As filed with the Securities and Exchange Commission on March 6, 2015
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
Sanchez Production Partners LP
(Exact name of registrant as specified in its charter)
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Delaware |
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11-3742489 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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1000 Main Street, Suite 3000
Houston, Texas 77002
(713) 783-8000 |
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Charles C. Ward
Chief Financial Officer, Treasurer & Secretary
Sanchez Production Partners GP LLC
1000 Main Street, Suite 3000
Houston, Texas 77002
(713) 783-8000 |
(Address, including zip code, and telephone number, including area code, of registrants principal executive offices) |
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(Name, address, including zip code, and telephone number,
including area code, of agent for service) |
Copy to:
Scott
L. Olson
Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas 77002
(713) 220-4200
Approximate
date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement, as determined in light of market conditions and other factors.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the
following box. ¨
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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¨ (Do not check if a smaller reporting company) |
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Smaller reporting company |
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x |
CALCULATION OF REGISTRATION FEE
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Title of Each Class of
Securities to be Registered |
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Amount to be Registered
(1)(2) |
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Proposed Maximum Offering Price Per Unit
(1)(2) |
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Proposed Maximum Aggregate
Offering Price
(1)(3)(4) |
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Amount of
Registration Fee |
Common Units (1) |
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Partnership Securities |
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Debt Securities |
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Warrants |
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Rights |
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Total |
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$500,000,000 |
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$58,100 |
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(1) |
An indeterminate aggregate amount or number of securities of each class is being registered hereunder, as may from time to time be offered, at indeterminate prices, with an aggregate initial offering price not to exceed
$500,000,000. Securities registered hereunder may be sold separately, together or as units with other securities registered hereunder. The indeterminate aggregate amount or number also includes such securities as may, from time to time, be issued
upon conversion or exchange of securities registered hereunder, to the extent any such securities are, by their terms, convertible into or exchangeable for other securities. |
(2) |
Information is not specified as to each class of securities to be registered pursuant to General Instruction II.D of Form S-3 under the Securities Act of 1933, as amended. |
(3) |
The proposed maximum aggregate price has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act. |
(4) |
Pursuant to General Instruction I.B.6. of Form S-3, if the aggregate market value of the registrants outstanding voting and non-voting common equity held by non-affiliates of the registrant does not equal or
exceed $75,000,000 subsequent to the effective date of this registration statement, then the aggregate offering price of all types of securities that the registrant may issue in primary offerings pursuant to this registration statement in any
12-month period may not exceed one-third of the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. In the event that subsequent to the effective date of this registration statement, the
aggregate market value of the registrants outstanding common units held by non-affiliates equals or exceeds $75,000,000, then the one-third limitation on sales shall not apply to additional sales made in primary offerings pursuant to this
registration statement. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment that specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act 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.
The information in this prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 6, 2015
PROSPECTUS
Sanchez Production Partners
LP
$500,000,000
COMMON UNITS
PARTNERSHIP
SECURITIES
DEBT SECURITIES
WARRANTS
RIGHTS
By this prospectus, we may from time to time offer and sell in one or more offerings any combination of the following securities:
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other partnership securities; |
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debt securities, which may be secured or unsecured senior or subordinated debt securities. |
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warrants to purchase common units, other partnership securities, rights or debt securities; and/or |
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rights to purchase common units, other partnership securities, warrants or debt securities. |
The aggregate
initial offering price of all securities sold by us under this prospectus will not exceed $500,000,000.
This prospectus provides a
general description of the securities we may offer. Supplements to this prospectus will provide the specific terms of the securities that we actually offer, including the offering prices and the net proceeds that we expect to receive. You should
carefully read this prospectus, any applicable prospectus supplement and any information under the headings Where You Can Find More Information and Incorporation by Reference before you invest in any of these securities. This
prospectus may not be used to sell securities unless it is accompanied by a prospectus supplement that describes those securities.
We may
sell these securities to or through underwriters or dealers, to other purchasers and/or through agents. Supplements to this prospectus will specify the names of any underwriters or agents.
Our common units are listed and traded on the NYSE MKT under the symbol SPP. On March 3, 2015, the closing price of our
common units on the NYSE MKT was $1.42 per unit. As of March 3, 2015, the aggregate market value of our outstanding common units held by non-affiliates was $31,464,674, or public float, based on 28,792,584 outstanding common units, of which
22,158,221 were held by non-affiliates, and a per unit price of $1.42 based on the closing sale price of our common units on March 3, 2015. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities in a public
primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75,000,000. We have not sold any securities pursuant to General Instruction I.B.6. of Form S-3 during
the prior 12 calendar month period that ends on and includes the date of this prospectus.
Limited
partnerships are inherently different from corporations. Please read Risk Factors on page 1 of this prospectus before you make an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this
prospectus is , 2015.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or SEC, utilizing a
shelf registration process. Under this shelf registration process, we may offer and sell any combination of the securities described in this prospectus in connection with one or more offerings from time to time, up to a total dollar
amount of $500,000,000.
This prospectus provides you with a general description of the securities we may offer. Each time we offer to
sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering and the securities offered by us in that offering. The prospectus supplement may also add, update or change information
contained in this prospectus. If there is any inconsistency between the information in this prospectus and any prospectus supplement, you should rely on the information provided in the prospectus supplement. This prospectus does not contain all of
the information included in the registration statement. The registration statement filed with the SEC includes exhibits that provide more details about the matters discussed in this prospectus. You should carefully read this prospectus, the related
exhibits filed with the SEC and any prospectus supplement, together with the additional information described below under the headings Where You Can Find More Information and Incorporation by Reference.
You should rely only on the information contained or incorporated by reference in this prospectus and in any accompanying prospectus
supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer of the securities covered by this
prospectus in any state where the offer is not permitted. You should assume that the information appearing in this prospectus, any prospectus supplement and any other document incorporated by reference is accurate only as of the date on the front
cover of those documents. Our business, financial condition, results of operations and prospects may have changed since those dates.
-i-
Under no circumstances should the delivery to you of this prospectus create any implication
that the information contained in this prospectus is correct as of any time after the date of this prospectus.
This prospectus may
not be used to sell securities unless it is accompanied by a prospectus supplement that describes those securities.
Unless otherwise
indicated or unless the context otherwise requires, all references in this prospectus to Sanchez, our partnership, we, our, us or similar references mean Sanchez Production Partners LP and
its consolidated subsidiaries. Such terms also refer to Sanchez Production Partners LLC, our predecessor-in-interest prior to our conversion from a limited liability company into a limited partnership. In this prospectus, we sometimes refer to the
common units, other partnership securities, debt securities, warrants and rights, collectively as the securities.
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference information into this document. This means
that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this prospectus. We incorporate by reference the documents
listed below, other than any portions of the respective filings that were furnished (pursuant to Item 2.02 or Item 7.01 of current reports on Form 8-K or other applicable SEC rules) rather than filed:
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our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC (File No. 1-33147) on March 5, 2015; |
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our Current Reports on Form 8-K, as filed with the SEC (File No. 1-33147) on January 12, 2015 and March 6, 2015; and |
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the description of our common units contained in our registration statement on Form 8-A filed with the SEC (File No. 1-33147) on March 6, 2015, including any amendments and reports filed for the purpose of updating
such description. |
All documents that we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, which we refer to as the Exchange Act, after the date of the initial registration statement of which this prospectus forms a part and prior to effectiveness of such registration statement and after the date of this
prospectus and until our offerings hereunder are completed will be deemed to be incorporated by reference into this prospectus and will be a part of this prospectus from the date of the filing of the document. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any other subsequently filed
document that also is or is deemed to be incorporated by reference in this prospectus modifies or supersedes that statement. Any statement that is modified or superseded will not constitute a part of this prospectus, except as modified or
superseded.
We will provide to each person, including any beneficial owner to whom a prospectus is delivered, a copy of these filings,
other than an exhibit to these filings, unless we have specifically incorporated that exhibit by reference into the filing, upon written or oral request and at no cost. Requests should be made by writing or telephoning us at the following address:
Sanchez Production Partners LP
1000 Main Street, Suite 3000
Houston, Texas 77002
(713)
783-8000
Attn: Investor Relations
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WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement with the SEC under the Securities Act of 1933, as amended, which we refer to as the Securities Act,
that registers the issuance and sale of the securities offered by this prospectus. The registration statement, including the attached exhibits, contains additional relevant information about us. The rules and regulations of the SEC allow us to omit
some information included in the registration statement from this prospectus.
We file annual, quarterly, and other reports and other
information with the SEC under the Exchange Act. You may read and copy any materials we file with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. Our SEC filings are also available to the public through the SECs website at http://www.sec.gov.
General information about us, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as
well as any amendments and exhibits to those reports, are available free of charge through our website at http://www.sanchezpp.com as soon as reasonably practicable after we file them with, or furnish them to, the SEC. Information on our website is
not incorporated into this prospectus or our other securities filings and is not a part of this prospectus.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information contained and incorporated by reference in this prospectus contains forward-looking statements as defined by the
SEC that are subject to a number of risks and uncertainties, many of which are beyond our control. These statements may include discussions about our:
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ability to resume, maintain and grow distributions; |
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oil, natural gas and natural gas liquids reserves; |
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realized oil, natural gas and natural gas liquids prices; |
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lease operating expenses, general and administrative expenses and developmental costs; |
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future operating results; and |
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plans, objectives, expectations, forecasts, outlook and intentions. |
All of these types of
statements, other than statements of historical fact included or incorporated by reference in this prospectus, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as may,
will, could, should, expect, plan, project, intend, anticipate, believe, estimate, predict, potential,
pursue, target, continue, the negative of such terms or other comparable terminology.
The
forward-looking statements contained and incorporated by reference in this prospectus are largely based on our expectations, which reflect estimates and assumptions made by the management of our general partner. These estimates and assumptions
reflect our best judgment based on currently known market conditions and
-iii-
other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In
addition, managements assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained and incorporated in this prospectus are not guarantees of future performance, and
we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors
listed in the Risk Factors section and elsewhere in this prospectus. The forward-looking statements speak only as of the date made, and other than as required by law, we do not intend to publicly update or revise any forward-looking
statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
-iv-
SANCHEZ PRODUCTION PARTNERS LP
Sanchez Production Partners LP, a Delaware limited partnership, was formed in 2005 as a limited liability company until our conversion on
March 6, 2015 into a limited partnership. We are focused on the acquisition, development and production of oil and natural gas properties, as well as midstream assets. Our proved reserves are located in the Cherokee Basin in Oklahoma, the
Woodford Shale in the Arkoma Basin in Oklahoma, the Central Kansas Uplift in Kansas and in Texas and Louisiana. Our primary business objective is to create long-term value and to generate stable cash flows allowing us to invest in our business to
grow our reserves and production.
Our headquarters are located at 1000 Main Street, Suite 3000 in Houston, Texas. Our phone number is
(713) 783-8000, and our website is accessed at www.sanchezpp.com. Information on our website is not incorporated into this prospectus or our other securities filings and is not a part of this prospectus.
RISK FACTORS
The securities to be offered by this prospectus may involve a high degree of risk. When considering an investment in any of the securities,
you should consider carefully all of the risk factors described in any annual report on Form 10-K, quarterly report on Form 10-Q or other document incorporated by reference into this prospectus or filed by us with the SEC after the date of this
prospectus. If applicable, we will include in any prospectus supplement a description of those significant factors that could make the offering described in the prospectus supplement speculative or risky.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying prospectus supplement, the net proceeds received by us from the sale of the securities described
in this prospectus will be added to our general funds and will be used for our general business purposes, which may include, among other things, repayment of indebtedness, capital expenditures and business development, future acquisitions and
additions to working capital. From time to time, we may engage in additional public or private financings of a character and amount which we may deem appropriate.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges for the periods shown. You should read these ratios of earnings to
fixed charges in connection with our consolidated financial statements, including the notes to those statements, incorporated by reference into this prospectus.
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Year Ended December 31, |
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2014 |
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2013 |
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2012 |
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2011 |
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2010 |
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Ratio of earnings to fixed charges |
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6.3x |
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(a)
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(a)
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3.1x |
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(a) |
(a) |
Earnings were inadequate to cover fixed charges. The coverage deficiency totaled $28.6 million, $86.5 million and $276.8 million for the years ended December 31, 2013, 2012 and 2010, respectively.
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For these ratios, earnings represent the aggregate of (a) pre-tax income (loss)
from continuing operations before adjustment for income or loss from equity investees, (b) fixed charges, (c) amortization of capitalized interest, (d) distributed income of equity investees and (e) our share of pre-tax losses of
equity investees for which charges arising from guarantees are included in fixed charges, net of (a) interest capitalized and (b) the minority interest in pre-tax income of subsidiaries that have not incurred fixed charges. Fixed
charges represent the sum of (a) interest expensed and capitalized; (b) amortized premiums, discounts, and capitalized expenses related to indebtedness; and (c) a reasonable approximation of the interest within rent expense.
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CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS OF SANCHEZ
LP
You should read the following discussion of our cash distribution policy in conjunction with the specific assumptions included
in this section. In addition, you should read Note Regarding Forward-Looking Statements and Risk Factors for information regarding statements that do not relate strictly to historical or current facts and certain risks
inherent in our business.
For additional information regarding our historical results of operations, you should refer to our
historical Condensed Consolidated Financial Statements and the notes to those financial statements incorporated by reference into this prospectus.
General
Rationale for Our Cash
Distribution Policy
Upon such time as the board of directors of our general partner determines that we have sufficient
available cash, we intend to make a minimum quarterly distribution of at least $0.05 per unit ($0.20 per unit on an annualized basis) on all of our units. As of March 2, 2015, we do not anticipate having sufficient available cash to be
able to make any distributions on our units during the next 12 months unless we consummate a significant acquisition that generates sufficient available cash, which is a strategy that we are pursuing. The amount of the available cash shortfall
during the next twelve months is anticipated to be at least the full amount of the approximately $1.5 million that would be needed to make a distribution in each quarter.
We expect that if we are successful in executing our business strategy, we will grow our business in a steady and sustainable manner and
distribute to our unitholders a portion of any increase in our earnings resulting from such growth. Our cash distribution policy reflects a judgment that our unitholders will be better served by our distributing rather than retaining a substantial
amount of the cash derived from our earnings. However, since it will be our policy to set our distributions based on the level of success of our operations, the actual amount of cash that we distribute on our common units will depend principally on
the amount of earnings that we can generate from our operations. In addition, as we discuss below, our ability to pay distributions is subject to various restrictions, as well as other factors.
We established the minimum quarterly distribution of $0.05 per unit in connection with entering into a Shared Services Agreement with SP
Holdings, LLC (SP Holdings), the sole member of our general partner, in May 2014 (the Services Agreement). At that time, our common unit price had historically been trading on the NYSE MKT around $2.00 per common unit. We
desired to have an approximate yield of 10% on its common units, which is the midpoint of the range for typical master limited partnership yields.
Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy
There is no guarantee that we will make quarterly cash distributions to our unitholders. We do not have a legal or contractual obligation to
pay quarterly distributions at our minimum quarterly distribution rate or at any other rate. Our cash distribution policy is subject to certain restrictions and may be changed at any time. The reasons for such uncertainties in our stated cash
distribution policy include the following factors:
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Our ability to make cash distributions may be limited by certain covenants in our revolving credit facility. Should we be unable to satisfy these covenants, we will be unable to make cash distributions notwithstanding
our cash distribution policy. |
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Our general partner will have the authority to establish cash reserves for the prudent conduct of our business, including for future cash distributions to our unitholders, and the establishment of or increase in those
reserves could result in a reduction in cash distributions from levels that we currently anticipate pursuant to our stated cash distribution policy. Our partnership agreement does not set a limit on the amount of cash reserves that our general
partner may establish. Any decision to establish cash reserves made by our general partner in good faith will be binding on our unitholders. |
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Prior to making any distribution on the common units, and pursuant to the Services Agreement, we will pay SP Holdings an administrative fee and reimburse our general partner and its affiliates, including SP Holdings,
for all direct and indirect expenses they incur on our behalf. Our partnership agreement does not set a limit on the amount of expenses for which our general partner and its affiliates may be reimbursed. These expenses may include salary, bonus,
incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to our general partner by its affiliates. We currently estimate that the aggregate amount of fees and reimbursed expenses
pursuant to the Services Agreement will be $3.9 million annually. Our partnership agreement provides that our general partner will determine in good faith the expenses that are allocable to us. The reimbursement of expenses and payment of fees, if
any, to our general partner and its affiliates will reduce our ability to pay distributions to our unitholders. |
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Even if our cash distribution policy is not modified or revoked, the amount of distributions that we pay under our cash distribution policy and the decision to make any distribution is determined by our general partner.
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Under Section 17-607 of the Delaware Act, we may not make a distribution if the distribution would cause our liabilities to exceed the fair value of our assets. |
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We may lack sufficient cash to pay distributions to our unitholders due to cash flow shortfalls attributable to a number of operational, commercial or other factors as well as increases in our operating or general and
administrative expenses, principal and interest payments on our outstanding debt, tax expenses, working capital requirements and anticipated cash needs. |
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If we make distributions out of capital surplus, as opposed to operating surplus, any such distributions would constitute a return of capital and would result in a reduction in the minimum quarterly distribution and the
target distribution levels. Please read Provisions of the Partnership Agreement Relating to Cash DistributionsAdjustment to the Minimum Quarterly Distribution and Target Distribution Levels. We do not anticipate that we will make
any distributions from capital surplus. |
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Our ability to make distributions to our unitholders depends on the performance of our assets and subsidiaries and their ability to distribute cash to us. The ability of our subsidiaries to make distributions to us may
be restricted by, among other things, the provisions of future indebtedness, applicable state limited liability company laws and other laws and regulations. |
Our Ability to Grow may be Dependent on Our Ability to Access External Expansion Capital
We expect to generally distribute a significant percentage of our cash from operations to our unitholders on a quarterly basis, after the
establishment of cash reserves and payment of our expenses. Therefore, our growth may not be as fast as businesses that reinvest most or all of their cash to expand ongoing operations. Moreover, our future growth may be slower than our historical
growth. We expect that we will rely primarily upon external financing sources, including bank borrowings and issuances of debt and equity interests, to fund our expansion capital expenditures. To the extent we are unable to finance growth
externally, our cash distribution policy will significantly impair our ability to grow.
Our Minimum Quarterly Distribution
Pursuant to our distribution policy, upon such time as our general partners board of directors determines that we have
sufficient available cash, we intend to declare a minimum quarterly distribution of $0.05 per unit for each complete quarter, or $0.20 per unit on an annualized basis. The payment of the full minimum quarterly distribution on all of our common units
outstanding as of March 6, 2015 would require us to have earnings providing amounts available for distribution of approximately $1.5 million per quarter, or $5.9 million per year. Our ability to make cash distributions at the minimum quarterly
distribution rate will be subject to the factors described above under GeneralLimitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy.
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The table below sets forth the number of common units outstanding as of March 6, 2015 and the
earnings needed to pay the aggregate minimum quarterly distribution on all of such units for a single fiscal quarter and a four quarter period:
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Number of Units |
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Distributions |
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One Quarter |
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Annualized |
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(in thousands) |
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Publicly held common units |
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23,368,826 |
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$ |
1,168 |
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$ |
4,673 |
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Common units held by affiliates of SOG |
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6,011,362 |
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301 |
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1,202 |
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Total |
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29,380,188 |
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$ |
1,469 |
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$ |
5,876 |
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SP Holdings is the initial holder of the incentive distribution rights, which entitle the holder to increasing
percentages, up to a maximum of 35.5%, of the cash we distribute in excess of $0.0875 per unit per quarter.
We expect to pay our
distributions on or about the last day of each of February, May, August and November to holders of record on or about the 15th day of each such month. If the distribution date does not fall on a business day, we will make the distribution on the
business day immediately preceding the indicated distribution date.
For each of the eight quarters ended December 31, 2014, we had no
cash available to make a distribution on our common units, with the shortfall being at least the full amount of the approximate $1.5 million that would have been needed to make a distribution in each such quarter. We do not anticipate being able to
make the minimum quarterly distribution on our common units until we acquire assets that generate cash, sell existing assets for cash or undertake a recapitalization event that results in us having additional available cash, none of which we
anticipate occurring before March 31, 2015. In addition to the limitations on our availability to make distributions discussed above under General, please also see Item 1A. Risk FactorsRisk Related to Our Distributions
to Unitholders in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 incorporated by reference herein regarding the risks involved in our being able to make distributions, including:
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our having insufficient cash flow from operations; |
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our reserve-based credit facility, which may limit our ability to make distributions; |
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significant declines in natural gas prices that reduce our ability to invest in new drilling opportunities which would generate cash flow to make distributions; |
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our incurrence of substantial capital expenditures that reduce cash available for distribution; |
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estimating maintenance capital expenditures higher than actual capital expenditures, which would reduce the cash available for distribution; |
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hedging activities that result in financial losses and reduced cash flow to make distributions; and |
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the lack of acquisitions, which may limit any increases in distributions. |
-5-
PROVISIONS OF THE PARTNERSHIP AGREEMENT RELATING TO CASH
DISTRIBUTIONS
Set forth below is a summary of the significant provisions of our partnership agreement that relate to cash
distributions.
Distributions of Available Cash
General
Our
partnership agreement requires that, on or about the last day of each of February, May, August and November, we distribute all of our available cash to unitholders of record on the applicable record date.
Definition of Available Cash
Available cash generally means, for any quarter, all cash on hand at the end of that quarter:
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less, the amount of cash reserves established by our general partner to: |
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provide for the proper conduct of our business (including cash reserves for our future capital expenditures and anticipated future debt service requirements subsequent to that quarter); |
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comply with applicable law, any of our debt instruments or other agreements; or |
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provide funds for distributions to our unitholders for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for distributions if the effect of the establishment of
such reserves will prevent us from distributing the minimum quarterly distribution on all common units); |
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plus, if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the
end of such quarter. |
The purpose and effect of the last bullet point above is to allow our general partner, if it so
decides, to use cash from working capital borrowings made after the end of the quarter but on or before the date of determination of available cash for that quarter to pay distributions to unitholders. Under our partnership agreement, working
capital borrowings are generally borrowings that are made under a credit facility, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to unitholders, and
with the intent of the borrower to repay such borrowings within twelve months with funds other than from additional working capital borrowings.
Operating Surplus and Capital Surplus
General
Any
distributions that we make will be characterized as made from operating surplus or capital surplus. Distributions from operating surplus are made differently than cash distributions that we would make from capital surplus.
Operating surplus distributions will be made to our unitholders and, if we make quarterly distributions above the first target distribution level described below, to the holder of our incentive distribution rights. We do not anticipate that we will
make any distributions from capital surplus. In such an event, however, any capital surplus distribution would be made pro rata to all unitholders, but the holder of the incentive distribution rights would generally not participate in any capital
surplus distributions with respect to those rights.
In determining operating surplus and capital surplus, we will only take into account
our proportionate share of our consolidated subsidiaries, provided they are not wholly owned, and our proportionate share of entities accounted for under the equity method.
-6-
Operating Surplus
We define operating surplus as:
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$20.0 million (as described below); plus |
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all of our cash receipts, excluding cash from interim capital transactions (as defined below), provided that cash receipts from the termination of a commodity hedge or interest rate hedge prior to its specified
termination date shall be amortized in operating surplus in equal quarterly installments over the remaining scheduled term of such commodity hedge or interest rate hedge; plus |
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working capital borrowings made after the end of a quarter but on or before the date of determination of operating surplus for that quarter; plus |
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cash distributions (including incremental distributions on incentive distribution rights) paid in respect of equity issued, other than equity issued in connection with consummating our initial public offering, to
finance all or a portion of expansion capital expenditures in respect of the period from the date that we enter into a binding obligation to commence the replacement, improvement, addition, expansion, acquisition, construction or development of a
capital asset and ending on the earlier to occur of the date the capital asset commences commercial service and the date that it is abandoned or disposed of; plus |
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cash distributions (including incremental distributions on incentive distribution rights) paid in respect of equity issued, other than equity issued in connection with our initial public offering, to pay interest on
debt incurred, or to pay distributions on equity issued, to finance the expansion capital expenditures referred to in the prior bullet; less |
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all of our operating expenditures (as defined below); less |
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the amount of cash reserves established by our general partner to provide funds for future operating expenditures; less |
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all working capital borrowings not repaid within twelve months after having been incurred, or repaid within such twelve-month period with the proceeds of additional working capital borrowings; less |
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any cash loss realized on disposition of an investment capital expenditure. |
As described
above, operating surplus does not reflect actual cash on hand that is available for distribution to our unitholders and is not limited to cash generated by our operations. For example, it includes a provision that will enable us, if we choose, to
distribute as operating surplus up to $20.0 million of cash we receive in the future from non-operating sources such an asset sales, issuances of securities and long-term borrowings that would otherwise be distributed as capital surplus. In
addition, the effect of including, as described above, certain cash distributions on equity interests in operating surplus will be to increase operating surplus by the amount of any such cash distributions. As a result, we may also distribute as
operating surplus up to the amount of any such cash that we receive from non-operating sources.
The proceeds of working capital
borrowings increase operating surplus and repayments of working capital borrowings are generally operating expenditures (as described below) and thus reduce operating surplus when repayments are made. However, if working capital borrowings, which
increase operating surplus, are not repaid during the twelve-month period following the borrowing, they will be deemed repaid at the end of such period, thus decreasing operating surplus at such time. When such working capital borrowings are in fact
repaid, they will not be treated as a further reduction in operating surplus because operating surplus will have been previously reduced by the deemed repayment.
We define interim capital transactions as (i) borrowings, refinancings or refundings of indebtedness (other than working capital
borrowings and items purchased on open account or for a deferred purchase price in the ordinary course of business) and sales of debt securities, (ii) issuances of equity securities and (iii) sales or other
-7-
dispositions of assets, other than sales or other dispositions of inventory, accounts receivable and other assets in the ordinary course of business and sales or other dispositions of assets as
part of normal asset retirements or replacements.
We define operating expenditures as all of our cash expenditures, including, but not
limited to, taxes, amounts paid under the Services Agreement, reimbursements of expenses of our general partner and its affiliates, director, officer and employee compensation, debt service payments, payments made in the ordinary course of business
under interest rate hedge contracts and commodity hedge contracts (provided that payments made in connection with the termination of any interest rate hedge contract or commodity hedge contract prior to the expiration of its settlement or
termination date specified therein will be amortized in operating expenditures in equal quarterly installments over the remaining scheduled life of such interest rate hedge contract or commodity hedge contract and amounts paid in connection with the
initial purchase of a rate hedge contract or a commodity hedge contract will be amortized over the life of such rate hedge contract or commodity hedge contract), estimated maintenance capital expenditures (as discussed in further detail below), and
repayment of working capital borrowings; provided, however, that operating expenditures will not include:
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repayments of working capital borrowings where such borrowings have previously been deemed to have been repaid (as described above); |
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payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness other than working capital borrowings; |
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expansion capital expenditures; |
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actual maintenance capital expenditures; |
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investment capital expenditures; |
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payment of transaction expenses (including taxes) relating to interim capital transactions; |
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distributions to our partners; or |
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repurchases of partnership interests (excluding repurchases we make to satisfy obligations under employee benefit plans). |
Capital Surplus
Capital surplus is defined in our partnership agreement as any distribution of available cash in excess of our cumulative operating surplus.
Accordingly, except as described above, capital surplus would generally be generated by:
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borrowings other than working capital borrowings; |
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sales of our equity and debt securities; and |
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sales or other dispositions of assets, other than inventory, accounts receivable and other assets sold in the ordinary course of business or as part of ordinary course retirement or replacement of assets.
|
Characterization of Cash Distributions
Our partnership agreement requires that we treat all available cash distributed as coming from operating surplus until the sum of all available
cash distributed since the closing of our initial public offering equals the operating surplus from the closing of our initial public offering through the end of the quarter immediately preceding that distribution. Our partnership agreement requires
that we treat any amount distributed in excess of operating surplus, regardless of its source, as capital surplus. We do not anticipate that we will make any distributions from capital surplus.
-8-
Capital Expenditures
Expansion capital expenditures are cash expenditures incurred for acquisitions or capital improvements that we expect will increase our
operating capacity, operating income or asset base over the long term. Examples of expansion capital expenditures include the construction, development or acquisition of assets associated with the upstream and midstream business to the extent such
capital expenditures are expected to expand our operating capacity, our operating income or our asset base. Expansion capital expenditures include interest payments (and related fees) on debt incurred and distributions on equity issued to finance
all or a portion of expansion capital expenditures in respect of the period from the date that we enter into a binding obligation to commence the replacement, improvement, addition, expansion acquisition, construction, development or capital
contribution of a capital asset and ending on the earlier to occur of the date that such capital improvement commences commercial service and the date that such capital improvement is abandoned or disposed of.
Maintenance capital expenditures are cash expenditures made to maintain, over the long-term, our operating capacity, operating income or asset
base. Examples of maintenance capital expenditures are expenditures to develop and replace our oil and natural gas reserves as well as the repair, refurbishment and replacement of gathering and transportation assets, to maintain equipment
reliability, integrity and safety and to address environmental laws and regulations.
Because our maintenance capital expenditures can be
very large and irregular, the amount of our actual maintenance capital expenditures may differ substantially from period to period, which could cause similar fluctuations in the amounts of operating surplus and cash available for distribution to our
unitholders if we subtracted actual maintenance capital expenditures from operating surplus. As a result, to eliminate the effect on operating surplus of these fluctuations, our partnership agreement requires that an estimate of the average
quarterly maintenance capital expenditures necessary to maintain our asset base over the long-term be subtracted from operating surplus each quarter as opposed to the actual amounts spent. The amount of estimated maintenance capital expenditures
deducted from operating surplus is subject to review and change by our board of directors at least once a year. The estimate is made at least annually and whenever an event occurs that is likely to result in a material adjustment to the amount of
our future estimated maintenance capital expenditures, such as a major acquisition or the introduction of new governmental regulations that will impact our business. For purposes of calculating operating surplus, any adjustment to this estimate will
be prospective only.
The use of estimated maintenance capital expenditures in calculating operating surplus has the following effects:
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it reduces the risk that maintenance capital expenditures in any one quarter will be large enough to render operating surplus less than the minimum quarterly distribution to be paid on all the units for that quarter and
subsequent quarters; |
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it increases our ability to distribute as operating surplus cash we receive from non-operating sources; |
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it is more difficult for us to raise our distribution above the minimum quarterly distribution and pay distributions on our incentive distribution rights; and |
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it reduces the likelihood that a large maintenance capital expenditure during one quarterly distribution period will prevent the payment of a distribution on the incentive distribution rights in respect of any quarterly
distribution period since the effect of an estimate is to spread the expected expense over several periods, thereby mitigating the effect of the actual payment of the expenditure on any single period. |
Investment capital expenditures are those capital expenditures that are neither maintenance capital expenditures nor expansion capital
expenditures. Investment capital expenditures largely will consist of capital expenditures made for investment purposes. Examples of investment capital expenditures include traditional capital expenditures for investment purposes, such as purchases
of securities, as well as other capital expenditures that might be made in lieu of such traditional investment capital expenditures, such as the
-9-
acquisition of a capital asset for investment purposes or development of facilities that are in excess of the maintenance of our existing operating capacity or operating income, but that are not
expected to expand our operating capacity or operating income over the long term.
Capital expenditures that are made in part for
maintenance capital purposes, investment capital purposes and/or expansion capital purposes will be allocated as maintenance capital expenditures, investment capital expenditures or expansion capital expenditure by our general partner.
Incentive Distribution Rights
Incentive distribution rights represent the right to receive increasing percentages (13.0%, 23.0% and 35.5%) of quarterly distributions from
operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. SP Holdings holds the incentive distribution rights, but may transfer these rights at any time.
If, for any quarter, we have distributed cash from operating surplus to the common unitholders in an amount equal to the minimum quarterly
distribution, then we will make additional distributions from operating surplus for that quarter among the unitholders and SP Holdings (as the holder of our incentive distribution rights) in the following manner:
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first, 100% to all unitholders, pro rata, until each unitholder receives a total of $0.0575 per unit for that quarter (the first target distribution); |
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second, 87.0% to all common unitholders, pro rata, and 13.0% to the holders of our incentive distribution rights, until each unitholder receives a total of $0.0625 per unit for that quarter (the second
target distribution); |
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third, 77.0% to all common unitholders, pro rata, and 23.0% to the holders of our incentive distribution rights, until each unitholder receives a total of $0.0875 per unit for that quarter (the third target
distribution); and |
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thereafter, 64.5% to all common unitholders, pro rata, and 35.5% to the holders of our incentive distribution rights. |
Percentage Allocations of Distributions from Operating Surplus
The following table illustrates the percentage allocations of distributions from operating surplus between the common unitholders and SP
Holdings (as the holder of our incentive distribution rights) based on the specified target distribution levels. The amounts set forth under the column heading Marginal Percentage Interest in Distributions are the percentage interests of
SP Holdings (as the holder of our incentive distribution rights) and the common unitholders in any distributions from operating surplus we distribute up to and including the corresponding amount in the column Total Quarterly Distribution Per
Common Unit. The percentage interests shown for our common unitholders and SP Holdings (as the holder of our incentive distribution rights) for the
-10-
minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below assume that SP
Holdings has not transferred its incentive distribution rights.
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Total Quarterly Distribution Per Common Unit |
|
Marginal Percentage Interest in Distributions |
|
|
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|
Common Unitholders |
|
|
SP Holdings (as Holder of Incentive Distribution Rights) |
|
Minimum Quarterly Distribution |
|
up to $0.05 |
|
|
100.0 |
% |
|
|
0.0 |
% |
First Target Distribution |
|
above $0.05 up to $0.0575 |
|
|
100.0 |
% |
|
|
0.0 |
% |
Second Target Distribution |
|
above $0.0575 up to $0.0625 |
|
|
87.0 |
% |
|
|
13.0 |
% |
Third Target Distribution |
|
above $0.0625 up to $0.0875 |
|
|
77.0 |
% |
|
|
23.0 |
% |
Thereafter |
|
above $0.0875 |
|
|
64.5 |
% |
|
|
35.5 |
% |
SP Holdings Right to Reset Incentive Distribution Levels
SP Holdings, as the initial holder of our incentive distribution rights, has the right under our partnership agreement to elect to relinquish
the right to receive incentive distribution payments based on the initial target distribution levels and to reset, at higher levels, the target distribution levels upon which the incentive distribution payments to SP Holdings would be set. If SP
Holdings transfers all or a portion of our incentive distribution rights in the future, then the holder or holders of a majority of our incentive distribution rights will be entitled to exercise this right. The following discussion assumes that SP
Holdings holds all of the incentive distribution rights at the time that a reset election is made. The right to reset the target distribution levels upon which the incentive distributions are based may be exercised, without approval of our
unitholders or the conflicts committee of our general partner, at any time when we have made cash distributions to the holders of the incentive distribution rights at the highest level of incentive distribution for the prior four consecutive fiscal
quarters. The reset target distribution levels will be higher than the target distribution levels prior to the reset such that there will be no incentive distributions paid under the reset target distribution levels until cash distributions per unit
following the reset event increase as described below. We anticipate that SP Holdings would exercise this reset right in order to facilitate acquisitions or internal growth projects that would otherwise not be sufficiently accretive to cash
distributions per common unit, taking into account the existing levels of incentive distribution payments being made to SP Holdings.
In
connection with the resetting of the target distribution levels and the corresponding relinquishment by SP Holdings of incentive distribution payments based on the target cash distributions prior to the reset, SP Holdings will be entitled to receive
a number of newly issued common units based on a predetermined formula described below that takes into account the cash parity value of the cash distributions related to the incentive distribution rights received by SP Holdings for the
two quarters prior to the reset event as compared to the average cash distribution per common unit in such quarters.
The number of common
units that SP Holdings would be entitled to receive from us in connection with a resetting of the minimum quarterly distribution amount and the target distribution levels then in effect would be equal to the quotient determined by dividing
(x) the amount of cash distributions received by SP Holdings in respect of its incentive distribution rights for the two fiscal quarters ended immediately prior to the date of such reset election by (y) the average amount of cash
distributed per common unit with respect to such quarters. SP Holdings would be entitled to receive distributions in respect of these common units pro rata in subsequent periods.
-11-
Following a reset election, a baseline minimum quarterly distribution amount will be calculated
as an amount equal to the average of the cash distributions paid per common unit for the two full fiscal quarters immediately preceding the reset election (which amount we refer to as the reset minimum quarterly distribution) and the
target distribution levels will be reset to be correspondingly higher such that we would make distributions from operating surplus for each quarter thereafter as follows:
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first, 100% to all common unitholders, pro rata, until each such unitholder receives an amount per unit equal to 115.0% of the reset minimum quarterly distribution for that quarter; |
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|
second, 87.0% to all common unitholders, pro rata, and 13.0% to SP Holdings, until each such unitholder receives an amount per unit equal to 125.0% of the reset minimum quarterly distribution for the quarter;
|
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|
third, 77.0% to all common unitholders, pro rata, and 23.0% to SP Holdings, until each such unitholder receives an amount per unit equal to 175.0% of the reset minimum quarterly distribution for the quarter; and
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|
thereafter, 64.5% to all common unitholders, pro rata, and 35.5% to SP Holdings. |
The
following table illustrates the percentage allocation of distributions from operating surplus among our unitholders and SP Holdings (as the holder of our incentive distribution rights) at various distribution levels (1) pursuant to the
distribution provisions of our partnership agreement, as well as (2) following a hypothetical reset of the target distribution levels based on the assumption that the quarterly distribution amount per common unit during the two fiscal quarters
immediately preceding the reset election was $0.0875.
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|
|
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|
|
Quarterly Distribution per Unit Prior to Reset |
|
Common Unitholders |
|
|
SP Holdings (as Holder of our Incentive Distribution Rights) |
|
|
Quarterly Distribution Per Unit Following Hypothetical Reset |
Minimum Quarterly Distribution |
|
up to $0.05 |
|
|
100.0 |
% |
|
|
0.0 |
% |
|
up to $0.0875(1) |
First Target Distribution |
|
above $0.05 up to $0.0575 |
|
|
100.0 |
% |
|
|
0.0 |
% |
|
above $0.0875 up to $0.1006(2) |
Second Target Distribution |
|
above $0.0575 up to $0.0625 |
|
|
87.0 |
% |
|
|
13.0 |
% |
|
above $0.1006 up to $0.1094(3) |
Third Target Distribution |
|
above $0.0625 up to $0.0875 |
|
|
77.0 |
% |
|
|
23.0 |
% |
|
above $0.1094 up to $0.1531(4) |
Thereafter |
|
above $0.0875 |
|
|
64.5 |
% |
|
|
35.5 |
% |
|
above $0.1531 |
(1) |
This amount is equal to the hypothetical reset minimum quarterly distribution. |
(2) |
This amount is 115.0% of the hypothetical reset minimum quarterly distribution. |
(3) |
This amount is 125.0% of the hypothetical reset minimum quarterly distribution. |
(4) |
This amount is 175.0% of the hypothetical reset minimum quarterly distribution. |
-12-
The following table illustrates the total amount of distributions from operating surplus that
would be distributed to our unitholders and SP Holdings (as the holder of our incentive distribution rights), in respect of its incentive distribution rights, based on the amount distributed for the quarter immediately prior to the reset. The table
assumes that immediately prior to the reset there would be 29,380,188 common units outstanding and the distribution to each common unit would be $0.0875 per quarter for the quarter prior to the reset.
|
|
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|
|
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|
|
|
|
|
Quarterly Distribution Per Unit Prior to Reset |
|
Cash Distributions Prior to Reset |
|
|
|
|
Common Units |
|
|
Incentive Distribution Rights |
|
|
Total |
|
|
|
|
|
(in thousands) |
|
Minimum Quarterly Distribution |
|
up to $0.05 |
|
$ |
1,469 |
|
|
$ |
|
|
|
$ |
1,469 |
|
First Target Distribution |
|
above $0.05 up to $0.0575 |
|
|
220 |
|
|
|
|
|
|
|
220 |
|
Second Target Distribution |
|
above $0.0575 up to $0.0625 |
|
|
147 |
|
|
|
22 |
|
|
|
169 |
|
Third Target Distribution |
|
above $0.0625 up to $0.0875 |
|
|
735 |
|
|
|
219 |
|
|
|
953 |
|
Thereafter |
|
above $0.0875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,571 |
|
|
$ |
241 |
|
|
$ |
2,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table illustrates the total amount of distributions from operating surplus that would be
distributed to our unitholders and SP Holdings (as the holder of our incentive distribution rights) in respect of its incentive distribution rights, with respect to the quarter in which the reset occurs. The table reflects that as a result of the
reset there would be 32,138,453 common units outstanding and the distribution to each common unit would be $0.0875. The number of common units to be issued to SP Holdings upon the reset was calculated by dividing (1) the amount received by SP
Holdings in respect of its incentive distribution rights for the two quarters prior to the reset as shown in the table above, or $482,000 in the aggregate, by (2) the average cash distributed on each common unit for the two quarters prior to
the reset, as shown in the table above, or $0.1750 per unit in the aggregate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Distribution Per Unit After Reset |
|
Cash Distributions After Reset |
|
|
|
|
Common Units |
|
|
Incentive Distribution Rights |
|
|
Total |
|
|
|
|
|
(in thousands, except per unit amounts) |
|
Minimum Quarterly Distribution |
|
up to $0.0875 |
|
$ |
2,812 |
|
|
$ |
|
|
|
$ |
2,812 |
|
First Target Distribution |
|
above $0.0875 up to $0.1006 |
|
|
|
|
|
|
|
|
|
|
|
|
Second Target Distribution |
|
above $0.1006 up to $0.1094 |
|
|
|
|
|
|
|
|
|
|
|
|
Third Target Distribution |
|
above $0.1094 up to $0.1531 |
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter |
|
above $0.1531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,812 |
|
|
$ |
|
|
|
$ |
2,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SP Holdings (as the holder of our incentive distribution rights) will be entitled to cause the target
distribution levels to be reset on more than one occasion, provided that it may not make a reset election except at a time when it has received incentive distributions for the prior four consecutive fiscal quarters based on the highest level of
incentive distributions that it is entitled to receive under our partnership agreement.
-13-
Distributions from Capital Surplus
How Distributions from Capital Surplus Will Be Made
Our partnership agreement requires that we make distributions from capital surplus, if any, in the following manner:
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|
|
first, to all common unitholders, pro rata, until the minimum quarterly distribution is reduced to zero, as described below; and |
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|
|
thereafter, we will make all distributions from capital surplus as if they were from operating surplus. |
Effect of a Distribution From Capital Surplus
Our partnership agreement treats a distribution of capital surplus as the repayment of the initial unit price from our initial public offering,
which is a return of capital. Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the corresponding reduction in relation to the fair
market value of the common units prior to the announcement of the distribution. Because distributions of capital surplus will reduce the minimum quarterly distribution and target distribution levels after any of these distributions are made, it may
be easier for SP Holdings to receive incentive distributions. However, any distribution of capital surplus before the minimum quarterly distribution is reduced to zero cannot be applied to the payment of the minimum quarterly distribution.
Once we reduce the minimum quarterly distribution and target distribution levels to zero, all future distributions will be made such that
64.5% is paid to all unitholders, pro rata, and 35.5% is paid to the holder or holders of incentive distribution rights, pro rata.
Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels
In addition to adjusting the minimum quarterly
distribution and target distribution levels to reflect a distribution of capital surplus, if we combine our common units into fewer common units or subdivide our common units into a greater number of common units, our partnership agreement specifies
that the following items will be proportionately adjusted:
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|
|
the minimum quarterly distribution; |
|
|
|
the target distribution levels; and |
|
|
|
the initial unit price, as described below under Distributions of Cash Upon Liquidation. |
For example, if a two-for-one split of the common units should occur, the minimum quarterly distribution, the target distribution levels and
the initial unit price would each be reduced to 50.0% of its initial level. Our partnership agreement provides that we do not make any adjustment by reason of the issuance of additional units for cash or property.
In addition, if as a result of a change in law or interpretation thereof, we are or any of our subsidiaries is treated as an association
taxable as a corporation or are otherwise subject to additional taxation as an entity for U.S. federal, state, local or non-U.S. income or withholding tax purposes, our general partner may, in its sole discretion, reduce the minimum quarterly
distribution and the target distribution levels for each quarter by multiplying each distribution level by a fraction, the numerator of which is cash for that quarter (after deducting our general partners estimate of our additional aggregate
liability for the quarter for such income and withholdings taxes payable by reason of such change in law or interpretation) and the denominator of which is the sum of (1) cash for that quarter, plus (2) our general partners estimate
of our additional aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in law or interpretation thereof. To the extent that the actual tax liability differs from the estimated tax liability for
any quarter, the difference will be accounted for in distributions with respect to subsequent quarters.
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Distributions of Cash Upon Liquidation
General
If we
dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We will first apply the proceeds of liquidation to the payment of our creditors. We will distribute any remaining
proceeds to the unitholders and the holders of the incentive distribution rights, in accordance with their capital account balances, as adjusted to reflect any gain or loss upon the sale or other disposition of our assets in liquidation.
The allocations of gain and loss upon liquidation are intended, to the extent possible, to entitle the holders of units to a repayment of the
initial value contributed by unitholders for their units in our initial public offering, which we refer to as the initial unit price for each unit. Any further net gain recognized upon liquidation will be allocated in a manner that takes
into account the incentive distribution rights of SP Holdings.
Manner of Adjustments for Gain
The manner of the adjustment for gain is set forth in the partnership agreement. We will generally allocate any gain to the partners in the
following manner:
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first, 100% to the general partner until the amount allocated under this paragraph equals the amount of losses allocated to the general partner; |
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second, 100% to the common unitholders, pro rata, until the capital account for each common unit is equal to: (A) the sum of (1) the initial unit price; (2) the amount of the minimum quarterly
distribution for the quarter during which our liquidation occurs reduced by any distribution made from operating surplus in satisfaction of the minimum quarterly distribution with respect to such common unit for such quarter; and (3) the excess
of the first target distribution per unit over the minimum quarterly distribution per unit for each quarter of our existence; less (B) the cumulative amount per unit of any distributions from operating surplus in excess of the minimum quarterly
distribution per unit that we have distributed to the unitholders, pro rata, for each quarter of our existence; |
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third, 87.0% to all unitholders, pro rata, and 13.0% to SP Holdings (as the holder of our incentive distribution rights), until we allocate under this paragraph an amount per unit equal to: (1) the sum of
the excess of the second target distribution per unit over the first target distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions from operating surplus in excess of the first
target distribution per unit that we distributed 87.0% to the unitholders, pro rata, and 13.0% to SP Holdings (as the holder of our incentive distribution rights) for each quarter of our existence; |
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fourth, 77.0% to all unitholders, pro rata, and 23.0% to SP Holdings (as the holder of our incentive distribution rights), until we allocate under this paragraph an amount per unit equal to: (1) the sum of
the excess of the third target distribution per unit over the second target distribution per unit for each quarter of our existence; less (2) the cumulative amount per unit of any distributions from operating surplus in excess of the second
target distribution per unit that we distributed 77.0% to the unitholders, pro rata, and 23.0% to SP Holdings (as the holder of our incentive distribution rights) for each quarter of our existence; and |
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thereafter, 64.5% to all unitholders, pro rata, and 35.5% to SP Holdings (as the holder of our incentive distribution rights). |
The percentage interests set forth above for SP Holdings assume SP Holdings has not transferred the incentive distribution rights.
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Manner of Adjustments for Losses
We will generally allocate any loss to our to our common unitholders in proportion to the positive balances in their capital accounts, until
the capital accounts of the common unitholders have been reduced to zero and thereafter, to our general partner.
Adjustments to
Capital Accounts
We will make adjustments to capital accounts upon the issuance of additional units. In doing so, we generally
will allocate any unrealized and, for tax purposes, unrecognized gain or loss resulting from the adjustments to the common unitholders and the holders of our incentive distribution rights in the same manner as we allocate gain or loss upon
liquidation.
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CONFLICTS OF INTEREST AND FIDUCIARY DUTIES
Conflicts of Interest
Conflicts of
interest exist and may arise in the future as a result of the relationships between our general partner and its affiliates, including SP Holdings, Sanchez Oil and Gas Corporation (SOG) and Sanchez Energy Partners I, LP
(SEPI), on the one hand, and us and our limited partners, on the other hand. The directors and officers of our general partner have fiduciary duties to manage our general partner in a manner beneficial to SP Holdings. At the same time,
our general partner has a duty to manage our partnership in a manner that it believes is not adverse to our interests. Our partnership agreement specifically defines the remedies available to unitholders for actions taken that, without these defined
liability standards, might constitute breaches of fiduciary duty under applicable Delaware law. The Delaware Revised Uniform Limited Partnership Act (Delaware Act) provides that Delaware limited partnerships may, in their partnership
agreements, expand, restrict or eliminate the fiduciary duties otherwise owed by the general partner to the limited partners and the partnership.
Whenever a conflict arises between our general partner or its affiliates, on the one hand, and us or our limited partners, on the other hand,
the resolution or course of action in respect of such conflict of interest shall be permitted and deemed approved by all of our limited partners and shall not constitute a breach of our partnership agreement, of any agreement contemplated thereby or
of any duty, if the resolution or course of action in respect of such conflict of interest is:
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approved by the conflicts committee of our general partner, although our general partner is not obligated to seek such approval; |
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approved by the holders of a majority of the outstanding common units, excluding any such units owned by our general partner or any of its affiliates; |
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determined by the board of directors of our general partner to be on terms no less favorable to us than those generally being provided to, or available from, unrelated third parties; or |
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determined by the board of directors of our general partner to be fair and reasonable to us, taking into account the totality of the relationships between the parties involved, including other transactions that may be
particularly favorable or advantageous to us. |
Our general partner may, but is not required to, seek the approval of such
resolutions or courses of action from the conflicts committee of its board of directors or from the holders of a majority of the outstanding common units as described above. If our general partner does not seek approval from the conflicts committee
or from holders of common units as described above and the board of directors of our general partner approves the resolution or course of action taken with respect to the conflict of interest, then our partnership agreement provides that it will be
presumed that, in making its decision, the board of directors of our general partner acted in good faith, and in any proceeding brought by or on behalf of us or any of our unitholders, the person bringing or prosecuting such proceeding will have the
burden of overcoming such presumption. Unless the resolution of a conflict is specifically provided for in our partnership agreement, the board of directors of our general partner or the conflicts committee of the board of directors of our general
partner may consider any factors that it determines in good faith to consider when resolving a conflict. An independent third-party is not required to evaluate the resolution. Under our partnership agreement, a determination, other action or failure
to act by our general partner, the board of directors of our general partner or any committee thereof (including the conflicts committee) will be deemed to be in good faith, unless our general partner, the board of directors of our
general partner or any committee thereof (including the conflicts committee) believed such determination, other action or failure to act was adverse to the interests of the partnership.
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Conflicts of interest could arise in the situations described below, among others:
Actions taken by our general partner may affect the amount of cash available to pay distributions to unitholders.
The amount of cash that is available for distribution to unitholders is affected by decisions of our general partner regarding such matters as:
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amount and timing of asset purchases and sales; |
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entry into and repayment of current and future indebtedness; |
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issuance of additional units; and |
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the creation, reduction or increase of reserves in any quarter. |
In addition, borrowings by us
and our affiliates do not constitute a breach of any duty owed by our general partner to our unitholders, including borrowings that have the purpose or effect of enabling our general partner or its affiliates to receive distributions on the
incentive distribution rights.
In addition, our general partner may use an amount, initially equal to $20.0 million, which would not
otherwise constitute operating surplus, in order to permit the payment of distributions on the incentive distribution rights. All of these actions may affect the amount of cash or equity distributed to our unitholders and our general partner. Please
read Provisions of the Partnership Agreement Relating to Cash Distributions.
For example, in the event we have not generated
sufficient cash from our operations to pay the minimum quarterly distribution on our common units, our partnership agreement permits us to borrow funds, which would enable us to make such distribution on all outstanding units. Please read
Provisions of the Partnership Agreement Relating to Cash DistributionsOperating Surplus and Capital SurplusOperating Surplus.
The directors and officers of our general partner have a fiduciary duty to make decisions in the best interests of the owners of our
general partner, which may be contrary to our interests.
Because certain officers and/or certain directors of our general partner
are also directors, managers and/or officers of affiliates of our general partner, including SP Holdings, SOG, SEPI and certain of their affiliates, they have fiduciary duties to such entities that may cause them to pursue business strategies that
disproportionately benefit them or which otherwise are not in our best interests.
Our general partner is allowed to take into
account the interests of parties other than us, such as SP Holdings, SOG, SEPI and their affiliates, in exercising certain rights under our partnership agreement.
Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by Delaware
fiduciary duty law as permitted by the Delaware Act. For example, our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. This entitles our
general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner. Examples include the exercise
of its call right, its voting rights with respect to any units it owns, its registration rights and its determination whether or not to consent to any merger or consolidation.
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Our partnership agreement limits the liability of, and replaces the duties owed by, our
general partner and also restricts the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty.
In addition to the provisions described above, our partnership agreement contains provisions that restrict the remedies available to our
unitholders for actions that might otherwise constitute breaches of fiduciary duty. For example, our partnership agreement provides that:
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our general partner shall not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as it acted in good faith, meaning that it believed that the decision was not
adverse to the interests of our partnership; |
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our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners for any acts or omissions unless there has been a final and non-appealable judgment entered by a
court of competent jurisdiction determining that our general partner or those other persons acted in bad faith or, in the case of a criminal matter, acted with knowledge that its conduct was criminal; and |
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in resolving conflicts of interest, it will be presumed that in making its decision the general partner, the board of directors of the general partner or the conflicts committee of the board of directors of our general
partner acted in good faith, and in any proceeding brought by or on behalf of any limited partner or us, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. |
By taking ownership of a common unit, a common unitholder will agree to become bound by the provisions in our partnership agreement, including
the provisions discussed above. Please read Fiduciary Duties.
Common unitholders have no right to enforce
obligations of our general partner and its affiliates under agreements with us.
Any agreements between us, on the one hand, and
our general partner and its affiliates, on the other, will not grant to the unitholders, separate and apart from us, the right to enforce the obligations of our general partner and its affiliates in our favor.
Contracts between us, on the one hand, and our general partner and its affiliates, on the other, are not and will not be the result of
arms-length negotiations.
Neither our partnership agreement nor any of the other agreements, contracts and arrangements
between us and our general partner and its affiliates are or will be the result of arms-length negotiations. Our general partner will determine, in good faith, the terms of any of such future transactions.
Except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval.
Under our partnership agreement, our general partner has full power and authority to do all things, other than those items that
require unitholder approval, necessary or appropriate to conduct our business, including, but not limited to, the following actions:
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expending, lending or borrowing money, assuming, guaranteeing or otherwise contracting for indebtedness and other liabilities, issuing evidences of indebtedness, including indebtedness that is convertible into our
securities, and incurring any other obligations; |
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preparing and transmitting tax, regulatory and other filings, periodic or other reports to governmental or other agencies having jurisdiction over our business or assets; |
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acquiring, disposing, mortgaging, pledging, encumbering, hypothecating, granting a security interest in or exchanging our assets or merging or otherwise combining us with or into another person; |
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negotiating, executing and performing contracts, conveyance or other instruments; |
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selecting or dismissing employees and agents, outside attorneys, accountants, consultants and contractors and determining their compensation and other terms of employment or hiring; |
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maintaining insurance for our benefit; |
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forming, acquiring an interest in, and contributing property and loaning money to, any further limited partnerships, joint ventures, corporations, limited liability companies or other relationships; |
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controlling all matters affecting our rights and obligations, including bringing and defending actions at law or in equity or otherwise litigating, arbitrating or mediating, and incurring legal expense and settling
claims and litigation; |
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indemnifying any person against liabilities and contingencies to the extent permitted by law; |
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purchasing, selling or otherwise acquiring or disposing of our partnership interests, or issuing, purchasing or otherwise acquiring additional options, rights, warrants, appreciation rights, phantom or tracking
interests relating to our partnership interests; and |
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entering into agreements with any of its affiliates to render services to us or to itself in the discharge of its duties as our general partner. |
Please read The Partnership Agreement for information regarding the voting rights of unitholders.
Common units are subject to our general partners call right.
If at any time our general partner and its controlled affiliates own more than 80% of the common units, our general partner will have the
right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at the market price calculated in accordance with the terms of our
partnership agreement. As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability upon a sale of your units. Our general partner is
not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the call right. There is no restriction in our partnership agreement that prevents our general partner from issuing
additional common units and exercising its call right. Our general partner may use its own discretion, free of fiduciary duty restrictions, in determining whether to exercise this right. As a result, a common unitholder may have his common units
purchased from him at an undesirable time or price. Please read The Partnership AgreementLimited Call Right.
We
may not choose to retain separate counsel for ourselves or for the holders of common units.
Attorneys, independent accountants and
others who perform services for us may be retained by our general partner. Attorneys, independent accountants and others who perform services for us are selected by our general partner or the conflicts committee of the board of directors of our
general partner and may perform services for our general partner and its affiliates. We may retain separate counsel for ourselves or the conflict committee in the event of a conflict of interest between our general partner and its affiliates, on the
one hand, and us or the holders of common units, on the other, depending on the nature of the conflict, although we may choose not to do so.
Our general partners affiliates may compete with us, and neither our general partner nor its affiliates have any obligation to
present business opportunities to us.
Our partnership agreement provides that our general partner is restricted from engaging in
any business other than those incidental to its ownership of interests in us. However, affiliates of our general partner are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with us,
and may acquire, construct or dispose of assets in the future without any obligation to offer us the opportunity to acquire those assets. In addition, under our partnership agreement, the doctrine of corporate opportunity, or any analogous doctrine,
will not apply to our general partner and its affiliates. As a result, neither our general partner nor any of its affiliates have any obligation to present business opportunities to us.
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The holder or holders of our incentive distribution rights may elect to cause us to issue
common units to it in connection with a resetting of incentive distribution levels without the approval of our unitholders. This election may result in lower distributions to our common unitholders in certain situations.
The holder or holders of a majority of our incentive distribution rights (initially SP Holdings) have the right, at any time when they have
received incentive distributions at the highest level to which they are entitled (35.5%) for each of the prior four consecutive fiscal quarters, to reset the initial target distribution levels at higher levels based on our cash distribution
levels at the time of the exercise of the reset election. Following a reset election, the minimum quarterly distribution will be reset to an amount equal to the average cash distribution per common unit for the two fiscal quarters immediately
preceding the reset election (such amount is referred to as the reset minimum quarterly distribution), and the target distribution levels will be reset to correspondingly higher levels based on percentage increases above the reset
minimum quarterly distribution.
We anticipate that SP Holdings would exercise this reset right in order to facilitate acquisitions or
internal growth projects that would not be sufficiently accretive to cash distributions per unit without such conversion. However, SP Holdings may transfer the incentive distribution rights at any time. It is possible that SP Holdings or a
transferee could exercise this reset election at a time when we are experiencing declines in our aggregate cash distributions or at a time when the holders of the incentive distribution rights expect that we will experience declines in our aggregate
cash distributions in the foreseeable future. In such situations, the holders of the incentive distribution rights may be experiencing, or may expect to experience, declines in the cash distributions that it receives related to the incentive
distribution rights and may therefore desire to be issued our common units, which are entitled to specified priorities with respect to our distributions and which therefore may be more advantageous for them to own in lieu of the right to receive
incentive distribution payments based on target distribution levels that are less certain to be achieved. As a result, a reset election may cause our common unitholders to experience dilution in the amount of cash distributions that they would have
otherwise received had we not issued new common units to the holders of the incentive distribution rights in connection with resetting the target distribution levels. Please read Provisions of the Partnership Agreement Relating to Cash
DistributionsIncentive Distribution Rights.
Fiduciary Duties
Duties owed to unitholders by our general partner are prescribed by law and in our partnership agreement. The Delaware Act provides that
Delaware limited partnerships may, in their partnership agreements, expand, restrict or eliminate the fiduciary duties otherwise owed by the general partner to limited partners and the partnership.
Our partnership agreement contains various provisions that eliminate and replace the fiduciary duties that might otherwise be owed by our
general partner. We have adopted these provisions to allow our general partner or its affiliates to engage in transactions with us that otherwise might be problematic under otherwise applicable state law fiduciary standards and to take into account
the interests of other parties in addition to our interests when resolving conflicts of interest. We believe this is appropriate and necessary because the board of directors of our general partner has a duty to manage our partnership in good faith
and a duty to manage our general partner in a manner beneficial to its owner. Without these modifications, our general partners ability to make decisions involving conflicts of interest would be restricted. Replacing the fiduciary duty
standards in this manner benefits our general partner by enabling it to take into consideration all parties (including it and its affiliates) involved in the proposed action. Replacing the fiduciary duty standards also strengthens the ability of our
general partner to attract and retain experienced and capable directors. However, modifying the fiduciary duty standards represents a detriment to our public unitholders because it restricts the recourse otherwise available to our public unitholders
for actions that, without those limitations, might constitute breaches of fiduciary duty, as described below, and permits our general partner to take into account the interests of third parties in addition to our interests when resolving conflicts
of interests.
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The following is a summary of the material restrictions of the fiduciary duties owed by our
general partner to the limited partners:
State law fiduciary duty standards |
Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. The duty of care, in the absence of a provision in a partnership agreement providing otherwise, would generally require a
general partner to act for the partnership in the same manner as a prudent person would act on his own behalf. The duty of loyalty, in the absence of a provision in a partnership agreement providing otherwise, would generally require that any action
taken or transaction engaged in be entirely fair to the partnership. |
Partnership agreement modified standards |
Our partnership agreement contains provisions that waive or consent to conduct by our general partner and its affiliates that might otherwise raise issues as to compliance with fiduciary duties or applicable law. For example, our partnership
agreement provides that when our general partner is acting in its capacity as our general partner, as opposed to in its individual capacity, it must act in good faith and will not be subject to any other standard under applicable law. In
addition, when our general partner is acting in its individual capacity, as opposed to in its capacity as our general partner, it may act without any fiduciary obligation to us or the unitholders whatsoever. These standards replace the obligations
to which our general partner would otherwise be held. |
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If our general partner does not obtain approval from the conflicts committee of the board of directors of our general partner or our common unitholders, excluding any such units owned by our general partner or its
affiliates, and the board of directors of our general partner approves the resolution or course of action taken with respect to the conflict of interest, then it will be presumed that, in making its decision, its board, which may include board
members affected by the conflict of interest, acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such
presumption. These standards replace the obligations to which our general partner would otherwise be held. |
Rights and remedies of unitholders |
The Delaware Act generally provides that a limited partner may institute legal action on behalf of the partnership to recover damages from a third-party where a general partner has refused to institute the action or where an effort to cause a
general partner to do so is not likely to succeed. These actions include actions against a general partner for breach of its duties or of our partnership agreement. In addition, the statutory or case law of some jurisdictions may permit a limited
partner to institute legal action on behalf of himself and all other similarly situated limited partners to recover damages from a general partner for violations of its duties to the limited partners. |
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The Delaware Act provides that, unless otherwise provided in a partnership agreement, a partner or other person shall not be liable to
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a limited partnership or to another partner or to another person that is a party to or is otherwise bound by a partnership agreement for breach of fiduciary duty for the partners or other
persons good faith reliance on the provisions of the partnership agreement. Under our partnership agreement, to the extent that, at law or in equity an indemnitee has duties (including fiduciary duties) and liabilities relating thereto to us
or to our partners, our general partner and any other indemnitee acting in connection with our business or affairs shall not be liable to us or to any partner for its good faith reliance on the provisions of our partnership agreement.
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By taking ownership of our common units, each common unitholder automatically agrees to be bound by the provisions in
our partnership agreement, including the provisions discussed above. This is in accordance with the policy of the Delaware Act favoring the principle of freedom of contract and the enforceability of partnership agreements. The failure of a limited
partner to sign a partnership agreement does not render the partnership agreement unenforceable against that person.
Under our
partnership agreement, we must indemnify our general partner and its officers, directors, managers and certain other specified persons, to the fullest extent permitted by law, against liabilities, costs and expenses incurred by our general partner
or these other persons. We must provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that these persons acted in bad faith. We must also provide this indemnification
for criminal proceedings unless our general partner or these other persons acted with knowledge that their conduct was criminal. Thus, our general partner could be indemnified for its negligent acts if it meets the requirements set forth above. To
the extent these provisions purport to include indemnification for liabilities arising under the Securities Act in the opinion of the SEC, such indemnification is contrary to public policy and, therefore, unenforceable. Please read The
Partnership AgreementIndemnification.
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DESCRIPTION OF THE COMMON UNITS
The Units
The common units are a
separate class of limited partner interests in us. The holders of units are entitled to participate in partnership distributions and exercise the rights or privileges available to limited partners under our partnership agreement. For a description
of the relative rights and preferences of holders of common units in and to partnership distributions, please read this section and Provisions of the Partnership Agreement Relating to Cash Distributions. For a description of other rights
and privileges of limited partners under our partnership agreement, including voting rights, please read The Partnership Agreement.
Transfer Agent and Registrar
Duties
Computershare Trust Company, N.A. serves as the registrar and transfer agent for the common units. We will pay all fees charged by the transfer
agent for transfers of common units except the following, which must be paid by unitholders:
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surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges; |
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special charges for services requested by a holder of a common unit; and |
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other similar fees or charges. |
There will be no charge to unitholders for disbursements of
our cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that
capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity.
Resignation or Removal
The transfer agent may resign, by notice to us, or be removed by us. The resignation or removal of the transfer agent will become effective
upon our appointment of a successor transfer agent and registrar and its acceptance of the appointment. If no successor is appointed or a successor has not accepted its appointment, our general partner may act as the transfer agent and registrar
until a successor is appointed.
Transfer of Common Units
Upon the transfer of a common unit in accordance with our partnership agreement, the transferee of the common unit shall be admitted as a
limited partner with respect to the common units transferred when such transfer and admission are reflected in our books and records. Each transferee:
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represents that the transferee has the capacity, power and authority to become bound by our partnership agreement; |
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automatically becomes bound by the terms and conditions of our partnership agreement; and |
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gives the consents, waivers and approvals contained in our partnership agreement. |
Our general
partner will cause any transfers to be recorded on our books and records no less frequently than quarterly.
We may, at our discretion,
treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holders rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the
nominee holder.
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Common units are securities and any transfers are subject to the laws governing the transfer of
securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a substituted limited partner in our partnership for the transferred common units.
Until a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the common unit as the
absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.
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THE PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our partnership agreement. Our partnership agreement is filed with the registration
statement of which this prospectus is a part.
We summarize the following provisions of our partnership agreement elsewhere in this
prospectus:
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with regard to distributions, please read Provisions of the Partnership Agreement Relating to Cash Distributions; |
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with regard to the duties of, and standard of care applicable to, our general partner, please read Conflicts of Interest and Fiduciary Duties; |
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with regard to the transfer of common units, please read Description of the Common UnitsTransfer of Common Units; and |
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with regard to allocations of taxable income and taxable loss, please read Material U.S. Federal Income Tax Consequences. |
Organization and Duration
We were formed
in 2005 as a limited liability company until our conversion on March 6, 2015 into a limited partnership. We will have a perpetual existence unless terminated pursuant to the terms of our partnership agreement.
Purpose
Our purpose, as set forth in our
partnership agreement, is limited to any business activity that is approved by our general partner and that lawfully may be conducted by a limited partnership organized under Delaware law; provided that our general partner shall not cause us to take
any action that the general partner determines would be reasonably likely to cause us to be treated as an association taxable as a corporation or otherwise taxable as an entity for U.S. federal income tax purposes.
Although our general partner has the ability to cause us and our current or future subsidiaries to engage in activities other than the
business of engaging in oil and natural gas exploration and production activities, our general partner may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or
in the best interests of us or the limited partners. Our general partner is generally authorized to perform all acts that it determines to be necessary or appropriate to carry out our purposes and to conduct our business.
Cash Distributions
Our partnership
agreement specifies the manner in which we will make cash distributions to holders of our common units and other partnership securities as well as to SP Holdings in respect of its incentive distribution rights. For a description of these cash
distribution provisions, please read Provisions of the Partnership Agreement Relating to Cash Distributions.
Capital Contributions
Unitholders are not obligated to make additional capital contributions, except as described below under Limited
Liability.
Voting Rights
The
following is a summary of the unitholder vote required for approval of the matters specified below. Matters that require the approval of a unit majority require the approval of a majority of the common units.
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In voting their common units, our general partner and its affiliates will have no fiduciary duty
or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners.
The incentive distribution rights may be entitled to vote in certain circumstances.
Issuance of additional units |
No approval right. |
Amendment of the partnership agreement |
Certain amendments may be made by our general partner without the approval of the unitholders. Other amendments generally require the approval of a unit majority. Please read Amendment of the Partnership Agreement.
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Merger of our partnership or the sale of all or substantially all of our assets |
Unit majority in certain circumstances. Please read Merger, Consolidation, Conversion, Sale or Other Disposition of Assets. |
Dissolution of our partnership |
Unit majority. Please read Dissolution. |
Continuation of our business upon dissolution |
Unit majority. Please read Dissolution. |
Withdrawal of our general partner |
Under most circumstances, the approval of a majority of the common units, excluding common units held by our general partner and its affiliates, is required for the withdrawal of our general partner prior to September 30, 2024 in a manner that
would cause a dissolution of our partnership. Please read Withdrawal or Removal of Our General Partner. |
Removal of our general partner |
Not less than 66 2/3% of the outstanding units, voting as a single class, including units held by our general partner and its affiliates. Please read Withdrawal or Removal of Our General Partner. |
Transfer of our general partner interest |
No approval right. Please read Transfer of General Partner Interest. |
Transfer of incentive distribution rights |
No approval right. Please read Transfer of Incentive Distribution Rights. |
Transfer of ownership interests in our general partner |
No approval right. Please read Transfer of Ownership Interests in the General Partner. |
If any person
or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all of its units, unless otherwise required by law or approved by the board of
directors of our general partner. This loss of voting rights does not apply to any person or group that acquires the units from our general partner or its affiliates and any transferees of that person or group approved by our general partner or to
any person or group who acquires the units with the specific prior approval of our general partner.
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Applicable Law; Forum, Venue and Jurisdiction
Our partnership agreement is governed by Delaware law. Our partnership agreement requires that any claims, suits, actions or proceedings:
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arising out of or relating in any way to the partnership agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of the partnership agreement or the duties, obligations or
liabilities among limited partners or of limited partners to us, or the rights or powers of, or restrictions on, the limited partners or us); |
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brought in a derivative manner on our behalf; |
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asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of us or our general partner, or owed by our general partner, to us or the limited partners; |
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asserting a claim arising pursuant to any provision of the Delaware Act; or |
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asserting a claim governed by the internal affairs doctrine |
shall be exclusively brought in the Court of
Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction), regardless of whether such claims, suits, actions or
proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims. In addition, each party to such claims, suits, actions or proceedings irrevocably
waives the right to trial by jury.
If any limited partner, our general partner or any person holding any beneficial interest in us
(whether through a broker, dealer, bank, trust company or clearing corporation) brings any of the claims, suits, actions or proceedings described in the bullets above and such person does not obtain a judgment on the merits that substantially
achieves, in substance and amount (if the extent of such achievement is disputed, then as determined by the Court of Chancery of the State of Delaware or such other court with subject matter jurisdiction of such claim, suit, action or proceeding),
the full remedy sought, then such limited partner, our general partner or person holding any beneficial interest in us shall be obligated to reimburse us and our affiliates (including our general partner, the directors of our general partner and the
owner of our general partner) for all fees, costs and expenses of every kind and description, including but not limited to all reasonable attorneys fees and other litigation expenses, that the parties may incur in connection with such claim,
suit, action or proceeding. We and our affiliates, as defined in Section 1.1 of our partnership agreement (including our general partner, the directors and officers of our general partner, SOG, SP Holdings, SEPI and Messrs. Sanchez III
and Willinger) would be entitled to recover all of their fees, costs and expenses in any such action, and such losing party would be severally liable for all such fees, costs and expenses.
By taking ownership of a common unit, a limited partner is irrevocably consenting to these limitations and provisions regarding claims, suits,
actions or proceedings and submitting to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or such other court) in connection with any such claims, suits, actions or proceedings. We intend to apply a broad interpretation
to each of the foregoing provisions in our partnership agreement in order to apply the fee-shifting provision broadly.
Limited Liability
Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Act and that he
otherwise acts in conformity with the provisions of the partnership agreement, his liability under the Delaware Act will be limited, subject to possible exceptions, to the amount of capital he is obligated to contribute to us for his common units
plus his share of any undistributed profits and assets. However, if it were determined that the right, or exercise of the right, by the limited partners as a group:
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to remove or replace our general partner; |
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to approve some amendments to our partnership agreement; or |
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to take other action under our partnership agreement |
constituted participation in the control of
our business for the purposes of the Delaware Act, then the limited partners could be held personally liable for our obligations under the laws of Delaware, to the same extent as our general partner. This liability would extend to persons who
transact business with us under the reasonable belief that the limited partner is a general partner. Neither our partnership agreement nor the Delaware Act specifically provides for legal recourse against our general partner if a limited partner
were to lose limited liability through any fault of our general partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for this type of a claim in Delaware case law.
Under the Delaware Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the
limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of
the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware Act provides that the fair value of property subject to liability for which recourse of creditors is limited shall be
included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability. The Delaware Act provides that a limited partner who receives a distribution and knew at the time of the
distribution that the distribution was in violation of the Delaware Act shall be liable to the limited partnership for the amount of the distribution for three years.
Limitations on the liability of members or limited partners for the obligations of a limited liability company or limited partnership have not
been clearly established in many jurisdictions. If, by virtue of our ownership interest in our subsidiary or any subsidiaries we may have in the future, or otherwise, it were determined that we were conducting business in any jurisdiction without
compliance with the applicable limited partnership or limited liability company statute, or that the right or exercise of the right by the limited partners as a group to remove or replace our general partner, to approve some amendments to our
partnership agreement, or to take other action under our partnership agreement constituted participation in the control of our business for purposes of the statutes of any relevant jurisdiction, then the limited partners could be held
personally liable for our obligations under the law of that jurisdiction to the same extent as our general partner under the circumstances. We will operate in a manner that our general partner considers reasonable and necessary or appropriate to
preserve the limited liability of the limited partners.
Issuance of Additional Interests
Our partnership agreement authorizes us to issue an unlimited number of additional partnership interests for the consideration and on the terms
and conditions determined by our general partner without the approval of the unitholders.
It is possible that we will fund acquisitions
through the issuance of additional common units or other partnership interests. Holders of any additional common units that we issue will be entitled to share equally with the then-existing common unitholders in our distributions. In addition, the
issuance of additional common units or other partnership interests may dilute the value of the interests of the then-existing common unitholders in our net assets.
In accordance with Delaware law and the provisions of our partnership agreement, we may also issue additional partnership interests that, as
determined by our general partner, may have rights to distributions or special voting rights to which the common units are not entitled. In addition, our partnership agreement does not prohibit our current or future subsidiaries from issuing equity
interests, which may effectively rank senior to the common units.
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Amendment of the Partnership Agreement
General
Amendments
to our partnership agreement may be proposed only by our general partner. However, our general partner will have no duty or obligation to propose any amendment and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the
limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. In order to adopt a proposed amendment, other than the amendments discussed below, our general partner is required to seek written
approval of the holders of the number of units required to approve the amendment or to call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as described below, an amendment must be approved by a unit
majority.
Prohibited Amendments
No amendment may be made that would:
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enlarge the obligations of any limited partner without his consent, unless approved by at least a majority of the type or class of limited partner interests so affected; or |
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enlarge the obligations of, restrict, change or modify in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to our general partner or any of its
affiliates without the consent of our general partner, which consent may be given or withheld in its sole discretion. |
The
provision of our partnership agreement preventing the amendments having the effects described in the clauses above can be amended upon the approval of the holders of at least 75.0% of the outstanding units, voting as a single class (including units
owned by our general partner and its affiliates). As of March 6, 2015, SEPI and SP Holdings collectively owned approximately 20.5% of our outstanding common units.
No Unitholder Approval
Our general partner may generally make amendments to our partnership agreement without the approval of any limited partner to reflect:
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a change in our name, the location of our principal place of business, our registered agent or our registered office; |
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the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement; |
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a change that our general partner determines to be necessary or appropriate to qualify or continue our qualification as a limited partnership or other entity in which the limited partners have limited liability under
the laws of any state or to ensure that neither we nor any of our subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes (to the extent not already so treated or
taxed); |
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a change in our fiscal year or taxable year and related changes; |
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an amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors, officers, agents or trustees from in any manner being subjected to the provisions of the Investment
Company Act of 1940, the Investment Advisers Act of 1940 or plan asset regulations adopted under the Employee Retirement Income Security Act of 1974, or (ERISA) whether or not substantially similar to plan asset regulations
currently applied or proposed; |
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an amendment that our general partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of additional partnership interests or the right to acquire partnership
interests; |
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any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone; |
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an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our partnership agreement; |
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any amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership or other entity, as otherwise permitted by our partnership
agreement; |
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conversions into, mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the conversion, merger or conveyance other than those it
receives by way of the conversion, merger or conveyance in certain circumstances; or |
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any other amendments substantially similar to any of the matters described in the clauses above. |
In addition, our general partner may make amendments to our partnership agreement, without the approval of any limited partner, if our general
partner determines that those amendments:
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do not adversely affect the limited partners, considered as a whole, or any particular class of limited partners, in any material respect; |
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are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in
any federal or state statute; |
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are necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the limited partner interests are
or will be listed for trading; |
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are necessary or appropriate for any action taken by our general partner relating to splits or combinations of units under the provisions of our partnership agreement; |
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are necessary or appropriate in connection with the creation, authorization or issuance of any class or series of partnership securities; or |
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are required to effect the intent of the provisions of our partnership agreement or are otherwise contemplated by our partnership agreement. |
Opinion of Counsel and Unitholder Approval
Any amendment that our general partner determines adversely affects in any material respect one or more particular classes of limited partners
will require the approval of at least a majority of the class or classes so affected, but no vote will be required by any class or classes of limited partners that our general partner determines are not adversely affected in any material respect.
Any amendment that would have a material adverse effect on the rights or preferences of any type or class of outstanding units in relation to other classes of units will require the approval of at least a majority of the type or class of units so
affected. Any amendment that would reduce the voting percentage required to take any action other than to remove the general partner or call a meeting of unitholders is required to be approved by the affirmative vote of limited partners whose
aggregate outstanding units constitute not less than the voting requirement sought to be reduced. Any amendment that would increase the percentage of units required to remove the general partner or call a meeting of unitholders must be approved by
the affirmative vote of limited partners whose aggregate outstanding units constitute not less than the percentage sought to be increased. For amendments of the type not requiring unitholder approval, our general partner will not be required to
obtain an opinion of counsel that an amendment will neither result in a loss of limited liability to the limited partners nor result in our being treated as a taxable entity for federal income tax purposes in connection with any of the amendments.
Any amendment relating to special unitholder meetings,
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notices of unitholder meetings, quorum and voting requirements, actions without a meeting and the amendment provisions in our partnership agreement require approval of 75% of our outstanding
units. No amendments to our partnership agreement, other than those the general partner can adopt without unitholder approval or in connection with a merger or consolidation, will become effective without the approval of holders of at least 90% of
the outstanding units, voting as a single class, unless we first obtain an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any of our limited partners.
Merger, Consolidation, Conversion, Sale or Other Disposition of Assets
A merger, consolidation or conversion of us requires the prior consent of our general partner. However, our general partner will have no duty
or obligation to consent to any merger, consolidation or conversion and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interest of us or
the limited partners.
In addition, our partnership agreement generally prohibits our general partner, without the prior approval of the
holders of a unit majority, from causing us to sell, exchange or otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions, including by way of merger, consolidation or other combination.
Our general partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without such approval. Our general partner may also sell all or substantially all of our assets under a
foreclosure or other realization upon those encumbrances without such approval. Finally, our general partner may consummate any merger without the prior approval of our unitholders if we are the surviving entity in the transaction, our general
partner has received an opinion of counsel regarding limited liability and tax matters, the transaction would not result in a material amendment to the partnership agreement (other than an amendment that the general partner could adopt without the
consent of other partners), each of our units will be an identical unit of our partnership following the transaction and the partnership securities to be issued do not exceed 20% of our outstanding partnership interests (other than incentive
distribution rights) immediately prior to the transaction. If the conditions specified in our partnership agreement are satisfied, our general partner may convert us or any of our subsidiaries into a new limited liability entity or merge us or any
of our subsidiaries into, or convey all of our assets to, a newly formed entity, if the sole purpose of that conversion, merger or conveyance is to effect a mere change in our legal form into another limited liability entity, we have received an
opinion of counsel regarding limited liability and tax matters and the governing instruments of the new entity provide the limited partners and our general partner with the same rights and obligations as contained in our partnership agreement. Our
unitholders are not entitled to dissenters rights of appraisal under our partnership agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets or any other similar
transaction or event.
Dissolution
We will continue as a limited partnership until dissolved and terminated under our partnership agreement and the Delaware Act. We will dissolve
upon:
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the election of our general partner to dissolve us, if approved by the holders of units representing a unit majority; |
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there being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law; |
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the entry of a decree of judicial dissolution of our partnership; |
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the withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer of its general partner interest in accordance with our
partnership agreement or its withdrawal or removal following the approval and admission of a successor; or |
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any other dissolution event as required by applicable Delaware law. |
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Upon a dissolution under the penultimate clause above, the holders of a unit majority may also
elect, within specific time limitations, to continue our business on the same terms and conditions described in our partnership agreement by appointing as a successor general partner an entity approved by the holders of units representing a unit
majority, subject to our receipt of an opinion of counsel to the effect that:
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the action would not result in the loss of limited liability under Delaware law of any limited partner; and |
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neither we nor any of our subsidiaries would be treated as an association taxable as a corporation or otherwise be taxable as an entity for U.S. federal income tax purposes upon the exercise of that right to continue
(to the extent not already so treated or taxed). |
Liquidation and Distribution of Proceeds
Upon our dissolution, unless our business is continued, the liquidator authorized to wind up our affairs will, acting with all of the powers of
our general partner that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as described in Provisions of the Partnership Agreement Relating to Cash DistributionsDistributions of Cash Upon
Liquidation. The liquidator may defer liquidation or distribution of our assets for a reasonable period of time or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to our
partners.
Withdrawal or Removal of Our General Partner
Except as described below, our general partner has agreed not to withdraw voluntarily as our general partner prior to September 30, 2024
without obtaining the approval of the holders of at least a majority of the outstanding common units, excluding common units held by our general partner and its affiliates, and furnishing an opinion of counsel regarding limited liability and tax
matters. On or after September 30, 2024, our general partner may withdraw as general partner without first obtaining approval of any unitholder by giving 90 days written notice, and that withdrawal will not constitute a violation of our
partnership agreement. Notwithstanding the information above, our general partner may withdraw without unitholder approval upon 90 days notice to the limited partners if at least 50% of the outstanding common units are held or controlled by
one person and its affiliates, other than our general partner and its affiliates. In addition, our partnership agreement permits our general partner to sell or otherwise transfer all of its general partner interest in us without the approval of the
unitholders. Please read Transfer of General Partner Interest.
Upon withdrawal of our general partner under any
circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the holders of a unit majority may appoint a successor to that withdrawing general partner. If a successor is not
elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period after that withdrawal, the holders of a unit majority
agree in writing to continue our business and to appoint a successor general partner. Please read Dissolution.
Our
general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66 2/3% of the outstanding units, voting together as a single class, including units held by our general partner and its affiliates, and
we receive an opinion of counsel regarding limited liability and tax matters. Any removal of our general partner is also subject to the approval of a successor general partner by the vote of a unit majority. The ownership of more than 33 1/3% of the
outstanding units by our general partner and its affiliates gives them the ability to prevent our general partners removal. As of March 6, 2015, SEPI and SP Holdings collectively owned 20.5% of our outstanding common units.
In the event of the removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that
withdrawal violates our partnership agreement, a successor general partner will have the option to purchase the general partner interest and incentive distribution rights of the departing general
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partner and its affiliates for a cash payment equal to the fair market value of those interests. Under all other circumstances where our general partner withdraws or is removed by the limited
partners, the departing general partner will have the option to require the successor general partner to purchase the general partner interest and the incentive distribution rights of the departing general partner and its affiliates for fair market
value. In each case, this fair market value will be determined by agreement between the departing general partner and the successor general partner. If no agreement is reached, an independent investment banking firm or other independent expert
selected by the departing general partner and the successor general partner will determine the fair market value; if the departing general partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of
the experts selected by each of them will determine the fair market value.
If the option described above is not exercised by either the
departing general partner or the successor general partner, then the departing general partners general partner interest and all of its affiliates incentive distribution rights will automatically convert into common units equal to the
fair market value of those interests as determined by an investment banking firm or other independent expert selected in the manner described in the preceding paragraph.
In addition, we will be required to reimburse the departing general partner for all amounts due to the departing general partner, including,
without limitation, all employee-related liabilities, including severance liabilities, incurred as a result of the termination of any employees employed for our benefit by the departing general partner or its affiliates.
Transfer of General Partner Interest
At any time, our general partner may transfer all or any of its general partner interest to another person without the approval of our common
unitholders. As a condition of this transfer, the transferee must, among other things, assume the rights and duties of our general partner, agree to be bound by the provisions of our partnership agreement and furnish an opinion of counsel regarding
limited liability and tax matters.
Transfer of Ownership Interests in the General Partner
At any time, the owners of our general partner may sell or transfer all or part of its ownership interests in our general partner to an
affiliate or third-party without the approval of our unitholders.
Transfer of Incentive Distribution Rights
By transfer of incentive distribution rights in accordance with our partnership agreement, each transferee of incentive distribution rights
will be admitted as a limited partner with respect to the incentive distribution rights transferred when such transfer and admission is reflected in our books and records. Each transferee:
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represents that the transferee has the capacity, power and authority to become bound by our partnership agreement; |
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automatically becomes bound by the terms and conditions of our partnership agreement; and |
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gives the consents, waivers and approvals contained in our partnership agreement. |
Our general
partner will cause any transfers to be recorded on our books and records no less frequently than quarterly.
We may, at our discretion,
treat the nominee holder of incentive distribution rights as the absolute owner. In that case, the beneficial holders rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial
owner and the nominee holder.
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Incentive distribution rights are securities and any transfers are subject to the laws governing
transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a limited partner for the transferred incentive distribution rights.
Until an incentive distribution right has been transferred on our books, we and the transfer agent may treat the record holder of the unit or
right as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.
Change of
Management Provisions
Our partnership agreement contains specific provisions that are intended to discourage a person or group from
attempting to remove Sanchez Production Partners GP LLC as our general partner or from otherwise changing our management. Please read Withdrawal or Removal of Our General Partner for a discussion of certain consequences of the
removal of our general partner. If any person or group, other than our general partner and its affiliates, acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all of its units. This loss of
voting rights does not apply in certain circumstances. Please read Meetings; Voting.
Limited Call Right
If at any time our general partner and its controlled affiliates own more than 80% of the then-issued and outstanding limited partner
interests of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or beneficial owners or to us, to acquire all, but not less than all, of the limited partner interests of the class
held by unaffiliated persons, as of a record date to be selected by our general partner, on at least 10, but not more than 60, days notice. The purchase price in the event of this purchase is the greater of:
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the highest price paid by our general partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days preceding the date on which our general partner first mails notice of
its election to purchase those limited partner interests; and |
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the average of the daily closing prices of the partnership securities of such class over the 20 consecutive trading days preceding the date that is three days before the date the notice is mailed. |
As a result of our general partners right to purchase outstanding limited partner interests, a holder of limited partner interests may
have his limited partner interests purchased at an undesirable time or at a price that may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future. The tax
consequences to a unitholder of the exercise of this call right are the same as a sale by that unitholder of his common units in the market. Please read Material U.S. Federal Income Tax ConsequencesDisposition of Units.
Non-Taxpaying Holders; Redemption
To avoid any adverse effect on the maximum applicable rates chargeable to customers by us or any of our future subsidiaries, or in order to
reverse an adverse determination that has occurred regarding such maximum rate, our partnership agreement provides our general partner the power to amend the agreement. If our general partner, with the advice of counsel, determines that our not
being treated as an association taxable as a corporation or otherwise taxable as an entity for U.S. federal income tax purposes, coupled with the tax status (or lack of proof thereof) of one or more of our limited partners, has, or is reasonably
likely to have, a material adverse effect on the maximum applicable rates chargeable to customers by us or our subsidiaries, then our general partner may adopt such amendments to our partnership agreement as it determines necessary or appropriate
to:
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obtain proof of the U.S. federal income tax status of our limited partners (and their owners, to the extent relevant); and |
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permit us to redeem the units held by any person whose tax status has or is reasonably likely to have a material adverse effect on the maximum applicable rates or who fails to comply with the procedures instituted by
our general partner to obtain proof of the federal income tax status. The redemption price in the case of such a redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date
set for redemption. |
Non-Citizen Assignees; Redemption
If our general partner, with the advice of counsel, determines that we are subject to U.S. federal, state or local laws or regulations that
create a substantial risk of cancellation or forfeiture of any property that we have an interest in because of the nationality, citizenship or other related status of any limited partner, then our general partner may adopt such amendments to our
partnership agreement as it determines necessary or advisable to:
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obtain proof of the nationality, citizenship or other related status of our limited partners (and their beneficial owners, to the extent relevant); and |
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permit us to redeem the units held by any person whose nationality, citizenship or other related status creates substantial risk of cancellation or forfeiture of any property or who fails to comply with the procedures
instituted by the general partner to obtain proof of the nationality, citizenship or other related status. The redemption price in the case of such a redemption will be the average of the daily closing prices per unit for the 20 consecutive trading
days immediately prior to the date set for redemption. |
Meetings; Voting
Except as described below regarding a person or group owning 20% or more of any class of units then outstanding, record holders of units on the
record date will be entitled to notice of, and to vote at, meetings of our limited partners and to act upon matters for which approvals may be solicited.
Our general partner does not anticipate that any meeting of our unitholders will be called in the foreseeable future. Any action that is
required or permitted to be taken by the unitholders may be taken either at a meeting of the unitholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize
or take that action at a meeting. Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote either in person or
by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called, represented in person or by proxy, will constitute a quorum, unless any action by the unitholders requires approval
by holders of a greater percentage of the units, in which case the quorum will be the greater percentage.
Each record holder of a unit
has a vote according to his percentage interest in us, although additional limited partner interests having special voting rights could be issued. Please read Issuance of Additional Interests. However, if at any time any person or
group, other than our general partner and its affiliates, or a direct or subsequently approved transferee of our general partner or its affiliates and purchasers specifically approved by our general partner, acquires, in the aggregate, beneficial
ownership of 20% or more of any class of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending notices of a
meeting of unitholders, calculating required votes, determining the presence of a quorum or for other similar purposes. Common units held in nominee or street name account will be voted by the broker or other nominee in accordance with the
instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise.
Any notice,
demand, request, report or proxy material required or permitted to be given or made to record common unitholders under our partnership agreement will be delivered to the record holder by us or by the transfer agent.
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Voting Rights of Incentive Distribution Rights
If a majority of the incentive distribution rights are held by our general partner and its affiliates, the holders of the incentive
distribution rights will have no right to vote in respect of such rights on any matter, unless otherwise required by law, and the holders of the incentive distribution rights shall be deemed to have approved any matter approved by our general
partner.
If less than a majority of the incentive distribution rights are held by our general partner and its affiliates, the incentive
distribution rights will be entitled to vote on all matters submitted to a vote of unitholders, other than amendments and other matters that our general partner determines do not adversely affect the holders of the incentive distribution rights in
any material respect. On any matter in which the holders of incentive distribution rights are entitled to vote, such holders will vote together with the common units as a single class, and such incentive distribution rights shall be treated in all
respects as common units when sending notices of a meeting of our 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 our
partnership agreement. The relative voting power of the holders of the incentive distribution rights and the common units will be set in the same proportion as cumulative cash distributions, if any, in respect of the incentive distribution rights
for the four consecutive quarters prior to the record date for the vote bears to the cumulative cash distributions in respect of such class of units for such four quarters.
Status as Limited Partner
By transfer of common units in accordance with our partnership agreement, each transferee of common units shall be admitted as a limited
partner with respect to the common units transferred when such transfer and admission are reflected in our books and records. Except as described under Limited Liability, the common units will be fully paid, and unitholders will
not be required to make additional contributions.
Indemnification
Under our partnership agreement, in most circumstances, we will indemnify the following persons, to the fullest extent permitted by law, from
and against all losses, claims, damages or similar events:
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any departing general partner; |
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any person who is or was an affiliate of our general partner or any departing general partner; |
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any person who is or was a manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of our partnership, our subsidiaries, our general partner, any departing general partner or
any of their affiliates; |
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any person who is or was serving at the request of a general partner, any departing general partner or any of their respective affiliates as a manager, managing member, general partner, director, officer, employee,
agent, fiduciary or trustee of another person owing a fiduciary duty to us or our subsidiaries; |
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any person who controls our general partner or any departing general partner; and |
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any person designated by our general partner. |
Any indemnification under these provisions will
only be out of our assets. Unless our general partner otherwise agrees, it will not be personally liable for, or have any obligation to contribute or lend funds or assets to us to enable us to effectuate, indemnification. We may purchase insurance
against liabilities asserted against and expenses incurred by persons for our activities, regardless of whether we would have the power to indemnify the person against liabilities under our partnership agreement.
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Reimbursement of Expenses
Our partnership agreement requires us to reimburse our general partner and its affiliates for all direct and indirect expenses they incur or
payments they make on our behalf and all other expenses allocable to us or otherwise incurred by our general partner and its affiliates in connection with operating our business. Our partnership agreement does not set a limit on the amount of
expenses for which our general partner and its affiliates may be reimbursed. These expenses may include salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to
our general partner by its affiliates. Our general partner is entitled to determine in good faith the expenses that are allocable to us.
Books and Reports
Our general partner is required to keep appropriate books of our business at our principal offices. These books
will be maintained for both tax and financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, our fiscal year is the calendar year.
We will furnish or make available to record holders of our common units, within 105 days after the close of each fiscal year, an annual report
containing audited consolidated financial statements and a report on those consolidated financial statements by our independent public accountants. Except for our fourth quarter, we will also furnish or make available summary financial information
within 50 days after the close of each quarter. We will be deemed to have made any such report available if we file such report with the SEC on EDGAR or make the report available on a publicly available website which we maintain.
We will furnish each record holder with information reasonably required for U.S. federal and state tax reporting purposes within 90 days after
the close of each calendar year. This information is expected to be furnished in summary form so that some complex calculations normally required of partners can be avoided. Our ability to furnish this summary information to our unitholders will
depend on their cooperation in supplying us with specific information. Every unitholder will receive information to assist him in determining his U.S. federal and state tax liability and in filing his U.S. federal and state income tax returns,
regardless of whether he supplies us with the necessary information.
Right to Inspect Our Books and Records
Our partnership agreement provides that a limited partner can, for a purpose reasonably related to his interest as a limited partner, upon
reasonable written demand stating the purpose of such demand and at his own expense, have furnished to him:
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a current list of the name and last known address of each record holder; |
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information as to the amount of cash, and a description and statement of the agreed value of any other capital contribution, contributed or to be contributed by each partner and the date on which each became a partner;
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copies of our partnership agreement, our certificate of limited partnership, related amendments and powers of attorney under which they have been executed; |
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information regarding the status of our business and financial condition (provided that obligation shall be satisfied to the extent the limited partner is furnished our most recent annual report and any subsequent
quarterly or periodic reports required to be filed (or which would be required to be filed) with the SEC pursuant to Section 13(a) of the Exchange Act); and |
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any other information regarding our affairs that our general partner determines is just and reasonable. |
Under our partnership agreement, however, each of our limited partners and other persons who acquire interests in our partnership interests do
not have rights to receive information from us or any of the persons we
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indemnify as described above under Indemnification for the purpose of determining whether to pursue litigation or assist in pending litigation against us or those indemnified
persons relating to our affairs, except pursuant to the applicable rules of discovery relating to the litigation commenced by the person seeking information.
Our general partner may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of
which our general partner believes in good faith is not in our best interests or that we are required by law or by agreements with third parties to keep confidential.
Registration Rights
Under our partnership agreement, we have agreed to register for resale under the Securities Act and applicable state securities laws any common
units or other limited partner interests proposed to be sold by our general partner or any of its affiliates or their assignees, including SEPI, if an exemption from the registration requirements is not otherwise available. These registration rights
continue for two years following any withdrawal or removal of our general partner. We are obligated to pay all expenses incidental to the registration, excluding underwriting discounts.
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DESCRIPTION OF PARTNERSHIP SECURITIES
Our partnership agreement authorizes us to issue an unlimited number of additional limited partner interests and other equity securities for
the consideration and on the terms and conditions established by our general partner in its sole discretion without the approval of any limited partners or the conflicts committee.
It is possible that we will fund acquisitions or capital expenditures through the issuance of additional common units or other partnership
securities. Holders of any additional common units that we issue will be entitled to share equally with the then-existing holders of common units in our distributions of available cash. In addition, the issuance of additional common units or other
partnership securities may dilute the value of the interests of the then-existing holders of common units in our net assets.
In
accordance with Delaware law and the provisions of our partnership agreement, we also may issue additional partnership securities that, in the sole discretion of our general partner, have special voting rights to which the common units are not
entitled.
The following is a description of the general terms and provisions of our partnership securities. The particular terms of any
series of partnership securities will be described in the applicable prospectus supplement and the amendment to our partnership agreement, if necessary, relating to that series of partnership securities, which will be filed as an exhibit to or
incorporated by reference in this prospectus at or before the time of issuance of any such series of partnership securities. If so indicated in a prospectus supplement, the terms of any such series may differ from the terms set forth below.
Our general partner is authorized to approve the issuance of one or more series of partnership securities without further authorization of the
limited partners and to fix the number of securities, designations, rights, privileges, restrictions and conditions of any such series.
The applicable prospectus supplement will set forth the number of securities, particular designation, relative rights and preferences and the
limitations of any series of partnership securities in respect of which this prospectus is delivered. The particular terms of any such series will include the following:
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the maximum number of securities to constitute the series and the designation and ranking thereof; |
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the annual distribution rate, if any, on securities of the series, whether such rate is fixed or variable or both, the dates from which distributions will begin to accrue or accumulate, whether distributions will be
cumulative and whether such distributions will be paid in cash, securities or otherwise; |
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whether the securities of the series will be redeemable and, if so, the price and the terms and conditions on which the securities of the series may be redeemed, including the time during which securities of the series
may be redeemed and any accumulated distributions thereof that the holders of the securities of the series will be entitled to receive upon the redemption thereof; |
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the liquidation preference, if any, applicable to securities of the series; |
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the terms and conditions, if any, on which the securities of the series will be convertible into, or exchangeable for, securities of any other class or classes of partnership securities, including the price or prices or
the rate or rates of conversion or exchange and the method, if any, of adjusting the same; and |
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the voting rights, if any, of the securities of the series. |
Partnership securities will be
fully paid and non-assessable when issued upon full payment of the purchase price therefor. The prospectus supplement will contain, if applicable, a description of the material United States federal income tax consequences relating to the purchase
and ownership of the series of partnership securities offered by the prospectus supplement. The transfer agent, registrar and distributions disbursement agent for the partnership securities will be designated in the applicable prospectus supplement.
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DESCRIPTION OF DEBT SECURITIES
Any debt securities that we offer under a prospectus supplement will be direct, unsecured general obligations. The debt securities will be
either senior debt securities or subordinated debt securities. The debt securities will be issued under one or more separate indentures between us and U.S. Bank National Association, as trustee. Senior debt securities will be issued under a senior
indenture and subordinated debt securities will be issued under a subordinated indenture. Together, the senior indenture and the subordinated indenture are called indentures. The indentures will be supplemented by supplemental
indentures, the material provisions of which will be described in a prospectus supplement.
As used in this description, the words
we, us and our refer to Sanchez Production Partners LP, and not to any of our subsidiaries or affiliates.
We have summarized some of the material provisions of the indentures below. This summary does not restate those agreements in their entirety.
A form of senior indenture and a form of subordinated indenture have been filed as exhibits to the registration statement of which this prospectus is a part. We urge you to read each of the indentures because each one, and not this description,
defines the rights of holders of debt securities.
Capitalized terms defined in the indentures have the same meanings when used in this
prospectus.
General
The debt
securities issued under the indentures will be our direct, unsecured general obligations. The senior debt securities will rank equally with all of our other senior and unsubordinated debt. The subordinated debt securities will have a junior position
to all of our senior debt.
The following description sets forth the general terms and provisions that could apply to debt securities that
we may offer to sell. A prospectus supplement relating to any series of debt securities being offered will include specific terms relating to the offering. These terms will include some or all of the following, among others:
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the title and type of the debt securities; |
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the total principal amount of the debt securities; |
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the percentage of the principal amount at which the debt securities will be issued and any payments due if the maturity of the debt securities is accelerated; |
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the dates on which the principal of the debt securities will be payable; |
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the interest rate which the debt securities will bear and the interest payment dates for the debt securities; |
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any conversion or exchange features; |
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any optional redemption periods; |
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any sinking fund or other provisions that would obligate us to repurchase or otherwise redeem some or all of the debt securities; |
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any provisions granting special rights to holders when a specified event occurs; |
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any changes to or additional events of default or covenants; |
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any special tax implications of the debt securities, including provisions for original issue discount securities, if offered; and |
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any other terms of the debt securities. |
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Neither of the indentures will limit the amount of debt securities that may be issued. Each
indenture will allow debt securities to be issued up to the principal amount that may be authorized by us and may be in any currency or currency unit designated by us.
Debt securities of a series may be issued in registered or global form.
Covenants
Under the indentures, we:
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will pay the principal of, and interest and any premium on, the debt securities when due; |
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will maintain a place of payment; |
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will deliver a certificate to the trustee each fiscal year reviewing our compliance with our obligations under the indentures; |
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will preserve our corporate existence; and |
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will segregate or deposit with any paying agent sufficient funds for the payment of any principal, interest or premium on or before the due date of such payment. |
Mergers and Sale of Assets
Each of the
indentures will provide that we may not consolidate with or merge into any other Person or sell, convey, transfer or lease all or substantially all of our properties and assets (on a consolidated basis) to another Person, unless:
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either: (a) we are the surviving Person; or (b) the Person formed by or surviving any such consolidation, amalgamation or merger or resulting from such conversion (if other than us) or to which such sale,
assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership organized or existing under the laws of the United States, any State thereof or the District of Columbia;
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the Person formed by or surviving any such conversion, consolidation, amalgamation or merger (if other than us) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made
assumes all of our obligations under such indenture and the debt securities governed thereby pursuant to agreements reasonably satisfactory to the trustee, which may include a supplemental indenture; |
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we or the successor will not immediately be in default under such indenture; and |
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we deliver an officers certificate and opinion of counsel to the trustee stating that such consolidation, amalgamation, merger, conveyance, sale, transfer or lease and any supplemental indenture comply with such
indenture and that all conditions precedent set forth in such indenture relating to such transaction have been complied with. |
Upon the assumption of our obligations under each indenture by a successor, we will be discharged from all obligations under such indenture.
As used in the indenture and in this description, the word Person means any individual, corporation, company, limited
liability company, partnership, limited partnership, joint venture, association, joint-stock company, trust, other entity, unincorporated organization or government or any agency or political subdivision thereof.
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Events of Default
Event of default, when used in the indentures with respect to debt securities of any series, will mean any of the following:
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default in the payment of any interest upon any debt security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; |
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default in the payment of the principal of (or premium, if any, on) any debt security of that series at its maturity; |
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default in the performance, or breach, of any covenant set forth in Article Ten of the applicable indenture (other than a covenant, a default in the performance of which or the breach of which is elsewhere specifically
dealt with as an event of default or which has expressly been included in such indenture solely for the benefit of one or more series of debt securities other than that series), and continuance of such default or breach for a period of 90 days after
there has been given, by registered or certified mail, to us by the trustee or to us and the trustee by the holders of at least 25% in principal amount of the then-outstanding debt securities of that series a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a Notice of Default thereunder; |
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default in the performance, or breach, of any covenant in the applicable indenture (other than a covenant set forth in Article Ten of such indenture or any other covenant, a default in the performance of which or the
breach of which is elsewhere specifically dealt with as an event of default or which has expressly been included in such indenture solely for the benefit of one or more series of debt securities other than that series), and continuance of such
default or breach for a period of 180 days after there has been given, by registered or certified mail, to us by the trustee or to us and the trustee by the holders of at least 25% in principal amount of the then-outstanding debt securities of that
series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default thereunder; |
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we, pursuant to or within the meaning of any bankruptcy law, (i) commence a voluntary case, (ii) consent to the entry of any order for relief against us in an involuntary case, (iii) consent to the
appointment of a custodian of us or for all or substantially all of our property, or (iv) make a general assignment for the benefit of our creditors; |
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a court of competent jurisdiction enters an order or decree under any bankruptcy law that (i) is for relief against us in an involuntary case, (ii) appoints a custodian of us or for all or substantially all of
our property, or (iii) orders the liquidation of us, and the order or decree remains unstayed and in effect for 60 consecutive days; |
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default in the deposit of any sinking fund payment when due; or |
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any other event of default provided with respect to debt securities of that series in accordance with provisions of the indenture related to the issuance of such debt securities. |
An event of default for a particular series of debt securities does not necessarily constitute an event of default for any other series of
debt securities issued under an indenture. The trustee may withhold notice to the holders of debt securities of any default (except in the payment of principal, interest or any premium) if it considers the withholding of notice to be in the
interests of the holders.
If an event of default for any series of debt securities occurs and continues, the trustee or the holders of
25% in aggregate principal amount of the debt securities of the series may declare the entire principal of all of the debt securities of that series to be due and payable immediately. If this happens, subject to certain conditions, the holders of a
majority of the aggregate principal amount of the debt securities of that series can void the declaration.
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Other than its duties in case of a default, a trustee is not obligated to exercise any of its
rights or powers under any indenture at the request, order or direction of any holders, unless the holders offer the trustee indemnity reasonably satisfactory to the trustee. If they provide this indemnification, and subject to the conditions set
forth in the indenture, the holders of a majority in principal amount outstanding of any series of debt securities may direct the time, method and place of conducting any proceeding or any remedy available to the trustee, or exercising any power
conferred upon the trustee, for any series of debt securities.
Amendments and Waivers
Subject to certain exceptions, the indentures and the debt securities issued thereunder may be amended or supplemented with the consent of the
holders of a majority in aggregate principal amount of the then-outstanding debt securities of each series affected by such amendment or supplemental indenture, with each such series voting as a separate class (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange offer for, debt securities) and, subject to certain exceptions, any past default or compliance with any provisions may be waived with respect to each series of debt
securities with the consent of the holders of a majority in principal amount of the then-outstanding debt securities of such series voting as a separate class (including consents obtained in connection with a purchase of, or tender offer or exchange
offer for, debt securities).
Without the consent of each holder of the outstanding debt securities affected, an amendment, supplement or
waiver may not, among other things:
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change the stated maturity of the principal of, or any installment of principal of or interest on, any debt security, reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, reduce the amount of the principal of an original issue discount security that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the applicable indenture, change the coin or currency
in which any debt security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the
redemption date therefor); |
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reduce the percentage in principal amount of the then-outstanding debt securities of any series, the consent of the holders of which is required for any such amendment or supplemental indenture, or the consent of the
holders of which is required for any waiver of compliance with certain provisions of the applicable indenture or certain defaults thereunder and their consequences provided for in the applicable indenture; |
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modify any of the provisions set forth in (i) the provisions of the applicable indenture related to the holders unconditional right to receive principal, premium, if any, and interest on the debt securities
or (ii) the provisions of the applicable indenture related to the waiver of past defaults under such indenture; |
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waive a redemption payment with respect to any debt security; provided, however, that any purchase or repurchase of debt securities shall not be deemed a redemption of the debt securities; |
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release any guarantor from any of its obligations under its guarantee or the applicable indenture, except in accordance with the terms of such indenture (as amended or supplemented); or |
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make any change in the foregoing amendment and waiver provisions, except to increase any percentage provided for therein or to provide that certain other provisions of the applicable indenture cannot be modified or
waived without the consent of the holder of each then-outstanding debt security affected thereby. |
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Notwithstanding the foregoing, without the consent of any holder of debt securities, we, the
guarantors, if any, and the trustee may amend each of the indentures or the debt securities issued thereunder to:
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cure any ambiguity or defect or to correct or supplement any provision therein that may be inconsistent with any other provision therein; |
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evidence the succession of another Person to us and the assumption by any such successor of our covenants therein and, to the extent applicable, of the debt securities; |
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provide for uncertificated debt securities in addition to or in place of certificated debt securities; provided that the uncertificated debt securities are issued in registered form for purposes of Section 163(f)
of the Internal Revenue Code of 1986, as amended (the Code), or in the manner such that the uncertificated debt securities are described in Section 163(f)(2)(B) of the Code; |
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add a guarantee and cause any Person to become a guarantor, and/or to evidence the succession of another Person to a guarantor and the assumption by any such successor of the guarantee of such guarantor therein and, to
the extent applicable, endorsed upon any debt securities of any series; |
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secure the debt securities of any series; |
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add to our covenants such further covenants, restrictions, conditions or provisions as we shall consider to be appropriate for the benefit of the holders of all or any series of debt securities (and if such covenants,
restrictions, conditions or provisions are to be for the benefit of less than all series of debt securities, stating that such covenants are expressly being included solely for the benefit of such series), to make the occurrence, or the occurrence
and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an event of default permitting the enforcement of all or any of the several remedies provided in the applicable indenture as set forth therein, or
to surrender any right or power therein conferred upon us; provided, that in respect of any such additional covenant, restriction, condition or provision, such amendment or supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an event of default or may limit the remedies available to the trustee upon such an event of
default or may limit the right of the holders of a majority in aggregate principal amount of the debt securities of such series to waive such an event of default; |
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make any change to any provision of the applicable indenture that does not adversely affect the rights or interests of any holder of debt securities issued thereunder; |
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provide for the issuance of additional debt securities in accordance with the provisions set forth in the applicable indenture; |
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add any additional defaults or events of default in respect of all or any series of debt securities; |
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add to, change or eliminate any of the provisions of the applicable indenture to such extent as shall be necessary to permit or facilitate the issuance of debt securities in bearer form, registrable or not registrable
as to principal, and with or without interest coupons; |
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change or eliminate any of the provisions of the applicable indenture; provided that any such change or elimination shall become effective only when there is no debt security outstanding of any series created prior to
the execution of such amendment or supplemental indenture that is entitled to the benefit of such provision; |
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establish the form or terms of debt securities of any series as permitted thereunder, including to reopen any series of any debt securities as permitted thereunder; |
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evidence and provide for the acceptance of appointment thereunder by a successor trustee with respect to the debt securities of one or more series and to add to or change any of the provisions of the applicable
indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one trustee, pursuant to the requirements of such indenture; |
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conform the text of the applicable indenture (and/or any supplemental indenture) or any debt securities issued thereunder to any provision of a description of such debt securities appearing in a prospectus or prospectus
supplement or an offering memorandum or offering circular to the extent that such provision appears on its face to have been intended to be a verbatim recitation of a provision of such indenture (and/or any supplemental indenture) or any debt
securities issued thereunder; or |
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modify, eliminate or add to the provisions of the applicable indenture to such extent as shall be necessary to effect the qualification of such indenture under the Trust Indenture Act of 1939, as amended (the
Trust Indenture Act), or under any similar federal statute subsequently enacted, and to add to such indenture such other provisions as may be expressly required under the Trust Indenture Act. |
The consent of the holders is not necessary under either indenture to approve the particular form of any proposed amendment. It is sufficient
if such consent approves the substance of the proposed amendment. After an amendment under an indenture becomes effective, we are required to mail to the holders of debt securities thereunder a notice briefly describing such amendment. However, the
failure to give such notice to all such holders, or any defect therein, will not impair or affect the validity of the amendment.
Legal Defeasance and
Covenant Defeasance
Each indenture provides that we may, at our option and at any time, elect to have all of our obligations
discharged with respect to the debt securities outstanding thereunder and all obligations of any guarantors of such debt securities discharged with respect to their guarantees (Legal Defeasance), except for:
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the rights of holders of outstanding debt securities to receive payments in respect of the principal of, or interest or premium, if any, on, such debt securities when such payments are due from the trust referred to
below; |
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our obligations with respect to the debt securities concerning temporary debt securities, registration of debt securities, mutilated, destroyed, lost or stolen debt securities, the maintenance of an office or agency for
payment and money for security payments held in trust; |
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the rights, powers, trusts, duties and immunities of the trustee and our and each guarantors obligations in connection therewith; and |
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the Legal Defeasance and Covenant Defeasance (as defined below) provisions of the applicable indenture. |
In addition, we may, at our option and at any time, elect to have our obligations released with respect to certain provisions of each
indenture, including certain provisions described in any prospectus supplement (such release and termination being referred to as Covenant Defeasance), and thereafter any failure to comply with such obligations or provisions will not
constitute a default or event of default. In addition, in the event Covenant Defeasance occurs in accordance with the applicable indenture, any defeasible event of default will no longer constitute an event of default.
In order to exercise either Legal Defeasance or Covenant Defeasance:
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we must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the debt securities, cash in U.S. dollars, non-callable government securities, or a combination of cash in U.S. dollars and
non-callable U.S. government securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, and interest and premium, if
any, on, the outstanding debt securities on the stated date for payment thereof or on the applicable redemption date, as the case may be, and we must specify whether the debt securities are being defeased to such stated date for payment or to a
particular redemption date; |
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in the case of Legal Defeasance, we must deliver to the trustee an opinion of counsel to the trustee confirming that (a) we have received from, or there has been published by, the Internal Revenue Service a ruling
or (b) since the issue date of the debt securities, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the holders of the outstanding
debt securities will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same time as would have been
the case if such Legal Defeasance had not occurred; |
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in the case of Covenant Defeasance, we must deliver to the trustee an opinion of counsel to the trustee confirming that the holders of the outstanding debt securities will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
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no default or event of default shall have occurred and be continuing on the date of such deposit (other than a default or event of default resulting from the borrowing of funds to be applied to such deposit);
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the deposit must not result in a breach or violation of, or constitute a default under, any other instrument to which we or any guarantor is a party or by which we or any guarantor is bound; |
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such Legal Defeasance or Covenant Defeasance must not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the applicable indenture) to which we are, or any
of our subsidiaries is, a party or by which we are, or any of our subsidiaries is, bound; |
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we must deliver to the trustee an officers certificate stating that the deposit was not made by us with the intent of preferring the holders of debt securities over our other creditors with the intent of
defeating, hindering, delaying or defrauding our creditors or the creditors of others; |
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we must deliver to the trustee an officers certificate stating that all conditions precedent set forth in clauses (1) through (6) of this paragraph have been complied with; and |
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we must deliver to the trustee an opinion of counsel (which opinion of counsel may be subject to customary assumptions, qualifications, and exclusions) stating that all conditions precedent set forth in clauses (2),
(3) and (6) of this paragraph have been complied with. |
Satisfaction and Discharge
Each of the indentures will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or
exchange of debt securities and certain rights of the trustee, as expressly provided for in such indenture) as to all outstanding debt securities and guarantees issued thereunder when:
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either (a) all of the debt securities theretofore authenticated and delivered under such indenture (except lost, stolen or destroyed debt securities that have been replaced or paid and debt securities for the
payment of which money has theretofore been deposited in trust or segregated and held in trust by us and thereafter repaid to us or discharged from such trust) have been delivered to the trustee for cancellation or (b) all debt securities not
theretofore delivered to the trustee for cancellation have become due and payable, will become due and payable at their stated maturity within one year, or are to be called for redemption within one year under arrangements satisfactory to the
trustee for the giving of notice of redemption by the trustee in the name, and at the expense, of us, and we or the guarantors, if any, have irrevocably deposited or caused to be deposited with the trustee funds, in an amount sufficient to pay and
discharge the entire indebtedness on the debt securities not theretofore delivered to the trustee for cancellation, for principal of and premium, if any, and interest on the debt securities to the date of deposit (in the case of debt securities that
have become due and payable) or to the stated maturity or redemption date, as the case may be, together with instructions from us irrevocably directing the trustee to apply such funds to the payment thereof at maturity or redemption, as the case may
be; |
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we have paid all other sums then due and payable under such indenture by us; and |
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we have delivered to the trustee an officers certificate and an opinion of counsel, which state that all conditions precedent under such indenture relating to the satisfaction and discharge of such indenture have
been complied with. |
No Personal Liability of Directors, Managers, Officers, Employees, Partners, Members and Stockholders
No director, manager, officer, employee, partner, member, unitholder or stockholder of our partnership, our general partner or any guarantor,
as such, shall have any liability for any of our or the guarantors obligations under the debt securities, the indentures, the guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder
of debt securities, upon our issuance of the debt securities and execution of the indentures, waives and releases all such liability. The waiver and release are part of the consideration for issuance of the debt securities. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.
Denominations
Unless stated otherwise in
the prospectus supplement for each issuance of debt securities, the debt securities will be issued in denominations of $1,000 each or integral multiples of $1,000.
Paying Agent and Registrar
The trustee
will initially act as paying agent and registrar for the debt securities. We may change the paying agent or registrar without prior notice to the holders of the debt securities, and we may act as paying agent or registrar.
Transfer and Exchange
A holder may
transfer or exchange debt securities in accordance with the applicable indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and we may require a holder to pay
any taxes and fees required by law or permitted by the applicable indenture. We are not required to transfer or exchange any debt security selected for redemption. In addition, we are not required to transfer or exchange any debt security for a
period of 15 days before a selection of debt securities to be redeemed.
Subordination
The payment of the principal of and premium, if any, and interest on subordinated debt securities and any of our other payment obligations in
respect of subordinated debt securities (including any obligation to repurchase subordinated debt securities) is subordinated in certain circumstances in right of payment, as set forth in the subordinated indenture, to the prior payment in full in
cash of all senior debt.
We also may not make any payment, whether by redemption, purchase, retirement, defeasance or otherwise, upon or
in respect of subordinated debt securities, except from a trust described under Legal Defeasance and Covenant Defeasance, if
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a default in the payment of all or any portion of the obligations on any designated senior debt (payment default) occurs that has not been cured or waived, or |
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any other default occurs and is continuing with respect to designated senior debt pursuant to which the maturity thereof may be accelerated (non-payment default) and, solely with respect to this clause, the
trustee for the subordinated debt securities receives a notice of the default (a payment blockage notice) from the trustee or other representative for the holders of such designated senior debt. |
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Cash payments on subordinated debt securities will be resumed (a) in the case of a payment
default, upon the date on which such default is cured or waived, and (b) in case of a nonpayment default, the earliest of the date on which such nonpayment default is cured or waived, the termination of the payment blockage period by written
notice to the trustee for the subordinated debt securities from the trustee or other representative for the holders of such designated senior debt, the payment in full of such designated senior debt or 179 days after the date on which the applicable
payment blockage notice is received. No new payment blockage period may be commenced unless and until 360 days have elapsed since the date of commencement of the payment blockage period resulting from the immediately prior payment blockage notice.
No nonpayment default in respect of designated senior debt that existed or was continuing on the date of delivery of any payment blockage notice to the trustee for the subordinated debt securities will be, or be made, the basis for a subsequent
payment blockage notice unless such default shall have been cured or waived for a period of no less than 90 consecutive days.
Upon any
payment or distribution of our assets or securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with the subordinated indenture) in connection with any dissolution or winding up or
total or partial liquidation or reorganization of us, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings or other marshalling of assets for the benefit of creditors, all amounts due or to become due
upon all senior debt shall first be paid in full, in cash or cash equivalents, before the holders of the subordinated debt securities or the trustee on their behalf shall be entitled to receive any payment by or on behalf of us on account of the
subordinated debt securities, or any payment to acquire any of the subordinated debt securities for cash, property or securities, or any distribution with respect to the subordinated debt securities of any cash, property or securities. Before any
payment may be made by, or on behalf of, us on any subordinated debt security (other than with the money, securities or proceeds held under any defeasance trust established in accordance with the subordinated indenture) in connection with any such
dissolution, winding up, liquidation or reorganization, any payment or distribution of our assets or securities, to which the holders of subordinated debt securities or the trustee on their behalf would be entitled, shall be made by us or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, or by the holders or the trustee if received by them or it, directly to the holders of senior debt or their representatives or
to any trustee or trustees under any indenture pursuant to which any such senior debt may have been issued, as their respective interests appear, to the extent necessary to pay all such senior debt in full, in cash or cash equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for the holders of such senior debt.
As a result of these
subordination provisions, in the event of our liquidation, bankruptcy, reorganization, insolvency, receivership or similar proceeding or an assignment for the benefit of our creditors or a marshalling of our assets or liabilities, holders of
subordinated debt securities may receive ratably less than other creditors.
Payment and Transfer
Principal, interest and any premium on fully registered debt securities will be paid at designated places. Payment will be made by check mailed
to the persons in whose names the debt securities are registered on days specified in the indentures or any prospectus supplement. Debt securities payments in other forms will be paid at a place designated by us and specified in a prospectus
supplement.
Fully registered debt securities may be transferred or exchanged at the office of the trustee or at any other office or
agency maintained by us for such purposes, without the payment of any service charge except for any tax or governmental charge.
Global Securities
The debt securities of a series may be issued in whole or in part in the form of one or more global certificates that we will deposit
with a depositary identified in the applicable prospectus supplement. Unless and until it is exchanged in whole or in part for the individual debt securities that it represents, a global security may not be transferred except as a whole:
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by the applicable depositary to a nominee of the depositary; |
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by any nominee to the depositary itself or another nominee; or |
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by the depositary or any nominee to a successor depositary or any nominee of the successor. |
We will describe the specific terms of the depositary arrangement with respect to a series of debt securities in the applicable prospectus
supplement. We anticipate that the following provisions will generally apply to depositary arrangements.
When we issue a global
security in registered form, the depositary for the global security or its nominee will credit, on its book-entry registration and transfer system, the respective principal amounts of the individual debt securities represented by that global
security to the accounts of persons that have accounts with the depositary (participants). Those accounts will be designated by the dealers, underwriters or agents with respect to the underlying debt securities or by us if those
debt securities are offered and sold directly by us. Ownership of beneficial interests in a global security will be limited to participants or persons that may hold interests through participants. For interests of participants, ownership of
beneficial interests in the global security will be shown on records maintained by the applicable depositary or its nominee. For interests of persons other than participants, that ownership information will be shown on the records of participants.
Transfer of that ownership will be effected only through those records. The laws of some states require that certain purchasers of securities take physical delivery of securities in definitive form. These limits and laws may impair our ability to
transfer beneficial interests in a global security.
As long as the depositary for a global security, or its nominee, is the
registered owner of that global security, the depositary or nominee will be considered the sole owner or holder of the debt securities represented by the global security for all purposes under the applicable indenture. Except as provided below,
owners of beneficial interests in a global security:
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will not be entitled to have any of the underlying debt securities registered in their names; |
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will not receive or be entitled to receive physical delivery of any of the underlying debt securities in definitive form; and |
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will not be considered the owners or holders under the indenture relating to those debt securities. |
Payments of the principal of, any premium on and any interest on individual debt securities represented by a global security registered in the
name of a depositary or its nominee will be made to the depositary or its nominee as the registered owner of the global security representing such debt securities. Neither we, the trustee for the debt securities, any paying agent nor the registrar
for the debt securities will be responsible for any aspect of the records relating to or payments made by the depositary or any participants on account of beneficial interests in the global security.
We expect that the depositary or its nominee, upon receipt of any payment of principal, any premium or interest relating to a global security
representing any series of debt securities, immediately will credit participants accounts with the payments. Those payments will be credited in amounts proportional to the respective beneficial interests of the participants in the principal
amount of the global security as shown on the records of the depositary or its nominee. We also expect that payments by participants to owners of beneficial interests in the global security held through those participants will be governed by
standing instructions and customary practices. This is now the case with securities held for the accounts of customers registered in street name. Those payments will be the sole responsibility of those participants.
If the depositary for a series of debt securities is at any time unwilling, unable or ineligible to continue as depositary and we do not
appoint a successor depositary within 90 days, we will issue individual debt securities of that series in exchange for the global security or securities representing that series. In addition, we may at any time in our sole discretion determine not
to have any debt securities of a series represented by one or more global securities. In that event, we will issue individual debt securities of that series in exchange for the global security
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or securities. The foregoing is subject to any limitations described in the applicable prospectus supplement. In any such instance, the owner of the beneficial interest will be entitled to
physical delivery of individual debt securities equal in principal amount to the beneficial interest and to have the debt securities registered in its name. Those individual debt securities will be issued in any authorized denominations.
Governing Law
Each indenture and the
debt securities will be governed by and construed in accordance with the laws of the State of New York.
Information Concerning the Trustee
U.S. Bank National Association will be the trustee under the indentures. A successor trustee may be appointed in accordance with the terms of
the indentures.
The indentures and the provisions of the Trust Indenture Act incorporated by reference therein will contain certain
limitations on the rights of the trustee, should it become a creditor of us, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be
permitted to engage in other transactions; however, if it acquires any conflicting interest (within the meaning of the Trust Indenture Act), it must eliminate such conflicting interest or resign.
A single banking or financial institution may act as trustee with respect to both the subordinated indenture and the senior indenture. If this
occurs, and should a default occur with respect to either the subordinated debt securities or the senior debt securities, such banking or financial institution would be required to resign as trustee under one of the indentures within 90 days of such
default, pursuant to the Trust Indenture Act, unless such default were cured, duly waived or otherwise eliminated.
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DESCRIPTION OF WARRANTS
We may issue warrants to purchase common units, other partnership securities, debt securities or rights. We may issue warrants independently
or together with other securities that may be attached to or separate from the warrants. If we issue warrants, we may do so under one or more warrant agreements between us and a warrant agent that we will name in the prospectus supplement.
The prospectus supplement relating to any warrants being offered will include specific terms relating to the offering. These terms will
include some or all of the following:
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the title of the warrants; |
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the securities purchasable upon the exercise of such warrants; |
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the aggregate number of warrants to be issued; |
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the principal amount of securities purchasable upon exercise of each warrant; |
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the price or prices at which each warrant will be issued; |
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the procedures for exercising the warrants; |
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the date upon which the exercise of warrants will commence; |
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the expiration date, and any other material terms of the warrants; and |
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any other terms of such warrants, including the terms, procedures and limitations relating to the exchange and exercise of such warrants. |
The warrants do not confer upon the holders thereof any voting or other rights of unitholders.
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DESCRIPTION OF RIGHTS
We may issue rights to purchase our common units, other partnership securities, debt securities or warrants. The rights may be issued
independently or together with any other security offered hereby and may or may not be transferable by the persons purchasing or receiving the rights in such offering. In connection with any offering of such rights, we may enter into a standby
underwriting or other arrangement with one or more underwriters or other purchasers pursuant to which such underwriters or other purchasers may be required to purchase any offered securities remaining unsubscribed for after such rights offering.
Each series of rights will be issued under a separate rights agreement that we will enter into with one or more banks, trust companies or
other financial institutions, as rights agent, all of which will be set forth in the applicable prospectus supplement. The rights agent will act solely as our agent in connection with the certificates relating to the rights and will not assume any
obligation or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights.
The
applicable prospectus supplement relating to any rights that we offer will include specific terms of any offering of rights for which this prospectus is being delivered, including the following:
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the price, if any, per right; |
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the exercise price payable for each common unit, partnership security, debt security or warrant upon the exercise of the rights; |
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the number of rights issued or to be issued to each unitholder; |
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the number and terms of the common units, partnership securities, debt securities or warrants that may be purchased per each right; |
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the extent to which the rights are transferable; |
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any other terms of the rights, including the terms, procedures and limitations relating to the exchange and exercise of the rights; |
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the respective dates on which the holders ability to exercise the rights will commence and will expire; |
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the extent to which the rights may include an over-subscription privilege with respect to unsubscribed securities; and |
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if applicable, the material terms of any standby underwriting or purchase arrangement entered into by us in connection with the offering of such rights. |
The description in the applicable prospectus supplement of any rights that we may offer will not necessarily be complete and will be qualified
in its entirety by reference to the applicable rights certificate, which will be filed with the SEC.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
This section summarizes the material federal income tax consequences that may be relevant to individual citizens or residents of the U.S.
owning our common units and, unless otherwise noted in the following discussion, is the opinion of Andrews Kurth LLP insofar as it relates to legal conclusions with respect to matters of federal income tax law. This section is based upon current
provisions of the Code, existing and proposed Treasury Regulations and current administrative rulings and court decisions, all of which are subject to change. 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 Sanchez Production Partners LP and our limited liability company operating subsidiaries.
The following discussion does not comment on all federal income tax matters affecting us or our unitholders and does not describe the
application of the alternative minimum tax that may be applicable to certain unitholders. Moreover, the discussion focuses on unitholders who are individual citizens or residents of the United States and has only limited application to corporations,
estates, 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 non-U.S. persons eligible for the
benefits of an applicable income tax treaty with the United States), 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 units as part of a straddle, hedge, conversion transaction or other risk reduction transaction, and persons deemed to sell their units under the constructive sale provisions
of the Code. In addition, the discussion only comments, to a limited extent, on state, local, and foreign tax consequences. Accordingly, we encourage each prospective unitholder to consult his own tax advisor in analyzing the state, local and
foreign tax consequences particular to him of the ownership or disposition of common units and potential changes in applicable laws.
No
ruling has been or will be requested from the IRS regarding any matter affecting us or the consequences of owning our common units. Instead, we will rely on opinions of Andrews Kurth LLP. Unlike a ruling, an opinion of counsel represents only that
counsels 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 common units and the prices at which the common units trade. In addition, the costs of any contest with the IRS, principally legal, accounting and related fees, will be borne indirectly by our unitholders and our
general partner because the costs will reduce the cash available for distribution. 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.
All statements as to matters of 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 Andrews Kurth LLP and are based on the accuracy of the representations made by us.
For the reasons described below, Andrews Kurth LLP has not rendered an opinion with respect to the following specific U.S. federal income tax
issues:
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the treatment of a common unitholder whose units are loaned to a short seller to cover a short sale of units (please read Tax Consequences of Unit OwnershipTreatment of Short Sales);
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whether our monthly convention for allocating taxable income and losses is permitted by existing Treasury Regulations (please read Disposition of UnitsAllocations Between Transferors and
Transferees); and |
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whether our method for depreciating Section 743 adjustments is sustainable in certain cases (please read Tax Consequences of Unit OwnershipSection 754 Election and Uniformity of
Units). |
Partnership Status
Except as discussed in the following paragraph, a partnership is not a taxable entity and incurs no U.S. federal income tax liability. Instead,
each partner is required to take into account his respective share of items of our income, gain, loss and deduction of the partnership in computing his U.S. federal income tax liability, even if no cash distributions are made to him. Distributions
by a partnership to a partner are generally not taxable to the partner unless the amount of cash distributed to him is in excess of his 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 in this discussion 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 exploration, development, mining or production, processing, transportation and marketing of natural resources, including oil, natural gas, and products thereof. Other types
of qualifying income include interest (other than from a financial business), dividends, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes
qualifying income. We estimate that less than 3% of our current gross income does not constitute qualifying income; however, this estimate could change from time to time. Based on and subject to this estimate, the factual representations made by us,
and a review of the applicable legal authorities, Andrews Kurth LLP is of the opinion that more than 90% of our current gross income constitutes qualifying income. The portion of our income that is qualifying income may change from time to time.
No ruling has been or will be sought from the IRS, and the IRS has made no determination as to our status or the status of our operating
subsidiaries for U.S. federal income tax purposes or whether our operations generate qualifying income under Section 7704 of the Internal Revenue Code. Instead, we will rely on the opinion of Andrews Kurth LLP on such matters.
Andrews Kurth LLP is of the opinion, based upon the Internal Revenue Code, its regulations, published revenue rulings, court decisions and factual representations made by us, that we are and will continue to be classified as a partnership, and each
of our operating subsidiaries will be disregarded as an entity separate from us, for U.S. federal income tax purposes.
In rendering its
opinion, Andrews Kurth LLP has relied on factual representations made by us. The representations made by us upon which Andrews Kurth LLP has relied include, without limitation:
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Neither we nor any of our operating subsidiaries have elected or will elect to be treated as a corporation; and |
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For each taxable year, more than 90% of our gross income has been and will be income that Andrews Kurth 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 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, 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 common unitholders in liquidation of their interests in us. This deemed contribution and liquidation would be tax-free
to common 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 U.S. federal income tax purposes.
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If we were taxable as a corporation for U.S. federal income tax purposes 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 common unitholders, and our net income
would be taxed to us at corporate rates. In addition, any distribution made to a common unitholder would be treated as taxable dividend income to the extent of our current or accumulated earnings and profits, or, in the absence of earnings and
profits, a nontaxable return of capital to the extent of the common unitholders tax basis in his units, or taxable capital gain, after the common unitholders tax basis in his units is reduced to zero. Accordingly, taxation as a
corporation would result in a material reduction in a common unitholders cash flow and after-tax return and thus would likely result in a substantial reduction of the value of the units.
The remainder of this section assumes that we are and will continue to be classified as a partnership for U.S. federal income tax purposes.
Common Unitholder Status
Common
unitholders who become our limited partners will be treated as our partners for U.S. federal income tax purposes. Also, common unitholders whose units are held in street name or by a nominee and who have the right to direct the nominee in the
exercise of all substantive rights attendant to the ownership of their units will be treated as our partners for U.S. federal income tax purposes. A beneficial owner of units whose units have been transferred to a short seller to complete a short
sale would appear to lose his status as a partner with respect to those units for U.S. federal income tax purposes. Please read Tax Consequences of Unit OwnershipTreatment of Short Sales. As there is no direct or indirect
controlling authority addressing assignees of common units who are entitled to execute and deliver transfer applications and thereby become entitled to direct the exercise of attendant rights, but who fail to execute and deliver transfer
applications, Andrews Kurth LLPs opinion does not extend to these persons. Furthermore, a purchaser or other transferee of common units who does not execute and deliver a transfer application may not receive some U.S. federal income tax
information or reports furnished to record holders of common units unless the common units are held in a nominee or street name account and the nominee or broker has executed and delivered a transfer application for those common units.
Items of our income, gain, loss, or deduction are not reportable by a common unitholder who is not a partner for U.S. federal income tax
purposes, and any cash distributions received by a common unitholder who is not a partner for U.S. federal income tax purposes would therefore be fully taxable as ordinary income. These common unitholders are urged to consult their own tax advisors
with respect to their status as our partners for U.S. federal income tax purposes.
The references to common unitholders in
the discussion that follows are to persons who are treated as our partners for U.S. federal income tax purposes.
Tax Consequences of Unit Ownership
Flow-Through of Taxable Income
Subject to the discussion below under Entity-Level Collections, neither we nor our subsidiaries pay any U.S. federal income
tax. Instead, each common unitholder is be required to report on his income tax return his share of our income, gains, losses and deductions without regard to whether corresponding cash distributions are received by him. Consequently, we may
allocate income to a common unitholder even if he has not received a cash distribution. Each common unitholder is required to include in income his share of our income, gain, loss and deduction for our taxable year or years ending with or within his
taxable year. Our taxable year ends on December 31.
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Treatment of Distributions
Distributions made by us to a common unitholder generally are not be taxable to the common unitholder for U.S. federal income tax purposes to
the extent of his tax basis in his units immediately before the distribution. Cash distributions made by us to a common unitholder in an amount in excess of his tax basis in his units generally are considered to be gain from the sale or exchange of
those units, taxable in accordance with the rules described under Disposition of Units below. To the extent that cash distributions made by us cause a common unitholders at risk amount to be less than zero at the
end of any taxable year, the common unitholder must recapture any losses deducted in previous years. Please read Limitations on Deductibility of Losses.
Any reduction in a common unitholders share of our liabilities for which no partner bears the economic risk of loss, known as
nonrecourse liabilities, will be treated as a distribution of cash to that common unitholder.
A decrease in a common
unitholders percentage interest in us because of our issuance of additional common units will decrease his share of our nonrecourse liabilities and thus will result in a corresponding deemed distribution of cash, which may constitute a non-pro
rata distribution. A non-pro rata distribution of money or property may result in ordinary income to a common unitholder, regardless of his tax basis in his units, if the distribution reduces the common unitholders share of our
unrealized receivables, including recapture of intangible drilling and development costs, depletion and depreciation recapture, and/or substantially appreciated inventory items, both as defined in Section 751 of the
Internal Revenue Code, and collectively, Section 751 Assets. To that extent, he will be treated as having received his proportionate share of the Section 751 Assets and having exchanged those assets with us in return for the non-pro
rata portion of the actual distribution made to him. This latter deemed exchange will generally result in the common unitholders realization of ordinary income. That income will equal the excess of (1) the non-pro rata portion of that
distribution over (2) the common unitholders tax basis (generally zero) for the share of Section 751 Assets deemed relinquished in the exchange.
Basis of Units
A
common unitholders initial tax basis in his units will be the amount he paid for those units plus his share of our nonrecourse liabilities . That basis will be increased by his share of our income and by any increases in his share of our
nonrecourse liabilities. That basis generally will be decreased, but not below zero, by distributions to him from us, by his share of our losses, by depletion deductions taken by him to the extent such deductions do not exceed his proportionate
share of the adjusted tax basis of the underlying producing properties, by any decreases in his share of our nonrecourse liabilities and by his share of our expenditures that are not deductible in computing taxable income and are not required to be
capitalized. A common unitholders share of our nonrecourse liabilities will generally be based on his share of our profits. Please read Disposition of UnitsRecognition of Gain or Loss.
Limitations on Deductibility of Losses
The deduction by a common unitholder of his share of our losses is limited to his tax basis in his units and, in the case of an individual,
estate, trust or corporate common unitholder (if more than 50% of the value of its stock is owned directly or indirectly by or for five or fewer individuals or some tax-exempt organizations) to the amount for which the common unitholder is
considered to be at risk with respect to our activities, if that amount is less than his tax basis. A common unitholder subject to these limitations must recapture losses deducted in previous years to the extent that distributions cause
his at risk amount to be less than zero at the end of any taxable year. Losses disallowed to a common unitholder or recaptured as a result of these limitations will carry forward and will be allowable as a deduction in a later year to the extent
that his tax basis or at risk amount, whichever is the limiting factor, is subsequently increased. Upon the taxable disposition of a unit, any gain recognized by a common unitholder can be offset by losses that were previously suspended by the at
risk limitation but may not be offset by losses suspended by the basis limitation. Any loss previously suspended by the at risk limitation in excess of that gain is no longer utilizable.
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In general, a common unitholder will be at risk to the extent of his tax basis in his units,
excluding any portion of that basis attributable to his share of our nonrecourse liabilities, reduced by (i) any portion of that basis representing amounts otherwise protected against loss because of a guarantee, stop loss agreement, or other
similar arrangement and (ii) any amount of money the common unitholder borrows to acquire or hold his units, if the lender of those borrowed funds owns an interest in us, is related to another common unitholder or can look only to the units for
repayment. A common unitholders at risk amount will increase or decrease as the tax basis of another common unitholders common units increases or decreases, other than tax basis increases or decreases attributable to increases or
decreases in his share of our nonrecourse liabilities.
The at risk limitation applies on an activity-by-activity basis, and in the case
of oil and natural gas properties, each property is treated as a separate activity. Thus, a taxpayers interest in each oil or gas property is generally required to be treated separately so that a loss from any one property would be limited to
the at risk amount for that property and not the at risk amount for all the taxpayers oil and natural gas properties. It is uncertain how this rule is implemented in the case of multiple oil and natural gas properties owned by a single entity
treated as a partnership for U.S. federal income tax purposes. However, for taxable years ending on or before the date on which further guidance is published, the IRS will permit aggregation of oil or gas properties we own in computing a common
unitholders at risk limitation with respect to us. If a common unitholder must compute his at risk amount separately with respect to each oil or gas property we own, he may not be allowed to utilize his share of losses or deductions
attributable to a particular property even though he has a positive at risk amount with respect to his units as a whole.
The passive loss
limitation generally provides that individuals, estates, trusts and some closely held corporations and personal service corporations are permitted to deduct losses from passive activities, which are generally defined as trade or business activities
in which the taxpayer does not materially participate, only to the extent of the taxpayers income from those passive activities. The passive loss limitation is applied separately with respect to each publicly traded partnership. Consequently,
any passive losses we generate will be available to offset only our passive income generated in the future and will not be available to offset income from other passive activities or investments, including our investments, a common unitholders
investments in other publicly traded partnerships, or a common unitholders salary or active business income. Passive losses that are not deductible because they exceed a common unitholders share of income we generate may only be deducted
by the common unitholder in full when he disposes of his entire investment in us in a fully taxable transaction with an unrelated party. The passive activity loss limitations are applied after certain other applicable limitations on deductions,
including the at risk rules and the tax basis limitation.
A common unitholders share of our net income may be offset by any of our
suspended passive losses, but it may not be offset by any other current or carryover losses from other passive activities, including those attributable to other publicly traded partnerships.
Limitation on Interest Deductions
The deductibility of a non-corporate taxpayers investment interest expense is generally limited to the amount of that
taxpayers net investment income. Investment interest expense includes:
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interest on indebtedness properly allocable to property held for investment; |
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our interest expense attributable to portfolio income; and |
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the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable to portfolio income. |
The computation of a common unitholders investment interest expense will take into account interest on any margin account borrowing or
other loan incurred to purchase or carry a common unit.
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Net investment income includes gross income from property held for investment and amounts treated
as portfolio income under the passive loss limitations, less deductible expenses, other than interest, directly connected with the production of investment income, but generally does not include gains attributable to the disposition of property held
for investment. The IRS has indicated that net passive income earned by a publicly traded partnership will be treated as investment income to its common unitholders for purposes of the investment interest expense limitations. In addition, the common
unitholders share of our portfolio income will be treated as investment income.
Entity-Level Collections
If we are required or elect under applicable law to pay any federal, state or local income tax on behalf of any common unitholder or any former
common unitholder, we are authorized to pay those taxes from our funds. That payment, if made, will be treated as a distribution of cash to the common unitholder on whose behalf the payment was made. If the payment is made on behalf of a common
unitholder whose identity cannot be determined, we are authorized to treat the payment as a distribution to all current common 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 a common unitholder in which event the common unitholder would be required to file a claim in order to obtain a credit or refund.
Allocation of Income, Gain, Loss and Deduction
In general, if we have a net profit, our items of income, gain, loss and deduction will be allocated among the common unitholders in accordance
with their percentage interests in us. If we have a net loss for an entire year, the loss will be allocated to our common unitholders according to their percentage interests in us to the extent of their positive capital account balances.
Specified items of our income, gain, loss and deduction will be allocated under Section 704(c) of the Internal Revenue Code to account
for the difference between the tax basis and fair market value of our assets at the time we issue common units in an offering, which assets are referred to in this discussion as Contributed Property. These allocations are required to
eliminate the difference between a partners book capital account, credited with the fair market value of Contributed Property, and the tax capital account, credited with the tax basis of Contributed Property, referred
to in this discussion as the book-tax disparity. The effect of these allocations to a common unitholder who purchases common units in such an offering will be essentially the same as if the tax basis of our assets were equal to their
fair market value at the time of the offering. In the event we issue additional common units or engage in certain other transactions in the future, Section 704(c) allocations will be made to all holders of common units to account for the
difference between the book basis for purposes of maintaining capital accounts and the fair market value of all property held by us at the time of the future transaction. In addition, items of recapture income will be allocated to the
extent possible to the common unitholder who was allocated the deduction giving rise to the treatment of that gain as recapture income in order to minimize the recognition of ordinary income by other common unitholders.
An allocation of items of our income, gain, loss or deduction, other than an allocation required by Section 704(c), will generally be
given effect for U.S. federal income tax purposes in determining a common unitholders share of an item of income, gain, loss or deduction only if the allocation has substantial economic effect. In any other case, a common unitholders
share of an item will be determined on the basis of his interest in us, which will be determined by taking into account all the facts and circumstances, including:
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his relative contributions to us; |
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the interests of all the common unitholders in profits and losses; |
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the interest of all the common unitholders in cash flow; and |
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the rights of all the common unitholders to distributions of capital upon liquidation. |
Treatment of Short Sales
A common unitholder whose units are loaned to a short seller to cover a short sale of units may be considered as having disposed of
those units. If so, he would no longer be a partner for tax purposes with respect to those units during the period of the loan and may recognize gain or loss from the disposition. As a result, during this period:
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none of our income, gain, loss or deduction with respect to those units would be reportable by the common unitholder; |
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any cash distributions received by the common unitholder with respect to those units would be fully taxable; and |
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all of these distributions would appear to be ordinary income. |
Because there is no direct or
indirect controlling authority on the issue relating to partnership interests, Andrews Kurth LLP has not rendered an opinion regarding the treatment of a common unitholder whose common units are loaned to a short seller. Therefore, common
unitholders desiring to assure their status as partners and avoid the risk of gain recognition are urged to modify any applicable brokerage account agreements to prohibit their brokers from borrowing and loaning their common units. The IRS has
announced that it is studying issues relating to the tax treatment of short sales of partnership interests. Please also read Disposition of UnitsRecognition of Gain or Loss.
Tax Rates
Under
current law, the highest effective U.S. federal income tax rate applicable to ordinary income of individuals currently is 39.6% and the maximum U.S. federal income tax rate for net long-term capital gains (generally, gains from the sale of certain
investment assets held for more than one year) of an individual is 20%. Such rates are subject to change by new legislation at any time.
In addition, a 3.8% net investment income tax (NIIT) is imposed on certain net investment income earned by individuals, estates,
and trusts. For these purposes, net investment income generally includes a common unitholders allocable share of our income and gain realized by a common unitholder from a sale of common units. In the case of an individual, the tax is imposed
on the lesser of (i) the common unitholders net investment income from all investments, or (ii) the amount by which the common unitholders modified adjusted gross income exceeds $250,000 (if the common unitholder is married and
filing jointly or a surviving spouse) or $200,000 (if the common unitholder is unmarried). In the case of an estate or trust, the tax is 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.
Section 754
Election
We have made the election permitted by Section 754 of the Internal Revenue Code. That election is irrevocable
without the consent of the IRS. That election will generally permit us to adjust a unit purchasers tax basis in our assets (inside basis) under Section 743(b) of the Internal Revenue Code to reflect his purchase price. The
Section 743(b) adjustment applies to a person who purchases common units in an offering from the selling unitholder, but does not apply to a person who purchases common units directly from us, and it belongs only to the purchaser and not to
other common unitholders. Please also read, however, Allocation of Income, Gain, Loss and Deduction above. For purposes of this discussion, a common unitholders inside basis in our assets has two components: (1) his
share of our tax basis in our assets (common basis) and (2) his Section 743(b) adjustment to that basis.
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The timing and calculation of deductions attributable to Section 743(b) adjustments to our
common basis will depend upon a number of factors, including the nature of the assets to which the adjustment is allocable, the extent to which the adjustment offsets any Internal Revenue Code Section 704(c) type gain or loss with respect to an
asset and certain elections we make as to the manner in which we apply Internal Revenue Code Section 704(c) principles with respect to an asset to which the adjustment is applicable. Please read Allocation of Income, Gain, Loss and
Deduction.
The timing of these deductions may affect the uniformity of our common units. Under our partnership agreement, our
general partner is authorized to take a position to preserve the uniformity of common units even if that position is not consistent with these and any other Treasury Regulations or if the position would result in lower annual depreciation or
amortization deductions than would otherwise be allowable to some common unitholders. Please read Uniformity of Units. Andrews Kurth LLP is unable to opine as to the validity of any such alternate tax positions because there is no
clear applicable authority. A common unitholders basis in a common unit is reduced by his share of our deductions (whether or not such deductions were claimed on an individual income tax return) so that any position that we take that
understates deductions will overstate the common unitholders basis in his common units and may cause the common unitholder to understate gain or overstate loss on any sale of such common units. Please read Uniformity of
Units.
A Section 754 election is advantageous if the transferees tax basis in his common units is higher than the
units share of the aggregate tax basis of our assets immediately prior to the transfer. In that case, as a result of the election, the transferee would have, among other items, a greater amount of depletion and depreciation deductions and the
transferees share of any gain or loss on a sale of our assets would be less. Conversely, a Section 754 election is disadvantageous if the transferees tax basis in his common units is lower than those units share of the
aggregate tax basis of our assets immediately prior to the transfer. Thus, the fair market value of the common units may be affected either favorably or unfavorably by the election. A basis adjustment is required regardless of whether a
Section 754 election is made in the case of a transfer of an interest in us if we have a substantial built-in loss immediately after the transfer, or if we distribute property and have a substantial basis reduction. Generally a built-in loss or
a basis reduction is substantial if it exceeds $250,000.
The calculations involved in the Section 754 election are complex and will
be made on the basis of assumptions as to the fair market value of our assets and other matters. For example, the allocation of the Section 743(b) adjustment among our assets must be made in accordance with the Internal Revenue Code. The IRS
could seek to reallocate some or all of any Section 743(b) adjustment we allocated to our tangible assets to goodwill instead. Goodwill, as an intangible asset, is generally either non-amortizable or amortizable over a longer period of time or
under a less accelerated method than our tangible assets. We cannot assure you that the determinations we make will not be successfully challenged by the IRS or that the resulting deductions will not be reduced or disallowed altogether. Should the
IRS require a different basis adjustment to be made, and should, in our opinion, the expense of compliance exceeds the benefit of the election, we may seek permission from the IRS to revoke our Section 754 election. If permission is granted, a
subsequent purchaser of common units may be allocated more income than such purchaser would have been allocated had the election not been revoked.
Tax Treatment of Operations
Accounting Method and Taxable Year
We use the year ending December 31 as our taxable year and the accrual method of accounting for U.S. federal income tax purposes. Each
common unitholder is required to include in income his share of our income, gain, loss and deduction for our taxable year ending within or with his taxable year. In addition, a common unitholder who has a taxable year ending on a date other than
December 31 and who disposes of all of his common units following the close of our taxable year but before the close of his taxable year must include his share of our income, gain, loss and deduction in income for his taxable year, with the
result that he will be required to include in income for his taxable year his share of more than twelve months of our income, gain, loss and deduction. Please read Disposition of UnitsAllocations Between Transferors and
Transferees.
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Depletion Deductions
Subject to the limitations on deductibility of losses discussed above, common unitholders are entitled to deductions for the greater of either
cost depletion or (if otherwise allowable) percentage depletion with respect to our oil and natural gas interests. Although the Internal Revenue Code requires each common unitholder to compute his own depletion allowance and maintain records of his
share of the adjusted tax basis of the underlying property for depletion and other purposes, we intend to furnish each of our common unitholders with information relating to this computation for U.S. federal income tax purposes. Each common
unitholder, however, remains responsible for calculating his own depletion allowance and maintaining records of his share of the adjusted tax basis of the underlying property for depletion and other purposes.
Percentage depletion is generally available with respect to common unitholders who qualify under the independent producer exemption contained
in Section 613A(c) of the Internal Revenue Code. For this purpose, an independent producer is a person not directly or indirectly involved in the retail sale of oil, natural gas, or derivative products or the operation of a major refinery.
Percentage depletion is calculated as an amount generally equal to 15% (and, in the case of marginal production, potentially a higher percentage) of the common unitholders gross income from the depletable property for the taxable year. The
percentage depletion deduction with respect to any property is limited to 100% of the taxable income of the common unitholder from the property for each taxable year, computed without the depletion allowance. A common unitholder that qualifies as an
independent producer may deduct percentage depletion only to the extent the common unitholders average net daily production of domestic crude oil, or the natural gas equivalent, does not exceed 1,000 barrels. This depletable amount may be
allocated between oil and natural gas production, with 6,000 cubic feet of domestic natural gas production regarded as equivalent to one barrel of crude oil. The 1,000 barrel limitation must be allocated among the independent producer and controlled
or related persons and family members in proportion to the respective production by such persons during the period in question.
In
addition to the foregoing limitations, the percentage depletion deduction otherwise available is limited to 65% of a common unitholders total taxable income from all sources for the year, computed without the depletion allowance, net operating
loss carrybacks, or capital loss carrybacks. Any percentage depletion deduction disallowed because of the 65% limitation may be deducted in the following taxable year if the percentage depletion deduction for such year plus the deduction carryover
does not exceed 65% of the common unitholders total taxable income for that year. The carryover period resulting from the 65% net income limitation is unlimited.
Common unitholders that do not qualify under the independent producer exemption are generally restricted to depletion deductions based on cost
depletion. Cost depletion deductions are calculated by (i) dividing the common unitholders share of the adjusted tax basis in the underlying mineral property by the number of mineral units (barrels of oil and thousand cubic feet, or Mcf,
of natural gas) remaining as of the beginning of the taxable year and (ii) multiplying the result by the number of mineral units sold within the taxable year. The total amount of deductions based on cost depletion cannot exceed the common
unitholders share of the total adjusted tax basis in the property.
All or a portion of any gain recognized by a common unitholder
as a result of either the disposition by us of some or all of our oil and natural gas interests or the disposition by the common unitholder of some or all of his common units may be taxed as ordinary income to the extent of recapture of depletion
deductions, except for percentage depletion deductions in excess of the basis of the property. The amount of the recapture is generally limited to the amount of gain recognized on the disposition.
The foregoing discussion of depletion deductions does not purport to be a complete analysis of the complex legislation and Treasury
Regulations relating to the availability and calculation of depletion deductions by the common unitholders. Further, because depletion is required to be computed separately by each common unitholder and not by us, no assurance can be given, and
Andrews Kurth LLP is unable to express any opinion,
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with respect to the availability or extent of percentage depletion deductions to the common unitholders for any taxable year. Moreover, the availability of percentage depletion may be reduced or
eliminated if recently proposed (or similar) tax legislation is enacted. For a discussion of such legislative proposals, please read Recent Legislative Developments. We encourage each prospective common unitholder to consult his
tax advisor to determine whether percentage depletion would be available to him.
Deductions for Intangible Drilling and Development
Costs
We elect to currently deduct intangible drilling and development costs (IDCs). IDCs generally include our
expenses for wages, fuel, repairs, hauling, supplies and other items that are incidental to, and necessary for, the drilling and preparation of wells for the production of oil, natural gas or geothermal energy. The option to currently deduct IDCs
applies only to those items that do not have a salvage value.
Although we elect to currently deduct IDCs, each common unitholder will
have the option of either currently deducting IDCs or capitalizing all or part of the IDCs and amortizing them on a straight-line basis over a 60-month period, beginning with the taxable month in which the expenditure is made. If a common unitholder
makes the election to amortize the IDCs over a 60-month period, no IDC preference amount in respect of those IDCs will result for alternative minimum tax purposes.
Integrated oil companies must capitalize 30% of all their IDCs (other than IDCs paid or incurred with respect to oil and natural gas wells
located outside of the United States) and amortize these IDCs over 60 months beginning in the month in which those costs are paid or incurred. If the taxpayer ceases to be an integrated oil company, it must continue to amortize those costs as long
as it continues to own the property to which the IDCs relate. An integrated oil company is a taxpayer that has economic interests in oil and natural gas properties and also carries on substantial retailing or refining operations. An oil
or gas producer is deemed to be a substantial retailer or refiner if it is subject to the rules disqualifying retailers and refiners from taking percentage depletion. In order to qualify as an independent producer that is not subject to
these IDC deduction limits, a common unitholder, either directly or indirectly through certain related parties, may not be involved in the refining of more than 75,000 barrels of oil (or the equivalent amount of natural gas) on average for any day
during the taxable year or in the retail marketing of oil and natural gas products exceeding $5 million per year in the aggregate.
IDCs
previously deducted that are allocable to property (directly or through ownership of an interest in a partnership) and that would have been included in the adjusted basis of the property had the IDC deduction not been taken are recaptured to the
extent of any gain realized upon the disposition of the property or upon the disposition by a common unitholder of interests in us. Recapture is generally determined at the common unitholder level. Where only a portion of the recapture property is
sold, any IDCs related to the entire property are recaptured to the extent of the gain realized on the portion of the property sold. In the case of a disposition of an undivided interest in a property, a proportionate amount of the IDCs with respect
to the property is treated as allocable to the transferred undivided interest to the extent of any gain recognized. Please read Disposition of UnitsRecognition of Gain or Loss.
The election to currently deduct IDCs may be restricted or eliminated if recently proposed (or similar) tax legislation is enacted. For a
discussion of such legislative proposals, please read Recent Legislative Developments.
Deduction for United
States Production Activities
Subject to the limitations on the deductibility of losses discussed above and the limitation
discussed below, common unitholders will be entitled to a deduction, herein referred to as the Section 199 deduction, equal to 9% of our qualified production activities income that is allocated to such common unitholder but not to exceed 50% of
such common unitholders actual or deemed IRS Form W-2 wages for the taxable year allocable to domestic production gross receipts.
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Qualified production activities income is generally equal to gross receipts from domestic
production activities reduced by cost of goods sold allocable to those receipts, other expenses directly associated with those receipts, and a share of other deductions, expenses and losses that are not directly allocable to those receipts or
another class of income. The products produced must be manufactured, produced, grown or extracted in whole or in significant part by the taxpayer in the United States.
For a partnership, the Section 199 deduction is determined at the partner level. To determine his Section 199 deduction, each common
unitholder will aggregate his share of the qualified production activities income allocated to him from us with the common unitholders qualified production activities income from other sources. Each common unitholder must take into account his
distributive share of the expenses allocated to him from our qualified production activities regardless of whether we otherwise have taxable income. However, our expenses that otherwise would be taken into account for purposes of computing the
Section 199 deduction are only taken into account only if and to the extent the common unitholders share of losses and deductions from all of our activities is not disallowed by the basis rules, the at-risk rules or the passive activity
loss rules. Please read Tax Consequences of Unit OwnershipLimitations on Deductibility of Losses.
The amount of a
common unitholders Section 199 deduction for each year is limited to 50% of the IRS Form W-2 wages actually or deemed paid by the common unitholder during the calendar year that are deducted in arriving at qualified production activities
income. Each common unitholder is treated as having been allocated IRS Form W-2 wages from us equal to the common unitholders allocable share of our wages that are deducted in arriving at our qualified production activities income for that
taxable year. It is not anticipated that we or our subsidiaries will pay material wages that will be allocated to our common unitholders, and thus a common unitholders ability to claim the Section 199 deduction may be limited.
A common unitholders otherwise allowable Section 199 deduction for each taxable year is reduced by 3% of the least of (i) the oil
related qualified production activities income of the common unitholder for the taxable year, (ii) the qualified production activities income of the common unitholder for the taxable year, or (iii) the common unitholders taxable income for the
taxable year (determined without regard to any Section 199 deduction). For this purpose, the term oil related qualified production activities income means the qualified production activities income attributable to the production,
refining, processing, transportation, or distribution of oil, gas, or any primary production thereof. We expect that most or all of our qualified production activities income will consist of oil related qualified production activities income.
This discussion of the Section 199 deduction does not purport to be a complete analysis of the complex legislation and Treasury authority
relating to the calculation of domestic production gross receipts, qualified production activities income, or IRS Form W-2 Wages, or how such items are allocated by us to common unitholders. Further, because the Section 199 deduction is
required to be computed separately by each common unitholder, no assurance can be given, and Andrews Kurth LLP is unable to express any opinion, as to the availability or extent of the Section 199 deduction to the common unitholders. Moreover,
the availability of Section 199 deductions may be reduced or eliminated if recently proposed (or similar) tax legislation is enacted. For a discussion of such legislative proposals, please read Recent Legislative Developments.
Each prospective common unitholder is encouraged to consult his tax advisor to determine whether the Section 199 deduction would be available to him.
Lease Acquisition Costs
The cost of acquiring oil and natural gas leaseholder or similar property interests is a capital expenditure that must be recovered through
depletion deductions if the lease is productive. If a lease is proved worthless and abandoned, the cost of acquisition less any depletion claimed may be deducted as an ordinary loss in the year the lease becomes worthless. Please read
Depletion Deductions. The amortization period for certain geological and geographical expenditures may be extended if recently proposed (or similar) tax legislation is enacted. For a discussion of such legislative proposal, please
read Recent Legislative Developments.
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Geophysical Costs
Geophysical costs paid or incurred in connection with the exploration for, or development of, oil or gas within the United States are allowed
as a deduction ratably over the 24-month period beginning on the date that such expense was paid or incurred.
Operating and
Administrative Costs
Amounts paid for operating a producing well are deductible as ordinary business expenses, as are
administrative costs to the extent they constitute ordinary and necessary business expenses which are reasonable in amount.
Tax
Basis, Depreciation and Amortization
The tax basis of our assets, such as casing, tubing, tanks, pumping units and other similar
property, will be used for purposes of computing depreciation and cost recovery deductions and, ultimately, gain or loss on the disposition of these assets. The U.S. federal income tax burden associated with the difference between the fair market
value of our assets and their tax basis immediately prior to any offering will be borne by our common unitholders as of that time. Please read Tax Consequences of Unit OwnershipAllocation of Income, Gain, Loss and Deduction.
To the extent allowable, we may elect to use the depreciation and cost recovery methods that will result in the largest deductions being
taken in the early years after assets are placed in service. Property we subsequently acquire or construct may be depreciated using accelerated methods permitted by the Internal Revenue Code.
If we dispose of depreciable property by sale, foreclosure, or otherwise, all or a portion of any gain, determined by reference to the amount
of depreciation previously deducted and the nature of the property, may be subject to the recapture rules and taxed as ordinary income rather than capital gain. Similarly, a common unitholder who has taken cost recovery or depreciation deductions
with respect to property we own will likely be required to recapture some or all of those deductions as ordinary income upon a sale of his interest in us. Please read Tax Consequences of Unit OwnershipAllocation of Income, Gain,
Loss and Deduction and Disposition of UnitsRecognition of Gain or Loss.
The costs incurred in selling our
units (called syndication expenses) must be capitalized and cannot be deducted currently, ratably or upon our termination. There are uncertainties regarding the classification of costs as organization expenses, which we may be able to
amortize, and as syndication expenses, which we may not amortize. The underwriting discounts and commissions we incur will be treated as syndication expenses.
Valuation and Tax Basis of Our Properties
The U.S. federal income tax consequences of the ownership and disposition of common units will depend in part on our estimates of the relative
fair market values and the tax bases of our assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we will make many of the relative fair market value estimates ourselves. These estimates and
determinations of basis are subject to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value or basis are later found to be incorrect, the character and amount of items of income, gain, loss or deduction
previously reported by common unitholders might change, and common unitholders might be required to adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.
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Disposition of Units
Recognition of Gain or Loss
Gain or loss will be recognized on a sale of common units equal to the difference between the common unitholders amount realized and the
common unitholders tax basis for the common units sold. A common unitholders amount realized will equal the sum of the cash or the fair market value of other property he receives plus his share of our nonrecourse liabilities. Because the
amount realized includes a common unitholders share of our nonrecourse liabilities, the gain recognized on the sale of common units could result in a tax liability in excess of any cash received from the sale.
Prior distributions from us in excess of cumulative net taxable income for a common unit that decreased a common unitholders tax basis
in that unit will, in effect, become taxable income if the common unit is sold at a price greater than the common unitholders tax basis in that unit, even if the price received is less than his original cost.
Except as noted below, gain or loss recognized by a common unitholder, other than a dealer in units, on the sale or exchange of a
common unit held for more than one year will generally be taxable as capital gain or loss. A portion of this gain or loss, which will likely be substantial, however, will be separately computed and taxed as ordinary income or loss under
Section 751 of the Internal Revenue Code to the extent attributable to assets giving rise to unrealized receivables or inventory items that we own. The term unrealized receivables includes potential recapture
items, including depreciation, depletion, and IDC recapture. Ordinary income attributable to unrealized receivables and inventory items may exceed net taxable gain realized on the sale of a common unit and may be recognized even if there is a net
taxable loss realized on the sale of a common unit. Thus, a common unitholder may recognize both ordinary income and a capital loss upon a sale of common units. Net capital loss may offset capital gains and no more than $3,000 of ordinary income, in
the case of individuals, and may only be used to offset capital gain in the case of corporations. For individuals, trusts and estates, both ordinary income and capital gain recognized on a sale of common units may be subject to NIIT in certain
circumstances. Please read Tax Consequences of Unit OwnershipTax 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. Treasury Regulations under Section 1223 of the Internal Revenue Code allow a selling common unitholder who can identify common units transferred
with an ascertainable holding period to elect to use the actual holding period of the common units transferred. Thus, according to the ruling, a common unitholder will be unable to select high or low basis common units to sell as would be the case
with corporate stock, but, according to the regulations, may designate specific common units sold for purposes of determining the holding period of common units transferred. A common unitholder electing to use the actual holding period of common
units transferred must consistently use that identification method for all subsequent sales or exchanges of common units. A common unitholder considering the purchase of additional common units or a sale of common units 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:
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an offsetting notional principal contract; or |
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a futures or forward contract with respect to the partnership interest or substantially identical property. |
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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 who enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively
sold the financial position.
Allocations Between Transferors and Transferees
In general, our taxable income or loss will be determined annually, will be prorated on a monthly basis and will be subsequently apportioned
among the common unitholders in proportion to the number of units owned by each of them as of the opening of the applicable exchange on the first business day of the month (the Allocation Date). However, gain or loss realized on a sale
or other disposition of our assets other than in the ordinary course of business will be allocated among the common unitholders on the Allocation Date in the month in which that gain or loss is recognized. As a result, a common unitholder
transferring common units may be allocated income, gain, loss and deduction realized after the date of transfer.
Although simplifying
conventions are contemplated by the Code and most publicly traded partnerships use similar simplifying conventions, the use of this method may not be permitted under existing Treasury Regulations. Recently, however, the Department of the Treasury
and the IRS issued proposed Treasury Regulations that provide a safe harbor pursuant to which a publicly-traded partnership may use a similar monthly simplifying convention to allocate tax items among transferor and transferee unitholders, although
such tax items must be prorated on a daily basis. Nonetheless, the proposed regulations do not specifically authorize the use of the proration method we have adopted. Existing publicly-traded partnerships are entitled to rely on those proposed
Treasury Regulations; however, they are not binding on the IRS and are subject to change until the final Treasury Regulations are issued. Accordingly, Andrews Kurth LLP is unable to opine on the validity of this method of allocating income and
deductions between common unitholders. If this method is not allowed under the Treasury Regulations, or only applies to transfers of less than all of the common unitholders interest, our taxable income or losses might be reallocated among the
common unitholders. We are authorized to revise our method of allocation between common unitholders, as well as among common unitholders whose interests vary during a taxable year, to conform to a method permitted under future Treasury Regulations.
A common unitholder who owns units at any time during a quarter and who disposes of them prior to the record date set for a cash
distribution for that quarter will be allocated items of our income, gain, loss and deductions attributable to that quarter but will not be entitled to receive that cash distribution.
Notification Requirements
A common unitholder who sells any of his common units, other than through a broker, generally is 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 common units who purchases units from another common 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 transfer of common units 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.
Constructive Termination
We will be considered to have constructively terminated for federal income tax purposes if there is a sale or exchange of 50% or more of the
total interests in our capital and profits within a twelve-month period. A
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constructive termination results in the closing of our taxable year for all common unitholders. In the case of a common unitholder reporting on a taxable year other than a fiscal year ending
December 31, the closing of our taxable year may result in more than 12 months of our taxable income or loss being includable in his taxable income for the year of termination. A constructive termination occurring on a date other than
December 31 will result in us filing two tax returns for one calendar year and the cost of the preparation of these returns will be borne by all common unitholders. However, pursuant to an IRS relief procedure for publicly traded partnerships
that have technically terminated, the IRS may allow, among other things, that we provide a single Schedule K-1 for the tax year in which a termination occurs. We would be required to make new tax elections after a constructive termination, including
a new election under Section 754 of the Internal Revenue Code, and a constructive termination would result in a deferral of our deductions for depreciation. A constructive termination could also result in penalties if we were unable to
determine that the constructive termination had occurred. Moreover, a constructive termination might either accelerate the application of, or subject us to, any tax legislation enacted before the constructive termination.
Uniformity of Units
Because we cannot match transferors and transferees of common units, we must maintain uniformity of the economic and tax characteristics of the
units to a purchaser of these units. In the absence of uniformity, we may be unable to completely comply with a number of U.S. federal income tax requirements, both statutory and regulatory. A lack of uniformity can result from a literal application
of Treasury Regulation Section 1.167(c)-1(a)(6) and Treasury Regulation Section 1.197-2(g)(3), neither of which is anticipated to apply to a material portion of our assets. Any non-uniformity could have a negative impact on the value of
the common units. Please read Tax Consequences of Unit OwnershipSection 754 Election.
Our partnership agreement
permits us to take positions in filing our tax returns that preserve the uniformity of our common units even under circumstances like those described above. These positions may include reducing for some common unitholders the depreciation,
amortization or loss deductions to which they would otherwise be entitled or reporting a slower amortization of Section 743(b) adjustments for some common unitholders than that to which they would otherwise be entitled. Andrews Kurth LLP is
unable to opine as to validity of such filing positions. A common unitholders basis in common units is reduced by his share of our deductions (whether or not such deductions were claimed on an individual income tax return) so that any position
that we take that understates deductions will overstate the common unitholders basis in his common units, and may cause the common unitholder to understate gain or overstate loss on any sale of such common units. Please read
Disposition of UnitsRecognition of Gain or Loss and Tax Consequences of Unit Ownership Section 754 Election. The IRS may challenge one or more of any positions we take to preserve the uniformity
of common units. If such a challenge were sustained, the uniformity of common units might be affected, and, under some circumstances, the gain from the sale of common units might be increased without the benefit of additional deductions.
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, may have substantially adverse tax consequences to them. Prospective common unitholders who are tax-exempt entities or non-U.S. persons should consult their tax advisor before
investing in our common units.
Employee benefit plans and most other organizations exempt from U.S. federal income tax, including
individual retirement accounts and other retirement plans, are subject to U.S. federal income tax on unrelated business taxable income. Virtually all of our income allocated to a common unitholder that is a tax-exempt organization will be unrelated
business taxable income and will be taxable to them.
Non-resident aliens and foreign corporations, trusts or estates that own units will
be considered to be engaged in business in the United States because of the ownership of units. As a consequence they will be
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required to file federal tax returns to report their share of our income, gain, loss or deduction and pay U.S. federal income tax at regular rates on their share of our net income or gain. Under
rules applicable to publicly traded partnerships, we will withhold tax, at the highest effective applicable rate, from cash distributions made quarterly to foreign common unitholders. Each foreign common unitholder must obtain a taxpayer
identification number from the IRS and submit that number to our transfer agent on a Form W-8 BEN or applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change these
procedures.
In addition, because a foreign corporation that owns units will be treated as engaged in a United States trade or business,
that corporation may be subject to the United States branch profits tax at a rate of 30%, in addition to regular U.S. federal income tax, on its share of our income and gain, as adjusted for changes in the foreign corporations U.S. net
equity, which is effectively connected with the conduct of a United States trade or business. That tax may be reduced or eliminated by an income tax treaty between the United States and the country in which the foreign corporate common
unitholder is a qualified resident. In addition, this type of common unitholder is subject to special information reporting requirements under Section 6038C of the Internal Revenue Code.
A foreign common unitholder who sells or otherwise disposes of a common unit will be subject to U.S. federal income tax on gain realized on
the sale or disposition of that unit to the extent the gain is effectively connected with a United States trade or business of the foreign common unitholder. Under a ruling published by the IRS interpreting the scope of effectively connected
income, a foreign unitholder would be considered to be engaged in business in the United States by virtue of the ownership of common units, and part or all of that common unitholders gain would be effectively connected with that
unitholders indirect U.S. trade or business. Moreover, under the Foreign Investment in Real Property Tax Act, a foreign common unitholder generally will be subject to U.S. federal income tax upon the sale or disposition of a unit if
(i) he owned (directly or constructively applying certain attribution rules) more than 5% of our 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 common unitholder held the units or the 5-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 common unitholders may be subject to U.S. federal income tax on gain from the sale or disposition of their common units.
Administrative Matters
Information Returns and Audit Procedures
We intend to furnish to each common 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 common unitholders 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 Andrews Kurth LLP can assure prospective common
unitholders that the IRS will not successfully contend in court that those positions are impermissible. Any challenge by the IRS could negatively affect the value of the units.
The IRS may audit our U.S. federal income tax information returns. Adjustments resulting from an IRS audit may require each common unitholder
to adjust a prior years tax liability and possibly may result in an audit of his own return. Any audit of a common unitholders return could result in adjustments not related to our returns as well as those related to our returns.
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Partnerships generally are treated as separate entities for purposes of federal tax audits,
judicial review of administrative adjustments by the IRS and tax settlement proceedings. The tax treatment of partnership items of income, gain, loss and deduction are determined in a partnership proceeding rather than in separate proceedings with
the partners. The Internal Revenue Code requires that one partner be designated as the Tax Matters Partner for these purposes. The partnership agreement appoints our general partners as our Tax Matters Partner.
The Tax Matters Partner will make some elections on our behalf and on behalf of common unitholders. In addition, the Tax Matters Partner can
extend the statute of limitations for assessment of tax deficiencies against common unitholders for items in our returns. The Tax Matters Partner may bind a common unitholder with less than a 1% profits interest in us to a settlement with the IRS
unless that common 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 common 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 common unitholder having at least a 1% interest in profits or by any group of common unitholders having in the aggregate at
least a 5% interest in profits. However, only one action for judicial review will go forward, and each common unitholder with an interest in the outcome may participate in that action.
A common unitholder must file a statement with the IRS identifying the treatment of any item on his U.S. 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 common unitholder to substantial penalties.
Nominee Reporting
Persons who hold an interest in us as a nominee for another person are required to furnish to us:
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the name, address and taxpayer identification number of the beneficial owner and the nominee; |
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a statement regarding whether the beneficial owner is: |
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a person that is not a United States person, |
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a foreign government, an international organization or any wholly-owned agency or instrumentality of either of the foregoing, or |
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the amount and description of units held, acquired or transferred for the beneficial owner; and |
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specific information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition cost for purchases, as well as the amount of net proceeds from sales. |
Brokers and financial institutions are required to furnish additional information, including whether they are United States persons and
specific information on units they acquire, hold or transfer for their own account. A penalty of $100 per failure, up to a maximum of $1,500,000 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
An additional tax equal to 20% of the amount of any portion of an underpayment of tax that is attributable to one or
more specified causes, including negligence or disregard of rules or regulations, substantial understatements of income tax and substantial valuation misstatements, is imposed by the Internal Revenue Code. No penalty will be imposed, however, for
any portion of an underpayment if it is shown that there was a reasonable cause for the underpayment of that portion and that the taxpayer acted in good faith regarding the underpayment of that portion.
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For individuals, substantial understatement of income tax in any taxable year exists if the
amount of the understatement exceeds the greater of 10% of the tax required to be shown on the return for the taxable year or $5,000 ($10,000 for most corporations). The amount of any understatement subject to penalty generally is reduced if any
portion is attributable to a position adopted on the return:
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for which there is, or was, substantial authority, or |
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as to which there is a reasonable basis and the relevant facts of that position are disclosed on the return. |
If any item of income, gain, loss or deduction included in the distributive shares of common unitholders could result in that kind of an
understatement of income for which no substantial authority exists, we must disclose the pertinent facts on our return. In addition, we will make a reasonable effort to furnish sufficient information for common unitholders to
make adequate disclosure on their returns to avoid liability for this penalty. More stringent rules would apply to an understatement of tax resulting from ownership of units if we were classified as a tax shelter, which we do not believe
includes us, or any of our investments, plans or arrangements.
A substantial valuation misstatement exists if (a) the value of any
property, or the tax basis of any property, claimed on a tax return is 150% or more of the amount determined to be the correct amount of the valuation or tax basis, (b) the price for any property or services (or for the use of property) claimed
on any such return with respect to any transaction between persons described in Section 482 of the Internal Revenue Code is 200% or more (or 50% or less) of the amount determined under Section 482 to be the correct amount of such price, or
(c) the net Section 482 transfer price adjustment for the taxable year exceeds the lesser of $5 million or 10% of the taxpayers gross receipts. No penalty is imposed unless the portion of the underpayment attributable to a
substantial valuation misstatement exceeds $5,000 ($10,000 for most corporations). The penalty is increased to 40% in the event of a gross valuation misstatement. We do not anticipate making any valuation misstatements.
Reportable Transactions
If we were to engage in a reportable transaction, we (and possibly you and others) would be required to make a detailed disclosure
of the transaction to the IRS. A transaction may be a reportable transaction based upon any of several factors, including the fact that it is a type of transaction publicly identified by the IRS as a listed transaction or that it
produces certain kinds of losses for partnerships, individuals, S corporations, and trusts in excess of $2 million in any single taxable year, or $4 million in any combination of six successive tax years. Our participation in a reportable
transaction could increase the likelihood that our U.S. federal income tax information return (and possibly a common unitholders tax return) is audited by the IRS. Please read Information Returns and Audit Procedures above.
Moreover, if we were to participate in a reportable transaction with a significant purpose to avoid or evade tax or a listed transaction,
our common unitholders could be subject to the following provisions of the American Jobs Creation Act of 2004:
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accuracy-related penalties with a broader scope, significantly narrower exceptions, and potentially greater amounts than described above at Accuracy-related Penalties, |
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for those persons otherwise entitled to deduct interest on federal tax deficiencies, non-deductibility of interest on any resulting tax liability, and |
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in the case of a listed transaction, an extended statute of limitations. |
We do not expect to
engage in any reportable transactions.
Recent Legislative Developments
The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units, may be
modified by administrative, legislative or judicial interpretation at any
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time. For example, from time to time the Presidential Administration and members of the U.S. Congress propose and consider substantive changes to the existing U.S. federal income tax laws that
would affect publicly traded partnerships. One such Administration budget proposal for fiscal year 2016 would, if enacted, tax publicly traded partnerships with fossil fuel activities as corporations for U.S. federal income tax purposes
beginning in 2021. We are unable to predict whether such changes, or other proposals, will ultimately be enacted. However, it is possible that a change in law could affect us and may be retroactively applied. Any such changes could negatively impact
the value of an investment in our common units
Legislation has also been proposed that would, if enacted, make significant changes to
U.S. federal income tax laws, including the elimination of certain key U.S. federal income tax incentives currently available to oil and natural gas exploration and production companies. These changes include, but are not limited to, (i) the
repeal of the percentage depletion allowance for oil and natural gas properties, (ii) the elimination of current deductions for intangible drilling and development costs, (iii) the elimination of the deduction for certain domestic
production activities, and (iv) an extension of the amortization period for certain geological and geophysical expenditures. The passage of any legislation as a result of these proposals or any other similar changes in U.S. federal income tax
laws could eliminate or postpone certain tax deductions that are currently available with respect to oil and natural gas exploration and development, and any such change could increase the taxable income allocable to our common unitholders and
negatively impact the value of an investment in our common units.
State, Local and Other Tax Considerations
In addition to U.S. federal income taxes, you will be subject to other taxes, including state and local income taxes, unincorporated business
taxes, and estate, inheritance or intangible taxes that may be imposed by the various jurisdictions in which we do business or own property or in which you are a resident. We currently do business and own property in multiple states, most of which
impose income taxes on individuals, corporations, and other entities. We may also own property or do business in additional states in the future. Although an analysis of those various taxes is not presented here, each prospective common unitholder
should consider their potential impact on his investment in us. You may not be required to file a return and pay taxes in some states because your income from that state falls below the filing and payment requirement. You will be required, however,
to file state income tax returns and to pay state income taxes in many of the states in which we may do business or own property, and you may be subject to penalties for failure to comply with those requirements. In some states, tax losses may not
produce a tax benefit in the year incurred and also may not be available to offset income in subsequent taxable years. Some of the states may require us, or we may elect, to withhold a percentage of income from amounts to be distributed to a common
unitholder who is not a resident of the state. Withholding, the amount of which may be greater or less than a particular common unitholders income tax liability to the state, generally does not relieve a nonresident common unitholder from the
obligation to file an income tax return. Amounts withheld may be treated as if distributed to common unitholders for purposes of determining the amounts distributed by us. Please read Tax Consequences of Unit OwnershipEntity-Level
Collections. Based on current law and our estimate of our future operations, we anticipate that any amounts required to be withheld will not be material.
It is the responsibility of each common unitholder to investigate the legal and tax consequences, under the laws of pertinent states and
localities, of his investment in us. Andrews Kurth LLP has not rendered an opinion on the state, local, alternative minimum tax or foreign tax consequences of an investment in us. We strongly recommend that each prospective common unitholder
consult, and depend on, his own tax counsel or other advisor with regard to those matters. It is the responsibility of each common unitholder to file all tax returns, that may be required of him.
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INVESTMENT IN SANCHEZ PRODUCTION PARTNERS LP
BY EMPLOYEE BENEFIT PLANS
An investment in us by an employee benefit plan is subject to additional considerations because the investments of these plans are subject to
the fiduciary responsibility and prohibited transaction provisions of ERISA, and restrictions imposed by Section 4975 of the Internal Revenue Code. For these purposes, the term employee benefit plan includes, but is not limited to,
qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified employee pension plans and tax deferred annuities or IRAs established or maintained by an employer or employee organization. Among other things, consideration should be
given to:
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whether the investment is prudent under Section 404(a)(1)(B) of ERISA; |
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whether in making the investment, that plan will satisfy the diversification requirements of Section 404(a)(l)(C) of ERISA; and |
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whether the investment will result in recognition of unrelated business taxable income by the plan and, if so, the potential after-tax investment return. |
The person with investment discretion with respect to the assets of an employee benefit plan, often called a fiduciary, should determine
whether an investment in us is authorized by the appropriate governing instrument and is a proper investment for the plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibits employee benefit plans, and IRAs that are not
considered part of an employee benefit plan, from engaging in specified transactions involving plan assets with parties that are parties in interest under ERISA or disqualified persons under the Internal Revenue
Code with respect to the plan.
In addition to considering whether the purchase of common units is a prohibited transaction, a fiduciary
of an employee benefit plan should consider whether the plan will, by investing in us, be deemed to own an undivided interest in our assets, with the result that our general partner also would be fiduciaries of the plan and our operations would be
subject to the regulatory restrictions of ERISA, including its prohibited transaction rules, as well as the prohibited transaction rules of the Internal Revenue Code.
The Department of Labor regulations provide guidance with respect to whether the assets of an entity in which employee benefit plans acquire
equity interests would be deemed plan assets under some circumstances. Under these regulations, an entitys assets would not be considered to be plan assets if, among other things:
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the equity interests acquired by employee benefit plans are publicly offered securities; i.e., the equity interests are widely held by 100 or more investors independent of the issuer and each other, freely transferable
and registered under some provisions of the federal securities laws; |
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the entity is an operating company,i.e., it is primarily engaged in the production or sale of a product or service other than the investment of capital either directly or through a majority owned
subsidiary or subsidiaries; or |
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there is no significant investment by benefit plan investors, which is defined to mean that less than 25% of the value of each class of equity interest, disregarding some interests held by our general
partner, its affiliates, and some other persons, is held by the employee benefit plans referred to above, IRAs, and any entity whose underlying assets include plan assets by reason of a plans investment in such entity (employee benefit plans
not subject to ERISA, including governmental plans are not counted as benefit plan investors). |
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Our assets should not be considered plan assets under these regulations because it is
expected that the investment will satisfy the requirements in the first bullet point above.
Plan fiduciaries contemplating a purchase of
common units should consult with their own counsel regarding the consequences under ERISA and the Internal Revenue Code in light of the serious penalties imposed on persons who engage in prohibited transactions or other violations.
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PLAN OF DISTRIBUTION
We may sell the securities covered by this prospectus through agents, underwriters or dealers, or directly to one or more purchasers without
using underwriters or agents.
We may designate agents to solicit offers to purchase our securities. We will name any agent involved in
offering or selling securities, and any commissions that will be paid to the agent, in the applicable prospectus supplement. Unless we indicate otherwise in a prospectus supplement, agents will act on a best efforts basis for the period of their
appointment.
Agents could make sales in privately negotiated transactions and/or any other method permitted by law, including sales
deemed to be an at the market offering as defined in Rule 415 promulgated under the Securities Act, which includes sales made directly on or through the NYSE MKT, the existing trading market for our common units, or sales made to or
through a market maker other than on an exchange.
If underwriters are used in the sale, the securities will be acquired by the
underwriters for their own account. The underwriters may resell the securities in one or more transactions (including block transactions), at negotiated prices, at a fixed public offering price or at varying prices determined at the time of sale. We
will include the names of the managing underwriter(s), as well as any other underwriters, and the terms of the transaction, including the compensation the underwriters and dealers will receive, in a prospectus supplement. If we use an underwriter,
we will execute an underwriting agreement with the underwriter(s) at the time that an agreement is reached for the sale of securities. The obligations of the underwriters to purchase the securities will be subject to certain conditions contained in
the underwriting agreement. The underwriters will be obligated to purchase all of the securities of the series offered if any of the securities are purchased. Any public offering price and any discounts or concessions allowed or re-allowed or paid
to dealers may be changed from time to time. The underwriters will use a prospectus supplement to sell securities.
If we use a dealer, we
will act as principal and will sell securities to the dealer. The dealer will then sell securities to the public at varying prices that the dealer will determine at the time it sells securities. We will include the name of the dealer and the terms
of the transactions with the dealer in the applicable prospectus supplement.
We may directly solicit offers to purchase securities, and
we may directly sell securities to institutional or other investors. In this case, no underwriters or agents would be involved. We will describe the terms of our direct sales in the applicable prospectus supplement.
Underwriters, dealers and agents that participate in the distribution of the securities may be underwriters as defined in the Securities Act
and any discounts or commissions received by them from us and any profit on their resale of the securities may be treated as underwriting discounts and commissions under the Securities Act. In connection with the sale of the securities offered by
this prospectus, underwriters may receive compensation from us or from the purchasers of the securities, for whom they may act as agents, in the form of discounts, concessions or commissions. Any underwriters, dealers or agents will be identified
and their compensation described in the applicable prospectus supplement. We may have agreements with the underwriters, dealers and agents to indemnify them against certain civil liabilities, including liabilities under the Securities Act, or to
contribute with respect to payments which the underwriters, dealers or agents may be required to make. Underwriters, dealers and agents may engage in transactions with, or perform services for, us or our subsidiaries in the ordinary course of their
business.
Unless otherwise specified in the applicable prospectus supplement, all securities offered by us under this prospectus will be
a new issue of securities with no established trading market, other than the common units, which are currently listed and traded on the NYSE MKT. We may elect to list any other class or series of securities on a national securities exchange or a
foreign securities exchange but are not obligated to do so. Any common units sold by this prospectus will be listed for trading on the NYSE MKT, or such other exchanges as
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our common units may be listed for trading at the time of issuance, subject to official notice of issuance. We cannot give you any assurance as to the liquidity of the trading markets for any of
the securities.
Any underwriter to whom securities are sold by us for public offering and sale may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act. Over-allotment transactions involve sales by the underwriters of the securities in excess of the offering size,
which creates a syndicate short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases of the securities
in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the
syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. These activities may cause the price of the securities to be higher than it would otherwise be. The underwriters will not be
obligated to engage in any of the aforementioned transactions and may discontinue such transactions at any time without notice.
In
compliance with guidelines of the Financial Industry Regulatory Authority, or FINRA, the maximum consideration or discount to be received by any FINRA member or independent broker dealer may not exceed 8% of the aggregate amount of the securities
offered pursuant to this prospectus and any applicable prospectus supplement.
LEGAL MATTERS
The validity of the securities offered in this prospectus will be passed upon for us by Andrews Kurth LLP, Houston, Texas. Any underwriter
will be advised about other issues relating to any offering by its own legal counsel. If such counsel to underwriters passes on legal matters in connection with an offering of securities made by this prospectus, and a related prospectus supplement,
that counsel will be named in the applicable prospectus supplement related to that offering.
EXPERTS
The consolidated financial statements of Sanchez Production Partners LLC (predecessor-in-interest to Sanchez Production Partners LP) as of
December 31, 2014 and 2013 and for the years then ended, have been incorporated herein in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing.
Certain information incorporated by reference in this prospectus regarding our estimated
quantities of natural gas reserves was prepared by Netherland, Sewell & Associates, Inc.
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Sanchez Production Partners LP
$500,000,000
COMMON UNITS
PARTNERSHIP
SECURITIES
DEBT SECURITIES
WARRANTS
RIGHTS
PROSPECTUS
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. |
Other Expenses of Issuance and Distribution. |
The following table sets forth the costs
and expenses, other than selling or underwriting discounts and commissions, to be incurred in connection with the issuance and distribution of the securities being registered hereby. Except for the SEC registration fee, all amounts are estimates.
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SEC registration fee |
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$ |
58,100 |
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Printing and engraving expenses |
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150,000 |
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Legal fees and expenses |
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250,000 |
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Trustee fees and expenses |
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30,000 |
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Accounting fees and expenses |
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100,000 |
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Miscellaneous |
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10,000 |
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Total |
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$ |
598,100 |
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Item 15. |
Indemnification of Directors and Officers. |
Sanchez Production Partners LP
Subject to any terms, conditions or restrictions set forth in our agreement of limited partnership, Section 17-108 of the Delaware Revised
Uniform Limited Partnership Act empowers a Delaware limited partnership to indemnify and hold harmless any partner or other person from and against any and all claims and demands whatsoever. The section of the prospectus included in the Registration
Statement entitled The Partnership AgreementIndemnification discloses that we will generally indemnify officers, directors and affiliates of our general partner to the fullest extent permitted by the law against all losses, claims,
damages or similar events and is incorporated herein by reference.
Sanchez Production Partners GP LLC
Subject to any terms, conditions or restrictions set forth in the limited liability company agreement of Sanchez Production Partners GP LLC,
our general partner, Section 18-108 of the Delaware Limited Liability Company Act empowers a Delaware limited liability company to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands
whatsoever.
Under the limited liability agreement of our general partner, in most circumstances, our general partner will indemnify the
following persons, to the fullest extent permitted by law, from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including reasonable legal fees and expenses), judgments, fines, penalties, interest,
settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative:
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any person who is or was an affiliate of our general partner; |
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any person who is or was a member, director, officer, fiduciary or trustee of our general partner; |
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any person who is or was an officer, member, partner, director, employee, agent or trustee of our general partner or any affiliate of our general partner, or any affiliate of any such person; |
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any person who is or was serving at the request of our general partner or any affiliate of our general partner as a director, officer, employee, member, partner, agent, fiduciary or trustee of another person (provided,
that such person is not providing, on a fee-for-services basis, trustee, fiduciary or custodial services); and |
II-1
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any person designated by our general partner. |
Our general partner will purchase insurance
covering its officers and directors against liabilities asserted and expenses incurred in connection with their activities as officers and directors of our general partner or any of its direct or indirect subsidiaries.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
(a) Exhibits
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Exhibit No. |
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Exhibit |
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**1.1 |
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Form of Underwriting Agreement for each of the securities registered hereby |
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***2.1 |
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Plan of Conversion (Incorporated by reference to Annex A included in Sanchez Production Partner LPs Registration Statement on Form S-4 (SEC File No. 333-198440), filed on January 26, 2015) |
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***4.1 |
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Certificate of Limited Partnership of Sanchez Production Partners LP (Incorporated by reference to Exhibit 4.2 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC File
No. 333-198440), filed on March 6, 2015) |
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***4.2 |
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Agreement of Limited Partnership of Sanchez Production Partners LP (Incorporated by reference to Exhibit 4.3 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC File No.
333-198440), filed on March 6, 2015) |
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***4.3 |
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Certificate of Formation of Sanchez Production Partners GP LLC (Incorporated by reference to Exhibit 4.4 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC File No.
333-198440), filed on March 6, 2015) |
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***4.4 |
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Limited Liability Company Agreement of Sanchez Production Partners GP LLC (Incorporated by reference to Exhibit 4.5 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC
File No. 333-198440), filed on March 6, 2015) |
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***4.8 |
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Form of common unit certificate (Incorporated by reference to Exhibit A to Exhibit 4.2 above) |
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*4.9 |
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Form of Senior Indenture (including form of senior debt security) |
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*4.10 |
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Form of Subordinated Indenture (including form of subordinated debt security) |
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**4.11 |
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Form of Warrant Agreement (including form of warrant certificate) |
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**4.12 |
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Form of Rights Agreement (including form of right certificate) |
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*5.1 |
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Opinion of Andrews Kurth LLP regarding legality of securities to be registered |
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*8.1 |
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Opinion of Andrews Kurth LLP regarding tax matters |
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*12.1 |
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Statement Regarding Computation of Ratio of Earnings to Fixed Charges |
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*23.1 |
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Consent of Andrews Kurth LLP (included in Exhibit 5.1) |
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*23.2 |
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Consent of KPMG LLP. |
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*23.3 |
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Consent of Netherland, Sewell & Associates, Inc. |
II-2
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Exhibit No. |
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Exhibit |
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*24.1 |
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Power of Attorney (included on signature pages). |
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*25.1 |
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Form T-1 Statement of Eligibility and Qualification of Trustee under Trust Indenture Act of 1939 regarding the senior debt securities. |
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*25.2 |
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Form T-1 Statement of Eligibility and Qualification of Trustee under Trust Indenture Act of 1939 regarding the subordinated debt securities. |
** |
To be filed by amendment or as an exhibit to Current Report on Form 8-K filed at a later date in connection with a specific offering. |
*** |
Incorporated by reference. |
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with
the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective
registration statement; and
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in this registration statement;
provided,
however, that Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs
is contained in reports filed with or furnished to the SEC by the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
II-3
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in
reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in
the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for
liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or
made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities
to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to
be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing
prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
B. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing
of the registrants annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plans annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by
II-4
a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
D. The undersigned
registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)( 1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
E. The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection (a) of subsection 310 of the Trust Indenture Act (Act) in accordance with the rules and regulations prescribed by the SEC under section 305(b)(2) of such
Act.
F. The registrant undertakes to send to each limited partner at least on an annual basis a detailed statement of any transactions
with Sanchez Production Partners GP LLC or its affiliates, and of fees, commissions, compensation and other benefits paid, or accrued to Sanchez Production Partners GP LLC or its affiliates for the fiscal year completed, showing the amount paid or
accrued to each recipient and the services performed.
G. The registrant undertakes to provide to the limited partners the financial
statements required by Form 10-K for the first full fiscal year of operations of the partnership.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas on March 6, 2015.
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Sanchez Production Partners LP |
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By: |
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Sanchez Production Partners GP LLC, its general
partner |
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By: |
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/s/ Stephen R. Brunner |
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Stephen R. Brunner |
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President, Chief Executive Officer & Chief Operating Officer |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of Sanchez Production Partners GP LLC hereby constitutes
and appoints Stephen R. Brunner and Charles C. Ward, and each of them individually, as his true and lawful attorneys-in-fact and agents, with full power of substitution, for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign, execute and file any or all amendments (including, without limitation, post-effective amendments) to this registration statement and any and all registration statements pursuant to Rule 462(b) of the Securities Act of 1933, with
any and all exhibits thereto, and all other documents required to be filed therewith, with the Securities and Exchange Commission or any regulatory authority, granting unto each such attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as he himself might or could do, if personally present, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
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Signature |
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Title |
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Date |
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/s/ Stephen R. Brunner
Stephen R. Brunner |
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President, Chief Executive Officer & Chief Operating Officer (Principal Executive Officer and Principal Operating Officer) |
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March 6, 2015 |
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/s/ Charles C. Ward
Charles C. Ward |
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Chief Financial Officer, Treasurer & Secretary (Principal Financing Officer and Principal Accounting Officer) |
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March 6, 2015 |
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/s/ Alan S. Bigman
Alan S. Bigman |
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Director
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March 6, 2015 |
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/s/ Richard S. Langdon
Richard S. Langdon |
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Director |
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March 6, 2015 |
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Signature |
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Title |
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Date |
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/s/ G. M. Byrd Larberg
G. M. Byrd Larberg |
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Director |
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March 6, 2015 |
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/s/ Antonio R. Sanchez, III
Antonio R. Sanchez, III |
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Director |
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March 6, 2015 |
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/s/ Gerald P. Willinger
Gerald P. Willinger |
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Director |
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March 6, 2015 |
EXHIBIT INDEX
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Exhibit No. |
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Exhibit |
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**1.1 |
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Form of Underwriting Agreement for each of the securities registered hereby |
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***2.1 |
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Plan of Conversion (Incorporated by reference to Annex A included in Sanchez Production Partner LPs Registration Statement on Form S-4 (SEC File No. 333-198440), filed on January 26, 2015) |
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***4.1 |
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Certificate of Limited Partnership of Sanchez Production Partners LP (Incorporated by reference to Exhibit 4.2 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC File
No. 333-198440), filed on March 6, 2015) |
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***4.2 |
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Agreement of Limited Partnership of Sanchez Production Partners LP (Incorporated by reference to Exhibit 4.3 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC File No.
333-198440), filed on March 6, 2015) |
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***4.3 |
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Certificate of Formation of Sanchez Production Partners GP LLC (Incorporated by reference to Exhibit 4.4 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC File No.
333-198440), filed on March 6, 2015) |
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***4.4 |
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Limited Liability Company Agreement of Sanchez Production Partners GP LLC (Incorporated by reference to Exhibit 4.5 to Sanchez Production Partner LPs Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (SEC
File No. 333-198440), filed on March 6, 2015) |
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***4.8 |
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Form of common unit certificate (Incorporated by reference to Exhibit A to Exhibit 4.2 above) |
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*4.9 |
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Form of Senior Indenture (including form of senior debt security) |
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*4.10 |
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Form of Subordinated Indenture (including form of subordinated debt security) |
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**4.11 |
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Form of Warrant Agreement (including form of warrant certificate) |
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**4.12 |
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Form of Rights Agreement (including form of right certificate) |
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*5.1 |
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Opinion of Andrews Kurth LLP regarding legality of securities to be registered |
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*8.1 |
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Opinion of Andrews Kurth LLP regarding tax matters |
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*12.1 |
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Statement Regarding Computation of Ratio of Earnings to Fixed Charges |
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*23.1 |
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Consent of Andrews Kurth LLP (included in Exhibit 5.1) |
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*23.2 |
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Consent of KPMG LLP. |
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*23.3 |
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Consent of Netherland, Sewell & Associates, Inc. |
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*24.1 |
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Power of Attorney (included on signature pages). |
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*25.1 |
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Form T-1 Statement of Eligibility and Qualification of Trustee under Trust Indenture Act of 1939 regarding the senior debt securities. |
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*25.2 |
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Form T-1 Statement of Eligibility and Qualification of Trustee under Trust Indenture Act of 1939 regarding the subordinated debt securities. |
** |
To be filed by amendment or as an exhibit to Current Report on Form 8-K filed at a later date in connection with a specific offering. |
*** |
Incorporated by reference. |
Exhibit 4.9
SANCHEZ PRODUCTION PARTNERS LP
AND
U.S. BANK NATIONAL
ASSOCIATION,
Trustee
INDENTURE
DATED AS OF ,
20
SENIOR DEBT SECURITIES
SANCHEZ PRODUCTION PARTNERS LP
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED,
AND INDENTURE, DATED AS OF ,
20
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TRUST INDENTURE ACT SECTION |
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INDENTURE SECTION |
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Section 310(a)(1) |
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6.9 |
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(a)(2) |
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6.9 |
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(a)(3) |
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Not Applicable |
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(a)(4) |
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Not Applicable |
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(a)(5) |
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6.9 |
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(b) |
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6.8 |
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Section 311 |
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6.13 |
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Section 312(a) |
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7.1, 7.2(a) |
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(b) |
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7.2(b) |
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(c) |
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7.2(c) |
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Section 313(a) |
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7.3 |
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(b) |
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* |
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(c) |
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* |
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(d) |
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7.3 |
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Section 314(a) |
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7.4 |
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(a)(4) |
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10.5 |
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(b) |
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Not Applicable |
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(c)(1) |
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1.3 |
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(c)(2) |
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1.3 |
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(c)(3) |
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Not Applicable |
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(d) |
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Not Applicable |
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(e) |
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1.3 |
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Section 315(a) |
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6.1(a) |
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(b) |
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6.2 |
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(c) |
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6.1(b) |
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(d) |
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6.1(c) |
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(d)(1) |
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6.1(a)(1) |
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(d)(2) |
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6.1(c)(2) |
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(d)(3) |
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6.1(c)(3) |
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(e) |
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5.14 |
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Section 316(a) |
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1.1, 1.2 |
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(a)(1)(A) |
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5.2, 5.12 |
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(a)(1)(B) |
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5.13 |
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(a)(2) |
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Not Applicable |
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(b) |
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5.8 |
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(c) |
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1.5(f) |
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TRUST INDENTURE ACT SECTION |
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INDENTURE SECTION |
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Section 317(a)(1) |
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5.3 |
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(a)(2) |
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5.4 |
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(b) |
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10.3 |
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Section 318(a) |
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1.8 |
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NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
* |
Deemed included pursuant to Section 318(c) of the Trust Indenture Act |
TABLE OF CONTENTS
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Page |
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ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
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1 |
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Section 1.1. |
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Definitions |
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1 |
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Section 1.2. |
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Incorporation by Reference of Trust Indenture Act |
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8 |
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Section 1.3. |
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Compliance Certificates and Opinions |
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8 |
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Section 1.4. |
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Form of Documents Delivered to Trustee |
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9 |
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Section 1.5. |
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Acts of Holders; Record Dates |
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9 |
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Section 1.6. |
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Notices, Etc., to Trustee, Partnership and Guarantors |
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10 |
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Section 1.7. |
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Notice to Holders; Waiver |
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11 |
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Section 1.8. |
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Conflict with Trust Indenture Act |
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11 |
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Section 1.9. |
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Effect of Headings and Table of Contents |
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11 |
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Section 1.10. |
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Successors and Assigns |
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12 |
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Section 1.11. |
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Separability Clause |
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12 |
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Section 1.12. |
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Benefits of Indenture |
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12 |
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Section 1.13. |
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Force Majeure |
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12 |
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Section 1.14. |
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Waiver of Jury Trial |
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12 |
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Section 1.15. |
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Governing Law |
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12 |
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Section 1.16. |
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Legal Holidays |
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12 |
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Section 1.17. |
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Securities in a Composite Currency, Currency Unit or Foreign Currency |
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13 |
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Section 1.18. |
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Payment in Required Currency; Judgment Currency |
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13 |
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Section 1.19. |
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Language of Notices, Etc. |
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14 |
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Section 1.20. |
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Incorporators, Partners, Members, Officers and Directors of the Partnership, the General Partner of the Partnership and the
Guarantors Exempt from Individual Liability |
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14 |
|
|
|
ARTICLE TWO SECURITY FORMS |
|
|
14 |
|
Section 2.1. |
|
Forms Generally |
|
|
14 |
|
Section 2.2. |
|
Form of Face of Security |
|
|
14 |
|
Section 2.3. |
|
Form of Reverse of Security |
|
|
17 |
|
Section 2.4. |
|
Global Securities |
|
|
21 |
|
Section 2.5. |
|
Form of Trustees Certificate of Authentication |
|
|
22 |
|
|
|
ARTICLE THREE THE SECURITIES |
|
|
22 |
|
Section 3.1. |
|
Amount Unlimited; Issuable in Series |
|
|
22 |
|
Section 3.2. |
|
Denominations |
|
|
25 |
|
Section 3.3. |
|
Execution, Authentication, Delivery and Dating |
|
|
25 |
|
Section 3.4. |
|
Temporary Securities |
|
|
27 |
|
Section 3.5. |
|
Registration, Registration of Transfer and Exchange |
|
|
27 |
|
Section 3.6. |
|
Mutilated, Destroyed, Lost and Stolen Securities |
|
|
29 |
|
Section 3.7. |
|
Payment of Interest; Interest Rights Preserved |
|
|
30 |
|
Section 3.8. |
|
Persons Deemed Owners |
|
|
31 |
|
Section 3.9. |
|
Cancellation |
|
|
31 |
|
Section 3.10. |
|
Computation of Interest |
|
|
32 |
|
Section 3.11. |
|
CUSIP or CINS Numbers |
|
|
32 |
|
|
|
ARTICLE FOUR SATISFACTION AND DISCHARGE |
|
|
32 |
|
Section 4.1. |
|
Satisfaction and Discharge of Indenture |
|
|
32 |
|
Section 4.2. |
|
Application of Trust Money |
|
|
33 |
|
i
|
|
|
|
|
|
|
ARTICLE FIVE REMEDIES |
|
|
33 |
|
Section 5.1. |
|
Events of Default |
|
|
33 |
|
Section 5.2. |
|
Acceleration of Maturity; Rescission and Annulment |
|
|
34 |
|
Section 5.3. |
|
Collection of Indebtedness and Suits for Enforcement by Trustee |
|
|
35 |
|
Section 5.4. |
|
Trustee May File Proofs of Claim |
|
|
36 |
|
Section 5.5. |
|
Trustee May Enforce Claims Without Possession of Securities |
|
|
36 |
|
Section 5.6. |
|
Application of Money Collected |
|
|
36 |
|
Section 5.7. |
|
Limitation on Suits |
|
|
37 |
|
Section 5.8. |
|
Unconditional Right of Holders to Receive Principal, Premium and Interest |
|
|
37 |
|
Section 5.9. |
|
Restoration of Rights and Remedies |
|
|
38 |
|
Section 5.10. |
|
Rights and Remedies Cumulative |
|
|
38 |
|
Section 5.11. |
|
Delay or Omission Not Waiver |
|
|
38 |
|
Section 5.12. |
|
Control by Holders |
|
|
38 |
|
Section 5.13. |
|
Waiver of Past Defaults |
|
|
38 |
|
Section 5.14. |
|
Undertaking for Costs |
|
|
39 |
|
Section 5.15. |
|
Waiver of Stay, Extension or Usury Laws |
|
|
39 |
|
|
|
ARTICLE SIX THE TRUSTEE |
|
|
39 |
|
Section 6.1. |
|
Certain Duties and Responsibilities |
|
|
39 |
|
Section 6.2. |
|
Notice of Defaults |
|
|
40 |
|
Section 6.3. |
|
Certain Rights of Trustee |
|
|
41 |
|
Section 6.4. |
|
Not Responsible for Recitals or Issuance of Securities |
|
|
42 |
|
Section 6.5. |
|
May Hold Securities |
|
|
42 |
|
Section 6.6. |
|
Money Held in Trust |
|
|
42 |
|
Section 6.7. |
|
Compensation and Reimbursement |
|
|
42 |
|
Section 6.8. |
|
Disqualification; Conflicting Interests |
|
|
43 |
|
Section 6.9. |
|
Corporate Trustee Required; Eligibility |
|
|
43 |
|
Section 6.10. |
|
Resignation and Removal; Appointment of Successor |
|
|
44 |
|
Section 6.11. |
|
Acceptance of Appointment by Successor |
|
|
45 |
|
Section 6.12. |
|
Merger, Conversion, Consolidation or Succession to Business |
|
|
46 |
|
Section 6.13. |
|
Preferential Collection of Claims Against Partnership |
|
|
46 |
|
Section 6.14. |
|
Appointment of Authenticating Agent |
|
|
46 |
|
|
|
ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY |
|
|
48 |
|
Section 7.1. |
|
Partnership to Furnish Trustee Names and Addresses of Holders |
|
|
48 |
|
Section 7.2. |
|
Preservation of Information; Communications to Holders |
|
|
48 |
|
Section 7.3. |
|
Reports by Trustee |
|
|
49 |
|
Section 7.4. |
|
Reports by Partnership |
|
|
49 |
|
|
|
ARTICLE EIGHT CONSOLIDATION, AMALGAMATION, MERGER AND SALE |
|
|
50 |
|
Section 8.1. |
|
Partnership May Consolidate, Etc., Only on Certain Terms |
|
|
50 |
|
Section 8.2. |
|
Successor Substituted |
|
|
51 |
|
|
|
ARTICLE NINE AMENDMENT, SUPPLEMENT AND WAIVER |
|
|
51 |
|
Section 9.1. |
|
Without Consent of Holders |
|
|
51 |
|
Section 9.2. |
|
With Consent of Holders |
|
|
52 |
|
Section 9.3. |
|
Execution of Amendments and Supplemental Indentures |
|
|
54 |
|
Section 9.4. |
|
Effect of Amendments and Supplemental Indentures |
|
|
54 |
|
Section 9.5. |
|
Conformity with Trust Indenture Act |
|
|
54 |
|
Section 9.6. |
|
Reference in Securities to Amendments or Supplemental Indentures |
|
|
54 |
|
Section 9.7. |
|
Effect of Consents |
|
|
54 |
|
ii
|
|
|
|
|
|
|
ARTICLE TEN COVENANTS |
|
|
55 |
|
Section 10.1. |
|
Payment of Principal, Premium and Interest |
|
|
55 |
|
Section 10.2. |
|
Maintenance of Office or Agency |
|
|
55 |
|
Section 10.3. |
|
Money for Securities Payments to Be Held in Trust |
|
|
55 |
|
Section 10.4. |
|
Existence |
|
|
56 |
|
Section 10.5. |
|
Statement by Officers as to Default |
|
|
57 |
|
|
|
ARTICLE ELEVEN REDEMPTION OF SECURITIES |
|
|
57 |
|
Section 11.1. |
|
Applicability of Article |
|
|
57 |
|
Section 11.2. |
|
Election to Redeem; Notice to Trustee |
|
|
57 |
|
Section 11.3. |
|
Selection by Trustee of Securities to Be Redeemed |
|
|
57 |
|
Section 11.4. |
|
Notice of Redemption |
|
|
58 |
|
Section 11.5. |
|
Deposit of Redemption Price |
|
|
58 |
|
Section 11.6. |
|
Securities Payable on Redemption Date |
|
|
58 |
|
Section 11.7. |
|
Securities Redeemed in Part |
|
|
59 |
|
|
|
ARTICLE TWELVE SINKING FUNDS |
|
|
59 |
|
Section 12.1. |
|
Applicability of Article |
|
|
59 |
|
Section 12.2. |
|
Satisfaction of Sinking Fund Payments with Securities |
|
|
59 |
|
Section 12.3. |
|
Redemption of Securities for Sinking Fund |
|
|
60 |
|
|
|
ARTICLE THIRTEEN DEFEASANCE |
|
|
60 |
|
Section 13.1. |
|
Option to Effect Legal Defeasance or Covenant Defeasance |
|
|
60 |
|
Section 13.2. |
|
Legal Defeasance and Discharge |
|
|
60 |
|
Section 13.3. |
|
Covenant Defeasance |
|
|
61 |
|
Section 13.4. |
|
Conditions to Legal or Covenant Defeasance |
|
|
61 |
|
Section 13.5. |
|
Deposited Money and U.S. Government Obligations to be Held in Trust, Other Miscellaneous Provisions |
|
|
62 |
|
Section 13.6. |
|
Reinstatement |
|
|
63 |
|
|
|
ARTICLE FOURTEEN GUARANTEE OF SECURITIES |
|
|
63 |
|
Section 14.1. |
|
Securities Guarantee |
|
|
63 |
|
Section 14.2. |
|
Limitation on Guarantor Liability |
|
|
65 |
|
Section 14.3. |
|
Execution and Delivery of Securities Guarantee Notation |
|
|
65 |
|
NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
iii
PARTIES
INDENTURE, dated as of , 20 , among Sanchez
Production Partners LP, a limited partnership duly organized and existing under the laws of the State of Delaware (herein called the Partnership), the Guarantors (as defined hereinafter) and U.S. Bank National Association, as trustee
(the Trustee).
RECITALS OF THE COMPANY:
The Partnership has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its
unsecured senior debentures, notes or other evidences of indebtedness (herein called the Securities), which may be guaranteed by the Guarantors, to be issued in one or more series as provided in this Indenture.
All things necessary to make this Indenture a valid agreement of the Partnership, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act (as defined herein) that are required to be a part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders (as defined herein) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the
singular;
(b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with
GAAP;
(c) the words herein, hereof and hereunder and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
(d) the words
Article and Section refer to an Article and Section, respectively, of this Indenture;
(e) the word
includes and its derivatives means includes, but is not limited to and corresponding derivative definitions; and
(f) references to any officer of any partnership or limited liability company that does not have officers but is managed or
controlled, directly or indirectly, by an entity that does have officers, shall be deemed to be references to the officers of such managing or controlling entity.
Certain terms, used principally in Article Six, are defined in that Article.
Act, when used with respect to any Holder, has the meaning specified in Section 1.5.
Additional Defeasible Provision means a covenant or other provision that is (a) made part of this Indenture pursuant to an
indenture supplemental hereto, a Board Resolution or an Officers Certificate delivered pursuant to Section 3.1, and (b) pursuant to the terms set forth in such supplemental indenture, Board Resolution or Officers Certificate,
made subject to the provisions of Article Thirteen.
Affiliate of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control, as used with respect to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms controlling,
controlled by and under common control with have correlative meanings.
Authenticating Agent means any
Person authorized by the Trustee to act on behalf of the Trustee to authenticate Securities.
Banking Day means, in respect of
any city, any date on which commercial banks are open for business in that city.
Bankruptcy Law means any applicable Federal
or State bankruptcy, insolvency, reorganization or other similar law.
Board of Directors means:
(a) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such
board;
(b) with respect to a partnership, the Board of Directors of the general partner of the partnership;
(c) with respect to a limited liability company, the managing member or members or any controlling committee of managers or members thereof or
any board or committee serving a similar management function; and
(d) with respect to any other Person, the individual or board or
committee of such Person serving a management function similar to those described in clauses (a), (b) or (c) of this definition.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant Secretary of the general partner of the
Partnership or a Guarantor, the principal financial officer of the general partner of the Partnership or a Guarantor, any other authorized officer of the general partner of the Partnership or a Guarantor, or a person duly authorized by any of them,
in each case as applicable, to have been duly adopted by the Board of Directors of the general partner of the Partnership and to be in full force and effect on the date of such certification, and delivered to the Trustee. Where any provision of this
Indenture refers to action to be taken pursuant to a Board Resolution (including the establishment of any series of the Securities and the forms and terms thereof), such action may be taken by any committee, officer or employee of the general
partner of the Partnership or a Guarantor, as applicable, authorized to take such action by the Board of Directors, as evidenced by a Board Resolution.
2
Business Day, when used with respect to any Place of Payment or other location,
means, except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions and trust companies in that Place
of Payment or other location are authorized or obligated by law, executive order or regulation to close.
CINS means CUSIP
International Numbering System.
Code means the United States Internal Revenue Code of 1986, as amended.
Corporate Trust Office means the office of the Trustee at the address specified in Section 3.5 or such other address as to
which the Trustee may give notice to the Partnership.
corporation, when used in reference to the Trustee or any prospective
Trustee, shall include any corporation, company, association, partnership, limited partnership, limited liability company, joint-stock company, trust or other entity, in each case, satisfying the requirements of Section 310(a)(1) of the Trust
Indenture Act.
Covenant Defeasance has the meaning specified in Section 13.3.
CUSIP means the Committee on Uniform Securities Identification Procedures.
Custodian means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
Debt means any obligation created or assumed by any Person for the repayment of money borrowed and any purchase money obligation
created or assumed by such Person and any guarantee of the foregoing.
Default means, with respect to a series of Securities,
any event that is, or after notice or lapse of time or both would be, an Event of Default.
Defaulted Interest has the meaning
specified in Section 3.7.
Definitive Security means a security other than a Global Security or a temporary Security.
Depositary means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or
more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 3.1, until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter shall mean or include each Person which is a Depositary hereunder, and if at any time there is more than one such Person, shall be a collective reference to such Persons.
Dollar or $ means the coin or currency of the United States of America, which at the time of payment is legal tender
for the payment of public and private debts.
Event of Default has the meaning specified in Section 5.1.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Foreign Currency means a currency used by the government of a country other than the United States of America.
3
GAAP means generally accepted accounting principles in the United States of America
as in effect from time to time, including those set forth in (1) the Financial Accounting Standards Board Accounting Standards Codification and any related Accounting Standards Updates by the Financial Accounting Standards Board, (2) such
other statements by such other entity as are approved by a significant segment of the accounting profession and (3) the rules and regulations of the SEC governing the inclusion of financial statements in periodic reports required to be filed
pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. All computations based on GAAP contained in the Indenture shall
be computed in conformity with GAAP.
Global Security means a Security in global form that evidences all or part of a series
of Securities and is authenticated and delivered to, and registered in the name of, the Depositary for the Securities of such series or its nominee.
Guaranteed Securities has the meaning specified in Section 14.1.
Guarantor means each Person that becomes a guarantor of any Securities pursuant to the applicable provisions of this Indenture.
Holder means a Person in whose name a Security is registered in the Security Register.
Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more
amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such amendment or supplemental indenture, the provisions of the Trust Indenture Act that
are deemed to be part of and govern this instrument and any such amendment or supplemental indenture, respectively. The term Indenture also shall include the terms of particular series of Securities established as contemplated by
Section 3.1.
interest, when used with respect to an Original Issue Discount Security which by its terms bears interest
only after Maturity, means interest payable after Maturity.
Interest Payment Date, when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
Judgment Currency has the meaning specified in
Section 1.18.
Legal Defeasance has the meaning specified in Section 13.2.
mandatory sinking fund payment has the meaning specified in Section 12.1.
Market Exchange Rate has the meaning specified in Section 1.17.
Maturity, when used with respect to any Security, means the date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
Notice of Default means a written notice of the kind specified in Section 5.1(c) or Section 5.1(d).
4
Officers Certificate means, in the case of the Partnership, a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President or any other duly authorized officer of the general partner of the Partnership, or a person duly authorized by any of
them, and delivered to the Trustee and, in the case of a Guarantor, a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or any other duly authorized officer of such Guarantor, or a person
duly authorized by any of them, and delivered to the Trustee.
Opinion of Counsel means a written opinion of counsel, who may
be an employee of or counsel for the Partnership or a Guarantor, as the case may be, and who shall be reasonably acceptable to the Trustee.
optional sinking fund payment has the meaning specified in Section 12.1.
Original Issue Discount Security means any Security which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
Outstanding, when used
with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
(b) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Partnership) in trust or set aside and segregated in trust by the Partnership (if the Partnership shall act as its own Paying Agent) for the Holders of such Securities; provided, however, that, if such
Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
(c) Securities that have been paid pursuant to Section 3.6 or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a protected purchaser in whose
hands such Securities are valid obligations of the Partnership;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding
shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof on such date pursuant to Section 5.2, (ii) the principal amount of a Security
denominated in one or more currencies or currency units other than U.S. dollars shall be the U.S. dollar equivalent of such currencies or currency units, determined in the manner provided as contemplated by Section 3.1 on the date of original
issuance of such Security or by Section 1.17, if not otherwise so provided pursuant to Section 3.1, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent (as so determined) on the date
of original issuance of such Security of the amount determined as provided in clause (i) above) of such Security, and (iii) Securities owned by the Partnership, any Guarantor or any other obligor upon the Securities or any Affiliate of the
Partnership or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any
5
such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned as described in
clause (iii) of the immediately preceding sentence which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgees right to act with respect to such
Securities and that the pledgee is not the Partnership, a Guarantor or any other obligor upon the Securities or any Affiliate of the Partnership or of such other obligor.
Partnership means the Person named as the Partnership in the first paragraph of this instrument until a successor or
resulting Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Partnership shall mean such successor or resulting Person.
Partnership Request or Partnership Order means, in the case of the Partnership, a written request or order signed by
the general partner of the Partnership in the name of and on behalf of the Partnership by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President or any other duly authorized officer of
the general partner of the Partnership or any person duly authorized by any of them, and delivered to the Trustee and, in the case of a Guarantor, a written request or order signed in the name of such Guarantor by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents or any other duly authorized officer of such Guarantor or any person duly authorized by any of them, and delivered to the Trustee.
Paying Agent means any Person authorized by the Partnership to pay the principal of and any premium or interest on any Securities
on behalf of the Partnership.
Periodic Offering means an offering of Securities of a series from time to time, the specific
terms of which Securities, including, without limitation, the rate or rates of interest or formula for determining the rate or rates of interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the original issue date or dates
thereof, the redemption provisions, if any, with respect thereto, and any other terms specified as contemplated by Section 3.1 with respect thereto, are to be determined by the Partnership upon the issuance of such Securities.
Person means any individual, corporation, company, limited liability company, partnership, limited partnership, joint venture,
association, joint-stock company, trust, other entity, unincorporated organization or government or any agency or political subdivision thereof.
Place of Payment, when used with respect to the Securities of any series, means, unless otherwise specifically provided for with
respect to such series as contemplated by Section 3.1, the office or agency of the Partnership and such other place or places where, subject to the provisions of Section 10.2, the principal of and any premium and interest on the Securities
of that series are payable as contemplated by Section 3.1.
Predecessor Security of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Redemption Date, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
Redemption Price, when used with respect to any Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.
6
Regular Record Date for the interest payable on any Interest Payment Date on the
Securities of any series means the date specified for that purpose as contemplated by Section 3.1.
Required Currency has
the meaning specified in Section 1.18.
Responsible Officer, when used with respect to the Trustee, means any officer
within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
SEC means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
Securities has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated
and delivered under this Indenture.
Securities Guarantee means each guarantee of the obligations of the Partnership under
this Indenture and the Securities by a Guarantor in accordance with the provisions hereof.
Security Register and
Security Registrar have the respective meanings specified in Section 3.5.
Special Record Date for the
payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7.
Stated Maturity, when used
with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and
payable.
Trustee means the Person named as the Trustee in the first paragraph of this instrument until a
successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such
Person, Trustee as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
Trust Indenture Act means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument was
executed, except as provided in Section 9.5; provided, however, that if the Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
U.S. Person shall have the meaning assigned to such term in Section 7701(a)(30) of
the Code.
U.S. Government Obligations means securities which are (a) direct obligations of the United States for the
payment of which its full faith and credit is pledged, or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States, and which are not callable or redeemable at the option of the issuer thereof.
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Vice President, when used with respect to the Partnership, the Guarantor or the
Trustee, means any vice president, regardless of whether designated by a number or a word or words added before or after the title vice president.
Section 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of
this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:
commission means
the SEC.
indenture securities means the Securities.
indenture security holder means a Holder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
obligor on the indenture securities means the Partnership, the Guarantor (if applicable) or any other obligor on the indenture
securities.
All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by a Trust Indenture Act
reference to another statute or defined by an SEC rule under the Trust Indenture Act have the meanings so assigned to them.
Section 1.3.
Compliance Certificates and Opinions.
Upon any application or request by the Partnership or a Guarantor to the Trustee to
take any action under any provision of this Indenture, the Partnership or such Guarantor, as the case may be, shall furnish to the Trustee an Officers Certificate stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished except as required under
Section 314(c) of the Trust Indenture Act.
Every certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (except for certificates provided for in Section 10.5) shall include:
(a) a statement
that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express an informed opinion as to whether such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
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Section 1.4. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any
certificate or opinion of an officer of the general partner of the Partnership or a Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows or, in
the exercise of reasonable care, should know that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the general partner of the Partnership or the Guarantor, as the case may be, stating that the information with respect to
such factual matters is in the possession of the Partnership or the Guarantor, as the case may be, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Section 1.5. Acts of Holders; Record
Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed (either physically or by means of a facsimile or an electronic transmission, provided that such
electronic transmission is transmitted through the facilities of a Depositary) by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Partnership or the Guarantors. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the Act of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to
Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee, the Partnership and, if applicable, the Guarantors, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
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(c) The ownership, principal amount and serial numbers of Securities held by any
Person, and the date of commencement of such Persons holding of same, shall be proved by the Security Register.
(d)
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Partnership or, if applicable, the Guarantors in reliance thereon, regardless of whether notation of such action is made upon
such Security.
(e) Without limiting the foregoing, a Holder entitled to give or take any action hereunder with regard to
any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such
principal amount.
(f) The Partnership may set any day as the record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided or permitted by this Indenture to be given or taken by Holders of Securities of such series,
but the Partnership shall have no obligation to do so. With regard to any record date set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action, regardless of whether such Holders remain Holders after such record date.
Section 1.6. Notices, Etc., to Trustee, Partnership and Guarantors.
(a) Any notice, request, demand, authorization, direction, consent, waiver or other communication by the Partnership, any of
the Guarantors or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail, postage prepaid, facsimile or overnight air courier guaranteeing next day delivery, to the others address:
If to the Partnership and/or any Guarantor:
Sanchez Production Partners LP
1000 Main Street, Suite 3000
Houston, Texas 77002
Telephone:
(713) 783-8000
Facsimile: (832) 308-3720
Attention: Chief Financial Officer
with a copy to:
Andrews Kurth
LLP
600 Travis, Suite 4200
Houston, Texas 77002
Telephone:
(713) 220-4200
Facsimile: (713) 220-4285
Attention: Scott Olson
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If to the Trustee:
U.S. Bank National Association
800 Nicollet Mall
Minneapolis,
MN 55402
Telephone:
Facsimile:
Attention:
Administrator
(b) The Partnership, the Guarantors or the Trustee, by notice to the others, may designate additional or
different addresses for subsequent notices or communications.
(c) All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.
Section 1.7. Notice to
Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holders address as it appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, regardless of whether such Holder actually receives such
notice.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case it shall be impracticable to give such notice by mail by reason of the suspension of regular
mail service or by reason of any other cause, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 1.8. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the provision of the Trust Indenture Act shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the
Trust Indenture Act shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.
Section 1.9. Effect of Headings
and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
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Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by each of the Partnership and the Guarantors shall bind their respective successors and
assigns, whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture or in the Securities or, if applicable, the Securities Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Securities or, if applicable, the Securities Guarantee, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder and the Holders any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 1.13. Force Majeure.
In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of
or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as
soon as practicable under the circumstances.
Section 1.14. Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE.
Section 1.15. Governing Law.
THIS INDENTURE, THE SECURITIES AND THE SECURITIES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
Section 1.16. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the Securities or, if applicable, the Securities Guarantee (other than a provision of the Securities of any series or, if applicable, the Securities Guarantee that
specifically states that such provision shall apply in lieu of this Section 1.16)) payment of interest or principal and any premium need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and if payment is so made, no interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
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Section 1.17. Securities in a Composite Currency, Currency Unit or Foreign Currency.
Unless otherwise specified in a Board Resolution, Officers Certificate or indenture supplemental hereto delivered pursuant to
Section 3.1 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series
or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any affected series which are denominated in a coin, currency or currencies other than Dollars (including, but not limited
to, any composite currency, currency units or Foreign Currency), then the principal amount of Securities of such series that shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate. For purposes of this Section 1.17, the term Market Exchange Rate shall mean the noon Dollar buying rate in The City of New York for cable transfers of such currency or currencies
as published by the Federal Reserve Bank of New York, as of the most recent available date. If such Market Exchange Rate is not so available for any reason with respect to such currency, such quotation of the Federal Reserve Bank of New York as of
the most recent available date, or quotations or rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of Euros shall be Brussels, Belgium, or such other
quotations or rates of exchange as appropriate shall be used. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection
with any action taken by Holders of Securities pursuant to the terms of this Indenture.
In no event will the Trustee have any duty or
liability regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph.
Section 1.18. Payment in
Required Currency; Judgment Currency.
Each of the Partnership and the Guarantors agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the Required
Currency) into a currency in which a judgment will be rendered (the Judgment Currency), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Required Currency could be purchased in
The City of New York with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which
in accordance with normal banking procedures the Required Currency could be purchased in The City of New York with the Judgment Currency on the Banking Day next preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (regardless of whether entered in accordance with subclause (a)), in any
currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.
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Section 1.19. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or Act required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official language of the country of publication.
Section 1.20. Incorporators,
Partners, Members, Officers and Directors of the Partnership, the General Partner of the Partnership and the Guarantors Exempt from Individual Liability.
No recourse under or upon any obligation, covenant or agreement of or contained in this Indenture or of or contained in any Security or, if
applicable, the Securities Guarantee, or for any claim based thereon or otherwise in respect thereof, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, member, officer, manager,
employee, partner or director, as such, past, present or future, of the Partnership, the general partner of the Partnership, any Guarantor or any successor Person, either directly or through the Partnership, any Guarantor or any successor Person,
whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a
part of the consideration for, the execution of this Indenture and the issue of the Securities.
ARTICLE TWO
SECURITY FORMS
Section 2.1.
Forms Generally.
The Securities of each series and, if applicable, the notation thereon relating to the Securities
Guarantee, shall be in substantially the form set forth in this Article Two, or in such other form or forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities and, if applicable, any notation of the Securities Guarantee, as evidenced by their execution
thereof.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by an authorized officer or other authorized person on behalf of the Partnership and delivered to the Trustee at or prior to the delivery of the Partnership Order contemplated by Section 3.3 for the authentication
and delivery of such Securities.
The forms of Global Securities of any series shall have such provisions and legends as are customary for
Securities of such series in global form, including without limitation any legend required by the Depositary for the Securities of such series.
Section 2.2. Form of Face of Security.
[If the Security is an Original Issue Discount Security and is not publicly offered within the meaning of Treasury Regulations
Section 1.1275-1(h), insertFOR PURPOSES OF SECTION 1275 OF THE
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UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS [ % OF ITS
PRINCIPAL AMOUNT] [$ PER $1,000 OF PRINCIPAL AMOUNT], THE ISSUE DATE IS , 20 AND,
THE YIELD TO MATURITY IS , COMPOUNDED [SEMIANNUALLY OR OTHER PROPER PERIOD].
[In the alternative instead of providing such legend, insert the following legendFOR PURPOSES OF SECTION 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, AND [THE NAME OR TITLE AND
ADDRESS OR TELEPHONE NUMBER OF A REPRESENTATIVE OF THE COMPANY] WILL, BEGINNING NO LATER THAN 10 DAYS AFTER THE ISSUE DATE, PROMPTLY MAKE AVAILABLE TO HOLDERS THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, THE YIELD TO MATURITY AND ANY OTHER
INFORMATION REQUIRED BY APPLICABLE TREASURY REGULATIONS.]
[Insert any other legend required by the Code or the regulations thereunder.]
[If a Global Security,insert legend required by Section 2.4 of the Indenture] [If applicable, insert UNLESS THIS
SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
SANCHEZ PRODUCTION PARTNERS LP
[TITLE OF SECURITY]
[CUSIP No. ]
Sanchez Production Partners LP, a limited partnership duly organized and existing under the laws of the State of Delaware (herein called the
Partnership, which term includes any successor or resulting Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to
, or
registered assigns, the principal sum of
United
States Dollars on
[If
the Security is to bear interest prior to Maturity, insert, and to pay interest thereon from or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, semi-annually on and in
each year, commencing , at the rate of % per annum, until the principal hereof is paid or made available for payment [if applicable, insert, and at the rate of
% per annum on any overdue principal and premium and on any installment of interest (to the extent that the payment of such interest shall be legally enforceable)]. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such
interest, which shall be the or (regardless of whether a Business Day), as the case may be, next
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preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of
this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].
[If the
Security is not to bear interest prior to Maturity, insertThe principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such
case the overdue principal of this Security shall bear interest at the rate of % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in
payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate
of % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided
for, and such interest shall also be payable on demand.]
[If a Global Security, insertPayment of the principal of (and
premium, if any) and [if applicable, insertany such] interest on this Security will be made by transfer of immediately available funds to a bank account in
designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts [state other currency].]
[If a Definitive Security, insertPayment of the principal of (and
premium, if any) and [if applicable, insertany such] interest on this Security will be made at the office or agency of the Partnership maintained for that purpose in
, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and
private debts] [state other currency] [or subject to any laws or regulations applicable thereto and to the right of the Partnership (as provided in the Indenture) to rescind the designation of any such Paying Agent, at the [main] offices of
in , or
at such other offices or agencies as the Partnership may designate, by [United States Dollar] [state other currency] check drawn on, or transfer to a [United States Dollar] account maintained by the payee with, a bank in The City of New York (so
long as the applicable Paying Agency has received proper transfer instructions in writing at least days prior to the payment date)] [if applicable, insert; provided, however, that payment of
interest may be made at the option of the Partnership by [United States Dollar] [state other currency] check mailed to the addresses of the Persons entitled thereto as such addresses shall appear in the Security Register] [or by transfer to a
[United States Dollar] [state other currency] account maintained by the payee with a bank in The City of New York [state other Place of Payment] (so long as the applicable Paying Agent has received proper transfer instructions in writing by the
record date prior to the applicable Interest Payment Date)].]
Reference is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Partnership has caused this instrument to be duly executed.
Dated:
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Sanchez Production Partners LP |
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By: |
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Sanchez Production Partners GP LLC, its general partner |
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Title: |
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Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of senior securities of the Partnership (herein called the Securities), issued and to be issued in
one or more series under an Indenture, dated as of , 20 (herein called the Indenture), between the Partnership, the
Guarantors, if any, and U.S. Bank National Association, as trustee (herein called the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Partnership, the Guarantors, if any, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are
to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if
any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in
the Indenture provided or permitted. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $ ].
This security is the general, unsecured, senior obligation of the Partnership [if applicable, insertand is guaranteed pursuant to a
guarantee (the Securities Guarantee) by [insert name of each Guarantor] (the Guarantors). The Securities Guarantee is the general, unsecured, senior obligation of each Guarantor.]
[If applicable, insertThe Securities of this series are subject to redemption upon not less than days
notice by mail, [if applicable, insert(1) on in any year commencing with the year
and ending with the year through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and
(2) ] at any time [on or after , 20 ], as a whole or in part, at the election of the Partnership, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed [on or before , %, and if
redeemed] during the 12-month period beginning of the years indicated,
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and thereafter at a Redemption Price equal to % of the principal amount, together
in the case of any such redemption [if applicable, insert(whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments the Stated Maturity of which is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insertThe Securities of this series are subject to redemption upon not less than nor
more than days notice by mail, (1) on in any year commencing with the year and ending with the year
through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the
table below, and (2) at any time [on or after ], as a whole or in part, at the election of the Partnership, at the
Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning
of the years indicated,
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and thereafter at a Redemption Price equal to % of the principal amount, together in the case of any
such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments the Stated Maturity of which is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insertNotwithstanding the foregoing, the Partnership may not, prior to
, redeem any Securities of this series as contemplated by [clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the
application, directly or indirectly, of moneys borrowed having an interest cost to the Partnership (calculated in accordance with generally accepted financial practice) of less than % per annum.]
[If applicable, insertThe sinking fund for this series provides for the redemption on
in each year beginning with the year and ending with the year of [not less
than] $ [ (mandatory sinking fund) and not more than $ ] aggregate principal amount of Securities of this series. [Securities of this series
acquired or redeemed by the Partnership otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made [If applicable, insert in the inverse
order in which they become due].]
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[If the Securities are subject to redemption in part of any kind, insertIn the event of
redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insertThe Securities of this series are not redeemable prior to Stated Maturity.]
[If the Security is not an Original Issue Discount Security,If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security,If an Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally
enforceable), all of the Partnerships obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the
Partnership [If applicable, insertand the Guarantors] and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Partnership [If applicable, insertand the
Guarantors] and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Partnership [If applicable, insertand
the Guarantors] with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, regardless of whether notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Partnership, which is
absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.
[If a Global Security, insertThis Global Security or portion hereof may not be exchanged for Definitive Securities of this series except
in the limited circumstances provided in the Indenture. The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be
considered the Holders thereof for any purpose under the Indenture.]
[If a Definitive Security, insertAs provided in the Indenture
and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Partnership in [if
applicable, insertany place where the principal of and any premium and interest on this Security are payable] [if applicable, insertThe City of New York [, or, subject to any laws or regulations applicable thereto and to the
right of the Partnership (limited as provided in the Indenture) to rescind the designation of any such transfer agent, at the [main] offices of
in or
at such other offices or agencies as the
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Partnership may designate]], duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Partnership and the Security Registrar duly executed by, the Holder
hereof or such Holders attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.]
The Securities of this series are issuable only in registered form without coupons in denominations of U.S.
$ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service
charge shall be made for any such registration of transfer or exchange, but the Partnership may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Partnership, [If applicable, insertany Guarantor,] the Trustee
and any agent of the Partnership [If applicable, insert, a Guarantor] or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, regardless of whether this Security be overdue,
and none of the Partnership, [If applicable, insertthe Guarantors,] the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, [If applicable,
insert, or the Securities Guarantee endorsed thereon,] or for any claim based thereon or otherwise in respect thereof, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder,
member, officer, manager or director, as such, past, present or future, of the Partnership [If applicable, insertor any Guarantor] or of any successor Person, either directly or through the Partnership [If applicable,
insertor any Guarantor] or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby
expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.
The Indenture provides that the Partnership [If applicable, insertand the Guarantors] (a) will be discharged from any and all
obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Partnership [If applicable,
insertor a Guarantor] deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide
money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.
Except as otherwise defined herein, all terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
[If a Definitive Security, insert as a separate page
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
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the within instrument of Sanchez Production Partners LP and does hereby irrevocably constitute and appoint
Attorney to transfer said instrument on the books of the within-named Partnership, with full power of substitution in the
premises.
Please Insert Social Security or Other Identifying Number of Assignee:
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in
every particular, without alteration or enlargement or any change whatsoever.]
[If a Security to which Article Fourteen has been made
applicable, insert the following Form of Notation on such Security relating to the Securities Guarantee
Each of the Guarantors (which
term includes any successor Person in such capacity under the Indenture), has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of
the principal of, and premium, if any, and interest on the Securities of this series and all other amounts due and payable under the Indenture and the Securities of this series by the Partnership.
The obligations of the Guarantors to the Holders of Securities of this series and to the Trustee pursuant to the Securities Guarantee and the Indenture are
expressly set forth in Article Fourteen of the Indenture and reference is hereby made to the Indenture for the precise terms of the Securities Guarantee.
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[NAME OF EACH GUARANTOR] |
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Section 2.4. Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR
IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
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If Securities of a series are issuable in whole or in part in the form of one or more Global
Securities, as specified as contemplated by Section 3.1, then, notwithstanding clause (i) of Section 3.1 and the provisions of Section 3.2, any Global Security shall represent such of the Outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be
reduced or increased, as the case may be, to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any reduction or increase in the amount, of Outstanding Securities represented thereby shall be made in such manner and
upon instructions given by such Person or Persons as shall be specified therein or in a Partnership Order. Subject to the provisions of Section 3.3, Section 3.4 and Section 3.5, the Trustee shall deliver and redeliver any Global
Security in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Partnership Order. Any instructions by the Partnership with respect to endorsement or delivery or redelivery of a Global Security
shall be in a Partnership Order (which need not comply with Section 1.3 and need not be accompanied by an Opinion of Counsel).
The
provisions of the last sentence of Section 3.3 shall apply to any Security represented by a Global Security if such Security was never issued and sold by the Partnership and the Partnership delivers to the Trustee the Global Security together
with a Partnership Order (which need not comply with Section 1.3 and need not be accompanied by an Opinion of Counsel) with regard to the reduction or increase, as the case may be, in the principal amount of Securities represented thereby,
together with the written statement contemplated by the last sentence of Section 3.3.
Section 2.5. Form of Trustees Certificate of
Authentication.
The Trustees certificate(s) of authentication shall be in substantially the following form:
This is one of the Securities of the series designated [insert title of applicable series] referred to in the within-mentioned
Indenture.
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U.S. Bank National Association, as Trustee |
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Authorized Officer |
ARTICLE THREE
THE SECURITIES
Section 3.1.
Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities that may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant to a Board
Resolution, and set forth, or determined in the manner provided, in an Officers Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series:
(a) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities
and which may be part of a series of Securities previously issued);
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(b) any limit upon the aggregate principal amount of the Securities of the series
which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4,
Section 3.5, Section 3.6, Section 9.6 or Section 11.7 and except for any Securities which, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder);
(c) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(d) the date or dates on which the principal of the Securities of the series is payable or the method of determination thereof;
(e) the rate or rates at which the Securities of the series shall bear interest, if any, or the formula, method or
provision pursuant to which such rate or rates are determined, the date or dates from which such interest shall accrue or the method of determination thereof, the Interest Payment Dates on which such interest shall be payable and the Regular Record
Date for the interest payable on any Interest Payment Date;
(f) the place or places where, subject to the provisions of
Section 10.2, the principal of and any premium and interest on Securities of the series shall be payable, Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange, and
notices and demands to or upon the Partnership in respect of the Securities of the series and this Indenture may be served;
(g) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option of the Partnership;
(h) the obligation, if any, of the
Partnership to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(i)
if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable;
(j) whether payment of principal of and premium, if any, and interest, if any, on the Securities of the series shall be without
deduction for taxes, assessments or governmental charges paid by Holders of the series;
(k) if other than the principal
amount thereof, the portion of the principal amount of Securities of the series that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.2;
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(l) if the amount of payments of principal of and any premium or interest on the
Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined;
(m) if and as applicable, that the Securities of the series shall be issuable in whole or in part in the form of one or more
Global Securities and, in such case, the Depositary or Depositaries for such Global Security or Global Securities and any circumstances other than those set forth in Section 3.5 in which any such Global Security may be transferred to, and
registered and exchanged for Securities registered in the name of, a Person other than the Depositary for such Global Security or a nominee thereof and in which any such transfer may be registered;
(n) any deletions from, modifications of or additions to the Events of Default set forth in Section 5.1 or the covenants
of the Partnership set forth in Article Ten with respect to the Securities of such series;
(o) whether and under what
circumstances the Partnership will pay additional amounts on the Securities of the series held by a Person who is not a U.S. Person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Partnership
will have the option to redeem the Securities of the series rather than pay such additional amounts;
(p) if the Securities
of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and
terms of such certificates, documents or conditions;
(q) if the Securities of the series are to be convertible into or
exchangeable for any other security or property of the Partnership, including, without limitation, securities of another Person held by the Partnership or its Affiliates and, if so, the terms thereof;
(r) if other than as provided in Section 13.2 and Section 13.3, the means of Legal Defeasance or Covenant Defeasance
as may be specified for the Securities of the series;
(s) if other than the Trustee, the identity of the initial Security
Registrar and any initial Paying Agent;
(t) whether the Securities of the series will be guaranteed pursuant to the
Securities Guarantee set forth in Article Fourteen, any modifications to the terms of Article Fourteen applicable to the Securities of such series and the applicability of any other guarantees; and
(u) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above and (subject to Section 3.3) set forth, or determined in the manner provided, in the Officers Certificate referred to above or in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the
consent of the Holders, for increases in the aggregate principal amount of such series of Securities and issuances of additional Securities of such series or for the establishment of additional terms with respect to the Securities of such series.
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If any of the terms of the series are established by action taken by or pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Partnership and, if applicable, the Guarantors and delivered to the Trustee at or prior to the
delivery of the Officers Certificate setting forth, or providing the manner for determining, the terms of the series.
With respect
to Securities of a series subject to a Periodic Offering, such Board Resolution or Officers Certificate may provide general terms for Securities of such series and provide either that the specific terms of particular Securities of such series
shall be specified in a Partnership Order or that such terms shall be determined by the Partnership and, if applicable, the Guarantors or one or more agents thereof designated in an Officers Certificate, in accordance with a Partnership Order.
Section 3.2. Denominations.
The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated
by Section 3.1. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.
Section 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Partnership by the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer or any Vice President of the general partner of the Partnership and need not be attested. The signature of any of these officers on the Securities may be manual or facsimile. Any notation of Securities Guarantee endorsed on
the Securities shall be executed on behalf of the applicable Guarantor by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer or any of its Vice Presidents and need not be attested. The signature of any
of these officers on any notation of the Securities Guarantee may be manual or facsimile.
Securities and any notation of a Securities
Guarantee bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Partnership or a Guarantor, as the case may be, shall bind the Partnership or such Guarantor, as the case may be, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Partnership may deliver Securities of any series
executed by the Partnership to the Trustee for authentication, together with a Partnership Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Partnership Order shall authenticate and deliver such
Securities; provided, however, that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with such other procedures (including, without
limitation, the receipt by the Trustee of written instructions from the Partnership) acceptable to the Trustee as may be specified by or pursuant to a Partnership Order delivered to the Trustee prior to the time of the first authentication of
Securities of such series. If the forms or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Section 2.1 and Section 3.1, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be fully protected in relying on such Board Resolution and shall be entitled to receive such documents as it may reasonably request. The
Trustee shall also be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officers Certificate pursuant to Section 3.1 and complying with Section 1.3 and an Opinion of Counsel complying
with Section 1.3 stating:
(a) if the form or forms of such Securities has been established in or pursuant to a Board
Resolution as permitted by Section 2.1, that each such form has been established in conformity with the provisions of this Indenture;
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(b) if the terms of such Securities have been, or in the case of Securities of a
series offered in a Periodic Offering will be, established in or pursuant to a Board Resolution as permitted by Section 3.1, that such terms have been, or in the case of Securities of a series offered in a Periodic Offering will be, established
in conformity with the provisions of this Indenture, subject, in the case of Securities of a series offered in a Periodic Offering, to any conditions specified in such Opinion of Counsel; and
(c) that such Securities, when authenticated and delivered by the Trustee and issued by the Partnership in the manner and
subject to any conditions and assumptions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Partnership and, if applicable, the Subsidiary Guarantees thereof will constitute valid and legally binding
obligations of the Guarantors, enforceable in accordance with their respective terms, subject to the following limitations: (i) bankruptcy, insolvency, moratorium, reorganization, liquidation, fraudulent conveyance or transfer and other similar
laws of general applicability relating to or affecting the enforcement of creditors rights, or to general equity principles, (ii) the availability of equitable remedies being subject to the discretion of the court to which application
therefor is made; and (iii) such other usual and customary matters as shall be specified in such Opinion of Counsel.
The Trustee shall not be
required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustees own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner that is not
reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all
Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers Certificate otherwise required pursuant to Section 3.1 or the Partnership Order and Opinion of Counsel otherwise
required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to
be issued.
With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely, as to the authorization by the
Partnership of any of such Securities, on the form or forms and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and the other documents delivered pursuant to Section 2.1 and
Section 3.1 and this Section, as applicable, in connection with the first authentication of Securities of such series.
Each Security
shall be dated the date of its authentication.
No Security nor any related Securities Guarantee shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or an Authenticating Agent by manual signature of an
authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Partnership, and
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the Partnership shall deliver such Security to the Trustee for cancellation as provided in Section 3.9, for all purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
Section 3.4. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the Partnership may execute, and upon Partnership Order the Trustee shall
authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Partnership will cause Definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of Definitive Securities of such series, the temporary Securities of such series shall be exchangeable for Definitive Securities of such series upon surrender of the temporary Securities of such series at
the office or agency of the Partnership in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of Definitive Securities of the same series and tenor of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to
the same benefits under this Indenture as Definitive Securities of such series.
Section 3.5. Registration, Registration of Transfer and
Exchange.
The Partnership shall cause to be kept at the office or agency of the Partnership in a Place of Payment required by
Section 10.2 a register (the register maintained in such office being herein sometimes referred to as the Security Register) in which, subject to such reasonable regulations as it may prescribe, the Partnership shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby appointed as the initial Security Registrar for the purpose of registering Securities and transfers of Securities as herein provided, and its Corporate
Trust Office, which, at the date hereof, is located at One Liberty Plaza, 23rd Floor, New York, NY 10006, is the initial office or agency where the Securities Register will be maintained. The Partnership may at any time replace such Security
Registrar, change such office or agency or act as its own Security Registrar. The Partnership will give prompt written notice to the Trustee of any change of the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series at the office or agency maintained pursuant to Section 10.2 for
such purpose, the Partnership and, if applicable, the Guarantors shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities, with a notation of the Securities
Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations and of a like aggregate principal amount.
At the option of the Holder, Securities of any series (except a Global Security) may be exchanged for other Securities of the same series and
tenor, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Partnership and, if applicable,
the Guarantors shall execute and the Trustee shall authenticate and deliver, the Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, which the Holder making the exchange is entitled to receive.
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All Securities issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Partnership and, if applicable, the Guarantors evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Partnership or the Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Partnership and the Security Registrar duly executed, by the Holder thereof or such Holders attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Partnership may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.4, Section 9.6 or Section 11.7 not
involving any transfer.
The Partnership shall not be required (a) to issue, register the transfer of or exchange Securities of any
series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 11.3 and ending at the close of business on the day
of such mailing, or (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any other provisions of this Indenture and except as otherwise specified with respect to any particular series of Securities
as contemplated by Section 3.1, a Global Security representing all or a portion of the Securities of a series may not be transferred, except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. Every Security authenticated and delivered upon
registration of, transfer of, or in exchange for or in lieu of, a Global Security shall be a Global Security except as provided in the two paragraphs immediately following.
If at any time the Depositary for any Securities of a series represented by one or more Global Securities notifies the Partnership that it is
unwilling or unable to continue as Depositary for such Securities or if at any time the Depositary for such Securities shall no longer be eligible to continue as Depositary under Section 3.1 or ceases to be a clearing agency registered under
the Exchange Act, the Partnership shall appoint a successor Depositary with respect to such Securities. If a successor Depositary for such Securities is not appointed by the Partnership within 90 days after the Partnership receives such notice or
becomes aware of such ineligibility, the Partnerships election pursuant to Section 3.1 that such Securities be represented by one or more Global Securities shall no longer be effective and the Partnership and, if applicable, the
Guarantors will execute and the Trustee, upon receipt of a Partnership Order for the authentication and delivery of Definitive Securities of such series, will authenticate and deliver, Securities, with a notation of the Securities Guarantee, if
applicable, executed by the Guarantors, of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing
such Securities in exchange for such Global Security or Securities registered in the names of such Persons as the Depositary shall direct.
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If specified by the Partnership pursuant to Section 3.1 with respect to Securities
represented by a Global Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for Securities of the same series and tenor in definitive registered form on such terms as are acceptable to
the Partnership, the Trustee and such Depositary. Thereupon, the Partnership and, if applicable, the Guarantors shall execute, and the Trustee, upon receipt of a Partnership Order for the authentication and delivery of Securities in definitive
registered form, shall authenticate and deliver, without service charge:
(a) to the Person specified by such Depositary a
new Security or Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to
and in exchange for such Persons beneficial interest in the Global Security; and
(b) to such Depositary a new Global
Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount
of Securities authenticated and delivered pursuant to clause (a) above.
Every Person who takes or holds any beneficial interest in a
Global Security agrees that:
(i) the Partnership, the Guarantors (if applicable) and the Trustee may deal with the
Depositary as sole owner of the Global Security and as the authorized representative of such Person;
(ii) such
Persons rights in the Global Security shall be exercised only through the Depositary and shall be limited to those rights established by law and agreement between such Person and the Depositary and/or direct and indirect participants of the
Depositary;
(iii) the Depositary and its participants make book-entry transfers of beneficial ownership among, and receive
and transmit distributions of the principal of (and premium, if any) and interest on the Global Securities to, such Persons in accordance with their own procedures; and
(iv) none of the Partnership, the Guarantors (if applicable), the Trustee, nor any agent of any of them will have any
responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership
interests.
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with such security or indemnity as may be required by the Partnership, the
Guarantors (if applicable) or the Trustee to save each of them and any agent of any of them harmless, then, in the absence of notice to the Partnership or the Trustee that such Security has been acquired by a protected purchaser, the Partnership
and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of
like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Partnership,
the Guarantors (if applicable) and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Security and (b) such security or
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indemnity as may be required by them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Partnership or the Trustee that such Security has been
acquired by a protected purchaser, the Partnership and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security, with a notation of the
Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Partnership in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Partnership may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Partnership and, if applicable, the Guarantors, regardless of whether the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this
Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, interest on any Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest.
Any interest on any Security of any series that is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called Defaulted Interest) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the
Partnership, at its election in each case, as provided in clause (a) or (b) below:
(a) The Partnership may elect
to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Partnership shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same
time the Partnership shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon, the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest that shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not
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less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Partnership of such Special Record Date and, in the name and at the
expense of the Partnership, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at such Holders
address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following
clause (b).
(b) The Partnership may make payment of any Defaulted Interest on the Securities of any series in any other
lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Partnership to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this
Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 3.8. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, prior to due presentment of a
Security for registration of transfer, the Partnership, the Trustee and, if applicable, the Guarantors and any agent thereof may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving
payment of principal of and any premium and (subject to Section 3.5 and Section 3.7) any interest on such Security and for all other purposes whatsoever, regardless of whether such Security be overdue, and none of the Partnership, the
Trustee nor, if applicable, the Guarantors nor any agent of any of them shall be affected by notice to the contrary.
No holder of any
beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Partnership, the Trustee, and, if applicable,
the Guarantors and any agent of any thereof as the owner of such Global Security for all purposes whatsoever.
Section 3.9. Cancellation.
All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Partnership may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered
hereunder that the Partnership may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder that the Partnership
has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Securities held by the Trustee shall be disposed of in accordance with its customary practices, and the Trustee shall thereafter deliver to the Partnership a certificate with respect to such disposition from time to
time upon written request.
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Section 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series
shall be computed on the basis of a 360-day year comprised of twelve 30-day months.
Section 3.11. CUSIP or CINS Numbers.
The Partnership in issuing the Securities may use CUSIP or CINS numbers (if then generally in use, and in addition to the other
identification numbers printed on the Securities), and, if so, the Trustee shall use CUSIP or CINS numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation
is made as to the correctness of such CUSIP or CINS numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any
such redemption shall not be affected by any defect in or omission of such CUSIP or CINS numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect and will be discharged with respect to the Securities of any series (except as to any
surviving rights of registration of transfer or exchange of Securities and certain rights of the Trustee, in each case, herein expressly provided for), and the Trustee, upon Partnership Request and at the expense of the Partnership, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture with respect to such Securities, when:
(a)
either:
(i) all such Securities theretofore authenticated and delivered (other than (A) such Securities which have
been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6, and (B) such Securities for the payment of which money has theretofore been deposited in trust or segregated and held in trust by the
Partnership and thereafter repaid to the Partnership or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee for cancellation:
(A) have become due and payable; or
(B) will become due and payable at their Stated Maturity within one year; or
(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Partnership,
and the Partnership, in the case of (ii)(A), (B) or
(C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to
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the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be, together with instructions from the Partnership irrevocably directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;
(b) the Partnership has paid or caused to be paid all other sums payable hereunder by the Partnership with respect to such
Securities; and
(c) the Partnership has delivered to the Trustee an Officers Certificate and an Opinion of Counsel,
which, taken together, state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to the Securities of any series, (x) the obligations of the Partnership to
the Trustee under Section 6.7, the obligations of the Trustee to any Authenticating Agent under Section 6.14 and the right of the Trustee to resign under Section 6.10 shall survive, and (y) if money shall have been deposited with
the Trustee pursuant to clause (a) of this Section, the obligations of the Partnership and the Trustee under Section 3.5, Section 3.6, Section 4.2, Section 6.6, Section 10.2, the last paragraph of Section 10.3 and
Section 13.6 shall survive.
Section 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall
be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Partnership acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and interest for the payment of which such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
Section 5.1.
Events of Default.
Event of Default, wherever used herein with respect to Securities of any series, means any one of
the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest upon any Security of that series when it
becomes due and payable, and continuance of such default for a period of 30 days; or
(b) default in the payment of the
principal of (or premium, if any, on) any Security of that series at its Maturity; or
(c) default in the performance, or
breach, of any covenant set forth in Article Ten in this Indenture (other than a covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in
this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified
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mail, to the Partnership by the Trustee or to the Partnership and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series a written
notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default hereunder; or
(d) default in the performance, or breach, of any covenant in this Indenture (other than a covenant in Article Ten or any
other covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 180 days after there has been given, by registered or certified mail, to the Partnership by the Trustee or to the Partnership and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default hereunder; or
(e) the Partnership pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case,
(ii) consents to the entry of any order for relief against the Partnership in an involuntary case, (iii) consents to the appointment of a Custodian of the Partnership or for all or substantially all of the property of the Partnership, or
(iv) makes a general assignment for the benefit of the creditors of the Partnership; or
(f) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Partnership in an involuntary case, (ii) appoints a Custodian of the Partnership or for all or substantially all of the property of the
Partnership, or (iii) orders the liquidation of the Partnership; and the order or decree remains unstayed and in effect for 60 consecutive days; or
(g) default in the deposit of any sinking fund payment when due; or
(h) any other Event of Default provided with respect to Securities of that series in accordance with Section 3.1.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) and all accrued and unpaid interest of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Partnership (and to the Trustee if given by
Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. Notwithstanding the foregoing, if an Event of Default specified in clause (e) or (f) of Section 5.1 occurs,
the Securities of any series at the time Outstanding shall be due and payable immediately without further action or notice.
At any time
after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article Five provided, the
Holders of a majority in aggregate principal amount of the Outstanding Securities of that series, by written notice to the Partnership and the Trustee, may rescind and annul such declaration and its consequences if:
(a) the Partnership or, if applicable, one or more of the Guarantors has paid or deposited with the Trustee a sum sufficient to
pay:
(i) all overdue interest on all Securities of that series;
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(ii) the principal of (and premium, if any, on) any Securities of that series
that has become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities;
(iii) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed
therefor in such Securities; and
(iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel; and
(b) all Events of Default with respect to
Securities of that series, other than the non-payment of the principal of Securities of that series that has become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Partnership covenants that if:
(a) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable
and such default continues for a period of 30 days; or
(b) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof;
the Partnership will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and any premium and on
any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Partnership fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against
the Partnership or, if applicable, the Guarantors or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Partnership or, if applicable, the
Guarantors or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual
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to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Partnership or, if applicable, any Guarantor or any other obligor upon the Securities, their property or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Partnership or, if applicable, the Guarantors for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole
amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, if the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7.
No provision of
this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, compromise, arrangement, adjustment or composition affecting the Securities or, if applicable,
the Securities Guarantee or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for
the election of a trustee in bankruptcy or similar official and be a member of a creditors or other similar committee.
Section 5.5.
Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
Section 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article Five shall be applied in the following order, at the date or dates fixed by
the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully
paid:
FIRST: To the payment of all amounts due the Trustee under Section 6.7;
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SECOND: To the payment of the amounts then due and unpaid for principal of and
any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal
and any premium and interest, respectively; and
THIRD: The balance, if any, to the Partnership.
Section 5.7. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this
Indenture (including, if applicable, the Securities Guarantee), or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the
Securities of that series;
(b) the Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable indemnity satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent
with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of the same series of Security, or to obtain or to seek to obtain priority or preference over any other Holder of the same series of Security or to enforce
any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all Holders of the same series of Security.
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional,
to receive payment of the principal of and any premium and interest on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of such Holder.
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Section 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Partnership, the Guarantors, the Trustee and the Holders
shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
To the fullest extent permitted by applicable law, no delay or omission of the Trustee or of any Holder of any Securities to exercise any
right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Five or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 5.12. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided, however, that:
(a) such direction shall not be in conflict with any rule of law or with this Indenture;
(b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction; and
(c) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if
the Trustee in good faith shall determine that the direction would expose the Trustee to personal liability.
Section 5.13. Waiver of Past
Defaults.
By written notice to the Partnership and the Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except:
(a) a continuing default in the payment of the principal of or any premium, if any, or interest on any Security of such series;
or
(b) a default in respect of a covenant or provision hereof that under Article Nine cannot be modified or amended
without the consent of the Holder of each Outstanding Security of such series affected.
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Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by such Holders acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant, other than the Trustee, in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Partnership, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
Each of the Partnership and the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of
the Partnership and the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 6.1.
Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default with respect
to the Securities of a particular series:
(i) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and as are provided by the Trust Indenture Act with respect to the Securities of such series, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing with respect to the Securities of a particular series, the
Trustee shall exercise with respect to the Securities of such series such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure to act, or its own bad faith or willful misconduct, except that:
(i) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in aggregate principal amount of the Outstanding Securities of any series, given pursuant to Section 5.12,
relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and
(iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Regardless of whether therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
Section 6.2. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail
to all Holders of Securities of such series, as their names and addresses appear in the Security Register, notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however,
that, except in the case of a Default in the payment of the principal of or any premium or interest on any Security of such series or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee may
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withhold from Holders of Securities notice of any continuing Default or Event of Default if a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in
the interest of the Holders of Securities of such series; and, provided, further, that in the case of any Default of the character specified in Section 5.1(c) with respect to Securities of such series, no such notice
to Holders shall be given until at least 60 days after the occurrence thereof and that in the case of any Default of the character specified in Section 5.1(d) with respect to Securities of such series, no such notice to Holders shall be given
until at least 90 days after the occurrence thereof.
Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Partnership or a Guarantor mentioned herein shall be
sufficiently evidenced by a Partnership Request or Partnership Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) shall be entitled to receive and may, in the absence of bad faith on its part, rely upon an Officers
Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and
premises of the Partnership, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder and
shall not be responsible for the supervision of officers and employees of such agents or attorneys;
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(h) the Trustee may request that the Partnership and, if applicable, the
Guarantors deliver an Officers Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers Certificate may be signed by any
person authorized to sign an Officers Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded;
(i) the Trustee shall be entitled to the rights and protections afforded to the Trustee pursuant to this Article Six in
acting as a Paying Agent or Security Registrar hereunder;
(j) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event that is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and
such notice references the Securities and this Indenture; and
(k) anything in this Indenture notwithstanding, in no event
shall the Trustee be liable for any special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including but not limited to loss of profit), even if the Partnership has been advised as to the likelihood of such
loss or damage and regardless of the form of action.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustees certificates of authentication, shall be taken as the
statements of the Partnership or, if applicable, the Guarantors, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. Neither the Trustee nor any Authenticating Agent makes any representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Partnership of Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Partnership or, if applicable, any
Guarantor, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 310(b) and 311 of the Trust Indenture Act and Section 6.8, Section 6.9 and Section 6.13, may otherwise
deal with the Partnership or, if applicable, the Guarantors with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall
be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Partnership or, if applicable, one or more of the Guarantors.
Section 6.7. Compensation and Reimbursement.
The Partnership agrees:
(a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
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(b) except as otherwise expressly provided herein, to reimburse the Trustee upon
its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(c)
to indemnify each of the Trustee and its officers, directors, agents and employees for, and to hold it and them harmless against, any loss, liability or expense incurred without negligence, bad faith or willful misconduct on its or their part,
arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself or themselves against any claim or liability in connection with the exercise or performance
of any of its or their powers or duties hereunder.
As security for the performance of the obligations of the Partnership under this
Section, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of the principal of (and premium, if any) or interest on particular
Securities.
Without limiting any rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders
services in connection with an Event of Default specified in Section 5.1(e) or Section 5.1(f), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services of the Trustee are intended to
constitute expenses of administration under any applicable Bankruptcy Law.
The provisions of this Section 6.7 shall survive the
resignation or removal of the Trustee and the termination or satisfaction and discharge of this Indenture and the Legal Defeasance of the Securities.
Section 6.8. Disqualification; Conflicting Interests.
Reference is made to Section 310(b) of the Trust Indenture Act. There shall be excluded from the operation of Section 310(b)(1) of
the Trust Indenture Act this Indenture with respect to the Securities of more than one series.
Section 6.9. Corporate Trustee Required;
Eligibility.
There shall at all times be a Trustee hereunder that shall be a corporation organized and doing business under
the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus required by the Trust Indenture Act, subject to supervision
or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee shall not be an obligor upon the Securities or an Affiliate
thereof. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, then it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six.
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Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to
the Partnership. If the instrument of acceptance of appointment by a successor Trustee required by Section 6.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Partnership.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 310(b) of the Trust Indenture Act after written request therefor by the
Partnership or by any Holder who has been a bona fide Holder of a Security for at least six months; or
(ii) the Trustee
shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Partnership or by any such Holder; or
(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a Custodian of the Trustee
or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Partnership by a Board Resolution may remove the Trustee with respect to all Securities, or
(B) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall
resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Partnership, by a Board Resolution, shall promptly appoint a successor
Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be
only one Trustee with respect to the Securities of any particular series), and the Partnership and the successor Trustee shall comply with the applicable requirements of Section 6.11. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series
delivered to the Partnership and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee with
respect to the Securities of such series and to that extent supersede the successor Trustee
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appointed by the Partnership. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Partnership or the Holders and accepted appointment in the
manner required by Section 6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such series.
(f) The Partnership shall give notice of
each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided
in Section 1.7. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, the successor Trustee so
appointed shall execute, acknowledge and deliver to the Partnership, the Guarantors (if applicable) and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Partnership, any Guarantor (if applicable) or
the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien under Section 6.7.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all)
series, the Partnership, the Guarantors (if applicable), the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee
shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of
the Partnership, any Guarantor (if applicable) or any successor Trustee, such retiring Trustee, upon payment of its charges, shall execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the
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retiring Trustee with respect to the Securities of the series to which the appointment of such successor relates and shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder with respect to the Securities of such series, subject nevertheless to its lien under Section 6.7.
(c) Upon request of any such successor Trustee, the Partnership and, if applicable, the Guarantors shall execute any and all
instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article and the Trust Indenture Act.
Section 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto. As soon as practicable, the
successor Trustee shall mail a notice of its succession to the Partnership and the Holders of the Securities then Outstanding. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
Section 6.13. Preferential Collection of Claims Against Partnership.
Reference is made to Section 311 of the Trust Indenture Act. For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term cash transaction means any transaction in which full payment for goods or securities sold is made
within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand;
(b) the term self-liquidating paper means any draft, bill of exchange, acceptance or obligation which is made,
drawn, negotiated or incurred by the Partnership or, if applicable, any Guarantor for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by
the Trustee simultaneously with the creation of the creditor relationship with the Partnership or, if applicable, such Guarantor arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
Section 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities, which shall be authorized to act
on behalf of the Trustee to authenticate Securities of such
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series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustees certificate
of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Partnership and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner
and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part
of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the
Trustee and to the Partnership and, if applicable, the Guarantors. The Trustee for any series of Securities may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the
Partnership and, if applicable, the Guarantors. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be qualified and eligible in accordance with the provisions of
this Section, the Trustee for such series may appoint a successor Authenticating Agent that shall be acceptable to the Partnership and, if applicable, the Guarantors and shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
Except with respect to an Authenticating Agent appointed at the request of the Partnership or, if applicable,
the Guarantors, the Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.14, and the Trustee shall be entitled to be reimbursed by the Partnership or, if applicable,
the Guarantors for such payments, subject to the provisions of Section 6.7.
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If an appointment with respect to one or more series is made pursuant to this Section 6.14,
the Securities of such series may have endorsed thereon, in addition to the Trustees certificate of authentication, an alternate certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
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U.S. Bank National Association, as Trustee |
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By: |
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As Authenticating Agent |
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By: |
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Authorized Officer |
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Partnership to Furnish Trustee Names and Addresses of Holders.
The Partnership will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 5 days after each Regular Record Date for a series of Securities, a list for such series of
Securities, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such series as of such Regular Record Date; and
(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Partnership of any such
request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished
with respect to such series of Securities.
Section 7.2. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, with respect to each series of Securities, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.
(b) If three or
more Holders (herein referred to as applicants) apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form of proxy or other communication
which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved at the time by the Trustee in accordance with
Section 7.2(a); or
(ii) inform such applicants as to the approximate number of Holders whose names and addresses
appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application.
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If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a) a copy of the form of proxy
or other communication that is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five
days after such tender the Trustee shall mail to such applicants and file with the SEC, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the
best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the SEC, after opportunity for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the SEC shall find, after notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of
any obligation or duty to such applicants respecting their application.
(c) Every Holder of Securities, by receiving and
holding the same, agrees with the Partnership, the Guarantors (if applicable) and the Trustee that none of the Partnership, the Guarantors (if applicable) nor the Trustee nor any agent of any of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders in accordance with Section 7.2(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 7.2(b).
Section 7.3. Reports by Trustee.
Any Trustees report required pursuant to Section 313(a) of the Trust Indenture Act shall be dated as of May 15, and shall be
transmitted within 60 days after May 15 of each year (but in all events at intervals of not more than 12 months), commencing with the year 20 , by mail to all Holders, as their names and addresses appear in the Security
Register. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, and with the SEC. The Partnership will notify the Trustee when any
Securities are listed on any stock exchange.
Section 7.4. Reports by Partnership.
The Partnership shall:
(a) file with the Trustee, within 15 days after the Partnership files the same with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Partnership may be required to file with the SEC pursuant to
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Section 13 or Section 15(d) of the Exchange Act; or, if the Partnership is not required to file information, documents or reports pursuant to either of said Sections, then it shall file
with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;
(b) file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such
additional information, documents and reports with respect to compliance by the Partnership with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and
(c) transmit by mail to all Holders, as their names and addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Partnership pursuant to clauses (a) and (b) of this Section as may be required by rules and regulations prescribed from
time to time by the SEC.
ARTICLE EIGHT
CONSOLIDATION, AMALGAMATION, MERGER AND SALE
Section 8.1. Partnership May Consolidate, Etc., Only on Certain Terms.
The Partnership shall not convert into, or consolidate, amalgamate or merge with or into any other Person or sell, convey, assign, transfer,
lease or otherwise dispose of all or substantially all of the properties and assets of the Partnership on a consolidated basis to any other Person unless:
(a) either: (i) the Partnership is the surviving Person; or (ii) the Person formed by or surviving any such
consolidation, amalgamation or merger or resulting from such conversion (if other than the Partnership) or to which such sale, conveyance, assignment, transfer, lease or other disposition has been made is a corporation, limited liability company or
limited partnership organized or existing under the laws of the United States, any State thereof or the District of Columbia;
(b) the Person formed by or surviving any such conversion, consolidation, amalgamation or merger (if other than the
Partnership) or the Person to which such sale, conveyance, assignment, transfer, lease or other disposition has been made assumes by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities and the performance of every covenant of this Indenture on the part of the Partnership to be performed or observed;
(c) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have occurred and be continuing; and
(d) the Partnership has delivered to
the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such conversion, consolidation, amalgamation, merger, sale, conveyance, assignment, transfer, lease or other disposition and such supplemental indenture comply
with this Article Eight and that all conditions precedent herein provided for relating to such transaction have been complied with.
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Section 8.2. Successor Substituted.
Upon any consolidation, amalgamation or merger of the Partnership with or into any other Person or any sale, conveyance, assignment, transfer,
lease or other disposition of all or substantially all of the properties and assets of the Partnership and, if applicable, the Guarantors on a consolidated basis in accordance with Section 8.1, the successor or resulting Person formed by or
resulting upon such consolidation, amalgamation or merger (if other than the Partnership) or to which such sale, conveyance, assignment, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Partnership under this Indenture with the same effect as if such successor Person had been named as the Partnership herein, and thereafter, except in the case of a lease, the predecessor Partnership and, if applicable, each
of the Guarantors shall be relieved of all obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders.
The Partnership, the Guarantors (if any) and the Trustee may amend or supplement this Indenture, the Securities Guarantee or the Securities
without the consent of any holder of a Security:
(a) to cure any ambiguity or defect or to correct or supplement any
provision herein that may be inconsistent with any other provision herein; or
(b) to evidence the succession of another
Person to the Partnership and the assumption by any such successor of the covenants of the Partnership herein and, to the extent applicable, of the Securities; or
(c) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided that the
uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in the manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; or
(d) to add a Securities Guarantee and cause any Person to become a Guarantor, and/or to evidence the succession of another
Person to a Guarantor and the assumption by any such successor of the Securities Guarantee of such Guarantor herein and, to the extent applicable, endorsed upon any Securities of any series[, and/or to cause any corporate subsidiary of the
Partnership to become a co-issuer of the Securities of any series]; or
(e) to secure the Securities of any series; or
(f) to add to the covenants of the Partnership such further covenants, restrictions, conditions or provisions as the
Partnership shall consider to be appropriate for the benefit of the Holders of all or any series of Securities (and if such covenants, restrictions, conditions or provisions are to be for the benefit of less than all series of Securities, stating
that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Partnership, and to make the occurrence, or the occurrence and continuance, of a Default in any such
additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional
covenant, restriction, condition or provision such amendment or supplemental indenture may provide for a
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particular period of grace after Default (which period may be shorter or longer than that allowed in the case of other Defaults), may provide for an immediate enforcement upon such an Event of
Default, may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default; or
(g) to make any change to any provision of this Indenture that does not adversely affect the rights or interests of any Holder
of Securities; or
(h) to provide for the issuance of additional Securities in accordance with the provisions set forth in
this Indenture; or
(i) to add any additional Defaults or Events of Default in respect of all or any series of Securities;
or
(j) to add to, change or eliminate any of the provisions of this Indenture to such extent as shall be necessary to
permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; or
(k) to change or eliminate any of the provisions of this Indenture; provided that any such change or elimination shall
become effective only when there is no Security Outstanding of any series created prior to the execution of such amendment or supplemental indenture that is entitled to the benefit of such provision; or
(l) to establish the form or terms of Securities of any series as permitted by Section 2.1 and Section 3.1, including
to reopen any series of any Securities as permitted under Section 3.1; or
(m) to evidence and provide for the
acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or
(n) to conform the
text of this Indenture (and/or any supplemental indenture) or any Securities issued hereunder to any provision of a description of such text or Securities appearing in a prospectus, prospectus supplement, offering memorandum or offering circular
pursuant to which such Securities were offered to the extent that such provision was intended by the Partnership to be a verbatim recitation of a provision of this Indenture (and/or any supplemental indenture) or any Securities or Securities
Guarantee issued hereunder, with such intention being evidenced by an Officers Certificate; or
(o) to modify,
eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act or under any similar federal statute subsequently enacted, and to add to this
Indenture such other provisions as may be expressly required under the Trust Indenture Act.
Section 9.2. With Consent of Holders.
The Partnership, the Guarantors (if any) and the Trustee may amend or supplement this Indenture, the Securities Guarantee and the Securities
with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of each series of Securities affected by such amendment or
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supplemental indenture, with each such series voting as a separate class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for,
Securities) and, subject to Section 5.8 and Section 5.13 hereof, any existing Default or Event of Default or compliance with any provision of this Indenture, the Securities Guarantee or the Securities may be waived with respect to each
series of Securities with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series voting as a separate class (including consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Securities).
It is not necessary for the consent of the Holders of Securities under this Section 9.2 to
approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance of the proposed amendment, supplement or waiver.
After an amendment, supplement or waiver under this Section 9.2 becomes effective, the Partnership will mail to the Holders of Securities
affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Partnership to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amendment,
supplemental indenture or waiver. Notwithstanding anything contained herein to the contrary, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.2 may not (with respect to any Securities held by
a non-consenting Holder):
(a) change the Stated Maturity of the principal of, or any installment of principal of or
interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change the coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date therefor); or
(b) reduce the percentage in aggregate principal amount of the Outstanding Securities of any series, the consent of whose
Holders is required for any such amendment or supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided
for in this Indenture; or
(c) modify any of the provisions of Section 5.8 or Section 5.13; or
(d) waive a redemption payment with respect to any Security; provided, however, that any purchase or repurchase
of Securities shall not be deemed a redemption of the Securities; or
(e) release any Guarantor from any of its obligations
under its Securities Guarantee or this Indenture, except in accordance with the terms of this Indenture (as amended or supplemented); or
(f) make any change in the foregoing amendment and waiver provisions, except to increase any percentage provided for therein or
to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby.
An amendment or supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been
included solely for the benefit of one or more
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particular series of Securities, or that modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Securities of any other series.
Section 9.3. Execution of Amendments and Supplemental
Indentures.
In executing, or accepting the additional trusts created by, any amendment or supplemental indenture permitted by
this Article Nine or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment or supplemental indenture is authorized or permitted by this Indenture.
Upon the request of the Partnership
accompanied by a Board Resolution authorizing the execution of any such amendment or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Securities as aforesaid, and
upon receipt by the Trustee of the documents described in Section 6.3 hereof, the Trustee will join with the Partnership and the Guarantors in the execution of such amendment or supplemental indenture unless such amendment or supplemental
indenture directly affects the Trustees own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amendment or supplemental Indenture.
Section 9.4. Effect of Amendments and Supplemental Indentures.
Upon the execution of any amendment or supplemental indenture under this Article Nine, this Indenture shall be modified in accordance
therewith, and such amendment or supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
Every amendment or supplemental indenture executed pursuant to this Article Nine shall conform to the requirements of the Trust Indenture
Act as then in effect.
Section 9.6. Reference in Securities to Amendments or Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any amendment or supplemental indenture pursuant to this
Article Nine may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplemental indenture. If the Partnership shall so determine, new Securities of any
series so modified as to conform, in the opinion of the Trustee and the Partnership, to any such amendment or supplemental indenture may be prepared and executed by the Partnership and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
Section 9.7. Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Security of a series is a continuing consent by
the Holder of a Security of such series and every subsequent Holder of a Security of such series or portion of a Security of such series that evidences the same debt as the consenting Holders Security of such series, even if the notation of
the consent is not made on any Security. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder of the Securities of such series.
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ARTICLE TEN
COVENANTS
Section 10.1.
Payment of Principal, Premium and Interest.
The Partnership covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.
Section 10.2. Maintenance of Office or Agency.
The Partnership will maintain in the United States an office or agency (which may be an office of the Trustee or Security Registrar or agent
of the Trustee or Security Registrar) where Securities of each series may be presented or surrendered for payment and surrendered for registration of transfer or exchange and where notices and demands to or upon the Partnership in respect of the
Securities of that series and this Indenture may be served. The Partnership will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Partnership shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Partnership may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Partnership will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any
such other office or agency.
Except as otherwise specified with respect to a series of Securities as contemplated by Section 3.1,
the Partnership hereby initially designates the Corporate Trust Office of the Trustee as the Partnerships office or agency for each such purpose for each series of Securities. The Trustee shall initially serve as Paying Agent. In the event the
Partnership makes any payment in any currency in which the Trustee is unable to pay, and notwithstanding anything herein to the contrary, the Partnership will appoint a Paying Agent other than the Trustee to make such payment and the Trustee will
have no obligations with respect to such payment and will incur no liability with respect to the failure by the Partnership or such other Paying Agent to make, or cause to be made, such payment.
Section 10.3. Money for Securities Payments to Be Held in Trust.
If the Partnership shall at any time act as its own Paying Agent, with respect to any series of Securities, it will, on or before each due
date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Partnership shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal
of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal and any premium or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Partnership will promptly notify the Trustee of its action or failure so to act. For purposes of this Section 10.3, should a due date for
55
principal of or any premium or interest on, or sinking fund payment with respect to, any series of Securities not be on a Business Day, such payment shall be due on the next Business Day without
any interest for the period from the due date until such Business Day.
The Partnership will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of or any premium or interest on Securities of that series in
trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Partnership (or any other obligor upon the Securities of that series) in the
making of any payment of principal or any premium or interest on the Securities of that series; and
(c) at any time during
the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
The Partnership and, if applicable, the Guarantors may at any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or by Partnership Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Partnership or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by the Partnership or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Subject to any applicable escheat or abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by
the Partnership, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for one year after such principal, premium or interest has become due and payable shall be paid to the
Partnership on Partnership Request, or (if then held by the Partnership) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Partnership for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Partnership as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Partnership cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Partnership.
Section 10.4. Existence.
Subject to Article Eight, the Partnership and, if any Securities of a series to which Article Fourteen has been made applicable are
Outstanding, each Guarantor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Partnership
and, if applicable, each Guarantor shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Partnership or such
Guarantor, as the case may be.
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Section 10.5. Statement by Officers as to Default.
Annually, within 120 days after the close of each fiscal year beginning with the first fiscal year during which one or more series of
Securities are Outstanding, the Partnership and, if any Securities of a series to which Article Fourteen has been made applicable are Outstanding, each Guarantor will deliver to the Trustee a brief certificate (which need not include the
statements set forth in Section 1.3) from the principal executive officer, principal financial officer or principal accounting officer of the Partnership and, if applicable, such Guarantor, stating that a review of the activities of the
Partnership during such year and of performance under this Indenture has been made, and as to his or her knowledge of the Partnerships or such Guarantors, as the case may be, compliance (without regard to any period of grace or
requirement of notice provided herein) with all conditions and covenants under this Indenture and, if the Partnership or such Guarantor, as the case may be, shall be in Default, specifying all such Defaults and the nature and status thereof of which
such officer has knowledge.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.1. Applicability of Article.
Securities of any series that are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for Securities of any series) in accordance with this Article Eleven.
Section 11.2.
Election to Redeem; Notice to Trustee.
The election of the Partnership to redeem any Securities shall be evidenced by a
Board Resolution. In case of any redemption at the election of the Partnership of less than all the Securities of any series, the Partnership shall, at least 15 days prior to the last date for the giving of notice of such redemption (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case
of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture or (b) pursuant to an election of the Partnership that is subject to
a condition specified in the terms of the Securities of the series to be redeemed, the Partnership shall furnish the Trustee with an Officers Certificate evidencing compliance with such restriction or condition.
Section 11.3. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to
be redeemed), the particular Securities to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of
Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series.
The Trustee
shall promptly notify the Partnership in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. If the Securities of any series to be
redeemed consist of Securities having different dates on which the principal is payable or different rates of interest, or different methods by which interest may
57
be determined or have any other different tenor or terms, then the Partnership may, by written notice to the Trustee, direct that the Securities of such series to be redeemed shall be selected
from among the groups of such Securities having specified tenor or terms and the Trustee shall thereafter select the particular Securities to be redeemed in the manner set forth in the preceding paragraph from among the group of such Securities so
specified.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at such Holders address appearing in the Security Register.
All
notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price, or if not then ascertainable, the manner of calculation thereof;
(c) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amounts) of the particular Securities to be redeemed;
(d) that on the Redemption Date
the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for payment of the Redemption Price; and
(f) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Partnership shall be given by the Partnership or, at the Partnerships request,
by the Trustee in the name and at the expense of the Partnership.
Section 11.5. Deposit of Redemption Price.
Prior to any Redemption Date, the Partnership shall deposit with the Trustee or with a Paying Agent (or, if the Partnership is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
Section 11.6. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at
the Redemption Price therein specified, and from and
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after such date (unless the Partnership shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such
Security for redemption in accordance with said notice, such Security shall be paid by the Partnership at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that unless otherwise specified
with respect to Securities of any series as contemplated in Section 3.1, installments of interest the Stated Maturity of which is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
Section 11.7. Securities Redeemed in
Part.
Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the
Partnership or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Partnership and the Trustee duly executed by, the Holder thereof or such Holders attorney duly authorized in writing),
and the Partnership shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and tenor, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
Section 12.1.
Applicability of Article.
The provisions of this Article Twelve shall be applicable to any sinking fund for the
retirement of Securities of a series except as otherwise specified as contemplated by Section 3.1 for Securities of such series.
The
minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a mandatory sinking fund payment, and any payment in excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an optional sinking fund payment. If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in
Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
Section 12.2. Satisfaction of Sinking Fund Payments with Securities.
The Partnership (a) may deliver Outstanding Securities of a series (other than any previously called for redemption) and
(b) may apply as a credit Securities of a series that have been redeemed either at the election of the Partnership pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
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Section 12.3. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any series of Securities (unless a shorter period shall be satisfactory to
the Trustee), the Partnership will deliver to the Trustee an Officers Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 12.2 and stating the basis for such credit and that such Securities have not been
previously so credited, and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment
date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Partnership in the manner provided in Section 11.4. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6 and Section 11.7.
ARTICLE THIRTEEN
DEFEASANCE
Section 13.1.
Option to Effect Legal Defeasance or Covenant Defeasance.
The Partnership may, at the option of its Board of Directors
evidenced by a Board Resolution, and at any time, elect to have either Section 13.2 or Section 13.3 hereof be applied to all Outstanding Securities of any series upon compliance with the conditions set forth below in this
Article Thirteen.
Section 13.2. Legal Defeasance and Discharge.
Upon the Partnerships exercise under Section 13.1 hereof of the option applicable to this Section 13.2, the Partnership and
each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be deemed to have been discharged from their obligations with respect to all Outstanding Securities of such series (including the
Securities Guarantee) on the date the conditions set forth below are satisfied (hereinafter, Legal Defeasance). For this purpose, Legal Defeasance means that the Partnership and the Guarantors will be deemed to have paid and discharged
the entire Debt represented by the Outstanding Securities of such series (including the Securities Guarantee), which will thereafter be deemed to be outstanding only for the purposes of Section 13.5 hereof and the other sections of
this Indenture referred to in clauses (a) and (b) below, and to have satisfied all their other obligations under such Securities, the Securities Guarantee and this Indenture (and the Trustee, on demand of and at the expense of the
Partnership, shall execute proper instruments acknowledging the same), except for the following provisions, which will survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of Outstanding Securities of such series to receive payments in respect of the principal of, or
interest or premium, if any, on, such Securities when such payments are due from the trust referred to in Section 13.4 hereof;
(b) the Partnerships obligations with respect to such Securities under Section 3.4, Section 3.5,
Section 3.6, Section 10.2 and Section 10.3 hereof;
60
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Partnerships and the Guarantors obligations in connection therewith; and
(d) this
Article Thirteen.
Subject to compliance with this Article Thirteen, the Partnership may exercise its option under this
Section 13.2 notwithstanding the prior exercise of its option under Section 13.3 hereof with respect to the same series of Securities.
Section 13.3. Covenant Defeasance.
Upon the Partnerships exercise under Section 13.1 hereof of the option applicable to this Section 13.3, the Partnership and
each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be released from each of their obligations with respect to the Securities of such series under the covenants contained in
Section 7.4, Section 8.1 and Section 10.4 hereof as well as any Additional Defeasible Provisions (such release and termination hereinafter referred to as Covenant Defeasance), and the Securities of such series will
thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed
outstanding for all other purposes hereunder (it being understood that such Securities will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the Outstanding Securities
of such series and the Securities Guarantee, the Partnership and the Guarantors may fail to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such failure to comply will not constitute a Default or an Event of Default
under Section 5.1 hereof, but, except as specified above, the remainder of this Indenture and such Securities and Securities Guarantees will be unaffected thereby. In addition, upon the Partnerships exercise under Section 13.1 hereof
of the option applicable to this Section 13.3 hereof, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, any Event of Default that constitutes an Additional Defeasible Provision will no longer constitute an
Event of Default.
Section 13.4. Conditions to Legal or Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance with respect to any series of Securities under either Section 13.2 or
Section 13.3 hereof:
(a) the Partnership must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Securities of such series, cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination of cash in U.S. dollars and non-callable U.S. Government Obligations, in such amounts as will be sufficient, in the opinion of
a nationally recognized investment bank, appraisal firm, or firm of independent public accountants, to pay the principal of, and interest and premium, if any, on, the Outstanding Securities of such series on the stated date for payment thereof or on
the applicable Redemption Date, as the case may be, and the Partnership must specify whether the Securities are being defeased to such stated date for payment or to a particular Redemption Date;
(b) in the case of an election under Section 13.2 hereof, the Partnership must deliver to the Trustee an Opinion of
Counsel stating that:
(i) the Partnership has received from, or there has been published by, the Internal Revenue Service
a ruling; or
(ii) since the Issue Date, there has been a change in the applicable U.S. federal income tax law,
61
in either case to the effect that, and based thereon such Opinion of Counsel will state that, the
Holders of the Outstanding Securities of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an
election under Section 13.3 hereof, the Partnership must deliver to the Trustee an Opinion of Counsel stating that the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default with respect to such series of Securities shall have occurred and be continuing on the date
of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);
(e) the deposit must not result in a breach or violation of, or constitute a default under, any other instrument to which the
Partnership or any Guarantor is a party or by which the Partnership or any Guarantor is bound;
(f) such Legal Defeasance
or Covenant Defeasance must not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Partnership or any of its Subsidiaries is a party or by which the
Partnership or any of its Subsidiaries is bound;
(g) the Partnership must deliver to the Trustee an Officers
Certificate stating that the deposit was not made by the Partnership with the intent of preferring the Holders of such Securities over the other creditors of the Partnership with the intent of defeating, hindering, delaying or defrauding any
creditors of the Partnership or others;
(h) the Partnership must deliver to the Trustee an Officers Certificate
stating that all conditions precedent set forth in clauses (a) through (f) of this Section 13.4 have been complied with; and
(i) the Partnership must deliver to the Trustee an Opinion of Counsel (which Opinion of Counsel may be subject to customary
assumptions, qualifications and exclusions) stating that all conditions precedent set forth in clauses (b), (c) and (f) of this Section 13.4 have been complied with.
Section 13.5. Deposited Money and U.S. Government Obligations to be Held in Trust, Other Miscellaneous Provisions.
Subject to the last paragraph of Section 10.3 hereof, all money and non-callable U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee,
62
collectively for purposes of this Section 13.5, the Trustee) pursuant to Section 13.4 hereof in respect of the Outstanding Securities of any series will be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Partnership acting as Paying Agent) as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
The Partnership will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or
non-callable U.S. Government Obligations deposited pursuant to Section 13.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge that by law is for the account of the Holders of the
Outstanding Securities.
Notwithstanding anything in this Article Thirteen to the contrary, the Trustee will deliver or pay to the
Partnership from time to time upon the request of the Partnership any money or non-callable U.S. Government Obligations held by it as provided in Section 13.4 hereof which, in the opinion of a nationally recognized investment bank, appraisal
firm or firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 13.4(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 13.6. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable U.S. Government Obligations in accordance with
Section 4.1, Section 13.2 or Section 13.3 hereof with respect to the Securities of any series, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Partnerships and the Guarantors obligations under this Indenture and such Securities and the Securities Guarantee will be revived and reinstated as though no deposit had occurred pursuant to
Section 4.1, Section 13.2 or Section 13.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money or non-callable U.S. Government Obligations in accordance with Section 4.1, Section 13.2 or
Section 13.3 hereof, as the case may be; provided, however, that, if the Partnership makes any payment of principal of or premium, if any, or interest on any such Security following the reinstatement of its obligations, the Partnership
will be subrogated to the rights of the Holders of such Securities to receive such payment from the money or non-callable U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE FOURTEEN
GUARANTEE OF SECURITIES
Section 14.1. Securities Guarantee.
(a) Subject to the other provisions of this Article Fourteen, each of the Guarantors hereby fully and unconditionally and
jointly and severally guarantees to each Holder of a Security of each series to which this Article Fourteen has been made applicable as provided in Section 3.1(t) (the Securities of such series being referred to herein as the
Guaranteed Securities) (which Security has been authenticated and delivered by the Trustee), and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Guaranteed Securities,
or the obligations of the Partnership hereunder or thereunder, that:
(i) the principal of and premium, if any, and
interest on the Guaranteed Securities will be promptly paid in full when due, whether at Stated Maturity, or by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Guaranteed Securities, if any, if
lawful, and all other obligations of the Partnership to the Holders of Guaranteed Securities, or the Trustee hereunder or thereunder, will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of any Guaranteed Securities or any of such other obligations, that
same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
63
Failing payment when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
(b) To the extent permissible under applicable law, the obligations of the Guarantors under this Securities Guarantee are
unconditional, irrespective of the validity, regularity or enforceability of the Guaranteed Securities or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Guaranteed Securities with respect to
any provisions hereof or thereof, the recovery of any judgment against the Partnership, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. To the extent
permitted by applicable law, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Partnership, any right to require a proceeding first against the
Partnership, protest, notice and all demands whatsoever and covenants that this Securities Guarantee will not be discharged except by complete performance of the obligations contained in the Guaranteed Securities and this Indenture.
(c) If any Holder or the Trustee is required by any court or otherwise to return to the Partnership, the Guarantors or any
custodian, trustee, liquidator or other similar official acting in relation to either the Partnership or the Guarantors, any amount paid by either to the Trustee or such Holder, then this Securities Guarantee, to the extent theretofore discharged,
will be reinstated in full force and effect.
(d) Each Guarantor agrees that it will not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, to the extent permitted by applicable law, as between the
Guarantors, on the one hand, and the Holders of Guaranteed Securities and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five hereof for the purposes of this
Securities Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as
provided in Article Five hereof, such obligations (regardless of whether due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Securities Guarantee. The Guarantors will have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Securities Guarantee.
64
Section 14.2. Limitation on Guarantor Liability.
Each Guarantor and, by its acceptance of Guaranteed Securities, each Holder thereof, hereby confirms that it is the intention of all such
parties that the Securities Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or State law
to the extent applicable to any Securities Guarantee. To effectuate the foregoing intention, to the extent permitted under applicable law, the Holders and each Guarantor hereby irrevocably agree that the obligations of such Guarantor will be limited
to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article Fourteen, result in the obligations of such Guarantor under its Securities Guarantee not
constituting a fraudulent transfer or conveyance.
Section 14.3. Execution and Delivery of Securities Guarantee Notation.
To evidence its Securities Guarantee set forth in Section 14.1 hereof, each Guarantor hereby agrees that a notation of such Securities
Guarantee substantially in the form set forth in Section 2.3 or established in or pursuant to a Board Resolution or in an indenture supplemental hereto, in accordance with the provisions of Section 2.1, will be endorsed by an officer of
such Guarantor on each Guaranteed Security authenticated and delivered by the Trustee and that this Indenture or a supplement to this Indenture will be executed on behalf of such Guarantor by one of its officers.
Each Guarantor hereby agrees that its Securities Guarantee set forth in Section 14.1 hereof will remain in full force and effect
notwithstanding any failure to endorse on each Guaranteed Security a notation of such Securities Guarantee.
If an officer whose signature
is on this Indenture or on the Securities Guarantee no longer holds that office at the time the Trustee authenticates the Guaranteed Security on which a notation of Securities Guarantee is endorsed, the Securities Guarantee will be valid
nevertheless.
The delivery of any Guaranteed Security by the Trustee, after the authentication thereof hereunder, will constitute due
delivery of the Securities Guarantee of such Guaranteed Security set forth in this Indenture on behalf of the Guarantors.
* * *
65
This instrument may be executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the
parties hereto have caused this Indenture to be duly executed, as of the day and year first above written.
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SANCHEZ PRODUCTION PARTNERS LP |
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By: |
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Sanchez Production Partners GP LLC, |
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its general partner |
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By: |
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Name: |
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Title: |
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U.S. BANK NATIONAL ASSOCIATION, as
Trustee |
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By: |
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Name: |
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Title: |
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Exhibit 4.10
SANCHEZ PRODUCTION PARTNERS LP
AND
U.S. BANK NATIONAL
ASSOCIATION,
Trustee
INDENTURE
DATED AS OF ,
20
SUBORDINATED DEBT SECURITIES
SANCHEZ PRODUCTION PARTNERS LP
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED,
AND INDENTURE, DATED AS OF ,
20
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TRUST INDENTURE ACT SECTION |
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INDENTURE SECTION |
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Section 310(a)(1) |
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6.9 |
(a)(2) |
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6.9 |
(a)(3) |
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Not Applicable |
(a)(4) |
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Not Applicable |
(a)(5) |
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6.9 |
(b) |
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6.8 |
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Section 311 |
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6.13 |
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Section 312(a) |
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7.1, 7.2(a) |
(b) |
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7.2(b) |
(c) |
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7.2(c) |
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Section 313(a) |
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7.3 |
(b) |
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* |
(c) |
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* |
(d) |
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7.3 |
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Section 314(a) |
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7.4 |
(a)(4) |
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10.5 |
(b) |
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Not Applicable |
(c)(1) |
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1.3 |
(c)(2) |
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1.3 |
(c)(3) |
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Not Applicable |
(d) |
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Not Applicable |
(e) |
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1.3 |
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Section 315(a) |
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6.1(a) |
(b) |
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6.2 |
(c) |
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6.1(b) |
(d) |
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6.1(c) |
(d)(1) |
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6.1(a)(1) |
(d)(2) |
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6.1(c)(2) |
(d)(3) |
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6.1(c)(3) |
(e) |
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5.14 |
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Section 316(a) |
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1.1, 1.2 |
(a)(1)(A) |
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5.2, 5.12 |
(a)(1)(B) |
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5.13 |
(a)(2) |
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Not Applicable |
(b) |
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5.8 |
(c) |
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1.5(f) |
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TRUST INDENTURE ACT SECTION |
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INDENTURE SECTION |
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Section 317(a)(1) |
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5.3 |
(a)(2) |
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5.4 |
(b) |
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10.3 |
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Section 318(a) |
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1.8 |
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
* |
Deemed included pursuant to Section 318(c) of the Trust Indenture Act |
TABLE OF CONTENTS
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ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
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1 |
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Section 1.1. |
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Definitions |
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1 |
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Section 1.2. |
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Incorporation by Reference of Trust Indenture Act |
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8 |
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Section 1.3. |
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Compliance Certificates and Opinions |
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9 |
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Section 1.4. |
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Form of Documents Delivered to Trustee |
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9 |
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Section 1.5. |
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Acts of Holders; Record Dates |
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10 |
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Section 1.6. |
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Notices, Etc., to Trustee, Partnership and Guarantors |
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11 |
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Section 1.7. |
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Notice to Holders; Waiver |
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12 |
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Section 1.8. |
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Conflict with Trust Indenture Act |
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12 |
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Section 1.9. |
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Effect of Headings and Table of Contents |
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12 |
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Section 1.10. |
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Successors and Assigns |
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12 |
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Section 1.11. |
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Separability Clause |
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13 |
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Section 1.12. |
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Benefits of Indenture |
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13 |
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Section 1.13. |
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Force Majeure |
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13 |
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Section 1.14. |
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Waiver of Jury Trial |
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13 |
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Section 1.15. |
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Governing Law |
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13 |
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Section 1.16. |
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Legal Holidays |
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13 |
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Section 1.17. |
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Securities in a Composite Currency, Currency Unit or Foreign Currency |
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14 |
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Section 1.18. |
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Payment in Required Currency; Judgment Currency |
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14 |
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Section 1.19. |
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Language of Notices, Etc. |
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15 |
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Section 1.20. |
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Incorporators, Shareholders, Partners, Members, Officers and Directors of the Partnership, the General Partner of the Partnership
and the Guarantors Exempt from Individual Liability |
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15 |
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ARTICLE TWO SECURITY FORMS |
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15 |
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Section 2.1. |
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Forms Generally |
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15 |
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Section 2.2. |
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Form of Face of Security |
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15 |
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Section 2.3. |
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Form of Reverse of Security |
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18 |
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Section 2.4. |
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Global Securities |
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22 |
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Section 2.5. |
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Form of Trustees Certificate of Authentication |
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23 |
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ARTICLE THREE THE SECURITIES |
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23 |
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Section 3.1. |
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Amount Unlimited; Issuable in Series |
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23 |
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Section 3.2. |
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Denominations |
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26 |
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Section 3.3. |
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Execution, Authentication, Delivery and Dating |
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26 |
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Section 3.4. |
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Temporary Securities |
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28 |
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Section 3.5. |
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Registration, Registration of Transfer and Exchange |
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28 |
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Section 3.6. |
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Mutilated, Destroyed, Lost and Stolen Securities |
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30 |
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Section 3.7. |
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Payment of Interest; Interest Rights Preserved |
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31 |
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Section 3.8. |
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Persons Deemed Owners |
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32 |
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Section 3.9. |
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Cancellation |
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32 |
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Section 3.10. |
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Computation of Interest |
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33 |
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Section 3.11. |
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CUSIP or CINS Numbers |
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33 |
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ARTICLE FOUR SATISFACTION AND DISCHARGE |
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33 |
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Section 4.1. |
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Satisfaction and Discharge of Indenture |
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33 |
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Section 4.2. |
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Application of Trust Money |
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34 |
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ARTICLE FIVE REMEDIES |
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34 |
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Section 5.1. |
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Events of Default |
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34 |
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Section 5.2. |
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Acceleration of Maturity; Rescission and Annulment |
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35 |
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Section 5.3. |
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Collection of Indebtedness and Suits for Enforcement by Trustee |
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36 |
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Section 5.4. |
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Trustee May File Proofs of Claim |
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37 |
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Section 5.5. |
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Trustee May Enforce Claims Without Possession of Securities |
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37 |
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Section 5.6. |
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Application of Money Collected |
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38 |
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Section 5.7. |
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Limitation on Suits |
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38 |
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Section 5.8. |
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Unconditional Right of Holders to Receive Principal, Premium and Interest |
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39 |
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Section 5.9. |
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Restoration of Rights and Remedies |
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39 |
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Section 5.10. |
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Rights and Remedies Cumulative |
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39 |
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Section 5.11. |
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Delay or Omission Not Waiver |
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39 |
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Section 5.12. |
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Control by Holders |
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39 |
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Section 5.13. |
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Waiver of Past Defaults |
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40 |
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Section 5.14. |
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Undertaking for Costs |
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40 |
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Section 5.15. |
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Waiver of Stay, Extension or Usury Laws |
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40 |
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ARTICLE SIX THE TRUSTEE |
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41 |
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Section 6.1. |
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Certain Duties and Responsibilities |
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41 |
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Section 6.2. |
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Notice of Defaults |
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42 |
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Section 6.3. |
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Certain Rights of Trustee |
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42 |
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Section 6.4. |
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Not Responsible for Recitals or Issuance of Securities |
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43 |
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Section 6.5. |
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May Hold Securities |
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43 |
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Section 6.6. |
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Money Held in Trust |
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44 |
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Section 6.7. |
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Compensation and Reimbursement |
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44 |
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Section 6.8. |
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Disqualification; Conflicting Interests |
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44 |
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Section 6.9. |
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Corporate Trustee Required; Eligibility |
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45 |
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Section 6.10. |
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Resignation and Removal; Appointment of Successor |
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45 |
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Section 6.11. |
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Acceptance of Appointment by Successor |
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46 |
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Section 6.12. |
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Merger, Conversion, Consolidation or Succession to Business |
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47 |
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Section 6.13. |
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Preferential Collection of Claims Against Partnership |
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47 |
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Section 6.14. |
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Appointment of Authenticating Agent |
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48 |
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ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY |
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49 |
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Section 7.1. |
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Partnership to Furnish Trustee Names and Addresses of Holders |
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49 |
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Section 7.2. |
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Preservation of Information; Communications to Holders |
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49 |
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Section 7.3. |
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Reports by Trustee |
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50 |
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Section 7.4. |
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Reports by Partnership |
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51 |
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ARTICLE EIGHT CONSOLIDATION, AMALGAMATION, MERGER AND SALE |
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51 |
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Section 8.1. |
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Partnership May Consolidate, Etc., Only on Certain Terms |
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51 |
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Section 8.2. |
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Successor Substituted |
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52 |
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ARTICLE NINE AMENDMENT, SUPPLEMENT AND WAIVER |
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52 |
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Section 9.1. |
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Without Consent of Holders |
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52 |
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Section 9.2. |
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With Consent of Holders |
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54 |
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Section 9.3. |
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Execution of Amendments and Supplemental Indentures |
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55 |
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Section 9.4. |
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Effect of Amendments and Supplemental Indentures |
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55 |
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Section 9.5. |
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Conformity with Trust Indenture Act |
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55 |
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Section 9.6. |
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Reference in Securities to Amendments or Supplemental Indentures |
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56 |
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Section 9.7. |
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Effect of Consents |
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56 |
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ii
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|
|
|
|
|
ARTICLE TEN COVENANTS |
|
|
56 |
|
Section 10.1. |
|
Payment of Principal, Premium and Interest |
|
|
56 |
|
Section 10.2. |
|
Maintenance of Office or Agency |
|
|
56 |
|
Section 10.3. |
|
Money for Securities Payments to Be Held in Trust |
|
|
57 |
|
Section 10.4. |
|
Existence |
|
|
58 |
|
Section 10.5. |
|
Statement by Officers as to Default |
|
|
58 |
|
|
|
ARTICLE ELEVEN REDEMPTION OF SECURITIES |
|
|
58 |
|
Section 11.1. |
|
Applicability of Article |
|
|
58 |
|
Section 11.2. |
|
Election to Redeem; Notice to Trustee |
|
|
58 |
|
Section 11.3. |
|
Selection by Trustee of Securities to Be Redeemed |
|
|
59 |
|
Section 11.4. |
|
Notice of Redemption |
|
|
59 |
|
Section 11.5. |
|
Deposit of Redemption Price |
|
|
60 |
|
Section 11.6. |
|
Securities Payable on Redemption Date |
|
|
60 |
|
Section 11.7. |
|
Securities Redeemed in Part |
|
|
60 |
|
|
|
ARTICLE TWELVE SINKING FUNDS |
|
|
61 |
|
Section 12.1. |
|
Applicability of Article |
|
|
61 |
|
Section 12.2. |
|
Satisfaction of Sinking Fund Payments with Securities |
|
|
61 |
|
Section 12.3. |
|
Redemption of Securities for Sinking Fund |
|
|
61 |
|
|
|
ARTICLE THIRTEEN DEFEASANCE |
|
|
62 |
|
Section 13.1. |
|
Option to Effect Legal Defeasance or Covenant Defeasance |
|
|
62 |
|
Section 13.2. |
|
Legal Defeasance and Discharge |
|
|
62 |
|
Section 13.3. |
|
Covenant Defeasance |
|
|
62 |
|
Section 13.4. |
|
Conditions to Legal or Covenant Defeasance |
|
|
63 |
|
Section 13.5. |
|
Deposited Money and U.S. Government Obligations to be Held in Trust, Other Miscellaneous Provisions |
|
|
64 |
|
Section 13.6. |
|
Reinstatement |
|
|
65 |
|
|
|
ARTICLE FOURTEEN GUARANTEE OF SECURITIES |
|
|
65 |
|
Section 14.1. |
|
Securities Guarantee |
|
|
65 |
|
Section 14.2. |
|
Limitation on Guarantor Liability |
|
|
66 |
|
Section 14.3. |
|
Execution and Delivery of Securities Guarantee Notation |
|
|
67 |
|
|
|
ARTICLE FIFTEEN SUBORDINATION OF SECURITIES |
|
|
67 |
|
Section 15.1. |
|
Securities Subordinated to Senior Debt |
|
|
67 |
|
Section 15.2. |
|
No Payment on Securities in Certain Circumstances |
|
|
67 |
|
Section 15.3. |
|
Payment over of Proceeds upon Dissolution, Etc. |
|
|
68 |
|
Section 15.4. |
|
Subrogation |
|
|
70 |
|
Section 15.5. |
|
Obligations of Partnership Unconditional |
|
|
70 |
|
Section 15.6. |
|
Notice to Trustee |
|
|
70 |
|
Section 15.7. |
|
Reliance on Judicial Order or Certificate of Liquidating Agent |
|
|
71 |
|
Section 15.8. |
|
Trustees Relation to Senior Debt |
|
|
71 |
|
Section 15.9. |
|
Subordination Rights Not Impaired by Acts or Omissions of the Partnership or Holders of Senior Debt |
|
|
72 |
|
Section 15.10. |
|
Holders Authorize Trustee to Effectuate Subordination of Securities |
|
|
72 |
|
Section 15.11. |
|
Not to Prevent Events of Default |
|
|
72 |
|
Section 15.12. |
|
Trustees Compensation Not Prejudiced |
|
|
72 |
|
Section 15.13. |
|
No Waiver of Subordination Provisions |
|
|
72 |
|
Section 15.14. |
|
Payments May Be Paid Prior to Dissolution |
|
|
73 |
|
Section 15.15. |
|
Trust Moneys Not Subordinated |
|
|
73 |
|
iii
|
|
|
|
|
|
|
ARTICLE SIXTEEN SUBORDINATION OF SECURITIES GUARANTEES |
|
|
73 |
|
Section 16.1. |
|
Securities Guarantees Subordinated to Guarantor Senior Debt |
|
|
73 |
|
Section 16.2. |
|
No Payment on Securities Guarantees in Certain Circumstances |
|
|
73 |
|
Section 16.3. |
|
Payment over of Proceeds upon Dissolution, Etc. |
|
|
74 |
|
Section 16.4. |
|
Subrogation |
|
|
76 |
|
Section 16.5. |
|
Obligations of Guarantor Unconditional |
|
|
76 |
|
Section 16.6. |
|
Notice to Trustee |
|
|
77 |
|
Section 16.7. |
|
Reliance on Judicial Order or Certificate of Liquidating Agent |
|
|
77 |
|
Section 16.8. |
|
Trustees Relation to Guarantor Senior Debt |
|
|
78 |
|
Section 16.9. |
|
Subordination Rights Not Impaired by Acts or Omissions of a Guarantor or Holders of Guarantor Senior Debt |
|
|
78 |
|
Section 16.10. |
|
Holders Authorize Trustee to Effectuate Subordination of Securities Guarantees |
|
|
78 |
|
Section 16.11. |
|
Not to Prevent Events of Default |
|
|
78 |
|
Section 16.12. |
|
Trustees Compensation Not Prejudiced |
|
|
79 |
|
Section 16.13. |
|
No Waiver of Subordination Provisions |
|
|
79 |
|
Section 16.14. |
|
Payments May Be Paid Prior to Dissolution |
|
|
79 |
|
NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
iv
PARTIES
INDENTURE, dated as of ,
20 , among Sanchez Production Partners LP, a limited partnership duly organized and existing under the laws of the State of Delaware (herein called the Partnership), the Guarantors (as defined hereinafter) and U.S.
Bank National Association, as trustee (the Trustee).
RECITALS OF THE COMPANY:
The Partnership has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its
unsecured subordinated debentures, notes or other evidences of indebtedness (herein called the Securities), which may be guaranteed by the Guarantors, to be issued in one or more series as provided in this Indenture.
All things necessary to make this Indenture a valid agreement of the Partnership, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act (as defined herein) that are required to be a part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders (as defined herein) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the
singular;
(b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with
GAAP;
(c) the words herein, hereof and hereunder and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
(d) the words
Article and Section refer to an Article and Section, respectively, of this Indenture;
(e) the word
includes and its derivatives means includes, but is not limited to and corresponding derivative definitions; and
(f) references to any officer of any partnership or limited liability company that does not have officers but is managed or
controlled, directly or indirectly, by an entity that does have officers, shall be deemed to be references to the officers of such managing or controlling entity.
Certain terms, used principally in Article Six, are defined in that Article.
Act, when used with respect to any Holder, has the meaning specified in Section 1.5.
Additional Defeasible Provision means a covenant or other provision that is (a) made part of this Indenture pursuant to an
indenture supplemental hereto, a Board Resolution or an Officers Certificate delivered pursuant to Section 3.1, and (b) pursuant to the terms set forth in such supplemental indenture, Board Resolution or Officers Certificate,
made subject to the provisions of Article Thirteen.
Affiliate of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control, as used with respect to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms controlling,
controlled by and under common control with have correlative meanings.
Authenticating Agent means any
Person authorized by the Trustee to act on behalf of the Trustee to authenticate Securities.
Banking Day means, in respect of
any city, any date on which commercial banks are open for business in that city.
Bankruptcy Law means any applicable Federal
or State bankruptcy, insolvency, reorganization or other similar law.
Board of Directors means:
(a) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such
board;
(b) with respect to a partnership, the Board of Directors of the general partner of the partnership;
(c) with respect to a limited liability company, the managing member or members or any controlling committee of managers or members thereof or
any board or committee serving a similar management function; and
(d) with respect to any other Person, the individual or board or
committee of such Person serving a management function similar to those described in clauses (a), (b) or (c) of this definition.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant Secretary of the general partner of the
Partnership or a Guarantor, the principal financial officer of the general partner of the Partnership or a Guarantor, any other authorized officer of the Partnership or a Guarantor, or a person duly authorized by any of them, in each case as
applicable, to have been duly adopted by the Board of Directors of the general partner of the Partnership and to be in full force and effect on the date of such certification, and delivered to the Trustee. Where any provision of this Indenture
refers to action to be taken pursuant to a Board Resolution (including the establishment of any series of the Securities and the forms and terms thereof), such action may be taken by any committee, officer or employee of the general partner of the
Partnership or a Guarantor, as applicable, authorized to take such action by the Board of Directors, as evidenced by a Board Resolution.
2
Business Day, when used with respect to any Place of Payment or other location,
means, except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions and trust companies in that Place
of Payment or other location are authorized or obligated by law, executive order or regulation to close.
CINS means CUSIP
International Numbering System.
Code means the United States Internal Revenue Code of 1986, as amended.
Corporate Trust Office means the office of the Trustee at the address specified in Section 3.5 or such other address as to
which the Trustee may give notice to the Partnership.
corporation, when used in reference to the Trustee or any prospective
Trustee, shall include any corporation, company, association, partnership, limited partnership, limited liability company, joint-stock company, trust or other entity, in each case, satisfying the requirements of Section 310(a)(1) of the Trust
Indenture Act.
Covenant Defeasance has the meaning specified in Section 13.3.
CUSIP means the Committee on Uniform Securities Identification Procedures.
Custodian means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
Debt means any obligation created or assumed by any Person for the repayment of money borrowed and any purchase money obligation
created or assumed by such Person and any guarantee of the foregoing.
Default means, with respect to a series of Securities,
any event that is, or after notice or lapse of time or both would be, an Event of Default.
Defaulted Interest has the meaning
specified in Section 3.7.
Definitive Security means a security other than a Global Security or a temporary Security.
Depositary means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or
more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 3.1, until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter shall mean or include each Person which is a Depositary hereunder, and if at any time there is more than one such Person, shall be a collective reference to such Persons.
Designated Guarantor Senior Debt shall have the meaning given to such term in a Board Resolution, Officers Certificate or
indenture supplemental hereto delivered pursuant to Section 3.1.
Designated Senior Debt shall have the meaning given to
such term in a Board Resolution, Officers Certificate or indenture supplemental hereto delivered pursuant to Section 3.1.
Dollar or $ means the coin or currency of the United States of America, which at the time of payment is legal tender
for the payment of public and private debts.
3
Event of Default has the meaning specified in Section 5.1.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Foreign Currency means a currency used by the government of a country other than the United States of America.
GAAP means generally accepted accounting principles in the United States of America as in effect from time to time, including
those set forth in (1) the Financial Accounting Standards Board Accounting Standards Codification and any related Accounting Standards Updates by the Financial Accounting Standards Board, (2) such other statements by such other entity as
are approved by a significant segment of the accounting profession and (3) the rules and regulations of the SEC governing the inclusion of financial statements in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. All computations based on GAAP contained in the Indenture shall be computed in conformity with GAAP.
Global Security means a Security in global form that evidences all or part of a series of Securities and is authenticated and
delivered to, and registered in the name of, the Depositary for the Securities of such series or its nominee.
Guaranteed
Securities has the meaning specified in Section 14.1.
Guarantor means each Person that becomes a guarantor of any
Securities pursuant to the applicable provisions of this Indenture.
Guarantor Senior Debt means, unless otherwise
provided with respect to the Securities of a series as contemplated by Section 3.1, (a) all Debt of a Guarantor, whether currently outstanding or hereafter issued, unless, by the terms of the instrument creating or evidencing such Debt, it
is provided that such Debt is not superior in right of payment to the Securities Guarantee or to other Debt which is pari passu with or subordinated to the Securities Guarantee, and (b) any modifications, refunding, deferrals, renewals
or extensions of any such Debt or securities, notes or other evidence of Debt issued in exchange for such Debt; provided that in no event shall Guarantor Senior Debt include (i) Debt of a Guarantor owed or owing to any
Subsidiary of such Guarantor or any officer, director or employee of such Guarantor or any Subsidiary of such Guarantor, (ii) Debt to trade creditors or (iii) any liability for taxes owed or owing by a Guarantor.
Holder means a Person in whose name a Security is registered in the Security Register.
Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more
amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such amendment or supplemental indenture, the provisions of the Trust Indenture Act that
are deemed to be part of and govern this instrument and any such amendment or supplemental indenture, respectively. The term Indenture also shall include the terms of particular series of Securities established as contemplated by
Section 3.1.
interest, when used with respect to an Original Issue Discount Security which by its terms bears interest
only after Maturity, means interest payable after Maturity.
4
Interest Payment Date, when used with respect to any Security, means the Stated
Maturity of an installment of interest on such Security.
Judgment Currency has the meaning specified in Section 1.18.
Legal Defeasance has the meaning specified in Section 13.2.
mandatory sinking fund payment has the meaning specified in Section 12.1.
Market Exchange Rate has the meaning specified in Section 1.17.
Maturity, when used with respect to any Security, means the date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
Notice of Default means a written notice of the kind specified in Section 5.1(c) or Section 5.1(d).
Officers Certificate means, in the case of the Partnership, a certificate signed by the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer, the President, any Vice President or any other duly authorized officer of the general partner of the Partnership, or a person duly authorized by any of them, and delivered to the Trustee and, in the
case of a Guarantor, a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or any other duly authorized officer of such Guarantor, or a person duly authorized by any of them, and delivered
to the Trustee.
Opinion of Counsel means a written opinion of counsel, who may be an employee of or counsel for the
Partnership or a Guarantor, as the case may be, and who shall be reasonably acceptable to the Trustee.
optional sinking fund
payment has the meaning specified in Section 12.1.
Original Issue Discount Security means any Security which
provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
Outstanding, when used with respect to Securities, means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(b) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the Partnership) in trust or set aside and segregated in trust by the Partnership (if the Partnership shall act as its own Paying Agent) for the Holders of such Securities;
provided, however, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
(c) Securities that have been paid pursuant to Section 3.6 or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture,
5
other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a protected purchaser in whose hands
such Securities are valid obligations of the Partnership;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding
shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof on such date pursuant to Section 5.2, (ii) the principal amount of a Security
denominated in one or more currencies or currency units other than U.S. dollars shall be the U.S. dollar equivalent of such currencies or currency units, determined in the manner provided as contemplated by Section 3.1 on the date of original
issuance of such Security or by Section 1.17, if not otherwise so provided pursuant to Section 3.1, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent (as so determined) on the date
of original issuance of such Security of the amount determined as provided in clause (i) above) of such Security, and (iii) Securities owned by the Partnership, any Guarantor or any other obligor upon the Securities or any Affiliate of the
Partnership or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned as described in clause (iii) of the immediately preceding sentence which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgees right to act with respect to such Securities and that the pledgee is not the Partnership, a Guarantor or any other obligor upon the Securities or any Affiliate of the
Partnership or of such other obligor.
Partnership means the Person named as the Partnership in the first
paragraph of this instrument until a successor or resulting Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Partnership shall mean such successor or resulting Person.
Partnership Request or Partnership Order means, in the case of the Partnership, a written request or order signed by
the general partner of the Partnership in the name of and on behalf the Partnership by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President or any other duly authorized officer of the
general partner of the Partnership or any person duly authorized by any of them, and delivered to the Trustee and, in the case of a Guarantor, a written request or order signed in the name of such Guarantor by its Chairman of the Board, its Chief
Executive Officer, its President, any of its Vice Presidents or any other duly authorized officer of such Guarantor or any person duly authorized by any of them, and delivered to the Trustee.
Paying Agent means any Person authorized by the Partnership to pay the principal of and any premium or interest on any Securities
on behalf of the Partnership.
Payment Blockage Period has the meaning specified in Section 15.2.
Periodic Offering means an offering of Securities of a series from time to time, the specific terms of which Securities,
including, without limitation, the rate or rates of interest or formula for determining the rate or rates of interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the original issue date or dates thereof, the redemption
provisions, if any, with respect thereto, and any other terms specified as contemplated by Section 3.1 with respect thereto, are to be determined by the Partnership upon the issuance of such Securities.
6
Person means any individual, corporation, company, limited liability company,
partnership, limited partnership, joint venture, association, joint-stock company, trust, other entity, unincorporated organization or government or any agency or political subdivision thereof.
Place of Payment, when used with respect to the Securities of any series, means, unless otherwise specifically provided for with
respect to such series as contemplated by Section 3.1, the office or agency of the Partnership and such other place or places where, subject to the provisions of Section 10.2, the principal of and any premium and interest on the Securities
of that series are payable as contemplated by Section 3.1.
Predecessor Security of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Redemption Date, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
Redemption Price, when used with respect to any Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.
Regular Record Date for the interest payable on any Interest Payment Date on the
Securities of any series means the date specified for that purpose as contemplated by Section 3.1.
Required Currency has
the meaning specified in Section 1.18.
Responsible Officer, when used with respect to the Trustee, means any officer
within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
SEC means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
Securities has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated
and delivered under this Indenture.
Securities Guarantee means each guarantee of the obligations of the Partnership under
this Indenture and the Securities by a Guarantor in accordance with the provisions hereof.
Securities Guarantee Payment Blockage
Period has the meaning specified in Section 16.2.
Security Register and Security Registrar have the
respective meanings specified in Section 3.5.
Senior Debt means, unless otherwise provided with respect to the
Securities of a series as contemplated by Section 3.1, (a) all Debt of the Partnership, whether currently outstanding or hereafter
7
issued, unless, by the terms of the instrument creating or evidencing such Debt, it is provided that such Debt is not superior in right of payment to the Securities or to other Debt which is
pari passu with or subordinated to the Securities, and (b) any modifications, refunding, deferrals, renewals or extensions of any such Debt or securities, notes or other evidence of Debt issued in exchange for such Debt; provided
that in no event shall Senior Debt include (i) Debt of the Partnership owed or owing to any Subsidiary of the Partnership or any officer, director or employee of the Partnership or any Subsidiary of the Partnership, (ii) Debt
to trade creditors or (iii) any liability for taxes owed or owing by the Partnership.
Special Record Date for the
payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7.
Stated Maturity, when used
with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and
payable.
Subsidiary means (a) a corporation more than 50% of the outstanding voting stock of which is owned, directly or
indirectly, by the Partnership or by one or more other Subsidiaries, or by the Partnership and one or more other Subsidiaries or (b) any partnership or other business organization more than 50% of the ownership interests having ordinary voting
power of which is so owned. For the purposes of this definition, voting stock means capital stock or equity interests which ordinarily have voting power for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
Trustee means the Person named as the Trustee
in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, Trustee as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
Trust Indenture Act means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument
was executed, except as provided in Section 9.5; provided, however, that if the Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
U.S. Person shall have the meaning assigned to such term in
Section 7701(a)(30) of the Code.
U.S. Government Obligations means securities which are (a) direct obligations of
the United States for the payment of which its full faith and credit is pledged, or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States, and which are not callable or redeemable at the option of the issuer thereof.
Vice President, when used with respect to the Partnership, the Guarantor or the Trustee, means any vice president, regardless of
whether designated by a number or a word or words added before or after the title vice president.
Section 1.2. Incorporation by
Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is
incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:
commission means the SEC.
8
indenture securities means the Securities.
indenture security holder means a Holder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
obligor on the indenture securities means the Partnership, the Guarantor (if applicable) or any other obligor on the indenture
securities.
All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by a Trust Indenture Act
reference to another statute or defined by an SEC rule under the Trust Indenture Act have the meanings so assigned to them.
Section 1.3.
Compliance Certificates and Opinions.
Upon any application or request by the Partnership or a Guarantor to the Trustee to take any
action under any provision of this Indenture, the Partnership or such Guarantor, as the case may be, shall furnish to the Trustee an Officers Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished except as required under Section 314(c) of
the Trust Indenture Act.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this
Indenture (except for certificates provided for in Section 10.5) shall include:
(a) a statement that each individual
signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(b) a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether such covenant or condition has been complied with; and
(d) a
statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
Section 1.4. Form of
Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion
with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
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Any certificate or opinion of an officer of the general partner of the Partnership or a Guarantor
may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows or, in the exercise of reasonable care, should know that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the general partner of the Partnership or the Guarantor, as the case may be, stating that the information with respect to such factual matters is in the possession of the Partnership or the Guarantor, as the case may be,
unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person
is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Section 1.5. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed (either physically or by means of a facsimile or an electronic transmission, provided that such electronic
transmission is transmitted through the facilities of a Depositary) by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly required, to the Partnership or the Guarantors. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the
Act of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the
Trust Indenture Act) conclusive in favor of the Trustee, the Partnership and, if applicable, the Guarantors, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of Securities held by any Person, and the date of commencement of such
Persons holding of same, shall be proved by the Security Register.
(d) Any request, demand, authorization,
direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Partnership or, if applicable, the Guarantors in reliance thereon, regardless of whether notation of such action is made upon such Security.
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(e) Without limiting the foregoing, a Holder entitled to give or take any action
hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any
different part of such principal amount.
(f) The Partnership may set any day as the record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided or permitted by this Indenture to be given or taken by Holders of
Securities of such series, but the Partnership shall have no obligation to do so. With regard to any record date set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to give or take the relevant action, regardless of whether such Holders remain Holders after such record date.
Section 1.6. Notices, Etc., to Trustee, Partnership and Guarantors.
(a) Any notice, request, demand, authorization, direction, consent, waiver or other communication by the Partnership, any of
the Guarantors or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail, postage prepaid, facsimile or overnight air courier guaranteeing next day delivery, to the others address:
If to the Partnership and/or any Guarantor:
Sanchez Production Partners LP
1000 Main Street, Suite 3000
Houston, Texas 77002
Telephone:
(713) 783-8000
Facsimile: (832) 308-3720
Attention: Chief Financial Officer
with a copy to:
Andrews Kurth
LLP
600 Travis, Suite 4200
Houston, Texas 77002
Telephone:
(713) 220-4200
Facsimile: (713) 220-4285
Attention: Scott Olson
If to the
Trustee:
U.S. Bank National Association
800 Nicollet Mall
Minneapolis,
MN 55402
Telephone: (212) 225-5065
Facsimile: (212) 225-5436
Attention: Administrator
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(b) The Partnership, the Guarantors or the Trustee, by notice to the others, may
designate additional or different addresses for subsequent notices or communications.
(c) All notices and communications
(other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.
Section 1.7. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holders address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, regardless of whether such Holder actually receives such notice.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case it shall be impracticable to give such notice by mail by reason of the suspension of regular mail
service or by reason of any other cause, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 1.8. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the provision of the Trust Indenture Act shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the
Trust Indenture Act shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.
Section 1.9. Effect of Headings
and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by each of the Partnership and the Guarantors shall bind their respective successors and
assigns, whether so expressed or not.
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Section 1.11. Separability Clause.
In case any provision in this Indenture or in the Securities or, if applicable, the Securities Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Securities or, if applicable, the Securities Guarantee, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, the holders of Senior Debt and the Holders any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 1.13. Force Majeure.
In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of
or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as
soon as practicable under the circumstances.
Section 1.14. Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE.
Section 1.15. Governing Law.
THIS INDENTURE, THE SECURITIES AND THE SECURITIES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
Section 1.16. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the Securities or, if applicable, the Securities Guarantee (other than a provision of the Securities of any series or, if applicable, the Securities Guarantee that
specifically states that such provision shall apply in lieu of this Section 1.16)) payment of interest or principal and any premium need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and if payment is so made, no interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
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Section 1.17. Securities in a Composite Currency, Currency Unit or Foreign Currency.
Unless otherwise specified in a Board Resolution, Officers Certificate or indenture supplemental hereto delivered pursuant to
Section 3.1 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series
or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any affected series which are denominated in a coin, currency or currencies other than Dollars (including, but not limited
to, any composite currency, currency units or Foreign Currency), then the principal amount of Securities of such series that shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate. For purposes of this Section 1.17, the term Market Exchange Rate shall mean the noon Dollar buying rate in The City of New York for cable transfers of such currency or currencies
as published by the Federal Reserve Bank of New York, as of the most recent available date. If such Market Exchange Rate is not so available for any reason with respect to such currency, such quotation of the Federal Reserve Bank of New York as of
the most recent available date, or quotations or rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of Euros shall be Brussels, Belgium, or such other
quotations or rates of exchange as appropriate shall be used. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection
with any action taken by Holders of Securities pursuant to the terms of this Indenture.
In no event will the Trustee have any duty or
liability regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph.
Section 1.18. Payment in
Required Currency; Judgment Currency.
Each of the Partnership and the Guarantors agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the Required
Currency) into a currency in which a judgment will be rendered (the Judgment Currency), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Required Currency could be purchased in
The City of New York with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which
in accordance with normal banking procedures the Required Currency could be purchased in The City of New York with the Judgment Currency on the Banking Day next preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (regardless of whether entered in accordance with subclause (a)), in any
currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.
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Section 1.19. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or Act required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official language of the country of publication.
Section 1.20. Incorporators,
Shareholders, Partners, Members, Officers and Directors of the Partnership, the General Partner of the Partnership and the Guarantors Exempt from Individual Liability.
No recourse under or upon any obligation, covenant or agreement of or contained in this Indenture or of or contained in any Security or, if
applicable, the Securities Guarantee, or for any claim based thereon or otherwise in respect thereof, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, member, officer, manager,
employee, partner or director, as such, past, present or future, of the Partnership, the general partner of the Partnership, any Guarantor or any successor Person, either directly or through the Partnership, any Guarantor or any successor Person,
whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a
part of the consideration for, the execution of this Indenture and the issue of the Securities.
ARTICLE TWO
SECURITY FORMS
Section 2.1.
Forms Generally.
The Securities of each series and, if applicable, the notation thereon relating to the Securities
Guarantee, shall be in substantially the form set forth in this Article Two, or in such other form or forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities and, if applicable, any notation of the Securities Guarantee, as evidenced by their execution
thereof.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by an authorized officer or other authorized person on behalf of the Partnership and delivered to the Trustee at or prior to the delivery of the Partnership Order contemplated by Section 3.3 for the authentication
and delivery of such Securities.
The forms of Global Securities of any series shall have such provisions and legends as are customary for
Securities of such series in global form, including without limitation any legend required by the Depositary for the Securities of such series.
Section 2.2. Form of Face of Security.
[If the Security is an Original Issue Discount Security and is not publicly offered within the meaning of Treasury Regulations
Section 1.1275-1(h), insertFOR PURPOSES OF SECTION 1275 OF THE
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UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS [ % OF ITS
PRINCIPAL AMOUNT] [$ PER $1,000 OF PRINCIPAL AMOUNT], THE ISSUE DATE IS , 20 AND, THE YIELD TO MATURITY
IS , COMPOUNDED [SEMIANNUALLY OR OTHER PROPER PERIOD].
[In the alternative instead of providing such legend, insert the following legendFOR PURPOSES OF SECTION 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, AND [THE NAME OR TITLE AND ADDRESS OR TELEPHONE NUMBER OF A REPRESENTATIVE OF
THE COMPANY] WILL, BEGINNING NO LATER THAN 10 DAYS AFTER THE ISSUE DATE, PROMPTLY MAKE AVAILABLE TO HOLDERS THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, THE YIELD TO MATURITY AND ANY OTHER INFORMATION REQUIRED BY APPLICABLE TREASURY
REGULATIONS.]
[Insert any other legend required by the Code or the regulations thereunder.]
[If a Global Security,insert legend required by Section 2.4 of the Indenture] [If applicable, insert UNLESS THIS
SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
SANCHEZ PRODUCTION PARTNERS LP
[TITLE OF SECURITY]
[CUSIP No. ]
Sanchez Production Partners LP, a limited partnership duly organized and existing under the laws of the State of Delaware (herein called the
Partnership, which term includes any successor or resulting Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to
, or
registered assigns, the principal sum of
United
States Dollars on [If the Security is to bear interest prior to Maturity, insert, and to pay interest thereon from
or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on
and in
each year, commencing , at the rate of % per annum, until the principal hereof is paid or made available
for payment [if applicable, insert, and at the rate of % per annum on any overdue principal and premium and on any installment of interest (to the extent that the payment of such interest shall be legally
enforceable)]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest, which shall be the or (regardless of whether a Business Day), as the
case may be, next
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preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of
this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].
[If
the Security is not to bear interest prior to Maturity, insertThe principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in
such case the overdue principal of this Security shall bear interest at the rate of % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default
in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the
rate of % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.]
[If a Global Security, insertPayment of the principal of
(and premium, if any) and [if applicable, insertany such] interest on this Security will be made by transfer of immediately available funds to a bank account in
designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts [state other currency].]
[If a Definitive Security, insertPayment of the principal of (and
premium, if any) and [if applicable, insertany such] interest on this Security will be made at the office or agency of the Partnership maintained for that purpose in
, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and
private debts] [state other currency] [or subject to any laws or regulations applicable thereto and to the right of the Partnership (as provided in the Indenture) to rescind the designation of any such Paying Agent, at the [main] offices of
in , or
at such other offices or agencies as the Partnership may designate, by [United States Dollar] [state other currency] check drawn on, or transfer to a [United States Dollar] account maintained by the payee with, a bank in The City of New York (so
long as the applicable Paying Agency has received proper transfer instructions in writing at least days prior to the payment date)] [if applicable, insert; provided, however, that payment of
interest may be made at the option of the Partnership by [United States Dollar] [state other currency] check mailed to the addresses of the Persons entitled thereto as such addresses shall appear in the Security Register] [or by transfer to a
[United States Dollar] [state other currency] account maintained by the payee with a bank in The City of New York [state other Place of Payment] (so long as the applicable Paying Agent has received proper transfer instructions in writing by the
record date prior to the applicable Interest Payment Date)].]
Reference is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Partnership has caused this instrument to be duly executed.
Dated:
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Sanchez Production Partners LP |
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By: |
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Sanchez Production Partners GP LLC, |
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its general partner |
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By: |
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Name: |
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Title: |
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Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of subordinated securities of the Partnership (herein called the Securities), issued and to be
issued in one or more series under an Indenture, dated as of , 20 (herein called the Indenture), between the Partnership, the Guarantors, if
any, and U.S. Bank National Association, as trustee (herein called the Trustee, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities thereunder of the Partnership, the Guarantors, if any, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at
different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the
Indenture provided or permitted. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $ ].
This security is the general, unsecured, subordinated obligation of the Partnership [if applicable, insertand is guaranteed pursuant to a
guarantee (the Securities Guarantee) by [insert name of each Guarantor] (the Guarantors). The Securities Guarantee is the general, unsecured, subordinated obligation of each Guarantor.]
[If applicable, insertThe Securities of this series are subject to redemption upon not less than
days notice by mail, [if applicable, insert(1) on in any
year commencing with the year and ending with the year through operation of the sinking fund for this series at a Redemption Price equal to 100% of the
principal amount, and (2) ] at any time [on or after , 20 ], as a whole or in part, at the election of the Partnership, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed [on or before , %, and if redeemed] during the 12-month
period beginning of the years indicated,
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Redemption Price |
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and thereafter at a Redemption Price equal to % of the principal amount, together
in the case of any such redemption [if applicable, insert(whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments the Stated Maturity of which is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insertThe Securities of this series are subject to redemption upon not less than
nor more than days notice by mail, (1) on
in any year commencing with the year and ending with the
year through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in
the table below, and (2) at any time [on or after ], as a whole or in part, at the election of the Partnership, at the
Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning
of the years indicated,
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Redemption Price For
Redemption Through
Operation of the Sinking Fund |
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Redemption Price for
Redemption Otherwise Than
Through Operation of the
Sinking Fund |
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and thereafter at a Redemption Price equal to % of the principal amount, together in the case of any
such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments the Stated Maturity of which is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insertNotwithstanding the foregoing, the Partnership may not, prior to
, redeem any Securities of this series as contemplated by [clause (2) of] the preceding paragraph as a part of, or in
anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Partnership (calculated in accordance with generally accepted financial practice) of less than
% per annum.]
[If applicable, insertThe sinking fund for this series provides for the redemption on
in each year beginning with the year and ending with the year
of [not less than] $ [ (mandatory sinking fund) and not more than $ ] aggregate principal
amount of Securities of this series. [Securities of this series acquired or redeemed by the Partnership otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required
to be made [If applicable, insert in the inverse order in which they become due].]
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[If the Securities are subject to redemption in part of any kind, insertIn the event of
redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insertThe Securities of this series are not redeemable prior to Stated Maturity.]
[If the Security is not an Original Issue Discount Security,If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security,If an Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally
enforceable), all of the Partnerships obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the
Partnership [If applicable, insertand the Guarantors] and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Partnership [If applicable, insertand the
Guarantors] and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Partnership [If applicable, insertand
the Guarantors] with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, regardless of whether notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Partnership, which is
absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.
[If a Global Security, insertThis Global Security or portion hereof may not be exchanged for Definitive Securities of this series except
in the limited circumstances provided in the Indenture. The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be
considered the Holders thereof for any purpose under the Indenture.]
[If a Definitive Security, insertAs provided in the
Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Partnership in [if
applicable, insertany place where the principal of and any premium and interest on this Security are payable] [if applicable, insertThe City of New York [, or, subject to any laws or regulations applicable thereto and to the
right of the Partnership (limited as provided in the Indenture) to rescind the designation of any such transfer agent, at the [main] offices of
in or
at such other offices or agencies as the
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Partnership may designate]], duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Partnership and the Security Registrar duly executed by, the
Holder hereof or such Holders attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.]
The Securities of this series are issuable only in registered form without coupons in denominations of U.S.
$ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service
charge shall be made for any such registration of transfer or exchange, but the Partnership may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Partnership, [If applicable, insertany Guarantor,] the Trustee
and any agent of the Partnership [If applicable, insert, a Guarantor] or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, regardless of whether this Security be overdue,
and none of the Partnership, [If applicable, insertthe Guarantors,] the Trustee nor any such agent shall be affected by notice to the contrary.
This Security is subordinated in right of payment to Senior Debt [If applicable, insert-and the Securities Guarantee is subordinated in right of
payment to Guarantor Senior Debt], to the extent and in the manner provided in the Indenture.
No recourse under or upon any obligation,
covenant or agreement of or contained in the Indenture or of or contained in any Security, [If applicable, insert, or the Securities Guarantee endorsed thereon,] or for any claim based thereon or otherwise in respect thereof, or because
of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, member, officer, manager or director, as such, past, present or future, of the Partnership [If applicable, insertor any
Guarantor] or of any successor Person, either directly or through the Partnership [If applicable, insertor any Guarantor] or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the
execution of the Indenture.
The Indenture provides that the Partnership [If applicable, insertand the Guarantors]
(a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the
Partnership [If applicable, insertor a Guarantor] deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance
with their terms will provide money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.
Except as otherwise defined herein, all terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
[If a Definitive Security, insert as a separate page
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FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
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Please Print or Type Name and Address of Assignee) |
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the within instrument of Sanchez Production Partners LP and does hereby irrevocably constitute and appoint
Attorney to transfer said instrument on the books of the within-named Partnership, with full power of
substitution in the premises.
Please Insert Social Security or Other Identifying Number of Assignee:
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in
every particular, without alteration or enlargement or any change whatsoever.]
[If a Security to which Article Fourteen has been made
applicable, insert the following Form of Notation on such Security relating to the Securities Guarantee
Each of the Guarantors (which
term includes any successor Person in such capacity under the Indenture), has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of
the principal of, and premium, if any, and interest on the Securities of this series and all other amounts due and payable under the Indenture and the Securities of this series by the Partnership.
The obligations of the Guarantors to the Holders of Securities of this series and to the Trustee pursuant to the Securities Guarantee and the Indenture are
expressly set forth in Article Fourteen of the Indenture and reference is hereby made to the Indenture for the precise terms of the Securities Guarantee.
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Guarantors: |
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Section 2.4. Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
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EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF,
OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
If Securities of a series are issuable in whole or in part in the form of one or more Global Securities, as specified as contemplated by
Section 3.1, then, notwithstanding clause (i) of Section 3.1 and the provisions of Section 3.2, any Global Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide
that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased, as the case may be,
to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any reduction or increase in the amount, of Outstanding Securities represented thereby shall be made in such manner and upon instructions given by such Person or
Persons as shall be specified therein or in a Partnership Order. Subject to the provisions of Section 3.3, Section 3.4 and Section 3.5, the Trustee shall deliver and redeliver any Global Security in the manner and upon instructions
given by the Person or Persons specified therein or in the applicable Partnership Order. Any instructions by the Partnership with respect to endorsement or delivery or redelivery of a Global Security shall be in a Partnership Order (which need not
comply with Section 1.3 and need not be accompanied by an Opinion of Counsel).
The provisions of the last sentence of
Section 3.3 shall apply to any Security represented by a Global Security if such Security was never issued and sold by the Partnership and the Partnership delivers to the Trustee the Global Security together with a Partnership Order (which need
not comply with Section 1.3 and need not be accompanied by an Opinion of Counsel) with regard to the reduction or increase, as the case may be, in the principal amount of Securities represented thereby, together with the written statement
contemplated by the last sentence of Section 3.3.
Section 2.5. Form of Trustees Certificate of Authentication.
The Trustees certificate(s) of authentication shall be in substantially the following form:
This is one of the Securities of the series designated [insert title of applicable series] referred to in the within-mentioned
Indenture.
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U.S. Bank National Association, as Trustee |
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ARTICLE THREE
THE SECURITIES
Section 3.1.
Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities that may be authenticated and delivered
under this Indenture is unlimited.
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The Securities may be issued in one or more series. There shall be established in or pursuant to
a Board Resolution, and set forth, or determined in the manner provided, in an Officers Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series:
(a) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities
and which may be part of a series of Securities previously issued);
(b) any limit upon the aggregate principal amount of
the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series
pursuant to Section 3.4, Section 3.5, Section 3.6, Section 9.6 or Section 11.7 and except for any Securities which, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder);
(c) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(d) the date or dates on which the principal of the Securities of the series is payable or the method of determination thereof;
(e) the rate or rates at which the Securities of the series shall bear interest, if any, or the formula, method or
provision pursuant to which such rate or rates are determined, the date or dates from which such interest shall accrue or the method of determination thereof, the Interest Payment Dates on which such interest shall be payable and the Regular Record
Date for the interest payable on any Interest Payment Date;
(f) the place or places where, subject to the provisions of
Section 10.2, the principal of and any premium and interest on Securities of the series shall be payable, Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange, and
notices and demands to or upon the Partnership in respect of the Securities of the series and this Indenture may be served;
(g) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option of the Partnership;
(h) the obligation, if any, of the
Partnership to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(i)
if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable;
(j) whether payment of principal of and premium, if any, and interest, if any, on the Securities of the series shall be without
deduction for taxes, assessments or governmental charges paid by Holders of the series;
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(k) if other than the principal amount thereof, the portion of the principal
amount of Securities of the series that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.2;
(l) if the amount of payments of principal of and any premium or interest on the Securities of the series may be determined
with reference to an index, the manner in which such amounts shall be determined;
(m) if and as applicable, that the
Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the Depositary or Depositaries for such Global Security or Global Securities and any circumstances other than those set
forth in Section 3.5 in which any such Global Security may be transferred to, and registered and exchanged for Securities registered in the name of, a Person other than the Depositary for such Global Security or a nominee thereof and in which
any such transfer may be registered;
(n) any deletions from, modifications of or additions to the Events of Default set
forth in Section 5.1 or the covenants of the Partnership set forth in Article Ten with respect to the Securities of such series;
(o) whether and under what circumstances the Partnership will pay additional amounts on the Securities of the series held by a
Person who is not a U.S. Person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Partnership will have the option to redeem the Securities of the series rather than pay such additional amounts;
(p) if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of
a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions;
(q) if the Securities of the series are to be convertible into or exchangeable for any other security or property of the
Partnership, including, without limitation, securities of another Person held by the Partnership or its Affiliates and, if so, the terms thereof;
(r) if other than as provided in Section 13.2 and Section 13.3, the means of Legal Defeasance or Covenant Defeasance
as may be specified for the Securities of the series;
(s) if other than the Trustee, the identity of the initial Security
Registrar and any initial Paying Agent;
(t) whether the Securities of the series will be guaranteed pursuant to the
Securities Guarantee set forth in Article Fourteen, any modifications to the terms of Article Fourteen applicable to the Securities of such series and the applicability of any other guarantees; and
(u) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above and (subject to Section 3.3) set forth, or determined in the manner provided, in the Officers Certificate referred to above or in any such indenture supplemental hereto.
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All Securities of any one series need not be issued at the same time and, unless otherwise
provided, a series may be reopened, without the consent of the Holders, for increases in the aggregate principal amount of such series of Securities and issuances of additional Securities of such series or for the establishment of additional terms
with respect to the Securities of such series.
If any of the terms of the series are established by action taken by or pursuant to a
Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Partnership and, if applicable, the Guarantors and delivered to the Trustee at or prior to the
delivery of the Officers Certificate setting forth, or providing the manner for determining, the terms of the series.
With respect
to Securities of a series subject to a Periodic Offering, such Board Resolution or Officers Certificate may provide general terms for Securities of such series and provide either that the specific terms of particular Securities of such series
shall be specified in a Partnership Order or that such terms shall be determined by the Partnership and, if applicable, the Guarantors or one or more agents thereof designated in an Officers Certificate, in accordance with a Partnership Order.
Section 3.2. Denominations.
The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated
by Section 3.1. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.
Section 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Partnership by the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer or any Vice President of the general partner of the Partnership and need not be attested. The signature of any of these officers on the Securities may be manual or facsimile. Any notation of Securities Guarantee endorsed on
the Securities shall be executed on behalf of the applicable Guarantor by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer or any of its Vice Presidents and need not be attested. The signature of any
of these officers on any notation of the Securities Guarantee may be manual or facsimile.
Securities and any notation of a Securities
Guarantee bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Partnership or a Guarantor, as the case may be, shall bind the Partnership or such Guarantor, as the case may be, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Partnership may deliver Securities of any
series executed by the Partnership to the Trustee for authentication, together with a Partnership Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Partnership Order shall authenticate and deliver
such Securities; provided, however, that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with such other procedures (including,
without limitation, the receipt by the Trustee of written instructions from the Partnership) acceptable to the Trustee as may be specified by or pursuant to a Partnership Order delivered to the Trustee prior to the time of the first authentication
of Securities of such series. If the forms or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as
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permitted by Section 2.1 and Section 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the
Trustee shall be fully protected in relying on such Board Resolution and shall be entitled to receive such documents as it may reasonably request. The Trustee shall also be entitled to receive, and (subject to Section 6.1) shall be fully
protected in relying upon, an Officers Certificate pursuant to Section 3.1 and complying with Section 1.3 and an Opinion of Counsel complying with Section 1.3 stating:
(a) if the form or forms of such Securities has been established in or pursuant to a Board Resolution as permitted by
Section 2.1, that each such form has been established in conformity with the provisions of this Indenture;
(b) if the
terms of such Securities have been, or in the case of Securities of a series offered in a Periodic Offering will be, established in or pursuant to a Board Resolution as permitted by Section 3.1, that such terms have been, or in the case of
Securities of a series offered in a Periodic Offering will be, established in conformity with the provisions of this Indenture, subject, in the case of Securities of a series offered in a Periodic Offering, to any conditions specified in such
Opinion of Counsel; and
(c) that such Securities, when authenticated and delivered by the Trustee and issued by the
Partnership in the manner and subject to any conditions and assumptions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Partnership and, if applicable, the Subsidiary Guarantees thereof will
constitute valid and legally binding obligations of the Guarantors, enforceable in accordance with their respective terms, subject to the following limitations: (i) bankruptcy, insolvency, moratorium, reorganization, liquidation, fraudulent
conveyance or transfer and other similar laws of general applicability relating to or affecting the enforcement of creditors rights, or to general equity principles, (ii) the availability of equitable remedies being subject to the
discretion of the court to which application therefor is made; and (iii) such other usual and customary matters as shall be specified in such Opinion of Counsel.
The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustees
own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officers Certificate otherwise required pursuant to Section 3.1 or the Partnership Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely, as to the authorization by the Partnership of any
of such Securities, on the form or forms and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and the other documents delivered pursuant to Section 2.1 and Section 3.1 and
this Section, as applicable, in connection with the first authentication of Securities of such series.
Each Security shall be dated the
date of its authentication.
No Security nor any related Securities Guarantee shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or an Authenticating
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Agent by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Partnership, and the Partnership shall
deliver such Security to the Trustee for cancellation as provided in Section 3.9, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
Section 3.4. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the Partnership may execute, and upon Partnership Order the Trustee shall
authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Partnership will cause Definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of Definitive Securities of such series, the temporary Securities of such series shall be exchangeable for Definitive Securities of such series upon surrender of the temporary Securities of such series at
the office or agency of the Partnership in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of Definitive Securities of the same series and tenor of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to
the same benefits under this Indenture as Definitive Securities of such series.
Section 3.5. Registration, Registration of Transfer and
Exchange.
The Partnership shall cause to be kept at the office or agency of the Partnership in a Place of Payment required by
Section 10.2 a register (the register maintained in such office being herein sometimes referred to as the Security Register) in which, subject to such reasonable regulations as it may prescribe, the Partnership shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby appointed as the initial Security Registrar for the purpose of registering Securities and transfers of Securities as herein provided, and its Corporate
Trust Office, which, at the date hereof, is located at One Liberty Plaza, 23rd Floor, New York, NY 10006, is the initial office or agency where the Securities Register will be maintained. The Partnership may at any time replace such Security
Registrar, change such office or agency or act as its own Security Registrar. The Partnership will give prompt written notice to the Trustee of any change of the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series at the office or agency maintained pursuant to Section 10.2 for
such purpose, the Partnership and, if applicable, the Guarantors shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities, with a notation of the Securities
Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations and of a like aggregate principal amount.
At the option of the Holder, Securities of any series (except a Global Security) may be exchanged for other Securities of the same series and
tenor, of any authorized denominations and of a like aggregate
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principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Partnership and, if applicable, the
Guarantors shall execute and the Trustee shall authenticate and deliver, the Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Partnership and, if
applicable, the Guarantors evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Partnership or the Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Partnership and the Security Registrar duly executed, by the Holder thereof or such Holders attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Partnership may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.4, Section 9.6 or Section 11.7 not
involving any transfer.
The Partnership shall not be required (a) to issue, register the transfer of or exchange Securities of any
series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 11.3 and ending at the close of business on the day
of such mailing, or (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any other provisions of this Indenture and except as otherwise specified with respect to any particular series of Securities
as contemplated by Section 3.1, a Global Security representing all or a portion of the Securities of a series may not be transferred, except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. Every Security authenticated and delivered upon
registration of, transfer of, or in exchange for or in lieu of, a Global Security shall be a Global Security except as provided in the two paragraphs immediately following.
If at any time the Depositary for any Securities of a series represented by one or more Global Securities notifies the Partnership that it is
unwilling or unable to continue as Depositary for such Securities or if at any time the Depositary for such Securities shall no longer be eligible to continue as Depositary under Section 3.1 or ceases to be a clearing agency registered under
the Exchange Act, the Partnership shall appoint a successor Depositary with respect to such Securities. If a successor Depositary for such Securities is not appointed by the Partnership within 90 days after the Partnership receives such notice or
becomes aware of such ineligibility, the Partnerships election pursuant to Section 3.1 that such Securities be represented by one or more Global Securities shall no longer be effective and the Partnership and, if applicable, the
Guarantors will execute and the Trustee, upon receipt of a Partnership Order for the authentication and delivery of Definitive Securities of such series, will authenticate and deliver, Securities, with a notation of the Securities Guarantee, if
applicable, executed by the Guarantors, of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing
such Securities in exchange for such Global Security or Securities registered in the names of such Persons as the Depositary shall direct.
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If specified by the Partnership pursuant to Section 3.1 with respect to Securities
represented by a Global Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for Securities of the same series and tenor in definitive registered form on such terms as are acceptable to
the Partnership, the Trustee and such Depositary. Thereupon, the Partnership and, if applicable, the Guarantors shall execute, and the Trustee, upon receipt of a Partnership Order for the authentication and delivery of Securities in definitive
registered form, shall authenticate and deliver, without service charge:
(a) to the Person specified by such Depositary a
new Security or Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to
and in exchange for such Persons beneficial interest in the Global Security; and
(b) to such Depositary a new Global
Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount
of Securities authenticated and delivered pursuant to clause (a) above.
Every Person who takes or holds any beneficial interest in a
Global Security agrees that:
(i) the Partnership, the Guarantors (if applicable) and the Trustee may deal with the
Depositary as sole owner of the Global Security and as the authorized representative of such Person;
(ii) such
Persons rights in the Global Security shall be exercised only through the Depositary and shall be limited to those rights established by law and agreement between such Person and the Depositary and/or direct and indirect participants of the
Depositary;
(iii) the Depositary and its participants make book-entry transfers of beneficial ownership among, and receive
and transmit distributions of the principal of (and premium, if any) and interest on the Global Securities to, such Persons in accordance with their own procedures; and
(iv) none of the Partnership, the Guarantors (if applicable), the Trustee, nor any agent of any of them will have any
responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership
interests.
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with such security or indemnity as may be required by the Partnership, the
Guarantors (if applicable) or the Trustee to save each of them and any agent of any of them harmless, then, in the absence of notice to the Partnership or the Trustee that such Security has been acquired by a protected purchaser, the Partnership
and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of
like tenor and principal amount and bearing a number not contemporaneously outstanding.
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If there shall be delivered to the Partnership, the Guarantors (if applicable) and the Trustee
(a) evidence to their satisfaction of the destruction, loss or theft of any Security and (b) such security or indemnity as may be required by them to save each of them and any agent of any of them harmless, then, in the absence of notice
to the Partnership or the Trustee that such Security has been acquired by a protected purchaser, the Partnership and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Partnership in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Partnership may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Partnership and, if applicable, the Guarantors, regardless of whether the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this
Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, interest on any Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest.
Any interest on any Security of any series that is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called Defaulted Interest) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the
Partnership, at its election in each case, as provided in clause (a) or (b) below:
(a) The Partnership may elect
to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Partnership shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same
time the Partnership shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon, the
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Trustee shall fix a Special Record Date for the payment of such Defaulted Interest that shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Partnership of such Special Record Date and, in the name and at the expense of the Partnership, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at such Holders address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities
of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).
(b) The Partnership may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Partnership to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
Section 3.8. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, prior to due presentment of a
Security for registration of transfer, the Partnership, the Trustee and, if applicable, the Guarantors and any agent thereof may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving
payment of principal of and any premium and (subject to Section 3.5 and Section 3.7) any interest on such Security and for all other purposes whatsoever, regardless of whether such Security be overdue, and none of the Partnership, the
Trustee nor, if applicable, the Guarantors nor any agent of any of them shall be affected by notice to the contrary.
No holder of any
beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Partnership, the Trustee, and, if applicable,
the Guarantors and any agent of any thereof as the owner of such Global Security for all purposes whatsoever.
Section 3.9.
Cancellation.
All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit
against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Partnership may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder that the Partnership may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder that the Partnership has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of in accordance with its customary practices, and the Trustee shall thereafter deliver to the Partnership a certificate
with respect to such disposition from time to time upon written request.
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Section 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series
shall be computed on the basis of a 360-day year comprised of twelve 30-day months.
Section 3.11. CUSIP or CINS Numbers.
The Partnership in issuing the Securities may use CUSIP or CINS numbers (if then generally in use, and in addition to the other
identification numbers printed on the Securities), and, if so, the Trustee shall use CUSIP or CINS numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation
is made as to the correctness of such CUSIP or CINS numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any
such redemption shall not be affected by any defect in or omission of such CUSIP or CINS numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect and will be discharged with respect to the Securities of any series (except as to any
surviving rights of registration of transfer or exchange of Securities and certain rights of the Trustee, in each case, herein expressly provided for), and the Trustee, upon Partnership Request and at the expense of the Partnership, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture with respect to such Securities, when:
(a)
either:
(i) all such Securities theretofore authenticated and delivered (other than (A) such Securities which have
been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6, and (B) such Securities for the payment of which money has theretofore been deposited in trust or segregated and held in trust by the
Partnership and thereafter repaid to the Partnership or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee for cancellation:
(A) have become due and payable; or
(B) will become due and payable at their Stated Maturity within one year; or
(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Partnership,
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and the Partnership, in the case of (ii)(A), (B) or (C) above, has deposited or caused
to be deposited with the Trustee as trust funds in trust for such purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if
any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be, together with instructions from the Partnership irrevocably directing the
Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;
(b) the Partnership has
paid or caused to be paid all other sums payable hereunder by the Partnership with respect to such Securities; and
(c) the
Partnership has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, which, taken together, state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with
respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to the Securities of
any series, (x) the obligations of the Partnership to the Trustee under Section 6.7, the obligations of the Trustee to any Authenticating Agent under Section 6.14 and the right of the Trustee to resign under Section 6.10 shall
survive, and (y) if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the obligations of the Partnership and the Trustee under Section 3.5, Section 3.6, Section 4.2, Section 6.6,
Section 10.2, the last paragraph of Section 10.3 and Section 13.6 shall survive.
Section 4.2. Application of Trust
Money.
Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to
Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Partnership acting as its own Paying Agent)
as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for the payment of which such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
Section 5.1.
Events of Default.
Event of Default, wherever used herein with respect to Securities of any series, means any
one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) default in the payment of any interest upon any Security of that series
when it becomes due and payable, and continuance of such default for a period of 30 days (regardless of whether such payment is prohibited by the provisions of Article Fifteen hereof); or
(b) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity (regardless
of whether such payment is prohibited by the provisions of Article Fifteen hereof); or
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(c) default in the performance, or breach, of any covenant set forth in
Article Ten in this Indenture (other than a covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit
of series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Partnership by the Trustee or to the Partnership and the Trustee
by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of
Default hereunder; or
(d) default in the performance, or breach, of any covenant in this Indenture (other than a
covenant in Article Ten or any other covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of
series of Securities other than that series), and continuance of such default or breach for a period of 180 days after there has been given, by registered or certified mail, to the Partnership by the Trustee or to the Partnership and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default
hereunder; or
(e) the Partnership pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary
case, (ii) consents to the entry of any order for relief against the Partnership in an involuntary case, (iii) consents to the appointment of a Custodian of the Partnership or for all or substantially all of the property of the
Partnership, or (iv) makes a general assignment for the benefit of the creditors of the Partnership; or
(f) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Partnership in an involuntary case, (ii) appoints a Custodian of the Partnership or for all or substantially all of the
property of the Partnership, or (iii) orders the liquidation of the Partnership; and the order or decree remains unstayed and in effect for 60 consecutive days; or
(g) default in the deposit of any sinking fund payment when due; or
(h) any other Event of Default provided with respect to Securities of that series in accordance with Section 3.1.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) and all accrued and unpaid interest of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Partnership (and to the Trustee if given by
Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. Notwithstanding the foregoing, if an Event of Default specified in clause (e) or (f) of Section 5.1 occurs,
the Securities of any series at the time Outstanding shall be due and payable immediately without further action or notice.
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At any time after such a declaration of acceleration with respect to Securities of any series has
been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article Five provided, the Holders of a majority in aggregate principal amount of the Outstanding Securities of that
series, by written notice to the Partnership and the Trustee, may rescind and annul such declaration and its consequences if:
(a) the Partnership or, if applicable, one or more of the Guarantors has paid or deposited with the Trustee a sum sufficient to
pay:
(i) all overdue interest on all Securities of that series;
(ii) the principal of (and premium, if any, on) any Securities of that series that has become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities;
(iii) to
the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities; and
(iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(b) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series that has become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Partnership covenants that if:
(a) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable
and such default continues for a period of 30 days (regardless of whether such payment is prohibited by the provisions of Article Fifteen hereof); or
(b) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof
(regardless of whether such payment is prohibited by the provisions of Article Fifteen hereof);
the Partnership will, upon demand of the Trustee,
pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest
on any overdue principal and any premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Partnership
fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or
final decree and may enforce the same
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against the Partnership or, if applicable, the Guarantors or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Partnership or, if applicable, the Guarantors or any other obligor upon such Securities, wherever situated.
If an
Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any
other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Partnership or, if applicable, any Guarantor or any other obligor upon the Securities, their property or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Partnership or, if applicable, the Guarantors for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole
amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, if the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7.
No provision of
this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, compromise, arrangement, adjustment or composition affecting the Securities or, if applicable,
the Securities Guarantee or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for
the election of a trustee in bankruptcy or similar official and be a member of a creditors or other similar committee.
Section 5.5.
Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
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Section 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article Five shall be applied in the following order, at the date or dates fixed by
the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully
paid:
FIRST: To the payment of all amounts due the Trustee under Section 6.7;
SECOND: Subject to Article Fifteen, to the payment of the amounts then due and unpaid for principal of and any premium and
interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium
and interest, respectively; and
THIRD: The balance, if any, to the Partnership.
Section 5.7. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this
Indenture (including, if applicable, the Securities Guarantee), or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the
Securities of that series;
(b) the Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable indemnity satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent
with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of the same series of Security, or to obtain or to seek to obtain priority or preference over any other Holder of the same series of Security or to enforce
any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all Holders of the same series of Security.
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Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional
(subject to Article Fifteen and Article Sixteen), to receive payment of the principal of and any premium and interest on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Partnership, the Guarantors, the Trustee and the Holders
shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
To the fullest extent permitted by applicable law, no delay or omission of the Trustee or of any Holder of any Securities to exercise any
right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Five or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 5.12. Control by Holders.
The Holders of a majority in aggregate principal amount of the Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided, however, that:
(a) such direction shall not be in conflict with any rule of law or with this Indenture;
(b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction; and
(c) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if
the Trustee in good faith shall determine that the direction would expose the Trustee to personal liability.
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Section 5.13. Waiver of Past Defaults.
By written notice to the Partnership and the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Securities of
any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except:
(a) a continuing default in the payment of the principal of or any premium, if any, or interest on any Security of such series;
or
(b) a default in respect of a covenant or provision hereof that under Article Nine cannot be modified or amended
without the consent of the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by such Holders acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant, other than the Trustee, in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Partnership, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
Each of the Partnership and the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of
the Partnership and the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
Section 6.1.
Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default with respect
to the Securities of a particular series:
(i) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and as are provided by the Trust Indenture Act with respect to the Securities of such series, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing with respect to the Securities of a particular series, the
Trustee shall exercise with respect to the Securities of such series such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure to act, or its own bad faith or willful misconduct, except that:
(i) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in aggregate principal amount of the Outstanding Securities of any series, given pursuant to Section 5.12,
relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and
(iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Regardless of whether therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
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Section 6.2. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail
to all Holders of Securities of such series, as their names and addresses appear in the Security Register, notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however,
that, except in the case of a Default in the payment of the principal of or any premium or interest on any Security of such series or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee may withhold
from Holders of Securities notice of any continuing Default or Event of Default if a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Securities of such series; and,
provided, further, that in the case of any Default of the character specified in Section 5.1(c) with respect to Securities of such series, no such notice to Holders shall be given until at least 60 days after the occurrence
thereof and that in the case of any Default of the character specified in Section 5.1(d) with respect to Securities of such series, no such notice to Holders shall be given until at least 90 days after the occurrence thereof.
Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Partnership or a Guarantor mentioned herein shall be
sufficiently evidenced by a Partnership Request or Partnership Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) shall be entitled to receive and may, in the absence of bad faith on its part, rely upon an Officers
Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction;
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(f) the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the
Partnership, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder and shall not be
responsible for the supervision of officers and employees of such agents or attorneys;
(h) the Trustee may request that
the Partnership and, if applicable, the Guarantors deliver an Officers Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which
Officers Certificate may be signed by any person authorized to sign an Officers Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded;
(i) the Trustee shall be entitled to the rights and protections afforded to the Trustee pursuant to this Article Six in
acting as a Paying Agent or Security Registrar hereunder;
(j) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event that is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and
such notice references the Securities and this Indenture; and
(k) anything in this Indenture notwithstanding, in no event
shall the Trustee be liable for any special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including but not limited to loss of profit), even if the Partnership has been advised as to the likelihood of such
loss or damage and regardless of the form of action.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustees certificates of authentication, shall be taken as the
statements of the Partnership or, if applicable, the Guarantors, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. Neither the Trustee nor any Authenticating Agent makes any representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Partnership of Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Partnership or, if applicable, any
Guarantor, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 310(b) and 311 of the Trust Indenture Act and Section 6.8, Section 6.9 and Section 6.13, may otherwise deal
with the Partnership or, if applicable, the Guarantors with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
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Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall
be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Partnership or, if applicable, one or more of the Guarantors.
Section 6.7. Compensation and Reimbursement.
The Partnership agrees:
(a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify each of the Trustee and its
officers, directors, agents and employees for, and to hold it and them harmless against, any loss, liability or expense incurred without negligence, bad faith or willful misconduct on its or their part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself or themselves against any claim or liability in connection with the exercise or performance of any of its or their powers or duties
hereunder.
As security for the performance of the obligations of the Partnership under this Section, the Trustee shall have a lien prior
to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of the principal of (and premium, if any) or interest on particular Securities. Such obligations of the Partnership
under this Section shall not be subordinated to the payment of Senior Debt pursuant to Article Fifteen.
Without limiting any rights
available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(e) or Section 5.1(f), the expenses (including the reasonable charges and
expenses of its counsel) and the compensation for the services of the Trustee are intended to constitute expenses of administration under any applicable Bankruptcy Law.
The provisions of this Section 6.7 shall survive the resignation or removal of the Trustee and the termination or satisfaction and
discharge of this Indenture and the Legal Defeasance of the Securities.
Section 6.8. Disqualification; Conflicting Interests.
Reference is made to Section 310(b) of the Trust Indenture Act. There shall be excluded from the operation of Section 310(b)(1) of
the Trust Indenture Act this Indenture with respect to the Securities of more than one series.
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Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that shall be a corporation organized and doing business under the laws of the United States
of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus required by the Trust Indenture Act, subject to supervision or examination by Federal or
State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee shall not be an obligor upon the Securities or an Affiliate thereof. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, then it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to
the Partnership. If the instrument of acceptance of appointment by a successor Trustee required by Section 6.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Partnership.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 310(b) of the Trust Indenture Act after written request therefor by the
Partnership or by any Holder who has been a bona fide Holder of a Security for at least six months; or
(ii) the Trustee
shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Partnership or by any such Holder; or
(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a Custodian of the Trustee
or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Partnership by a Board Resolution may remove the Trustee with respect to all Securities, or
(B) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of acting, or if
a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Partnership, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that
or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any
particular series), and the Partnership and the successor Trustee shall comply with the applicable requirements of Section 6.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor
Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series delivered to the Partnership and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Partnership. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Partnership or the Holders and accepted appointment in the manner required
by Section 6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(f) The Partnership shall give notice of each resignation
and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in
Section 1.7. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, the successor Trustee so
appointed shall execute, acknowledge and deliver to the Partnership, the Guarantors (if applicable) and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Partnership, any Guarantor (if applicable) or
the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien under Section 6.7.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all)
series, the Partnership, the Guarantors (if applicable), the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee
shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with
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respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (iii) shall add to or change any
of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute
such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery
of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Partnership, any Guarantor (if applicable) or any
successor Trustee, such retiring Trustee, upon payment of its charges, shall execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee with respect to the Securities of the
series to which the appointment of such successor relates and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of such series, subject
nevertheless to its lien under Section 6.7.
(c) Upon request of any such successor Trustee, the Partnership and, if
applicable, the Guarantors shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as
the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article and the Trust Indenture Act.
Section 6.12. Merger, Conversion, Consolidation
or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto. As soon as
practicable, the successor Trustee shall mail a notice of its succession to the Partnership and the Holders of the Securities then Outstanding. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
Section 6.13. Preferential Collection of Claims Against Partnership.
Reference is made to Section 311 of the Trust Indenture Act. For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term cash transaction means any transaction in which full payment for goods or securities sold is made
within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand;
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(b) the term self-liquidating paper means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Partnership or, if applicable, any Guarantor for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the
security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Partnership or, if applicable, such Guarantor arising from the making, drawing, negotiating or incurring of the draft,
bill of exchange, acceptance or obligation.
Section 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities, which shall be authorized to act
on behalf of the Trustee to authenticate Securities of such series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustees
certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Partnership and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the
manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part
of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the
Trustee and to the Partnership and, if applicable, the Guarantors. The Trustee for any series of Securities may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the
Partnership and, if applicable, the Guarantors. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be qualified and eligible in accordance with the provisions of
this Section, the Trustee for such series may appoint a successor Authenticating Agent that shall be acceptable to the Partnership and, if applicable, the Guarantors and shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
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Except with respect to an Authenticating Agent appointed at the request of the Partnership or, if
applicable, the Guarantors, the Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.14, and the Trustee shall be entitled to be reimbursed by the Partnership or, if
applicable, the Guarantors for such payments, subject to the provisions of Section 6.7.
If an appointment with respect to one or
more series is made pursuant to this Section 6.14, the Securities of such series may have endorsed thereon, in addition to the Trustees certificate of authentication, an alternate certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
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U.S. Bank National Association, as Trustee |
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By: |
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As Authenticating Agent |
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By: |
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Authorized Officer |
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Partnership to Furnish Trustee Names and Addresses of Holders.
The Partnership will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 5 days after each Regular Record Date for a series of Securities, a list for such series of
Securities, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such series as of such Regular Record Date; and
(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Partnership of any such
request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;
provided,
however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished with respect to such series of Securities.
Section 7.2. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, with respect to each series of Securities, in as current a form as is reasonably practicable,
the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may
destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.
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(b) If three or more Holders (herein referred to as applicants) apply
in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire
to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, at its election, either:
(i) afford such applicants
access to the information preserved at the time by the Trustee in accordance with Section 7.2(a); or
(ii) inform such
applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a), and as to the approximate cost of mailing to such Holders the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a) a
copy of the form of proxy or other communication that is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to such applicants and file with the SEC, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the SEC, after opportunity for a hearing upon the objections specified in
the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the SEC shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants respecting their application.
(c) Every Holder of
Securities, by receiving and holding the same, agrees with the Partnership, the Guarantors (if applicable) and the Trustee that none of the Partnership, the Guarantors (if applicable) nor the Trustee nor any agent of any of them shall be held
accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 7.2(b), regardless of the source from which such information was derived, and that the Trustee shall not be
held accountable by reason of mailing any material pursuant to a request made under Section 7.2(b).
Section 7.3. Reports by
Trustee.
Any Trustees report required pursuant to Section 313(a) of the Trust Indenture Act shall be dated as of
May 15, and shall be transmitted within 60 days after May 15 of each year (but in all events at intervals of not more than 12 months), commencing with the year 20 , by mail to all Holders, as their names and
addresses appear in the Security Register. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, and with the SEC. The Partnership will
notify the Trustee when any Securities are listed on any stock exchange.
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Section 7.4. Reports by Partnership.
The Partnership shall:
(a) file with the Trustee, within 15 days after the Partnership files the same with the SEC, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Partnership may be required to file with the SEC pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Partnership is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the SEC, in accordance with
rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;
(b)
file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Partnership with the conditions and covenants
of this Indenture as may be required from time to time by such rules and regulations; and
(c) transmit by mail to all
Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Partnership pursuant to clauses
(a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the SEC.
ARTICLE EIGHT
CONSOLIDATION, AMALGAMATION, MERGER AND SALE
Section 8.1. Partnership May Consolidate, Etc., Only on Certain Terms.
The Partnership shall not convert into, or consolidate, amalgamate or merge with or into any other Person or sell, convey, assign, transfer,
lease or otherwise dispose of all or substantially all of the properties and assets of the Partnership on a consolidated basis to any other Person unless:
(a) either: (i) the Partnership is the surviving Person; or (ii) the Person formed by or surviving any such
consolidation, amalgamation or merger or resulting from such conversion (if other than the Partnership) or to which such sale, conveyance, assignment, transfer, lease or other disposition has been made is a corporation, limited liability company or
limited partnership organized or existing under the laws of the United States, any State thereof or the District of Columbia;
(b) the Person formed by or surviving any such conversion, consolidation, amalgamation or merger (if other than the
Partnership) or the Person to which such sale, conveyance, assignment, transfer, lease or other disposition has been made assumes by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities and the performance of every covenant of this Indenture on the part of the Partnership to be performed or observed;
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(c) immediately after giving effect to such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and
(d) the Partnership has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that
such conversion, consolidation, amalgamation, merger, sale, conveyance, assignment, transfer, lease or other disposition and such supplemental indenture comply with this Article Eight and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 8.2. Successor Substituted.
Upon any consolidation, amalgamation or merger of the Partnership with or into any other Person or any sale, conveyance, assignment, transfer,
lease or other disposition of all or substantially all of the properties and assets of the Partnership and, if applicable, the Guarantors on a consolidated basis in accordance with Section 8.1, the successor or resulting Person formed by or
resulting upon such consolidation, amalgamation or merger (if other than the Partnership) or to which such sale, conveyance, assignment, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Partnership under this Indenture with the same effect as if such successor Person had been named as the Partnership herein, and thereafter, except in the case of a lease, the predecessor Partnership and, if applicable, each
of the Guarantors shall be relieved of all obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders.
The Partnership, the Guarantors (if any) and the Trustee may amend or supplement this Indenture, the Securities Guarantee or the Securities
without the consent of any holder of a Security:
(a) to cure any ambiguity or defect or to correct or supplement any
provision herein that may be inconsistent with any other provision herein; or
(b) to evidence the succession of another
Person to the Partnership and the assumption by any such successor of the covenants of the Partnership herein and, to the extent applicable, of the Securities; or
(c) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided that the
uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in the manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code[, and/or to cause any corporate
subsidiary of the Partnership to become a co-issuer of the Securities of any series]; or
(d) to add a Securities Guarantee
and cause any Person to become a Guarantor, and/or to evidence the succession of another Person to a Guarantor and the assumption by any such successor of the Securities Guarantee of such Guarantor herein and, to the extent applicable, endorsed upon
any Securities of any series; or
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(e) to secure the Securities of any series; or
(f) to add to the covenants of the Partnership such further covenants, restrictions, conditions or provisions as the
Partnership shall consider to be appropriate for the benefit of the Holders of all or any series of Securities (and if such covenants, restrictions, conditions or provisions are to be for the benefit of less than all series of Securities, stating
that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Partnership, and to make the occurrence, or the occurrence and continuance, of a Default in any such
additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional
covenant, restriction, condition or provision such amendment or supplemental indenture may provide for a particular period of grace after Default (which period may be shorter or longer than that allowed in the case of other Defaults), may provide
for an immediate enforcement upon such an Event of Default, may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such
series to waive such an Event of Default; or
(g) to make any change to any provision of this Indenture that does not
adversely affect the rights or interests of any Holder of Securities; or
(h) to provide for the issuance of additional
Securities in accordance with the provisions set forth in this Indenture; or
(i) to add any additional Defaults or Events
of Default in respect of all or any series of Securities; or
(j) to add to, change or eliminate any of the provisions of
this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; or
(k) to change or eliminate any of the provisions of this Indenture; provided that any such change or elimination shall
become effective only when there is no Security Outstanding of any series created prior to the execution of such amendment or supplemental indenture that is entitled to the benefit of such provision; or
(l) to establish the form or terms of Securities of any series as permitted by Section 2.1 and Section 3.1, including
to reopen any series of any Securities as permitted under Section 3.1; or
(m) to evidence and provide for the
acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or
(n) to conform the
text of this Indenture (and/or any supplemental indenture) or any Securities issued hereunder to any provision of a description of such text or Securities appearing in a prospectus, prospectus supplement, offering memorandum or offering circular
pursuant to which such Securities were offered to the extent that such provision was intended by the Partnership to be a verbatim recitation of a provision of this Indenture (and/or any supplemental indenture) or any Securities or Securities
Guarantee issued hereunder, with such intention being evidenced by an Officers Certificate; or
(o) to modify,
eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act or under any similar federal statute subsequently enacted, and to add to this
Indenture such other provisions as may be expressly required under the Trust Indenture Act.
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Section 9.2. With Consent of Holders.
The Partnership, the Guarantors (if any) and the Trustee may amend or supplement this Indenture, the Securities Guarantee and the Securities
with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of each series of Securities affected by such amendment or supplemental indenture, with each such series voting as a separate class (including,
without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities) and, subject to Section 5.8 and Section 5.13 hereof, any existing Default or Event of Default or compliance with any
provision of this Indenture, the Securities Guarantee or the Securities may be waived with respect to each series of Securities with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series
voting as a separate class (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities).
It is not necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed
amendment, supplement or waiver, but it is sufficient if such consent approves the substance of the proposed amendment, supplement or waiver.
After an amendment, supplement or waiver under this Section 9.2 becomes effective, the Partnership will mail to the Holders of Securities
affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Partnership to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amendment,
supplemental indenture or waiver. Notwithstanding anything contained herein to the contrary, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.2 may not (with respect to any Securities held by
a non-consenting Holder):
(a) change the Stated Maturity of the principal of, or any installment of principal of or
interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change the coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date therefor); or
(b) reduce the percentage in aggregate principal amount of the Outstanding Securities of any series, the consent of whose
Holders is required for any such amendment or supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided
for in this Indenture; or
(c) modify any of the provisions of Section 5.8 or Section 5.13; or
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(d) waive a redemption payment with respect to any Security; provided,
however, that any purchase or repurchase of Securities shall not be deemed a redemption of the Securities; or
(e)
release any Guarantor from any of its obligations under its Securities Guarantee or this Indenture, except in accordance with the terms of this Indenture (as amended or supplemented); or
(f) make any change in the foregoing amendment and waiver provisions, except to increase any percentage provided for therein or
to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby.
An amendment or supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been
included solely for the benefit of one or more particular series of Securities, or that modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
Section 9.3. Execution of Amendments and Supplemental Indentures.
In executing, or accepting the additional trusts created by, any amendment or supplemental indenture permitted by this Article Nine
or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such
amendment or supplemental indenture is authorized or permitted by this Indenture.
Upon the request of the Partnership accompanied by a
Board Resolution authorizing the execution of any such amendment or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Securities as aforesaid, and upon receipt by
the Trustee of the documents described in Section 6.3 hereof, the Trustee will join with the Partnership and the Guarantors in the execution of such amendment or supplemental indenture unless such amendment or supplemental indenture directly
affects the Trustees own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amendment or supplemental Indenture.
Section 9.4. Effect of Amendments and Supplemental Indentures.
Upon the execution of any amendment or supplemental indenture under this Article Nine, this Indenture shall be modified in accordance
therewith, and such amendment or supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
Every amendment or supplemental indenture executed pursuant to this Article Nine shall conform to the requirements of the Trust Indenture
Act as then in effect.
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Section 9.6. Reference in Securities to Amendments or Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any amendment or supplemental indenture pursuant to this
Article Nine may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplemental indenture. If the Partnership shall so determine, new Securities of any
series so modified as to conform, in the opinion of the Trustee and the Partnership, to any such amendment or supplemental indenture may be prepared and executed by the Partnership and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
Section 9.7. Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Security of a series is a continuing consent by
the Holder of a Security of such series and every subsequent Holder of a Security of such series or portion of a Security of such series that evidences the same debt as the consenting Holders Security of such series, even if the notation of
the consent is not made on any Security. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder of the Securities of such series.
ARTICLE TEN
COVENANTS
Section 10.1.
Payment of Principal, Premium and Interest.
The Partnership covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.
Section 10.2. Maintenance of Office or Agency.
The Partnership will maintain in the United States an office or agency (which may be an office of the Trustee or Security Registrar or agent
of the Trustee or Security Registrar) where Securities of each series may be presented or surrendered for payment and surrendered for registration of transfer or exchange and where notices and demands to or upon the Partnership in respect of the
Securities of that series and this Indenture may be served. The Partnership will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Partnership shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Partnership may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Partnership will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any
such other office or agency.
Except as otherwise specified with respect to a series of Securities as contemplated by Section 3.1,
the Partnership hereby initially designates the Corporate Trust Office of the Trustee as the Partnerships office or agency for each such purpose for each series of Securities. The Trustee shall initially serve as Paying Agent. In the event the
Partnership makes any payment in any currency in which the Trustee is unable to pay, and notwithstanding anything herein to the contrary, the Partnership will
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appoint a Paying Agent other than the Trustee to make such payment and the Trustee will have no obligations with respect to such payment and will incur no liability with respect to the failure by
the Partnership or such other Paying Agent to make, or cause to be made, such payment.
Section 10.3. Money for Securities Payments to Be Held in
Trust.
If the Partnership shall at any time act as its own Paying Agent, with respect to any series of Securities, it will, on
or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Partnership shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal
of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal and any premium or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Partnership will promptly notify the Trustee of its action or failure so to act. For purposes of this Section 10.3, should a due date for principal of or any
premium or interest on, or sinking fund payment with respect to, any series of Securities not be on a Business Day, such payment shall be due on the next Business Day without any interest for the period from the due date until such Business Day.
The Partnership will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of or any premium or interest on Securities of that series in
trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Partnership (or any other obligor upon the Securities of that series) in the
making of any payment of principal or any premium or interest on the Securities of that series; and
(c) at any time during
the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
The Partnership and, if applicable, the Guarantors may at any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or by Partnership Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Partnership or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by the Partnership or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Subject to any applicable escheat or abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by the
Partnership, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for one year after such principal, premium or interest has become due and payable shall be paid to the
Partnership on Partnership Request, or (if then held by the Partnership) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Partnership for payment
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thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Partnership as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Partnership cause to be published once, in The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the
Partnership.
Section 10.4. Existence.
Subject to Article Eight, the Partnership and, if any Securities of a series to which Article Fourteen has been made applicable are
Outstanding, each Guarantor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Partnership and, if
applicable, each Guarantor shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Partnership or such
Guarantor, as the case may be.
Section 10.5. Statement by Officers as to Default.
Annually, within 120 days after the close of each fiscal year beginning with the first fiscal year during which one or more series of
Securities are Outstanding, the Partnership and, if any Securities of a series to which Article Fourteen has been made applicable are Outstanding, each Guarantor will deliver to the Trustee a brief certificate (which need not include the
statements set forth in Section 1.3) from the principal executive officer, principal financial officer or principal accounting officer of the Partnership and, if applicable, such Guarantor, stating that a review of the activities of the
Partnership during such year and of performance under this Indenture has been made, and as to his or her knowledge of the Partnerships or such Guarantors, as the case may be, compliance (without regard to any period of grace or
requirement of notice provided herein) with all conditions and covenants under this Indenture and, if the Partnership or such Guarantor, as the case may be, shall be in Default, specifying all such Defaults and the nature and status thereof of which
such officer has knowledge.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.1. Applicability of Article.
Securities of any series that are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for Securities of any series) in accordance with this Article Eleven.
Section 11.2.
Election to Redeem; Notice to Trustee.
The election of the Partnership to redeem any Securities shall be evidenced by a
Board Resolution. In case of any redemption at the election of the Partnership of less than all the Securities of any series, the Partnership shall, at least 15 days prior to the last date for the giving of notice of such redemption (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case
of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture or (b) pursuant to an election of the Partnership that is subject to
a condition specified in the terms of the Securities of the series to be redeemed, the Partnership shall furnish the Trustee with an Officers Certificate evidencing compliance with such restriction or condition.
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Section 11.3. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to
be redeemed), the particular Securities to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of
Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series.
The Trustee
shall promptly notify the Partnership in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. If the Securities of any series to be
redeemed consist of Securities having different dates on which the principal is payable or different rates of interest, or different methods by which interest may be determined or have any other different tenor or terms, then the Partnership may, by
written notice to the Trustee, direct that the Securities of such series to be redeemed shall be selected from among the groups of such Securities having specified tenor or terms and the Trustee shall thereafter select the particular Securities to
be redeemed in the manner set forth in the preceding paragraph from among the group of such Securities so specified.
For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such
Securities which has been or is to be redeemed.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at such Holders address appearing in the Security Register.
All
notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price, or if not then ascertainable, the manner of calculation thereof;
(c) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amounts) of the particular Securities to be redeemed;
(d) that on the Redemption Date
the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date;
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(e) the place or places where such Securities are to be surrendered for payment
of the Redemption Price; and
(f) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Partnership shall be given by the Partnership or, at the Partnerships request,
by the Trustee in the name and at the expense of the Partnership.
Section 11.5. Deposit of Redemption Price.
Prior to any Redemption Date, the Partnership shall deposit with the Trustee or with a Paying Agent (or, if the Partnership is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
Section 11.6. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at
the Redemption Price therein specified, and from and after such date (unless the Partnership shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by the Partnership at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that unless otherwise specified with
respect to Securities of any series as contemplated in Section 3.1, installments of interest the Stated Maturity of which is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
Section 11.7. Securities Redeemed in
Part.
Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the
Partnership or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Partnership and the Trustee duly executed by, the Holder thereof or such Holders attorney duly authorized in writing),
and the Partnership shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and tenor, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.
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ARTICLE TWELVE
SINKING FUNDS
Section 12.1.
Applicability of Article.
The provisions of this Article Twelve shall be applicable to any sinking fund for the
retirement of Securities of a series except as otherwise specified as contemplated by Section 3.1 for Securities of such series.
The
minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a mandatory sinking fund payment, and any payment in excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an optional sinking fund payment. If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in
Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.
Section 12.2. Satisfaction of Sinking Fund Payments with Securities.
The Partnership (a) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (b) may
apply as a credit Securities of a series that have been redeemed either at the election of the Partnership pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series;
provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
Section 12.3. Redemption of Securities for Sinking
Fund.
Not less than 45 days prior to each sinking fund payment date for any series of Securities (unless a shorter period shall be
satisfactory to the Trustee), the Partnership will deliver to the Trustee an Officers Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 12.2 and stating the basis for such credit and that such Securities
have not been previously so credited, and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Partnership in the manner provided in Section 11.4. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6 and Section 11.7.
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ARTICLE THIRTEEN
DEFEASANCE
Section 13.1.
Option to Effect Legal Defeasance or Covenant Defeasance.
The Partnership may, at the option of its Board of Directors evidenced
by a Board Resolution, and at any time, elect to have either Section 13.2 or Section 13.3 hereof be applied to all Outstanding Securities of any series upon compliance with the conditions set forth below in this Article Thirteen.
Section 13.2. Legal Defeasance and Discharge.
Upon the Partnerships exercise under Section 13.1 hereof of the option applicable to this Section 13.2, the Partnership and
each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be deemed to have been discharged from their obligations with respect to all Outstanding Securities of such series (including the
Securities Guarantee) on the date the conditions set forth below are satisfied (hereinafter, Legal Defeasance). For this purpose, Legal Defeasance means that the Partnership and the Guarantors will be deemed to have paid and discharged
the entire Debt represented by the Outstanding Securities of such series (including the Securities Guarantee), which will thereafter be deemed to be outstanding only for the purposes of Section 13.5 hereof and the other sections of
this Indenture referred to in clauses (a) and (b) below, and to have satisfied all their other obligations under such Securities, the Securities Guarantee and this Indenture (and the Trustee, on demand of and at the expense of the
Partnership, shall execute proper instruments acknowledging the same), except for the following provisions, which will survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of Outstanding Securities of such series to receive payments in respect of the principal of, or
interest or premium, if any, on, such Securities when such payments are due from the trust referred to in Section 13.4 hereof;
(b) the Partnerships obligations with respect to such Securities under Section 3.4, Section 3.5,
Section 3.6, Section 10.2 and Section 10.3 hereof;
(c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Partnerships and the Guarantors obligations in connection therewith; and
(d)
this Article Thirteen.
Subject to compliance with this Article Thirteen, the Partnership may exercise its option under this
Section 13.2 notwithstanding the prior exercise of its option under Section 13.3 hereof with respect to the same series of Securities.
Section 13.3. Covenant Defeasance.
Upon the Partnerships exercise under Section 13.1 hereof of the option applicable to this Section 13.3, the Partnership and
each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be released from each of their obligations with respect to the Securities of such series under the covenants contained in
Section 7.4, Section 8.1 and Section 10.4 hereof as well as any Additional Defeasible Provisions (such release and termination hereinafter referred to as Covenant Defeasance), and the Securities of such series will
thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed
outstanding for all other
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purposes hereunder (it being understood that such Securities will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the
Outstanding Securities of such series and the Securities Guarantee, the Partnership and the Guarantors may fail to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such failure to comply will not constitute a
Default or an Event of Default under Section 5.1 hereof, but, except as specified above, the remainder of this Indenture and such Securities and Securities Guarantees will be unaffected thereby. In addition, upon the Partnerships exercise
under Section 13.1 hereof of the option applicable to this Section 13.3 hereof, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, any Event of Default that constitutes an Additional Defeasible Provision
will no longer constitute an Event of Default.
Section 13.4. Conditions to Legal or Covenant Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance with respect to any series of Securities under either Section 13.2 or
Section 13.3 hereof:
(a) the Partnership must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Securities of such series, cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination of cash in U.S. dollars and non-callable U.S. Government Obligations, in such amounts as will be sufficient, in the opinion of
a nationally recognized investment bank, appraisal firm, or firm of independent public accountants, to pay the principal of, and interest and premium, if any, on, the Outstanding Securities of such series on the stated date for payment thereof or on
the applicable Redemption Date, as the case may be, and the Partnership must specify whether the Securities are being defeased to such stated date for payment or to a particular Redemption Date;
(b) in the case of an election under Section 13.2 hereof, the Partnership must deliver to the Trustee an Opinion of
Counsel stating that:
(i) the Partnership has received from, or there has been published by, the Internal Revenue Service
a ruling; or
(ii) since the Issue Date, there has been a change in the applicable U.S. federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel will state that, the Holders of the Outstanding Securities of such
series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 13.3 hereof, the
Partnership must deliver to the Trustee an Opinion of Counsel stating that the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance
and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
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(d) no Default or Event of Default with respect to such series of Securities
shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);
(e) the deposit must not result in a breach or violation of, or constitute a default under, any other instrument to which the
Partnership or any Guarantor is a party or by which the Partnership or any Guarantor is bound;
(f) such Legal Defeasance
or Covenant Defeasance must not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Partnership or any of its Subsidiaries is a party or by which the
Partnership or any of its Subsidiaries is bound;
(g) the Partnership must deliver to the Trustee an Officers
Certificate stating that the deposit was not made by the Partnership with the intent of preferring the Holders of such Securities over the other creditors of the Partnership with the intent of defeating, hindering, delaying or defrauding any
creditors of the Partnership or others;
(h) the Partnership must deliver to the Trustee an Officers Certificate
stating that all conditions precedent set forth in clauses (a) through (f) of this Section 13.4 have been complied with; and
(i) the Partnership must deliver to the Trustee an Opinion of Counsel (which Opinion of Counsel may be subject to customary
assumptions, qualifications and exclusions) stating that all conditions precedent set forth in clauses (b), (c) and (f) of this Section 13.4 have been complied with.
Section 13.5. Deposited Money and U.S. Government Obligations to be Held in Trust, Other Miscellaneous Provisions.
Subject to the last paragraph of Section 10.3 hereof, all money and non-callable U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 13.5, the Trustee) pursuant to Section 13.4 hereof in respect of the Outstanding Securities of any series will be held
in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Partnership acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
The Partnership will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or
non-callable U.S. Government Obligations deposited pursuant to Section 13.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge that by law is for the account of the Holders of the
Outstanding Securities.
Notwithstanding anything in this Article Thirteen to the contrary, the Trustee will deliver or pay to the
Partnership from time to time upon the request of the Partnership any money or non-callable U.S. Government Obligations held by it as provided in Section 13.4 hereof which, in the opinion of a nationally recognized investment bank, appraisal
firm or firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 13.4(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
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Section 13.6. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable U.S. Government Obligations in accordance with
Section 4.1, Section 13.2 or Section 13.3 hereof with respect to the Securities of any series, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Partnerships and the Guarantors obligations under this Indenture and such Securities and the Securities Guarantee will be revived and reinstated as though no deposit had occurred pursuant to
Section 4.1, Section 13.2 or Section 13.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money or non-callable U.S. Government Obligations in accordance with Section 4.1, Section 13.2 or
Section 13.3 hereof, as the case may be; provided, however, that, if the Partnership makes any payment of principal of or premium, if any, or interest on any such Security following the reinstatement of its obligations, the
Partnership will be subrogated to the rights of the Holders of such Securities to receive such payment from the money or non-callable U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE FOURTEEN
GUARANTEE OF SECURITIES
Section 14.1. Securities Guarantee.
(a) Subject to the other provisions of this Article Fourteen, each of the Guarantors hereby fully and unconditionally and
jointly and severally guarantees to each Holder of a Security of each series to which this Article Fourteen has been made applicable as provided in Section 3.1(t) (the Securities of such series being referred to herein as the
Guaranteed Securities) (which Security has been authenticated and delivered by the Trustee), and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Guaranteed Securities,
or the obligations of the Partnership hereunder or thereunder, that:
(i) the principal of and premium, if any, and
interest on the Guaranteed Securities will be promptly paid in full when due, whether at Stated Maturity, or by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Guaranteed Securities, if any, if
lawful, and all other obligations of the Partnership to the Holders of Guaranteed Securities, or the Trustee hereunder or thereunder, will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of any Guaranteed Securities or any of such other obligations, that
same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and
severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
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(b) To the extent permissible under applicable law, the obligations of the
Guarantors under this Securities Guarantee are unconditional, irrespective of the validity, regularity or enforceability of the Guaranteed Securities or this Indenture, the absence of any action to enforce the same, any waiver or consent by any
Holder of the Guaranteed Securities with respect to any provisions hereof or thereof, the recovery of any judgment against the Partnership, any action to enforce the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. To the extent permitted by applicable law, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the
Partnership, any right to require a proceeding first against the Partnership, protest, notice and all demands whatsoever and covenants that this Securities Guarantee will not be discharged except by complete performance of the obligations contained
in the Guaranteed Securities and this Indenture.
(c) If any Holder or the Trustee is required by any court or otherwise to
return to the Partnership, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Partnership or the Guarantors, any amount paid by either to the Trustee or such Holder, then this Securities
Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.
(d) Each Guarantor agrees
that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, to the extent
permitted by applicable law, as between the Guarantors, on the one hand, and the Holders of Guaranteed Securities and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in
Article Five hereof for the purposes of this Securities Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of such obligations as provided in Article Five hereof, such obligations (regardless of whether due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Securities Guarantee.
The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Securities Guarantee.
Section 14.2. Limitation on Guarantor Liability.
Each Guarantor and, by its acceptance of Guaranteed Securities, each Holder thereof, hereby confirms that it is the intention of all such
parties that the Securities Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or State law
to the extent applicable to any Securities Guarantee. To effectuate the foregoing intention, to the extent permitted under applicable law, the Holders and each Guarantor hereby irrevocably agree that the obligations of such Guarantor will be limited
to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article Fourteen, result in the obligations of such Guarantor under its Securities Guarantee not
constituting a fraudulent transfer or conveyance.
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Section 14.3. Execution and Delivery of Securities Guarantee Notation.
To evidence its Securities Guarantee set forth in Section 14.1 hereof, each Guarantor hereby agrees that a notation of such Securities
Guarantee substantially in the form set forth in Section 2.3 or established in or pursuant to a Board Resolution or in an indenture supplemental hereto, in accordance with the provisions of Section 2.1, will be endorsed by an officer of
such Guarantor on each Guaranteed Security authenticated and delivered by the Trustee and that this Indenture or a supplement to this Indenture will be executed on behalf of such Guarantor by one of its officers.
Each Guarantor hereby agrees that its Securities Guarantee set forth in Section 14.1 hereof will remain in full force and effect
notwithstanding any failure to endorse on each Guaranteed Security a notation of such Securities Guarantee.
If an officer whose signature
is on this Indenture or on the Securities Guarantee no longer holds that office at the time the Trustee authenticates the Guaranteed Security on which a notation of Securities Guarantee is endorsed, the Securities Guarantee will be valid
nevertheless.
The delivery of any Guaranteed Security by the Trustee, after the authentication thereof hereunder, will constitute due
delivery of the Securities Guarantee of such Guaranteed Security set forth in this Indenture on behalf of the Guarantors.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
Section 15.1. Securities Subordinated to Senior Debt.
The Partnership covenants and agrees, and each Holder, by its acceptance of a Security, likewise covenants and agrees, that all Securities
shall be issued subject to the provisions of this Article Fifteen; and each Person holding any Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of the principal of and
interest and premium, if any, on each and all of the Securities shall, to the extent and in the manner set forth in this Article Fifteen, be subordinated in right of payment to the prior payment in full, in cash or cash equivalents, of all
existing and future Senior Debt.
Section 15.2. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment by or on behalf of the Partnership of the principal of or interest or premium, if any, on
each and all of the Securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), whether pursuant to the terms of the Securities or upon acceleration or otherwise,
shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of the obligations on any Designated Senior Debt and such default shall not have been cured or waived or the benefits of this sentence waived
by or on behalf of the holders of such Senior Debt.
(b) During the continuance of any other event of default with respect
to any Designated Senior Debt pursuant to which the maturity thereof may be accelerated, upon receipt by the Trustee of written notice from the trustee or other representative for the holders of such Designated Senior Debt (or the holders of at
least a majority in principal amount of such Designated Senior Debt then outstanding), no payment of the principal of or interest or premium, if any, on each and all of the Securities (other than with the money, securities or proceeds held
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under any defeasance trust established in accordance with this Indenture) may be made by or on behalf of the Partnership upon or in respect of the Securities for a period (a Payment
Blockage Period) commencing on the date of receipt of such notice and ending 179 days thereafter (unless, in each case, such Payment Blockage Period has been terminated by written notice to the Trustee from such trustee of, or other
representatives for, such holders or by payment in full in cash or cash equivalents of such Designated Senior Debt or such event of default has been cured or waived). Not more than one Payment Blockage Period may be commenced with respect to the
Securities during any period of 360 consecutive days. Notwithstanding anything in this Indenture to the contrary, there must be 180 consecutive days in any 360-day period in which no Payment Blockage Period is in effect. No event of default that
existed or was continuing (it being acknowledged that any subsequent action that would give rise to an event of default pursuant to any provision under which an event of default previously existed or was continuing shall constitute a new event of
default for this purpose) on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Debt initiating such Payment Blockage Period shall be, or shall be made, the basis for the commencement of a second
Payment Blockage Period by the trustee or other representative for the holders of such Designated Senior Debt, whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment shall be received by the
Trustee or any Holder when such payment is prohibited by clause (a) or (b) above, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Persons making payment or distribution of the assets of the Partnership for application to the payment of all Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any
of such Senior Debt may have been issued, and any excess above such amounts due and owing on Senior Debt shall be paid to the Partnership.
Section 15.3. Payment over of Proceeds upon Dissolution, Etc.
(a) Upon any payment or distribution of assets or securities of the Partnership of any kind or character, whether in cash,
property or securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), in connection with any dissolution or winding up or total or partial liquidation or
reorganization of the Partnership, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, assignment of assets for the benefit of creditors or other marshalling of assets and liabilities of the
Partnership, all amounts due or to become due upon all Senior Debt shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee on their behalf shall be entitled to receive any payment by (or on behalf of) the
Partnership on account of the Securities, or any payment to acquire any of the Securities for cash, property or securities, or any distribution with respect to the Securities of any cash, property or securities. Before any payment may be made by, or
on behalf of, the Partnership on any Security (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture) in connection with any such dissolution, winding up, liquidation or
reorganization, any payment or distribution of assets or securities of the Partnership of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on their behalf would be entitled, but for the provisions
of this Article Fifteen, shall be made by the Partnership or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, or by the Holders or the Trustee if received by them or
it, to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of the Partnership for application to the payment of all
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Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any such Senior Debt may have been issued, to the extent necessary to pay all such Senior Debt in
full, in cash or cash equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on behalf of the Partnership, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other similar Person, the Senior Debt or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent the obligation to repay any Senior Debt is declared to be fraudulent or invalid or otherwise set aside under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then the obligation so declared fraudulent or invalid or otherwise set aside (and all other amounts that would come due with respect thereto had such obligation not been so affected)
shall be deemed to be reinstated and outstanding as Senior Debt for all purposes hereof as if such declaration or setting aside had not occurred.
(c) In the event that, notwithstanding the provision in clause (a) above prohibiting such payment or distribution, any
payment or distribution of assets or securities of the Partnership of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder at a time when such payment or distribution is prohibited by clause
(a) above and before all obligations in respect of Senior Debt are paid in full, in cash or cash equivalents, such payment or distribution shall be received and held in trust for the benefit of, and shall be paid over or delivered to, the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of the Partnership for application to the payment of all Senior Debt remaining unpaid, or to the trustee
or trustees under any indenture pursuant to which any such Senior Debt may have been issued, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt.
(d) For purposes of this Section 15.3, the words cash, property or securities shall not be deemed to include,
so long as the effect of this clause is not to cause the Securities to be treated in any case or proceeding or similar event described in this Section 15.3 as part of the same class of claims as the Senior Debt or any class of claims
pari passu with, or senior to, the Senior Debt for any payment or distribution, securities of the Partnership or any other Person provided for by a plan of reorganization or readjustment that are subordinated, at least to the extent
that the Securities are subordinated, to the payment of all Senior Debt then outstanding; provided that (i) if a new Person results from such reorganization or readjustment, such Person assumes the Senior Debt and (ii) the rights of
the holders of the Senior Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Partnership with, or the merger of the Partnership with or into, another Person or the liquidation
or dissolution of the Partnership following the sale, conveyance, transfer, lease or other disposition of all or substantially all of its property and assets to another Person upon the terms and conditions provided in Section 8.1 of this
Indenture shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 15.3 if such other Person shall, as a part of such consolidation, merger, sale, conveyance, transfer, lease or other
disposition, comply (to the extent required) with the conditions stated in Section 8.1 of this Indenture.
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Section 15.4. Subrogation.
(a) Upon the payment in full of all Senior Debt in cash or cash equivalents, the Holders shall be subrogated to the rights of
the holders of Senior Debt to receive payments or distributions to the holders of Senior Debt of cash, property or securities of the Partnership made on such Senior Debt until the principal of and premium, if any, and interest on the Securities
shall be paid in full; and, for the purposes of such subrogation, no payments or distributions of any cash, property or securities to which the Holders or the Trustee on their behalf would be entitled except for the provisions of this
Article Fifteen, and no payment pursuant to the provisions of this Article Fifteen to the holders of Senior Debt by the Holders or the Trustee on their behalf shall, as between the Partnership, its creditors other than holders of Senior
Debt, and the Holders, be deemed to be a payment by the Partnership to or on account of the Senior Debt. It is understood that the provisions of this Article Fifteen are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of the Senior Debt, on the other hand.
(b) If any payment or distribution to
which the Holders would otherwise have been entitled but for the provisions of this Article Fifteen shall have been applied, pursuant to the provisions of this Article Fifteen, to the payment of all amounts payable under Senior Debt, then,
and in such case, the Holders shall be entitled to receive from the holders of such Senior Debt any payments or distributions received by such holders of Senior Debt in excess of the amount required to make payment in full, in cash or cash
equivalents, of such Senior Debt of such holders.
Section 15.5. Obligations of Partnership Unconditional.
(a) Nothing contained in this Article Fifteen or elsewhere in this Indenture or in the Securities is intended to or shall
impair, as among the Partnership and the Holders, the obligation of the Partnership, which is absolute and unconditional, to pay to the Holders the principal of and premium, if any, and interest on the Securities as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Partnership other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Holders
or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Fifteen of the holders of the Senior Debt.
(b) Without limiting the generality of the foregoing, nothing contained in this Article Fifteen will restrict the right of
the Trustee or the Holders to take any action to declare the Securities to be due and payable prior to their Stated Maturity pursuant to Section 5.2 of this Indenture or to pursue any rights or remedies hereunder; provided,
however, that all Senior Debt then due and payable or thereafter declared to be due and payable shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee are entitled to receive any direct or indirect payment
from the Partnership with respect to any Security.
Section 15.6. Notice to Trustee.
(a) The Partnership shall give prompt written notice to the Trustee of any fact known to the Partnership that would prohibit
the making of any payment to or by the Trustee in respect of the Securities pursuant to the provisions of this Article Fifteen. The Trustee shall not be charged with the knowledge of the existence of any default or event of default with respect
to any Senior Debt or of any other facts that would prohibit the making of any payment to or by the
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Trustee unless and until the Trustee shall have received notice in writing at its Corporate Trust Office to that effect signed by an officer of the Partnership, or by a holder of Senior Debt or
trustee or agent thereof; and prior to the receipt of any such written notice, the Trustee shall, subject to Article Six, be entitled to assume that no such facts exist; provided that, if the Trustee shall not have received the notice
provided for in this Section 15.6 at least three Business Days prior to the date upon which, by the terms of this Indenture, any monies shall become payable for any purpose (including, without limitation, the payment of the principal of or
premium, if any, or interest on any Security), then, notwithstanding anything herein to the contrary, the Trustee shall have full power and authority to receive any monies from the Partnership and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary that may be received by it on or after such three Business Day period except for an acceleration of the Securities prior to such application. Nothing contained in this
Section 15.6 shall limit the right of the holders of Senior Debt to recover payments as contemplated by this Article Fifteen. The foregoing shall not apply if the Paying Agent is the Partnership. The Trustee shall be entitled to rely on
the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such
Senior Debt or a trustee or representative on behalf of any such holder.
(b) In the event that the Trustee determines in
good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Fifteen, the Trustee may request such Person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person
under this Article Fifteen and, if such evidence is not furnished to the Trustee, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
Section 15.7. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities referred to in this Article Fifteen, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent jurisdiction in which bankruptcy, dissolution, winding up, liquidation or reorganization proceedings are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or distribution, delivered to the Trustee or to the Holders for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior
Debt and other Debt of the Partnership, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Fifteen.
Section 15.8. Trustees Relation to Senior Debt.
(a) Each of the Trustee and any Paying Agent shall be entitled to all the rights set forth in this Article Fifteen with
respect to any Senior Debt that may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Senior Debt and nothing in this Indenture shall deprive the Trustee or any Paying Agent of any of its
rights as such holder.
(b) With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe
only such of its covenants and obligations as are specifically set forth in this Article Fifteen, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe
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any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Securities or to
the Partnership or to any other person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article Fifteen or otherwise.
Section 15.9. Subordination Rights Not Impaired by Acts or Omissions of the Partnership or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to enforce subordination as provided in this Article Fifteen will at any
time in any way be prejudiced or impaired by any act or failure to act on the part of the Partnership or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Partnership with the terms of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise be charged with. The provisions of this Article Fifteen are intended to be for the benefit of, and shall be enforceable directly by, the holders of Senior Debt.
Section 15.10. Holders Authorize Trustee to Effectuate Subordination of Securities.
Each Holder by such Holders acceptance of any Securities authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in this Article Fifteen, and appoints the Trustee such Holders attorney-in-fact for such purposes, including, in the event of any dissolution, winding up,
liquidation or reorganization of the Partnership (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the property and
assets of the Partnership, the filing of a claim for the unpaid balance of its Securities in the form required in those proceedings.
Section 15.11.
Not to Prevent Events of Default.
The failure to make a payment on account of principal of or premium, if any, or interest on the
Securities by reason of any provision of this Article Fifteen will not be construed as preventing the occurrence of an Event of Default.
Section 15.12. Trustees Compensation Not Prejudiced.
Nothing in this Article Fifteen will apply to amounts due to the Trustee pursuant to other sections of this Indenture, including
Section 6.7.
Section 15.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 15.9, the holders of Senior Debt may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Holders and without impairing or releasing the subordination provided in this Article Fifteen or the obligations hereunder of the Holders to the
holders of Senior Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt or any instrument evidencing the same or any agreement under which
Senior Debt is outstanding or secured; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (c) release any Person liable in any manner for the collection of Senior Debt; and
(d) exercise or refrain from exercising any rights against the Partnership and any other Person.
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Section 15.14. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Fifteen or elsewhere in this Indenture shall prevent (a) the Partnership, except under the
conditions described in Section 15.2 or Section 15.3, from making payments of principal of and premium, if any, and interest on the Securities, or from depositing with the Trustee any money for such payments, or (b) the application by
the Trustee of any money deposited with it for the purpose of making such payments of principal of and premium, if any, and interest on the Securities to the holders entitled thereto unless, at least two Business Days prior to the date upon which
such payment becomes due and payable, the Trustee shall have received the written notice provided for in Section 15.2(b) of this Indenture (or there shall have been an acceleration of the Securities prior to such application) or in
Section 15.6 of this Indenture. The Partnership shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Partnership.
Section 15.15. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust
under Article Four by the Trustee for the payment of principal of and premium, if any, and interest on the Securities shall not be subordinated to the prior payment of any Senior Debt (provided that, at the time deposited, such deposit did not
violate any then outstanding Senior Debt), and none of the Holders shall be obligated to pay over any such amount to any holder of Senior Debt.
ARTICLE SIXTEEN
SUBORDINATION OF SECURITIES GUARANTEES
Section 16.1. Securities Guarantees Subordinated to Guarantor Senior Debt.
Each Guarantor covenants and agrees, and each Holder, by its acceptance of a Securities Guarantee, likewise covenants and agrees, that all
Securities Guarantees shall be issued subject to the provisions of this Article Sixteen; and each Person holding any Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of
all obligations on each and all of the Securities Guarantees shall, to the extent and in the manner set forth in this Article Sixteen, be subordinated in right of payment to the prior payment in full, in cash or cash equivalents, of all
existing and future Guarantor Senior Debt of such Guarantor.
Section 16.2. No Payment on Securities Guarantees in Certain
Circumstances.
(a) No direct or indirect payment by or on behalf of any Guarantor of any obligations on each
and all of the Securities Guarantees (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), whether pursuant to the terms of the Securities Guarantees or upon acceleration
or otherwise, shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of the obligations on any Designated Guarantor Senior Debt of such Guarantor and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders of such Guarantor Senior Debt.
(b) During
the continuance of any other event of default with respect to any Designated Guarantor Senior Debt pursuant to which the maturity thereof may be accelerated, upon receipt by the Trustee of written notice from the trustee or other representative for
the holders of such Designated Guarantor Senior Debt (or the holders of at least a majority in principal amount of such Designated Guarantor Senior Debt then outstanding), no payment of any
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obligations on each and all of the Securities Guarantees (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture) may be
made by or on behalf of any Guarantor upon or in respect of the Securities Guarantees for a period (a Securities Guarantee Payment Blockage Period) commencing on the date of receipt of such notice and ending 179 days thereafter (unless,
in each case, such Securities Guarantee Payment Blockage Period has been terminated by written notice to the Trustee from such trustee of, or other representatives for, such holders or by payment in full in cash or cash equivalents of such
Designated Guarantor Senior Debt or such event of default has been cured or waived). Not more than one Securities Guarantee Payment Blockage Period may be commenced with respect to the Securities Guarantees during any period of 360 consecutive days.
Notwithstanding anything in this Indenture to the contrary, there must be 180 consecutive days in any 360-day period in which no Securities Guarantee Payment Blockage Period is in effect. No event of default that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to an event of default pursuant to any provision under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose) on the date
of the commencement of any Securities Guarantee Payment Blockage Period with respect to the Designated Guarantor Senior Debt initiating such Securities Guarantee Payment Blockage Period shall be, or shall be made, the basis for the commencement of a
second Securities Guarantee Payment Blockage Period by the trustee or other representative for the holders of such Designated Guarantor Senior Debt, whether or not within a period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing,
any payment shall be received by the Trustee or any Holder when such payment is prohibited by clause (a) or (b) above, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Persons making payment or distribution of the assets of the Partnership for application to the payment of all Guarantor Senior Debt remaining unpaid, or to the trustee or
trustees under any indenture pursuant to which any of such Guarantor Senior Debt may have been issued, and any excess above such amounts due and owing on Guarantor Senior Debt shall be paid to such Guarantor.
Section 16.3. Payment over of Proceeds upon Dissolution, Etc.
(a) Upon any payment or distribution of assets or securities of a Guarantor of any kind or character, whether in cash, property
or securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), in connection with any dissolution or winding up or total or partial liquidation or reorganization of
such Guarantor, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, assignment of assets for the benefit of creditors or other marshalling of assets and liabilities of such Guarantor, all amounts due or
to become due upon all Guarantor Senior Debt shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee on their behalf shall be entitled to receive any payment by (or on behalf of) such Guarantor on account of the
Securities Guarantees, or any payment to acquire any of the Securities Guarantees for cash, property or securities, or any distribution with respect to the Securities Guarantees of any cash, property or securities. Before any payment may be made by,
or on behalf of, any Guarantor on any Securities Guarantee (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture) in connection with any such dissolution, winding up,
liquidation or reorganization, any payment or distribution of assets or securities of such Guarantor of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on their behalf would be entitled, but for
the provisions of this
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Article Sixteen, shall be made by such Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, or by the
Holders or the Trustee if received by them or it, to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of such Guarantor for application to the payment
of all Guarantor Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any such Guarantor Senior Debt may have been issued, to the extent necessary to pay all such Guarantor Senior Debt in full, in cash or
cash equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Guarantor Senior Debt.
(b) To the extent any payment of Guarantor Senior Debt (whether by or on behalf of any Guarantor, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other similar Person, the Guarantor Senior Debt or part thereof
originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent the obligation to repay any Guarantor Senior Debt is declared to be fraudulent or invalid or otherwise set aside
under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then the obligation so declared fraudulent or invalid or otherwise set aside (and all other amounts that would come due with respect thereto had such obligation
not been so affected) shall be deemed to be reinstated and outstanding as Guarantor Senior Debt for all purposes hereof as if such declaration or setting aside had not occurred.
(c) In the event that, notwithstanding the provision in clause (a) above prohibiting such payment or distribution, any
payment or distribution of assets or securities of any Guarantor of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder at a time when such payment or distribution is prohibited by clause
(a) above and before all obligations in respect of Guarantor Senior Debt are paid in full, in cash or cash equivalents, such payment or distribution shall be received and held in trust for the benefit of, and shall be paid over or delivered to,
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of such Guarantor for application to the payment of all Guarantor Senior Debt remaining unpaid, or to
the trustee or trustees under any indenture pursuant to which any such Guarantor Senior Debt may have been issued, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Guarantor Senior Debt.
(d) For purposes of this Section 16.3, the words cash, property or securities shall not be deemed to
include, so long as the effect of this clause is not to cause the Securities Guarantees to be treated in any case or proceeding or similar event described in this Section 16.3 as part of the same class of claims as the Guarantor Senior Debt or
any class of claims pari passu with, or senior to, the Guarantor Senior Debt for any payment or distribution, securities of any Guarantor or any other Person provided for by a plan of reorganization or readjustment that are subordinated, at least to
the extent that the Securities Guarantees are subordinated, to the payment of all Guarantor Senior Debt then outstanding; provided that (i) if a new Person results from such reorganization or readjustment, such Person assumes the
Guarantor Senior Debt and (ii) the rights of the holders of the Guarantor Senior Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of a Guarantor with, or the merger of a
Guarantor with or into, another Person or the liquidation or dissolution of a Guarantor following the sale, conveyance, transfer, lease or other disposition of all or substantially all of its property
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and assets to another Person without violation of the terms and conditions provided in this Indenture shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes
of this Section 16.3.
Section 16.4. Subrogation.
(a) Upon the payment in full of all Guarantor Senior Debt in cash or cash equivalents, the Holders shall be subrogated to the
rights of the holders of Guarantor Senior Debt to receive payments or distributions of cash, property or securities of the Guarantors made on such Guarantor Senior Debt until all obligations arising under the Securities Guarantees shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to the holders of the Guarantor Senior Debt of any cash, property or securities to which the Holders or the Trustee on their behalf would be entitled except for the
provisions of this Article Sixteen, and no payment pursuant to the provisions of this Article Sixteen to the holders of Guarantor Senior Debt by the Holders or the Trustee on their behalf shall, as between each Guarantor, its creditors
other than holders of Guarantor Senior Debt, and the Holders, be deemed to be a payment by such Guarantor to or on account of the Guarantor Senior Debt. It is understood that the provisions of this Article Sixteen are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Guarantor Senior Debt, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this
Article Sixteen shall have been applied, pursuant to the provisions of this Article Sixteen, to the payment of all amounts payable under Guarantor Senior Debt, then, and in such case, the Holders shall be entitled to receive from the
holders of such Guarantor Senior Debt any payments or distributions received by such holders of Guarantor Senior Debt in excess of the amount required to make payment in full, in cash or cash equivalents, of such Guarantor Senior Debt of such
holders.
Section 16.5. Obligations of Guarantor Unconditional.
(a) Nothing contained in this Article Sixteen or elsewhere in this Indenture or in the Securities is intended to or shall
impair, as among the Guarantors and the Holders, the obligation of such Guarantors, which is absolute and unconditional, to pay to the Holders all obligations arising under the Securities Guarantees as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Guarantors other than the holders of the Guarantor Senior Debt, nor shall anything herein or therein prevent the Holders or the
Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Sixteen of the holders of the Guarantor Senior Debt.
(b) Without limiting the generality of the foregoing, nothing contained in this Article Sixteen will restrict the right of
the Trustee or the Holders to take any action to declare the Securities to be due and payable prior to their Stated Maturity pursuant to Section 5.2 of this Indenture or to pursue any rights or remedies hereunder; provided,
however, that all Guarantor Senior Debt then due and payable or thereafter declared to be due and payable shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee are entitled to receive any direct or
indirect payment from any Guarantor with respect to its Securities Guarantee.
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Section 16.6. Notice to Trustee.
(a) Each Guarantor shall give prompt written notice to the Trustee of any fact known to such Guarantor that would prohibit the
making of any payment to or by the Trustee in respect of the Securities Guarantees pursuant to the provisions of this Article Sixteen. The Trustee shall not be charged with the knowledge of the existence of any default or event of default with
respect to any Guarantor Senior Debt of any Guarantor or of any other facts that would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing at its Corporate Trust Office to that
effect signed by an Officer of such Guarantor, or by a holder of such Guarantor Senior Debt or trustee or agent thereof; and prior to the receipt of any such written notice, the Trustee shall, subject to Article Six, be entitled to assume that
no such facts exist; provided that, if the Trustee shall not have received the notice provided for in this Section 16.6 at least three Business Days prior to the date upon which, by the terms of this Indenture, any monies shall become
payable for any purpose (including, without limitation, the payment of all obligations arising under any Securities Guarantee), then, notwithstanding anything herein to the contrary, the Trustee shall have full power and authority to receive any
monies from such Guarantor and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary that may be received by it on or after such three Business Day period except for an acceleration of
the Securities prior to such application. Nothing contained in this Section 16.6 shall limit the right of the holders of Guarantor Senior Debt to recover payments as contemplated by this Article Sixteen. The foregoing shall not apply if
the Paying Agent is the Partnership. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Guarantor Senior Debt (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by a holder of such Guarantor Senior Debt or a trustee or representative on behalf of any such holder.
(b) In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any
Person as a holder of Guarantor Senior Debt to participate in any payment or distribution pursuant to this Article Sixteen, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Guarantor Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Sixteen and, if such evidence
is not furnished to the Trustee, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
Section 16.7. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities referred to in this Article Sixteen, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent jurisdiction in which bankruptcy, dissolution, winding up, liquidation or reorganization proceedings are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or distribution, delivered to the Trustee or to the Holders for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Guarantor
Senior Debt and other Debt of a Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Sixteen.
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Section 16.8. Trustees Relation to Guarantor Senior Debt.
(a) Each of the Trustee and any Paying Agent shall be entitled to all the rights set forth in this Article Sixteen with
respect to any Guarantor Senior Debt that may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Guarantor Senior Debt and nothing in this Indenture shall deprive the Trustee or any Paying
Agent of any of its rights as such holder.
(b) With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Sixteen, and no implied covenants or obligations with respect to the holders of Guarantor Senior Debt shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior Debt and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or
distribute to Holders of Securities Guarantees or to a Guarantor or to any other person cash, property or securities to which any holders of Guarantor Senior Debt shall be entitled by virtue of this Article Sixteen or otherwise.
Section 16.9. Subordination Rights Not Impaired by Acts or Omissions of a Guarantor or Holders of Guarantor Senior Debt.
No right of any present or future holders of any Guarantor Senior Debt to enforce subordination as provided in this Article Sixteen will
at any time in any way be prejudiced or impaired by any act or failure to act on the part of a Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by such Guarantor with the terms of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise be charged with. The provisions of this Article Sixteen are intended to be for the benefit of, and shall be enforceable directly by, the holders of Guarantor Senior
Debt.
Section 16.10. Holders Authorize Trustee to Effectuate Subordination of Securities Guarantees.
Each Holder by such Holders acceptance of any Securities Guarantees authorizes and expressly directs the Trustee on such Holders
behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Sixteen, and appoints the Trustee such Holders attorney-in-fact for such purposes, including, in the event of any
dissolution, winding up, liquidation or reorganization of a Guarantor (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards
liquidation of the property and assets of such Guarantor, the filing of a claim for the unpaid balance of its Securities Guarantees in the form required in those proceedings. If the Trustee does not file a proper claim or proof of indebtedness in
the form required in such proceeding at least 30 days before the expiration of the time to file such claim or proof, each holder of Guarantor Senior Debt is hereby authorized to file an appropriate claim for and on behalf of the Holders.
Section 16.11. Not to Prevent Events of Default.
The failure to fulfill any obligation arising under the Securities Guarantees by reason of any provision of this Article Sixteen will not
be construed as preventing the occurrence of an Event of Default.
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Section 16.12. Trustees Compensation Not Prejudiced.
Nothing in this Article Sixteen will apply to amounts due to the Trustee pursuant to other sections of this Indenture, including
Section 6.7.
Section 16.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 16.9, the holders of Guarantor Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Holders and without impairing or releasing the subordination provided in this Article Sixteen or the obligations hereunder of the Holders to
the holders of Guarantor Senior Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Guarantor Senior Debt or any instrument evidencing the same or any
agreement under which Guarantor Senior Debt is outstanding or secured; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (c) release any Person liable in any manner for
the collection of Guarantor Senior Debt; and (d) exercise or refrain from exercising any rights against the Partnership and any other Person.
Section 16.14. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Sixteen or elsewhere in this Indenture shall prevent (a) a Guarantor, except under the conditions
described in Section 16.2 or Section 16.3, from fulfilling any obligation arising under the Securities Guarantees, or from depositing with the Trustee any money for such payments, or (b) the application by the Trustee of any money
deposited with it for the purpose of fulfilling any obligation arising under the Securities Guarantees to the holders entitled thereto unless, at least two Business Days prior to the date upon which such payment becomes due and payable, the Trustee
shall have received the written notice provided for in Section 16.2(b) of this Indenture (or there shall have been an acceleration of the Securities Guarantees prior to such application) or in Section 16.6 of this Indenture. The
Partnership shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of such Guarantor.
* * *
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This instrument may be executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the
parties hereto have caused this Indenture to be duly executed, as of the day and year first above written.
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SANCHEZ PRODUCTION PARTNERS LP |
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Sanchez Production Partners GP LLC, |
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its general partner |
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Name: |
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U.S. BANK NATIONAL ASSOCIATION, as
Trustee |
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By: |
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Name: |
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Title: |
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Exhibit 5.1
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600 Travis, Suite 4200 |
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Houston, Texas 77002 |
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713.220.4200 Phone |
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713.220.4285 Fax |
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andrewskurth.com |
March 6, 2015
Sanchez Production Partners LP
1000 Main Street, Suite 3000
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as special counsel to Sanchez Production Partners LP, a Delaware limited partnership (the Issuer), in connection
with the preparation of a registration statement on Form S-3 (the Registration Statement) filed with the Securities and Exchange Commission (the SEC) on March 6, 2015 pursuant to the Securities Act of 1933, as amended
(the Securities Act). The Registration Statement relates to the offering from time to time, as set forth in the Registration Statement, the form of prospectus contained therein (the Prospectus) and one or more supplements to
the Prospectus (each, a Prospectus Supplement), by the Issuer of up to $500,000,000 of (i) common units (Common Units) of the Issuer, (ii) other partnership securities of the Issuer (Partnership
Securities), (iii) senior debt securities of the Issuer (Senior Debt Securities), (iv) subordinated debt securities of the Issuer (Subordinated Debt Securities and together with the Senior Debt Securities, the
Debt Securities), (v) warrants to purchase debt or equity securities of the Issuer (Warrants) and (vi) subscription rights to purchase any combination of Common Units, Partnership Securities, Debt Securities and
Warrants (Rights and collectively with the Common Units, Partnership Securities, Debt Securities and Warrants, the Securities). All capitalized terms that are not defined herein shall have the meanings assigned to them in the
Registration Statement or in either of the Indentures (as defined below).
Senior Debt Securities will be issued pursuant to a senior
indenture substantially in the form attached as Exhibit 4.9 to the Registration Statement (the Senior Indenture), between the Issuer and The Bank of Nova Scotia Trust Company of New York, as trustee (the Senior Debt Trustee),
as it may be amended or supplemented from time to time, including at the time of and in connection with the issuance of such Senior Debt Securities. Similarly, Subordinated Debt Securities will be issued pursuant to a subordinated indenture,
substantially in the form attached as Exhibit 4.10 to the Registration Statement (the Subordinated Indenture, and together with the Senior Indenture, the Indentures), between the Issuer and The Bank of Nova Scotia Trust
Company of New York, as trustee (the Subordinated Debt Trustee), as it may be amended or supplemented from time to time, including at the time of and in connection with the issuance of such Subordinated Debt Securities. The Warrants will
be issued pursuant to a warrant agreement (the Warrant Agreement) between the Issuer and a warrant agent. The Rights will be issued pursuant to a rights agreement (the Rights Agreement) between the Issuer and a rights agent.
Austin Beijing Dallas Dubai Houston
London New York Research Triangle Park The Woodlands Washington, DC
Sanchez Production Partners LP
March 6, 2015
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2
In arriving at the opinions expressed below, we have examined (i) the Certificate of
Limited Partnership of the Issuer (the Formation Certificate), (ii) the Agreement of Limited Partnership of the Issuer (the Partnership Agreement and collectively with the Formation Certificate, the Issuer
Organizational Documents), (iii) the Registration Statement, (iv) the Prospectus, (v) the forms of the Indentures and (vi) originals or copies certified or otherwise identified to our satisfaction of such other instruments
and other certificates of public officials, officers and representatives of the Issuer and such other persons as we have deemed appropriate as a basis for the opinions expressed below.
In rendering the opinions expressed below, we have assumed and have not verified (i) the genuineness of the signatures on all documents
that we have examined, (ii) the legal capacity of all natural persons, (iii) the authenticity of all documents supplied to us as originals and (iv) the conformity to the authentic originals of all documents supplied to us as
certified, photostatic or faxed copies. In conducting our examination of documents, we have assumed the power, corporate or other, of all parties thereto other than the Issuer to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and the due execution and delivery by such parties of such documents and that, except as set forth in the numbered opining paragraphs below, to the extent such documents
purport to constitute agreements, such documents constitute valid and binding obligations of such parties.
In rendering the opinions
expressed below with respect to the Securities therein referred to, we have assumed that:
(i) any supplemental indenture to either of the
Indentures executed and delivered, and any Board Resolution certified and delivered, pursuant to either of the Indentures in any such case, in or pursuant to which the terms of any Debt Securities are established and pursuant to which such Debt
Securities are issued, will comply with such Indenture as theretofore amended or supplemented, and the form and terms of such Debt Securities will comply with such Indenture as then and theretofore amended or supplemented (including by any such
supplemental indenture) and any such Board Resolution (and any Officers Certificate delivered pursuant thereto);
(ii) the form and
terms of any Debt Securities, the form and terms of any Warrants or Rights, and the form and terms of any and all Securities or other securities or obligations comprising the same or subject thereto (in the case of the Warrants and Rights), the
issuance, sale and delivery thereof by the Issuer, and the incurrence and performance by the Issuer of its obligations thereunder or in respect thereof (including, without limitation, its obligations under any related Indenture, Warrant Agreement or
Rights Agreement) in accordance with the terms thereof, will be in full compliance with, and will not violate, the Issuer Organizational Documents or any applicable law, rule, regulation, order, judgment, decree, award or agreement binding upon the
Issuer, or to which the issuance, sale and delivery of such Securities, or the incurrence and performance of such obligations, may be subject, or violate any applicable public policy, or be subject to any defense in law or equity, and (without
limiting the generality of the foregoing) Section 5-501.6.b of the New York General Obligations Law will apply in the case of all such Debt Securities;
Sanchez Production Partners LP
March 6, 2015
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(iii) the number of Common Units or Partnership Securities, as the case may be, offered
pursuant to the Registration Statement does not exceed, at the time of issuance, the authorized number of Common Units or Partnership Securities, as the case may be, under the Issuer Organizational Documents minus that number of Common Units or
Partnership Securities, as the case may be, that may have been issued and are outstanding, or are reserved for issuance for other purposes, at such time; and
(iv) (A) the Registration Statement, and any amendments thereto (including post-effective amendments), will have become effective; (B) a
Prospectus Supplement will have been prepared and filed with the SEC describing the Securities offered thereby; (C) all Securities will be issued and sold in compliance with applicable federal and state securities laws and in the manner stated
in the Registration Statement and the appropriate Prospectus Supplement; and (D) any Securities issuable upon conversion, exchange or exercise of any Security being offered will be duly authorized, created and, if appropriate, reserved for
issuance upon such conversion, exchange or exercise.
Based upon and subject to the foregoing, and subject also to the limitations and
other assumptions and qualifications set forth below, we are of the opinion that:
1. With respect to any Common Units, assuming
(a) the taking by the Issuer of all necessary partnership action to authorize and approve the issuance of such Common Units, the terms of the offering thereof and related matters and (b) the issuance and delivery of such Common Units in
accordance with the terms of the applicable definitive purchase, underwriting or similar agreement approved by the board of directors of the general partner of the Issuer (the General Partner) on behalf of the Issuer, upon payment (or
delivery) of the consideration therefor provided for therein, such Common Units will be validly issued, fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 17-303(a) and 17-607 of the Delaware Revised Uniform Limited Partnership Act (the DRULPA)).
2. With respect to any
series of Partnership Securities, assuming (a) the taking by the Issuer of all necessary partnership action to authorize and approve the issuance and terms of such series of Partnership Securities, the terms of the offering thereof and related
matters and (b) the issuance and delivery of such series of Partnership Securities in accordance with the terms of the applicable definitive purchase, underwriting or similar agreement approved by the board of directors of the General Partner
on behalf of the Issuer, upon payment (or delivery) of the consideration therefor provided for therein, such series of Partnership Securities will be validly issued, fully paid and nonassessable (except as such nonassessability may be affected by
Sections 17-303(a) and 17-607 of the DRULPA).
3. With respect to any series of Debt Securities to be issued under an Indenture, assuming
(a) the due authorization and valid execution and delivery of such Indenture by the Issuer, as issuer, and the Trustee, (b) the due authorization and valid execution and delivery of the applicable supplement, if any, to such Indenture by
the Issuer, as issuer, and the Trustee, or the due authorization and valid execution and delivery of the applicable Board Resolution by the Issuer and the valid execution and delivery of the applicable Officers Certificate by a duly
Sanchez Production Partners LP
March 6, 2015
Page
4
authorized officer of the Issuer, in each case, in accordance with the terms of such Indenture, as theretofore amended or supplemented, (c) the qualification under the Trust Indenture Act of
1939, as amended (the Trust Indenture Act), of such Indenture, as then and theretofore amended or supplemented, (d) the taking by the Issuer of all necessary partnership action to authorize and approve the issuance and terms of such
series of Debt Securities, the terms of the offering thereof and related matters, and (e) the execution, authentication, issuance and delivery of the Debt Securities of such series in accordance with the terms of such Indenture as then and
theretofore amended and supplemented (including by any such supplemental indenture), or Board Resolution and Officers Certificate, and the applicable definitive purchase, underwriting or similar agreement approved by the board of directors of
the General Partner on behalf of the Issuer, upon payment (or delivery) of the consideration therefor provided for in such purchase, underwriting or similar agreement, such Debt Securities will be validly issued and will constitute valid and legally
binding obligations of the Issuer.
4. With respect to any Warrants to be issued under a Warrant Agreement, assuming (a) the taking
by the Issuer of all necessary partnership action to authorize and approve (i) the issuance and terms of the Warrants, the terms of the offering thereof and related matters, (ii) the issuance of any Common Units and/or Partnership
Securities that are receivable upon exercise of Warrants, (iii) the issuance and terms of any series of any Debt Securities that are receivable upon exercise of Warrants, and the execution and delivery of the applicable Indenture and any
applicable supplemental indenture, or the applicable Board Resolution or Officers Certificate and (iv) the issuance and terms of any Rights that are receivable upon exercise of Warrants, and the execution and delivery of the applicable
Rights Agreement, and (b) the execution and delivery by all parties thereto and authentication, in the case of the applicable series of Debt Securities, and issuance of (i) the applicable Warrants, (ii) such Common Units and/or
Partnership Securities, (iii) such series of Debt Securities and Indenture (and qualification of such Indenture under the Trust Indenture Act) and any such supplemental indenture, or Board Resolution and Officers Certificate and
(iv) such Rights and Rights Agreement in accordance with (A) the Organizational Documents, in the case of Common Units and/or Partnership Securities, such Indenture as then and theretofore amended and supplemented (including by any such
supplemental indenture), or Board Resolution and Officers Certificate, in the case of a series of Debt Securities, and the Rights Agreement, in the case of the Rights, and (B) the applicable definitive purchase, underwriting or similar
agreement approved by the board of directors of the General Partner on behalf of the Issuer, upon payment (or delivery) of the consideration therefor provided for in such purchase, underwriting or similar agreement, such Warrants will constitute
valid and legally binding obligations of the Issuer.
5. With respect to any Rights to be issued under a Rights Agreement, assuming
(a) the taking by the Issuer of all necessary partnership action to authorize and approve (i) the issuance and terms of the Rights, the terms of the offering thereof and related matters, (ii) the issuance of any Common Units and/or
Partnership Securities that are receivable upon exercise of Rights, (iii) the issuance and terms of any series of any Debt Securities that are receivable upon exercise of Rights, and the execution and delivery of the applicable Indenture and
any applicable supplemental indenture, or the applicable Board Resolution or Officers Certificate and (iv) the issuance and terms of any Warrants that are receivable upon exercise of Rights, and the
Sanchez Production Partners LP
March 6, 2015
Page
5
execution and delivery of any related Warrant Agreement, and (b) the execution and delivery by all parties thereto and authentication, in the case of the applicable series of Debt
Securities, and issuance of (i) the applicable Rights, (ii) such Common Units and/or Partnership Securities, (iii) such series of Debt Securities and Indenture (and qualification of such Indenture under the Trust Indenture Act) and
any such supplemental indenture, or Board Resolution and Officers Certificate and (iv) such Warrants and Warrant Agreement in accordance with (A) the provisions of the Issuer Organizational Documents, in the case of Common Units
and/or Partnership Securities, such Indenture as then and theretofore amended and supplemented (including by any such supplemental indenture), or Board Resolution and Officers Certificate, in the case of a series of Debt Securities, and the
applicable Warrant Agreement, in the case of the Warrants and (B) the applicable definitive purchase, underwriting or similar agreement approved by the board of directors of the General Partner on behalf of the Issuer, upon payment (or
delivery) of the consideration therefor provided for in such purchase, underwriting or similar agreement, such Rights will constitute valid and legally binding obligations of the Issuer.
Our opinions in paragraphs 3, 4 and 5 above are subject to applicable bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfer or conveyance), reorganization, moratorium and other similar laws affecting creditors rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at
law), including, without limitation, (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing, and we express no
opinion herein with respect to provisions relating to severability or separability. Our opinions in paragraphs 3, 4 and 5 above, insofar as they pertain to the choice of law provisions of the instruments referred to in such paragraphs, are rendered
solely in reliance upon New York General Obligations Law Section 5-1401, and are expressly conditioned upon the assumption that the legality, validity, binding effect and enforceability of said provisions
will be determined by a court of the State of New York or a United States federal court sitting in New York and applying New York choice of law rules, including said Section 5-1401. We express no opinion
as to any constitutional limitations upon said Section 5-1401 or their effect, if any, upon any opinion herein expressed.
We express no opinion other than as to the laws of the State of New York and the DRULPA (which is deemed to include the applicable provisions
of the Delaware Constitution and reported judicial opinions interpreting those laws).
We hereby consent to the filing of this opinion as
an exhibit to the Registration Statement and to the reference to this firm under the heading Legal Matters in the Prospectus. In giving this consent, we do not admit that we are experts under the Securities Act, or the rules
and regulations of the SEC thereunder, with respect to any part of the Registration Statement, including this exhibit. We assume no obligation to update or supplement this opinion or any matter related to this opinion to reflect any change of fact,
circumstance, or law after the effective date of the Registration Statement.
|
Very truly yours, |
|
/s/ Andrews Kurth LLP |
Exhibit 8.1
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|
|
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|
|
Andrews Kurth LLP 600 Travis, Suite 4200
Houston, Texas 77002 +1.713.220.4200 Phone
+1.713.220.4285 Fax andrewskurth.com |
|
Austin Beijing Dallas
Dubai Houston
London New York
Research Triangle Park The Woodlands
Washington, DC |
March 6, 2015
Sanchez Production Partners LP
Sanchez Production Partners GP
LLC
1000 Main Street, Suite 3000
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as special
counsel to Sanchez Production Partners LP, a Delaware limited partnership (the Partnership), in connection with the preparation of a registration statement on Form S-3 (the Registration Statement), filed with
the Securities Exchange Commission on March 6, 2015, relating to the registration of the offering and sale (the Offering) of common units representing limited partner interests in the Partnership (the Common
Units) to be issued and sold by the Partnership from time to time pursuant to Rule 415 under the Securities Act of 1933, as amended (the Act).
In connection therewith, we have participated in the preparation of the discussion set forth under the caption, Material U.S. Federal
Income Tax Consequences, in the Registration Statement (the Discussion). The statements in the Discussion, insofar as such statements purport to constitute summaries of United States federal income tax law and regulations or
legal conclusions with respect thereto, subject to the qualifications and assumptions stated in the Discussion and the limitations and qualifications set forth herein, constitute our opinion as to the material United States federal income tax
consequences for purchasers of the Common Units pursuant to the Offering.
This opinion letter is limited to the matters set forth herein,
and no opinions are intended to be implied or may be inferred beyond those expressly stated herein. Our opinion is rendered as of the date hereof, and we assume no obligation to update or supplement this opinion or any matter related to this opinion
to reflect any change of fact, circumstances, or law after the effective date of the Registration Statement. In addition, our opinion is based on the assumption that the matter will be properly presented to the applicable court.
Sanchez Production Partners LP
March 6, 2015
Page 2
Furthermore, our opinion is not binding on the Internal Revenue Service or a court. In addition, we must note that our opinion represents
merely our best legal judgment on the matters presented and that others may disagree with our conclusion. There can be no assurance that the Internal Revenue Service will not take a contrary position or that a court would agree with our opinion if
litigated.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement of the Partnership and to the
references to our firm and this opinion contained in the Discussion. In giving this consent, we do not admit that we are experts under the Act or under the rules and regulations of the Securities Exchange Commission relating thereto,
with respect to any part of the Registration Statement, including this exhibit to the Registration Statement.
Very truly yours,
/s/ Andrews Kurth LLP
Exhibit 12.1
RATIO OF EARNINGS TO FIXED CHARGES
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|
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|
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|
|
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|
Fiscal Year Ended December 31, |
|
Earnings |
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
2011 |
|
|
2010 |
|
Net income (loss) (1) |
|
$ |
9,582 |
|
|
$ |
(28,569 |
) |
|
$ |
(86,486 |
) |
|
$ |
19,765 |
|
|
$ |
(276,810 |
) |
Fixed charges (2) |
|
|
2,565 |
|
|
|
7,258 |
|
|
|
7,266 |
|
|
|
9,261 |
|
|
|
13,096 |
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,928 |
|
|
|
7,258 |
|
|
|
7,266 |
|
|
|
9,261 |
|
|
|
13,096 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) |
|
$ |
12,147 |
|
|
$ |
(21,311 |
) |
|
$ |
(79,220 |
) |
|
$ |
29,026 |
|
|
$ |
(263,714 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
Ratio of earnings to fixed charges (3) |
|
|
6.3x |
|
|
|
|
|
|
|
|
|
|
|
3.1x |
|
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|
|
|
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|
|
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(1) |
Net income (loss) is the equivalent of income from continuing operations plus income (loss) from discontinued operations, minus income from equity affiliates that exceeded dividends from affiliates. |
(2) |
Fixed charges equal the sum of the following: interest expensed and capitalized; amortized premiums, discounts, and capitalized expenses related to indebtedness; and a reasonable approximation of the interest within
rent expense. |
(3) |
Earnings were inadequate to cover fixed charges in certain periods. The coverage deficiency totaled approximately, $28.6 million, $86.5 million and $276.8 million for the fiscal years ended December 31, 2013, 2012
and 2010, respectively. |
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Unitholders of Sanchez Production Partners LP and Board of Director of Sanchez Production Partners GP LLC:
We consent to the use of our report dated March 5, 2015, with respect to the consolidated balance sheets of Sanchez Production Partners LLC (formerly
Constellation Energy Partners LLC) as of December 31, 2014 and 2013, and the related consolidated statements of operations, changes in members equity, and cash flows for the years then ended, incorporated herein by reference and to the
reference to our firm under the heading Experts in the prospectus.
/s/ KPMG LLP
Houston, Texas
March 6, 2015
Exhibit 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
As independent petroleum engineers, we hereby consent to the incorporation by reference of our report dated February 3, 2015, included as part
of the consolidated financial statements of Sanchez Production Partners LLC as of December 31, 2014, in the Registration Statement on Form S-3 and related Prospectus of Sanchez Production Partners LP.
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NETHERLAND, SEWELL & ASSOCIATES, INC. |
|
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By: |
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/s/ Danny D. Simmons |
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Danny D. Simmons |
|
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President and Chief Operating Officer |
Houston, Texas
March 6, 2015
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
¨ |
Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) |
U.S. BANK
NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
31-0841368
I.R.S.
Employer Identification No.
|
|
|
800 Nicollet Mall
Minneapolis, Minnesota |
|
55402 |
(Address of principal executive offices) |
|
(Zip Code) |
Steven A. Finklea
U.S. Bank National Association
5555 San Felipe, Suite 1150
Houston, Texas 77056
(713) 235-9208
(Name,
address and telephone number of agent for service)
Sanchez
Production Partners LP
(Issuer with respect to the Securities)
|
|
|
Delaware |
|
11-3742489 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
|
|
|
1000 Main Street, Suite 3000
Houston, Texas |
|
77002 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Senior Debt
(Title of
the Indenture Securities)
FORM T-1
Item 1. |
GENERAL INFORMATION. Furnish the following information as to the Trustee. |
|
a) |
Name and address of each examining or supervising authority to which it is subject. |
|
|
Comptroller of the Currency |
|
b) |
Whether it is authorized to exercise corporate trust powers. |
Item 2. |
AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. |
None
Items 3-15 |
Items 3-15 are not applicable because to the best of the Trustees knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee. |
Item 16. |
LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification. |
|
1. |
A copy of the Articles of Association of the Trustee.* |
|
2. |
A copy of the certificate of authority of the Trustee to commence business, attached as Exhibit 2. |
|
3. |
A copy of the certificate of authority of the Trustee to exercise corporate trust powers, attached as Exhibit 3. |
|
4. |
A copy of the existing bylaws of the Trustee.** |
|
5. |
A copy of each Indenture referred to in Item 4. Not applicable. |
|
6. |
The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6. |
|
7. |
Report of Condition of the Trustee as of December 31, 2014 published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7. |
* |
Incorporated by reference to Exhibit 25.1 to Amendment No. 2 to registration statement on S-4, Registration Number 333-128217 filed on November 15, 2005. |
** |
Incorporated by reference to Exhibit 25.1 to registration statement on form S-3ASR, Registration Number 333-199863 filed on November 5, 2014. |
2
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Houston,
State of Texas on the 23rd of February 2015.
|
|
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|
|
By: |
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/s/ Steven A. Finklea |
|
|
|
|
Steven A. Finklea |
|
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|
|
Vice President |
|
|
3
Exhibit 2
Office of the Comptroller of the Currency Washington, DC 20219
CERTIFICATE OF CORPORATE EXISTENCE
I, Thomas J. Curry, Comptroller of the Currency, do hereby
certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq, as amended, and 12 USC 1, et seq, as amended, has possession, custody,
and control of all records pertaining to the chartering, regulation, and supervision of all national banking associations. 2. U.S. Bank National Association, Cincinnati, Ohio (Charter No. 24), is a national banking association formed
under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this certificate.
IN TESTIMONY WHEREOF, today,
January 21, 2015, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the U.S. Department of the Treasury, in the City of Washington, District of Columbia. Comptroller of the Currency
4
Exhibit 3
Office of the Comptroller of the Currency Washington, DC 20219
CERTIFICATION OF FIDUCIARY POWERS
I, Thomas J. Curry, Comptroller of the Currency, do hereby
certify that:
1. The Office of the Comptroller of the Currency, pursuant to Revised Statutes 324, et seq, as amended, and 12 USC 1, et seq, as amended, has
possession, custody, and control of all records pertaining to the chartering, regulation, and supervision of all national banking associations. 2. U.S. Bank National Association, Cincinnati, Ohio (Charter No. 24), was granted, under the
hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of the Act of Congress approved September 28, 1962, 76 Stat. 668, 12 USC 92a, and that the authority so granted remains in full force and
effect on the date of this certificate. IN TESTIMONY WHEREOF, today, January 21, 2015, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the U.S. Department of the Treasury, in the City of Washington,
District of Columbia. Comptroller of the Currency
5
Exhibit 6
CONSENT
In accordance
with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon its request therefor.
Dated: February 23, 2015
|
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|
|
By: |
|
/s/ Steven A. Finklea |
|
|
|
|
Steven A. Finklea |
|
|
|
|
Vice President |
|
|
6
Exhibit 7
U.S. Bank National Association
Statement of Financial Condition
As of 12/31/2014
($000s)
|
|
|
|
|
|
|
12/31/2014 |
|
Assets |
|
|
|
|
Cash and Balances Due From Depository Institutions |
|
$ |
10,622,022 |
|
Securities |
|
|
100,557,832 |
|
Federal Funds |
|
|
79,987 |
|
Loans & Lease Financing Receivables |
|
|
247,427,720 |
|
Fixed Assets |
|
|
4,246,071 |
|
Intangible Assets |
|
|
13,078,376 |
|
Other Assets |
|
|
22,967,351 |
|
|
|
|
|
|
Total Assets |
|
$ |
398,978,359 |
|
|
|
Liabilities |
|
|
|
|
Deposits |
|
$ |
294,158,985 |
|
Fed Funds |
|
|
1,722,932 |
|
Treasury Demand Notes |
|
|
0 |
|
Trading Liabilities |
|
|
734,026 |
|
Other Borrowed Money |
|
|
45,457,856 |
|
Acceptances |
|
|
0 |
|
Subordinated Notes and Debentures |
|
|
3,650,000 |
|
Other Liabilities |
|
|
11,857,789 |
|
|
|
|
|
|
Total Liabilities |
|
$ |
357,581,588 |
|
|
|
Equity |
|
|
|
|
Common and Preferred Stock |
|
|
18,200 |
|
Surplus |
|
|
14,266,400 |
|
Undivided Profits |
|
|
26,256,268 |
|
Minority Interest in Subsidiaries |
|
|
855,903 |
|
|
|
|
|
|
Total Equity Capital |
|
$ |
41,396,771 |
|
|
|
Total Liabilities and Equity Capital |
|
$ |
398,978,359 |
|
7
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
¨ |
Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) |
U.S. BANK
NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
31-0841368
I.R.S.
Employer Identification No.
|
|
|
800 Nicollet Mall
Minneapolis, Minnesota |
|
55402 |
(Address of principal executive offices) |
|
(Zip Code) |
Steven A. Finklea
U.S. Bank National Association
5555 San Felipe, Suite 1150
Houston, Texas 77056
(713) 235-9208
(Name,
address and telephone number of agent for service)
Sanchez
Production Partners LP
(Issuer with respect to the Securities)
|
|
|
Delaware |
|
11-3742489 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
|
|
|
1000 Main Street, Suite 3000
Houston, Texas |
|
77002 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
Subordinated Debt
(Title
of the Indenture Securities)
FORM T-1
Item 1. |
GENERAL INFORMATION. Furnish the following information as to the Trustee. |
|
a) |
Name and address of each examining or supervising authority to which it is subject. |
|
|
Comptroller of the Currency |
|
b) |
Whether it is authorized to exercise corporate trust powers. |
Item 2. |
AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. |
None
Items 3-15 |
Items 3-15 are not applicable because to the best of the Trustees knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee. |
Item 16. |
LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification. |
|
1. |
A copy of the Articles of Association of the Trustee.* |
|
2. |
A copy of the certificate of authority of the Trustee to commence business, attached as Exhibit 2. |
|
3. |
A copy of the certificate of authority of the Trustee to exercise corporate trust powers, attached as Exhibit 3. |
|
4. |
A copy of the existing bylaws of the Trustee.** |
|
5. |
A copy of each Indenture referred to in Item 4. Not applicable. |
|
6. |
The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6. |
|
7. |
Report of Condition of the Trustee as of December 31, 2014 published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7. |
* |
Incorporated by reference to Exhibit 25.1 to Amendment No. 2 to registration statement on S-4, Registration Number 333-128217 filed on November 15, 2005. |
** |
Incorporated by reference to Exhibit 25.1 to registration statement on form S-3ASR, Registration Number 333-199863 filed on November 5, 2014. |
2
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Houston,
State of Texas on the 23rd of February 2015.
|
|
|
|
|
By: |
|
/s/ Steven A. Finklea |
|
|
|
|
Steven A. Finklea |
|
|
|
|
Vice President |
|
|
3
Exhibit 2
Office of the Comptroller of the Currency Washington, DC 20219
Certificate of Corporate Existence
I, Thomas J. Curry, Comptroller of the Currency, do hereby
certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq, as amended, and 12 USC 1, et seq, as amended, has possession, custody,
and control of all records pertaining to the chartering, regulation, and supervision of all national banking associations. 2. U.S. Bank National Association, Cincinnati, Ohio (Charter No. 24), is a national banking association formed
under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this certificate.
IN TESTIMONY WHEREOF, today,
January 21, 2015, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the U.S. Department of the Treasury, in the City of Washington, District of Columbia.
Comptroller of the Currency
4
Exhibit 3
Office of the Comptroller of the Currency Washington, DC 20219
CERTIFICATE OF FIDUCIARY POWERS
I, Thomas J. Curry, Comptroller of the Currency, do hereby
certify that:
1. The Office of the Comptroller of the Currency, pursuant to Revised Statutes 324, et seq, as amended, and 12 USC 1, et seq, as amended, has
possession, custody, and control of all records pertaining to the chartering, regulation, and supervision of all national banking associations. 2. U.S. Bank National Association, Cincinnati, Ohio (Charter No. 24), was granted, under the
hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of the Act of Congress approved September 28, 1962, 76 Stat. 688, 12 USC 92a, and that the authority so granted remains in full force and
effect on the date of this certificate.
IN TESTIMONY WHEREOF, today, January 21, 2015, I have hereunto subscribed my name and caused my seal of office to be
affixed to these presents at the U.S. Department of the Treasury, in the City of Washington, District of Columbia.
Comptroller of the Currency
5
Exhibit 6
CONSENT
In accordance
with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon its request therefor.
Dated: February 23, 2015
|
|
|
|
|
By: |
|
/s/ Steven A. Finklea |
|
|
|
|
Steven A. Finklea |
|
|
|
|
Vice President |
|
|
6
Exhibit 7
U.S. Bank National Association
Statement of Financial Condition
As of 12/31/2014
($000s)
|
|
|
|
|
|
|
12/31/2014 |
|
Assets |
|
|
|
|
Cash and Balances Due From Depository Institutions |
|
$ |
10,622,022 |
|
Securities |
|
|
100,557,832 |
|
Federal Funds |
|
|
79,987 |
|
Loans & Lease Financing Receivables |
|
|
247,427,720 |
|
Fixed Assets |
|
|
4,246,071 |
|
Intangible Assets |
|
|
13,078,376 |
|
Other Assets |
|
|
22,967,351 |
|
|
|
|
|
|
Total Assets |
|
$ |
398,978,359 |
|
|
|
Liabilities |
|
|
|
|
Deposits |
|
$ |
294,158,985 |
|
Fed Funds |
|
|
1,722,932 |
|
Treasury Demand Notes |
|
|
0 |
|
Trading Liabilities |
|
|
734,026 |
|
Other Borrowed Money |
|
|
45,457,856 |
|
Acceptances |
|
|
0 |
|
Subordinated Notes and Debentures |
|
|
3,650,000 |
|
Other Liabilities |
|
|
11,857,789 |
|
|
|
|
|
|
Total Liabilities |
|
$ |
357,581,588 |
|
|
|
Equity |
|
|
|
|
Common and Preferred Stock |
|
|
18,200 |
|
Surplus |
|
|
14,266,400 |
|
Undivided Profits |
|
|
26,256,268 |
|
Minority Interest in Subsidiaries |
|
|
855,903 |
|
|
|
|
|
|
Total Equity Capital |
|
$ |
41,396,771 |
|
|
|
Total Liabilities and Equity Capital |
|
$ |
398,978,359 |
|
7
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