ET Series B Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ET Series B Preferred Unit assigned to the ET Series B Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

CONVERSION RIGHTS
The ETO Series B Preferred Units are not convertible into or exchangeable for any other securities or property at the option of the holder.    The ET Series B Preferred Units will not be convertible into or exchangeable for any other securities or property at the option of the holder.
LIQUIDATION RIGHTS

If necessary, the holders of outstanding ETO Series B Preferred Units will first be specially allocated items of ETO’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ETO’s affairs, whether voluntary or involuntary, a liquidation preference of $1,000 per ETO Series B Preferred Unit.

 

If the amount of ETO’s gross income and gain available to be specially allocated to the ETO Series B Preferred Units is not sufficient to cause the capital account of such ETO Series B Preferred Unit to equal the liquidation preference of the ETO Series B Preferred Unit, then the amount that a holder of such ETO Series B Preferred Units would receive upon liquidation may be less than the ETO Series B Preferred Unit liquidation preference. Any accumulated and unpaid distributions

  

If necessary, the holders of outstanding ET Series B Preferred Units will first be specially allocated items of ET’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ET’s affairs, whether voluntary or involuntary, a liquidation preference of $1,000 per ET Series B Preferred Unit.

 

If the amount of ET’s gross income and gain available to be specially allocated to the ET Series B Preferred Units is not sufficient to cause the capital account of such ET Series B Preferred Unit to equal the liquidation preference of the ET Series B Preferred Unit, then the amount that a holder of such ET Series B Preferred Units would receive upon liquidation may be less than the ET Series B Preferred Unit liquidation preference. Any

 

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ETO Series B Preferred Unitholders

  

ET Series B Preferred Unitholders

on the ETO Series B Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ETO Series B Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ETO with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ETO’s affairs.    accumulated and unpaid distributions on the ET Series B Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ET Series B Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ET with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ET’s affairs.
VOTING RIGHTS

Except as described below, holders of the ETO Series B Preferred Units generally have no voting rights.

 

Unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series B Preferred Units, voting as a separate class, ETO may not adopt any amendment to the ETO Partnership Agreement that would have a material adverse effect on the terms of the ETO Series B Preferred Units.

 

In addition, unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series B Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ETO may not (i) create or issue any parity securities (including any additional ETO Series B Preferred Units) if the cumulative distributions payable on then outstanding ETO Series B Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ETO Series B Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ETO Series B Preferred Unit

  

Except as described below, holders of the ET Series B Preferred Units generally will have no voting rights.

 

Unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series B Preferred Units, voting as a separate class, ET may not adopt any amendment to the ET Partnership Agreement that would have a material adverse effect on the terms of the ET Series B Preferred Units.

 

In addition, unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series B Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ET may not (i) create or issue any parity securities (including any additional ET Series B Preferred Units) if the cumulative distributions payable on then outstanding ET Series B Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ET Series B Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ET Series B Preferred Unit

TRANSFER OF UNITS
There is no restriction on the transfer of the ETO Series B Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ETO Partnership Agreement.    There is no restriction on the transfer of the ET Series B Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ET Partnership Agreement.

 

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ETO Series B Preferred Unitholders

  

ET Series B Preferred Unitholders

PREEMPTIVE RIGHTS
No holder of ETO Series B Preferred Units has any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ETO Partnership Agreement.    No holder of ET Series B Preferred Units will have any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ET Partnership Agreement.
RIGHTS UPON A CHANGE OF CONTROL
The holders of ETO Series B Preferred Units do not have any specific rights or protections upon a change of control at ETO.    The holders of ET Series B Preferred Units will not have any specific rights or protections upon a change of control at ET.
NO SINKING FUND
The ETO Series B Preferred Units do not have the benefit of any sinking fund.    The ET Series B Preferred Units will not have the benefit of any sinking fund.

Series C Preferred Units

 

ETO Series C Preferred Unitholders

  

ET Series C Preferred Unitholders

ISSUANCE AND DISTRIBUTIONS

In April 2018, ETO issued 18,000,000 ETO Series C Preferred Units at a price to the public of $25.00 per unit.

 

Distributions on the ETO Series C Preferred Units are cumulative from and including the date of original issue and are payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ETO’s general partner. Distributions on the ETO Series C Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding, May 15, 2023, at a rate equal to 7.375% per annum of the $25.00 liquidation preference per ETO Series C Preferred Unit (equal to $1.84375 per ETO Series C Preferred Unit per annum). On and after May 15, 2023, distributions on the ETO Series C Preferred Units will accumulate for each distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.530% per annum.

  

By adoption of Amendment No. 8 to the ET Partnership Agreement, ET will create the ET Series C Preferred Units, which, following the effective time of the Merger, will (i) rank pari passu with the other ET Preferred Units with respect to distributions and rights upon liquidation and (ii) have substantially the same preferences, rights, powers and duties as the ETO Series C Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).

 

Distributions on the Series ET C Preferred Units will be cumulative from and including                 , 2021 and will be payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ET’s general partner. Distributions on the ET Series C Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding, May 15, 2023, at a rate equal to 7.375% per annum of the $25.00 liquidation preference per ET Series C Preferred Unit (equal to $1.84375 per ET Series C Preferred Unit per annum). On and after May 15, 2023, distributions on the ET Series C Preferred Units will accumulate

 

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ET Series C Preferred Unitholders

   for each distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.530% per annum.
RANKING

The ETO Series C Preferred Units, with respect to anticipated quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ETO’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ETO Series C Preferred Units are subordinated to all of ETO’s and its subsidiaries’ existing and future indebtedness and other liabilities (including indebtedness outstanding under existing credit facilities, ETO’s senior notes, and any other senior securities ETO may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ETO Partnership Agreement, ETO may issue junior securities from time to time in one or more series without the consent of the holders of the ETO Series C Preferred Units. ETO’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ETO’s general partner will also determine the number of units constituting each series of securities. ETO’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

  

The ET Series C Preferred Units will, with respect to anticipated quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ET’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ET Series C Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness and other liabilities (including ET’s senior notes, and any other senior securities ET may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ET Partnership Agreement, ET may issue junior securities from time to time in one or more series without the consent of the holders of the ET Series C Preferred Units. ET’s general partner will have the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ET’s general partner will also determine the number of units constituting each series of securities. ET’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

RESTRICTIONS ON DISTRIBUTIONS
ETO will not declare or pay or set aside for payment any distribution on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ETO Series C Preferred Units and any parity securities through the most recent respective distribution periods.    ET will not declare or pay or set aside for payment any distribution on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ET Series C Preferred Units and any parity securities through the most recent respective distribution periods.

 

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ET Series C Preferred Unitholders

Accumulated distributions in arrears for any past distribution period may be declared by ETO’s general partner and paid on any date fixed by ETO’s general partner, whether or not a distribution payment date, to holders of the ETO Series C Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ETO Series C Preferred Units (e.g., monthly rather than quarterly), ETO’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, the general partner expects to have sufficient funds to pay the full distribution in respect of the ETO Series C Preferred Units on the next successive distribution payment date.

  

Accumulated distributions in arrears for any past distribution period may be declared by ET’s general partner and paid on any date fixed by ET’s general partner, whether or not a distribution payment date, to holders of the ET Series C Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ET Series C Preferred Units (e.g., monthly rather than quarterly), ET’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, the general partner expects to have sufficient funds to pay the full distribution in respect of the ET Series C Preferred Units on the next successive distribution payment date.

OPTIONAL REDEMPTION

At any time on or after May 15, 2023, ETO may redeem the ETO Series C Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $25.00 per ETO Series C Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a “Series C Rating Event” (as defined below), ETO may redeem the ETO Series C Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $25.50 per ETO Series C Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ETO’s outstanding indebtedness. ETO must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ETO may undertake multiple partial redemptions.

 

“Series C Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ETO Series C Preferred Units, or (ii) a lower

  

At any time on or after May 15, 2023, ET may redeem the ET Series C Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $25.00 per ET Series C Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a “Series C Rating Event” (as defined below), ET may redeem the ET Series C Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $25.50 per ET Series C Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ET’s outstanding indebtedness. ET must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ET may undertake multiple partial redemptions.

 

“Series C Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in

 

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ETO Series C Preferred Unitholders

  

ET Series C Preferred Unitholders

Equity Credit being given to the ETO Series C Preferred Units than the Equity Credit that would have been assigned to the ETO Series C Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ETO Series C Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $25.00 per ETO Series C Preferred Unit assigned to the ETO Series C Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.    effect with respect to the ET Series C Preferred Units, or (ii) a lower Equity Credit being given to the ET Series C Preferred Units than the Equity Credit that would have been assigned to the ET Series C Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ET Series C Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $25.00 per ET Series C Preferred Unit assigned to the ET Series C Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.
CONVERSION RIGHTS
The ETO Series C Preferred Units are not convertible into or exchangeable for any other securities or property at the option of the holder.    The ET Series C Preferred Units will not be convertible into or exchangeable for any other securities or property at the option of the holder.
LIQUIDATION RIGHTS

If necessary, the holders of outstanding ETO Series C Preferred Units will first be specially allocated items of ETO’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ETO’s affairs, whether voluntary or involuntary, a liquidation preference of $25.00 per ETO Series C Preferred Unit.

 

If the amount of ETO’s gross income and gain available to be specially allocated to the ETO Series C Preferred Units is not sufficient to cause the capital account of such ETO Series C Preferred Unit to equal the liquidation preference of the ETO Series C Preferred Unit, then the amount that a holder of such ETO Series C Preferred Units would receive upon liquidation may be less than the ETO Series C Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ETO Series C Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ETO Series C Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ETO with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ETO’s affairs.

  

If necessary, the holders of outstanding ET Series C Preferred Units will first be specially allocated items of ET’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ET’s affairs, whether voluntary or involuntary, a liquidation preference of $25.00 per ET Series C Preferred Unit.

 

If the amount of ET’s gross income and gain available to be specially allocated to the ET Series C Preferred Units is not sufficient to cause the capital account of such ET Series C Preferred Unit to equal the liquidation preference of the ET Series C Preferred Unit, then the amount that a holder of such ET Series C Preferred Units would receive upon liquidation may be less than the ET Series C Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ET Series C Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ET Series C Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ET with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ET’s affairs.

 

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ETO Series C Preferred Unitholders

  

ET Series C Preferred Unitholders

VOTING RIGHTS

Except as described below, holders of the ETO Series C Preferred Units generally have no voting rights.

 

Unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series C Preferred Units, voting as a separate class, ETO may not adopt any amendment to the ETO Partnership Agreement that would have a material adverse effect on the terms of the ETO Series C Preferred Units.

 

In addition, unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series C Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ETO may not (i) create or issue any parity securities (including any additional ETO Series C Preferred Units) if the cumulative distributions payable on then outstanding ETO Series C Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ETO Series C Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ETO Series C Preferred Unit.

  

Except as described below, holders of the ET Series C Preferred Units generally will have no voting rights.

 

Unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series C Preferred Units, voting as a separate class, ET may not adopt any amendment to the ET Partnership Agreement that would have a material adverse effect on the terms of the ET Series C Preferred Units.

 

In addition, unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series C Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ET may not (i) create or issue any parity securities (including any additional ET Series C Preferred Units) if the cumulative distributions payable on then outstanding ET Series C Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ET Series C Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ET Series C Preferred Unit.

TRANSFER OF UNITS
There is no restriction on the transfer of the ETO Series C Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ETO Partnership Agreement.    There is no restriction on the transfer of the ET Series C Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ET Partnership Agreement.
PREEMPTIVE RIGHTS
No holder of ETO Series C Preferred Units has any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ETO Partnership Agreement.    No holder of ET Series C Preferred Units will have any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ET Partnership Agreement.

 

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ETO Series C Preferred Unitholders

  

ET Series C Preferred Unitholders

RIGHTS UPON A CHANGE OF CONTROL
The holders of ETO Series C Preferred Units do not have any specific rights upon a change of control under the ETO Partnership Agreement.    The holders of ET Series C Preferred Units will not have any specific rights upon a change of control under the ET Partnership Agreement.
NO SINKING FUND
The ETO Series C Preferred Units do not have the benefit of any sinking fund.    The ET Series C Preferred Units will not have the benefit of any sinking fund.

Series D Preferred Units

 

ETO Series D Preferred Unitholders

  

ET Series D Preferred Unitholders

ISSUANCE AND DISTRIBUTIONS

In July 2018, ETO issued 16,000,000 ETO Series D Preferred Units at a price to the public of $25.00 per unit.

 

Distributions on the ETO Series D Preferred Units are cumulative from and including the date of original issue and are payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ETO’s general partner. Distributions on the ETO Series D Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding, August 15, 2023, at a rate equal to 7.625% per annum of the $25.00 liquidation preference per ETO Series D Preferred Unit (equal to $1.9063 per ETO Series D Preferred Unit per annum). On and after August 15, 2023, distributions on the ETO Series D Preferred Units will accumulate for each distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.738% per annum.

  

By adoption of Amendment No. 8 to the ET Partnership Agreement, ET will create the ET Series D Preferred Units, which, following the effective time of the Merger, will (i) rank pari passu with the other ET Preferred Units with respect to distributions and rights upon liquidation and (ii) have substantially the same preferences, rights, powers and duties as the ETO Series D Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).

 

Distributions on the Series ET C Preferred Units will be cumulative from and including                 , 2021 and will be payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ET’s general partner. Distributions on the ET Series D Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding, August 15, 2023, at a rate equal to 7.625% per annum of the $25.00 liquidation preference per ET Series D Preferred Unit (equal to $1.9063 per ET Series D Preferred Unit per annum). On and after August 15, 2023, distributions on the ET Series D Preferred Units will accumulate for each distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 4.738% per annum.

 

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ETO Series D Preferred Unitholders

  

ET Series D Preferred Unitholders

RANKING

The ETO Series D Preferred Units, with respect to anticipated quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ETO’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ETO Series D Preferred Units are subordinated to all of ETO’s and its subsidiaries’ existing and future indebtedness and other liabilities (including indebtedness outstanding under existing credit facilities, ETO’s senior notes, and any other senior securities ETO may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ETO Partnership Agreement, ETO may issue junior securities from time to time in one or more series without the consent of the holders of the ETO Series D Preferred Units. ETO’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ETO’s general partner will also determine the number of units constituting each series of securities. ETO’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

  

The ET Series D Preferred Units will, with respect to anticipated quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ET’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ET Series D Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness and other liabilities (including ET’s senior notes, and any other senior securities ET may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ET Partnership Agreement, ET may issue junior securities from time to time in one or more series without the consent of the holders of the ET Series D Preferred Units. ET’s general partner will have the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ET’s general partner will also determine the number of units constituting each series of securities. ET’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

RESTRICTIONS ON DISTRIBUTIONS

ETO will not declare or pay or set aside for payment any distribution on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ETO Series D Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ETO’s general partner and paid on any date fixed by ETO’s general partner, whether or not a distribution payment date, to

  

ET will not declare or pay or set aside for payment any distribution on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ET Series D Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ET’s general partner and paid on any date fixed by ET’s general partner, whether or not a distribution payment date,

 

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ETO Series D Preferred Unitholders

  

ET Series D Preferred Unitholders

holders of the ETO Series D Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ETO Series D Preferred Units (e.g., monthly rather than quarterly), ETO’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, the general partner expects to have sufficient funds to pay the full distribution in respect of the ETO Series D Preferred Units on the next successive distribution payment date.

  

to holders of the ET Series D Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ET Series D Preferred Units (e.g., monthly rather than quarterly), ET’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, the general partner expects to have sufficient funds to pay the full distribution in respect of the ET Series D Preferred Units on the next successive distribution payment date.

OPTIONAL REDEMPTION

At any time on or after August 15, 2023, ETO may redeem the ETO Series D Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $25.00 per ETO Series D Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series D Rating Event (as defined below), ETO may redeem the ETO Series D Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $25.50 per ETO Series D Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ETO’s outstanding indebtedness. ETO must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ETO may undertake multiple partial redemptions.

 

“Series D Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ETO Series D Preferred Units, or (ii) a lower Equity Credit being given to the ETO Series D Preferred Units than the Equity Credit that would have been assigned to the ETO Series D Preferred Units by such rating agency pursuant to the current criteria. “Equity

  

At any time on or after August 15, 2023, ET may redeem the ET Series D Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $25.00 per ET Series D Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series D Rating Event (as defined below), ET may redeem the ET Series D Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $25.50 per ET Series D Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ET’s outstanding indebtedness. ET must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ET may undertake multiple partial redemptions.

 

“Series D Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ET Series D Preferred Units, or (ii) a lower Equity Credit being given to the ET Series D Preferred Units than the Equity Credit that would have been assigned to the ET Series D Preferred Units by such rating agency pursuant to the

 

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ETO Series D Preferred Unitholders

  

ET Series D Preferred Unitholders

Credit” for the purposes of the ETO Series D Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $25.00 per ETO Series D Preferred Unit assigned to the ETO Series D Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.    Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ET Series D Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $25.00 per ET Series D Preferred Unit assigned to the ET Series D Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.
CONVERSION RIGHTS
The ETO Series D Preferred Units are not convertible into or exchangeable for any other securities or property at the option of the holder.    The ET Series D Preferred Units will not be convertible into or exchangeable for any other securities or property at the option of the holder.
LIQUIDATION RIGHTS

If necessary, the holders of outstanding ETO Series D Preferred Units will first be specially allocated items of ETO’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ETO’s affairs, whether voluntary or involuntary, a liquidation preference of $25.00 per ETO Series D Preferred Unit.

 

If the amount of ETO’s gross income and gain available to be specially allocated to the ETO Series D Preferred Units is not sufficient to cause the capital account of such ETO Series D Preferred Unit to equal the liquidation preference of the ETO Series D Preferred Unit, then the amount that a holder of such ETO Series D Preferred Units would receive upon liquidation may be less than the ETO Series D Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ETO Series D Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ETO Series D Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ETO with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ETO’s affairs.

  

If necessary, the holders of outstanding ET Series D Preferred Units will first be specially allocated items of ET’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ET’s affairs, whether voluntary or involuntary, a liquidation preference of $25.00 per ET Series D Preferred Unit.

 

If the amount of ET’s gross income and gain available to be specially allocated to the ET Series D Preferred Units is not sufficient to cause the capital account of such ET Series D Preferred Unit to equal the liquidation preference of the ET Series D Preferred Unit, then the amount that a holder of such ET Series D Preferred Units would receive upon liquidation may be less than the ET Series D Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ET Series D Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ET Series D Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ET with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ET’s affairs.

VOTING RIGHTS
Except as described below, holders of the ETO Series D Preferred Units generally have no voting rights.    Except as described below, holders of the ET Series D Preferred Units generally will have no voting rights.

 

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ETO Series D Preferred Unitholders

  

ET Series D Preferred Unitholders

 

Unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series D Preferred Units, voting as a separate class, ETO may not adopt any amendment to the ETO Partnership Agreement that would have a material adverse effect on the terms of the ETO Series D Preferred Units.

 

In addition, unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series D Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ETO may not (i) create or issue any parity securities (including any additional ETO Series D Preferred Units) if the cumulative distributions payable on then outstanding ETO Series D Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ETO Series D Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ETO Series D Preferred Unit.

  

 

Unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series D Preferred Units, voting as a separate class, ET may not adopt any amendment to the ET Partnership Agreement that would have a material adverse effect on the terms of the ET Series D Preferred Units.

 

In addition, unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series D Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ET may not (i) create or issue any parity securities (including any additional ET Series D Preferred Units) if the cumulative distributions payable on then outstanding ET Series D Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ET Series D Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ET Series D Preferred Unit.

TRANSFER OF UNITS
There is no restriction on the transfer of the ETO Series D Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ETO Partnership Agreement.    There is no restriction on the transfer of the ET Series D Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ET Partnership Agreement.
PREEMPTIVE RIGHTS
No holder of ETO Series D Preferred Units has any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ETO Partnership Agreement.    No holder of ET Series D Preferred Units will have any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ET Partnership Agreement.
RIGHTS UPON A CHANGE OF CONTROL
The holders of ETO Series D Preferred Units do not have any specific rights upon a change of control under the ETO Partnership Agreement.    The holders of ET Series D Preferred Units will not have any specific rights upon a change of control under the ET Partnership Agreement.
NO SINKING FUND
The ETO Series D Preferred Units do not have the benefit of any sinking fund.    The ET Series D Preferred Units will not have the benefit of any sinking fund.

 

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Series E Preferred Units

 

ETO Series E Preferred Unitholders

  

ET Series E Preferred Unitholders

ISSUANCE AND DISTRIBUTIONS

In April 2019, ETO issued 28,000,000 ETO Series E Preferred Units at a price to the public of $25.00 per unit.

 

Distributions on the ETO Series E Preferred Units are cumulative from and including the date of original issue and are payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ETO’s general partner. Distributions on the ETO Series E Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding, May 15, 2024, at a rate equal to 7.600% per annum of the $25.00 liquidation preference per ETO Series E Preferred Unit (equal to $1.900 per ETO Series E Preferred Unit per annum). On and after May 15, 2024, distributions on the ETO Series E Preferred Units will accumulate for each distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 5.161% per annum.

  

By adoption of Amendment No. 8 to the ET Partnership Agreement, ET will create the ET Series E Preferred Units, which, following the effective time of the Merger, will (i) rank pari passu with the other ET Preferred Units with respect to distributions and rights upon liquidation and (ii) have substantially the same preferences, rights, powers and duties as the ETO Series E Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).

 

Distributions on the Series ET C Preferred Units will be cumulative from and including                 , 2021 and will be payable quarterly in arrears on the 15th day of February, May, August and November of each year, in each case when, as, and if declared by ET’s general partner. Distributions on the ET Series E Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding, May 15, 2024, at a rate equal to 7.600% per annum of the $25.00 liquidation preference per ET Series E Preferred Unit (equal to $1.900 per ET Series E Preferred Unit per annum). On and after May 15, 2024, distributions on the ET Series E Preferred Units will accumulate for each distribution period at a percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 5.161% per annum.

RANKING

The ETO Series E Preferred Units, with respect to anticipated quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ETO’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

  

The ET Series E Preferred Units will, with respect to anticipated quarterly distributions and distributions upon the liquidation, winding-up and dissolution of ET’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

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ETO Series E Preferred Unitholders

  

ET Series E Preferred Unitholders

 

The ETO Series E Preferred Units are subordinated to all of ETO’s and its subsidiaries’ existing and future indebtedness and other liabilities (including indebtedness outstanding under existing credit facilities, ETO’s senior notes, and any other senior securities ETO may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ETO Partnership Agreement, ETO may issue junior securities from time to time in one or more series without the consent of the holders of the ETO Series E Preferred Units. ETO’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ETO’s general partner will also determine the number of units constituting each series of securities. ETO’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

  

 

The ET Series E Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness and other liabilities (including ET’s senior notes, and any other senior securities ET may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ET Partnership Agreement, ET may issue junior securities from time to time in one or more series without the consent of the holders of the ET Series E Preferred Units. ET’s general partner will have the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ET’s general partner will also determine the number of units constituting each series of securities. ET’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

RESTRICTIONS ON DISTRIBUTIONS

ETO will not declare or pay or set aside for payment any distribution on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ETO Series E Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ETO’s general partner and paid on any date fixed by ETO’s general partner, whether or not a distribution payment date, to holders of the ETO Series E Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ETO Series E Preferred Units (e.g., monthly rather than quarterly), ETO’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, the general partner expects to have sufficient funds to pay the full distribution in respect of the ETO Series E Preferred Units on the next successive distribution payment date.

  

ET will not declare or pay or set aside for payment any distribution on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ET Series E Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ET’s general partner and paid on any date fixed by ET’s general partner, whether or not a distribution payment date, to holders of the ET Series E Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ET Series E Preferred Units (e.g., monthly rather than quarterly), ET’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, the general partner expects to have sufficient funds to pay the full distribution in respect of the ET Series E Preferred Units on the next successive distribution payment date.

 

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ETO Series E Preferred Unitholders

  

ET Series E Preferred Unitholders

OPTIONAL REDEMPTION

At any time on or after May 15, 2024, ETO may redeem the ETO Series E Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $25.00 per ETO Series E Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series E Rating Event (as defined below), ETO may redeem the ETO Series E Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $25.50 per ETO Series E Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ETO’s outstanding indebtedness. ETO must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ETO may undertake multiple partial redemptions.

 

“Series E Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ETO Series E Preferred Units, or (ii) a lower Equity Credit being given to the ETO Series E Preferred Units than the Equity Credit that would have been assigned to the ETO Series E Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ETO Series E Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $25.00 per ETO Series E Preferred Unit assigned to the ETO Series E Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

  

At any time on or after May 15, 2024, ET may redeem the ET Series E Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $25.00 per ET Series E Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series E Rating Event (as defined below), ET may redeem the ET Series E Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $25.50 per ET Series E Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ET’s outstanding indebtedness. ET must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ET may undertake multiple partial redemptions.

 

“Series E Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ET Series E Preferred Units, or (ii) a lower Equity Credit being given to the ET Series E Preferred Units than the Equity Credit that would have been assigned to the ET Series E Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ET Series E Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $25.00 per ET Series E Preferred Unit assigned to the ET Series E Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

CONVERSION RIGHTS
The ETO Series E Preferred Units are not convertible into or exchangeable for any other securities or property at the option of the holder.    The ET Series E Preferred Units will not be convertible into or exchangeable for any other securities or property at the option of the holder.

 

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ETO Series E Preferred Unitholders

  

ET Series E Preferred Unitholders

LIQUIDATION RIGHTS

If necessary, the holders of outstanding ETO Series E Preferred Units will first be specially allocated items of ETO’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ETO’s affairs, whether voluntary or involuntary, a liquidation preference of $25.00 per ETO Series E Preferred Unit.

 

If the amount of ETO’s gross income and gain available to be specially allocated to the ETO Series E Preferred Units is not sufficient to cause the capital account of such ETO Series E Preferred Unit to equal the liquidation preference of the ETO Series E Preferred Unit, then the amount that a holder of such ETO Series E Preferred Units would receive upon liquidation may be less than the ETO Series E Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ETO Series E Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ETO Series E Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ETO with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ETO’s affairs.

  

If necessary, the holders of outstanding ET Series E Preferred Units will first be specially allocated items of ET’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ET’s affairs, whether voluntary or involuntary, a liquidation preference of $25.00 per ET Series E Preferred Unit.

 

If the amount of ET’s gross income and gain available to be specially allocated to the ET Series E Preferred Units is not sufficient to cause the capital account of such ET Series E Preferred Unit to equal the liquidation preference of the ET Series E Preferred Unit, then the amount that a holder of such ET Series E Preferred Units would receive upon liquidation may be less than the ET Series E Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ET Series E Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ET Series E Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ET with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ET’s affairs.

VOTING RIGHTS

Except as described below, holders of the ETO Series E Preferred Units generally have no voting rights.

 

Unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series E Preferred Units, voting as a separate class, ETO may not adopt any amendment to the ETO Partnership Agreement that would have a material adverse effect on the terms of the ETO Series E Preferred Units.

 

In addition, unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series E Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been

  

Except as described below, holders of the ET Series E Preferred Units generally will have no voting rights.

 

Unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series E Preferred Units, voting as a separate class, ET may not adopt any amendment to the ET Partnership Agreement that would have a material adverse effect on the terms of the ET Series E Preferred Units.

 

In addition, unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series E Preferred Units, voting as a class together with holders of any other parity

 

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ETO Series E Preferred Unitholders

  

ET Series E Preferred Unitholders

conferred and are exercisable, ETO may not (i) create or issue any parity securities (including any additional ETO Series E Preferred Units) if the cumulative distributions payable on then outstanding ETO Series E Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ETO Series E Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ETO Series E Preferred Unit.

  

securities upon which like voting rights have been conferred and are exercisable, ET may not (i) create or issue any parity securities (including any additional ET Series E Preferred Units) if the cumulative distributions payable on then outstanding ET Series E Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ET Series E Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ET Series E Preferred Unit.

TRANSFER OF UNITS
There is no restriction on the transfer of the ETO Series E Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ETO Partnership Agreement.    There is no restriction on the transfer of the ET Series E Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ET Partnership Agreement.
PREEMPTIVE RIGHTS
No holder of ETO Series E Preferred Units has any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ETO Partnership Agreement.    No holder of ET Series E Preferred Units will have any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ET Partnership Agreement.
RIGHTS UPON A CHANGE OF CONTROL
The holders of ETO Series E Preferred Units do not have any specific rights upon a change of control under the ETO Partnership Agreement.    The holders of ET Series E Preferred Units will not have any specific rights upon a change of control under the ET Partnership Agreement.
NO SINKING FUND
The ETO Series E Preferred Units do not have the benefit of any sinking fund.    The ET Series E Preferred Units will not have the benefit of any sinking fund.

Series F Preferred Units

 

ETO Series F Preferred Unitholders

  

ET Series F Preferred Unitholders

ISSUANCE AND DISTRIBUTIONS
In January 2020, ETO issued and sold 500,000 ETO Series F Preferred Units at a price to the public of $1,000 per unit.    By adoption of Amendment No. 8 to the ET Partnership Agreement, ET will create the ET Series F Preferred Units, which, following the effective time of the Merger, will (i) rank pari passu with the other ET Preferred Units with respect to distributions and

 

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Distributions on the ETO Series F Preferred Units are cumulative from the date of original issue and are payable semi-annually in arrears on the 15th day of May and November of each year.

 

Distributions on the ETO Series F Preferred Units are payable out of amounts legally available therefor from and including the date of original issue to, but excluding May 15, 2025 (the “Series F First Call Date”), at a rate of 6.750% per annum of the $1,000 liquidation preference per ETO Series F Preferred Unit (equal to $67.50 per ETO Series F Preferred Unit per annum).

 

On and after the Series F First Call Date, the distribution rate on the ETO Series F Preferred Units for each Series F Reset Period (as defined below) will equal a percentage of the $1,000 liquidation preference equal to the five-year U.S. Treasury Rate as of the most recent Series F Reset Distribution Determination Date plus a spread of 5.134% per annum.

 

“Series F Reset Date” means the Series F First Call Date and each date falling on the fifth anniversary of the preceding Series F Reset Date.

 

“Series F Reset Distribution Determination Date” means, in respect of any Series F Reset Period, the day falling two business days prior to the beginning of such Series F Reset Period.

 

“Series F Reset Period” means the period from and including the Series F First Call Date to, but excluding, the next following Series F Reset Date and thereafter each period from and including each Series F Reset Date to, but excluding, the next following Series F Reset Date.

 

The distribution rate for each Series F Reset Period will be determined by the calculation agent for the ETO Series F Preferred Units, as of the applicable Series F Reset Distribution Determination Date. Unless ETO has validly called all ETO Series F Preferred Units for redemption on the ETO Series F First Call Date, ETO will appoint a calculation agent (other than ETO or its affiliates) for the ETO Series F Preferred Units prior to the Series F Reset Distribution Determination Date preceding the Series F First Call Date and will keep a record of such appointment at ETO’s principal offices, which will be available to any ETO unitholder upon request.

  

rights upon liquidation and (ii) have substantially the same preferences, rights, powers and duties as the ETO Series F Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).

 

Distributions on the ET Series F Preferred Units are cumulative                 from                 , 2021 and are payable semi-annually in arrears on the 15th day of May and November of each year.

 

Distributions on the ET Series F Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding May 15, 2025 (the “Series F First Call Date”), at a rate of 6.750% per annum of the $1,000 liquidation preference per ET Series F Preferred Unit (equal to $67.50 per ET Series F Preferred Unit per annum).

 

On and after the Series F First Call Date, the distribution rate on the ET Series F Preferred Units for each Series F Reset Period (as defined below) will equal a percentage of the $1,000 liquidation preference equal to the five-year U.S. Treasury Rate as of the most recent Series F Reset Distribution Determination Date plus a spread of 5.134% per annum.

 

“Series F Reset Date” means the Series F First Call Date and each date falling on the fifth anniversary of the preceding Series F Reset Date.

 

“Series F Reset Distribution Determination Date” means, in respect of any Series F Reset Period, the day falling two business days prior to the beginning of such Series F Reset Period.

 

“Series F Reset Period” means the period from and including the Series F First Call Date to, but excluding, the next following Series F Reset Date and thereafter each period from and including each Series F Reset Date to, but excluding, the next following Series F Reset Date.

 

The distribution rate for each Series F Reset Period will be determined by the calculation agent for the ET Series F Preferred Units, as of the applicable Series F Reset Distribution Determination Date. Unless ET has validly called all ET Series F Preferred Units for redemption on the ET Series F

 

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ET Series F Preferred Unitholders

   First Call Date, ET will appoint a calculation agent (other than ET or its affiliates) for the ET Series F Preferred Units prior to the Series F Reset Distribution Determination Date preceding the Series F First Call Date and will keep a record of such appointment at ET’s principal offices, which will be available to any ET unitholder upon request.
RANKING

The ETO Series F Preferred Units, with respect to anticipated semi-annual distributions and distributions upon the liquidation, winding-up and dissolution of ETO’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ETO Series F Preferred Units are subordinated to all of ETO’s and its subsidiaries’ existing and future indebtedness and other liabilities (including indebtedness outstanding under existing credit facilities, ETO’s senior notes, and any other senior securities ETO may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ETO Partnership Agreement, ETO may issue junior securities from time to time in one or more series without the consent of the holders of the ETO Series F Preferred Units. ETO’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ETO’s general partner will also determine the number of units constituting each series of securities. ETO’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

  

The ET Series F Preferred Units will, with respect to anticipated semi-annual distributions and distributions upon the liquidation, winding-up and dissolution of ET’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ET Series F Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness and other liabilities (including ET’s senior notes, and any other senior securities ET may issue in the future with respect to assets available to satisfy claims against it).

 

Under the ET Partnership Agreement, ET may issue junior securities from time to time in one or more series without the consent of the holders of the ET Series F Preferred Units. ET’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ET’s general partner will also determine the number of units constituting each series of securities. ET’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

RESTRICTIONS ON DISTRIBUTIONS
ETO will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all    ET will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on

 

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outstanding ETO Series F Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ETO’s general partner and paid on any date fixed by ETO’s general partner, whether or not a distribution payment date, to holders of the ETO Series F Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ETO Series F Preferred Units (e.g., quarterly rather than semi-annually), ETO’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ETO’s general partner expects to have sufficient funds to pay the full distribution in respect of the ETO Series F Preferred Units on the next successive distribution payment date.

  

all outstanding ET Series F Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ET’s general partner and paid on any date fixed by ET’s general partner, whether or not a distribution payment date, to holders of the ET Series F Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ET Series F Preferred Units (e.g., quarterly rather than semi-annually), ET’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ET’s general partner expects to have sufficient funds to pay the full distribution in respect of the ET Series F Preferred Units on the next successive distribution payment date.

OPTIONAL REDEMPTION
At any time on or after February 15, 2023, ETO may redeem the ETO Series F Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ETO Series F Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series F Rating Event (as defined below), ETO may redeem the ETO Series F Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $1,020 per ETO Series F Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ETO’s outstanding indebtedness. ETO must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ETO may undertake multiple partial redemptions.    At any time on or after February 15, 2023, ET may redeem the ET Series F Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ET Series F Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series F Rating Event (as defined below), ET may redeem the ET Series F Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $1,020 per ET Series F Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ET’s outstanding indebtedness. ET must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ET may undertake multiple partial redemptions.

 

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ET Series F Preferred Unitholders

“Series F Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ETO Series F Preferred Units, or (ii) a lower Equity Credit being given to the ETO Series F Preferred Units than the Equity Credit that would have been assigned to the ETO Series F Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ETO Series F Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ETO Series F Preferred Unit assigned to the ETO Series F Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.    “Series F Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ET Series F Preferred Units, or (ii) a lower Equity Credit being given to the ET Series F Preferred Units than the Equity Credit that would have been assigned to the ET Series F Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ET Series F Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ET Series F Preferred Unit assigned to the ET Series F Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.
CONVERSION RIGHTS
The ETO Series F Preferred Units are not convertible into or exchangeable for any other securities or property at the option of the holder.    The ET Series F Preferred Units will not be convertible into or exchangeable for any other securities or property at the option of the holder.
LIQUIDATION RIGHTS

If necessary, the holders of outstanding ETO Series F Preferred Units will first be specially allocated items of ETO’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ETO’s affairs, whether voluntary or involuntary, a liquidation preference of $1,000 per ETO Series F Preferred Unit.

 

If the amount of ETO’s gross income and gain available to be specially allocated to the ETO Series F Preferred Units is not sufficient to cause the capital account of such ETO Series F Preferred Unit to equal the liquidation preference of the ETO Series F Preferred Unit, then the amount that a holder of such ETO Series F Preferred Units would receive upon liquidation may be less than the ETO Series F Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ETO Series F Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ETO Series F Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ETO with or into any other entity, individually or in a series of

  

If necessary, the holders of outstanding ET Series F Preferred Units will first be specially allocated items of ET’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ET’s affairs, whether voluntary or involuntary, a liquidation preference of $1,000 per ET Series F Preferred Unit.

 

If the amount of ET’s gross income and gain available to be specially allocated to the ET Series F Preferred Units is not sufficient to cause the capital account of such ET Series F Preferred Unit to equal the liquidation preference of the ET Series F Preferred Unit, then the amount that a holder of such ET Series F Preferred Units would receive upon liquidation may be less than the ET Series F Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ET Series F Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ET Series F Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ET with or

 

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ET Series F Preferred Unitholders

transactions, will not be deemed to be a liquidation, dissolution or winding up of ETO’s affairs.    into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ET’s affairs.
VOTING RIGHTS

Except as described below, holders of the ETO Series F Preferred Units generally have no voting rights.

 

Unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series F Preferred Units, voting as a separate class, ETO may not adopt any amendment to the ETO Partnership Agreement that would have a material adverse effect on the terms of the ETO Series F Preferred Units.

 

In addition, unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series F Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ETO may not (i) create or issue any parity securities (including any additional ETO Series F Preferred Units) if the cumulative distributions payable on then outstanding ETO Series F Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ETO Series F Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ETO Series F Preferred Unit

  

Except as described below, holders of the ET Series F Preferred Units generally will have no voting rights.

 

Unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series F Preferred Units, voting as a separate class, ET may not adopt any amendment to the ET Partnership Agreement that would have a material adverse effect on the terms of the ET Series F Preferred Units.

 

In addition, unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series F Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ET may not (i) create or issue any parity securities (including any additional ET Series F Preferred Units) if the cumulative distributions payable on then outstanding ET Series F Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

On any matter on which the holders of the ET Series F Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ET Series F Preferred Unit

TRANSFER OF UNITS
There is no restriction on the transfer of the ETO Series F Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ETO Partnership Agreement.    There is no restriction on the transfer of the ET Series F Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ET Partnership Agreement.
PREEMPTIVE RIGHTS
No holder of ETO Series F Preferred Units has any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ETO Partnership Agreement.    No holder of ET Series F Preferred Units will have any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ET Partnership Agreement.

 

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ET Series F Preferred Unitholders

RIGHTS UPON A CHANGE OF CONTROL
The holders of ETO Series F Preferred Units do not have any specific rights or protections upon a change of control at ETO.    The holders of ET Series F Preferred Units will not have any specific rights or protections upon a change of control at ET.
NO SINKING FUND
The ETO Series F Preferred Units do not have the benefit of any sinking fund.    The ET Series F Preferred Units will not have the benefit of any sinking fund.

Series G Preferred Units

 

ETO Series G Preferred Unitholders

  

ET Series G Preferred Unitholders

ISSUANCE AND DISTRIBUTIONS

In January 2020, ETO issued and sold 1,100,000 ETO Series G Preferred Units at a price to the public of $1,000 per unit.

 

Distributions on the ETO Series G Preferred Units are cumulative from the date of original issue and are payable semi-annually in arrears on the 15th day of May and November of each year.

 

Distributions on the ETO Series G Preferred Units are payable out of amounts legally available therefor from and including the date of original issue to, but excluding May 15, 2030 (the “Series G First Call Date”), at a rate of 7.125% per annum of the $1,000 liquidation preference per ETO Series G Preferred Unit (equal to $71.25 per ETO Series G Preferred Unit per annum).

 

On and after the Series G First Call Date, the distribution rate on the ETO Series G Preferred Units for each Series G Reset Period (as defined below) will equal a percentage of the $1,000 liquidation preference equal to the five-year U.S. Treasury Rate as of the most recent Series G Reset Distribution Determination Date plus a spread of 5.306% per annum.

 

“Series G Reset Date” means the Series G First Call Date and each date falling on the fifth anniversary of the preceding Series G Reset Date.

 

“Series G Reset Distribution Determination Date” means, in respect of any Series G Reset Period, the day falling two business days prior to the beginning of such Series G Reset Period.

  

By adoption of Amendment No. 8 to the ET Partnership Agreement, ET will create the ET Series G Preferred Units, which, following the effective time of the Merger, will (i) rank pari passu with the other ET Preferred Units with respect to distributions and rights upon liquidation and (ii) have substantially the same preferences, rights, powers and duties as the ETO Series G Preferred Units (other than any non-substantive differences to reflect the issuance of such securities by ET, as opposed to ETO).

 

Distributions on the ET Series G Preferred Units are cumulative             from                 , 2021 and are payable semi-annually in arrears on the 15th day of May and November of each year.

 

Distributions on the ET Series G Preferred Units will be payable out of amounts legally available therefor from and including the date of original issue to, but excluding May 15, 2030 (the “Series G First Call Date”), at a rate of 7.125% per annum of the $1,000 liquidation preference per ET Series G Preferred Unit (equal to $71.25 per ET Series G Preferred Unit per annum).

 

On and after the Series G First Call Date, the distribution rate on the ET Series G Preferred Units for each Series G Reset Period (as defined below) will equal a percentage of the $1,000 liquidation preference equal to the five-year U.S. Treasury Rate as of the most recent Series G Reset Distribution Determination Date plus a spread of 5.306% per annum.

 

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ET Series G Preferred Unitholders

“Series G Reset Period” means the period from and including the Series G First Call Date to, but excluding, the next following Series G Reset Date and thereafter each period from and including each Series G Reset Date to, but excluding, the next following Series G Reset Date.

 

The distribution rate for each Series G Reset Period will be determined by the calculation agent for the ETO Series G Preferred Units, as of the applicable Series G Reset Distribution Determination Date. Unless ETO has validly called all ETO Series G Preferred Units for redemption on the ETO Series G First Call Date, ETO will appoint a calculation agent (other than ETO or its affiliates) for the ETO Series G Preferred Units prior to the Series G Reset Distribution Determination Date preceding the Series G First Call Date and will keep a record of such appointment at ETO’s principal offices, which will be available to any ETO unitholder upon request.

  

“Series G Reset Date” means the Series G First Call Date and each date falling on the fifth anniversary of the preceding Series G Reset Date.

 

“Series G Reset Distribution Determination Date” means, in respect of any Series G Reset Period, the day falling two business days prior to the beginning of such Series G Reset Period.

 

“Series G Reset Period” means the period from and including the Series G First Call Date to, but excluding, the next following Series G Reset Date and thereafter each period from and including each Series G Reset Date to, but excluding, the next following Series G Reset Date.

 

The distribution rate for each Series G Reset Period will be determined by the calculation agent for the ET Series G Preferred Units, as of the applicable Series G Reset Distribution Determination Date. Unless ET has validly called all ET Series G Preferred Units for redemption on the ET Series G First Call Date, ET will appoint a calculation agent (other than ET or its affiliates) for the ET Series G Preferred Units prior to the Series G Reset Distribution Determination Date preceding the Series G First Call Date and will keep a record of such appointment at ET’s principal offices, which will be available to any ET unitholder upon request.

RANKING

The ETO Series G Preferred Units, with respect to anticipated semi-annual distributions and distributions upon the liquidation, winding-up and dissolution of ETO’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ETO Series G Preferred Units are subordinated to all of ETO’s and its subsidiaries’ existing and future indebtedness and other liabilities (including indebtedness outstanding under existing credit facilities, ETO’s senior notes, and any other senior securities ETO may issue in the future with respect to assets available to satisfy claims against it).

  

The ET Series G Preferred Units will, with respect to anticipated semi-annual distributions and distributions upon the liquidation, winding-up and dissolution of ET’s affairs, rank:

 

•  senior to any junior securities (including ET Common Units and the general partner interest);

 

•  pari passu with any parity securities (including each other series of ET Preferred Units); and

 

•  junior to any senior securities.

 

The ET Series G Preferred Units will be subordinated to all of ET’s and its subsidiaries’ existing and future indebtedness and other liabilities (including ET’s senior notes, and any other senior securities ET may issue in the future with respect to assets available to satisfy claims against it).

 

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ET Series G Preferred Unitholders

Under the ETO Partnership Agreement, ETO may issue junior securities from time to time in one or more series without the consent of the holders of the ETO Series G Preferred Units. ETO’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ETO’s general partner will also determine the number of units constituting each series of securities. ETO’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”   

 

Under the ET Partnership Agreement, ET may issue junior securities from time to time in one or more series without the consent of the holders of the ET Series G Preferred Units. ET’s general partner has the authority to determine the designations, preferences, rights, powers, and duties of any such series before the issuance of any units of that series. ET’s general partner will also determine the number of units constituting each series of securities. ET’s ability to issue additional parity securities in certain circumstances or senior securities is limited as described below under “Voting Rights.”

RESTRICTIONS ON DISTRIBUTIONS

ETO will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ETO Series G Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ETO’s general partner and paid on any date fixed by ETO’s general partner, whether or not a distribution payment date, to holders of the ETO Series G Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ETO Series G Preferred Units (e.g., quarterly rather than semi-annually), ETO’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ETO’s general partner expects to have sufficient funds to pay the full distribution in respect of the ETO Series G Preferred Units on the next successive distribution payment date.

  

ET will not declare or pay or set aside for payment distributions on any junior securities (other than a distribution payable solely in junior securities) unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding ET Series G Preferred Units and any parity securities through the most recent respective distribution periods.

 

Accumulated distributions in arrears for any past distribution period may be declared by ET’s general partner and paid on any date fixed by ET’s general partner, whether or not a distribution payment date, to holders of the ET Series G Preferred Units on the record date for such payment, which may not be less than 10 days before such distribution periods.

 

To the extent a distribution period applicable to a class of junior securities or parity securities is shorter than the distribution period applicable to the ET Series G Preferred Units (e.g., quarterly rather than semi-annually), ET’s general partner may declare and pay regular distributions with respect to such junior securities or parity securities so long as, at the time of declaration of such distribution, ET’s general partner expects to have sufficient funds to pay the full distribution in respect of the ET Series G Preferred Units on the next successive distribution payment date.

OPTIONAL REDEMPTION
At any time on or after February 15, 2023, ETO may redeem the ETO Series G Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ETO Series G Preferred    At any time on or after February 15, 2023, ET may redeem the ET Series G Preferred Units, in whole or in part, out of amounts legally available therefor, at a redemption price of $1,000 per ET Series G Preferred

 

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ET Series G Preferred Unitholders

Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series G Rating Event (as defined below), ETO may redeem the ETO Series G Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $1,020 per ETO Series G Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ETO’s outstanding indebtedness. ETO must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ETO may undertake multiple partial redemptions.

 

“Series G Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ETO Series G Preferred Units, or (ii) a lower Equity Credit being given to the ETO Series G Preferred Units than the Equity Credit that would have been assigned to the ETO Series G Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ETO Series G Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ETO Series G Preferred Unit assigned to the ETO Series G Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

  

Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. In addition, upon the occurrence of a Series G Rating Event (as defined below), ET may redeem the ET Series G Preferred Units, in whole but not in part, out of amounts legally available therefor, at a price of $1,020 per ET Series G Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose and would be subject to compliance with the provisions of the instruments governing ET’s outstanding indebtedness. ET must provide not less than 30 days’ and not more than 60 days’ written notice of any such redemption. ET may undertake multiple partial redemptions.

 

“Series G Rating Event” means a change by any rating agency to the current criteria, which change results in (i) any shortening of the length of time for which the current criteria are scheduled to be in effect with respect to the ET Series G Preferred Units, or (ii) a lower Equity Credit being given to the ET Series G Preferred Units than the Equity Credit that would have been assigned to the ET Series G Preferred Units by such rating agency pursuant to the current criteria. “Equity Credit” for the purposes of the ET Series G Preferred Units means the dollar amount or percentage in relation to the stated liquidation preference amount of $1,000 per ET Series G Preferred Unit assigned to the ET Series G Preferred Units as equity, rather than debt, by a rating agency in evaluating the capital structure of an entity.

CONVERSION RIGHTS
The ETO Series G Preferred Units are not convertible into or exchangeable for any other securities or property at the option of the holder.    The ET Series G Preferred Units will not be convertible into or exchangeable for any other securities or property at the option of the holder.
LIQUIDATION RIGHTS
If necessary, the holders of outstanding ETO Series G Preferred Units will first be specially allocated items of ETO’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ETO’s affairs, whether voluntary or    If necessary, the holders of outstanding ET Series G Preferred Units will first be specially allocated items of ET’s gross income and gain in a manner designed to cause, in the event of any liquidation, dissolution or winding up of ET’s affairs, whether voluntary or

 

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ETO Series G Preferred Unitholders

  

ET Series G Preferred Unitholders

involuntary, a liquidation preference of $1,000 per ETO Series G Preferred Unit.

 

If the amount of ETO’s gross income and gain available to be specially allocated to the ETO Series G Preferred Units is not sufficient to cause the capital account of such ETO Series G Preferred Unit to equal the liquidation preference of the ETO Series G Preferred Unit, then the amount that a holder of such ETO Series G Preferred Units would receive upon liquidation may be less than the ETO Series G Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ETO Series G Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ETO Series G Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ETO with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ETO’s affairs.

  

involuntary, a liquidation preference of $1,000 per ET Series G Preferred Unit.

 

If the amount of ET’s gross income and gain available to be specially allocated to the ET Series G Preferred Units is not sufficient to cause the capital account of such ET Series G Preferred Unit to equal the liquidation preference of the ET Series G Preferred Unit, then the amount that a holder of such ET Series G Preferred Units would receive upon liquidation may be less than the ET Series G Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the ET Series G Preferred Units and the parity securities will be paid prior to any distributions in liquidation made in accordance with capital account balances. The rights of holders of the ET Series G Preferred Units to receive the liquidation preference will be subject to the rights of the holders of any senior securities and the proportional rights of holders of the parity securities. A consolidation or merger of ET with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of ET’s affairs.

VOTING RIGHTS

Except as described below, holders of the ETO Series G Preferred Units generally have no voting rights.

 

Unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series G Preferred Units, voting as a separate class, ETO may not adopt any amendment to the ETO Partnership Agreement that would have a material adverse effect on the terms of the ETO Series G Preferred Units.

 

In addition, unless ETO has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ETO Series G Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ETO may not (i) create or issue any parity securities (including any additional ETO Series G Preferred Units) if the cumulative distributions payable on then outstanding ETO Series G Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

  

Except as described below, holders of the ET Series G Preferred Units generally will have no voting rights.

 

Unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series G Preferred Units, voting as a separate class, ET may not adopt any amendment to the ET Partnership Agreement that would have a material adverse effect on the terms of the ET Series G Preferred Units.

 

In addition, unless ET has received the affirmative vote or consent of the holders of at least two-thirds of the outstanding ET Series G Preferred Units, voting as a class together with holders of any other parity securities upon which like voting rights have been conferred and are exercisable, ET may not (i) create or issue any parity securities (including any additional ET Series G Preferred Units) if the cumulative distributions payable on then outstanding ET Series G Preferred Units (or parity securities, if applicable) are in arrears, or (ii) create or issue any senior securities.

 

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ETO Series G Preferred Unitholders

  

ET Series G Preferred Unitholders

On any matter on which the holders of the ETO Series G Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ETO Series G Preferred Unit    On any matter on which the holders of the ET Series G Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per ET Series G Preferred Unit
TRANSFER OF UNITS
There is no restriction on the transfer of the ETO Series G Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ETO Partnership Agreement.    There is no restriction on the transfer of the ET Series G Preferred Units other than restrictions and conditions applicable to transfers of any limited partner interests under the ET Partnership Agreement.
PREEMPTIVE RIGHTS
No holder of ETO Series G Preferred Units has any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ETO Partnership Agreement.    No holder of ET Series G Preferred Units will have any preemptive, preferential or other similar right with respect to the issuance of additional partnership securities under the ET Partnership Agreement.
RIGHTS UPON A CHANGE OF CONTROL
The holders of ETO Series G Preferred Units do not have any specific rights or protections upon a change of control at ETO.    The holders of ET Series G Preferred Units will not have any specific rights or protections upon a change of control at ET.
NO SINKING FUND
The ETO Series G Preferred Units do not have the benefit of any sinking fund.    The ET Series G Preferred Units will not have the benefit of any sinking fund.

 

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NO APPRAISAL OR DISSENTERS’ RIGHTS

Holders of ETO Preferred Units do not have appraisal or dissenters’ rights under applicable law or contractual appraisal or dissenters’ rights under the ETO Partnership Agreement or the Merger Agreement.

 

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BUSINESS

ET

For information on ET’s business, see Part I. Item 1. “Business” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex C to this prospectus.

ETO

For information on ETO’s business, see Part I. Item 1. “Business” in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex D to this prospectus.

 

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PROPERTY

ET

For information on ET’s property, see Part I. Item 2. “Properties” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex C to this prospectus.

ETO

For information on ETO’s property, see Part I. Item 2. “Properties” in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex D to this prospectus.

 

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LEGAL PROCEEDINGS

ET

For information on ET’s legal proceedings, see Part I. Item 3. “Legal Proceedings” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex C to this prospectus.

ETO

For information on ETO’s property, see Part I. Item 3. “Legal Proceedings” in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex D to this prospectus.

 

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MARKET FOR REGISTRANT’S COMMON UNITS, RELATED UNITHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ET

For information on ET’s common units, related unitholder matters and issuer purchases of securities, see Part II. Item 5. “Market for Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Equity Securities” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex C to this prospectus.

ETO

For information on ETO’s common units, related unitholder matters and issuer purchases of securities, see Part II. Item 5. “Market for Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Equity Securities” in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex D to this prospectus.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

ET

For information on ET’s management’s discussion and analysis of financial condition and results of operations, see Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex C to this prospectus.

ETO

For information on ETO’s management’s discussion and analysis of financial condition and results of operations, see Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex D to this prospectus.

 

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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

ET

For information on ET’s changes in and disagreements with accountants on accounting and financial disclosure, see Part II. Item 9. “Changes In and Disagreements with Accountants on Accounting and Financial Disclosure” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex C to this prospectus.

ETO

For information on ETO’s changes in and disagreements with accountants on accounting and financial disclosure, see Part II. Item 9. “Changes In and Disagreements with Accountants on Accounting and Financial Disclosure” in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex D to this prospectus.

 

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ET

For information on quantitative and qualitative disclosures about ET’s market risk, see Part II. Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in ET’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex C to this prospectus.

ETO

For information on quantitative and qualitative disclosures about ETO’s market risk, see Part II. Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in ETO’s Annual Report on Form 10-K for the year ended December 31, 2020, attached as Annex D to this prospectus.

 

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LEGAL MATTERS

The validity of the ET Preferred Units to be issued in connection with the Merger and being offered hereby will be passed upon for ET by Latham & Watkins LLP, Houston, Texas. Certain U.S. federal income tax consequences relating to the ET Preferred Units will be passed upon by Latham & Watkins LLP, Houston, Texas.

 

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EXPERTS

ET

The consolidated financial statements of Energy Transfer LP and subsidiaries and management’s assessment of the effectiveness of internal control over financial reporting incorporated by reference in this prospectus and elsewhere in the registration statement have been so incorporated by reference in reliance upon the reports of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.

ETO

The consolidated financial statements of Energy Transfer Operating, L.P. and subsidiaries incorporated by reference in this prospectus and elsewhere in the registration statement have been so incorporated by reference in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.

 

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WHERE YOU CAN FIND MORE INFORMATION

ET has filed with the SEC a registration statement under the Securities Act of which this prospectus forms a part, which registers the ET Preferred Units to be issued to ETO Preferred Unitholders in connection with the Merger. The registration statement, including the exhibits and schedules attached to the registration statement, contains additional relevant information about ET and the ET Preferred Units.

ET and ETO are subject to the information and reporting requirements of the Exchange Act. In accordance with the Exchange Act, ET and ETO file annual, quarterly and current reports and other information with the SEC under the Exchange Act. Copies of ET’s and ETO’s filings with the SEC are available to you without charge upon written or oral request. You can obtain any of these documents by requesting them in writing or by telephone from ET or ETO at: 8111 Westchester Drive, Suite 600, Dallas, TX 75225, Attention: Investor Relations, Email: InvestorRelations@energytransfer.com. ET and ETO also make available free of charge on their internet website at www.energytransfer.com, respectively, the reports and other information filed by ET and ETO with the SEC, as soon as reasonably practicable after such material is electronically filed or furnished to the SEC. Neither ET’s nor ETO’s website, nor the information contained on their website, is part of this prospectus or the documents included herein.

In order to receive timely delivery of the documents in advance of closing of the Merger, your request should be received no later than                     , 2021. If you request any documents, ET or ETO will mail them to you by first class mail, or another equally prompt means, within one business day after receipt of your request.

This prospectus includes as annexes certain documents that ET and ETO have previously filed with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act as set forth in the table of contents of this prospectus. Any statement contained in such a document shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in an annex hereto consisting of a document filed with the SEC subsequently to such document modifies or replaces such statement. The information included in the annexes hereto is incorporated into this prospectus except to the extent so modified or superseded.

The information concerning ET contained in this prospectus or the documents included herein has been provided by ET, and the information concerning ETO contained in this prospectus or the documents included herein has been provided by ETO.

Neither ET nor ETO has authorized anyone to give any information or make any representation about the Merger, ET or ETO that is different from, or in addition to, that contained in this prospectus or the documents included herein. Therefore, if anyone distributes this type of information, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this prospectus is unlawful, or you are a person to whom it is unlawful to direct these types or activities, then the offer presented in this prospectus does not extend to you. The information contained in this prospectus speaks only as of its date, or in the case of information in a document included herein, as of the date of such document, unless the information specifically indicates that another date applies.

 

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Annex A

 

AGREEMENT AND PLAN OF MERGER

by and among

ENERGY TRANSFER LP,

ETO MERGER SUB LLC

and

ENERGY TRANSFER OPERATING, L.P.

Dated as of March 5, 2021

 

 


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TABLE OF CONTENTS

 

ARTICLE I.

 

THE MERGER

 

Section 1.1

   The Merger      1  

Section 1.2

   Closing      2  

Section 1.3

   Effective Time      2  

Section 1.4

   Effects of the Merger      2  

Section 1.5

   Organizational Documents of the Surviving Entity      2  

Section 1.6

   ET Partnership Agreement      2  
ARTICLE II.

 

CONVERSION OF UNITS; EXCHANGE OF CERTIFICATES

 

Section 2.1

   Effect on ETO Partnership Interests.      2  

Section 2.2

   Exchange of Hook Units      4  

Section 2.3

   Exchange of ETO Preferred Units      4  

Section 2.4

   Withholding      6  
ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF ETO

 

Section 3.1

   Organization and Existence      6  

Section 3.2

   Capitalization      7  

Section 3.3

   Power and Authority      7  

Section 3.4

   No Violations      7  
ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES OF ET AND MERGER SUB

 

Section 4.1

   Organization and Existence      8  

Section 4.2

   Capitalization      8  

Section 4.3

   Power and Authority      8  

Section 4.4

   No Violations      9  
ARTICLE V.

 

COVENANTS AND AGREEMENTS

 

Section 5.1

   Further Assurances      9  

Section 5.2

   Tax Matters      9  

Section 5.3

   Registration Statement      10  

Section 5.4

   NYSE Listing      10  
ARTICLE VI.

 

CONDITIONS TO THE MERGER

 

Section 6.1

   Conditions to Each Party’s Obligation to Effect the Merger      10  

 

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ARTICLE VII.

 

TERMINATION

 

Section 7.1

   Termination or Abandonment      10  
ARTICLE VIII.

 

MISCELLANEOUS

 

Section 8.1

   No Survival      10  

Section 8.2

   Expenses      11  

Section 8.3

   Counterparts; Effectiveness      11  

Section 8.4

   Governing Law      11  

Section 8.5

   Jurisdiction; Specific Enforcement      11  

Section 8.6

   WAIVER OF JURY TRIAL      11  

Section 8.7

   Assignment; Binding Effect      12  

Section 8.8

   Severability      12  

Section 8.9

   Entire Agreement      12  

Section 8.10

   Amendments; Waivers      12  

Section 8.11

   Headings      12  

Section 8.12

   No Third-Party Beneficiaries      12  

Section 8.13

   Interpretation      12  

Section 8.14

   Definitions      13  

Exhibit A

   Amendment No. 8 to ET Partnership Agreement   

 

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of March 5, 2021, is by and among Energy Transfer LP, a Delaware limited partnership (“ET”), ETO Merger Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of ET (“Merger Sub”), and Energy Transfer Operating, L.P., a Delaware limited partnership (“ETO”) (each, a “party” and, together, the “parties”).

WITNESSETH:

WHEREAS, the parties intend that Merger Sub be merged with and into ETO (the “Merger”), with ETO surviving the Merger as a wholly owned subsidiary of ET;

WHEREAS, the Board of Directors of Energy Transfer Partners, L.L.C. (“ETO GP LLC”), a Delaware limited liability company and the general partner of Energy Transfer Partners GP, L.P. (“ETO GP”), a Delaware limited partnership and the general partner of ETO, has (a) determined that it is in the best interests of, and fair and reasonable to, ETO and its unitholders, and declared it advisable, for ETO to enter into this Agreement, (b) approved this Agreement, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger and (c) directed that this Agreement be submitted to the holders of ETO Common Units and the holders of Hook Units for approval by written consent;

WHEREAS, ET, in its capacity as the record and beneficial owner of ETO Common Units constituting a “Unit Majority” (as defined in the ETO Partnership Agreement), has approved, by written consent, this Agreement and the transactions contemplated hereby, including the Merger;

WHEREAS, ETP Holdco Corporation, a Delaware corporation, in its capacity as the record and beneficial owner of all of the Hook Units, has approved, by written consent, this Agreement and the transactions contemplated hereby, including the Merger;

WHEREAS, the Board of Directors of LE GP, LLC, a Delaware limited liability company and the sole general partner of ET (“ET GP”), has (a) determined that it is in the best interests of, and fair and reasonable to, ET and its unitholders, and declared it advisable, for ET to enter into this Agreement, and (b) approved this Agreement, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger;

WHEREAS, ET, as the sole member of Merger Sub, has (a) determined that it is in the best interests of Merger Sub, and declared it advisable, for Merger Sub to enter into this Agreement, and (b) approved this Agreement, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger; and

WHEREAS, ET, Merger Sub and ETO desire to make certain representations, warranties, covenants and agreements specified herein in connection with this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, ET, Merger Sub and ETO agree as follows:

ARTICLE I.

THE MERGER

Section 1.1 The Merger. At the Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the Delaware Revised Uniform Limited Partnership Act (the “Delaware LP Act”) and the Delaware Limited Liability Company Act (the “Delaware LLC

 

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Act”), Merger Sub shall be merged with and into ETO, whereupon the separate limited liability company existence of Merger Sub shall cease, and ETO shall continue its limited partnership existence under Delaware law as the surviving entity in the Merger (the “Surviving Entity”) with all limited partner interests in the Surviving Entity owned directly by ET and, prior to the dissolution of ETO GP contemplated by Section 2.1(e), all general partner interests in the Surviving Entity owned directly by ETO GP.

Section 1.2 Closing. The closing of the Merger (the “Closing”) shall take place at the offices of Latham & Watkins LLP, 811 Main Street, Suite 3700, Houston, Texas 77002, at 10:00 a.m., local time, on the second business day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), or at such other place, date and time as ET and ETO may agree. The date on which the Closing actually occurs is referred to as the “Closing Date.”

Section 1.3 Effective Time. On the Closing Date, ETO shall file with the Secretary of State of the State of Delaware a certificate of merger (the “Certificate of Merger”), executed in accordance with, and containing such information as is required by, the relevant provisions of the Delaware LP Act and the Delaware LLC Act in order to effect the Merger, and make any other filings or recordings as may be required by Delaware law in connection with the Merger. The Merger shall become effective at the date and time of the filing of the Certificate of Merger or at such later date and time as agreed to by ET and ETO and set forth in the Certificate of Merger in accordance with the relevant provisions of the Delaware LP Act and the Delaware LLC Act (such date and time is hereinafter referred to as the “Effective Time”).

Section 1.4 Effects of the Merger. The effects of the Merger shall be as provided in this Agreement and in the applicable provisions of the Delaware LP Act and the Delaware LLC Act. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all of the property, rights, privileges, powers and franchises of ETO and Merger Sub shall vest in the Surviving Entity, and all debts, liabilities and duties of ETO and Merger Sub shall become the debts, liabilities and duties of the Surviving Entity, all as provided under the Delaware LP Act and the Delaware LLC Act.

Section 1.5 Organizational Documents of the Surviving Entity.

(a) At the Effective Time, the certificate of limited partnership of ETO, as in effect immediately prior to the Effective Time, shall remain unchanged and shall be the certificate of limited partnership of the Surviving Entity from and after the Effective Time until thereafter amended in accordance with the provisions thereof and applicable Law.

(b) At the Effective Time, the ETO Partnership Agreement, as in effect immediately prior to the Effective Time, shall remain unchanged and shall be the partnership agreement of the Surviving Entity from and after the Effective Time until thereafter amended in accordance with the provisions thereof and applicable Law.

Section 1.6 ET Partnership Agreement. Contemporaneously with the Closing, the Third Amended and Restated Agreement of Limited Partnership of ET, dated February 8, 2006, as amended (the “ET Partnership Agreement”), shall be amended pursuant to the authority of the General Partner in Sections 13.1(d) and 13.1(g) of the ET Partnership Agreement in substantially the form set forth in Exhibit A attached hereto (the “ET LPA Amendment”).

ARTICLE II.

CONVERSION OF UNITS; EXCHANGE OF CERTIFICATES

Section 2.1 Effect on ETO Partnership Interests.

(a) Treatment of Common Units. At the Effective Time, each common unit representing a limited partner interest in ETO (the “ETO Common Units”) issued and outstanding immediately prior to the Effective Time shall

 

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be unaffected by the Merger and remain outstanding as a limited partner interest in the Surviving Entity, and ET shall continue as a limited partner of ETO and be the sole limited partner of ETO.

(b) Conversion of Hook Units. At the Effective Time, by virtue of the Merger and without any action on the part of the parties or the holder thereof, the (i) Class K Units representing limited partner interests in ETO (the “ETO Class K Units”), (ii) Class L Units representing limited partner interests in ETO (the “ETO Class L Units”), (iii) Class M Units representing limited partner interests in ETO (the “ETO Class M Units”) and (iv) Class N Units representing limited partner interests in ETO (the “ETO Class N Units” and, together with the ETO Class K Units, the ETO Class L Units and the ETO Class M Units, the “Hook Units”), issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive the following duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) Class B Units representing limited partner interests in ET (the “ET Class B Units”) (the “Hook Unit Merger Consideration”):

 

  (i)

101,525,429 ETO Class K Units shall be converted into 193,396,409 ET Class B Units;

 

  (ii)

307,304,055 ETO Class L Units shall be converted into 244,726,324 ET Class B Units;

 

  (iii)

281,280,400 ETO Class M Units shall be converted into 149,334,657 ET Class B Units; and

 

  (iv)

166,068,756 ETO Class N Units shall be converted into 88,167,610 ET Class B Units.

(c) Conversion of ETO Preferred Units. At the Effective Time, by virtue of the Merger and without any action on the part of the parties or the holders thereof,

(i) each 6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in ETO (the “ETO Series A Preferred Units”) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) ET Series A Preferred Unit;

(ii) each 6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in ETO (the “ETO Series B Preferred Units”) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) ET Series B Preferred Unit;

(iii) each 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in ETO (the “ETO Series C Preferred Units”) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) ET Series C Preferred Unit;

(iv) each 7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in ETO (the “ETO Series D Preferred Units”) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) ET Series D Preferred Unit;

(v) each 7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in ETO (the “ETO Series E Preferred Units”) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) ET Series E Preferred Unit;

(vi) each 6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in ETO (the “ETO Series F Preferred Units”) issued and outstanding

 

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immediately prior to the Effective Time shall be converted into the right to receive one duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) ET Series F Preferred Unit;

(vii) each 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in ETO (the “ETO Series G Preferred Units” and, together with the ETO Series A Preferred Units, ETO Series B Preferred Units, ETO Series C Preferred Units, ETO Series D Preferred Units, ETO Series E Preferred Units and ETO Series F Preferred Units, the “ETO Preferred Units” issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one duly authorized, validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) ET Series G Preferred Unit (the “ET Series G Preferred Units,” and together with the ET Series A Preferred Units, ET Series B Preferred Units, ET Series C Preferred Units, ET Series D Preferred Units, ET Series E Preferred Units and the ET Series F Preferred Units, the “New ET Preferred Units” and collectively, the “Preferred Merger Consideration” and, together with the Hook Unit Merger Consideration, the “Merger Consideration”).

(d) Effect of the Merger on ETO Partnership Interests. All of the Hook Units and ETO Preferred Units converted into the right to receive ET Class B Units and New ET Preferred Units, respectively, shall cease to be outstanding, shall be cancelled and shall cease to exist as of the Effective Time, and each book-entry account formerly representing any Hook Unit or ETO Preferred Unit (each, a “Book-Entry Unit”) shall thereafter represent only the right to receive the applicable Merger Consideration.

(e) ETO General Partner Interest. At the Effective Time, the General Partner Interest (as defined in the ETO Partnership Agreement) of ETO issued and outstanding immediately prior to the Effective Time shall be unaffected by the Merger and remain outstanding as a general partner interest of the Surviving Entity, and ETO GP shall continue as the general partner of ETO (subject to the following sentence). Following the Effective Time, it is anticipated that ETO GP will be dissolved and as a result of such dissolution, ETO GP will withdraw as the general partner of ETO, the ETO general partner interest shall be distributed to ETO GP LLC, and ETO GP LLC shall be admitted as the successor general partner of ETO, with such admission being effective immediately prior to the withdrawal of ETO GP.

(f) Treatment of Merger Sub Interests. At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, the limited liability company interests of Merger Sub (the “Merger Sub Units”) issued and outstanding immediately prior to the Effective Time shall be canceled and no consideration shall be paid in exchange therefor.

(g) No Dissenters or Appraisal Rights. No dissenters’ or appraisal rights shall be available with respect to the Merger or the other transactions contemplated hereby.

Section 2.2 Exchange of Hook Units. At the Effective Time, ET shall issue to the previous holders of the Hook Units the Hook Unit Merger Consideration to be held in non-certificated book-entry form.

Section 2.3 Exchange of ETO Preferred Units.

(a) Exchange Agent. Prior to the Effective Time, ET shall appoint an exchange agent mutually acceptable to ET and ETO (the “Exchange Agent”) for the purpose of exchanging ETO Preferred Units for the applicable portion of the Preferred Merger Consideration. Prior to the Effective Time, ET shall deposit, or shall cause to be deposited, with the Exchange Agent, in trust for the benefit of holders of ETO Preferred Units, New ET Preferred Units (which shall be in non-certificated book-entry form) issuable pursuant to Article II sufficient to effect the delivery of the applicable portion of the Preferred Merger Consideration to the holders of ETO Preferred Units. Following the Effective Time, ET agrees to make available to the Exchange Agent, from time to time as needed,

 

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New ET Preferred Units and cash sufficient to make any distributions pursuant to Section 2.3(c). All New ET Preferred Units and cash deposited with the Exchange Agent from time to time is hereinafter referred to as the “Exchange Fund.”

(b) Exchange Procedures. As soon as reasonably practicable after the Effective Time and in any event not later than the fifth business day following the Effective Time, ET shall cause the Exchange Agent to mail to each holder of ETO Preferred Units, which at the Effective Time were converted into the right to receive the applicable portion of the Preferred Merger Consideration pursuant to Section 2.1(a), (i) a customary letter of transmittal and (ii) instructions for use in effecting the surrender of the certificates or book-entry notations representing ETO Preferred Units (including customary provisions with respect to delivery of an “agent’s message” with respect to Book-Entry Units representing ETO Preferred Units) (in each case, “Certificates”) in exchange for the applicable portion of the Preferred Merger Consideration and any distributions payable pursuant to Section 2.3(c). Upon surrender of Certificates for cancellation to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such ETO Preferred Units shall be entitled to receive in exchange therefor (subject to withholding tax as specified in Section 2.4), as applicable, that number of whole New ET Preferred Units to which such holder is entitled pursuant to Section 2.1(c), and a check in an amount equal to the aggregate amount of cash that such holder has a right to receive pursuant to Section 2.3(c) to which such holder is entitled, and the ETO Preferred Units represented by the Certificates so surrendered shall forthwith be cancelled. If any cash payment is to be made to, or any New ET Preferred Units constituting any part of the applicable portion of the Preferred Merger Consideration is to be registered in the name of, a person other than the person in whose name the applicable surrendered ETO Preferred Units is registered, it shall be a condition to the payment or registration thereof that the surrendered Certificate be in proper form for transfer and that the person requesting such payment or delivery of the Preferred Merger Consideration pay any transfer or other similar Taxes required as a result of such registration in the name of a person other than the registered holder of such Certificate or establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable. Until surrendered as contemplated by this Section 2.3(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the applicable portion of the Preferred Merger Consideration (and any amounts to be paid pursuant to Section 2.3(c)) upon such surrender. No interest shall be paid or shall accrue on any amount payable pursuant to Section 2.3(c).

(c) Distributions with Respect to New ET Preferred Units. No distributions with respect to New ET Preferred Units shall be paid to the holder of any unsurrendered Certificates with respect to ETO Preferred Units represented thereby until such Certificate has been surrendered in accordance with this Article II. Subject to applicable Laws, following surrender of any such Certificate, there shall be paid to the record holder thereof, without interest, (i) promptly after such surrender, the amount of distributions with a record date after the Effective Time and a payment date on or prior to the date of such surrender and not theretofore paid with respect to such New ET Preferred Units and (ii) at the appropriate payment date, the amount of distributions with a record date after the Effective Time and a payment date subsequent to the date of such surrender payable with respect to such New ET Preferred Units.

(d) No Further Ownership Rights in ETO Preferred Units; Closing of Transfer Books. All Preferred Merger Consideration issued upon the surrender for exchange of Certificates representing ETO Preferred Units in accordance with the terms of this Article II and any cash paid pursuant to Section 2.3(c) shall be deemed to have been issued (or paid) in full satisfaction of all rights pertaining to ETO Preferred Units previously represented by such Certificates. After the Effective Time, the transfer books of ETO shall be closed, and there shall be no further registration of transfers on the transfer books of the Surviving Entity of ETO Preferred Units that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Entity or the Exchange Agent for any reason, they shall be cancelled and exchanged as provided in this Article II.

 

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(e) Termination of Exchange Fund. Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to the former holders of ETO Preferred Units for one year after the Effective Time shall be delivered to ET upon demand, and any holders of ETO Preferred Units who have not theretofore complied with this Article II shall thereafter look only to ET for payment of their claim of the applicable portion of the Preferred Merger Consideration and any distributions pursuant to Section 2.3(c). Any amounts remaining unclaimed by holders of ETO Preferred Units immediately prior to such time as such amounts would otherwise escheat to or become the property of any federal, state of the United States, local, foreign, domestic, tribal or multinational government, regulatory or administrative agency, bureau, commission, commissioner, legislature, court, arbitrator, body, entity or other authority or governmental instrumentality (each, a “Governmental Entity”) will, to the extent permitted by applicable Law, become the property of ET.

(f) Lost, Stolen or Destroyed Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by ET, the posting by such person of a bond, in such reasonable amount as ET may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue and pay in exchange for such lost, stolen or destroyed Certificate the applicable portion of the Preferred Merger Consideration and distributions to be paid in respect of ETO Preferred Units represented by such Certificate as contemplated by this Article II.

(g) No Liability. Notwithstanding anything in this Agreement to the contrary, none of ETO, ET, Merger Sub, the Exchange Agent or any other person shall be liable to any former holder of ETO Preferred Units for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

Section 2.4 Withholding. Each of ET, Merger Sub and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement such amounts as ET, Merger Sub and the Exchange Agent are required to deduct and withhold under the Internal Revenue Code of 1986, as amended (the “Code”), or any Tax Law, with respect to the making of such payment (and to the extent deduction and withholding is required, such deduction and withholding may be taken in ET Class B Units or New ET Preferred Units, as applicable). To the extent that amounts are so withheld and paid over to the applicable Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the person in respect of whom such deduction and withholding was made. If withholding is taken in ET Class B Units or New ET Preferred Units, ET, Merger Sub or the Exchange Agent (as applicable) shall be treated as having sold such ET Class B Units or New ET Preferred Units, as applicable, for an amount of cash equal to the fair market value of such ET Class B Units or New ET Preferred Units at the time of such deemed sale.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF ETO

ETO hereby represents and warrants to ET and Merger Sub as follows:

Section 3.1 Organization and Existence. Each of ETO and its Subsidiaries is a legal entity duly organized or formed, validly existing and in good standing under the Laws of its jurisdiction of organization or formation and has all requisite limited partnership, limited liability company or other applicable power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except to the extent that the failure to have such power or authority would not be reasonably likely to have a material adverse effect on ETO’s ability to enter into or perform its obligations under this Agreement or consummate the transactions contemplated hereby. Each of ETO and its Subsidiaries is qualified to do business in each jurisdiction where the nature of its business or the ownership of its properties requires it to be so qualified, except to the extent that the failure to be so qualified would not be reasonably likely to have a material adverse effect on ETO’s ability to enter into or perform its obligations under this Agreement or consummate the transactions contemplated hereby.

 

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Section 3.2 Capitalization. As of March 4, 2021, the issued and outstanding limited partner interests and general partner interests of ETO consisted of: (a) 2,458,702,066 ETO Common Units; (b) 101,525,429 ETO Class K Units; (c) 307,304,055 ETO Class L Units; (d) 281,280,400 ETO Class M Units; (e) 166,068,939 ETO Class N Units; (f) 950,000 ETO Series A Preferred Units; (g) 550,000 ETO Series B Preferred Units; (h) 18,000,000 ETO Series C Preferred Units; (i) 17,800,000 ETO Series D Preferred Units; (j) 32,000,000 ETO Series E Preferred Units; (k) 500,000 ETO Series F Preferred Units; (l) 1,100,000 ETO Series G Preferred Units issued and outstanding; and (m) the non-economic general partner interest (the “ETO GP Interest”). All outstanding limited partner interests and the ETO GP Interest are duly authorized, validly issued, fully paid (to the extent required by the ETO Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and free of preemptive rights (except as set forth in the ETO Partnership Agreement).

Section 3.3 Power and Authority.

(a) ETO has the limited partnership power and authority to enter into this Agreement and to perform all of its obligations and consummate the transactions contemplated hereby and thereby. ETO has taken all necessary and appropriate limited partnership actions to authorize, execute and deliver this Agreement and each agreement and instrument to be executed and delivered by ETO pursuant hereto, and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by ETO and is a valid and binding obligation of ETO enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity (collectively, the “Enforceability Exceptions”).

(b) Other than in connection with or in compliance with (i) the Delaware LP Act, (ii) the Delaware LLC Act, (iii) the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgate thereunder, (iv) the Securities Act of 1933, as amended (the “Securities Act”), and the rules promulgated thereunder, (v) applicable state securities, takeover, and “blue sky” laws, (vi) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (vii) the rules and regulations of the New York Stock Exchange (the “NYSE”), (viii) the rules and regulations of the Securities and Exchange Commission (the “SEC”) in connection with the filing with the SEC of a registration statement on Form S-4 to register the issuance of the Preferred Merger Consideration, and subject to the accuracy of the representations and warranties of ET and Merger Sub in Section 4.3(b), no authorization, consent, order, license, permit or approval of, or registration, declaration, notice or filing with, any Governmental Entity is necessary, under applicable Law, for the consummation by ETO or ETO GP LLC of the transactions contemplated by this Agreement, except such authorizations, consent, orders, licenses permits, approvals or filings that are not required to be obtained or made prior to consummation of such transactions or that, if not obtained or made, would not materially impede or delay the consummation of the Merger and the other transactions contemplated by this Agreement.

Section 3.4 No Violations. The execution and delivery of this Agreement or any other agreement or instrument executed and delivered pursuant hereto by ETO, does not, or when executed will not, and the consummation of the transactions contemplated hereby or thereby and the performance by ETO of the obligations that it is obligated to perform hereunder or thereunder do not:

(a) conflict with or result in a breach of any of the provisions of the ETO Partnership Agreement;

(b) create any lien on ETO under any indenture, mortgage, lien, agreement, contract, commitment or instrument to which ETO is a party or its properties and assets are bound;

(c) conflict with any municipal, state or federal ordinance, law (including common law), rule, regulation, judgment, order, writ, injunction, or decree (collectively, “Laws”) applicable to ETO; or

(d) conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both) or accelerate or permit the acceleration of the performance required by, or require any consent,

 

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authorization or approval under, any indenture, mortgage, lien or agreement, contract, commitment or instrument to which ETO is a party or by which it is bound;

except, in the case of clauses (b), (c) and (d), as would not be reasonably likely to have, individually or in the aggregate, a materially adverse effect on ETO or result in any material loss, cost or liability of ETO.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF ET AND MERGER SUB

Each of ET and Merger Sub, jointly and severally, represents and warrants to ETO as follows:

Section 4.1 Organization and Existence.

(a) Each of ET and Merger Sub is a legal entity duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited partnership and limited liability company power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except to the extent that the failure to have such power or authority would not be reasonably likely to have a material adverse effect on ET or Merger Sub’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby. Each of ET and Merger Sub is qualified to do business in each jurisdiction where the nature of its business or the ownership of its properties requires it to be qualified, except to the extent that the failure to be so qualified would not be reasonably likely to have a material and adverse effect on ET or Merger Sub’s ability to enter into or perform its obligations under this Agreement or consummate the transaction contemplated hereby.

Section 4.2 Capitalization.

(a) As of March 4, 2021, the issued and outstanding limited partner interests and general partner interests of ET consisted of (i) 2,703,455,611 common units representing limited partner interests in ET, (ii) 669,124,023 Class A Units representing limited partner interests in ET and (iii) the general partner interest (the “ET GP Interest”). All outstanding limited partner interests and the ET GP Interest are duly authorized, validly issued, fully paid (to the extent required by the ET Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and free of preemptive rights (except as set forth in the ET Partnership Agreement).

(b) As of the date of this Agreement, all of the issued and outstanding limited liability company interests of Merger Sub are validly issued and outstanding. All of the issued and outstanding limited liability company interests of Merger Sub are, and at the Effective Time will be, owned by ET or a direct or indirect wholly owned Subsidiary of ET. Merger Sub does not have any outstanding option, warrant, right or any other agreement pursuant to which any person other than ET may acquire any equity security of Merger Sub. Merger Sub has not conducted any business prior to the date hereof and neither has, and prior to the Effective Time will not have, any assets, liabilities or obligations of any nature other than those incident to their respective formation and pursuant to this Agreement, the Merger and the other transactions contemplated by this Agreement.

Section 4.3 Power and Authority.

(a) Each of ET and Merger Sub has the requisite limited partnership or limited liability company, as applicable, power and authority to enter into this Agreement and to perform all of their respective obligations and consummate the transactions contemplated hereby and thereby. Each of ET and Merger Sub has taken all necessary and appropriate limited partnership or limited liability company, as applicable, actions to authorize, execute and deliver this Agreement and each agreement and instrument to be executed and delivered by ET

 

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pursuant hereto, and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by ET and is a valid and binding obligation of ET enforceable in accordance with its terms, except as such enforcement may be limited by the Enforceability Exceptions.

(b) Other than in connection with or in compliance with (i) the Delaware LP Act, (ii) the Delaware LLC Act, (iii) the Exchange Act, and the rules promulgated thereunder, (iv) the Securities Act, and the rules promulgated thereunder, (v) applicable state securities, takeover and “blue sky” laws, (vi) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (vii) the rules and regulations of the NYSE, (viii) rules and regulations of the SEC in connection with the filing with the SEC of a registration statement on Form S-4 to register the issuance of the Preferred Merger Consideration, and, subject to the accuracy of the representations and warranties of the ETO in Section 3.3(b), no authorization, consent, order, license, permit or approval of, or registration, declaration, notice or filing with, any Governmental Entity is necessary, under applicable Law, for the consummation by ET or Merger Sub of the transactions contemplated by this Agreement, except for such authorizations, consent, orders, licenses, permits, approvals or filings that are not required to be obtained or made prior to consummation of such transactions or that, if not obtained or made, would not materially impede or delay the consummation of the Merger and the other transactions contemplated by this Agreement.

Section 4.4 No Violations. The execution and delivery of this Agreement, or any other agreement or instrument executed and delivered pursuant hereto by ET and Merger Sub, does not, or when executed will not, and the consummation of the transactions contemplated hereby or thereby and the performance by ET and Merger Sub of the respective obligations that they are obligated to perform hereunder or thereunder do not:

(a) conflict with or result in a breach of any of the provisions of the ET Partnership Agreement or the limited liability company agreement of Merger Sub;

(b) create any lien on ET or Merger Sub under any indenture, mortgage, lien, agreement, contract, commitment or instrument to which ET or Merger Sub is a party or their respective properties and assets are bound;

(c) conflict with any Laws applicable to ET or Merger Sub; or

(d) conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both) or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, any indenture, mortgage, lien or agreement, contract, commitment or instrument to which ET or Merger Sub is a party or by which it is bound;

except, in the case of clauses (b), (c) and (d), as would not be reasonably likely to have, individually or in the aggregate, a materially adverse effect on ET or Merger Sub or result in any material loss, cost or liability of ET or Merger Sub.

ARTICLE V.

COVENANTS AND AGREEMENTS

Section 5.1 Further Assurances. In case at any time after the Closing any further action is necessary to carry out the transactions contemplated hereby or the purposes of this Agreement, each of the parties will take such further action as the other party may reasonably request.

Section 5.2 Tax Matters. ET and ETO each acknowledges and agrees that, for U.S. federal income and applicable state and local tax purposes, the Merger is intended to be treated as a partnership merger transaction

 

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under Treasury Regulations Sections 1.708-1(c)(1) and 1.708-1(c)(3)(i), whereby ETO will be the terminating partnership and ET will be the resulting partnership (the “Intended Tax Treatment”). Unless required to do so as a result of a “determination” as defined in Section 1313 of the Code, each of ET and ETO agrees not to make any tax filings or otherwise take any position inconsistent with the Intended Tax Treatment and to cooperate with the other party to make any filings, statements, or reports required to effect, disclose or report the Intended Tax Treatment.

Section 5.3 Registration Statement. Each of ET, Merger Sub and ETO shall jointly prepare, and ET shall file with the SEC, a registration statement on Form S-4 to be filed with the SEC in connection with the issuance of the New ET Preferred Units in the Merger (including any amendments or supplements, the “Form S-4”).

Section 5.4 NYSE Listing. ET shall cause the ET Series C Preferred Units, ET Series D Preferred Units and ET Series E Preferred Units to be issued in the Merger to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date.

ARTICLE VI.

CONDITIONS TO THE MERGER

Section 6.1 Conditions to Each Partys Obligation to Effect the Merger. The respective obligations of each party to effect the Merger shall be subject to the fulfillment (or waiver by all parties, to the extent permissible under applicable Law) at or prior to the Effective Time of the following conditions:

(a) no injunction, order or decree by any court or other Governmental Entity of competent jurisdiction shall have been entered and shall continue to be in effect, no Law shall have been adopted or be effective, and no agreement with any Governmental Entity shall be in effect, in each case that prohibits, prevents or makes unlawful the consummation of the Merger or the other transactions contemplated by this Agreement;

(b) the representations and warranties of each party shall be true and correct in all material respects both at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date; and

(c) the Form S-4 shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC.

ARTICLE VII.

TERMINATION

Section 7.1 Termination or Abandonment. Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated and abandoned at any time prior to the Effective Time by the mutual written consent of ETO and ET.

ARTICLE VIII.

MISCELLANEOUS

Section 8.1 No Survival. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Merger, except for covenants and agreements which contemplate performance after the Effective Time or otherwise expressly by their terms survive the Effective Time.

 

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Section 8.2 Expenses. All costs and expenses incurred in connection with the Merger, this Agreement and the transactions contemplated hereby shall be paid by the party incurring or required to incur such expenses.

Section 8.3 Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties and delivered (by telecopy, electronic delivery or otherwise) to the other parties. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.

Section 8.4 Governing Law. This Agreement, and all claims or causes of action (whether at Law, in contract or in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

Section 8.5 Jurisdiction; Specific Enforcement. The parties agree that irreparable damage, for which monetary damages would not be an adequate remedy, would occur in the event that any of the provisions of this Agreement were not performed, or were threatened to not be performed, in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other remedy that may be available to it at law or in equity, each of the parties shall be entitled to an injunction or injunctions or equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), and all such rights and remedies at law or in equity shall be cumulative. The parties further agree that no party to this Agreement shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 8.5 and each party waives any objection to the imposition of such relief or any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument. In addition, each of the parties hereto irrevocably agrees that any legal action or proceeding relating to or arising out of this Agreement and the rights and obligations hereunder, or for recognition and enforcement of any judgment relating to or arising out of this Agreement and the rights and obligations hereunder brought by the other party hereto or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to or arising out of this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by the applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 8.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO

 

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INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 8.7 Assignment; Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

Section 8.8 Severability. Any term or provision of this Agreement that is held to be invalid or unenforceable in a court of competent jurisdiction shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement. Upon such a determination, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

Section 8.9 Entire Agreement. This Agreement together with the exhibits and schedules hereto constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof, and this Agreement is not intended to grant standing to any person other than the parties hereto.

Section 8.10 Amendments; Waivers. At any time prior to the Effective Time, any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by ETO, ET and Merger Sub or, in the case of a waiver, by the party against whom the waiver is to be effective.

Section 8.11 Headings. Headings of the Articles and Sections of this Agreement are for convenience of the parties only and shall be given no substantive or interpretive effect whatsoever. The table of contents to this Agreement is for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 8.12 No Third-Party Beneficiaries. Each of ET, Merger Sub and ETO agrees that (a) their respective representations, warranties, covenants and agreements set forth herein are solely for the benefit of ETO or ET and Merger Sub, as applicable, in accordance with and subject to the terms of this Agreement, and (b) except for the right of ETO’s unitholders to receive the Merger Consideration on the terms and conditions of this Agreement, this Agreement is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.

Section 8.13 Interpretation. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, unless the context otherwise requires. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. References in this Agreement to specific laws or to specific provisions of laws shall include all rules and regulations promulgated thereunder, and any statute defined or referred to herein or in any agreement or instrument referred

 

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to herein shall mean such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. Each of the parties has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.

Section 8.14 Definitions.

(a) As used in this Agreement:

(i) “business day” means any day other than a Saturday, a Sunday or a legal holiday for commercial banks in New York, New York.

(ii) “ET Series A Preferred Unit” means a new series of preferred units representing limited partner interests in ET, to be established at Closing pursuant to the ET LPA Amendment, designated as “6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” and having the preferences, rights, powers and duties set forth in the ET LPA Amendment.

(iii) “ET Series B Preferred Unit” means a new series of preferred units representing limited partner interests in ET, to be established at Closing pursuant to the ET LPA Amendment, designated as “6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” and having the preferences, rights, powers and duties set forth in the ET LPA Amendment.

(iv) “ET Series C Preferred Unit” means a new series of preferred units representing limited partner interests in ET, to be established at Closing pursuant to the ET LPA Amendment, designated as “7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” and having the preferences, rights, powers and duties set forth in the ET LPA Amendment.

(v) “ET Series D Preferred Unit” means a new series of preferred units representing limited partner interests in ET, to be established at Closing pursuant to the ET LPA Amendment, designated as “7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” and having the preferences, rights, powers and duties set forth in the ET LPA Amendment.

(vi) “ET Series E Preferred Unit” means a new series of preferred units representing limited partner interests in ET, to be established at Closing pursuant to the ET LPA Amendment, designated as “7.600% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” and having the preferences, rights, powers and duties set forth in the ET LPA Amendment.

(vii) “ET Series F Preferred Unit” means a new series of preferred units representing limited partner interests in ET, to be established at Closing pursuant to the ET LPA Amendment, designated as “6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units” and having the preferences, rights, powers and duties set forth in the ET LPA Amendment.

(viii) “ET Series G Preferred Unit” means a new series of preferred units representing limited partner interests in ET, to be established at Closing pursuant to the ET LPA Amendment, designated as “7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units” and having the preferences, rights, powers and duties set forth in the ET LPA Amendment.

(ix) “ETO Partnership Agreement” means that certain Fifth Amended Restated Agreement of Limited Partnership of ETO, dated October 19, 2018, as amended.

(x) “person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity, group (as such term is used in Section 13 of the Exchange Act) or organization, including a Governmental Entity, and any permitted successors and assigns of such person.

 

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(xi) “Subsidiary” means, with respect to any person, any corporation, limited liability company, partnership, association, or business entity, whether incorporated or unincorporated, of which (A) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that person or one or more Subsidiaries of that person or a combination thereof, (B) if a partnership (whether general or limited), a general partner interest is at the time owned or controlled, directly or indirectly, by that person or one or more Subsidiaries of that person or a combination thereof or (C) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that person or one or more Subsidiaries of that person or a combination thereof. For purposes hereof, a person or persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity (other than a corporation) if such person or persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses. Notwithstanding the foregoing, none of USA Compression Partners, LP, Sunoco LP or any of their respective Subsidiaries shall be deemed Subsidiaries of ET or ETO.

(xii) “Tax” or “Taxes” means any and all U.S. federal, state or local or non-U.S. or provincial taxes, charges, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and similar charges, including any and all interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental Entity in connection or with respect thereto.

(xiii) “Tax Return” means any return, report or similar filing (including any attached schedules, supplements and additional or supporting material) filed or required to be filed with respect to Taxes, including any information return, claim for refund, amended return or declaration of estimated Taxes (and including any amendments with respect thereto).

(xiv) “Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references in this Agreement to sections of the Treasury Regulations shall include any corresponding provisions or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.

(b) Each of the following terms is defined in the section of this Agreement set forth opposite such term:

 

Agreement

   Preamble

Book-Entry Unit

   Section 2.1(d)

business day

   Section 8.14(a)(i)

Certificate of Merger

   Section 1.3

Certificates

   Section 2.3(b)

Closing

   Section 1.2

Closing Date

   Section 1.2

Code

   Section 2.4

Delaware LLC Act

   Section 1.1

Delaware LP Act

   Section 1.1

Effective Time

   Section 1.3

Enforceability Exceptions

   Section 3.3

ET

   Preamble

ET Class B Units

   Section 2.1(b)

ET GP

   Recitals

ET LPA Amendment

   Section 1.6

ET Partnership Agreement

   Section 1.6

ET Series A Preferred Units

   Section 8.14(a)(i)

 

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ET Series B Preferred Units

   Section 8.14(a)(i)

ET Series C Preferred Units

   Section 8.14(a)(i)

ET Series D Preferred Units

   Section 8.14(a)(i)

ET Series E Preferred Units

   Section 8.14(a)(i)

ET Series F Preferred Units

   Section 8.14(a)(i)

ET Series G Preferred Units

   Section 8.14(a)(i)

ETO

   Preamble

ETO Class K Units

   Section 2.1(b)

ETO Class L Units

   Section 2.1(b)

ETO Class M Units

   Section 2.1(b)

ETO Class N Units

   Section 2.1(b)

ETO Common Units

   Section 2.1(a)

ETO GP

   Preamble

ETO GP Interest

   Section 3.2

ETO GP LLC

   Preamble

ETO Partnership Agreement

   Section 8.14(a)(ix)

ETO Preferred Units

   Section 2.1(c)(vii)

ETO Series A Preferred Units

   Section 2.1(c)(i)

ETO Series B Preferred Units

   Section 2.1(c)(ii)

ETO Series C Preferred Units

   Section 2.1(c)(iii)

ETO Series D Preferred Units

   Section 2.1(c)(iv)

ETO Series E Preferred Units

   Section 2.1(c)(v)

ETO Series F Preferred Units

   Section 2.1(c)(vi)

ETO Series G Preferred Units

   Section 2.1(c)(vii)

Exchange Act

   Section 3.3(b)

Exchange Agent

   Section 2.3(a)

Exchange Fund

   Section 2.3(a)

Form S-4

   Section 2.1(b)

Governmental Entity

   Section 2.3(e)

Hook Unit Merger Consideration

   Section 2.1(b)

Hook Units

   Section 2.1(b)

Laws

   Section 3.4(c)

Merger

   Recitals

Merger Consideration

   Section 2.1(c)(vii)

Merger Sub

   Preamble

Merger Sub Units

   Section 2.1(f)

New ET Preferred Units

   Section 2.1(c)(vii)

NYSE

   Section 3.3(b)

person

   Section 8.14(a)(ii)

Preferred Merger Consideration

   Section 2.1(c)(vii)

SEC

   Section 3.3(b)

Securities Act

   Section 3.3(b)

Subsidiary

   Section 8.14(a)(xi)

Tax

   Section 8.14(a)(xii)

Tax Return

   Section 8.14(a)(xiii)

Treasury Regulation

   Section 8.14(a)(xiv)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

 

ENERGY TRANSFER LP
By:  

LE GP, LLC,

its general partner

By:  

/s/ Thomas E. Long

 

Name: Thomas E. Long

Title: Co-Chief Executive Officer

 

ETO MERGER SUB LLC
By:   /s/ Thomas E. Long
 

Name: Thomas E. Long

Title: Co-Chief Executive Officer

 

ENERGY TRANSFER OPERATING, L.P.
By:  

Energy Transfer Partners GP, L.P.,

its general partner

By:  

Energy Transfer Partners, L.L.C.,

its general partner

By:   /s/ Thomas E. Long
 

Name: Thomas E. Long

Title: Co-Chief Executive Officer

Signature Page to Agreement and Plan of Merger

 

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Exhibit A

Amendment No. 8 to ET Partnership Agreement

[See attached as Annex B.]

 

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Annex B

AMENDMENT NO. 8 TO

THIRD AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

ENERGY TRANSFER LP

This Amendment No. 8 (this “Amendment No. 8”) to the Third Amended and Restated Agreement of Limited Partnership of Energy Transfer LP (the “Partnership”) dated as of February 8, 2006 (as amended to date, the “Partnership Agreement”) is hereby adopted effective as of [ ● ] (the “Effective Date”) by LE GP, LLC, a Delaware limited liability company (the “General Partner”), as the general partner of the Partnership. Capitalized terms used but not defined herein have the meaning given such terms in the Partnership Agreement.

WHEREAS, Section 5.8 of the Partnership Agreement provides that the General Partner, without the approval of any Limited Partner except as otherwise provided in the Partnership Agreement, may, for any Partnership purpose, at any time and from time to time, issue additional Partnership Securities to such Persons for such consideration and on such terms and conditions as the General Partner shall determine;

WHEREAS, the General Partner, without the approval of any Partner, may amend any provision of the Partnership Agreement (i) pursuant to Section 13.1(d)(i) of the Partnership Agreement to reflect a change that, the General Partner determines, does not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect and (ii) pursuant to Section 13.1(g) of the Partnership Agreement to reflect an amendment that the General Partner determines to be necessary or appropriate in connection with the authorization of issuance of any class or series of Partnership Securities pursuant to Section 5.8 of the Partnership Agreement;

WHEREAS, in connection with the transactions contemplated by that certain Agreement and Plan of Merger, dated as of March 5, 2021, by and among the Partnership, the MLP and ETO Merger Sub LLC, a Delaware limited liability company, a Delaware limited liability company and wholly owned subsidiary of the Partnership, pursuant to which Merger Sub will merge with and into the MLP, with the MLP surviving as a wholly owned subsidiary of the Partnership, the Partnership will issue limited partner interests designated as (i) “6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (ii) “6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (iii) “7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (iv) “7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (v) “7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (vi) “6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units”; (vii) “7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units”; and (viii) “Class B Units,” each having the rights, preferences and privileges set forth in this Amendment No. 8;

WHEREAS, the General Partner has determined, pursuant to Section 13.1(g) of the Partnership Agreement, that the amendments to the Partnership Agreement set forth herein are necessary or appropriate in connection with the authorization of the issuance of the (i) “6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (ii) “6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (iii) “7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (iv) “7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (v) “7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units”; (vi) “6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units”; (vii) “7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units,” and (vii) Class B Units; and

WHEREAS, the General Partner has determined, pursuant to Section 13.1(d)(i) of the Partnership Agreement, that, if and to the extent any amendments set forth herein are not necessary or appropriate in connection with the authorization of the issuance of the New Units, such amendments to the Partnership Agreement set forth herein do not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect.

 

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NOW THEREFORE, the General Partner does hereby amend the Partnership Agreement as follows:

Section 1 Amendments.

(a) Section 1.1 of the Partnership Agreement is amended to add or to amend and restate the following definitions in their entirety in the appropriate alphabetical order:

Arrears” means, (a) with respect to the Series A Distributions, the full cumulative Series A Distributions through the most recent Series A Distribution Payment Date that have not been paid on all Outstanding Series A Preferred Units, (b) with respect to the Series B Distributions, the full cumulative Series B Distributions through the most recent Series B Distribution Payment Date that have not been paid on all Outstanding Series B Preferred Units, (c) with respect to the Series C Distributions, the full cumulative Series C Distributions through the most recent Series C Distribution Payment Date that have not been paid on all Outstanding Series C Preferred Units, (d) with respect to the Series D Distributions, the full cumulative Series D Distributions through the most recent Series D Distribution Payment Date that have not been paid on all Outstanding Series D Preferred Units, (e) with respect to the Series E Distributions, the full cumulative Series E Distributions through the most recent Series E Distribution Payment Date that have not been paid on all Outstanding Series E Preferred Units, (f) with respect to the Series F Distributions, the full cumulative Series F Distributions through the most recent Series F Distribution Payment Date that have not been paid on all Outstanding Series F Preferred Units and (g) with respect to the Series G Distributions, the full cumulative Series G Distributions through the most recent Series G Distribution Payment Date that have not been paid on all Outstanding Series G Preferred Units.

Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date:

(a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly owned) on hand at the end of such Quarter, and (ii) all additional cash and cash equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly owned) on hand immediately prior to the date of the distribution of Available Cash with respect to such Quarter, less

(b) the amount of any cash reserves (or the Partnership’s proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned) established by the General Partner to (i) provide for the proper conduct of the business of the Partnership (including reserves for future capital expenditures, for anticipated future credit needs of the Partnership Group and for refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing relating to FERC rate proceedings) subsequent to such Quarter, (ii) comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which any Group Member is a party or by which it is bound or its assets are subject, (iii) provide funds for distributions under Section 6.3 in respect of any one or more of the next four Quarters; (iv) provide funds for Series A Distributions, (v) provide funds for Series B Distributions, (vi) provide funds for Series C Distributions, (vii) provide funds for Series D Distributions, (viii) provide funds for Series E Distributions, (ix) provide funds for Series F Distributions, (x) provide funds for Series G Distributions or (xi) provide funds for distributions to the Class B Units; provided, however, that disbursements made by a Group Member or cash reserves established, increased or reduced after the end of such Quarter but on or before the date of determination of Available Cash with respect to such Quarter shall be deemed to have been made, established, increased or reduced, for purposes of determining Available Cash, within such Quarter if the General Partner so determines.

Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.

 

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Calculation Agent” means the financial institution that will be appointed by the General Partner prior to the Series A Floating Rate Period, Series B Floating Rate Period, Series C Floating Rate Period, Series D Floating Rate Period, Series E Floating Rate Period, Series F Reset Distribution Determination Date preceding the Series F First Call Date or Series G Reset Distribution Determination Date preceding the Series G First Call Date to act in its capacity as calculation agent for the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the Series F Preferred Units and the Series G Preferred Units, as applicable, and its successors and assigns or any other calculation agent appointed by the General Partner. For the avoidance of doubt, the Partnership and its affiliates shall not be appointed by the General Partner to act as calculation agent for the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the Series F Preferred Units or the Series G Preferred Units.

Class B Units” has the meaning given such term in Section 5.24(a).

Class B Unit Distribution Rate” means an amount per Class B Unit equal to 7.5% per annum (1.875% per Quarter), of the Class B Unit Issue Price.

Class B Unit Issuance Date” means [                ], 2021.

Class B Unit Issue Price” means $18.84.

Class B Unit Quarterly Distribution” has the meaning set forth in Section 5.24(b)(iii)(B).

Common Unit” means a Partnership Security representing a fractional part of the Partnership Interests of all Limited Partners, and having the rights and obligations specified with respect to Common Units in this Agreement. The term “Common Unit” does not include a Class A Unit, Class B Unit, a Series A Preferred Unit, a Series B Preferred Unit, a Series C Preferred Unit, a Series D Preferred Unit, a Series E Preferred Unit, a Series F Preferred Unit or a Series G Preferred Unit.

Equity Credit” means the dollar amount or percentage in relation to the stated liquidation preference amount of (a) $1,000.00 per Series A Preferred Unit, (b) $1,000.00 per Series B Preferred Unit, (c) $25.00 per Series C Preferred Unit, (d) $25.00 per Series D Preferred Unit, (e) $25.00 per Series E Preferred Unit, (f) $1,000.00 per Series F Preferred Unit or (g) $1,000.00 per Series G Preferred Unit, assigned to the Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units or Series G Preferred Units, as applicable, as equity, rather than debt, by a Rating Agency in evaluating the capital structure of the Partnership.

ETP Holdco” means ETP Holdco Corporation, a Delaware corporation.

ETP Holdco Items” means any item of Partnership income, gain, loss, deduction or credit attributable to the Partnership’s ownership of ETP Holdco or the Partnership’s ownership of any indebtedness of ETP Holdco or any of its subsidiaries.

ETP Holdco Distributions” means any portion of the Partnership cash distributions attributable to (i) any distribution or dividend received by the Partnership from ETP Holdco or the proceeds of sale of the capital stock of ETP Holdco or (ii) any interest payments received by the Partnership with respect to indebtedness of ETP Holdco or its subsidiaries.

H.15(519)” means the statistical release designated as such, or any successor publication, published by the Board of Governors of the U.S. Federal Reserve System.

Limited Partner Interest” means the ownership interest of a Limited Partner or Assignee in the Partnership, which may be evidenced by Common Units, Class A Units, Series A Preferred Units, Series B

 

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Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and Class B Units or other Partnership Securities or a combination thereof or interest therein, and includes any and all benefits to which such Limited Partner or Assignee is entitled as provided in this Agreement, together with all obligations of such Limited Partner or Assignee to comply with the terms and provisions of this Agreement.

most recent H.15(519)” means the H.15(519) published closest in time but prior to the close of business on the second Business Day prior to the Series F Reset Date or the Series G Reset Date, as applicable.

New Units” means the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the Series F Preferred Units, the Series G Preferred Units, and the Class B Units.

Outstanding” means, with respect to Partnership Securities, all Partnership Securities that are issued by the Partnership and reflected as outstanding on the Partnership’s books and records as of the date of determination; provided, however, that if at any time any Person or Group (other than the General Partner or its Affiliates) beneficially owns 20% or more of any Outstanding Partnership Securities of any class then Outstanding, all Partnership Securities owned by such Person or Group shall not be voted on any matter and shall not be considered to be Outstanding when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required by law), calculating required votes, determining the presence of a quorum or for other similar purposes under this Agreement, except that Common Units so owned shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Common Units shall not, however, be treated as a separate class of Partnership Securities for purposes of this Agreement); provided, further, that the limitation in the foregoing proviso shall not apply (i) to any Person or Group who acquired 20% or more of any Outstanding Partnership Securities of any class then Outstanding directly from the General Partner or its Affiliates, (ii) to any Person or Group who acquired 20% or more of any Outstanding Partnership Securities of any class then Outstanding directly or indirectly from a Person or Group described in clause (i) if the General Partner shall have notified such Person or Group in writing that such limitation shall not apply to such Person or Group, (iii) to any Person or Group who acquired 20% or more of any Partnership Securities issued by the Partnership with the prior approval of the Board of Directors of the General Partner, (iv) to any Series A Holder in connection with any vote, consent or approval of the Series A Holders pursuant to Section 5.17(b)(iii), (v) to any Series B Holder in connection with any vote, consent or approval of the Series B Holders pursuant to Section 5.18(b)(iii), (vi) to any Series C Holder in connection with any vote, consent or approval of the Series C Holders pursuant to Section 5.19(b)(iii), (vii) to any Series D Holder in connection with any vote, consent or approval of the Series D Holders pursuant to Section 5.20(b)(iii), (viii) to any Series E Holder in connection with any vote, consent or approval of the Series E Holders pursuant to Section 5.21(b)(iii), (ix) to any Series F Holder in connection with any vote, consent or approval of the Series F Holders pursuant to Section 5.22(b)(iii) or (x) to any Series G Holder in connection with any vote, consent or approval of the Series G Holders pursuant to Section 5.23(b)(iii).

Partnership Security” means any class or series of equity interest in the Partnership (but excluding any options, rights, warrants and appreciation rights relating to an equity interest in the Partnership) and General Partner Units and any General Partner Interest represented thereby, including without limitation, Common Units, Class A Units, Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and Class B Units.

Paying Agent” means the Transfer Agent, acting in its capacity as paying agent for the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the Series F Preferred Units and the Series G Preferred Units, and its respective successors and assigns or any other paying agent appointed by the General Partner; provided, however, that if no Paying Agent is specifically designated for the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the Series F Preferred Units or the Series G Preferred Units, the General Partner shall act in such capacity.

 

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Percentage Interest” means as of any date of determination (a) as to the General Partner, the amount of its aggregate Capital Contributions to the Partnership divided by the aggregate Capital Contributions made to the Partnership by all Partners (other than Capital Contributions made to the Partnership by a Partner with respect to a Class A Unit, a Class B Unit, a Series A Preferred Unit, a Series B Preferred Unit, a Series C Preferred Unit, a Series D Preferred Unit, a Series E Preferred Unit, a Series F Preferred Unit or a Series G Preferred Unit), (b) as to any Unitholder or Assignee holding Common Units, the product obtained by multiplying (i) 100% less the percentage applicable to paragraphs (a) and (c) hereof by (ii) the quotient obtained by dividing (A) the number of Common Units held by such Unitholder or Assignee by (B) the total number of all Outstanding Common Units, and (c) as to the holders of other Partnership Securities issued by the Partnership in accordance with Section 5.8, the percentage established as a part of such issuance. The Percentage Interest with respect to a Class A Unit, Class B Unit, Series A Preferred Unit, Series B Preferred Unit, Series C Preferred Unit, Series D Preferred Unit, Series E Preferred Unit, Series F Preferred Unit and Series G Preferred Unit shall at all times be zero.

Pro Rata” means (a) when modifying Units or any class thereof, apportioned equally among all such designated Units in accordance with their relative Percentage Interests, (b) when modifying Partners and Assignees, apportioned among all Partners and Assignees in accordance with their relative Percentage Interests, (c) solely when modifying Series A Holders, apportioned equally among all Series A Holders in accordance with the relative number or percentage of Series A Preferred Units held by each such Series A Holder, (d) solely when modifying Series B Holders, apportioned equally among all Series B Holders in accordance with the relative number or percentage of Series B Preferred Units held by each such Series B Holder, (e) solely when modifying Series C Holders, apportioned equally among all Series C Holders in accordance with the relative number or percentage of Series C Preferred Units held by each such Series C Holder, (f) solely when modifying Series D Holders, apportioned equally among all Series D Holders in accordance with the relative number or percentage of Series D Preferred Units held by each such Series D Holder, (g) solely when modifying Series E Holders, apportioned equally among all Series E Holders in accordance with the relative number or percentage of Series E Preferred Units held by each such Series E Holder, (h) solely when modifying Series F Holders, apportioned equally among all Series F Holders in accordance with the relative number or percentage of Series F Preferred Units held by each such Series F Holder, (i) solely when modifying Series G Holders, apportioned equally among all Series G Holders in accordance with the relative number or percentage of Series G Preferred Units held by each such Series G Holder and (j) solely when modifying holders of Class B Units, apportioned equally among all holders of Class B Units in accordance with the relative number or percentage of Class B Units held by each such holder.

Rating Agency” means any nationally recognized statistical rating organization (within the meaning of Section 3(a)(62) of the Securities Exchange Act) that publishes a rating for the Partnership.

Recapitalized Unit” means the Class K Units, the Class L Units, the Class M Units and the Class N Units established pursuant to the Fifth Amended and Restated Agreement of Limited Partnership of the MLP, as amended.

Series A Base Liquidation Preference” means a liquidation preference for each Series A Preferred Unit initially equal to $1,000 per unit.

Series A Current Criteria” means the Equity Credit criteria of a Rating Agency for securities such as the Series A Preferred Units, as such criteria were in effect as of the Series A Original Issue Date.

Series A Distribution Payment Date” means (a) during the Series A Fixed Rate Period, the 15th day of each February and August of each year and (b) during the Series A Floating Rate Period, the 15th day of each February, May, August and November of each year; provided however, that if any Series A Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series A Distribution Payment Date shall instead be on the immediately succeeding Business Day.

 

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Series A Distribution Period” means a period of time from and including the preceding Series A Distribution Payment Date, to, but excluding, the next Series A Distribution Payment Date for such Series A Distribution Period.

Series A Distribution Rate” means an annual rate equal to (a) during the Series A Fixed Rate Period, 6.250% of the Series A Liquidation Preference and (b) during the Series A Floating Rate Period, a percentage of the Series A Liquidation Preference equal to the sum of (i) the Three-Month LIBOR, as calculated on each applicable Series A LIBOR Determination Date, and (ii) 4.028%.

Series A Distribution Record Date” has the meaning given such term in Section 5.17(b)(ii)(B).

Series A Distributions” means distributions with respect to Series A Preferred Units pursuant to Section 5.17(b)(ii).

Series A Fixed Rate Period” means the period from and including the date hereof to, but excluding, February 15, 2023.

Series A Floating Rate Period” means the period from and including February 15, 2023 and thereafter until such time as all of the Outstanding Series A Preferred Units are redeemed in accordance with Section 5.17(b)(iv).

Series A Holder” means a Record Holder of Series A Preferred Units.

Series A Junior Securities” means any class or series of Partnership Securities that, with respect to distributions on such Partnership Securities and distributions upon liquidation of the Partnership, ranks junior to the Series A Preferred Units, including but not limited to Common Units, Class A Units, Class B Units and the General Partner Interest, but excluding any Series A Parity Securities and Series A Senior Securities.

Series A LIBOR Determination Date” means the London Business Day immediately preceding the first day in each relevant Series A Distribution Period.

Series A Liquidation Preference” means a liquidation preference for each Series A Preferred Unit initially equal to $1,000 per unit (subject to adjustment for any splits, combinations or similar adjustments to the Series A Preferred Units), which liquidation preference shall be subject to increase by the per Series A Preferred Unit amount of any accumulated and unpaid Series A Distributions (whether or not such distributions shall have been declared).

Series A Original Issue Date” means November 16, 2017.

Series A Parity Securities” means the Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and any other class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks on parity with the Series A Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series A Preferred Units” has the meaning given such term in Section 5.17(a).

Series A Rating Event” means a change by any Rating Agency to the Series A Current Criteria, which change results in (a) any shortening of the length of time for which the Series A Current Criteria are scheduled to be in effect with respect to the Series A Preferred Units or (b) a lower Equity Credit being given to the Series A Preferred Units than the Equity Credit that would have been assigned to the Series A Preferred Units by such Rating Agency pursuant to its Series A Current Criteria.

Series A Redemption Date” has the meaning given such term in Section 5.17(b)(iv)(A).

 

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Series A Redemption Notice” has the meaning given such term in Section 5.17(b)(iv)(B).

Series A Redemption Price” has the meaning given such term in Section 5.17(b)(iv)(A).

Series A Senior Securities” means any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks senior to the Series A Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series B Base Liquidation Preference” means a liquidation preference for each Series B Preferred Unit initially equal to $1,000 per unit.

Series B Current Criteria” means the Equity Credit criteria of a Rating Agency for securities such as the Series B Preferred Units, as such criteria were in effect as of the Series B Original Issue Date.

Series B Distribution Payment Date” means (a) during the Series B Fixed Rate Period, the 15th day of each February and August of each year and (b) during the Series B Floating Rate Period, the 15th day of each February, May, August and November of each year; provided however, that if any Series B Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series B Distribution Payment Date shall instead be on the immediately succeeding Business Day.

Series B Distribution Period” means a period of time from and including the preceding Series B Distribution Payment Date, to, but excluding, the next Series B Distribution Payment Date for such Series B Distribution Period.

Series B Distribution Rate” means an annual rate equal to (a) during the Series B Fixed Rate Period, 6.625% of the Series B Liquidation Preference and (b) during the Series B Floating Rate Period, a percentage of the Series B Liquidation Preference equal to the sum of (i) the Three-Month LIBOR, as calculated on each applicable Series B LIBOR Determination Date, and (ii) 4.155%.

Series B Distribution Record Date” has the meaning given such term in Section 5.18(b)(ii)(B).

Series B Distributions” means distributions with respect to Series B Preferred Units pursuant to Section 5.18(b)(ii).

Series B Fixed Rate Period” means the period from and including the date hereof to, but excluding, February 15, 2028.

Series B Floating Rate Period” means the period from and including February 15, 2028 and thereafter until such time as all of the Outstanding Series B Preferred Units are redeemed in accordance with Section 5.18(b)(iv).

Series B Holder” means a Record Holder of Series B Preferred Units.

Series B Junior Securities” means any class or series of Partnership Securities that, with respect to distributions on such Partnership Securities and distributions upon liquidation of the Partnership, ranks junior to the Series B Preferred Units, including but not limited to Common Units, Class A Units, Class B Units and the General Partner Interest, but excluding any Series B Parity Securities and Series B Senior Securities.

Series B LIBOR Determination Date” means the London Business Day immediately preceding the first day in each relevant Series B Distribution Period.

Series B Liquidation Preference” means a liquidation preference for each Series B Preferred Unit initially equal to $1,000 per unit (subject to adjustment for any splits, combinations or similar adjustments to the

 

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Series B Preferred Units), which liquidation preference shall be subject to increase by the per Series B Preferred Unit amount of any accumulated and unpaid Series B Distributions (whether or not such distributions shall have been declared).

Series B Original Issue Date” means November 16, 2017.

Series B Parity Securities” means the Series A Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and any other class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks on parity with the Series B Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series B Preferred Units” has the meaning given such term in Section 5.18(a).

Series B Rating Event” means a change by any Rating Agency to the Series B Current Criteria, which change results in (a) any shortening of the length of time for which the Series B Current Criteria are scheduled to be in effect with respect to the Series B Preferred Units or (b) a lower Equity Credit being given to the Series B Preferred Units than the Equity Credit that would have been assigned to the Series B Preferred Units by such Rating Agency pursuant to its Series B Current Criteria.

Series B Redemption Date” has the meaning given such term in Section 5.18(b)(iv)(A).

Series B Redemption Notice” has the meaning given such term in Section 5.18(b)(iv)(B).

Series B Redemption Price” has the meaning given such term in Section 5.18(b)(iv)(A).

Series B Senior Securities” means any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks senior to the Series B Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series C Base Liquidation Preference” means a liquidation preference for each Series C Preferred Unit initially equal to $25.00 per unit.

Series C Current Criteria” means the Equity Credit criteria of a Rating Agency for securities such as the Series C Preferred Units, as such criteria were in effect as of the Series C Original Issue Date.

Series C Distribution Payment Date” means the 15th day of each February, May, August and November of each year; provided however, that if any Series C Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series C Distribution Payment Date shall instead be on the immediately succeeding Business Day.

Series C Distribution Period” means a period of time from and including the preceding Series C Distribution Payment Date, to, but excluding, the next Series C Distribution Payment Date for such Series C Distribution Period.

Series C Distribution Rate” means an annual rate equal to (a) during the Series C Fixed Rate Period, 7.375% of the Series C Liquidation Preference and (b) during the Series C Floating Rate Period, a percentage of the Series C Liquidation Preference equal to the sum of (i) the Three-Month LIBOR, as calculated on each applicable Series C LIBOR Determination Date, and (ii) 4.530%.

Series C Distribution Record Date” has the meaning given such term in Section 5.19(b)(ii)(B).

 

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Series C Distributions” means distributions with respect to Series C Preferred Units pursuant to Section 5.19(b)(ii).

Series C Fixed Rate Period” means the period from and including the date hereof to, but excluding, May 15, 2023.

Series C Floating Rate Period” means the period from and including May 15, 2023 and thereafter until such time as all of the Outstanding Series C Preferred Units are redeemed in accordance with Section 5.19(b)(iv).

Series C Holder” means a Record Holder of Series C Preferred Units.

Series C Junior Securities” means any class or series of Partnership Securities that, with respect to distributions on such Partnership Securities and distributions upon liquidation of the Partnership, ranks junior to the Series C Preferred Units, including but not limited to Common Units, Class A Units, Class B Units and the General Partner Interest, but excluding any Series C Parity Securities and Series C Senior Securities.

Series C LIBOR Determination Date” means the London Business Day immediately preceding the first day in each relevant Series C Distribution Period.

Series C Liquidation Preference” means a liquidation preference for each Series C Preferred Unit initially equal to $25.00 per unit (subject to adjustment for any splits, combinations or similar adjustments to the Series C Preferred Units), which liquidation preference shall be subject to increase by the per Series C Preferred Unit amount of any accumulated and unpaid Series C Distributions (whether or not such distributions shall have been declared).

Series C Original Issue Date” means April 25, 2018.

Series C Parity Securities” means the Series A Preferred Units, Series B Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and other any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks on parity with the Series C Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series C Preferred Units” has the meaning given such term in Section 5.19(a).

Series C Rating Event” means a change by any Rating Agency to the Series C Current Criteria, which change results in (a) any shortening of the length of time for which the Series C Current Criteria are scheduled to be in effect with respect to the Series C Preferred Units or (b) a lower Equity Credit being given to the Series C Preferred Units than the Equity Credit that would have been assigned to the Series C Preferred Units by such Rating Agency pursuant to its Series C Current Criteria.

Series C Redemption Date” has the meaning given such term in Section 5.19(b)(iv)(A).

Series C Redemption Notice” has the meaning given such term in Section 5.19(b)(iv)(B).

Series C Redemption Price” has the meaning given such term in Section 5.19(b)(iv)(A).

Series C Senior Securities” means any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks senior to the Series C Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

 

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Series D Base Liquidation Preference” means a liquidation preference for each Series D Preferred Unit initially equal to $25.00 per unit.

Series D Current Criteria” means the Equity Credit criteria of a Rating Agency for securities such as the Series D Preferred Units, as such criteria were in effect as of the Series D Original Issue Date.

Series D Distribution Payment Date” means the 15th day of each February, May, August and November of each year; provided however, that if any Series D Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series D Distribution Payment Date shall instead be on the immediately succeeding Business Day.

Series D Distribution Period” means a period of time from and including the preceding Series D Distribution Payment Date, to, but excluding, the next Series D Distribution Payment Date for such Series D Distribution Period.

Series D Distribution Rate” means an annual rate equal to (a) during the Series D Fixed Rate Period, 7.625% of the Series D Liquidation Preference and (b) during the Series D Floating Rate Period, a percentage of the Series D Liquidation Preference equal to the sum of (i) the Three-Month LIBOR, as calculated on each applicable Series D LIBOR Determination Date, and (ii) 4.738%.

Series D Distribution Record Date” has the meaning given such term in Section 5.20(b)(ii)(B).

Series D Distributions” means distributions with respect to Series D Preferred Units pursuant to Section 5.20(b)(ii).

Series D Fixed Rate Period” means the period from and including the date hereof to, but excluding, August 15, 2023.

Series D Floating Rate Period” means the period from and including August 15, 2023 and thereafter until such time as all of the Outstanding Series D Preferred Units are redeemed in accordance with Section 5.20(b)(iv).

Series D Holder” means a Record Holder of Series D Preferred Units.

Series D Junior Securities” means any class or series of Partnership Securities that, with respect to distributions on such Partnership Securities and distributions upon liquidation of the Partnership, ranks junior to the Series D Preferred Units, including but not limited to Common Units, Class A Units, Class B Units and the General Partner Interest, but excluding any Series D Parity Securities and Series D Senior Securities.

Series D LIBOR Determination Date” means the Business Day immediately preceding the first day in each relevant Series D Distribution Period.

Series D Liquidation Preference” means a liquidation preference for each Series D Preferred Unit initially equal to $25.00 per unit (subject to adjustment for any splits, combinations or similar adjustments to the Series D Preferred Units), which liquidation preference shall be subject to increase by the per Series D Preferred Unit amount of any accumulated and unpaid Series D Distributions (whether or not such distributions shall have been declared).

Series D Original Issue Date” means July 23, 2018.

Series D Parity Securities” means the Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and any other class

 

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or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks on parity with the Series D Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series D Preferred Units” has the meaning given such term in Section 5.20(a).

Series D Rating Event” means a change by any Rating Agency to the Series D Current Criteria, which change results in (a) any shortening of the length of time for which the Series D Current Criteria are scheduled to be in effect with respect to the Series D Preferred Units or (b) a lower Equity Credit being given to the Series D Preferred Units than the Equity Credit that would have been assigned to the Series D Preferred Units by such Rating Agency pursuant to its Series D Current Criteria.

Series D Redemption Date” has the meaning given such term in Section 5.20(b)(iv)(A).

Series D Redemption Notice” has the meaning given such term in Section 5.20(b)(iv)(B).

Series D Redemption Price” has the meaning given such term in Section 5.20(b)(iv)(A).

Series D Senior Securities” means any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks senior to the Series D Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series E Base Liquidation Preference” means a liquidation preference for each Series E Preferred Unit initially equal to $25.00 per unit.

Series E Current Criteria” means the Equity Credit criteria of a Rating Agency for securities such as the Series E Preferred Units, as such criteria were in effect as of the Series E Original Issue Date.

Series E Distribution Payment Date” means the 15th day of each February, May, August and November of each year; provided however, that if any Series E Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series E Distribution Payment Date shall instead be on the immediately succeeding Business Day.

Series E Distribution Period” means a period of time from and including the preceding Series E Distribution Payment Date, to, but excluding, the next Series E Distribution Payment Date for such Series E Distribution Period.

Series E Distribution Rate” means an annual rate equal to (a) during the Series E Fixed Rate Period, 7.600% of the Series E Liquidation Preference and (b) during the Series E Floating Rate Period, a percentage of the Series E Liquidation Preference equal to the sum of (i) the Three-Month LIBOR, as calculated on each applicable Series E LIBOR Determination Date, and (ii) 5.161%.

Series E Distribution Record Date” has the meaning given such term in Section 5.21(b)(ii)(B).

Series E Distributions” means distributions with respect to Series E Preferred Units pursuant to Section 5.21(b)(ii).

Series E Fixed Rate Period” means the period from and including the date hereof to, but excluding, May 15, 2024.

Series E Floating Rate Period” means the period from and including May 15, 2024 and thereafter until such time as all of the Outstanding Series E Preferred Units are redeemed in accordance with Section 5.21(b)(iv).

 

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Series E Holder” means a Record Holder of Series E Preferred Units.

Series E Junior Securities” means any class or series of Partnership Securities that, with respect to distributions on such Partnership Securities and distributions upon liquidation of the Partnership, ranks junior to the Series E Preferred Units, including but not limited to Common Units, Class A Units, Class B Units and the General Partner Interest, but excluding any Series E Parity Securities and Series E Senior Securities.

Series E LIBOR Determination Date” means the Business Day immediately preceding the first day in each relevant Series E Distribution Period.

Series E Liquidation Preference” means a liquidation preference for each Series E Preferred Unit initially equal to $25.00 per unit (subject to adjustment for any splits, combinations or similar adjustments to the Series E Preferred Units), which liquidation preference shall be subject to increase by the per Series E Preferred Unit amount of any accumulated and unpaid Series E Distributions (whether or not such distributions shall have been declared).

Series E Original Issue Date” means April 25, 2019.

Series E Parity Securities” means the Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series F Preferred Units, Series G Preferred Units and any other class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks on parity with the Series E Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series E Preferred Units” has the meaning given such term in Section 5.21(a).

Series E Rating Event” means a change by any Rating Agency to the Series E Current Criteria, which change results in (a) any shortening of the length of time for which the Series E Current Criteria are scheduled to be in effect with respect to the Series E Preferred Units or (b) a lower Equity Credit being given to the Series E Preferred Units than the Equity Credit that would have been assigned to the Series E Preferred Units by such Rating Agency pursuant to its Series E Current Criteria.

Series E Redemption Date” has the meaning given such term in Section 5.21(b)(iv)(A).

Series E Redemption Notice” has the meaning given such term in Section 5.21(b)(iv)(B).

Series E Redemption Price” has the meaning given such term in Section 5.21(b)(iv)(A).

Series E Senior Securities” means any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks senior to the Series E Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series F Base Liquidation Preference” means a liquidation preference for each Series F Preferred Unit initially equal to $1,000.00 per Series F Preferred Unit.

Series F Current Criteria” means the Equity Credit criteria of a Rating Agency for securities such as the Series F Preferred Units, as such criteria were in effect as of the Series F Original Issue Date.

Series F Distribution Payment Date” means the 15th day of each May and November of each year; provided however, that if any Series F Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series F Distribution Payment Date shall instead be on the immediately succeeding Business Day.

 

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Series F Distribution Period” means a period of time from and including the preceding Series F Distribution Payment Date, to, but excluding, the next Series F Distribution Payment Date for such Series F Distribution Period.

Series F Distribution Rate” means an initial distribution rate for the Series F Preferred Units from and including the date of original issue to, but excluding, the Series F First Call Date equal to 6.750% per annum of the $1,000.00 liquidation preference per Series F Preferred Unit (equal to $67.50 per Series F Preferred Unit per annum). On and after the Series F First Call Date, the distribution rate on the Series F Preferred Units for each Series F Reset Period will equal for each Series F Preferred Unit a percentage of the $1,000.00 liquidation preference for such Series F Preferred Unit equal to the Series F Five-year U.S. Treasury Rate as of the most recent Series F Reset Distribution Determination Date plus a spread of 5.134% per annum.

Series F Distribution Record Date” has the meaning given such term in Section 5.22(b)(ii)(B).

Series F Distributions” means distributions with respect to Series F Preferred Units pursuant to Section 5.22(b)(ii).

Series F First Call Date” means May 15, 2025.

Series F Five-year U.S. Treasury Rate” means, as of any Series F Reset Distribution Determination Date, as applicable, (i) an interest rate (expressed as a decimal) determined to be the per annum rate equal to the arithmetic mean, for the immediately preceding week, of the daily yields to maturity for U.S. Treasury securities with a maturity of five years from the next Series F Reset Date and trading in the public securities markets or (ii) if the H.15(519) is not published during the week preceding the Series F Reset Distribution Determination Date, or does not contain such yields, then the rate will be determined by interpolation between the arithmetic mean, for the immediately preceding week, of the daily yields to maturity for each of the two series of U.S. Treasury securities trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Series F Reset Date following the next succeeding Series F Reset Distribution Determination Date, and (B) the other maturity as close as possible to, but later than, the Series F Reset Date following the next succeeding Series F Reset Distribution Determination Date, in each case as published in the most recent H.15(519) under the caption “Treasury Constant Maturities” as the yield on actively traded U.S. Treasury securities adjusted to constant maturity. If the Series F Five-year U.S. Treasury Rate cannot be determined pursuant to the methods described in clauses (i) or (ii) above, then the Series F Five-year U.S. Treasury Rate will be the same interest rate determined for the immediately preceding Series F Reset Distribution Determination Date, or if this sentence is applicable with respect to the first Series F Reset Distribution Determination Date, 6.750%.

Series F Holder” means a Record Holder of Series F Preferred Units.

Series F Junior Securities” means any class or series of Partnership Securities that, with respect to distributions on such Partnership Securities and distributions upon liquidation of the Partnership, ranks junior to the Series F Preferred Units, including but not limited to Common Units, Class A Units, Class B Units and the General Partner Interest, but excluding any Series F Parity Securities and Series F Senior Securities.

Series F Liquidation Preference” means a liquidation preference for each Series F Preferred Unit initially equal to $1,000.00 per Series F Preferred Unit (subject to adjustment for any splits, combinations or similar adjustments to the Series F Preferred Units), which liquidation preference shall be subject to increase by the per Series F Preferred Unit amount of any accumulated and unpaid Series F Distributions (whether or not such distributions shall have been declared).

Series F Original Issue Date” means January 22, 2020.

 

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Series F Parity Securities” means the Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series G Preferred Units and any other class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks on parity with the Series F Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series F Preferred Units” has the meaning given such term in Section 5.22(a).

Series F Rating Event” means a change by any Rating Agency to the Series F Current Criteria, which change results in (a) any shortening of the length of time for which the Series F Current Criteria are scheduled to be in effect with respect to the Series F Preferred Units or (b) a lower Equity Credit being given to the Series F Preferred Units than the Equity Credit that would have been assigned to the Series F Preferred Units by such Rating Agency pursuant to its Series F Current Criteria.

Series F Redemption Date” has the meaning given such term in Section 5.22(b)(iv)(A).

Series F Redemption Notice” has the meaning given such term in Section 5.22(b)(iv)(B).

Series F Redemption Price” has the meaning given such term in Section 5.22(b)(iv)(A).

Series F Reset Date” means the Series F First Call Date and each date falling on the fifth anniversary of the preceding Series F Reset Date.

Series F Reset Distribution Determination Date” means, in respect of any Series F Reset Period, the day falling two Business Days prior to the beginning of such Series F Reset Period.

Series F Reset Period” means the period from and including the Series F First Call Date to, but excluding, the next following Series F Reset Date and thereafter each period from and including each Series F Reset Date to, but excluding, the next following Series F Reset Date, until such time as all of the Outstanding Series F Preferred Units are redeemed in accordance with Section 5.22(b)(iv).

Series F Senior Securities” means any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks senior to the Series F Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series G Base Liquidation Preference” means a liquidation preference for each Series G Preferred Unit initially equal to $1,000.00 per Series G Preferred Unit.

Series G Current Criteria” means the Equity Credit criteria of a Rating Agency for securities such as the Series G Preferred Units, as such criteria were in effect as of the Series G Original Issue Date.

Series G Distribution Payment Date” means the 15th day of each May and November of each year; provided however, that if any Series G Distribution Payment Date would otherwise occur on a day that is not a Business Day, such Series G Distribution Payment Date shall instead be on the immediately succeeding Business Day.

Series G Distribution Period” means a period of time from and including the preceding Series G Distribution Payment Date, to, but excluding, the next Series G Distribution Payment Date for such Series G Distribution Period.

Series G Distribution Rate” means an initial distribution rate for the Series G Preferred Units from and including the date of original issue to, but excluding, the Series G First Call Date equal to 7.125% per annum of the $1,000.00 liquidation preference per Series G Preferred Unit (equal to $71.25 per Series G Preferred Unit per

 

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annum). On and after the Series G First Call Date, the distribution rate on the Series G Preferred Units for each Series G Reset Period will equal for each Series G Preferred Unit a percentage of the $1,000.00 liquidation preference for such Series G Preferred Unit equal to the Series G Five-year U.S. Treasury Rate as of the most recent Series G Reset Distribution Determination Date plus a spread of 5.306% per annum.

Series G Distribution Record Date” has the meaning given such term in Section 5.23(b)(ii)(B).

Series G Distributions” means distributions with respect to Series G Preferred Units pursuant to Section 5.23(b)(ii).

Series G First Call Date” means May 15, 2030.

Series G Five-year U.S. Treasury Rate” means, as of any Series G Reset Distribution Determination Date, as applicable, (i) an interest rate (expressed as a decimal) determined to be the per annum rate equal to the arithmetic mean, for the immediately preceding week, of the daily yields to maturity for U.S. Treasury securities with a maturity of five years from the next Series G Reset Date and trading in the public securities markets or (ii) if the H.15(519) is not published during the week preceding the Series G Reset Distribution Determination Date, or does not contain such yields, then the rate will be determined by interpolation between the arithmetic mean, for the immediately preceding week, of the daily yields to maturity for each of the two series of U.S. Treasury securities trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Series G Reset Date following the next succeeding Series G Reset Distribution Determination Date, and (B) the other maturity as close as possible to, but later than, the Series G Reset Date following the next succeeding Series G Reset Distribution Determination Date, in each case as published in the most recent H.15(519) under the caption “Treasury Constant Maturities” as the yield on actively traded U.S. Treasury securities adjusted to constant maturity. If the Series G Five-year U.S. Treasury Rate cannot be determined pursuant to the methods described in clauses (i) or (ii) above, then the Series G Five-year U.S. Treasury Rate will be the same interest rate determined for the immediately preceding Series G Reset Distribution Determination Date, or if this sentence is applicable with respect to the first Series G Reset Distribution Determination Date, 7.125%.

Series G Holder” means a Record Holder of Series G Preferred Units.

Series G Junior Securities” means any class or series of Partnership Securities that, with respect to distributions on such Partnership Securities and distributions upon liquidation of the Partnership, ranks junior to the Series G Preferred Units, including but not limited to Common Units, Class A Units, Class B Unit and the General Partner Interest, but excluding any Series G Parity Securities and Series G Senior Securities.

Series G Liquidation Preference” means a liquidation preference for each Series G Preferred Unit initially equal to $1,000.00 per Series G Preferred Unit (subject to adjustment for any splits, combinations or similar adjustments to the Series G Preferred Units), which liquidation preference shall be subject to increase by the per Series G Preferred Unit amount of any accumulated and unpaid Series G Distributions (whether or not such distributions shall have been declared).

Series G Original Issue Date” means January 22, 2020.

Series G Parity Securities” means the Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units and any other class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks on parity with the Series G Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Series G Preferred Units” has the meaning given such term in Section 5.23(a).

 

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Series G Rating Event” means a change by any Rating Agency to the Series G Current Criteria, which change results in (a) any shortening of the length of time for which the Series G Current Criteria are scheduled to be in effect with respect to the Series G Preferred Units or (b) a lower Equity Credit being given to the Series G Preferred Units than the Equity Credit that would have been assigned to the Series G Preferred Units by such Rating Agency pursuant to its Series G Current Criteria.

Series G Redemption Date” has the meaning given such term in Section 5.23(b)(iv)(A).

Series G Redemption Notice” has the meaning given such term in Section 5.23(b)(iv)(B).

Series G Redemption Price” has the meaning given such term in Section 5.23(b)(iv)(A).

Series G Reset Date” means the Series G First Call Date and each date falling on the fifth anniversary of the preceding Series G Reset Date.

Series G Reset Distribution Determination Date” means, in respect of any Series G Reset Period, the day falling two Business Days prior to the beginning of such Series G Reset Period.

Series G Reset Period” means the period from and including the Series G First Call Date to, but excluding, the next following Series G Reset Date and thereafter each period from and including each Series G Reset Date to, but excluding, the next following Series G Reset Date, until such time as all of the Outstanding Series G Preferred Units are redeemed in accordance with Section 5.23(b)(iv).

Series G Senior Securities” means any class or series of Partnership Interests established after the date hereof by the General Partner, the terms of which class or series expressly provide that it ranks senior to the Series G Preferred Units as to distributions and amounts payable upon a dissolution or liquidation pursuant to Article XII.

Transfer Agent” means such bank, trust company or other Person (including the General Partner or one of its Affiliates) as shall be appointed from time to time by the Partnership to act as registrar and transfer agent for the Common Units; provided that if no Transfer Agent is specifically designated for any other Partnership Securities, the General Partner shall act in such capacity. The Transfer Agent for the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the Series F Preferred Units and the Series G Preferred Units shall be American Stock Transfer & Trust Company, LLC, and its successors and assigns, or any other transfer agent and registrar appointed by the General Partner for the Series A Preferred Units, the Series B Preferred Units, the Series C Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the Series F Preferred Units or the Series G Preferred Units, as applicable.

Unit” means a Partnership Security that is designated as a “Unit” and shall include Common Units, Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and Class B Units, but shall not include the General Partner Units (or the General Partner Interest represented thereby) or Class A Units.

Unit Majority” means at least a majority of the Outstanding Units (excluding the Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and Class B Units in respect of matters in which the holders of the Series A Preferred Units, Series B Preferred Units, Series C Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and Class B Units are not entitled to a vote), voting together as a single class.

 

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(b) Section 5.6(a) of the Partnership Agreement is hereby amended and restated in its entirety as follows:

“Section 5.6 Capital Accounts.

(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership Interests held by a nominee in any case in which the nominee has furnished the identity of such owner to the Partnership in accordance with Section 6031(c) of the Code or any other method acceptable to the General Partner) owning a Partnership Interest a separate Capital Account with respect to such Partnership Interest in accordance with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of all Capital Contributions made to the Partnership with respect to such Partnership Interest and (ii) all items of Partnership income and gain (including, without limitation, income and gain exempt from tax) computed in accordance with Section 5.6(b) and allocated with respect to such Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed distributions of cash or property made with respect to such Partnership Interest (provided that the Capital Account of a Series A Holder, a Series B Holder, a Series C Holder, a Series D Holder, a Series E Holder, a Series F Holder or a Series G Holder shall not be reduced by any Series A Distributions, Series B Distributions, Series C Distributions, Series D Distributions, Series E Distributions, Series F Distributions or Series G Distributions it receives) and (y) all items of Partnership deduction and loss computed in accordance with Section 5.6(b) and allocated with respect to such Partnership Interest pursuant to Section 6.1. The Capital Account balance with respect to each Common Unit as of the Effective Date was the Closing Price of the Common Units on the Effective Date. The initial Capital Account Balance in respect of each Series A Preferred Unit on the date hereof is the Series A Liquidation Preference on such date. The initial Capital Account Balance in respect of each Series B Preferred Unit on the date hereof is the Series B Liquidation Preference on such date. The initial Capital Account Balance in respect of each Series C Preferred Unit on the date hereof is the Series C Liquidation Preference on such date. The initial Capital Account Balance in respect of each Series D Preferred Unit on the date hereof is the Series D Liquidation Preference on such date. The initial Capital Account Balance in respect of each Series E Preferred Unit on the date hereof is the Series E Liquidation Preference on such date. The initial Capital Account Balance in respect of each Series F Preferred Unit on the date hereof is the Series F Liquidation Preference on such date. The initial Capital Account Balance in respect of each Series G Preferred Unit on the date hereof is the Series G Liquidation Preference on such date. The initial Capital Account Balance in respect of each Class B Unit on the date hereof is the Class B Unit Price on such date.

(c) Article V of the Partnership Agreement is hereby amended by deleting Section 5.13 in its entirety and replacing with “[Reserved]” and adding a new Section 5.17, Section 5.18, Section 5.19, Section 5.20, Section 5.21, Section 5.22, Section 5.23 and Section 5.24 at the end thereof as follows:

“Section 5.17 Establishment of Series A Preferred Units.

(a) General. The Partnership hereby designates and creates a class of Partnership Securities to be designated as “6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” (the “Series A Preferred Units”), having the preferences, rights, powers, and duties set forth herein, including this Section 5.17. Each Series A Preferred Unit shall be identical in all respects to every other Series A Preferred Unit, except as to the respective dates from which the Series A Liquidation Preference shall increase or from which Series A Distributions may begin accruing, to the extent such dates may differ. The Series A Preferred Units represent perpetual equity interests in the Partnership and shall not give rise to a claim by the Partnership or a Series A Holder for conversion or, except as set forth in Section 5.17(b)(iv), redemption thereof at a particular date.

(b) Rights of Series A Preferred Units. The Series A Preferred Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Series A Preferred Units.

(A) The authorized number of Series A Preferred Units shall be unlimited. Series A Preferred Units that are purchased or otherwise acquired by the Partnership shall be cancelled.

 

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(B) The Series A Preferred Units shall be represented by one or more global Certificates registered in the name of the Depositary or its nominee, and no Series A Holder shall be entitled to receive a definitive Certificate evidencing its Series A Preferred Units, unless (1) requested by a Series A Holder and consented to by the General Partner in its sole discretion, (2) otherwise required by law or (3) the Depositary gives notice of its intention to resign or is no longer eligible to act as such with respect to the Series A Preferred Units and the General Partner shall have not selected a substitute Depositary within 60 calendar days thereafter. So long as the Depositary shall have been appointed and is serving with respect to the Series A Preferred Units, payments and communications made by the Partnership to Series A Holders shall be made by making payments to, and communicating with, the Depositary.

(ii) Distributions.

(A) Distributions on each Outstanding Series A Preferred Unit shall be cumulative and shall accumulate at the applicable Series A Distribution Rate from and including [ ● ], 2021 (or, for any subsequently issued and newly Outstanding Series A Preferred Units, from and including the Series A Distribution Payment Date immediately preceding the issue date of such Series A Preferred Units) until such time as the Partnership pays the Series A Distribution or redeems such Series A Preferred Unit in accordance with Section 5.17(b)(iv), whether or not such Series A Distributions shall have been declared. Series A Holders shall be entitled to receive Series A Distributions from time to time out of any assets of the Partnership legally available for the payment of distributions at the Series A Distribution Rate per Series A Preferred Unit when, as, and, if declared by the General Partner. Series A Distributions, to the extent declared by the General Partner to be paid by the Partnership in accordance with this Section 5.17(b)(ii), shall be paid, in Arrears, on each Series A Distribution Payment Date. Series A Distributions shall accumulate in each Series A Distribution Period from and including the preceding Series A Distribution Payment Date (other than the initial Series A Distribution Period, which shall commence on and include [ ● ], 2021), to, but excluding, the next Series A Distribution Payment Date for such Series A Distribution Period; provided that distributions shall accrue on accumulated but unpaid Series A Distributions at the Series A Distribution Rate. If any Series A Distribution Payment Date otherwise would occur on a date that is not a Business Day, declared Series A Distributions shall be paid on the immediately succeeding Business Day without the accumulation of additional distributions. During the Series A Fixed Rate Period, Series A Distributions shall be payable based on a 360-day year consisting of twelve 30 day months. During the Series A Floating Rate Period, Series A Distributions shall be computed by multiplying the Series A Distribution Rate by a fraction, the numerator of which will be the actual number of days elapsed during that Series A Distribution Period (determined by including the first day of such Series A Distribution Period and excluding the last day, which is the Series A Distribution Payment Date), and the denominator of which will be 360, and by multiplying the result by the aggregate Series A Liquidation Preference of all Outstanding Series A Preferred Units. All Series A Distributions that are (1) accumulated and unpaid or (2) payable by the Partnership pursuant to this Section 5.17(b)(ii) shall be payable without regard to income of the Partnership and shall be treated for federal income tax purposes as guaranteed payments for the use of capital under Section 707(c) of the Code. The guaranteed payment with respect to any Series A Distribution Period shall be for the account of the holders of Series A Preferred Units as of the applicable Series A Distribution Record Date.

(B) Not later than 5:00 p.m., New York City time, on each Series A Distribution Payment Date, the Partnership shall pay those Series A Distributions, if any, that shall have been declared by the General Partner to Series A Holders on the Record Date for the applicable Series A Distribution. The Record Date (the “Series A Distribution Record Date”) for the payment of any Series A Distributions shall be as of the close of business on the first Business Day of the month of the applicable Series A Distribution Payment Date, except that in the case of payments of

 

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Series A Distributions in Arrears, the Series A Distribution Record Date with respect to a Series A Distribution Payment Date shall be such date as may be designated by the General Partner in accordance with this Section 5.17. So long as any Series A Preferred Units are Outstanding, no distribution shall be declared or paid or set aside for payment on any Series A Junior Securities (other than a distribution payable solely in Series A Junior Securities) unless full cumulative Series A Distributions have been or contemporaneously are being paid or set apart for payment on all Outstanding Series A Preferred Units (and distributions on any other Series A Parity Securities) through the most recent respective Series A Distribution Payment Date (and distribution payment date with respect to such Series A Parity Securities, if any); provided, however, notwithstanding anything to the contrary in this Section 5.17(b)(ii)(B), if a distribution period with respect to a class of Series A Junior Securities or Series A Parity Securities is shorter than the Series A Distribution Period, the General Partner may declare and pay regular distributions with respect to such Series A Junior Securities or Series A Parity Securities, so long as, at the time of declaration of such distribution, (1) there are no Series A Distributions in Arrears, and (2) the General Partner expects to have sufficient funds to pay the full distribution in respect of the Series A Preferred Units on the next successive Series A Distribution Payment Date. Accumulated Series A Distributions in Arrears for any past Series A Distribution Period may be declared by the General Partner and paid on any date fixed by the General Partner, whether or not a Series A Distribution Payment Date, to Series A Holders on the Record Date for such payment, which may not be less than 10 days before such payment date. Subject to the next succeeding sentence, if all accumulated Series A Distributions in Arrears on all Outstanding Series A Preferred Units and all accumulated distributions in arrears on any Series A Parity Securities shall not have been declared and paid, or if sufficient funds for the payment thereof shall not have been set apart, payment of accumulated distributions in Arrears on the Series A Preferred Units and accumulated distributions in arrears on any such Series A Parity Securities shall be made in order of their respective distribution payment dates, commencing with the earliest distribution payment date. If less than all distributions payable with respect to all Series A Preferred Units and any other Series A Parity Securities are paid, any partial payment shall be made Pro Rata with respect to the Series A Preferred Units and any such other Series A Parity Securities entitled to a distribution payment at such time in proportion to the aggregate distribution amounts remaining due in respect of such Series A Preferred Units and such other Series A Parity Securities at such time. Subject to Section 12.4 and Section 5.17(b)(v), Series A Holders shall not be entitled to any distribution, whether payable in cash, property or Partnership Securities, in excess of full cumulative Series A Distributions. Except insofar as distributions accrue on the amount of any accumulated and unpaid Series A Distributions as described in Section 5.17(b)(ii)(A), no interest or sum of money in lieu of interest shall be payable in respect of any distribution payment which may be in Arrears on the Series A Preferred Units. So long as the Series A Preferred Units are held of record by the Depositary or its nominee, declared Series A Distributions shall be paid to the Depositary in same-day funds on each Series A Distribution Payment Date or other distribution payment date in the case of payments for Series A Distributions in Arrears.

(C) The Series A Distribution Rate for each Series A Distribution Period in the Series A Floating Rate Period will be determined by the Calculation Agent using Three-Month LIBOR as in effect on the Distribution Determination Date for such Series A Distribution Period. The Calculation Agent then will add the spread of 4.028% per annum to Three-Month LIBOR as determined on the applicable Distribution Determination Date.

Notwithstanding the foregoing:

(A) If the Calculation Agent determines on the relevant Distribution Determination Date that the LIBOR base rate has been discontinued, then the Calculation Agent will use a substitute or successor base rate that it has determined in its sole discretion is most comparable to the LIBOR base rate, provided that if the Calculation Agent determines there is an industry-accepted

 

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substitute or successor base rate, then the Calculation Agent shall use such substitute or successor base rate; and

(B) If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine what business day convention to use, the definition of business day, the Distribution Determination Date to be used and any other relevant methodology for calculating such substitute or successor base rate.

(C) Unless otherwise determined by the General Partner, Series A Distributions shall be deemed to have been paid out of deductions from Available Cash with respect to the Quarter ended immediately preceding the Quarter in which the Series A Distribution is made.

(iii) Voting Rights.

(A) Notwithstanding anything to the contrary in this Agreement, the Series A Preferred Units shall not have any voting rights or rights to consent or approve any action or matter, except as set forth in Section 13.3(c), this Section 5.17(b)(iii) or as otherwise required by the Delaware Act.

(B) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series A Preferred Units, voting as a separate class, the General Partner shall not adopt any amendment to this Agreement that the General Partner determines would have a material adverse effect on the powers, preferences, duties, or special rights of the Series A Preferred Units; provided, however, that (i) subject to Section 5.17(b)(iii)(C), the issuance of additional Partnership Securities (and any amendment to this Agreement in connection therewith) shall not be deemed to constitute such a material adverse effect for purposes of this Section 5.17(b)(iii)(B) and (ii) for purposes of this Section 5.17(b)(iii)(B), no amendment of this Agreement in connection with a merger or other transaction in which the Series A Preferred Units remain Outstanding with the terms thereof materially unchanged in any respect adverse to the Series A Holders (as determined by the General Partner) shall be deemed to materially and adversely affect the powers, preferences, duties, or special rights of the Series A Preferred Units.

(C) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series A Preferred Units, voting as a class together with holders of any other Series A Parity Securities upon which like voting rights have been conferred and are exercisable, the Partnership shall not (x) create or issue any Series A Parity Securities (including any additional Series A Preferred Units) if the cumulative distributions payable on Outstanding Series A Preferred Units (or any Series A Parity Securities, if the holders of such Series A Parity Securities vote as a class together with the Series A Holders pursuant to this Section 5.17(b)(iii)(C)) are in Arrears or (y) create or issue any Series A Senior Securities.

(D) For any matter described in this Section 5.17(b)(iii) in which the Series A Holders are entitled to vote as a class (whether separately or together with the holders of any Series A Parity Securities), such Series A Holders shall be entitled to one vote per Series A Preferred Unit. Any Series A Preferred Units held by the Partnership or any of its Subsidiaries or their controlled Affiliates shall not be entitled to vote.

(E) Notwithstanding Section 5.17(b)(iii)(B) and 5.17(b)(iii)(C), no vote of the Series A Holders shall be required if, at or prior to the time when such action is to take effect, provision is made for the redemption of all Series A Preferred Units at the time Outstanding.

(iv) Optional Redemption; Series A Rating Event.

(A) The Partnership shall have the right (1) at any time, and from time to time, on or after February 15, 2023 or (2) at any time within 120 days after the conclusion of any review or appeal process instituted by the Partnership following the occurrence of a Series A Rating Event, in each

 

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case, to redeem the Series A Preferred Units, which redemption may be in whole or in part (except with respect to a redemption pursuant to clause (2) of this Section 5.17(b)(iv)(A) which shall be in whole but not in part), using any source of funds legally available for such purpose. Any such redemption shall occur on a date set by the General Partner (the “Series A Redemption Date”). The Partnership shall effect any such redemption by paying cash for each Series A Preferred Unit to be redeemed equal to 100% (in the case of a redemption described in clause (1) of this Section 5.17(b)(iv)(A)), or 102% (in the case of a redemption described in clause (2) of this Section 5.17(b)(iv)(A)), of the Series A Liquidation Preference for such Series A Preferred Unit on such Series A Redemption Date plus an amount equal to all unpaid Series A Distributions thereon from the date of issuance to, but excluding, the Series A Redemption Date (whether or not such distributions shall have been declared) (the “Series A Redemption Price”). So long as the Series A Preferred Units to be redeemed are held of record by the Depositary or the nominee of the Depositary, the Series A Redemption Price shall be paid by the Paying Agent to the Depositary on the Series A Redemption Date.

(B) The Partnership shall give notice of any redemption by mail, postage prepaid, not less than 15 days and not more than 60 days before the scheduled Series A Redemption Date to the Series A Holders (as of 5:00 p.m. New York City time on the Business Day next preceding the day on which notice is given) of any Series A Preferred Units to be redeemed as such Series A Holders’ names appear on the books of the Transfer Agent and at the address of such Series A Holders shown therein. Such notice (the “Series A Redemption Notice”) shall state, as applicable: (1) the Series A Redemption Date, (2) the number of Series A Preferred Units to be redeemed and, if less than all Outstanding Series A Preferred Units are to be redeemed, the number (and in the case of Series A Preferred Units in certificated form, the identification) of Series A Preferred Units to be redeemed from such Series A Holder, (3) the Series A Redemption Price, (4) the place where any Series A Preferred Units in certificated form are to be redeemed and shall be presented and surrendered for payment of the Series A Redemption Price therefor (which shall occur automatically if the Certificate representing such Series A Preferred Units is issued in the name of the Depositary or its nominee), and (5) that distributions on the Series A Preferred Units to be redeemed shall cease to accumulate from and after such Series A Redemption Date.

(C) If the Partnership elects to redeem less than all of the Outstanding Series A Preferred Units, the number of Series A Preferred Units to be redeemed shall be determined by the General Partner, and such Series A Preferred Units shall be redeemed by such method of selection as the Depositary shall determine, either Pro Rata or by lot, with adjustments to avoid redemption of fractional Series A Preferred Units. The aggregate Series A Redemption Price for any such partial redemption of the Outstanding Series A Preferred Units shall be allocated correspondingly among the redeemed Series A Preferred Units. The Series A Preferred Units not redeemed shall remain Outstanding and entitled to all the rights, preferences and duties provided in this Section 5.17.

(D) If the Partnership gives or causes to be given a Series A Redemption Notice, the Partnership shall deposit with the Paying Agent funds sufficient to redeem the Series A Preferred Units as to which such Series A Redemption Notice shall have been given, no later than 10:00 a.m. New York City time on the Series A Redemption Date, and shall give the Paying Agent irrevocable instructions and authority to pay the Series A Redemption Price to each Series A Holder whose Series A Preferred Units are to be redeemed upon surrender or deemed surrender (which shall occur automatically if the Certificate representing such Series A Preferred Units is issued in the name of the Depositary or its nominee) of the Certificates therefor as set forth in the Series A Redemption Notice. If a Series A Redemption Notice shall have been given, from and after the Series A Redemption Date, unless the Partnership defaults in providing funds sufficient for such redemption at the time and place specified for payment pursuant to the Series A Redemption Notice, all Series A Distributions on such Series A Preferred Units to be redeemed shall cease to accumulate and all rights of holders of such Series A Preferred Units as Limited

 

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Partners with respect to such Series A Preferred Units to be redeemed shall cease, except the right to receive the Series A Redemption Price, and such Series A Preferred Units shall not thereafter be transferred on the books of the Transfer Agent or be deemed to be Outstanding for any purpose whatsoever. The Series A Holders shall have no claim to the interest income, if any, earned on funds deposited with the Paying Agent. Any funds deposited with the Paying Agent hereunder by the Partnership for any reason, including redemption of Series A Preferred Units, that remain unclaimed or unpaid after one year after the applicable Series A Redemption Date or other payment date, as applicable, shall be, to the extent permitted by law, repaid to the Partnership upon its written request, after which repayment the Series A Holders entitled to such redemption or other payment shall have recourse only to the Partnership.

Notwithstanding any Series A Redemption Notice, there shall be no redemption of any Series A Preferred Units called for redemption until funds sufficient to pay the full Series A Redemption Price of such Series A Preferred Units shall have been deposited by the Partnership with the Paying Agent.

(E) Any Series A Preferred Units that are redeemed or otherwise acquired by the Partnership shall be cancelled. If only a portion of the Series A Preferred Units represented by a Certificate shall have been called for redemption, upon surrender of the Certificate to the Paying Agent (which shall occur automatically if the Certificate representing such Series A Preferred Units is registered in the name of the Depositary or its nominee), the Partnership shall issue and the Paying Agent shall deliver to the Series A Holders a new Certificate (or adjust the applicable book-entry account) representing the number of Series A Preferred Units represented by the surrendered Certificate that have not been called for redemption.

(F) Notwithstanding anything to the contrary in this Section 5.17, in the event that full cumulative distributions on the Series A Preferred Units and any Series A Parity Securities shall not have been paid or declared and set aside for payment, the Partnership shall not be permitted to repurchase, redeem or otherwise acquire, in whole or in part, any Series A Preferred Units or Series A Parity Securities except pursuant to a purchase or exchange offer made on the same relative terms to all Series A Holders and holders of any Series A Parity Securities. Subject to Section 4.9, so long as any Series A Preferred Units are Outstanding, the Partnership shall not be permitted to redeem, repurchase or otherwise acquire any Common Units or any other Series A Junior Securities unless full cumulative distributions on the Series A Preferred Units and any Series A Parity Securities for all prior and the then-ending Series A Distribution Periods, with respect to the Series A Preferred Units, and all prior and then ending distribution periods, with respect to any such Series A Parity Securities, shall have been paid or declared and set aside for payment.

(v) Liquidation Rights. In the event of the dissolution and winding up of the Partnership under Section 12.4 or a sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, either voluntary or involuntary, the Record Holders of the Series A Preferred Units shall be entitled to receive, out of the assets of the Partnership available for distribution to the Partners or any Assignees, prior and in preference to any distribution of any assets of the Partnership to the Record Holders of any other class or series of Partnership Interests (other than Series A Senior Securities or Series A Parity Securities), (A) first, any accumulated and unpaid distributions on the Series A Preferred Units (regardless of whether previously declared) and (B) then, any positive value in each such holder’s Capital Account in respect of such Series A Preferred Units. If in the year of such dissolution and winding up, or sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, any such Record Holder’s Capital Account in respect of such Series A Preferred Units is less than the aggregate Series A Base Liquidation Preference of such Series A Preferred Units, then, notwithstanding anything to the contrary contained in this Agreement, and prior to any other allocation pursuant to this Agreement for such year and any distribution pursuant to the preceding sentence (other than any allocations or distributions made with respect to any other Series A Parity Securities upon which like allocation and distribution rights have been conferred), items of gross

 

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income and gain shall be allocated to all Unitholders then holding Series A Preferred Units, Pro Rata, until the Capital Account in respect of each Outstanding Series A Preferred Unit is equal to the Series A Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation); provided, however, that in the event that like allocation rights have been conferred upon other Series A Parity Securities (including pursuant to Sections 5.18(b)(v), 5.19(b)(v), 5.20(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then items of gross income and gain shall be allocated to all Unitholders then holding Series A Preferred Units and such Series A Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series A Preferred Unit and such Series A Parity Security is equal to the applicable liquidation preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). If in the year of such dissolution and winding up any such Record Holder’s Capital Account in respect of such Series A Preferred Units is less than the aggregate Series A Base Liquidation Preference of such Series A Preferred Units after the application of the preceding sentence, then to the extent permitted by applicable law, but otherwise notwithstanding anything to the contrary contained in this Agreement, items of gross income and gain for any preceding taxable year(s) with respect to which IRS Form 1065 Schedules K-1 have not been filed by the Partnership shall be reallocated to all Unitholders then holding Series A Preferred Units, Pro Rata, until the Capital Account in respect of each such Outstanding Series A Preferred Unit after making allocations pursuant to this and the immediately preceding sentence is equal to the Series A Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation); provided, however, that in the event like allocation rights have been conferred upon other Series A Parity Securities (including pursuant to Sections 5.18(b)(v), 5.19(b)(v), 5.20(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then any such items of gross income and gain shall be reallocated to all Unitholders then holding Series A Preferred Units and such Series A Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series A Preferred Unit and such Series A Parity Security after making allocations pursuant to this and the immediately preceding sentence is equal to the applicable liquidation preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). After such allocations have been made to the Outstanding Series A Preferred Units, and any Series A Parity Securities, as applicable, any remaining Net Termination Gain or Net Termination Loss shall be allocated to the Partners pursuant to Section 6.1(c) or Section 6.1(d), as the case may be. At the time of the dissolution of the Partnership, subject to Section 17-804 of the Delaware Act, the Record Holders of the Series A Preferred Units shall become entitled to receive any distributions in respect of the Series A Preferred Units that are accrued and unpaid as of the date of such distribution, and shall have the status of, and shall be entitled to all remedies available to, a creditor of the Partnership, and such entitlement of the Record Holders of the Series A Preferred Units to such accrued and unpaid distributions shall have priority over any entitlement of any other Partners or Assignees (other than holders of any Series A Senior Securities or Series A Parity Securities) with respect to any distributions by the Partnership to such other Partners or Assignees; provided, however, that the General Partner, as such, will have no liability for any obligations with respect to such distributions to any Record Holder(s) of Series A Preferred Units.

(vi) Rank. The Series A Preferred Units shall each be deemed to rank as to distributions on such Partnership Securities and distributions upon liquidation of the Partnership:

(A) senior to any Series A Junior Securities;

(B) on a parity with any Series A Parity Securities;

(C) junior to any Series A Senior Securities; and

(D) junior to all existing and future indebtedness of the Partnership and other liabilities with respect to assets available to satisfy claims against the Partnership.

(vii) No Sinking Fund. The Series A Preferred Units shall not have the benefit of any sinking fund.

 

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(viii) Record Holders. To the fullest extent permitted by applicable law, the General Partner, the Partnership, the Transfer Agent, and the Paying Agent may deem and treat any Series A Holder as the true, lawful, and absolute owner of the applicable Series A Preferred Units for all purposes, and none of the General Partner, the Partnership, the Transfer Agent or the Paying Agent shall be affected by any notice to the contrary, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which the Series A Preferred Units may be listed or admitted to trading, if any.

(ix) Other Rights; Fiduciary Duties. The Series A Preferred Units and the Series A Holders shall not have any designations, preferences, rights, powers or duties, other than as set forth in this Agreement or as provided by applicable law. Notwithstanding anything to the contrary in this Agreement or any duty existing at law, in equity or otherwise, to the fullest extent permitted by applicable law, neither the General Partner nor any other Indemnitee shall owe any duties, including fiduciary duties, or have any liabilities to Series A Holders, other than the implied contractual covenant of good faith and fair dealing.

“Section 5.18 Establishment of Series B Preferred Units.

(a) General. The Partnership hereby designates and creates a class of Partnership Securities to be designated as “6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” (the “Series B Preferred Units”), having the preferences, rights, powers, and duties set forth herein, including this Section 5.18. Each Series B Preferred Unit shall be identical in all respects to every other Series B Preferred Unit, except as to the respective dates from which the Series B Liquidation Preference shall increase or from which Series B Distributions may begin accruing, to the extent such dates may differ. The Series B Preferred Units represent perpetual equity interests in the Partnership and shall not give rise to a claim by the Partnership or a Series B Holder for conversion or, except as set forth in Section 5.18(b)(iv), redemption thereof at a particular date.

(b) Rights of Series B Preferred Units. The Series B Preferred Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Series B Preferred Units.

(A) The authorized number of Series B Preferred Units shall be unlimited. Series B Preferred Units that are purchased or otherwise acquired by the Partnership shall be cancelled.

(B) The Series B Preferred Units shall be represented by one or more global Certificates registered in the name of the Depositary or its nominee, and no Series B Holder shall be entitled to receive a definitive Certificate evidencing its Series B Preferred Units, unless (1) requested by a Series B Holder and consented to by the General Partner in its sole discretion, (2) otherwise required by law or (3) the Depositary gives notice of its intention to resign or is no longer eligible to act as such with respect to the Series B Preferred Units and the General Partner shall have not selected a substitute Depositary within 60 calendar days thereafter. So long as the Depositary shall have been appointed and is serving with respect to the Series B Preferred Units, payments and communications made by the Partnership to Series B Holders shall be made by making payments to, and communicating with, the Depositary.

(ii) Distributions.

(A) Distributions on each Outstanding Series B Preferred Unit shall be cumulative and shall accumulate at the applicable Series B Distribution Rate from and including [ ● ], 2021 (or, for any subsequently issued and newly Outstanding Series B Preferred Units, from and including the Series B Distribution Payment Date immediately preceding the issue date of such Series B Preferred Units) until such time as the Partnership pays the Series B Distribution or redeems such Series B Preferred Unit in accordance with Section 5.18(b)(iv), whether or not such Series B Distributions shall have been declared. Series B Holders shall be entitled to receive Series B

 

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Distributions from time to time out of any assets of the Partnership legally available for the payment of distributions at the Series B Distribution Rate per Series B Preferred Unit when, as, and, if declared by the General Partner. Series B Distributions, to the extent declared by the General Partner to be paid by the Partnership in accordance with this Section 5.18(b)(ii), shall be paid, in Arrears, on each Series B Distribution Payment Date. Series B Distributions shall accumulate in each Series B Distribution Period from and including the preceding Series B Distribution Payment Date (other than the initial Series B Distribution Period, which shall commence on and include [ ● ], 2021), to, but excluding, the next Series B Distribution Payment Date for such Series B Distribution Period; provided that distributions shall accrue on accumulated but unpaid Series B Distributions at the Series B Distribution Rate. If any Series B Distribution Payment Date otherwise would occur on a date that is not a Business Day, declared Series B Distributions shall be paid on the immediately succeeding Business Day without the accumulation of additional distributions. During the Series B Fixed Rate Period, Series B Distributions shall be payable based on a 360-day year consisting of twelve 30 day months. During the Series B Floating Rate Period, Series B Distributions shall be computed by multiplying the Series B Distribution Rate by a fraction, the numerator of which will be the actual number of days elapsed during that Series B Distribution Period (determined by including the first day of such Series B Distribution Period and excluding the last day, which is the Series B Distribution Payment Date), and the denominator of which will be 360, and by multiplying the result by the aggregate Series B Liquidation Preference of all Outstanding Series B Preferred Units. All Series B Distributions that are (1) accumulated and unpaid or (2) payable by the Partnership pursuant to this Section 5.18(b)(ii) shall be payable without regard to income of the Partnership and shall be treated for federal income tax purposes as guaranteed payments for the use of capital under Section 707(c) of the Code. The guaranteed payment with respect to any Series B Distribution Period shall be for the account of the holders of Series B Preferred Units as of the applicable Series B Distribution Record Date.

(B) Not later than 5:00 p.m., New York City time, on each Series B Distribution Payment Date, the Partnership shall pay those Series B Distributions, if any, that shall have been declared by the General Partner to Series B Holders on the Record Date for the applicable Series B Distribution. The Record Date (the “Series B Distribution Record Date”) for the payment of any Series B Distributions shall be as of the close of business on the first Business Day of the month of the applicable Series B Distribution Payment Date, except that in the case of payments of Series B Distributions in Arrears, the Series B Distribution Record Date with respect to a Series B Distribution Payment Date shall be such date as may be designated by the General Partner in accordance with this Section 5.18. So long as any Series B Preferred Units are Outstanding, no distribution shall be declared or paid or set aside for payment on any Series B Junior Securities (other than a distribution payable solely in Series B Junior Securities) unless full cumulative Series B Distributions have been or contemporaneously are being paid or set apart for payment on all Outstanding Series B Preferred Units (and distributions on any other Series B Parity Securities) through the most recent respective Series B Distribution Payment Date (and distribution payment date with respect to such Series B Parity Securities, if any); provided, however, notwithstanding anything to the contrary in this Section 5.18(b)(ii)(B), if a distribution period with respect to a class of Series B Junior Securities or Series B Parity Securities is shorter than the Series B Distribution Period, the General Partner may declare and pay regular distributions with respect to such Series B Junior Securities or Series B Parity Securities, so long as, at the time of declaration of such distribution, (i) there are no Series B Distributions in Arrears, and (ii) the General Partner expects to have sufficient funds to pay the full distribution in respect of the Series B Preferred Units on the next successive Series B Distribution Payment Date. Accumulated Series B Distributions in Arrears for any past Series B Distribution Period may be declared by the General Partner and paid on any date fixed by the General Partner, whether or not a Series B Distribution Payment Date, to Series B Holders on the Record Date for such payment, which may not be less

 

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than 10 days before such payment date. Subject to the next succeeding sentence, if all accumulated Series B Distributions in Arrears on all Outstanding Series B Preferred Units and all accumulated distributions in arrears on any Series B Parity Securities shall not have been declared and paid, or if sufficient funds for the payment thereof shall not have been set apart, payment of accumulated distributions in Arrears on the Series B Preferred Units and accumulated distributions in arrears on any such Series B Parity Securities shall be made in order of their respective distribution payment dates, commencing with the earliest distribution payment date. If less than all distributions payable with respect to all Series B Preferred Units and any other Series B Parity Securities are paid, any partial payment shall be made Pro Rata with respect to the Series B Preferred Units and any such other Series B Parity Securities entitled to a distribution payment at such time in proportion to the aggregate distribution amounts remaining due in respect of such Series B Preferred Units and such other Series B Parity Securities at such time. Subject to Section 12.4 and Section 5.18(b)(v), Series B Holders shall not be entitled to any distribution, whether payable in cash, property or Partnership Securities, in excess of full cumulative Series B Distributions. Except insofar as distributions accrue on the amount of any accumulated and unpaid Series B Distributions as described in Section 5.18(b)(ii)(A), no interest or sum of money in lieu of interest shall be payable in respect of any distribution payment which may be in Arrears on the Series B Preferred Units. So long as the Series B Preferred Units are held of record by the Depositary or its nominee, declared Series B Distributions shall be paid to the Depositary in same-day funds on each Series B Distribution Payment Date or other distribution payment date in the case of payments for Series B Distributions in Arrears.

(C) The Series B Distribution Rate for each Series B Distribution Period in the Series B Floating Rate Period will be determined by the Calculation Agent using Three-Month LIBOR as in effect on the Distribution Determination Date for such Series B Distribution Period. The Calculation Agent then will add the spread of 4.155% per annum to Three-Month LIBOR as determined on the applicable Distribution Determination Date.

Notwithstanding the foregoing:

(A) If the Calculation Agent determines on the relevant Distribution Determination Date that the LIBOR base rate has been discontinued, then the Calculation Agent will use a substitute or successor base rate that it has determined in its sole discretion is most comparable to the LIBOR base rate, provided that if the Calculation Agent determines there is an industry-accepted substitute or successor base rate, then the Calculation Agent shall use such substitute or successor base rate; and

(B) If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine what business day convention to use, the definition of business day, the Distribution Determination Date to be used and any other relevant methodology for calculating such substitute or successor base rate.

(C) Unless otherwise determined by the General Partner, Series B Distributions shall be deemed to have been paid out of deductions from Available Cash with respect to the Quarter ended immediately preceding the Quarter in which the Series B Distribution is made.

(iii) Voting Rights.

(A) Notwithstanding anything to the contrary in this Agreement, the Series B Preferred Units shall not have any voting rights or rights to consent or approve any action or matter, except as set forth in Section 13.3(c), this Section 5.18(b)(iii) or as otherwise required by the Delaware Act.

(B) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series B Preferred Units, voting as a separate class, the General Partner shall not adopt any amendment to this Agreement that the General Partner determines would have a material adverse effect on the powers, preferences,

 

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duties, or special rights of the Series B Preferred Units; provided, however, that (1) subject to Section 5.18(b)(iii)(C), the issuance of additional Partnership Securities (and any amendment to this Agreement in connection therewith) shall not be deemed to constitute such a material adverse effect for purposes of this Section 5.18(b)(iii)(B) and

(2) for purposes of this Section 5.18(b)(iii)(B), no amendment of this Agreement in connection with a merger or other transaction in which the Series B Preferred Units remain Outstanding with the terms thereof materially unchanged in any respect adverse to the Series B Holders (as determined by the General Partner) shall be deemed to materially and adversely affect the powers, preferences, duties, or special rights of the Series B Preferred Units.

(C) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series B Preferred Units, voting as a class together with holders of any other Series B Parity Securities upon which like voting rights have been conferred and are exercisable, the Partnership shall not (x) create or issue any Series B Parity Securities (including any additional Series B Preferred Units) if the cumulative distributions payable on Outstanding Series B Preferred Units (or any Series B Parity Securities, if the holders of such Series B Parity Securities vote as a class together with the Series B Holders pursuant to this Section 5.18(b)(iii)(C)) are in Arrears or (y) create or issue any Series B Senior Securities.

(D) For any matter described in this Section 5.18(b)(iii) in which the Series B Holders are entitled to vote as a class (whether separately or together with the holders of any Series B Parity Securities), such Series B Holders shall be entitled to one vote per Series B Preferred Unit. Any Series B Preferred Units held by the Partnership or any of its Subsidiaries or their controlled Affiliates shall not be entitled to vote.

(E) Notwithstanding Section 5.18(b)(iii)(B) and Section 5.18(b)(iii)(C), no vote of the Series B Holders shall be required if, at or prior to the time when such action is to take effect, provision is made for the redemption of all Series B Preferred Units at the time Outstanding.

(iv) Optional Redemption; Series B Rating Event.

(A) The Partnership shall have the right (1) at any time, and from time to time, on or after February 15, 2028 or (2) at any time within 120 days after the conclusion of any review or appeal process instituted by the Partnership following the occurrence of a Series B Rating Event, in each case, to redeem the Series B Preferred Units, which redemption may be in whole or in part (except with respect to a redemption pursuant to clause (2) of this Section 5.18(b)(iv)(A) which shall be in whole but not in part), using any source of funds legally available for such purpose. Any such redemption shall occur on a date set by the General Partner (the “Series B Redemption Date”). The Partnership shall effect any such redemption by paying cash for each Series B Preferred Unit to be redeemed equal to 100% (in the case of a redemption described in clause (1) of this Section 5.18(b)(iv)(A)), or 102% (in the case of a redemption described in clause (2) of this Section 5.18(b)(iv)(A)), of the Series B Liquidation Preference for such Series B Preferred Unit on such Series B Redemption Date plus an amount equal to all unpaid Series B Distributions thereon from the date of issuance to, but excluding, the Series B Redemption Date (whether or not such distributions shall have been declared) (the “Series B Redemption Price”). So long as the Series B Preferred Units to be redeemed are held of record by the Depositary or the nominee of the Depositary, the Series B Redemption Price shall be paid by the Paying Agent to the Depositary on the Series B Redemption Date.

(B) The Partnership shall give notice of any redemption by mail, postage prepaid, not less than 15 days and not more than 60 days before the scheduled Series B Redemption Date to the Series B Holders (as of 5:00 p.m. New York City time on the Business Day next preceding the day on which notice is given) of any Series B Preferred Units to be redeemed as such Series B Holders’ names appear on the books of the Transfer Agent and at the address of such Series B

 

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Holders shown therein. Such notice (the “Series B Redemption Notice”) shall state, as applicable: (1) the Series B Redemption Date, (2) the number of Series B Preferred Units to be redeemed and, if less than all Outstanding Series B Preferred Units are to be redeemed, the number (and in the case of Series B Preferred Units in certificated form, the identification) of Series B Preferred Units to be redeemed from such Series B Holder, (3) the Series B Redemption Price, (4) the place where any Series B Preferred Units in certificated form are to be redeemed and shall be presented and surrendered for payment of the Series B Redemption Price therefor (which shall occur automatically if the Certificate representing such Series B Preferred Units is issued in the name of the Depositary or its nominee), and (5) that distributions on the Series B Preferred Units to be redeemed shall cease to accumulate from and after such Series B Redemption Date.

(C) If the Partnership elects to redeem less than all of the Outstanding Series B Preferred Units, the number of Series B Preferred Units to be redeemed shall be determined by the General Partner, and such Series B Preferred Units shall be redeemed by such method of selection as the Depositary shall determine, either Pro Rata or by lot, with adjustments to avoid redemption of fractional Series B Preferred Units. The aggregate Series B Redemption Price for any such partial redemption of the Outstanding Series B Preferred Units shall be allocated correspondingly among the redeemed Series B Preferred Units. The Series B Preferred Units not redeemed shall remain Outstanding and entitled to all the rights, preferences and duties provided in this Section 5.18.

(D) If the Partnership gives or causes to be given a Series B Redemption Notice, the Partnership shall deposit with the Paying Agent funds sufficient to redeem the Series B Preferred Units as to which such Series B Redemption Notice shall have been given, no later than 10:00 a.m. New York City time on the Series B Redemption Date, and shall give the Paying Agent irrevocable instructions and authority to pay the Series B Redemption Price to each Series B Holder whose Series B Preferred Units are to be redeemed upon surrender or deemed surrender (which shall occur automatically if the Certificate representing such Series B Preferred Units is issued in the name of the Depositary or its nominee) of the Certificates therefor as set forth in the Series B Redemption Notice. If a Series B Redemption Notice shall have been given, from and after the Series B Redemption Date, unless the Partnership defaults in providing funds sufficient for such redemption at the time and place specified for payment pursuant to the Series B Redemption Notice, all Series B Distributions on such Series B Preferred Units to be redeemed shall cease to accumulate and all rights of holders of such Series B Preferred Units as Limited Partners with respect to such Series B Preferred Units to be redeemed shall cease, except the right to receive the Series B Redemption Price, and such Series B Preferred Units shall not thereafter be transferred on the books of the Transfer Agent or be deemed to be Outstanding for any purpose whatsoever. The Series B Holders shall have no claim to the interest income, if any, earned on funds deposited with the Paying Agent.

Any funds deposited with the Paying Agent hereunder by the Partnership for any reason, including redemption of Series B Preferred Units, that remain unclaimed or unpaid after one year after the applicable Series B Redemption Date or other payment date, as applicable, shall be, to the extent permitted by law, repaid to the Partnership upon its written request, after which repayment the Series B Holders entitled to such redemption or other payment shall have recourse only to the Partnership. Notwithstanding any Series B Redemption Notice, there shall be no redemption of any Series B Preferred Units called for redemption until funds sufficient to pay the full Series B Redemption Price of such Series B Preferred Units shall have been deposited by the Partnership with the Paying Agent.

(E) Any Series B Preferred Units that are redeemed or otherwise acquired by the Partnership shall be cancelled. If only a portion of the Series B Preferred Units represented by a Certificate shall have been called for redemption, upon surrender of the Certificate to the Paying Agent (which shall occur automatically if the Certificate representing such Series B Preferred Units is registered in the name of the Depositary or its nominee), the Partnership shall issue and the Paying

 

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Agent shall deliver to the Series B Holders a new Certificate (or adjust the applicable book-entry account) representing the number of Series B Preferred Units represented by the surrendered Certificate that have not been called for redemption.

(F) Notwithstanding anything to the contrary in this Section 5.18, in the event that full cumulative distributions on the Series B Preferred Units and any Series B Parity Securities shall not have been paid or declared and set aside for payment, the Partnership shall not be permitted to repurchase, redeem or otherwise acquire, in whole or in part, any Series B Preferred Units or Series B Parity Securities except pursuant to a purchase or exchange offer made on the same relative terms to all Series B Holders and holders of any Series B Parity Securities. Subject to Section 4.9, so long as any Series B Preferred Units are Outstanding, the Partnership shall not be permitted to redeem, repurchase or otherwise acquire any Common Units or any other Series B Junior Securities unless full cumulative distributions on the Series B Preferred Units and any Series B Parity Securities for all prior and the then-ending Series B Distribution Periods, with respect to the Series B Preferred Units, and all prior and then ending distribution periods, with respect to any such Series B Parity Securities, shall have been paid or declared and set aside for payment.

(v) Liquidation Rights. In the event of the dissolution and winding up of the Partnership under Section 12.4 or a sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, either voluntary or involuntary, the Record Holders of the Series B Preferred Units shall be entitled to receive, out of the assets of the Partnership available for distribution to the Partners or any Assignees, prior and in preference to any distribution of any assets of the Partnership to the Record Holders of any other class or series of Partnership Interests (other than Series B Senior Securities or Series B Parity Securities), (A) first, any accumulated and unpaid distributions on the Series B Preferred Units (regardless of whether previously declared) and (B) then, any positive value in each such holder’s Capital Account in respect of such Series B Preferred Units. If in the year of such dissolution and winding up, or sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, any such Record Holder’s Capital Account in respect of such Series B Preferred Units is less than the aggregate Series B Base Liquidation Preference of such Series B Preferred Units, then, notwithstanding anything to the contrary contained in this Agreement, and prior to any other allocation pursuant to this Agreement for such year and any distribution pursuant to the preceding sentence (other than any allocations or distributions made with respect to any other Series B Parity Securities upon which like allocation and distribution rights have been conferred), items of gross income and gain shall be allocated to all Unitholders then holding Series B Preferred Units, Pro Rata, until the Capital Account in respect of each Outstanding Series B Preferred Unit is equal to the Series B Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation); provided, however, that in the event that like allocation rights have been conferred upon other Series B Parity Securities (including pursuant to Sections 5.17(b)(v), 5.19(b)(v), 5.20(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then items of gross income and gain shall be allocated to all Unitholders then holding Series B Preferred Units and such Series B Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series B Preferred Unit and such Series B Parity Security is equal to the applicable liquidation preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). If in the year of such dissolution and winding up any such Record Holder’s Capital Account in respect of such Series B Preferred Units is less than the aggregate Series B Base Liquidation Preference of such Series B Preferred Units after the application of the preceding sentence, then to the extent permitted by applicable law, but otherwise notwithstanding anything to the contrary contained in this Agreement, items of gross income and gain for any preceding taxable year(s) with respect to which IRS Form 1065 Schedules K-1 have not been filed by the Partnership shall be reallocated to all Unitholders then holding Series B Preferred Units, Pro Rata, until the Capital Account in respect of each such Outstanding Series B Preferred Unit after making allocations pursuant to this and the immediately preceding sentence is equal to the Series B Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the

 

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effect of such allocation); provided, however, that in the event like allocation rights have been conferred upon other Series B Parity Securities (including pursuant to Sections 5.17(b)(v), 5.19(b)(v), 5.20(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then any such items of gross income and gain shall be reallocated to all Unitholders then holding Series B Preferred Units and such Series B Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series B Preferred Unit and such Series B Parity Security after making allocations pursuant to this and the immediately preceding sentence is equal to the applicable liquidation preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). After such allocations have been made to the Outstanding Series B Preferred Units, and any Series B Parity Securities, as applicable, any remaining Net Termination Gain or Net Termination Loss shall be allocated to the Partners pursuant to Section 6.1(c) or Section 6.1(d), as the case may be. At the time of the dissolution of the Partnership, subject to Section 17-804 of the Delaware Act, the Record Holders of the Series B Preferred Units shall become entitled to receive any distributions in respect of the Series B Preferred Units that are accrued and unpaid as of the date of such distribution, and shall have the status of, and shall be entitled to all remedies available to, a creditor of the Partnership, and such entitlement of the Record Holders of the Series B Preferred Units to such accrued and unpaid distributions shall have priority over any entitlement of any other Partners or Assignees (other than holders of any Series B Senior Securities or Series B Parity Securities) with respect to any distributions by the Partnership to such other Partners or Assignees; provided, however, that the General Partner, as such, will have no liability for any obligations with respect to such distributions to any Record Holder(s) of Series B Preferred Units.

(vi) Rank. The Series B Preferred Units shall each be deemed to rank as to distributions on such Partnership Securities and distributions upon liquidation of the Partnership:

(A) senior to any Series B Junior Securities;

(B) on a parity with any Series B Parity Securities;

(C) junior to any Series B Senior Securities; and

(D) junior to all existing and future indebtedness of the Partnership and other liabilities with respect to assets available to satisfy claims against the Partnership.

(vii) No Sinking Fund. The Series B Preferred Units shall not have the benefit of any sinking fund.

(viii) Record Holders. To the fullest extent permitted by applicable law, the General Partner, the Partnership, the Transfer Agent, and the Paying Agent may deem and treat any Series B Holder as the true, lawful, and absolute owner of the applicable Series B Preferred Units for all purposes, and none of the General Partner, the Partnership, the Transfer Agent or the Paying Agent shall be affected by any notice to the contrary, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which the Series B Preferred Units may be listed or admitted to trading, if any.

(ix) Other Rights; Fiduciary Duties. The Series B Preferred Units and the Series B Holders shall not have any designations, preferences, rights, powers or duties, other than as set forth in this Agreement or as provided by applicable law. Notwithstanding anything to the contrary in this Agreement or any duty existing at law, in equity or otherwise, to the fullest extent permitted by applicable law, neither the General Partner nor any other Indemnitee shall owe any duties, including fiduciary duties, or have any liabilities to Series B Holders, other than the implied contractual covenant of good faith and fair dealing.

“Section 5.19 Establishment of Series C Preferred Units.

(a) General. The Partnership hereby designates and creates a class of Partnership Securities to be designated as “7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” (the “Series C Preferred Units”), having the preferences, rights, powers, and duties set forth herein, including this Section 5.19. Each Series C Preferred Unit shall be identical in all respects to every other

 

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Series C Preferred Unit, except as to the respective dates from which the Series C Liquidation Preference shall increase or from which Series C Distributions may begin accruing, to the extent such dates may differ. The Series C Preferred Units represent perpetual equity interests in the Partnership and shall not give rise to a claim by the Partnership or a Series C Holder for conversion or, except as set forth in Section 5.19(b)(iv), redemption thereof at a particular date.

(b) Rights of Series C Preferred Units. The Series C Preferred Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Series C Preferred Units.

(A) The authorized number of Series C Preferred Units shall be unlimited. Series C Preferred Units that are purchased or otherwise acquired by the Partnership shall be cancelled.

(B) The Series C Preferred Units shall be represented by one or more global Certificates registered in the name of the Depositary or its nominee, and no Series C Holder shall be entitled to receive a definitive Certificate evidencing its Series C Preferred Units, unless (1) requested by a Series C Holder and consented to by the General Partner in its sole discretion, (2) otherwise required by law or (3) the Depositary gives notice of its intention to resign or is no longer eligible to act as such with respect to the Series C Preferred Units and the General Partner shall have not selected a substitute Depositary within 60 calendar days thereafter. So long as the Depositary shall have been appointed and is serving with respect to the Series C Preferred Units, payments and communications made by the Partnership to Series C Holders shall be made by making payments to, and communicating with, the Depositary.

(ii) Distributions.

(A) Distributions on each Outstanding Series C Preferred Unit shall be cumulative and shall accumulate at the applicable Series C Distribution Rate from and including [ ● ], 2021 (or, for any subsequently issued and newly Outstanding Series C Preferred Units, from and including the Series C Distribution Payment Date immediately preceding the issue date of such Series C Preferred Units) until such time as the Partnership pays the Series C Distribution or redeems such Series C Preferred Unit in accordance with Section 5.19(b)(iv), whether or not such Series C Distributions shall have been declared. Series C Holders shall be entitled to receive Series C Distributions from time to time out of any assets of the Partnership legally available for the payment of distributions at the Series C Distribution Rate per Series C Preferred Unit when, as, and, if declared by the General Partner. Series C Distributions, to the extent declared by the General Partner to be paid by the Partnership in accordance with this Section 5.19(b)(ii), shall be paid, in Arrears, on each Series C Distribution Payment Date. Series C Distributions shall accumulate in each Series C Distribution Period from and including the preceding Series C Distribution Payment Date (other than the initial Series C Distribution Period, which shall commence on and include [ ● ], 2021), to, but excluding, the next Series C Distribution Payment Date for such Series C Distribution Period; provided that distributions shall accrue on accumulated but unpaid Series C Distributions at the Series C Distribution Rate. If any Series C Distribution Payment Date otherwise would occur on a date that is not a Business Day, declared Series C Distributions shall be paid on the immediately succeeding Business Day without the accumulation of additional distributions. During the Series C Fixed Rate Period, Series C Distributions shall be payable based on a 360-day year consisting of twelve 30 day months. During the Series C Floating Rate Period, Series C Distributions shall be computed by multiplying the Series C Distribution Rate by a fraction, the numerator of which will be the actual number of days elapsed during that Series C Distribution Period (determined by including the first day of such Series C Distribution Period and excluding the last day, which is the Series C Distribution Payment Date), and the denominator of which will be 360, and by multiplying the result by the aggregate Series C Liquidation Preference of all Outstanding Series C Preferred Units. All Series C Distributions that are (1) accumulated and unpaid or (2) payable by the Partnership

 

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pursuant to this Section 5.19(b)(ii) shall be payable without regard to income of the Partnership and shall be treated for federal income tax purposes as guaranteed payments for the use of capital under Section 707(c) of the Code. The guaranteed payment with respect to any Series C Distribution Period shall be for the account of the holders of Series C Preferred Units as of the applicable Series C Distribution Record Date.

(B) Not later than 5:00 p.m., New York City time, on each Series C Distribution Payment Date, the Partnership shall pay those Series C Distributions, if any, that shall have been declared by the General Partner to Series C Holders on the Record Date for the applicable Series C Distribution. The Record Date (the “Series C Distribution Record Date”) for the payment of any Series C Distributions shall be as of the close of business on the first Business Day of the month of the applicable Series C Distribution Payment Date, except that in the case of payments of Series C Distributions in Arrears, the Series C Distribution Record Date with respect to a Series C Distribution Payment Date shall be such date as may be designated by the General Partner in accordance with this Section 5.19. So long as any Series C Preferred Units are Outstanding, no distribution shall be declared or paid or set aside for payment on any Series C Junior Securities (other than a distribution payable solely in Series C Junior Securities) unless full cumulative Series C Distributions have been or contemporaneously are being paid or set apart for payment on all Outstanding Series C Preferred Units (and distributions on any other Series C Parity Securities) through the most recent respective Series C Distribution Payment Date (and distribution payment date with respect to such Series C Parity Securities, if any); provided, however, notwithstanding anything to the contrary in this Section 5.19(b)(ii)(B), if a distribution period with respect to a class of Series C Junior Securities or Series C Parity Securities is shorter than the Series C Distribution Period, the General Partner may declare and pay regular distributions with respect to such Series C Junior Securities or Series C Parity Securities, so long as, at the time of declaration of such distribution, (1) there are no Series C Distributions in Arrears, and (2) the General Partner expects to have sufficient funds to pay the full distribution in respect of the Series C Preferred Units on the next successive Series C Distribution Payment Date. Accumulated Series C Distributions in Arrears for any past Series C Distribution Period may be declared by the General Partner and paid on any date fixed by the General Partner, whether or not a Series C Distribution Payment Date, to Series C Holders on the Record Date for such payment, which may not be less than 10 days before such payment date. Subject to the next succeeding sentence, if all accumulated Series C Distributions in Arrears on all Outstanding Series C Preferred Units and all accumulated distributions in arrears on any Series C Parity Securities shall not have been declared and paid, or if sufficient funds for the payment thereof shall not have been set apart, payment of accumulated distributions in Arrears on the Series C Preferred Units and accumulated distributions in arrears on any such Series C Parity Securities shall be made in order of their respective distribution payment dates, commencing with the earliest distribution payment date. If less than all distributions payable with respect to all Series C Preferred Units and any other Series C Parity Securities are paid, any partial payment shall be made Pro Rata with respect to the Series C Preferred Units and any such other Series C Parity Securities entitled to a distribution payment at such time in proportion to the aggregate distribution amounts remaining due in respect of such Series C Preferred Units and such other Series C Parity Securities at such time. Subject to Section 12.4 and Section 5.19(b)(v), Series C Holders shall not be entitled to any distribution, whether payable in cash, property or Partnership Securities, in excess of full cumulative Series C Distributions. Except insofar as distributions accrue on the amount of any accumulated and unpaid Series C Distributions as described in Section 5.19(b)(ii)(A), no interest or sum of money in lieu of interest shall be payable in respect of any distribution payment which may be in Arrears on the Series C Preferred Units. So long as the Series C Preferred Units are held of record by the Depositary or its nominee, declared Series C Distributions shall be paid to the Depositary in same-day funds on each Series C Distribution Payment Date or other distribution payment date in the case of payments for Series C Distributions in Arrears.

 

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(C) The Series C Distribution Rate for each Series C Distribution Period in the Series C Floating Rate Period will be determined by the Calculation Agent using Three-Month LIBOR as in effect on the Distribution Determination Date for such Series C Distribution Period. The Calculation Agent then will add the spread of 4.530% per annum to Three-Month LIBOR as determined on the applicable Distribution Determination Date.

Notwithstanding the foregoing:

(A) If the Calculation Agent determines on the relevant Distribution Determination Date that the LIBOR base rate has been discontinued, then the Calculation Agent will use a substitute or successor base rate that it has determined in its sole discretion is most comparable to the LIBOR base rate, provided that if the Calculation Agent determines there is an industry-accepted substitute or successor base rate, then the Calculation Agent shall use such substitute or successor base rate.

(B) If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine what business day convention to use, the definition of business day, the Distribution Determination Date to be used and any other relevant methodology for calculating such substitute or successor base rate.

(C) Unless otherwise determined by the General Partner, Series C Distributions shall be deemed to have been paid out of deductions from Available Cash with respect to the Quarter ended immediately preceding the Quarter in which the Series C Distribution is made.

(iii) Voting Rights.

(A) Notwithstanding anything to the contrary in this Agreement, the Series C Preferred Units shall not have any voting rights or rights to consent or approve any action or matter, except as set forth in Section 13.3(c), this Section 5.19(b)(iii) or as otherwise required by the Delaware Act.

(B) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series C Preferred Units, voting as a separate class, the General Partner shall not adopt any amendment to this Agreement that the General Partner determines would have a material adverse effect on the powers, preferences, duties, or special rights of the Series C Preferred Units; provided, however, that (1) subject to Section 5.19(b)(iii)(C), the issuance of additional Partnership Securities (and any amendment to this Agreement in connection therewith) shall not be deemed to constitute such a material adverse effect for purposes of this Section 5.19(b)(iii)(B) and (2) for purposes of this Section 5.19(b)(iii)(B), no amendment of this Agreement in connection with a merger or other transaction in which the Series C Preferred Units remain Outstanding with the terms thereof materially unchanged in any respect adverse to the Series C Holders (as determined by the General Partner) shall be deemed to materially and adversely affect the powers, preferences, duties, or special rights of the Series C Preferred Units.

(C) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series C Preferred Units, voting as a class together with holders of any other Series C Parity Securities upon which like voting rights have been conferred and are exercisable, the Partnership shall not (x) create or issue any Series C Parity Securities (including any additional Series C Preferred Units) if the cumulative distributions payable on Outstanding Series C Preferred Units (or any Series C Parity Securities, if the holders of such Series C Parity Securities vote as a class together with the Series C Holders pursuant to this Section 5.19(b)(iii)(C)) are in Arrears or (y) create or issue any Series C Senior Securities.

(D) For any matter described in this Section 5.19(b)(iii) in which the Series C Holders are entitled to vote as a class (whether separately or together with the holders of any Series C Parity

 

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Securities), such Series C Holders shall be entitled to one vote per Series C Preferred Unit. Any Series C Preferred Units held by the Partnership or any of its Subsidiaries or their controlled Affiliates shall not be entitled to vote.

(E) Notwithstanding Sections 5.19(b)(iii)(B) and 5.19(b)(iii)(C), no vote of the Series C Holders shall be required if, at or prior to the time when such action is to take effect, provision is made for the redemption of all Series C Preferred Units at the time Outstanding.

(iv) Optional Redemption; Series C Rating Event.

(A) The Partnership shall have the right (1) at any time, and from time to time, on or after May 15, 2023 or (2) at any time within 120 days after the conclusion of any review or appeal process instituted by the Partnership following the occurrence of a Series C Rating Event, in each case, to redeem the Series C Preferred Units, which redemption may be in whole or in part (except with respect to a redemption pursuant to clause (2) of this Section 5.19(b)(iv)(A) which shall be in whole but not in part), using any source of funds legally available for such purpose. Any such redemption shall occur on a date set by the General Partner (the “Series C Redemption Date”). The Partnership shall effect any such redemption by paying cash for each Series C Preferred Unit to be redeemed equal to 100% (in the case of a redemption described in clause (1) of this Section 5.19(b)(iv)(A)), or 102% (in the case of a redemption described in clause (2) of this Section 5.19(b)(iv)(A)), of the Series C Liquidation Preference for such Series C Preferred Unit on such Series C Redemption Date plus an amount equal to all unpaid Series C Distributions thereon from the date of issuance to, but excluding, the Series C Redemption Date (whether or not such distributions shall have been declared) (the “Series C Redemption Price”). So long as the Series C Preferred Units to be redeemed are held of record by the Depositary or the nominee of the Depositary, the Series C Redemption Price shall be paid by the Paying Agent to the Depositary on the Series C Redemption Date.

(B) The Partnership shall give notice of any redemption by mail, postage prepaid, not less than 30 days and not more than 60 days before the scheduled Series C Redemption Date to the Series C Holders (as of 5:00 p.m. New York City time on the Business Day next preceding the day on which notice is given) of any Series C Preferred Units to be redeemed as such Series C Holders’ names appear on the books of the Transfer Agent and at the address of such Series C Holders shown therein. Such notice (the “Series C Redemption Notice”) shall state, as applicable: (1) the Series C Redemption Date, (2) the number of Series C Preferred Units to be redeemed and, if less than all Outstanding Series C Preferred Units are to be redeemed, the number (and in the case of Series C Preferred Units in certificated form, the identification) of Series C Preferred Units to be redeemed from such Series C Holder, (3) the Series C Redemption Price, (4) the place where any Series C Preferred Units in certificated form are to be redeemed and shall be presented and surrendered for payment of the Series C Redemption Price therefor (which shall occur automatically if the Certificate representing such Series C Preferred Units is issued in the name of the Depositary or its nominee), and (5) that distributions on the Series C Preferred Units to be redeemed shall cease to accumulate from and after such Series C Redemption Date.

(C) If the Partnership elects to redeem less than all of the Outstanding Series C Preferred Units, the number of Series C Preferred Units to be redeemed shall be determined by the General Partner, and such Series C Preferred Units shall be redeemed by such method of selection as the Depositary shall determine, either Pro Rata or by lot, with adjustments to avoid redemption of fractional Series C Preferred Units. The aggregate Series C Redemption Price for any such partial redemption of the Outstanding Series C Preferred Units shall be allocated correspondingly among the redeemed Series C Preferred Units. The Series C Preferred Units not redeemed shall remain Outstanding and entitled to all the rights, preferences and duties provided in this Section 5.19.

(D) If the Partnership gives or causes to be given a Series C Redemption Notice, the Partnership shall deposit with the Paying Agent funds sufficient to redeem the Series C Preferred

 

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Units as to which such Series C Redemption Notice shall have been given, no later than 10:00 a.m. New York City time on the Series C Redemption Date, and shall give the Paying Agent irrevocable instructions and authority to pay the Series C Redemption Price to each Series C Holder whose Series C Preferred Units are to be redeemed upon surrender or deemed surrender (which shall occur automatically if the Certificate representing such Series C Preferred Units is issued in the name of the Depositary or its nominee) of the Certificates therefor as set forth in the Series C Redemption Notice. If a Series C Redemption Notice shall have been given, from and after the Series C Redemption Date, unless the Partnership defaults in providing funds sufficient for such redemption at the time and place specified for payment pursuant to the Series C Redemption Notice, all Series C Distributions on such Series C Preferred Units to be redeemed shall cease to accumulate and all rights of holders of such Series C Preferred Units as Limited Partners with respect to such Series C Preferred Units to be redeemed shall cease, except the right to receive the Series C Redemption Price, and such Series C Preferred Units shall not thereafter be transferred on the books of the Transfer Agent or be deemed to be Outstanding for any purpose whatsoever. The Series C Holders shall have no claim to the interest income, if any, earned on funds deposited with the Paying Agent. Any funds deposited with the Paying Agent hereunder by the Partnership for any reason, including redemption of Series C Preferred Units, that remain unclaimed or unpaid after one year after the applicable Series C Redemption Date or other payment date, as applicable, shall be, to the extent permitted by law, repaid to the Partnership upon its written request, after which repayment the Series C Holders entitled to such redemption or other payment shall have recourse only to the Partnership. Notwithstanding any Series C Redemption Notice, there shall be no redemption of any Series C Preferred Units called for redemption until funds sufficient to pay the full Series C Redemption Price of such Series C Preferred Units shall have been deposited by the Partnership with the Paying Agent.

(E) Any Series C Preferred Units that are redeemed or otherwise acquired by the Partnership shall be cancelled. If only a portion of the Series C Preferred Units represented by a Certificate shall have been called for redemption, upon surrender of the Certificate to the Paying Agent (which shall occur automatically if the Certificate representing such Series C Preferred Units is registered in the name of the Depositary or its nominee), the Partnership shall issue and the Paying Agent shall deliver to the Series C Holders a new Certificate (or adjust the applicable book-entry account) representing the number of Series C Preferred Units represented by the surrendered Certificate that have not been called for redemption.

(F) Notwithstanding anything to the contrary in this Section 5.19, in the event that full cumulative distributions on the Series C Preferred Units and any Series C Parity Securities shall not have been paid or declared and set aside for payment, the Partnership shall not be permitted to repurchase, redeem or otherwise acquire, in whole or in part, any Series C Preferred Units or Series C Parity Securities except pursuant to a purchase or exchange offer made on the same relative terms to all Series C Holders and holders of any Series C Parity Securities. Subject to Section 4.9, so long as any Series C Preferred Units are Outstanding, the Partnership shall not be permitted to redeem, repurchase or otherwise acquire any Common Units or any other Series C Junior Securities unless full cumulative distributions on the Series C Preferred Units and any Series C Parity Securities for all prior and the then-ending Series C Distribution Periods, with respect to the Series C Preferred Units, and all prior and then ending distribution periods, with respect to any such Series C Parity Securities, shall have been paid or declared and set aside for payment.

(v) Liquidation Rights. In the event of the dissolution and winding up of the Partnership under Section 12.4 or a sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, either voluntary or involuntary, the Record Holders of the Series C Preferred Units shall be entitled to receive, out of the assets of the Partnership available for distribution to the Partners or any Assignees, prior and in preference to any distribution of any assets of the Partnership to the Record

 

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Holders of any other class or series of Partnership Interests (other than Series C Senior Securities or Series C Parity Securities), (1) first, any accumulated and unpaid distributions on the Series C Preferred Units (regardless of whether previously declared) and (2) then, any positive value in each such holder’s Capital Account in respect of such Series C Preferred Units. If in the year of such dissolution and winding up, or sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, any such Record Holder’s Capital Account in respect of such Series C Preferred Units is less than the aggregate Series C Base Liquidation Preference of such Series C Preferred Units, then, notwithstanding anything to the contrary contained in this Agreement, and prior to any other allocation pursuant to this Agreement for such year and any distribution pursuant to the preceding sentence (other than any allocations or distributions made with respect to any other Series C Parity Securities upon which like allocation and distribution rights have been conferred), items of gross income and gain shall be allocated to all Unitholders then holding Series C Preferred Units, Pro Rata, until the Capital Account in respect of each Outstanding Series C Preferred Unit is equal to the Series C Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation); provided, however, that in the event that like allocation rights have been conferred upon other Series C Parity Securities (including pursuant to Sections 5.17(b)(v), 5.18(b)(v), 5.20(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then items of gross income and gain shall be allocated to all Unitholders then holding Series C Preferred Units and such Series C Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series C Preferred Unit and such Series C Parity Security is equal to the applicable liquidation preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). If in the year of such dissolution and winding up any such Record Holder’s Capital Account in respect of such Series C Preferred Units is less than the aggregate Series C Base Liquidation Preference of such Series C Preferred Units after the application of the preceding sentence, then to the extent permitted by applicable law, but otherwise notwithstanding anything to the contrary contained in this Agreement, items of gross income and gain for any preceding taxable year(s) with respect to which IRS Form 1065 Schedules K-1 have not been filed by the Partnership shall be reallocated to all Unitholders then holding Series C Preferred Units, Pro Rata, until the Capital Account in respect of each such Outstanding Series C Preferred Unit after making allocations pursuant to this and the immediately preceding sentence is equal to the Series C Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation); provided, however, that in the event like allocation rights have been conferred upon other Series C Parity Securities (including pursuant to Sections 5.17(b)(v), 5.18(b)(v), 5.20(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then any such items of gross income and gain shall be reallocated to all Unitholders then holding Series C Preferred Units and such Series C Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series C Preferred Unit and such Series C Parity Security after making allocations pursuant to this and the immediately preceding sentence is equal to the applicable liquidation preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). After such allocations have been made to the Outstanding Series C Preferred Units and any Series C Parity Securities, as applicable, any remaining Net Termination Gain or Net Termination Loss shall be allocated to the Partners pursuant to Section 6.1(c) or Section 6.1(d), as the case may be. At the time of the dissolution of the Partnership, subject to Section 17-804 of the Delaware Act, the Record Holders of the Series C Preferred Units shall become entitled to receive any distributions in respect of the Series C Preferred Units that are accrued and unpaid as of the date of such distribution, and shall have the status of, and shall be entitled to all remedies available to, a creditor of the Partnership, and such entitlement of the Record Holders of the Series C Preferred Units to such accrued and unpaid distributions shall have priority over any entitlement of any other Partners or Assignees (other than holders of any Series C Senior Securities or Series C Parity Securities) with respect to any distributions by the Partnership to such other Partners or Assignees; provided, however, that the General Partner, as such, will have no liability for any obligations with respect to such distributions to any Record Holder(s) of Series C Preferred Units.

 

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(vi) Rank. The Series C Preferred Units shall each be deemed to rank as to distributions on such Partnership Securities and distributions upon liquidation of the Partnership:

(A) senior to any Series C Junior Securities;

(B) on a parity with any Series C Parity Securities;

(C) junior to any Series C Senior Securities; and

(D) junior to all existing and future indebtedness of the Partnership and other liabilities with respect to assets available to satisfy claims against the Partnership.

(vii) No Sinking Fund. The Series C Preferred Units shall not have the benefit of any sinking fund.

(viii) Record Holders. To the fullest extent permitted by applicable law, the General Partner, the Partnership, the Transfer Agent, and the Paying Agent may deem and treat any Series C Holder as the true, lawful, and absolute owner of the applicable Series C Preferred Units for all purposes, and none of the General Partner, the Partnership, the Transfer Agent or the Paying Agent shall be affected by any notice to the contrary, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which the Series C Preferred Units may be listed or admitted to trading, if any.

(ix) Other Rights; Fiduciary Duties. The Series C Preferred Units and the Series C Holders shall not have any designations, preferences, rights, powers or duties, other than as set forth in this Agreement or as provided by applicable law. Notwithstanding anything to the contrary in this Agreement or any duty existing at law, in equity or otherwise, to the fullest extent permitted by applicable law, neither the General Partner nor any other Indemnitee shall owe any duties, including fiduciary duties, or have any liabilities to Series C Holders, other than the implied contractual covenant of good faith and fair dealing.

“Section 5.20 Establishment of Series D Preferred Units.

(a) General. The Partnership hereby designates and creates a class of Partnership Securities to be designated as “7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” (the “Series D Preferred Units”), having the preferences, rights, powers, and duties set forth herein, including this Section 5.20. Each Series D Preferred Unit shall be identical in all respects to every other Series D Preferred Unit, except as to the respective dates from which the Series D Liquidation Preference shall increase or from which Series D Distributions may begin accruing, to the extent such dates may differ. The Series D Preferred Units represent perpetual equity interests in the Partnership and shall not give rise to a claim by the Partnership or a Series D Holder for conversion or, except as set forth in Section 5.20(b)(iv), redemption thereof at a particular date.

(b) Rights of Series D Preferred Units. The Series D Preferred Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Series D Preferred Units.

(A) The authorized number of Series D Preferred Units shall be unlimited. Series D Preferred Units that are purchased or otherwise acquired by the Partnership shall be cancelled.

(B) The Series D Preferred Units shall be represented by one or more global Certificates registered in the name of the Depositary or its nominee, and no Series D Holder shall be entitled to receive a definitive Certificate evidencing its Series D Preferred Units, unless (1) requested by a Series D Holder and consented to by the General Partner in its sole discretion, (2) otherwise required by law or (3) the Depositary gives notice of its intention to resign or is no longer eligible to act as such with respect to the Series D Preferred Units and the General Partner shall have not selected a substitute Depositary within 60 calendar days thereafter. So long as the Depositary shall have been appointed and is serving with respect to the Series D Preferred Units, payments and

 

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communications made by the Partnership to Series D Holders shall be made by making payments to, and communicating with, the Depositary.

(ii) Distributions.

(A) Distributions on each Outstanding Series D Preferred Unit shall be cumulative and shall accumulate at the applicable Series D Distribution Rate from and including [ ● ], 2021 (or, for any subsequently issued and newly Outstanding Series D Preferred Units, from and including the Series D Distribution Payment Date immediately preceding the issue date of such Series D Preferred Units) until such time as the Partnership pays the Series D Distribution or redeems such Series D Preferred Unit in accordance with Section 5.20(b)(iv), whether or not such Series D Distributions shall have been declared. Series D Holders shall be entitled to receive Series D Distributions from time to time out of any assets of the Partnership legally available for the payment of distributions at the Series D Distribution Rate per Series D Preferred Unit when, as, and, if declared by the General Partner. Series D Distributions, to the extent declared by the General Partner to be paid by the Partnership in accordance with this Section 5.20(b)(ii), shall be paid, in Arrears, on each Series D Distribution Payment Date. Series D Distributions shall accumulate in each Series D Distribution Period from and including the preceding Series D Distribution Payment Date (other than the initial Series D Distribution Period, which shall commence on and include [ ● ], 2021), to, but excluding, the next Series D Distribution Payment Date for such Series D Distribution Period; provided that distributions shall accrue on accumulated but unpaid Series D Distributions at the Series D Distribution Rate. If any Series D Distribution Payment Date otherwise would occur on a date that is not a Business Day, declared Series D Distributions shall be paid on the immediately succeeding Business Day without the accumulation of additional distributions. During the Series D Fixed Rate Period, Series D Distributions shall be payable based on a 360-day year consisting of twelve 30 day months. During the Series D Floating Rate Period, Series D Distributions shall be computed by multiplying the Series D Distribution Rate by a fraction, the numerator of which will be the actual number of days elapsed during that Series D Distribution Period (determined by including the first day of such Series D Distribution Period and excluding the last day, which is the Series D Distribution Payment Date), and the denominator of which will be 360, and by multiplying the result by the aggregate Series D Liquidation Preference of all Outstanding Series D Preferred Units. All Series D Distributions that are (1) accumulated and unpaid or (2) payable by the Partnership pursuant to this Section 5.20(b)(ii) shall be payable without regard to income of the Partnership and shall be treated for federal income tax purposes as guaranteed payments for the use of capital under Section 707(c) of the Code. The guaranteed payment with respect to any Series D Distribution Period shall be for the account of the holders of Series D Preferred Units as of the applicable Series D Distribution Record Date.

(B) Not later than 5:00 p.m., New York City time, on each Series D Distribution Payment Date, the Partnership shall pay those Series D Distributions, if any, that shall have been declared by the General Partner to Series D Holders on the Record Date for the applicable Series D Distribution. The Record Date (the “Series D Distribution Record Date”) for the payment of any Series D Distributions shall be as of the close of business on the first Business Day of the month of the applicable Series D Distribution Payment Date, except that in the case of payments of Series D Distributions in Arrears, the Series D Distribution Record Date with respect to a Series D Distribution Payment Date shall be such date as may be designated by the General Partner in accordance with this Section 5.20. So long as any Series D Preferred Units are Outstanding, no distribution shall be declared or paid or set aside for payment on any Series D Junior Securities (other than a distribution payable solely in Series D Junior Securities) unless full cumulative Series D Distributions have been or contemporaneously are being paid or set apart for payment on all Outstanding Series D Preferred Units (and distributions on any other Series D Parity Securities) through the most recent respective Series D Distribution Payment Date (and

 

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distribution payment date with respect to such Series D Parity Securities, if any); provided, however, notwithstanding anything to the contrary in this Section 5.20(b)(ii)(B), if a distribution period with respect to a class of Series D Junior Securities or Series D Parity Securities is shorter than the Series D Distribution Period, the General Partner may declare and pay regular distributions with respect to such Series D Junior Securities or Series D Parity Securities, so long as, at the time of declaration of such distribution, (1) there are no Series D Distributions in Arrears, and (2) the General Partner expects to have sufficient funds to pay the full distribution in respect of the Series D Preferred Units on the next successive Series D Distribution Payment Date. Accumulated Series D Distributions in Arrears for any past Series D Distribution Period may be declared by the General Partner and paid on any date fixed by the General Partner, whether or not a Series D Distribution Payment Date, to Series D Holders on the Record Date for such payment, which may not be less than 10 days before such payment date. Subject to the next succeeding sentence, if all accumulated Series D Distributions in Arrears on all Outstanding Series D Preferred Units and all accumulated distributions in arrears on any Series D Parity Securities shall not have been declared and paid, or if sufficient funds for the payment thereof shall not have been set apart, payment of accumulated distributions in Arrears on the Series D Preferred Units and accumulated distributions in arrears on any such Series D Parity Securities shall be made in order of their respective distribution payment dates, commencing with the earliest distribution payment date. If less than all distributions payable with respect to all Series D Preferred Units and any other Series D Parity Securities are paid, any partial payment shall be made Pro Rata with respect to the Series D Preferred Units and any such other Series D Parity Securities entitled to a distribution payment at such time in proportion to the aggregate distribution amounts remaining due in respect of such Series D Preferred Units and such other Series D Parity Securities at such time. Subject to Section 12.4 and Section 5.20(b)(v), Series D Holders shall not be entitled to any distribution, whether payable in cash, property or Partnership Securities, in excess of full cumulative Series D Distributions. Except insofar as distributions accrue on the amount of any accumulated and unpaid Series D Distributions as described in Section 5.20(b)(ii)(A), no interest or sum of money in lieu of interest shall be payable in respect of any distribution payment which may be in Arrears on the Series D Preferred Units. So long as the Series D Preferred Units are held of record by the Depositary or its nominee, declared Series D Distributions shall be paid to the Depositary in same-day funds on each Series D Distribution Payment Date or other distribution payment date in the case of payments for Series D Distributions in Arrears.

(C) The Series D Distribution Rate for each Series D Distribution Period in the Series D Floating Rate Period will be determined by the Calculation Agent using Three-Month LIBOR as in effect on the Distribution Determination Date for such Series D Distribution Period. The Calculation Agent then will add the spread of 4.738% per annum to Three-Month LIBOR as determined on the applicable Distribution Determination Date.

Notwithstanding the foregoing:

(A) If the Calculation Agent determines on the relevant Distribution Determination Date that the LIBOR base rate has been discontinued, then the Calculation Agent will use a substitute or successor base rate that it has determined in its sole discretion is most comparable to the LIBOR base rate, provided that if the Calculation Agent determines there is an industry-accepted substitute or successor base rate, then the Calculation Agent shall use such substitute or successor base rate.

(B) If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine what business day convention to use, the definition of business day, the Distribution Determination Date to be used and any other relevant methodology for calculating such substitute or successor base rate.

 

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(C) Unless otherwise determined by the General Partner, Series D Distributions shall be deemed to have been paid out of deductions from Available Cash with respect to the Quarter ended immediately preceding the Quarter in which the Series D Distribution is made.

(iii) Voting Rights.

(A) Notwithstanding anything to the contrary in this Agreement, the Series D Preferred Units shall not have any voting rights or rights to consent or approve any action or matter, except as set forth in Section 13.3(c), this Section 5.20(b)(iii) or as otherwise required by the Delaware Act.

(B) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series D Preferred Units, voting as a separate class, the General Partner shall not adopt any amendment to this Agreement that the General Partner determines would have a material adverse effect on the powers, preferences, duties, or special rights of the Series D Preferred Units; provided, however, that (1) subject to Section 5.20(b)(iii)(C), the issuance of additional Partnership Securities (and any amendment to this Agreement in connection therewith) shall not be deemed to constitute such a material adverse effect for purposes of this Section 5.20(b)(iii)(B) and (2) for purposes of this Section 5.20(b)(iii)(B), no amendment of this Agreement in connection with a merger or other transaction in which the Series D Preferred Units remain Outstanding with the terms thereof materially unchanged in any respect adverse to the Series D Holders (as determined by the General Partner) shall be deemed to materially and adversely affect the powers, preferences, duties, or special rights of the Series D Preferred Units.

(C) Notwithstanding anything to the contrary in this Agreement, without the affirmative vote or consent of the holders of at least 66 2/3% of the Outstanding Series D Preferred Units, voting as a class together with holders of any other Series D Parity Securities upon which like voting rights have been conferred and are exercisable, the Partnership shall not (x) create or issue any Series D Parity Securities (including any additional Series D Preferred Units) if the cumulative distributions payable on Outstanding Series D Preferred Units (or any Series D Parity Securities, if the holders of such Series D Parity Securities vote as a class together with the Series D Holders pursuant to this Section 5.20(b)(iii)(C)) are in Arrears or (y) create or issue any Series D Senior Securities.

(D) For any matter described in this Section 5.20(b)(iii) in which the Series D Holders are entitled to vote as a class (whether separately or together with the holders of any Series D Parity Securities), such Series D Holders shall be entitled to one vote per Series D Preferred Unit. Any Series D Preferred Units held by the Partnership or any of its Subsidiaries or their controlled Affiliates shall not be entitled to vote.

(E) Notwithstanding Sections 5.20(b)(iii)(B) and 5.20(b)(iii)(C), no vote of the Series D Holders shall be required if, at or prior to the time when such action is to take effect, provision is made for the redemption of all Series D Preferred Units at the time Outstanding.

(iv) Optional Redemption; Series D Rating Event.

(A) The Partnership shall have the right (1) at any time, and from time to time, on or after August 15, 2023 or (2) at any time within 120 days after the conclusion of any review or appeal process instituted by the Partnership following the occurrence of a Series D Rating Event, in each case, to redeem the Series D Preferred Units, which redemption may be in whole or in part (except with respect to a redemption pursuant to clause (2) of this Section 5.20(b)(iv)(A) which shall be in whole but not in part), using any source of funds legally available for such purpose. Any such redemption shall occur on a date set by the General Partner (the “Series D Redemption Date”). The Partnership shall effect any such redemption by paying cash for each Series D Preferred Unit to be redeemed equal to 100% (in the case of a redemption described in clause (1) of this Section 5.20(b)(iv)(A)), or 102% (in the case of a redemption described in clause (2) of this Section 5.20(b)(iv)(A)), of the Series D Liquidation Preference for such Series D Preferred Unit on such Series D Redemption Date plus an amount equal to all unpaid Series D Distributions

 

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thereon from the date of issuance to, but excluding, the Series D Redemption Date (whether or not such distributions shall have been declared) (the “Series D Redemption Price”). So long as the Series D Preferred Units to be redeemed are held of record by the Depositary or the nominee of the Depositary, the Series D Redemption Price shall be paid by the Paying Agent to the Depositary on the Series D Redemption Date.

(B) The Partnership shall give notice of any redemption by mail, postage prepaid, not less than 30 days and not more than 60 days before the scheduled Series D Redemption Date to the Series D Holders (as of 5:00 p.m. New York City time on the Business Day next preceding the day on which notice is given) of any Series D Preferred Units to be redeemed as such Series D Holders’ names appear on the books of the Transfer Agent and at the address of such Series D Holders shown therein. Such notice (the “Series D Redemption Notice”) shall state, as applicable: (1) the Series D Redemption Date, (2) the number of Series D Preferred Units to be redeemed and, if less than all Outstanding Series D Preferred Units are to be redeemed, the number (and in the case of Series D Preferred Units in certificated form, the identification) of Series D Preferred Units to be redeemed from such Series D Holder, (3) the Series D Redemption Price, (4) the place where any Series D Preferred Units in certificated form are to be redeemed and shall be presented and surrendered for payment of the Series D Redemption Price therefor (which shall occur automatically if the Certificate representing such Series D Preferred Units is issued in the name of the Depositary or its nominee), and (5) that distributions on the Series D Preferred Units to be redeemed shall cease to accumulate from and after such Series D Redemption Date.

(C) If the Partnership elects to redeem less than all of the Outstanding Series D Preferred Units, the number of Series D Preferred Units to be redeemed shall be determined by the General Partner, and such Series D Preferred Units shall be redeemed by such method of selection as the Depositary shall determine, either Pro Rata or by lot, with adjustments to avoid redemption of fractional Series D Preferred Units. The aggregate Series D Redemption Price for any such partial redemption of the Outstanding Series D Preferred Units shall be allocated correspondingly among the redeemed Series D Preferred Units. The Series D Preferred Units not redeemed shall remain Outstanding and entitled to all the rights, preferences and duties provided in this Section 5.20.

(D) If the Partnership gives or causes to be given a Series D Redemption Notice, the Partnership shall deposit with the Paying Agent funds sufficient to redeem the Series D Preferred Units as to which such Series D Redemption Notice shall have been given, no later than 10:00 a.m. New York City time on the Series D Redemption Date, and shall give the Paying Agent irrevocable instructions and authority to pay the Series D Redemption Price to each Series D Holder whose Series D Preferred Units are to be redeemed upon surrender or deemed surrender (which shall occur automatically if the Certificate representing such Series D Preferred Units is issued in the name of the Depositary or its nominee) of the Certificates therefor as set forth in the Series D Redemption Notice. If a Series D Redemption Notice shall have been given, from and after the Series D Redemption Date, unless the Partnership defaults in providing funds sufficient for such redemption at the time and place specified for payment pursuant to the Series D Redemption Notice, all Series D Distributions on such Series D Preferred Units to be redeemed shall cease to accumulate and all rights of holders of such Series D Preferred Units as Limited Partners with respect to such Series D Preferred Units to be redeemed shall cease, except the right to receive the Series D Redemption Price, and such Series D Preferred Units shall not thereafter be transferred on the books of the Transfer Agent or be deemed to be Outstanding for any purpose whatsoever. The Series D Holders shall have no claim to the interest income, if any, earned on funds deposited with the Paying Agent. Any funds deposited with the Paying Agent hereunder by the Partnership for any reason, including redemption of Series D Preferred Units, that remain unclaimed or unpaid after one year after the applicable Series D Redemption Date or other payment date, as applicable, shall be, to the extent permitted by law, repaid to the Partnership upon its written request, after which repayment the Series D Holders entitled to such redemption

 

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or other payment shall have recourse only to the Partnership. Notwithstanding any Series D Redemption Notice, there shall be no redemption of any Series D Preferred Units called for redemption until funds sufficient to pay the full Series D Redemption Price of such Series D Preferred Units shall have been deposited by the Partnership with the Paying Agent.

(E) Any Series D Preferred Units that are redeemed or otherwise acquired by the Partnership shall be cancelled. If only a portion of the Series D Preferred Units represented by a Certificate shall have been called for redemption, upon surrender of the Certificate to the Paying Agent (which shall occur automatically if the Certificate representing such Series D Preferred Units is registered in the name of the Depositary or its nominee), the Partnership shall issue and the Paying Agent shall deliver to the Series D Holders a new Certificate (or adjust the applicable book-entry account) representing the number of Series D Preferred Units represented by the surrendered Certificate that have not been called for redemption.

(F) Notwithstanding anything to the contrary in this Section 5.20, in the event that full cumulative distributions on the Series D Preferred Units and any Series D Parity Securities shall not have been paid or declared and set aside for payment, the Partnership shall not be permitted to repurchase, redeem or otherwise acquire, in whole or in part, any Series D Preferred Units or Series D Parity Securities except pursuant to a purchase or exchange offer made on the same relative terms to all Series D Holders and holders of any Series D Parity Securities. Subject to Section 4.9, so long as any Series D Preferred Units are Outstanding, the Partnership shall not be permitted to redeem, repurchase or otherwise acquire any Common Units or any other Series D Junior Securities unless full cumulative distributions on the Series D Preferred Units and any Series D Parity Securities for all prior and the then-ending Series D Distribution Periods, with respect to the Series D Preferred Units, and all prior and then ending distribution periods, with respect to any such Series D Parity Securities, shall have been paid or declared and set aside for payment.

(v) Liquidation Rights. In the event of the dissolution and winding up of the Partnership under Section 12.4 or a sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, either voluntary or involuntary, the Record Holders of the Series D Preferred Units shall be entitled to receive, out of the assets of the Partnership available for distribution to the Partners or any Assignees, prior and in preference to any distribution of any assets of the Partnership to the Record Holders of any other class or series of Partnership Interests (other than Series D Senior Securities or Series D Parity Securities), (A) first, any accumulated and unpaid distributions on the Series D Preferred Units (regardless of whether previously declared) and (B) then, any positive value in each such holder’s Capital Account in respect of such Series D Preferred Units. If in the year of such dissolution and winding up, or sale, exchange, or other disposition of all or substantially all of the assets of the Partnership, any such Record Holder’s Capital Account in respect of such Series D Preferred Units is less than the aggregate Series D Base Liquidation Preference of such Series D Preferred Units, then, notwithstanding anything to the contrary contained in this Agreement, and prior to any other allocation pursuant to this Agreement for such year and any distribution pursuant to the preceding sentence (other than any allocations or distributions made with respect to any other Series D Parity Securities upon which like allocation and distribution rights have been conferred), items of gross income and gain shall be allocated to all Unitholders then holding Series D Preferred Units, Pro Rata, until the Capital Account in respect of each Outstanding Series D Preferred Unit is equal to the Series D Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation); provided, however, that in the event that like allocation rights have been conferred upon other Series D Parity Securities (including pursuant to Sections 5.17(b)(v), 5.18(b)(v), 5.19(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then items of gross income and gain shall be allocated to all Unitholders then holding Series D Preferred Units and such Series D Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series D Preferred Unit and such Series D Parity Security is equal to the applicable liquidation preference (and no other allocation

 

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pursuant to this Agreement shall reverse the effect of such allocation). If in the year of such dissolution and winding up any such Record Holder’s Capital Account in respect of such Series D Preferred Units is less than the aggregate Series D Base Liquidation Preference of such Series D Preferred Units after the application of the preceding sentence, then to the extent permitted by applicable law, but otherwise notwithstanding anything to the contrary contained in this Agreement, items of gross income and gain for any preceding taxable year(s) with respect to which IRS Form 1065 Schedules K-1 have not been filed by the Partnership shall be reallocated to all Unitholders then holding Series D Preferred Units, Pro Rata, until the Capital Account in respect of each such Outstanding Series D Preferred Unit after making allocations pursuant to this and the immediately preceding sentence is equal to the Series D Base Liquidation Preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation); provided, however, that in the event like allocation rights have been conferred upon other Series D Parity Securities (including pursuant to Sections 5.17(b)(v), 5.18(b)(v), 5.19(b)(v), 5.21(b)(v), 5.22(b)(v) and 5.23(b)(v)), then any such items of gross income and gain shall be reallocated to all Unitholders then holding Series D Preferred Units and such Series D Parity Securities, Pro Rata, until the Capital Account in respect of each Outstanding Series D Preferred Unit and such Series D Parity Security after making allocations pursuant to this and the immediately preceding sentence is equal to the applicable liquidation preference (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). After such allocations have been made to the Outstanding Series D Preferred Units and any Series D Parity Securities, as applicable, any remaining Net Termination Gain or Net Termination Loss shall be allocated to the Partners pursuant to Section 6.1(c) or Section 6.1(d), as the case may be. At the time of the dissolution of the Partnership, subject to Section 17-804 of the Delaware Act, the Record Holders of the Series D Preferred Units shall become entitled to receive any distributions in respect of the Series D Preferred Units that are accrued and unpaid as of the date of such distribution, and shall have the status of, and shall be entitled to all remedies available to, a creditor of the Partnership, and such entitlement of the Record Holders of the Series D Preferred Units to such accrued and unpaid distributions shall have priority over any entitlement of any other Partners or Assignees (other than holders of any Series D Senior Securities or Series D Parity Securities) with respect to any distributions by the Partnership to such other Partners or Assignees; provided, however, that the General Partner, as such, will have no liability for any obligations with respect to such distributions to any Record Holder(s) of Series D Preferred Units.

(vi) Rank. The Series D Preferred Units shall each be deemed to rank as to distributions on such Partnership Securities and distributions upon liquidation of the Partnership:

(A) senior to any Series D Junior Securities;

(B) on a parity with any Series D Parity Securities;

(C) junior to any Series D Senior Securities; and

(D) junior to all existing and future indebtedness of the Partnership and other liabilities with respect to assets available to satisfy claims against the Partnership.

(vii) No Sinking Fund. The Series D Preferred Units shall not have the benefit of any sinking fund.

(viii) Record Holders. To the fullest extent permitted by applicable law, the General Partner, the Partnership, the Transfer Agent, and the Paying Agent may deem and treat any Series D Holder as the true, lawful, and absolute owner of the applicable Series D Preferred Units for all purposes, and none of the General Partner, the Partnership, the Transfer Agent or the Paying Agent shall be affected by any notice to the contrary, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which the Series D Preferred Units may be listed or admitted to trading, if any.

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Agreement or as provided by applicable law. Notwithstanding anything to the contrary in this Agreement or any duty existing at law, in equity or otherwise, to the fullest extent permitted by applicable law, neither the General Partner nor any other Indemnitee shall owe any duties, including fiduciary duties, or have any liabilities to Series D Holders, other than the implied contractual covenant of good faith and fair dealing.

“Section 5.21 Establishment of Series E Preferred Units.

(a) General. The Partnership hereby designates and creates a class of Partnership Securities to be designated as “7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units” (the “Series E Preferred Units”), having the preferences, rights, powers, and duties set forth herein, including this Section 5.21. Each Series E Preferred Unit shall be identical in all respects to every other Series E Preferred Unit, except as to the respective dates from which the Series E Liquidation Preference shall increase or from which Series E Distributions may begin accruing, to the extent such dates may differ. The Series E Preferred Units represent perpetual equity interests in the Partnership and shall not give rise to a claim by the Partnership or a Series E Holder for conversion or, except as set forth in Section 5.21(b)(iv), redemption thereof at a particular date.

(b) Rights of Series E Preferred Units. The Series E Preferred Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Series E Preferred Units.

(A) The authorized number of Series E Preferred Units shall be unlimited. Series E Preferred Units that are purchased or otherwise acquired by the Partnership shall be cancelled.

(B) The Series E Preferred Units shall be represented by one or more global Certificates registered in the name of the Depositary or its nominee, and no Series E Holder shall be entitled to receive a definitive Certificate evidencing its Series E Preferred Units, unless (1) requested by a Series E Holder and consented to by the General Partner in its sole discretion, (2) otherwise required by law or (3) the Depositary gives notice of its intention to resign or is no longer eligible to act as such with respect to the Series E Preferred Units and the General Partner shall have not selected a substitute Depositary within 60 calendar days thereafter. So long as the Depositary shall have been appointed and is serving with respect to the Series E Preferred Units, payments and communications made by the Partnership to Series E Holders shall be made by making payments to, and communicating with, the Depositary.

(ii) Distributions.

(A) Distributions on each Outstanding Series E Preferred Unit shall be cumulative and shall accumulate at the applicable Series E Distribution Rate from and including [ ● ], 2021 (or, for any subsequently issued and newly Outstanding Series E Preferred Units, from and including the Series E Distribution Payment Date immediately preceding the issue date of such Series E Preferred Units) until such time as the Partnership pays the Series E Distribution or redeems such Series E Preferred Unit in accordance with Section 5.21(b)(iv), whether or not such Series E Distributions shall have been declared. Series E Holders shall be entitled to receive Series E Distributions from time to time out of any assets of the Partnership legally available for the payment of distributions at the Series E Distribution Rate per Series E Preferred Unit when, as, and, if declared by the General Partner. Series E Distributions, to the extent declared by the General Partner to be paid by the Partnership in accordance with this Section 5.21(b)(ii), shall be paid, in Arrears, on each Series E Distribution Payment Date. Series E Distributions shall accumulate in each Series E Distribution Period from and including the preceding Series E Distribution Payment Date (other than the initial Series E Distribution Period, which shall commence on and include [ ● ], 2021), to, but excluding, the next Series E Distribution Payment Date for such Series E Distribution Period; provided that distributions shall accrue on accumulated

 

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but unpaid Series E Distributions at the Series E Distribution Rate. If any Series E Distribution Payment Date otherwise would occur on a date that is not a Business Day, declared Series E Distributions shall be paid on the immediately succeeding Business Day without the accumulation of additional distributions.

During the Series E Fixed Rate Period, Series E Distributions shall be payable based on a 360- day year consisting of twelve 30 day months. During the Series E Floating Rate Period, Series E Distributions shall be computed by multiplying the Series E Distribution Rate by a fraction, the numerator of which will be the actual number of days elapsed during that Series E Distribution Period (determined by including the first day of such Series E Distribution Period and excluding the last day, which is the Series E Distribution Payment Date), and the denominator of which will be 360, and by multiplying the result by the aggregate Series E Liquidation Preference of all Outstanding Series E Preferred Units. All Series E Distributions that are (1) accumulated and unpaid or (2) payable by the Partnership pursuant to this Section 5.21(b)(ii) shall be payable without regard to income of the Partnership and shall be treated for federal income tax purposes as guaranteed payments for the use of capital under Section 707(c) of the Code. The guaranteed payment with respect to any Series E Distribution Period shall be for the account of the holders of Series E Preferred Units as of the applicable Series E Distribution Record Date.

(B) Not later than 5:00