sv3
As filed with the Securities and Exchange Commission on
September 22, 2006
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF
1933
WILLIAMS PARTNERS
L.P.
WILLIAMS PARTNERS FINANCE
CORPORATION
(and certain subsidiaries identified in footnote (*)
below)
(Exact name of registrants as
specified in their charter)
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Delaware
Delaware
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20-2485124
20-5021238
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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One Williams Center
Tulsa, Oklahoma 74172-0172
(918) 573-2000
(Address, including zip code,
and telephone number,
including area code, of
registrants principal executive offices)
James J. Bender, Esq.
General Counsel
Williams Partners GP LLC
One Williams Center, Suite 4900
Tulsa, Oklahoma 74172-0172
(918) 573-2000
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
With a copy to:
Andrews Kurth LLP
1350 I Street, NW, Suite 1100
Washington, D.C. 20005
(202) 662-2700
Attn: William J. Cooper
Approximate date of commencement of proposed sale to the
public: From time to time after the effective
date of this registration statement.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box: o
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: þ
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. o
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. o
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. o
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. o
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Title of Each Class of
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Amount to be
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Offering Price
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Aggregate
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Securities to be Registered
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Registered
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per Unit
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Offering Price(1)
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Amount of Registration Fee
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Primary Offering:
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Common units representing limited
partner interests(2)
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Debt Securities(2)(3)
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Guarantees of Debt Securities(4)
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Total Primary
Offering:
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$1,500,000,000(2
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$160,500.00
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Secondary Offering:
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Common units representing limited
partner interests(5)
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1,250,000
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(6)
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$43,800,000(7
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$4,686.60
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TOTAL:
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$1,543,800,000
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$165,186.60
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(1) |
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Estimated solely for the purpose of calculating the registration
fee. The registration fee has been calculated in accordance with
Rule 457(o) under the Securities Act of 1933, as amended,
and reflects the offering price rather than the principal amount
of any debt securities issued at a discount. Rule 457(o)
permits the registration fee to be calculated on the basis of
the maximum offering price of all of the securities listed and,
therefore, with regard to the primary offering, the table does
not specify by each class information as to the amount to be
registered or the proposed maximum offering price per security. |
(2) |
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The amount of securities registered in the primary offering
consists of $1,500,000,000 of an indeterminate number or amount
of common units of Williams Partners L.P. and debt securities of
Williams Partners L.P. and, if applicable, Williams Partners
Finance Corporation. In no event will the aggregate offering
price of all securities issued from time to time in the primary
offering pursuant to this registration statement exceed
$1,500,000,000. |
(3) |
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If any debt securities are issued at original issue discount,
then the offering price of such debt securities shall be in such
amount as shall result in an aggregate initial offering price
not to exceed the amount identified in Note 2 above, less
the dollar amount of any registered securities previously issued. |
(4) |
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Williams Partners Operating LLC, Carbonate Trend Pipeline LLC
and/or
Mid-Continent Fractionation and Storage, LLC may guarantee the
obligations of Williams Partners L.P. and, if applicable,
Williams Partners Finance Corporation under some or all of the
debt securities. No separate consideration will be paid in
respect of any such guarantees. Pursuant to Rule 457(n) of
the Securities Act of 1933, as amended, no separate fee is
payable with respect to the guarantees of the debt securities. |
(5) |
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Common units of Williams Partners L.P. that may be resold by or
for the account of the selling unitholders. |
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The proposed maximum offering price per common unit will be
determined from time to time by the selling unitholders in
connection with, and at the time of, any sale by the selling
unitholders of Williams Partners L.P.s common units
registered hereunder. |
(7) |
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Estimated solely for the purpose of determining the registration
fee on the basis of the average high and low sales prices of the
common units on the New York Stock Exchange on
September 20, 2006. |
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The following are co-registrants that may guarantee some or all
of the debt securities: |
WILLIAMS PARTNERS OPERATING
LLC
(Exact name of registrant as
specified in its charter)
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Delaware
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20-2891139
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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CARBONATE TREND PIPELINE
LLC
(Exact name of registrant as
specified in its charter)
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Delaware
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20-2891187
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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MID-CONTINENT FRACTIONATION AND
STORAGE, LLC
(Exact name of registrant as
specified in its charter)
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Delaware
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20-1568868
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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The Registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until this
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION DATED
SEPTEMBER 22, 2006
PROSPECTUS
$1,500,000,000
WILLIAMS PARTNERS L.P.
COMMON UNITS REPRESENTING
LIMITED PARTNER INTERESTS
WILLIAMS PARTNERS L.P.
WILLIAMS PARTNERS FINANCE
CORPORATION
DEBT SECURITIES
1,250,000
COMMON UNITS REPRESENTING LIMITED PARTNER INTERESTS
OFFERED BY SELLING UNITHOLDERS
We may from time to time offer and sell common units
representing limited partner interests in Williams Partners L.P.
and debt securities of Williams Partners L.P. Williams Partners
Finance Corp. may act as co-issuer of the debt securities and
Williams Partners Operating LLC, Carbonate Trend Pipeline LLC
and/or
Mid-Continent Fractionation and Storage, LLC may guarantee the
debt securities. The aggregate initial offering price of the
securities that we will offer by this prospectus will not exceed
$1,500,000,000. We will offer the securities in amounts, at
prices and on terms to be determined by market conditions at the
time of our offerings. In addition, up to 1,250,000 common units
may be offered from time to time by the selling unitholders
named herein. For a more detailed discussion of the selling
unitholders, please read Selling Unitholders. Each
time we or a selling unitholder sells securities pursuant to
this prospectus, we will provide a supplement to this prospectus
that contains specific information about the offering and the
specific terms of the securities offered. We will not receive
the proceeds from any sale of common units by the selling
unitholders, unless otherwise indicated in a prospectus
supplement. You should read this prospectus and the applicable
prospectus supplement and the documents incorporated by
reference herein and therein carefully before you invest in our
securities.
Our common units are listed for trading on the New York Stock
Exchange under the ticker symbol WPZ.
We, Williams Partners Finance Corporation and the selling
unitholders will sell these securities directly to investors, or
through agents, dealers or underwriters as designated from time
to time, or through a combination of these methods, on a
continuous or delayed basis.
This prospectus may not be used to consummate sales of our
securities unless it is accompanied by the applicable prospectus
supplement.
You should rely only on the information incorporated by
reference or provided in this prospectus or any prospectus
supplement. We have not authorized anyone else to provide you
with different information or to make additional
representations. We are not making or soliciting an offer of any
securities other than the securities described in this
prospectus and any prospectus supplement. We are not making or
soliciting an offer of these securities in any state or
jurisdiction where the offer is not permitted or in any
circumstances in which such offer or solicitation is unlawful.
You should not assume that the information contained or
incorporated by reference in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the
front of those documents. We will disclose any material changes
in our affairs in an amendment to this prospectus, the
applicable prospectus supplement or a future filing with the
Securities and Exchange Commission incorporated by reference in
this prospectus and the applicable prospectus supplement.
Investing in our securities involves a high degree of risk.
Limited partnerships are inherently different from corporations.
Please read Risk Factors beginning on page 4 of
this prospectus, contained in the applicable prospectus
supplement and in the documents incorporated by reference herein
and therein before you make any investment in our securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is ,
2006.
TABLE OF
CONTENTS
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34
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ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement on
Form S-3
that we have filed with the Securities and Exchange Commission
using a shelf registration process. Under this shelf
registration process, we may sell, in one or more offerings, up
to $1,500,000,000 in total aggregate offering price of common
units of Williams Partners L.P. or debt securities of Williams
Partners L.P. and, if applicable, Williams Partners Finance
Corporation described in this prospectus. This prospectus
generally describes us, the common units of Williams Partners
L.P., the debt securities of Williams Partners L.P. and, if
applicable, Williams Partners Finance Corporation and the
guarantees of the debt securities. Each time we sell common
units or debt securities with this prospectus, 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 also may add to,
update, or change information in this prospectus.
Unless the context clearly indicates otherwise, references in
this prospectus to Williams Partners L.P.,
we, our, us or like terms,
when used in the present tense, prospectively or for historical
periods since August 23, 2005, refer to Williams Partners
L.P. and its subsidiaries, including Williams Partners Finance
Corporation. References to our predecessor, or to
we, our, us or like terms
for historical periods prior to August 23, 2005, refer to
the assets of The Williams Companies, Inc. and its subsidiaries,
which were contributed to us at the closing of our initial
public offering on August 23, 2005. In either case, unless
the context clearly indicates otherwise, references to
Williams Partners L.P., we,
our, us or like terms generally include
the operations of Discovery Producer Services LLC, or Discovery,
in which we own a 40% interest, and Williams Four Corners LLC,
or Four Corners, in which we own a 25.1% interest. When we refer
to Discovery and Four Corners by name, we are referring
exclusively to their respective businesses and operations.
In addition to covering our offering of securities, this
prospectus covers the offering for resale of up to 1,250,000
common units by certain selling unitholders. Each time a selling
unitholder sells common units with this prospectus, a prospectus
supplement will be provided, containing specific information
about the terms of that offering and the securities being
offered. The prospectus supplement also may add to, update, or
change information in this prospectus. Please read Selling
Unitholders.
The information in this prospectus is accurate as of its date.
You should read carefully this prospectus, any prospectus
supplement, and the additional information described below under
the heading Where You Can Find More Information.
ABOUT
WILLIAMS PARTNERS L.P.
Williams Partners L.P. is a publicly traded Delaware limited
partnership formed by The Williams Companies, Inc., or Williams,
in February 2005, to own, operate and acquire a diversified
portfolio of complementary energy assets. We are principally
engaged in the business of gathering, transporting and
processing natural gas and fractionating and storing natural gas
liquids. Fractionation is the process by which a mixed stream of
natural gas liquids is separated into its constituent products,
such as ethane, propane and butane. These natural gas liquids
result from natural gas processing and crude oil refining and
are used as petrochemical feedstocks, heating fuels and gasoline
additives, among other applications.
Operations of our businesses are located in the United States.
We manage our business and analyze our results of operations on
a segment basis. Our operations are divided into two business
segments:
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Gathering and Processing. Our Gathering and
Processing segment includes (1) our 25.1% ownership
interest in Four Corners, (2) our 40% ownership interest in
Discovery and (3) the Carbonate Trend gas gathering
pipeline off the coast of Alabama. Four Corners owns a
3,500-mile
natural gas gathering system, including three natural gas
processing plants and two natural gas treating plants, located
in the San Juan Basin in Colorado and New Mexico. Discovery
owns an integrated natural gas gathering and transportation
pipeline system extending from offshore in the Gulf of Mexico to
a natural gas processing facility and a natural gas liquids
fractionator in Louisiana. These assets generate revenues by
providing natural gas gathering, transporting and processing
services and integrated natural gas liquid
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fractionating services to customers under a range of contractual
arrangements. Although Discovery includes fractionation
operations, which would normally fall within the NGL Services
segment, it is primarily engaged in gathering and processing and
is managed as such.
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NGL Services. Our NGL Services segment
includes three integrated natural gas liquids storage facilities
and a 50% undivided interest in a natural gas liquids
fractionator near Conway, Kansas. These assets generate revenues
by providing stand-alone natural gas liquids fractionation and
storage services using various fee-based contractual
arrangements where we receive a fee or fees based on actual or
contracted volumetric measures.
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We account for each of our 40% interest in Discovery and our
25.1% interest in Four Corners as an equity investment, and
therefore do not consolidate their financial results.
Williams Partners GP LLC, the general partner of Williams
Partners L.P., is an indirect wholly owned subsidiary of
Williams, and holds no assets other than its 2% general partner
interest and incentive distribution rights in Williams Partners
L.P.
Our principal executive offices are located at One Williams
Center, Tulsa, Oklahoma
74172-0172,
and our phone number is 918-573-2000.
ABOUT
WILLIAMS PARTNERS FINANCE CORPORATION
Williams Partners Finance Corporation is a Delaware corporation
and wholly owned subsidiary of Williams Partners L.P. organized
for the sole purpose of co-issuing debt securities from time to
time with Williams Partners L.P., including, but not limited to,
debt securities offered by this prospectus. Williams Partners
Finance Corporation does not have any operations of any kind and
does not have any revenue other than as may be incidental to its
activities as a co-issuer of debt securities with Williams
Partners L.P.
THE
SUBSIDIARY GUARANTORS
Williams Partners L.P. owns a 100% member interest in Williams
Partners Operating LLC. Williams Partners Operating LLC owns a
100% member interest in each of Carbonate Trend Pipeline LLC and
Mid-Continent Fractionation and Storage, LLC.
Occasionally, in this prospectus, we refer to Williams Partners
Operating LLC, Carbonate Trend Pipeline LLC and Mid-Continent
Fractionation and Storage, LLC as the Subsidiary
Guarantors. The Subsidiary Guarantors may individually or
jointly and severally, unconditionally guarantee the payment
obligations under any series of debt securities offered by
Williams Partners L.P. and, if applicable, Williams Partners
Finance Corporation pursuant to this prospectus, as may be set
forth in a related prospectus supplement.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed a registration statement with the SEC under the
Securities Act of 1933, as amended, that registers the offer and
sale of the securities covered by this prospectus. The
registration statement, including the attached exhibits,
contains additional relevant information about us. In addition,
Williams Partners L.P. files annual, quarterly and other reports
and other information with the SEC. You may read and copy any
document we file with the SEC at the SECs Public Reference
Room at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the SECs
Public Reference Room. The SEC maintains an Internet site that
contains reports, proxy and information statements and other
information regarding issuers that file electronically with the
SEC. Our SEC filings are available on the SECs web site at
http://www.sec.gov.
You also can obtain information about us at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
The SEC allows us to incorporate by reference the
information we have filed with the SEC. This means that we can
disclose important information to you without actually including
the specific information in this prospectus by referring you to
other documents filed separately with the SEC. The information
incorporated
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by reference is an important part of this prospectus.
Information that Williams Partners L.P. later provides to the
SEC, and which is deemed to be filed with the SEC,
automatically will update information previously filed with the
SEC, and may replace information in this prospectus.
We incorporate by reference in this prospectus the following
documents that Williams Partners L.P. has filed with the SEC:
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Annual Report on
Form 10-K
(File
No. 1-32599)
for the year ended December 31, 2005 filed on March 3,
2006;
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Quarterly Reports on
Form 10-Q
(File
No. 1-32599)
for the quarters ended March 31, 2006 and June 30,
2006 filed on May 2, 2006 and August 8, 2006,
respectively;
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Current Reports on
Form 8-K
(File
No. 1-32599)
filed on April 7, 2006 (except for the information under
Item 7.01 and the related exhibit), June 12, 2006,
June 20, 2006 (except for the information under
Item 7.01 and the related exhibit), August 29, 2006
and September 22, 2006 and our amended Current Report on
Form 8-K/A
(File
No. 1-32599)
filed on August 10, 2006; and
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The description of our common units contained in our
registration statement on
Form 8-A
(File
No. 1-32599)
filed on August 9, 2005, and any subsequent amendments or
reports filed for the purpose of updating such description.
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These reports contain important information about us, our
financial condition and our results of operations.
All documents that we file with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, after the
date of this prospectus and prior to the termination of all
offerings made pursuant to this prospectus also will be deemed
to be incorporated herein by reference and will automatically
update and supersede information in this prospectus. We also
incorporate by reference any future filings made with the SEC
under the Exchange Act subsequent to the date of the initial
registration statement and prior to effectiveness of the
registration statement. Nothing in this prospectus shall be
deemed to incorporate information furnished to, but not filed
with, the SEC pursuant to Item 2.02 or Item 7.01 of
Form 8-K
(or corresponding information furnished under Item 9.01 or
included as an exhibit).
We make available free of charge on or through our Internet
website, http://www.williamslp.com, our Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after we electronically file such
material with, or furnish it to, the SEC. Information contained
on our Internet website is not part of this prospectus.
You may obtain any of the documents incorporated by reference in
this prospectus from the SEC through the SECs website at
the address provided above. You also may request a copy of any
document incorporated by reference in this prospectus (excluding
any exhibits to those documents, unless the exhibit is
specifically incorporated by reference in this document), at no
cost, by visiting our Internet website at
http://www.williamslp.com,
or by writing or calling us at the following address:
Investor Relations
Williams Partners L.P.
One Williams Center, Suite 5000
Tulsa, Oklahoma
74172-0172
Telephone:
(918) 573-2078
You should rely only on the information incorporated by
reference or provided in this prospectus or any prospectus
supplement. We have not authorized anyone else to provide you
with any information. You should not assume that the information
incorporated by reference or provided in this prospectus or any
prospectus supplement is accurate as of any date other than the
date on the front of each document.
3
RISK
FACTORS
Limited partner interests are inherently different from the
capital stock of a corporation, although many of the business
risks to which we are subject are similar to those that would be
faced by a corporation engaged in a similar business. Before you
invest in our securities, you should carefully consider those
risk factors included in our most-recent Annual Report on
Form 10-K
and our Quarterly Reports on
Form 10-Q
that are incorporated herein by reference and those that may be
included in the applicable prospectus supplement, together with
all of the other information included in this prospectus, any
prospectus supplement and the documents we incorporate by
reference in evaluating an investment in our securities.
If any of the risks discussed in the foregoing documents were
actually to occur, our business, financial condition, results of
operations, or cash flow could be materially adversely affected.
In that case, our ability to make distributions to our
unitholders or pay interest on, or the principal of, any debt
securities, may be reduced, the trading price of our securities
could decline and you could lose all or part of your
investment.
FORWARD-LOOKING
STATEMENTS
Certain matters included or incorporated by reference in this
prospectus, excluding historical information, include
forward-looking statements statements that discuss
our expected future results based on current and pending
business operations.
Forward-looking statements can be identified by words such as
anticipates, believes,
expects, planned, scheduled,
could, continues, estimates,
forecasts, might, potential,
projects, may, should or
similar expressions. Similarly, statements that describe our
future plans, objectives or goals are also forward-looking
statements.
Although we believe these forward-looking statements are based
on reasonable assumptions, statements made regarding future
results are subject to a number of assumptions, uncertainties
and risks that may cause future results to be materially
different from the results stated or implied in this prospectus
and the documents incorporated herein by reference. These risks
and uncertainties include, among other things:
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We may not have sufficient cash from operations to enable us to
pay the minimum quarterly distribution following establishment
of cash reserves and payment of fees and expenses, including
payments to our general partner.
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Because of the natural decline in production from existing wells
and competitive factors, the success of our gathering and
transportation businesses depends on our ability to connect new
sources of natural gas supply, which is dependent on factors
beyond our control. Any decrease in supplies of natural gas
could adversely affect our business and operating results.
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Our processing, fractionation and storage businesses could be
affected by any decrease in the price of natural gas liquids or
a change in the price of natural gas liquids relative to the
price of natural gas.
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Lower natural gas and oil prices could adversely affect our
fractionation and storage businesses.
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We depend on certain key customers and producers for a
significant portion of our revenues and supply of natural gas
and natural gas liquids. The loss of any of these key customers
or producers could result in a decline in our revenues and cash
available to pay distributions.
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If third-party pipelines and other facilities interconnected to
our pipelines and facilities become unavailable to transport
natural gas and natural gas liquids or to treat natural gas, our
revenues and cash available to pay distributions could be
adversely affected.
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Our future financial and operating flexibility may be adversely
affected by restrictions in our indenture and by our leverage.
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Williams credit agreement and Williams public
indentures contain financial and operating restrictions that may
limit our access to credit. In addition, our ability to obtain
credit in the future will be affected by Williams credit
ratings.
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Our general partner and its affiliates have conflicts of
interest and limited fiduciary duties, which may permit them to
favor their own interests to the detriment of our unitholders.
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Our partnership agreement limits our general partners
fiduciary duties to our unitholders and restricts the remedies
available to unitholders for actions taken by our general
partner that might otherwise constitute breaches of fiduciary
duty.
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Even if unitholders are dissatisfied, they cannot currently
remove our general partner without its consent.
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You may be required to pay taxes on your share of our income
even if you do not receive any cash distributions from us.
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Our operations are subject to operational hazards and unforeseen
interruptions for which we may or may not be adequately insured.
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Additional information about risks and uncertainties that could
cause actual results to differ materially from forward-looking
statements is contained in Item 1A of Part I,
Risk Factors, of our most-recent annual report on
Form 10-K
and Item 1A of Part II, Risk Factors, of
our quarterly reports on
Form 10-Q,
which are incorporated herein by reference, and may be included
in the applicable prospectus supplement. The risk factors and
other factors noted throughout this prospectus, the applicable
prospectus supplement and the documents incorporated herein and
therein by reference could cause our actual results to differ
materially from those contained in any forward-looking
statement. The forward-looking statements included in this
prospectus, the applicable prospectus supplement and the
documents incorporated herein and therein by reference are only
made as of the date of such document and, except as required by
securities laws, we undertake no obligation to publicly update
forward-looking statements to reflect subsequent events or
circumstances.
5
USE OF
PROCEEDS
Unless we specify otherwise in any prospectus supplement, we
will use the net proceeds (after the payment of any offering
expenses and underwriting discounts and commissions) from our
sale of securities for general partnership purposes, which may
include, among other things:
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paying or refinancing all or a portion of our indebtedness
outstanding at the time; and
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funding working capital, capital expenditures or acquisitions
(which may consist of acquisitions of discrete assets or
businesses).
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The actual application of proceeds from the sale of any
particular offering of securities using this prospectus will be
described in the applicable prospectus supplement relating to
such offering. The precise amount and timing of the application
of these proceeds will depend upon our funding requirements and
the availability and cost of other funds.
We will not receive any net proceeds from the sale of common
units by the selling unitholders pursuant to this prospectus,
unless otherwise indicated in a prospectus supplement.
6
RATIO OF
EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for Williams Partners
L.P. for each of the periods indicated is as follows:
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Six Months Ended
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Years Ended December 31,
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June 30,
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2001
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2002
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2003
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2004
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2005
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2006
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Ratio of Earnings to Fixed Charges
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2.68x
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1.68x
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10.08x
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Earnings were inadequate to cover fixed charges by
$12.1 million, $17.9 million and $1.6 million for
the years ended December 31, 2001, 2004 and 2005,
respectively. Fixed charges for the years ended
December 31, 2001, 2002, 2003, 2004 and 2005 include
interest expense associated with advances from Williams that
were forgiven in conjunction with the closing of our initial
public offering on August 23, 2005.
For periods prior to August 23, 2005, the closing date of
our initial public offering, the ratios presented above reflect
the historical cost-basis accounts of our predecessor, and
include charges from Williams and its subsidiaries for direct
costs and allocations of indirect corporate overhead. Our
management believes that the allocation methods are reasonable,
and that the allocations are representative of the costs we
would have incurred on a stand-alone basis. For periods
beginning on August 23, 2005, these ratios reflect the
financial statements of Williams Partners L.P. and its
subsidiaries.
For purposes of calculating the ratio of earnings to fixed
charges:
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earnings is the aggregate of the following
items: pre-tax income or loss from continuing operations before
income or loss from equity investees; plus fixed charges; plus
distributed income of equity investees; less our share of
pre-tax losses of equity investees for which charges arising
from guarantees are included in fixed charges; and less
capitalized interest.
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fixed charges means the sum of the following:
interest expensed and capitalized; amortized premiums, discounts
and capitalized expenses related to indebtedness; an estimate of
the interest within rental expense; and our share of interest
expense from equity investees where the related pre-tax loss has
been included in earnings.
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7
DESCRIPTION
OF THE COMMON UNITS
The
Units
The common units and the subordinated units are separate classes
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 and
subordinated units in and to partnership distributions, please
read this section and How We Make Cash
Distributions. For a description of the 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 registrar and
transfer agent for the common units. We pay all fees charged by
the transfer agent for transfers of common units, except the
following that 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.
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There is no charge to unitholders for disbursements of our cash
distributions. We will indemnify the transfer agent against all
claims and losses that may arise out of all actions of the
transfer agent or its agents or subcontractors for their
activities in that capacity, except for any liability due to any
gross negligence or willful misconduct of the transfer agent or
its agents or subcontractors.
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
has been appointed and has accepted the appointment within
30 days after notice of the resignation or removal, our
general partner may act as the transfer agent and registrar
until a successor is appointed.
Transfer
of Common Units
By transfer of common units or the issuance of common units in a
merger or consolidation in accordance with our partnership
agreement, each transferee of common units will be admitted as a
limited partner with respect to the common units transferred
when such transfer and admission is reflected in our books and
records. Additionally, each transferee:
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represents that the transferee has the capacity, power and
authority to enter into our partnership agreement;
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automatically agrees to be bound by the terms and conditions of,
and is deemed to have executed, our partnership
agreement; and
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gives the consents and approvals contained in our partnership
agreement.
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An assignee will become a substituted limited partner of our
partnership for the transferred common units automatically upon
the recording of the transfer on our books and records. 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 are transferable according to
the laws governing transfer of securities. Until a common unit
has been transferred on our books, we and the transfer agent may
treat the record holder of the unit as the absolute owner for
all purposes, except as otherwise required by law or stock
exchange regulations.
Subordinated
Units
The subordinated units represent a separate class of limited
partner interests in our partnership, and the rights of holders
of subordinated units to participate in distributions differ
from, and are subordinated to, the rights of the holders of
common units. Unlike the common units, the subordinated units
are not publicly traded.
Cash
Distribution Policy
During the subordination period, the common units will have the
right to receive distributions of available cash from operating
surplus in an amount equal to the minimum quarterly distribution
of $0.35 per common unit, plus any arrearages in the
payment of the minimum quarterly distribution on the common
units from prior quarters, before any distributions of available
cash from operating surplus may be made on the subordinated
units.
The purpose of the subordinated units is to increase the
likelihood that during the subordination period there will be
available cash to be distributed on the common units. The
subordinated units are not entitled to receive any arrearages in
the payment of the minimum quarterly distribution from prior
quarters. For a more complete description of our cash
distribution policy on the subordinated units, please read
How We Make Cash Distributions Distributions
of Available Cash from Operating Surplus During the
Subordination Period.
Conversion
of the Subordinated Units
Each subordinated unit will convert into one common unit at the
end of the subordination period, which will end once we meet the
financial tests in the partnership agreement. For a more
complete description of the circumstances under which the
subordinated units will convert into common units, please read
How We Make Cash Distributions Subordination
Period.
Distributions
Upon Liquidation
If we liquidate during the subordination period, we will, to the
extent possible, allocate gain and loss to entitle the holders
of common units a preference over the holders of subordinated
units to the extent required to permit the common unitholders to
receive their unrecovered initial unit price, plus the minimum
quarterly distribution for the quarter during which liquidation
occurs, plus any arrearages. For a more complete description of
this liquidation preference, please read How We Make Cash
Distributions Distributions of Cash Upon
Liquidation.
Limited
Voting Rights
For a more complete description of the voting rights of holders
of subordinated units, please read The Partnership
Agreement Voting Rights.
9
HOW WE
MAKE CASH DISTRIBUTIONS
General
Rationale
for our Cash Distribution Policy
Our cash distribution policy reflects a basic judgment that our
unitholders will be better served by distributing our available
cash rather than retaining it. Our available cash includes cash
generated from the operation of our assets and businesses, which
include the gathering, transporting and processing of natural
gas and the fractionating and storing of NGLs, as described
elsewhere in this prospectus. Our cash distribution policy is
consistent with the terms of our partnership agreement, which
requires that we distribute all of our available cash on a
quarterly basis. Because we are not subject to an entity-level
federal income tax, we have more cash to distribute to you than
would be the case if we were subject to such tax.
Limitations
on Our Ability to Make Quarterly Distributions
There is no guarantee that unitholders will receive quarterly
distributions from us. Our distribution policy may become
subject to limitations and restrictions and may be changed at
any time, including:
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Our board of directors has broad discretion to establish
reserves for the prudent conduct of our business and the
establishment of those reserves could result in a reduction in
the amount of cash available to pay distributions.
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Although our ability to make distributions is not currently
restricted under Williams revolving credit agreement,
Williams other debt instruments or our working capital
facility with Williams, we or Williams may enter into future
debt arrangements that could subject our ability to pay
distributions to compliance with certain tests or ratios or
otherwise restrict our ability to pay distributions.
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Our ability to make distributions of available cash will depend,
to a significant extent, on Discoverys and Four
Corners ability to make cash distributions to us. In
addition, although Discoverys and Four Corners
limited liability company agreements have been amended to
provide for quarterly distributions of available cash, Discovery
and Four Corners have a limited history of making distributions
to their respective members. Discoverys and Four
Corners management committees, on which we are
represented, have broad discretion to establish reserves for the
prudent conduct of their respective businesses. The
establishment of those reserves could result in a reduction in
Discoverys and Four Corners cash available to pay
distributions, which could cause a corresponding reduction in
the amount of our cash available to pay distributions.
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Even if our cash distribution policy is not modified, the amount
of distributions we pay and the decision to make any
distribution is at the discretion of our general partner, taking
into consideration the terms of our partnership agreement.
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Under
Section 17-607
of the Delaware Revised Uniform Limited Partnership Act, we may
not make a distribution to you if the distribution would cause
our liabilities to exceed the fair value of our assets.
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Although our partnership agreement requires us to distribute our
available cash, our partnership agreement, including provisions
requiring us to make cash distributions contained therein, may
be amended. Although during the subordination period, with
certain exceptions, our partnership agreement may not be amended
without approval of nonaffiliated common unitholders, our
partnership agreement can be amended with the approval of a
majority of the outstanding common units after the subordination
period has ended. As of September 1, 2006, Williams owned
approximately 8.6% of the outstanding common units and 100% of
the outstanding subordinated units.
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Our
Cash Distribution Policy May Limit Our Ability to
Grow
Because we distribute all of our available cash, our growth may
not be as fast as businesses that reinvest their available cash
to expand ongoing operations. We intend generally to rely upon
external financing sources, including borrowings and issuances
of debt and equity securities, to fund our acquisition and
growth capital
10
expenditures. However, to the extent we are unable to finance
growth externally, our cash distribution policy will
significantly impair our ability to grow.
Discoverys
Cash Distribution Policy
A substantial portion of our cash available to pay distributions
is cash we receive as distributions from Discovery. As in our
partnership agreement, Discoverys limited liability
company agreement, as amended, provides for the distribution of
available cash on a quarterly basis, with available cash defined
to mean, for each fiscal quarter, cash generated from
Discoverys business less reserves that are necessary or
appropriate to provide for the conduct of its business and to
comply with applicable law or any debt instrument or other
agreement to which it is a party. Under Discoverys limited
liability company agreement, the amount of Discoverys
quarterly distributions, including the amount of cash reserves
not distributed, is determined by the members of
Discoverys management committee representing a
majority-in-interest
in Discovery. We own a 40% interest in Discovery, and an
affiliate of Williams owns a 20% interest in Discovery.
Discoverys limited liability agreement may only be amended
with the unanimous approval of all its members.
Four
Corners Cash Distribution Policy
A substantial portion of our cash available to pay distributions
will be cash we receive as distributions from Four Corners. Four
Corners limited liability company agreement, as amended,
provides for the distribution of available cash at least
quarterly, with available cash defined to mean, for each fiscal
quarter, cash generated from Four Corners business less
reserves that are necessary or appropriate to provide for the
conduct of its business and to comply with applicable law or any
debt instrument or other agreement to which it is a party. Under
Four Corners limited liability company agreement, the
amount of Four Corners quarterly distributions, including
the amount of cash reserves not distributed, will be determined
by the members of Four Corners management committee
representing a
majority-in-interest
in Four Corners. We own a 25.1% interest in Four Corners, and an
affiliate of Williams owns a 74.9% interest in Four Corners.
Four Corners limited liability agreement may only be
amended with the unanimous approval of all its members.
Operating
Surplus and Capital Surplus
Overview
All cash distributed to unitholders will be characterized as
either operating surplus or capital
surplus. We treat distributions of available cash from
operating surplus differently than distributions of available
cash from capital surplus.
Definition
of Available Cash
Available cash generally means, for each fiscal quarter all cash
on hand at the end of the 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
reserves for future capital expenditures and for our anticipated
credit needs);
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comply with applicable law, any of our debt instruments or other
agreements; or
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provide funds for distribution to our unitholders and to our
general partner for any one or more of the next four quarters;
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plus all cash on hand on the date of determination of available
cash for the quarter resulting from working capital borrowings
made after the end of the quarter for which the determination is
being made. Working capital borrowings are generally borrowings
that will be made under our working capital facility with
Williams and in all cases are used solely for working capital
purposes or to pay distributions to partners.
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Definition
of Operating Surplus
Operating surplus for any period generally means:
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our cash balance on the closing date of our initial public
offering of $12.8 million, which excluded
$24.4 million retained from the proceeds of our initial
public offering to make a capital contribution to Discovery to
fund an escrow account required in connection with the Tahiti
pipeline lateral expansion project; plus
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$10.0 million; plus
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all of our cash receipts after the closing of our initial public
offering, excluding (1) cash from borrowings that are not
working capital borrowings, (2) sales of equity and debt
securities and (3) sales or other dispositions of assets
outside the ordinary course of business; plus
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working capital borrowings made after the end of a quarter but
before the date of determination of operating surplus for the
quarter; less
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all of our operating expenditures after the closing of our
initial public offering (including the repayment of working
capital borrowings, but not the repayment of other borrowings)
and maintenance capital expenditures (including capital
contributions to Discovery to be used by Discovery for
maintenance capital expenditures); less
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the amount of cash reserves established by our general partner
for future operating expenditures.
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Because operating surplus is a cash accounting concept, the
benefit that we receive from our gas purchase contract with a
subsidiary of Williams and the partial credit for general and
administrative expenses and other reimbursements we receive from
Williams under the omnibus agreement will be part of our
operating surplus.
As described above, operating surplus does not reflect actual
cash on hand that is available for distribution to our
unitholders. For example, it includes a provision that will
enable us, if we choose, to distribute as operating surplus up
to $22.8 million of cash we receive in the future from
non-operating sources, such as asset sales, issuances of
securities, and long-term borrowings, that would otherwise be
distributed as capital surplus.
Definition
of Capital Surplus
Capital surplus will generally be generated only by:
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borrowings other than working capital borrowings;
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sales of debt and equity securities; and
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sales or other disposition of assets for cash, other than
inventory, accounts receivable and other current assets sold in
the ordinary course of business or non-current assets sold as
part of normal retirements or replacements of assets.
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Characterization
of Cash Distributions
We will treat all available cash distributed as coming from
operating surplus until the sum of all available cash
distributed since we began operations equals the operating
surplus as of the most recent date of determination of available
cash. We will treat any amount distributed in excess of
operating surplus, regardless of its source, as capital surplus.
We do not anticipate that we will make any distributions from
capital surplus.
Subordination
Period
Overview
During the subordination period, which we define below, the
common units will have the right to receive distributions of
available cash from operating surplus in an amount equal to the
minimum quarterly distribution of $0.35 per quarter, plus
any arrearages in the payment of the minimum quarterly
distribution on the common
12
units from prior quarters, before any distributions of available
cash from operating surplus may be made on the subordinated
units. Distribution arrearages do not accrue on the subordinated
units. The purpose of the subordinated units is to increase the
likelihood that during the subordination period there will be
available cash from operating surplus to be distributed on the
common units.
Definition
of Subordination Period
Except as described below under Early
Termination of Subordination Period, the subordination
period will extend until the first day of any quarter beginning
after June 30, 2008 that each of the following tests are
met:
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distributions of available cash from operating surplus on each
of the outstanding common units and subordinated units equaled
or exceeded the minimum quarterly distribution for each of the
three consecutive, non-overlapping four-quarter periods
immediately preceding that date;
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the adjusted operating surplus (as defined below)
generated during each of the three consecutive, non-overlapping
four-quarter periods immediately preceding that date equaled or
exceeded the sum of the minimum quarterly distributions on all
of the outstanding common units and subordinated units during
those periods on a fully diluted basis and the related
distribution on the 2% general partner interest during those
periods; and
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there are no arrearages in payment of the minimum quarterly
distribution on the common units.
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If the unitholders remove our general partner without cause, the
subordination period may end early.
Early
Termination of Subordination Period
The subordination period will automatically terminate and all of
the subordinated units will convert into common units on a
one-for-one
basis if each of the following occurs:
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distributions of available cash from operating surplus on each
outstanding common unit and subordinated unit equaled or
exceeded $2.10 (150% of the annualized minimum quarterly
distribution) for any four-quarter period immediately preceding
that date;
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the adjusted operating surplus (as defined below)
generated during any four-quarter period immediately preceding
that date equaled or exceeded the sum of a distribution of $2.10
(150% of the annualized minimum quarterly distribution) on all
of the outstanding common units and subordinated units on a
fully diluted basis; and
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there are no arrearages in payment of the minimum quarterly
distribution on the common units.
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Definition
of Adjusted Operating Surplus
Adjusted operating surplus for any period generally means:
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operating surplus generated with respect to that period; less
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any net increase in working capital borrowings with respect to
that period; less
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any net reduction in cash reserves for operating expenditures
made with respect to that period not relating to an operating
expenditure made with respect to that period; plus
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any net decrease in working capital borrowings with respect to
that period; plus
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any net increase in cash reserves for operating expenditures
with respect to that period required by any debt instrument for
the repayment of principal, interest or premium.
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Adjusted operating surplus is intended to reflect the cash
generated from operations during a particular period and
therefore excludes net increases in working capital borrowings
and net drawdowns of reserves of cash generated in prior periods.
13
Effect
of Expiration of the Subordination Period
Upon expiration of the subordination period, each outstanding
subordinated unit will convert into one common unit and will
then participate pro rata with the other common units in
distributions of available cash. In addition, if the unitholders
remove our general partner other than for cause and units held
by our general partner and its affiliates are not voted in favor
of such removal:
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the subordination period will end and each subordinated unit
will immediately convert into one common unit;
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any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished; and
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our general partner will have the right to convert its general
partner interest and, if any, its incentive distribution rights
into common units or to receive cash in exchange for those
interests.
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Distributions
of Available Cash from Operating Surplus During the
Subordination Period
We will make distributions of available cash from operating
surplus for any quarter during the subordination period in the
following manner:
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first, 98% to the common unitholders, pro rata, and 2% to
our general partner, until we distribute for each outstanding
common unit an amount equal to the minimum quarterly
distribution for that quarter;
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second, 98% to the common unitholders, pro rata, and 2%
to our general partner, until we distribute for each outstanding
common unit an amount equal to any arrearages in payment of the
minimum quarterly distribution on the common units for any prior
quarters during the subordination period;
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third, 98% to the subordinated unitholders, pro rata, and
2% to our general partner, until we distribute for each
subordinated unit an amount equal to the minimum quarterly
distribution for that quarter; and
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thereafter, in the manner described in
Incentive Distribution Rights below.
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The preceding discussion is based on the assumptions that our
general partner maintains its 2% general partner interest and
that we do not issue additional classes of equity securities.
Distributions
of Available Cash from Operating Surplus After the Subordination
Period
We will make distributions of available cash from operating
surplus for any quarter after the subordination period in the
following manner:
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first, 98% to all unitholders, pro rata, and 2% to our
general partner, until we distribute for each outstanding unit
an amount equal to the minimum quarterly distribution for that
quarter; and
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thereafter, in the manner described in
Incentive Distribution Rights below.
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The preceding discussion is based on the assumptions that our
general partner maintains its 2% general partner interest and
that we do not issue additional classes of equity securities.
Incentive
Distribution Rights
Incentive distribution rights represent the right to receive an
increasing percentage of quarterly distributions of available
cash from operating surplus after the minimum quarterly
distribution and the target distribution levels have been
achieved. Our general partner currently holds the incentive
distribution rights, but may transfer these rights separately
from its general partner interest, subject to restrictions in
the partnership agreement.
If for any quarter:
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we have distributed available cash from operating surplus to the
common and subordinated unitholders in an amount equal to the
minimum quarterly distribution; and
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we have distributed available cash from operating surplus on
outstanding common units in an amount necessary to eliminate any
cumulative arrearages in payment of the minimum quarterly
distribution;
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then, we will distribute any additional available cash from
operating surplus for that quarter among the unitholders and our
general partner in the following manner:
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first, 98% to all unitholders, pro rata, and 2% to our
general partner, until each unitholder receives a total of
$0.4025 per unit for that quarter (the first target
distribution);
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second, 85% to all unitholders, pro rata, and 15% to our
general partner, until each unitholder receives a total of
$0.4375 per unit for that quarter (the second target
distribution);
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third, 75% to all unitholders, pro rata, and 25% to our
general partner, until each unitholder receives a total of
$0.5250 per unit for that quarter (the third target
distribution); and
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thereafter, 50% to all unitholders, pro rata, and 50% to
our general partner.
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In each case, the amount of the target distribution set forth
above is exclusive of any distributions to common unitholders to
eliminate any cumulative arrearages in payment of the minimum
quarterly distribution. The percentage interests set forth above
for our general partner assumes that our general partner
maintains its 2% general partner interest, that our general
partner has not transferred the incentive distribution rights
and that we do not issue additional classes of equity securities.
Percentage
Allocations of Available Cash from Operating Surplus
The following table illustrates the percentage allocations of
the additional available cash from operating surplus among the
unitholders and our general partner up to the various target
distribution levels. The amounts set forth under Marginal
Percentage Interest in Distributions are the percentage
interests of the unitholders and our general partner in any
available cash from operating surplus we distribute up to and
including the corresponding amount in the column Total
Quarterly Distribution Target Amount, until available cash
from operating surplus we distribute reaches the next target
distribution level, if any. The percentage interests shown for
the unitholders and our general partner for the minimum
quarterly distribution are also applicable to quarterly
distribution amounts that are less than the minimum quarterly
distribution. The percentage interests set forth below for our
general partner include its 2% general partner interest and
assume our general partner has contributed additional capital to
maintain its 2% general partner interest, that our general
partner has not transferred the incentive distribution rights
and that we do not issue additional classes of equity securities.
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Marginal Percentage
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Total Quarterly
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Interest in Distributions
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Distribution Target Amount
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Unitholders
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General Partner
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Minimum Quarterly Distribution
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$0.3500
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98
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%
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2
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%
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First Target Distribution
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up to $0.4025
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98
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%
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2
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%
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Second Target Distribution
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above $0.4025 up to $0.4375
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85
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%
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15
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%
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Third Target Distribution
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above $0.4375 up to $0.5250
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75
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%
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25
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%
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Thereafter
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above $0.5250
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50
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%
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50
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%
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Distributions
from Capital Surplus
How
Distributions from Capital Surplus Will Be Made
We will make distributions of available cash from capital
surplus, if any, in the following manner:
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first, 98% to all unitholders, pro rata, and 2% to our
general partner, until we distribute for each common unit that
was issued in our initial public offering, an amount of
available cash from capital surplus equal to the initial public
offering price;
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second, 98% to the common unitholders, pro rata, and 2%
to our general partner, until we distribute for each common
unit, an amount of available cash from capital surplus equal to
any unpaid arrearages in payment of the minimum quarterly
distribution on the common units; and
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thereafter, we will make all distributions of available
cash from capital surplus as if they were from operating surplus.
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The preceding discussion is based on the assumption that our
general partner maintains its 2% general partner interest and
that we do not issue additional classes of equity securities.
Effect
of a Distribution from Capital Surplus
The 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. The
initial public offering price less any distributions of capital
surplus per unit is referred to as the unrecovered initial
unit price. Each time a distribution of capital surplus is
made, the minimum quarterly distribution and the target
distribution levels will be reduced in the same proportion as
the corresponding reduction in the unrecovered initial unit
price. Because distributions of capital surplus will reduce the
minimum quarterly distribution, after any of these distributions
are made it may be easier for our general partner to receive
incentive distributions and for the subordinated units to
convert into common units. However, any distribution of capital
surplus before the unrecovered initial unit price is reduced to
zero cannot be applied to the payment of the minimum quarterly
distribution or any arrearages.
Once we distribute capital surplus on a unit in an amount equal
to the initial unit price, we will reduce the minimum quarterly
distribution and the target distribution levels to zero. We will
then make all future distributions from operating surplus, with
50% being paid to the holders of units and 50% to our general
partner. The percentage interests shown for our general partner
assume that our general partner maintains its 2% general partner
interest, that our general partner has not transferred the
incentive distribution rights and that we do not issue
additional classes of equity securities.
Adjustment
to the Minimum Quarterly Distribution and Target Distribution
Levels
In addition to adjusting the minimum quarterly distribution and
target distribution levels to reflect a distribution of capital
surplus, if we combine our units into fewer units or subdivide
our units into a greater number of units, we will
proportionately adjust:
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the minimum quarterly distribution;
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the target distribution levels;
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the unrecovered initial unit price; and
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the number of common units into which a subordinated unit is
convertible.
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For example, if a
two-for-one
split of the common units should occur, the minimum quarterly
distribution, the target distribution levels and the unrecovered
initial unit price would each be reduced to 50% of its initial
level and each subordinated unit would be convertible into two
common units. We will not make any adjustment by reason of the
issuance of additional units for cash or property.
In addition, if legislation is enacted or if existing law is
modified or interpreted by a governmental taxing authority so
that we become taxable as a corporation or otherwise subject to
taxation as an entity for federal, state or local income tax
purposes, we will reduce the minimum quarterly distribution and
the target distribution levels for each quarter by multiplying
each distribution level by a fraction, the numerator of which is
available cash for that quarter and the denominator of which is
the sum of available cash for that quarter plus our general
partners estimate of our aggregate liability for the
quarter for such income taxes payable by reason of such
legislation or interpretation. To the extent that the actual tax
liability differs from the estimated tax liability for any
quarter, the difference will be accounted for in subsequent
quarters.
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Distributions
of Cash Upon Liquidation
Overview
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 our general partner, in
accordance with their capital account balances, as adjusted to
reflect any gain or loss upon the sale or other disposition of
our assets in liquidation.
The allocations of gain and loss upon liquidation are intended,
to the extent possible, to entitle the holders of outstanding
common units to a preference over the holders of outstanding
subordinated units upon our liquidation, to the extent required
to permit common unitholders to receive their unrecovered
initial unit price plus the minimum quarterly distribution for
the quarter during which liquidation occurs plus any unpaid
arrearages in payment of the minimum quarterly distribution on
the common units. However, there may not be sufficient gain upon
our liquidation to enable the holders of common units to fully
recover all of these amounts, even though there may be cash
available to pay distributions to the holders of subordinated
units. Any further net gain recognized upon liquidation will be
allocated in a manner that takes into account the incentive
distribution rights of our general partner.
Manner
of Adjustments for Gain
The manner of the adjustment for gain is set forth in the
partnership agreement. If our liquidation occurs before the end
of the subordination period, we will allocate any gain to the
partners in the following manner:
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first, to our general partner and the holders of units
who have negative balances in their capital accounts to the
extent of and in proportion to those negative balances;
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second, 98% to the common unitholders, pro rata, and 2%
to our general partner, until the capital account for each
common unit is equal to the sum of:
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(1) the unrecovered initial unit price for that common unit;
(2) the amount of the minimum quarterly distribution for
the quarter during which our liquidation occurs; and
(3) any unpaid arrearages in payment of the minimum
quarterly distribution;
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third, 98% to the subordinated unitholders, pro rata, and
2% to our general partner until the capital account for each
subordinated unit is equal to the sum of:
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(1) the unrecovered initial unit price for that
subordinated unit; and
(2) the amount of the minimum quarterly distribution for
the quarter during which our liquidation occurs;
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fourth, 98% to all unitholders, pro rata, and 2% to our
general partner, until we allocate under this paragraph an
amount per unit equal to:
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(1) the sum of the excess of the first target distribution
per unit over the minimum quarterly distribution per unit for
each quarter of our existence; less
(2) the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the minimum
quarterly distribution per unit that we distributed 98% to the
unitholders, pro rata, and 2% to our general partner, for each
quarter of our existence;
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fifth, 85% to all unitholders, pro rata, and 15% to our
general partner, until we allocate under this paragraph an
amount per unit equal to:
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(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
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(2) the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the first
target distribution per unit that we distributed 85% to the
unitholders, pro rata, and 15% to our general partner for each
quarter of our existence;
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sixth, 75% to all unitholders, pro rata, and 25% to our
general partner, until we allocate under this paragraph an
amount per unit equal to:
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(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 of
available cash from operating surplus in excess of the second
target distribution per unit that we distributed 75% to the
unitholders, pro rata, and 25% to our general partner for each
quarter of our existence; and
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thereafter, 50% to all unitholders, pro rata, and 50% to
our general partner.
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The percentage interests set forth above for our general partner
assume that our general partner maintains its 2% general partner
interest, that our general partner has not transferred the
incentive distribution rights and that we do not issue
additional classes of equity securities.
If the liquidation occurs after the end of the subordination
period, the distinction between common units and subordinated
units will disappear, so that clause (3) of the second
bullet point above and all of the third bullet point above will
no longer be applicable.
Manner
of Adjustments for Losses
If our liquidation occurs before the end of the subordination
period, we will generally allocate any loss to our general
partner and the unitholders in the following manner:
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first, 98% to holders of subordinated units in proportion
to the positive balances in their capital accounts and 2% to our
general partner, until the capital accounts of the subordinated
unitholders have been reduced to zero;
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second, 98% to the holders of common units in proportion
to the positive balances in their capital accounts and 2% to our
general partner, until the capital accounts of the common
unitholders have been reduced to zero; and
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thereafter, 100% to our general partner.
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The percentage interests set forth above for our general partner
assume that our general partner maintains its 2% general partner
interest, that our general partner has not transferred the
incentive distribution rights and that we do not issue
additional classes of equity securities.
If the liquidation occurs after the end of the subordination
period, the distinction between common units and subordinated
units will disappear, so that all of the first bullet point
above will no longer be applicable.
Adjustments
to Capital Accounts
We will make adjustments to capital accounts upon the issuance
of additional units. In doing so, we will allocate any
unrealized and, for tax purposes, unrecognized gain or loss
resulting from the adjustments to the unitholders and our
general partner in the same manner as we allocate gain or loss
upon liquidation. In the event that we make positive adjustments
to the capital accounts upon the issuance of additional units,
we will allocate any later negative adjustments to the capital
accounts resulting from the issuance of additional units or upon
our liquidation in a manner which results, to the extent
possible, in our general partners capital account balances
equaling the amount which they would have been if no earlier
positive adjustments to the capital accounts had been made.
18
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 Williams, 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 its owners. At the
same time, our general partner has a fiduciary duty to manage us
in a manner beneficial to us and our unitholders. Our
partnership agreement contains provisions that modify and limit
our general partners fiduciary duties to the unitholders.
Our partnership agreement also restricts the remedies available
to unitholders for actions taken that, without those
limitations, might constitute breaches of fiduciary duty.
Whenever a conflict arises between our general partner or its
affiliates, on the one hand, and us or any other partner, on the
other, our general partner will resolve that conflict. Our
general partner may, but is not required to, seek the approval
of such resolution from the conflicts committee of the board of
directors of our general partner. An independent third party is
not required to evaluate the fairness of the resolution.
Our general partner will not be in breach of its obligations
under the partnership agreement or its duties to us or our
unitholders if the resolution of the conflict is:
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approved by the conflicts committee, although our general
partner is not obligated to seek such approval;
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approved by the vote of a majority of the outstanding common
units, excluding any common units owned by our general partner
or any of its affiliates;
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on terms no less favorable to us than those generally being
provided to or available from unrelated third parties; or
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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.
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If our general partner does not seek approval from the conflicts
committee and the board of directors of our general partner
determines that the resolution or course of action taken with
respect to the conflict of interest satisfies either of the
standards set forth in the third and fourth bullet points above,
then it will be presumed that, in making its decision, the board
of directors 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. Unless the resolution of
a conflict is specifically provided for in our partnership
agreement, our general partner or the conflicts committee may
consider any factors it determines in good faith to consider
when resolving a conflict. When our partnership agreement
requires someone to act in good faith, it requires that person
to reasonably believe that he is acting in the best interests of
the partnership, unless the context otherwise requires.
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 or accelerate the
right to convert subordinated units.
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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cash expenditures;
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borrowings;
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issuance of additional units; and
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the creation, reduction or increase of reserves in any quarter.
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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:
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enabling our general partner or its affiliates to receive
distributions on any subordinated units held by them or the
incentive distribution rights; or
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hastening the expiration of the subordination period.
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For example, in the event we have not generated sufficient cash
from our operations to pay the minimum quarterly distribution on
our common units and our subordinated units, our partnership
agreement permits us to borrow funds, which would enable us to
make this distribution on all outstanding units. Please read
How We Make Cash Distributions Subordination
Period.
Our partnership agreement provides that we and our subsidiaries
may borrow funds from our general partner and its affiliates.
Our general partner and its affiliates may not borrow funds from
us, our operating company, or its operating subsidiaries.
Neither
our partnership agreement nor any other agreement requires
Williams to pursue a business strategy that favors us or
utilizes our assets or dictates what markets to pursue or grow.
Williams directors and officers have a fiduciary duty to
make these decisions in the best interests of the stockholders
of Williams, which may be contrary to our
interests.
Because the officers and certain of the directors of our general
partner are also directors
and/or
officers of Williams, such directors and officers have fiduciary
duties to Williams that may cause them to pursue business
strategies that disproportionately benefit Williams 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 Williams, in resolving conflicts
of interest.
Our partnership agreement contains provisions that reduce the
standards to which our general partner would otherwise be held
by state fiduciary duty law. 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 limited call right, its voting rights with respect to the
units it owns, its registration rights and its determination
whether or not to consent to any merger or consolidation of the
partnership.
Our
general partner has limited its liability and reduced its
fiduciary duties, and has also restricted 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:
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provides that the 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 it
believed that the decision was in the best interests of our
partnership;
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generally provides that affiliated transactions and resolutions
of conflicts of interest not approved by the conflicts committee
of the board of directors of our general partner and not
involving a vote of unitholders must be on terms no less
favorable to us than those generally being provided to or
available from unrelated third parties or be fair and
reasonable to us, as determined by the general partner in
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good faith, and that, in determining whether a transaction or
resolution is fair and reasonable, our general
partner may consider the totality of the relationships between
the parties involved, including other transactions that may be
particularly advantageous or beneficial to us; and
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provides that our general partner and its officers and directors
will not be liable for monetary damages to us, 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 engaged in fraud or willful
misconduct.
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We do
not have any officers or employees and rely solely on officers
and employees of our general partner and its
affiliates.
Affiliates of our general partner conduct businesses and
activities of their own in which we have no economic interest.
If these separate activities are significantly greater than our
activities, there could be material competition for the time and
effort of the officers and employees who provide services to
general partner. The officers of general partner are not
required to work full time on our affairs. These officers are
required to devote time to the affairs of Williams or its
affiliates and are compensated by them for the services rendered
to them.
Certain
of our officers are not required to devote their full time to
our business.
All of the senior officers of our general partner are also
senior officers of Williams and spend sufficient amounts of
their time overseeing the management, operations, corporate
development and future acquisition initiatives of our business.
Alan Armstrong, the chief operating officer of our general
partner, is the principal executive responsible for the
oversight of our affairs. Our non-executive directors devote as
much time as is necessary to prepare for and attend board of
directors and committee meetings.
We
reimburse our general partner and its affiliates for
expenses.
We reimburse our general partner and its affiliates for costs
incurred in managing and operating us, including costs incurred
in rendering corporate staff and support services to us. Our
partnership agreement provides that our general partner will
determine the expenses that are allocable to us in good faith.
Our
general partner intends to limit its liability regarding our
obligations.
Our general partner intends to limit its liability under
contractual arrangements so that the other party has recourse
only to our assets and not against our general partner or its
assets or any affiliate of our general partner or its assets.
Our partnership agreement provides that any action taken by our
general partner to limit its or our liability is not a breach of
our general partners fiduciary duties, even if we could
have obtained terms that are more favorable without the
limitation on liability.
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
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partnership agreement generally provides that any affiliated
transaction, such as an agreement, contract or arrangement
between us and our general partner and its affiliates, must be:
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on terms no less favorable to us than those generally being
provided to or available from unrelated third parties; or
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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).
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Our general partner determines, in good faith, the terms of any
of these transactions.
Our general partner and its affiliates have no obligation to
permit us to use any facilities or assets of our general partner
and its affiliates, except as may be provided in contracts
entered into specifically dealing with that use. Our general
partner may also enter into additional contractual arrangements
with any of its affiliates on our behalf. There is no obligation
of our general partner and its affiliates to enter into any
contracts of this kind.
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 or with respect to which our
general partner has sought conflicts committee approval, on such
terms as it determines to be necessary or appropriate to conduct
our business including, but not limited to, the following:
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the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness, including indebtedness that is convertible into
securities of the partnership, and the incurring of any other
obligations;
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the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies
having jurisdiction over our business or assets;
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the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of our assets or the
merger or other combination of us with or into another person;
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the negotiation, execution and performance of any contracts,
conveyances or other instruments;
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the distribution of partnership cash;
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the selection and dismissal of employees and agents, outside
attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of
employment or hiring;
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the maintenance of insurance for our benefit and the benefit of
our partners;
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the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further
limited or general partnerships, joint ventures, corporations,
limited liability companies or other relationships;
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the control of any matters affecting our rights and obligations,
including the bringing and defending of actions at law or in
equity and otherwise engaging in the conduct of litigation,
arbitration or mediation and the incurring of legal expense and
the settlement of claims and litigation;
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the indemnification of any person against liabilities and
contingencies to the extent permitted by law;
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the purchase, sale or other acquisition or disposition of our
securities, or the issuance of additional options, rights,
warrants and appreciation rights relating to our
securities; and
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the entering into of agreements with any of its affiliates to
render services to us or to itself in the discharge of its
duties as our general partner.
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Please read The Partnership Agreement Voting
Rights for information regarding the voting rights of
unitholders.
Common
units are subject to our general partners limited call
right.
Our general partner may exercise its right to call and purchase
common units as provided in the partnership agreement or assign
this right to one of its affiliates or to us. 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 Agreement Limited Call
Right.
We may
not choose to retain separate counsel for ourselves or for the
holders of common units.
The attorneys, independent accountants and others who perform
services for us have been 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 and may perform services for our general
partner and its affiliates. We may retain separate counsel for
ourselves or the holders of common units 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. We
do not intend to do so in most cases.
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 activities 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. Williams may acquire,
construct or dispose of midstream or other 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 the general partner and its affiliates. As a
result, neither the general partner nor any of its affiliates
have any obligation to present business opportunities to us.
Fiduciary
Duties
Our general partner is accountable to us and our unitholders as
a fiduciary. Fiduciary duties owed to unitholders by our general
partner are prescribed by law and the partnership agreement. The
Delaware Revised Uniform Limited Partnership Act, which we refer
to as the Delaware Act, provides that Delaware limited
partnerships may, in their partnership agreements, expand,
restrict or eliminate the fiduciary duties otherwise owed by a
general partner to limited partners and the partnership.
Our partnership agreement contains various provisions modifying
and restricting 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 would be prohibited by
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 fiduciary duties to manage our general partner in a
manner beneficial both to its owner, Williams, as well as to
you. Without these modifications, the general partners
ability to make decisions involving conflicts of interests would
be restricted. The modifications to the fiduciary standards
benefit our general partner by enabling it to take into
consideration all parties involved in the proposed action. These
modifications also strengthen the ability of our general partner
to attract and retain experienced and capable directors. These
modifications represent a detriment to the common unitholders
because they restrict the remedies available to unitholders for
actions that, without those limitations, might constitute
breaches of fiduciary duty, as described below and permit our
general partner to take into account the interests of third
parties in addition to our interests when resolving conflicted
interests. The following is a summary of:
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the fiduciary duties imposed on our general partner by the
Delaware Act;
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material modifications of these duties contained in our
partnership agreement; and
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certain rights and remedies of unitholders contained in the
Delaware Act.
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State law fiduciary duty standards |
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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 prohibit a general partner
of a Delaware limited partnership from taking any action or
engaging in any transaction where a conflict of interest is
present. |
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Partnership agreement modified standards |
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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,
Section 7.9 of 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 reduce the obligations to which our general partner
would otherwise be held. |
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Our partnership agreement generally provides that affiliated
transactions and resolutions of conflicts of interest not
involving a vote of unitholders and that are not approved by the
conflicts committee of the board of directors of our general
partner must be: |
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on terms no less favorable to us than those
generally being provided to or available from unrelated third
parties; or
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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). |
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If our general partner does not seek approval from the conflicts
committee and the board of directors of our general partner
determines that the resolution or course of action taken with
respect to the conflict of interest satisfies either of the
standards set forth in the bullet points above, then it will be
presumed that, in making its decision, the board of directors,
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 reduce
the obligations to which our general partner would otherwise be
held. |
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In addition to the other more specific provisions limiting the
obligations of our general partner, our partnership agreement
further provides that our general partner, its affiliates and
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directors will not be liable for monetary damages to us, our
limited partners for errors of judgment or for any acts or
omissions unless there has been a final and non-appealable
judgment by a court of competent jurisdiction determining that
our general partner or its officers and directors acted in bad
faith or engaged in fraud or willful misconduct. |
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Rights and remedies of unitholders |
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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 fiduciary
duties or of the 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 fiduciary duties to
the limited partners. |
In order to become one of our limited partners, a common
unitholder is required to agree to be bound by the provisions in
the partnership agreement, including the provisions discussed
above. Please read Description of the Common
Units Transfer of Common Units. 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
our partnership agreement does not render the partnership
agreement unenforceable against that person.
Under the partnership agreement, we must indemnify our general
partner and its officers, directors and managers, 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 or engaged in
fraud or willful misconduct. We also must provide this
indemnification for criminal proceedings unless our general
partner or these other persons acted with knowledge that their
conduct was unlawful. Thus, our general partner could be
indemnified for its negligent acts if it meets the requirements
set forth above. To the extent that these provisions purport to
include indemnification for liabilities arising under the
Securities Act, in the opinion of the Securities and Exchange
Commission such indemnification is contrary to public policy and
therefore unenforceable. If you have questions regarding the
fiduciary duties of our general partner please read The
Partnership Agreement Indemnification.
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THE
PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our
partnership agreement. Our partnership agreement is incorporated
by reference as an exhibit to the registration statement of
which this prospectus constitutes a part. We will provide
prospective investors with a copy of this agreement upon request
at no charge.
We summarize the following provisions of our partnership
agreement elsewhere in this prospectus:
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with regard to distributions of available cash, please read
How We Make Cash Distributions;
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with regard to the transfer of common units, please read
Description of the Common Units Transfer of
Common Units; and
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with regard to allocations of taxable income and taxable loss,
please read Material Tax Considerations.
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Organization
and Duration
We were organized on February 28, 2005 and have a perpetual
existence.
Purpose
Our purpose under the partnership agreement is limited to
serving as the sole member of our operating company and engaging
in any business activities that may be engaged in by our
operating company and its subsidiaries or that are approved by
our general partner. The limited liability company agreement of
our operating company provides that it may, directly or
indirectly, engage in:
(1) its operations as conducted immediately before our
initial public offering;
(2) any other activity approved by our general partner but
only to the extent that our general partner determines that, as
of the date of the acquisition or commencement of the activity,
the activity generates qualifying income as this
term is defined in Section 7704 of the Internal Revenue
Code; or
(3) any activity that enhances the operations of an
activity that is described in (1) or (2) above.
Although our general partner has the ability to cause us, our
operating company or its subsidiaries to engage in activities
other than gathering, transporting and processing natural gas
and the fractionating and storing of NGLs, our general partner
has no current plans to do so 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. Our general partner is
authorized in general to perform all acts it determines to be
necessary or appropriate to carry out our purposes and to
conduct our business.
Power of
Attorney
Each limited partner and each person who acquires a unit from a
unitholder, by accepting the common unit, automatically grants
to our general partner and, if appointed, a liquidator, a power
of attorney to, among other things, execute and file documents
required for our qualification, continuance or dissolution. The
power of attorney also grants our general partner the authority
to amend, and to make consents and waivers under, our
partnership agreement. Please read Amendment
of the Partnership Agreement below.
Capital
Contributions
Unitholders are not obligated to make additional capital
contributions, except as described below under
Limited Liability.
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Limited
Liability
Participation
in the Control of Our Partnership
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
our partnership agreement, his liability under the Delaware Act
will be limited, subject to possible exceptions, to the amount
of capital he is obligated to contribute to us for his common
units plus his share of any undistributed profits and assets. If
it were determined, however, that the right, or exercise of the
right, by the limited partners as a group:
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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;
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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 who reasonably believe that the limited partner
is a general partner. Neither our partnership agreement nor the
Delaware Act specifically provides for legal recourse against
our general partner if a limited partner were to lose limited
liability through any fault of our general partner. While this
does not mean that a limited partner could not seek legal
recourse, we know of no precedent for such a claim in Delaware
case law.
Unlawful
Partnership Distribution
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.
Under the Delaware Act, a substituted limited partner of a
limited partnership is liable for the obligations of his
assignor to make contributions to the partnership, except that
such person is not obligated for liabilities unknown to him at
the time he became a limited partner and that could not be
ascertained from the partnership agreement.
Failure
to Comply with the Limited Liability Provisions of Jurisdictions
in Which We Do Business
Our subsidiaries may be deemed to conduct business in Kansas,
Louisiana, Alabama, Colorado and New Mexico. Our subsidiaries
may conduct business in other states in the future. Maintenance
of our limited liability may require compliance with legal
requirements in the jurisdictions in which the operating company
conducts business, including qualifying our subsidiaries to do
business there. Limitations on the liability of limited partners
for the obligations of a limited partnership have not been
clearly established in many jurisdictions. If, by virtue of our
membership interest in our operating company or otherwise, it
were determined that we were conducting business in any state
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 the
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.
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Voting
Rights
The following matters require the unitholder vote specified
below. Matters requiring the approval of a unit
majority require:
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during the subordination period, the approval of a majority of
the common units, excluding those common units held by our
general partner and its affiliates, and a majority of the
subordinated units, voting as separate classes; and
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after the subordination period, the approval of a majority of
the common units.
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In voting their common and subordinated units, our general
partner and its affiliates 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 and the limited
partners.
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Issuance of additional units |
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No approval right. |
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Amendment of the partnership agreement |
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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 |
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Unit majority. Please read Merger, Sale or
Other Disposition of Assets. |
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Amendment of the limited liability company agreement of the
operating company and other action taken by us as the sole
member of our operating company |
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Unit majority if such amendment or other action would adversely
affect our limited partners (or any particular class of limited
partners) in any material respect. Please read
Amendment of the Partnership
Agreement Action Relating to the Operating
Company. |
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Dissolution of our partnership |
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Unit majority. Please read Termination and
Dissolution. |
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Continuation of our partnership upon dissolution |
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Unit majority. Please read Termination and
Dissolution. |
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Withdrawal of our general partner |
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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 June 30, 2015 in a manner which
would cause a dissolution of our partnership. Please read
Withdrawal or Removal of Our General
Partner. |
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Removal of our general partner |
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Not less than
662/3%
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. |
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Transfer of the general partner interest |
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Our general partner may transfer all, but not less than all, of
the general partner interest in us without a vote of our
unitholders to an affiliate or another person in connection with
its merger or consolidation with or into, or sale of all or
substantially all of its assets to, such person. The approval of
a majority of the common units, excluding common units held by
our general partner and its |
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affiliates, is required in other circumstances for a transfer of
the general partner interest to a third party prior to
June 30, 2015. Please read Transfer of
General Partner Interest. |
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Transfer of incentive distribution rights |
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Except for transfers to an affiliate or another person as part
of our general partners merger or consolidation with or
into, or sale of all or substantially all of its assets to, or
sale of all or substantially all of its equity interest to, such
person, the approval of a majority of the common units,
excluding common units held by our general partner and its
affiliates, is required in most circumstances for a transfer of
the incentive distribution rights to a third party prior to
June 30, 2015. Please read Transfer of
Incentive Distribution Rights. |
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Transfer of ownership interests in our general partner |
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No approval required at any time. Please read
Transfer of Ownership Interests in Our
General Partner. |
Issuance
of Additional Securities
Our partnership agreement authorizes us to issue an unlimited
number of additional partnership securities and rights to buy
partnership securities, subject to the limitations imposed by
the New York Stock Exchange, 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, subordinated units or other
equity securities. Holders of any additional common units we
issue will be entitled to share equally with the then-existing
holders of common units in our distributions of available cash.
In addition, the issuance of additional partnership interests
may dilute the value of the interests of the then-existing
holders of common units in our net assets.
In accordance with Delaware law and the provisions of our
partnership agreement, we may also issue additional partnership
securities that, as determined by our general partner, may have
special voting rights to which the common units are not
entitled. In addition, our partnership agreement does not
prohibit the issuance by our subsidiaries of equity securities,
which may effectively rank senior to our common units.
Upon issuance of additional partnership securities, our general
partner will have the right, but not the obligation, to make
additional capital contributions to the extent necessary to
maintain its 2% general partner interest in us. Our general
partners 2% interest in us will be reduced if we issue
additional units in the future and our general partner does not
contribute a proportionate amount of capital to us to maintain
its 2% general partner interest. Moreover, our general partner
will have the right, which it may from time to time assign in
whole or in part to any of its affiliates, to purchase common
units, subordinated units or other equity securities whenever,
and on the same terms that, we issue those securities to persons
other than our general partner and its affiliates, to the extent
necessary to maintain its and its affiliates percentage
interest, including its interest represented by common units and
subordinated units, that existed immediately prior to each
issuance. The holders of common units will not have preemptive
rights to acquire additional common units or other partnership
securities.
Amendment
of the Partnership Agreement
General
Amendments to our partnership agreement may be proposed only by
or with the consent of 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
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amendment, other than the amendments discussed below, our
general partner must seek written approval of the holders of the
number of units required to approve the amendment or 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:
(1) enlarge the obligations of any limited partner without
its consent, unless approved by at least a majority of the type
or class of limited partner interests so affected; or
(2) enlarge the obligations of, restrict 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 may be given or withheld at its
option.
The provision of our partnership agreement preventing the
amendments having the effects described in clauses (1) or
(2) above can be amended upon the approval of the holders
of at least 90% of the outstanding units voting together as a
single class (including units owned by our general partner and
its affiliates). As of September 1, 2006, our general
partner and its affiliates owned approximately 38.2% of the
outstanding units.
No
Unitholder Approval
Our general partner may generally make amendments to our
partnership agreement without the approval of any limited
partner to reflect:
(1) a change in our name, the location of our principal
place of business, our registered agent or our registered office;
(2) the admission, substitution, withdrawal or removal of
partners in accordance with our partnership agreement;
(3) a change that our general partner determines to be
necessary or appropriate for us to qualify or to continue our
qualification as a limited partnership or a partnership in which
the limited partners have limited liability under the laws of
any state or to ensure that neither we, the operating company
nor its subsidiaries will be treated as an association taxable
as a corporation or otherwise taxed as an entity for federal
income tax purposes;
(4) 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 Advisors Act of 1940 or plan asset
regulations adopted under ERISA whether or not substantially
similar to plan asset regulations currently applied or proposed;
(5) subject to the limitations on the issuance of
additional partnership securities described above, an amendment
that our general partner determines to be necessary or
appropriate for the authorization of additional partnership
securities or rights to acquire partnership securities;
(6) any amendment expressly permitted in our partnership
agreement to be made by our general partner acting alone;
(7) an amendment effected, necessitated or contemplated by
a merger agreement that has been approved under the terms of our
partnership agreement;
(8) 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;
(9) a change in our fiscal year or taxable year and related
changes;
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(10) certain mergers or conveyances as set forth in our
partnership agreement; or
(11) any other amendments substantially similar to any of
the matters described in clauses (1) through
(10) 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 (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; or
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are required to effect the intent of the provisions of the
partnership agreement or are otherwise contemplated by our
partnership agreement.
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Opinion
of Counsel and Unitholder Approval
Our general partner will not be required to obtain an opinion of
counsel that an amendment will not result in a loss of limited
liability to the limited partners or result in our being taxed
as an entity for federal income tax purposes in connection with
any of the amendments described above under No
Unitholder Approval. No other amendments to our
partnership agreement will become effective without the approval
of holders of at least 90% of the outstanding units voting as a
single class unless we 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.
In addition to the above restrictions, 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 reduces the voting percentage required to take
any action must be approved by the affirmative vote of limited
partners whose aggregate outstanding units constitute not less
than the voting requirement sought to be reduced.
Action
Relating to the Operating Company
Without the approval of the holders of units representing a unit
majority, our general partner is prohibited from consenting on
our behalf, as the sole member of the operating company, to any
amendment to the limited liability company agreement of the
operating company or taking any action on our behalf permitted
to be taken by a member of the operating company, in each case,
that would adversely affect our limited partners (or any
particular class of limited partners) in any material respect.
Merger,
Sale or Other Disposition of Assets
A merger or consolidation of us requires the consent of our
general partner. However, our general partner will have no duty
or obligation to consent to any merger or consolidation 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 addition, the partnership agreement generally
prohibits our general partner, without the prior approval of the
holders of units representing a unit majority, from causing us
to, among other things, 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, or approving on our behalf
the sale, exchange or other disposition of all or substantially
all of the assets of our
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subsidiaries. Our general partner may, however, mortgage,
pledge, hypothecate or grant a security interest in all or
substantially all of our assets without that approval. Our
general partner may also sell all or substantially all of our
assets under a foreclosure or other realization upon those
encumbrances without that approval. Finally, our general partner
may consummate any merger or consolidation without the prior
approval of our unitholders if our general partner has received
an opinion of counsel that the merger or consolidation, as the
case may be, would not result in the loss of the limited
liability of to the limited partners or result in our being
taxed as an entity for federal income tax purposes, we are the
surviving entity in the transaction, the transaction would not
result in an amendment to our partnership agreement that the
could not otherwise be adopted solely by our general partner,
each of our units will be an identical unit of our partnership
following the transaction, and the units to be issued do not
exceed 20% of our outstanding units 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 some or all of our
assets to, a newly formed entity if the sole purpose of that
merger or conveyance is to effect a mere change in our legal
form into another limited liability entity. The 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 transaction or event.
Termination
and Dissolution
We will continue as a limited partnership until terminated under
our partnership agreement. We will dissolve upon:
(1) the election of our general partner to dissolve us, if
approved by the holders of units representing a unit majority;
(2) the entry of a decree of judicial dissolution of our
partnership;
(3) 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
withdrawal or removal following approval and admission of a
successor; or
(4) there being no limited partners, unless we are
continued without dissolution in accordance with applicable
Delaware law.
Upon a dissolution under clause (3) 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 the 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 of
any limited partner; and
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none of our partnership, our operating company nor any of our
other subsidiaries would be treated as an association taxable as
a corporation or otherwise be taxable as an entity for federal
income tax purposes upon the exercise of that right to continue.
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Liquidation
and Distribution of Proceeds
Upon our dissolution, unless we are reconstituted and continued
as a new limited partnership, 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
How We Make Cash Distributions Distributions
of Cash Upon Liquidation. The liquidator may defer
liquidation or distribution of our assets for a reasonable
period at time or distribute assets to partners in kind if it
determines that a sale would be impractical or would cause undue
loss to the partners.
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Withdrawal
or Removal of Our General Partner
Except as described below, our general partner has agreed not to
withdraw voluntarily as the general partner of our partnership
prior to June 30, 2015 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 June 30,
2015, 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 in some instances 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 and Transfer of
Incentive Distribution Rights below.
Upon the 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 majority of the outstanding common units
and subordinated units, voting as separate classes, may select 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 of time 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
Termination and Dissolution.
Our general partner may not be removed unless that removal is
approved by the vote of the holders of not less than
662/3%
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 the holders of a majority of the outstanding common
units and subordinated units, voting as separate classes. The
ownership of more than
331/3%
of the outstanding units by our general partner and its
affiliates would give them the practical ability to prevent the
general partners removal. As of September 1, 2006,
our general partner and its affiliates owned approximately 38.2%
of the outstanding units.
Our partnership agreement also provides that if our general
partner is removed as our general partner under circumstances
where cause does not exist and units held by our general partner
and its affiliates are not voted in favor of that removal:
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the subordination period will end and all outstanding
subordinated units will immediately convert into common units on
a
one-for-one
basis;
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any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished; and
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our general partner will have the right to convert its general
partner interest and its incentive distribution rights into
common units or to receive cash in exchange for those interests
based on the fair market value of the interests at the time.
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In the event of removal of a general partner under circumstances
where cause exists or withdrawal of a 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 partner for a cash payment equal to the fair
market value of those interests. Under all other circumstances
where a 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 of the departing general partner and its
incentive distribution rights for their 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
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market value. Or, 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, the
departing general partners general partner interest and
its 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 the departing general
partner, including, without limitation, all employee-related
liabilities, including severance liabilities, incurred for the
termination of any employees employed by the departing general
partner or its affiliates for our benefit.
Transfer
of General Partner Interest
Except for transfer by our general partner of all, but not less
than all, of its general partner interest in us to:
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an affiliate of our general partner (other than an
individual); or
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another entity as part of the merger or consolidation of our
general partner with or into another entity or the transfer by
our general partner of all or substantially all of its assets to
another entity,
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our general partner may not transfer all or any part of its
general partner interest in us to another person prior to
June 30, 2015 without 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. 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.
Our general partner and its affiliates may at any time transfer
units to one or more persons, without unitholder approval,
except that they may not transfer subordinated units to us.
Transfer
of Incentive Distribution Rights
Our general partner or its affiliates or a subsequent holder may
transfer its incentive distribution rights to an affiliate of
the holder (other than an individual) or another entity as part
of the merger or consolidation of such holder with or into
another entity, the sale of all the ownership interests in the
holder or the sale of all or substantially all of its assets to,
that entity without the prior approval of the unitholders. Prior
to June 30, 2015, other transfers of the incentive
distribution rights will require the affirmative vote of holders
of a majority of the outstanding common units (excluding common
units held by our general partner and its affiliates). On or
after June 30, 2015, the incentive distribution rights will
be freely transferable.
Transfer
of Ownership Interests in Our General Partner
At any time, the members of our general partner may sell or
transfer all or part of their membership interests in our
general partner to an affiliate or a third party without the
approval of our unitholders.
Change of
Management Provisions
Our partnership agreement contains specific provisions that are
intended to discourage a person or group from attempting to
remove Williams Partners GP LLC as our general partner or
otherwise change our management. 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 to any person or group that
acquires the units from our general
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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 prior approval of the board of
directors of our general partner.
Our partnership agreement also provides that if our general
partner is removed under circumstances where cause does not
exist and units held by our general partner and its affiliates
are not voted in favor of that removal:
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the subordination period will end and all outstanding
subordinated units will immediately convert into common units on
a
one-for-one
basis;
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any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished; and
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our general partner will have the right to convert its general
partner interest and its incentive distribution rights into
common units or to receive cash in exchange for those interests.
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Limited
Call Right
If at any time our general partner and its affiliates hold more
than 80% of the then-issued and outstanding partnership
securities of any class, our general partner will have the
right, but not the obligation, which it may assign in whole or
in part to any of its affiliates or to us, to acquire all, but
not less than all, of the remaining partnership securities 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:
(1) the highest price paid by either of our general partner
or any of its affiliates for any partnership securities 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 partnership securities; and
(2) the current market price as of the date three days
before the date the notice is mailed.
As a result of our general partners right to purchase
outstanding partnership securities, a holder of partnership
securities may have his partnership securities purchased at an
undesirable time or price. Our partnership agreement provides
that the resolution of any conflict of interest that is fair and
reasonable will not be a breach of the partnership agreement.
Our general partner may, but it is not obligated to, submit the
conflict of interest represented by the exercise of the limited
call right to the conflicts committee for approval or seek a
fairness opinion from an investment banker. If our general
partner exercises its limited call right, it will make a
determination at the time, based on the facts and circumstances,
and upon the advice of counsel, as to the appropriate method of
determining the fairness and reasonableness of the transaction.
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 limited 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. If our general partner
exercised its limited call right, the effect would be to take us
private and, if the units were subsequently deregistered, we
would no longer be subject to the reporting requirements of the
Exchange Act.
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 Tax
Considerations Disposition of Common Units.
Meetings;
Voting
Except as described below regarding a person or group owning 20%
or more of any class of units then outstanding, unitholders who
are record holders of units on the record date will be entitled
to notice of, and to vote at, meetings of our limited partners
and to act upon matters for which approvals may be solicited. In
the case of common units held by our general partner on behalf
of non-citizen assignees, our general partner will
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distribute the votes on those common units in the same ratios as
the votes of limited partners on other units are cast.
Our general partner does not anticipate that any meeting of
unitholders will be called in the foreseeable future. Any action
that is required or permitted to be taken by the unitholders may
be taken either at a meeting of the unitholders or without a
meeting if consents in writing describing the action so taken
are signed by holders of the number of units 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 Securities
above. 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, or a person or group who acquire units with the
prior approval of the board of 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.
Except as the partnership agreement otherwise provides,
subordinated units will vote together with common units as a
single class.
Any notice, demand, request, report or proxy material required
or permitted to be given or made to record holders of common
units under our partnership agreement will be delivered to the
record holder by us or by the transfer agent.
Status as
Limited Partner
By transfer of any 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 is reflected in our books and
records.
Except as described above under Limited
Liability above, the common units will be fully paid, and
unitholders will not be required to make additional
contributions.
Non-Citizen
Assignees; Redemption
If we are or become subject to federal, state or local laws or
regulations that, in the determination of our general partner,
create a substantial risk of cancellation or forfeiture of any
property in which we have an interest because of the
nationality, citizenship or other related status of any limited
partner we may redeem the units held by the limited partner at
their current market price, in accordance with the procedures
set forth in our partnership agreement. In order to avoid any
cancellation or forfeiture, our general partner may require each
limited partner to furnish information about his nationality,
citizenship or related status. If a limited partner or assignee
fails to furnish information about his nationality, citizenship
or other related status within 30 days after a request for
the information or our general partner determines after receipt
of the information that the limited partner is not an eligible
citizen, the limited partner may be treated as a non-citizen
assignee. A non-citizen assignee is entitled to an interest
equivalent to that of a limited partner for the right to share
in allocations and distributions from us, including liquidating
distributions. A non-citizen assignee does not have the right to
direct the voting of his units and may not receive distributions
in kind upon our liquidation.
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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:
(1) our general partner;
(2) any departing general partner;
(3) any person who is or was an affiliate of our general
partner (including Williams and its subsidiaries) or any
departing general partner;
(4) any person who is or was an officer, director, member,
partner, fiduciary or trustee of any entity described in (1),
(2) or (3) above;
(5) any person who is or was serving as an officer,
director, member, partner, fiduciary or trustee of another
person at the request of our general partner or any departing
general partner; and
(6) any person designated by our general partner.
Any indemnification under these provisions will only be out of
our assets. Unless it otherwise agrees, our general partner will
not be personally liable for, or have any obligation to
contribute or loan 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 the
partnership agreement.
Books and
Reports
Our general partner is required to keep appropriate books of our
business at our principal offices. The books are maintained for
both tax and financial reporting purposes on an accrual basis.
For tax and financial reporting purposes, our fiscal year is the
calendar year.
We will furnish or make available to record holders of common
units, within 120 days after the close of each fiscal year,
an annual report containing audited financial statements and a
report on those financial statements by our independent
registered public accounting firm or make such reports available
on the SECs Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) System. Except for our fourth quarter, we will
also furnish or make available on EDGAR summary financial
information within 90 days after the close of each quarter.
We will furnish each record holder of a unit with information
reasonably required for tax reporting purposes within
90 days after the close of each calendar year. This
information is expected to be furnished in summary form so that
some complex calculations normally required of partners can be
avoided. Our ability to furnish this summary information to
unitholders will depend on the cooperation of unitholders in
supplying us with specific information. Every unitholder will
receive information to assist him in determining his federal and
state tax liability and filing his federal and state income tax
returns, regardless of whether he supplies us with information.
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 demand stating the purpose of such
demand and at his own expense, obtain:
(1) a current list of the name and last known address of
each partner;
(2) a copy of our tax returns;
(3) information as to the amount of cash, and a description
and statement of the net agreed value of any other property or
services, contributed or to be contributed by each partner and
the date on which each became a partner;
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(4) copies of our partnership agreement, the certificate of
limited partnership of the partnership, related amendments and
powers of attorney under which they have been executed;
(5) information regarding the status of our business and
financial condition; and
(6) any other information regarding our affairs as is just
and reasonable.
Our general partner may, and intends to, keep confidential from
the limited partners trade secrets or other information the
disclosure of which our general partner believes in good faith
is not in our best interests, could damage us or our business 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, subordinated units or other partnership
securities proposed to be sold by our general partner or any of
its affiliates or their assignees if an exemption from the
registration requirements is not otherwise available. These
registration rights continue for two years following any
withdrawal or removal of Williams Partners GP LLC as our general
partner. We are obligated to pay all expenses incidental to the
registration, excluding underwriting discounts and commissions.
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DESCRIPTION
OF THE DEBT SECURITIES
The following description sets forth the general terms and
provisions that apply to the debt securities. Each prospectus
supplement will state the particular terms that will apply to
the debt securities included in the supplement. The debt
securities will be issued solely by Williams Partners L.P. or
with Williams Partners Finance Corporation as co-issuer. In the
case of debt securities that are issued by Williams Partner
L.P., references in this Description of the Debt
Securities to us, we, or
our refer only to Williams Partners L.P. and not to
any of its subsidiaries. In the case of debt securities
co-issued by Williams Partners Finance Corporation, references
in this Description of the Debt Securities to
us, we or our refer,
collectively, to Williams Partners L.P. and Williams Partners
Finance Corporation.
The debt securities will be issued pursuant to an indenture
among us, JPMorgan Chase Bank, N.A. and, if applicable,
subsidiary guarantors of such debt securities. If we offer
senior debt securities, we will issue them under a senior
indenture. If we offer subordinated debt securities, we will
issue them under a subordinated indenture containing
subordination provisions. The debt securities will be governed
by the provisions of the applicable indenture and those made
part of such indenture by reference to the Trust Indenture Act
of 1939, as amended.
The following summary of certain provisions of the debt
securities does not purport to be complete and is subject to,
and qualified in its entirety by, reference to all the
provisions of the applicable indenture, including the
definitions therein of certain terms. Wherever particular
sections or defined terms of the indenture are referred to, it
is intended that such sections or defined terms shall be
incorporated herein by reference. We urge you to read the
indentures filed as exhibits to the registration statement of
which this prospectus is a part, because those indentures, and
not this description, govern your rights as a holder of debt
securities. References in this prospectus to an
indenture refer to each of the senior indenture and
the subordinated indenture.
General
Any series of debt securities that we issue:
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will be our general obligations;
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will be the general obligations of the subsidiary guarantors of
such series, if applicable; and
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may be subordinated to our senior indebtedness.
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Neither indenture limits the aggregate principal amount of debt
securities that we may issue under that indenture. We may issue
debt securities under each indenture from time to time in
separate series, up to the aggregate amount authorized for each
such series.
We will prepare a prospectus supplement and an indenture
supplement or a resolution of the board of directors of our
general partner and accompanying officers certificate
relating to any series of debt securities that we offer, which
will include specific terms relating to some or all of the
following:
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the title and series of such debt securities;
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any limit upon the aggregate principal amount of such debt
securities of such series;
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whether such debt securities will be in global or other form;
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the date or dates and method or methods by which principal and
any premium on such debt securities is payable;
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the interest rate or rates (or method by which such rate will be
determined), if any;
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the dates on which any such interest will be payable and the
method of payment;
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whether and under what circumstances any additional amounts are
payable with respect to such debt securities;
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the notice, if any, to holders of such debt securities regarding
the determination of interest on a floating rate debt security;
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the basis upon which interest on such debt securities shall be
calculated, if other than that of a 360 day year of twelve
30-day
months;
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the place or places where the principal of and interest or
additional amounts, if any, on such debt securities will be
payable;
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any redemption or sinking fund provisions, or the terms of any
repurchase at the option of the holder of the debt securities;
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the denominations of such debt securities, if other than $1,000
and integral multiples thereof;
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any rights of the holders of such debt securities to convert the
debt securities into other securities or property;
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the terms, if any, on which payment of principal or any premium,
interest or additional amounts on such debt securities will be
payable in a currency other than U.S. dollars;
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the terms, if any, by which the amount of payments of principal
or any premium, interest or additional amounts on such debt
securities may be determined by reference to an index, formula,
financial or economic measure or other methods;
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if other than the principal amount hereof, the portion of the
principal amount of such debt securities that will be payable
upon declaration of acceleration of the maturity thereof or
provable in bankruptcy;
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any events of default or covenants in addition to or in lieu of
those described herein and remedies therefor;
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whether such debt securities will be subject to defeasance or
covenant defeasance;
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the trustee and any authenticating or paying agents, transfer
agents or registrars or any other agents with respect to such
debt securities;
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the terms, if any, on which such debt securities will be
subordinate to other debt of ours;
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whether such debt securities will be co-issued by Williams
Partners Finance Corporation;
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whether such debt securities will be guaranteed and the terms
thereof;
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whether such debt securities will be secured by collateral and
the terms of such security; and
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any other specific terms of such debt securities and any other
deletions from or additions to or modifications of the indenture
with respect to such debt securities.
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This description of debt securities will be deemed modified,
amended or supplemented by any description of any series of debt
securities set forth in a prospectus supplement related to that
series.
The prospectus supplement may also describe any material United
States federal income tax consequences or other special
considerations regarding the applicable series of debt
securities, including those relating to:
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debt securities with respect to which payments of principal,
premium or interest are determined with reference to an index or
formula, including changes in prices of particular securities,
currencies or commodities;
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debt securities with respect to which principal, premium or
interest is payable in a foreign or composite currency;
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debt securities that are issued at a discount below their stated
principal amount, bearing no interest or interest at a rate that
at the time of issuance is below market rates; and
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variable rate debt securities that are exchangeable for fixed
rate debt securities.
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Debt securities may be presented for transfer or, if applicable,
exchange or conversion, in the manner, at the places and subject
to the restrictions set forth in the debt securities and the
prospectus supplement. Such services will be provided without
charge, other than any tax or other governmental charge payable
in connection therewith, but subject to the limitations provided
in the indenture.
The indenture does not contain any covenant or other specific
provision affording protection to holders of the debt securities
in the event of a highly leveraged transaction or a change in
control of the Company, except to the limited extent described
below under Consolidation, Merger and Sale of
Assets or as provided in any supplemental indenture.
Ranking
The senior debt securities will have the same rank as all of our
other unsecured and unsubordinated debt. The subordinated debt
securities will be subordinated to senior indebtedness as
described under Subordination below.
Guarantees
If and to the extent provided in a prospectus supplement and an
indenture supplement or a resolution of the board of directors
of our general partner and accompanying officers
certificate relating to a particular series of debt securities,
each of our subsidiaries that becomes a guarantor of the debt
securities of such series, and any of our subsidiaries that is a
successor thereto, will fully, irrevocably, unconditionally and
absolutely guarantee the due and punctual payment of the
principal of, and premium, if any, and interest on such debt
securities, and all other amounts due and payable under the
applicable indenture and such debt securities by us to the
trustee or the holders of such debt securities. The terms of any
such guarantees may provide for their release upon the
occurrence of certain events, such as the debt securities of a
series subject to such guarantees achieving an investment grade
rating.
Modification
and Waiver
The indenture provides that supplements to the indenture and the
applicable supplemental indentures may be made by us and the
trustee for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the
indenture or of modifying in any manner the rights of the
holders of debt securities of a series under the indenture or
the debt securities of such series, with the consent of the
holders of a majority (or such greater amount as is provided for
a particular series of debt securities) in principal amount of
the outstanding debt securities of each series issued under such
indenture that are affected by the supplemental indenture;
provided that no such supplemental indenture may, without the
consent of the holder of each such debt security affected
thereby, among other things:
(a) change the stated maturity of the principal of, or any
premium, interest or additional amounts on, such debt
securities, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest or any
additional amounts thereon, or reduce any premium payable on
redemption thereof or otherwise, or reduce the amount of the
principal of debt securities issued with original issue discount
that would be due and payable upon an acceleration of the
maturity thereof or the amount thereof provable in bankruptcy,
or change the redemption provisions or adversely affect the
right of repayment at the option of the holder, or change the
place of payment or currency in which the principal of, or any
premium, interest or additional amounts with respect to any debt
security is payable, or impair or affect the right of any holder
of debt securities to institute suit for the payment after such
payment is due;
(b) reduce the percentage of outstanding debt securities of
any series, the consent of the holders of which is required for
any such supplemental indenture, or the consent of whose holders
is required for any waiver or reduce the quorum required for
voting;
(c) modify any of the provisions of the sections of such
indenture relating to supplemental indentures with the consent
of the holders, waivers of past defaults or compliance with
covenants, except
41
to increase any such percentage or to provide that certain other
provisions of such indenture cannot be modified or waived
without the consent of each holder affected thereby; or
(d) make any change that adversely affects the right to
convert or exchange any security into or for common units or
other securities, cash or other property in accordance with the
terms of the applicable debt security.
The indenture provides that a supplemental indenture that
changes or eliminates any covenant or other provision of the
indenture that has expressly been included solely for the
benefit of one or more particular series of debt securities, or
that modifies the rights of the holders of such series with
respect to such covenant or other provision, shall be deemed not
to affect the rights under the indenture of the holders of debt
securities of any other series.
The indenture provides that we and the trustee may, without the
consent of the holders of any series of debt securities issued
thereunder, enter into additional supplemental indentures for
one of the following purposes:
(a) to evidence the succession of another person and the
assumption by any such successor of our covenants in such
indenture and in the debt securities issued thereunder;
(b) to add to our covenants or to surrender any right or
power conferred on us pursuant to the indenture;
(c) to establish the form and terms of debt securities
issued thereunder;
(d) to evidence and provide for a successor trustee under
such indenture with respect to one or more series of debt
securities issued thereunder or to provide for or facilitate the
administration of the trusts under such indenture by more than
one trustee;
(e) to cure any ambiguity, to correct or supplement any
provision in the indenture that may be inconsistent with any
other provision of the indenture or to make any other provisions
with respect to matters or questions arising under such
indenture; provided that no such action pursuant to this
clause (e) shall adversely affect the interests of the
holders of any series of debt securities issued thereunder in
any material respect;
(f) to add to, delete from or revise the conditions,
limitations and restrictions on the authorized amount, terms or
purposes of issue, authentication and delivery of securities
under the indenture;
(g) to add any additional events of default with respect to
all or any series of debt securities;
(h) to supplement any of the provisions of the indenture as
may be necessary to permit or facilitate the defeasance and
discharge of any series of debt securities, provided that such
action does not adversely affect the interests of any holder of
an outstanding debt security of such series or any other
security in any material respect;
(i) to make provisions with respect to the conversion or
exchange rights of holders of debt securities of any series;
(j) to pledge to the trustee as security for the debt
securities of any series any property or assets;
(k) to add guarantees in respect of the debt securities of
one or more series;
(l) to change or eliminate any of the provisions of the
indenture, provided that any such change or elimination become
effective only when there is no security of any series
outstanding created prior to the execution of such supplemental
indenture which is entitled to the benefit of such provision;
(m) to provide for certificated securities in addition to
or in place of global securities; or
(n) to qualify such indenture under the Trust Indenture Act
of 1939, as amended.
42
Events of
Default
Unless otherwise provided in any prospectus supplement, the
following will be events of default under the indenture with
respect to each series of debt securities issued thereunder:
(a) default for 30 days in the payment when due of
interest or any additional amount on any series of debt
securities;
(b) default in the payment of principal (or premium, if
any) on any series of debt securities outstanding under the
indenture when due;
(c) failure by us for 60 days after receipt by
registered or certified mail of written notice from the trustee
upon instruction from holders of at least 25% in principal
amount of the then outstanding debt securities of such series to
comply with any of the other covenants in the indenture and
stating that such notice is a Notice of Default
under the indenture; provided, that if such failure cannot be
remedied within such
60-day
period, such period shall be extended by another 60 days so
long as (i) such failure is subject to cure and
(ii) we are using commercially reasonable efforts to cure
such failure; and provided, further, that a failure to comply
with any such other covenant in the indenture that results from
a change in generally accepted accounting principles shall not
be deemed to be an event of default;
(d) default in the payment, if any, of any sinking fund
installment when and as due by the terms of any debt security of
such series, subject to any cure period that may be specified in
any debt security of such series;
(e) certain events of bankruptcy, insolvency or
reorganization of us;
(f) if applicable, failure of any guarantee to be in full
force and effect; and
(g) any other event of default provided in, or pursuant to,
the indenture with respect to a particular series of debt
securities, provided that any event of default that results from
a change in generally accepted accounting principles shall not
be deemed to be an event of default.
In case an event of default specified in clause (a) or
(b) above shall occur and be continuing with respect to any
series of debt securities, holders of at least 25%, and in case
an event of default specified in any clause other than clause
(a), (b) or (e) above shall occur and be continuing
with respect to any series of debt securities, holders of at
least a majority, in aggregate principal amount of the debt
securities of such series then outstanding may declare the
principal (or, in the case of discounted debt securities, the
amount specified in the terms thereof) of such series to be due
and payable. If an event of default described in (e) above
shall occur and be continuing then the principal amount (or, in
the case of discounted debt securities, the amount specified in
the terms thereof) of all the debt securities outstanding shall
be and become due and payable immediately, without notice or
other action by any holder or the applicable trustee, to the
full extent permitted by law. Any event of default with respect
to a particular series of debt securities under such indenture
may be waived by the holders of a majority in aggregate
principal amount of the outstanding debt securities of such
series, except in each case a failure to pay principal of or
premium, interest or additional amounts, if any, on such debt
securities or a default in respect of a covenant or provision
which cannot be modified or amended without the consent of each
holder affected thereby.
The indenture provides that the applicable trustee may withhold
notice to the holders of any default with respect to any series
of debt securities (except in payment of principal of or
interest or premium on, or sinking fund payment in respect of,
the debt securities) if the applicable trustee considers it in
the interest of holders to do so.
The indenture contains a provision entitling the applicable
trustee to be indemnified by the holders before proceeding to
exercise any trust or power under the indenture at the request
of such holders. The indenture provides that the holders of a
majority in aggregate principal amount of the then outstanding
debt securities of any series may direct the time, method and
place of conducting any proceedings for any remedy available to
the applicable trustee or of exercising any trust or power
conferred upon the applicable trustee with respect to the debt
securities of such series; provided, however, that the
applicable trustee may decline to follow any
43
such direction if, among other reasons, the applicable trustee
determines in good faith that the actions or proceedings as
directed may not lawfully be taken or would be unduly
prejudicial to the holders of the debt securities of such series
not joining in such direction. The right of a holder to
institute a proceeding with respect to a series of debt
securities will be subject to certain conditions precedent
including, without limitation, that in case of an event of
default specified in clause (a), (b) or (e) of the
first paragraph above under Events of
Default, holders of at least 25%, or in case of an event
of default other than specified in clause (a), (b) or
(e) of the first paragraph above under
Events of Default, holders of at least a
majority, in aggregate principal amount of the debt securities
of such series then outstanding make a written request upon the
applicable trustee to exercise its powers under such indenture,
indemnify the applicable trustee and afford the applicable
trustee reasonable opportunity to act. Notwithstanding the
foregoing, the holder has an absolute right to receipt of the
principal of, premium, if any, and interest when due on the debt
securities, to require conversion of debt securities if such
indenture provides for convertibility at the option of the
holder and to institute suit for the enforcement thereof.
Consolidation,
Merger and Sale of Assets
The indenture provides that we may not directly or indirectly
consolidate with or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or
substantially all of our assets and properties and the assets
and properties of our subsidiaries (taken as a whole) to another
person in one or more related transactions unless we survive or
the successor person is a person organized under the laws of any
domestic jurisdiction and assumes our obligations on the debt
securities issued thereunder, and under the indenture, and after
giving effect thereto no event of default, and no event that,
after notice or lapse of time or both, would become an event of
default, shall have occurred and be continuing, and that certain
other conditions are met.
Certain
Covenants
Payment of Principal, any Premium, Interest or Additional
Amounts. We will duly and punctually pay the
principal of, and premium and interest on or any additional
amounts payable with respect to, any debt securities of any
series in accordance with their terms.
Maintenance of Office or Agency. We will be
required to maintain an office or agency in each place of
payment for each series of debt securities for notice and demand
purposes and for the purposes of presenting or surrendering debt
securities for payment, registration of transfer, or exchange.
Reports. So long as any debt securities of a
particular series are outstanding, we will file with the
trustee, within 30 business days after we are required to file
the same with the Securities and Exchange Commission (the
Commission), copies of the annual reports and of the
information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which we may be
required to file with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act; or, if we are not
required to file information, documents or reports pursuant to
either of said Sections, then we shall file with the trustee and
the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to
time in such rules and regulations.
Additional Covenants. Any additional covenants
with respect to any series of debt securities will be set forth
in the prospectus supplement relating thereto.
Conversion
Rights
The terms and conditions, if any, upon which the debt securities
are convertible into common units or other securities will be
set forth in the applicable prospectus supplement relating
thereto. Such terms will include the conversion price (or manner
of calculation thereof), the conversion period, provisions as to
whether conversion will be at our option or the option of the
holders, the events requiring an adjustment of the
44
conversion price and provisions affecting conversion in the
event of redemption of such debt securities and any restrictions
on conversion.
Redemption;
Repurchase at the Option of the Holder; Sinking Fund
The terms and conditions, if any, upon which (a) the debt
securities are redeemable at our option, (b) the holder of
debt securities may cause us to repurchase such debt securities
or (c) the debt securities are subject to any sinking fund
will be set forth in the applicable prospectus supplement
relating thereto.
Repurchases
on the Open Market
We or any affiliate of ours may at any time or from time to time
repurchase any debt security in the open market or otherwise.
Such debt securities may, at our option or the option of our
relevant affiliate, be held, resold or surrendered to the
trustee for cancellation.
Discharge,
Defeasance and Covenant Defeasance
The indenture provides, with respect to each series of debt
securities issued thereunder, that we may satisfy and discharge
our obligations under such debt securities of a series and such
indenture with respect to debt securities of such series if:
(a) all debt securities of such series previously
authenticated and delivered, with certain exceptions, have been
accepted by the applicable trustee for cancellation; or
(b) (i) the debt securities of such series have become
due and payable, or mature within one year, or all of them are
to be called for redemption within one year under arrangements
satisfactory to the applicable trustee for giving the notice of
redemption and we irrevocably deposit in trust with the
applicable trustee, as trust funds solely for the benefit of the
holders of such debt securities, for that purpose, money or
governmental obligations or a combination thereof sufficient (in
the opinion of a nationally recognized independent registered
public accounting firm expressed in a written certification
thereof delivered to the applicable trustee) to pay the entire
indebtedness on the debt securities of such series to maturity
or redemption, as the case may be, and pays all other sums
payable by us under such indenture; and
(ii) we deliver to the applicable trustee an officers
certificate and an opinion of counsel, in each case stating that
all conditions precedent provided for in such indenture relating
to the satisfaction and discharge of such indenture with respect
to the debt securities of such series have been complied with.
Notwithstanding such satisfaction and discharge, our obligations
to compensate and indemnify the trustee, to pay additional
amounts, if any, in respect of debt securities in certain
circumstances and to convert or exchange debt securities
pursuant to the terms thereof and our obligations and the
obligations of the trustee to hold funds in trust and to apply
such funds pursuant to the terms of the indenture, with respect
to issuing temporary debt securities, with respect to the
registration, transfer and exchange of debt securities, with
respect to the replacement of mutilated, destroyed, lost or
stolen debt securities and with respect to the maintenance of an
office or agency for payment, shall in each case survive such
satisfaction and discharge.
Unless inapplicable to debt securities of a series pursuant to
the terms thereof, the indenture provides that (i) we will
be deemed to have paid and will be discharged from any and all
obligations in respect of the debt securities issued thereunder
of any series, and the provisions of such indenture will, except
as noted below, no longer be in effect with respect to the debt
securities of such series (legal defeasance) and
(ii) (1) we may omit to comply with the covenant under
Consolidation, Merger and Sale of Assets
and any other additional covenants established pursuant to the
terms of such series, and such omission shall be deemed not to
be an event of default under clause (c) or (f) of the
first paragraph of Events of Default and
(2) the occurrence of any event described in
clause (f) of the first paragraph of
Events of Default shall not be
45
deemed to be an event of default, in each case with respect to
the outstanding debt securities of such series; provided that
the following conditions shall have been satisfied with respect
to such series:
(a) we have irrevocably deposited in trust with the
applicable trustee as trust funds solely for the benefit of the
holders of the debt securities of such series, for payment of
the principal of and interest of the debt securities of such
series, money or government obligations or a combination thereof
sufficient (in the opinion of a nationally recognized
independent registered public accounting firm expressed in a
written certification thereof delivered to the applicable
trustee) without consideration of any reinvestment to pay and
discharge the principal of and accrued interest on the
outstanding debt securities of such series to maturity or
earlier redemption (irrevocably provided for under arrangements
satisfactory to the applicable trustee), as the case may be;
(b) such deposit will not result in a breach or violation
of, or constitute a default under, such indenture or any other
material agreement or instrument to which we are a party or by
which we are bound;
(c) no default with respect to such debt securities of such
series shall have occurred and be continuing on the date of such
deposit;
(d) we shall have delivered to such trustee an opinion of
counsel as described in the indenture to the effect that the
holders of the debt securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result
of our exercise of our option under this provision of such
indenture and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not
occurred;
(e) we have delivered to the applicable trustee an
officers certificate and an opinion of counsel, in each
case stating that all conditions precedent provided for in such
indenture relating to the defeasance contemplated have been
complied with;
(f) if the debt securities are to be redeemed prior to
their maturity, notice of such redemption shall have been duly
given or provision therefor satisfactory to the trustee shall
have been made; and
(g) any such defeasance shall comply with any additional or
substitute terms provided for by the terms of such debt
securities of such series.
Notwithstanding a legal defeasance, our obligations with respect
to the following in respect of debt securities of such series
will survive with respect to such securities until otherwise
terminated or discharged under the terms of the indenture or
until no debt securities of such series are outstanding:
(a) the rights of holders of outstanding debt securities of
such series to receive payments in respect of the principal of,
interest on or premium or additional amounts, if any, payable in
respect of, such debt securities when such payments are due from
the trust referred in clause (a) in the preceding paragraph;
(b) the issuance of temporary debt securities, the
registration, transfer and exchange of debt securities, the
replacement of mutilated, destroyed, lost or stolen debt
securities and the maintenance of an office or agency for
payment and holding payments in trust;
(c) the rights, powers, trusts, duties and immunities of
the trustee, and our obligations in connection
therewith; and
(d) the legal defeasance provisions of the indenture.
Subordination
The debt securities of a series may be subordinated, and rank
junior in right of payment, to all of our Senior Indebtedness to
the extent provided in the subordinated indenture. Senior
Indebtedness, unless otherwise provided with respect to
the debt securities of a series, means (1) all our debt,
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 subordinated debt securities or to other debt
46
which is equal in right of payment with or subordinated to the
subordinated debt securities, and (2) any modifications,
refunding, deferrals, renewals or extensions of any such debt or
securities, notes or other evidence of debt issued in exchange
for such debt; provided that in no event shall Senior
Indebtedness include (i) our indebtedness owed or owing to
any of our Subsidiaries or to any officer, director or employee
of us or any of our Subsidiaries, (ii) indebtedness to
trade creditors or (iii) any liability for taxes owed or
owing by us.
The holders of our Senior Indebtedness will receive payment in
full of such Senior Indebtedness before holders of subordinated
debt securities will receive any payment of principal, premium
or interest with respect to the subordinated debt securities:
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upon any payment or distribution of our assets to creditors;
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upon our liquidation or dissolution; or
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in a bankruptcy, receivership or similar proceeding relating to
us or our property.
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Until the Senior Indebtedness is paid in full, any distribution
to which holders of subordinated debt securities would otherwise
be entitled will be made to the holders of Senior Indebtedness,
except that such holders of subordinated debt securities may
receive capital stock and any debt securities that are
subordinated to Senior Indebtedness to at least the same extent
as the subordinated debt securities.
If we do not pay any principal, premium or interest that has
become due with respect to Senior Indebtedness within any
applicable grace period (including at maturity), or any other
default on Senior Indebtedness occurs and the maturity of the
Senior Indebtedness is accelerated in accordance with its terms,
we may not:
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make any payments of principal, premium, if any, or interest
with respect to subordinated debt securities;
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make any deposit for the purpose of defeasance of the
subordinated debt securities; or
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repurchase, redeem or otherwise retire any subordinated debt
securities, except that in the case of subordinated debt
securities that provide for a mandatory sinking fund, we may
deliver subordinated debt securities to the trustee in
satisfaction of our sinking fund obligation,
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unless:
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the default has been cured or waived and the declaration of
acceleration has been rescinded;
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the Senior Indebtedness has been paid in full in cash; or
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we and the trustee receive written notice approving the payment
from the representatives of each issue of Designated Senior
Indebtedness.
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Designated Senior Indebtedness means:
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any Senior Indebtedness which, at the date of determination, has
an aggregate principal amount outstanding of, or under which, at
the date of determination, the holders thereof are committed to
lend up to, at least $100 million; and
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any other Senior Indebtedness that we may designate.
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During the continuance of any default with respect to any
Designated Senior Indebtedness, other than a default described
in the paragraph preceding the definition of Designated Senior
Indebtedness, that may cause the maturity of any Designated
Senior Indebtedness to be accelerated immediately without
further notice, other than any notice required to effect such
acceleration, or upon the expiration of any applicable grace
periods, we may not make payments on the subordinated debt
securities for a period called the Payment Blockage
Period. A Payment Blockage Period will commence on the
receipt by us and the trustee of written notice of the default,
called a Blockage Notice, from the representative of
any Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and will expire 179 days
thereafter.
47
The Payment Blockage Period may be terminated before its
expiration:
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by written notice to the trustee and us from the person or
persons who gave the Blockage Notice;
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by repayment in full in cash of the Senior Indebtedness with
respect to which the Blockage Notice was given; or
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if the default giving rise to the Payment Blockage Period is no
longer continuing.
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Unless the holders of such Designated Senior Indebtedness or the
representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, we may resume
payments on the subordinated debt securities after the
expiration of the Payment Blockage Period.
Not more than one Blockage Notice may be given in any period of
360 consecutive days unless otherwise specified with respect to
a series of subordinated debt securities. The total number of
days during which any one or more Payment Blockage Periods are
in effect, however, may not exceed an aggregate of 179 days
during any period of 360 consecutive days.
After all Senior Indebtedness is paid in full and until the
subordinated debt securities are paid in full, holders of the
subordinated debt securities shall be subrogated to the rights
of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness.
As a result of the subordination provisions described above, in
the event of insolvency, the holders of Senior Indebtedness, as
well as certain of our general creditors, may recover more,
ratably, than the holders of the subordinated debt securities.
No
Personal Liability of Directors, Officers, Employees and
Unitholders
Unless otherwise provided in a prospectus supplement and an
indenture supplement, no director, officer, partner, member,
employee, incorporator, manager or unitholder or other owner of
any equity interest in us, our general partner or partners or
any subsidiary guarantors, if applicable, will have any
liability for any obligations of us or any subsidiary guarantors
under any debt securities, any indenture, any guarantee of any
debt securities or for any claim based on, in respect of, or by
reason of, such obligations or their creation. The trustee and
each holder of any debt security, by acceptance thereof, waives
and releases all such liability. The waiver and release are part
of the consideration for issuance of any debt securities and any
guarantee.
Applicable
Law
The indenture provides that the debt securities and the
indenture will be governed by and construed in accordance with
the laws of the State of New York.
About the
Trustee
We may appoint a separate trustee for any series of debt
securities. We use the term trustee to refer to the
trustee appointed with respect to any such series of debt
securities. We may maintain banking and other commercial
relationships with the trustee and its affiliates in the
ordinary course of business, and the trustee may own debt
securities.
Book
Entry, Delivery and Form
We may issue debt securities of a series in the form of one or
more global certificates deposited with a depositary. We expect
that The Depository Trust Company, New York, New York, or
DTC, will act as depositary. If we issue debt
securities of a series in book-entry form, we will issue one or
more global certificates that will be deposited with DTC and
will not issue physical certificates to each holder. A global
security may not be transferred unless it is exchanged in whole
or in part for a certificated security, except that DTC, its
nominees and their successors may transfer a global security as
a whole to one another.
DTC will keep a computerized record of its participants, such as
a broker, whose clients have purchased the debt securities. The
participants will then keep records of their clients who
purchased the debt securities.
48
Beneficial interests in global securities will be shown on, and
transfers of beneficial interests in global securities will be
made only through, records maintained by DTC and its
participants.
DTC advises us that it is:
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a limited-purpose trust company organized under the New York
Banking Law;
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a banking organization within the meaning of the New
York Banking Law;
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a member of the United States Federal Reserve System;
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a clearing corporation within the meaning of the New
York Uniform Commercial Code; and
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a clearing agency registered under the provisions of
Section 17A of the Securities Exchange Act of 1934.
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DTC is owned by a number of its participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. The rules that
apply to DTC and its participants are on file with the
Securities and Exchange Commission.
DTC holds securities that its participants deposit with DTC. DTC
also records the settlement among participants of securities
transactions, such as transfers and pledges, in deposited
securities through computerized records for participants
accounts. This eliminates the need to exchange certificates.
Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other
organizations.
We will wire principal, premium, if any, and interest payments
due on the global securities to DTCs nominee. We, the
trustee and any paying agent will treat DTCs nominee as
the owner of the global securities for all purposes.
Accordingly, we, the trustee and any paying agent will have no
direct responsibility or liability to pay amounts due on the
global securities to owners of beneficial interests in the
global securities.
It is DTCs current practice, upon receipt of any payment
of principal, premium, if any, or interest, to credit
participants accounts on the payment date according to
their respective holdings of beneficial interests in the global
securities as shown on DTCs records. In addition, it is
DTCs current practice to assign any consenting or voting
rights to participants, whose accounts are credited with debt
securities on a record date, by using an omnibus proxy.
Payments by participants to owners of beneficial interests in
the global securities, as well as voting by participants, will
be governed by the customary practices between the participants
and the owners of beneficial interests, as is the case with debt
securities held for the account of customers registered in
street name. Payments to holders of beneficial
interests are the responsibility of the participants and not of
DTC, the trustee or us.
Beneficial interests in global securities will be exchangeable
for certificated securities with the same terms in authorized
denominations only if: DTC notifies us that it is unwilling or
unable to continue as depositary or if DTC ceases to be a
clearing agency registered under applicable law and a successor
depositary is not appointed by us within 90 days; or,
subject to the procedures of DTC, we determine not to require
all of the debt securities of a series to be represented by a
global security and notify the trustee of our decision.
49
SELLING
UNITHOLDERS
In addition to covering our offering of securities, this
prospectus covers the offering for resale of up to 1,250,000
common units by certain selling unitholders who are subsidiaries
of Williams. Any prospectus supplement reflecting a sale of
common units hereunder will set forth, with respect to each
selling unitholder:
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the identity of the selling unitholder;
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any material relationships that the selling unitholder has had
within the past three years with Williams Partners L.P. or any
of its predecessors or affiliates;
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the number of common units owned by the selling unitholder prior
to the offering;
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the number of common units to be offered for sale by the selling
unitholder; and
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the number and (if one percent or more) the percentage of common
units to be owned by the selling unitholder after completion of
the offering.
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Concurrently with the consummation of our initial public
offering on August 23, 2005, certain indirect wholly owned
subsidiaries of Williams contributed various member interests in
entities that held natural gas gathering, transporting and
processing assets and natural gas liquids fractionation and
storage assets to us, in exchange for: (1) a 2.0% general
partner interest; (2) 2,000,000 common units;
(3) 7,000,000 subordinated units; (4) incentive
distribution rights (which represent the right to receive
increasing percentages of quarterly distributions in excess of
specified amounts); and (5) certain other rights and
interests, including certain registration rights. Under our
partnership agreement, our general partner and its affiliates
have the right to cause us to register under the Securities Act
and applicable state securities laws the offer and sale of any
units that they hold. Subject to the terms and conditions of our
partnership agreement, these registration rights allow our
general partner and its affiliates or their assignees holding
any units to require registration of any of these units and to
include any of these units in a registration by us of other
units, including units offered by us or by any unitholder. Our
general partner will continue to have these registration rights
for two years following its withdrawal or removal as our general
partner. In connection with any registration of this kind, we
will indemnify each unitholder participating in the registration
and its officers, directors and controlling persons from and
against any liabilities under the Securities Act or any
applicable state securities laws arising from the registration
statement or prospectus. We will bear all costs and expenses
incidental to any registration, excluding any underwriting
discounts and commissions.
The selling unitholders may sell all, some or none of the common
units covered by this prospectus. Please read Plan of
Distribution-Distribution by Selling Unitholders. We will
bear all costs, expenses and fees in connection with the
registration of the common units offered by the selling
unitholders under this prospectus other than underwriting
discounts and commissions, which will be borne by the selling
unitholders.
50
MATERIAL
TAX CONSIDERATIONS
This section is a discussion of the material tax considerations
that may be relevant to prospective unitholders who are
individual citizens or residents of the United States and,
unless otherwise noted in the following discussion, is the
opinion of Andrews Kurth LLP, counsel to our general partner and
us, insofar as it relates to matters of United States
federal income tax law and legal conclusions with respect to
those matters. This section is based upon current provisions of
the Internal Revenue Code, existing and proposed regulations and
current administrative rulings and court decisions, all of which
are subject to change. Later changes in these authorities may
cause the tax consequences to vary substantially from the
consequences described below. Unless the context otherwise
requires, references in this section to us or
we are references to Williams Partners L.P. and our
operating company.
The following discussion does not address all federal income tax
matters affecting us or the unitholders. Moreover, the
discussion focuses on unitholders who are individual citizens or
residents of the United States and has only limited application
to corporations, estates, trusts, nonresident aliens or other
unitholders subject to specialized tax treatment, such as
tax-exempt institutions, foreign persons, individual retirement
accounts (IRAs), real estate investment trusts (REITs), employee
benefit plans or mutual funds. Accordingly, we urge each
prospective unitholder to consult, and depend on, his own tax
advisor in analyzing the federal, state, local and foreign tax
consequences particular to him of the ownership or disposition
of the common units.
All statements as to matters of law and legal conclusions, but
not as to factual matters, contained in this section, unless
otherwise noted, are the opinion of Andrews Kurth LLP and are
based on the accuracy of the representations made by us and our
general partner.
No ruling has been or will be requested from the IRS regarding
any matter affecting us or prospective unitholders. Instead, we
will rely on opinions and advice 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 in
this discussion 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 result in a reduction in cash available to
pay distributions to our unitholders and our general partner and
thus will be borne indirectly by our unitholders and our general
partner. Furthermore, the tax treatment of us, or of an
investment in us, may be significantly modified by future
legislative or administrative changes or court decisions. Any
modifications may or may not be retroactively applied.
For the reasons described below, Andrews Kurth LLP has not
rendered an opinion with respect to the following specific
federal income tax issues:
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the treatment of a unitholder whose common units are loaned to a
short seller to cover a short sale of common units (please read
Tax Consequences of Unit Ownership
Treatment of Short Sales);
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whether our monthly convention for allocating taxable income and
losses is permitted by existing Treasury Regulations (please
read Disposition of Common Units
Allocations Between Transferors and Transferees); and
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whether our method for depreciating Section 743 adjustments
is sustainable in certain cases (please read
Tax Consequences of Unit Ownership
Section 754 Election and Uniformity
of Units).
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Partnership
Status
A partnership is not a taxable entity and incurs no federal
income tax liability. Instead, each partner of a partnership is
required to take into account his share of items of income,
gain, loss and deduction of the partnership in computing his
federal income tax liability, regardless of whether cash
distributions are made to him by the partnership. Distributions
by a partnership to a partner are generally not taxable to the
partner unless the amount of cash distributed is in excess of
the partners adjusted basis in his partnership interest.
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Section 7704 of the Internal Revenue Code provides that
publicly traded partnerships will, as a general rule, be taxed
as corporations. However, an exception, referred to as the
Qualifying Income Exception, exists with respect to
publicly traded partnerships of which 90% or more of the gross
income for every taxable year consists of qualifying
income. Qualifying income includes income and gains
derived from the transportation, storage and processing of crude
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 2% of our current income is
not 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 our general partner and a review
of the applicable legal authorities, Andrews Kurth LLP is of the
opinion that at least 90% of our current gross income
constitutes qualifying income. The portion of our income that is
qualifying income can 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 for 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
that, based upon the Internal Revenue Code, its regulations,
published revenue rulings and court decisions and the
representations described below, we will be classified as a
partnership and the operating company will be disregarded as an
entity separate from us for federal income tax purposes.
In rendering its opinion, Andrews Kurth LLP has relied on
factual representations made by us and our general partner. The
representations made by us and our general partner upon which
Andrews Kurth LLP has relied include:
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Neither we nor our operating company have elected nor will elect
to be treated as a corporation; and
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For each taxable year, more than 90% of our gross income 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.
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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 the unitholders in liquidation of
their interests in us. This deemed contribution and liquidation
would be tax-free to unitholders and us so long as we, at that
time, do not have liabilities in excess of the tax basis of our
assets. Thereafter, we would be treated as a corporation for
federal income tax purposes.
If we were taxable as a corporation in any taxable year, either
as a result of a failure to meet the Qualifying Income Exception
or otherwise, our items of income, gain, loss and deduction
would be reflected only on our tax return rather than being
passed through to the unitholders, and our net income would be
taxed to us at corporate rates. In addition, any distribution
made to a unitholder would be treated as either taxable dividend
income, to the extent of 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
unitholders tax basis in his common units, or taxable
capital gain, after the unitholders tax basis in his
common units is reduced to zero. Accordingly, taxation as a
corporation would result in a material reduction in a
unitholders cash flow and after-tax return and thus would
likely result in a substantial reduction of the value of the
units.
The discussion below is based on Andrews Kurth LLPs
opinion that we will be classified as a partnership for federal
income tax purposes.
Limited
Partner Status
Unitholders who have become limited partners of Williams
Partners L.P. will be treated as partners of Williams Partners
L.P. for federal income tax purposes. Also, unitholders whose
common units are held in street name or by a nominee and who
have the right to direct the nominee in the exercise of all
substantive
52
rights attendant to the ownership of their common units will be
treated as partners of Williams Partners L.P. for federal income
tax purposes.
A beneficial owner of common units whose units have been
transferred to a short seller to complete a short sale would
appear to lose his status as a partner with respect to those
units for federal income tax purposes. Please read
Tax Consequences of Unit Ownership
Treatment of Short Sales.
Items of our income, gain, loss or deduction are not reportable
by a unitholder who is not a partner for federal income tax
purposes, and any cash distributions received by a unitholder
who is not a partner for federal income tax purposes would
therefore be fully taxable as ordinary income. These holders are
urged to consult their own tax advisors with respect to their
status as partners in Williams Partners L.P. for federal income
tax purposes.
Tax
Consequences of Unit Ownership
Flow-through of Taxable Income. We will not
pay any federal income tax. Instead, each unitholder will be
required to report on his income tax return his share of our
income, gains, losses and deductions without regard to whether
corresponding cash distributions are received by him.
Consequently, we may allocate income to a unitholder even if he
has not received a cash distribution. Each unitholder will be
required to include in income his allocable share of our income,
gains, losses and deductions for our taxable year or years
ending with or within his taxable year. Our taxable year ends on
December 31.
Treatment of Distributions. Distributions by
us to a unitholder generally will not be taxable to the
unitholder for federal income tax purposes to the extent of his
tax basis in his common units immediately before the
distribution. Our cash distributions in excess of a
unitholders tax basis in his common units generally will
be considered to be gain from the sale or exchange of the common
units, taxable in accordance with the rules described under
Disposition of Common Units below. Any
reduction in a unitholders share of our liabilities for
which no partner, including our general partner, bears the
economic risk of loss, known as nonrecourse
liabilities, will be treated as a distribution of cash to
that unitholder. To the extent our distributions cause a
unitholders at risk amount to be less than
zero at the end of any taxable year, he must recapture any
losses deducted in previous years. Please read
Limitations on Deductibility of Losses.
A decrease in a 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 unitholder, regardless of his tax basis in his common
units, if the distribution reduces the unitholders share
of our unrealized receivables, including
depreciation recapture,
and/or
substantially appreciated inventory items, both as
defined in Section 751 of the Internal Revenue Code, and
collectively, Section 751 Assets. To that
extent, he will be treated as having been distributed his
proportionate share of the Section 751 Assets and having
exchanged those assets with us in return for the non-pro rata
portion of the actual distribution made to him. This latter
deemed exchange will generally result in the unitholders
realization of ordinary income, which will equal the excess of
the non-pro rata portion of that distribution over the
unitholders tax basis for the share of Section 751
Assets deemed relinquished in the exchange.
Basis of Common Units. A unitholders
initial tax basis for his common units will be the amount he
paid for the common units plus his share of our nonrecourse
liabilities. That basis will be increased by his share of our
income and by any increases in his share of our nonrecourse
liabilities. That basis generally will be decreased, but not
below zero, by distributions from us, by the unitholders
share of our losses, by any decreases in his share of our
nonrecourse liabilities and by his share of our expenditures
that are not deductible in computing taxable income and are not
required to be capitalized. A unitholder will have no share of
our debt that is recourse to our general partner, but will have
a share, generally based on his share of profits, of our
nonrecourse liabilities. Please read
Disposition of Common Units
Recognition of Gain or Loss.
Limitations on Deductibility of Losses. The
deduction by a unitholder of his share of our losses will be
limited to the tax basis in his units and, in the case of an
individual unitholder or a corporate unitholder, if
53
more than 50% of the value of the corporate unitholders
stock is owned directly or indirectly by or for five or fewer
individuals or some tax-exempt organizations, to the amount for
which the unitholder is considered to be at risk
with respect to our activities, if that amount is less than his
tax basis. A unitholder must recapture losses deducted in
previous years to the extent that distributions cause his at
risk amount to be less than zero at the end of any taxable year.
Losses disallowed to a unitholder or recaptured as a result of
these limitations will carry forward and will be allowable 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 unitholder can be offset by losses that were
previously suspended by the at risk limitation but may not be
offset by losses suspended by the basis limitation. Any excess
loss above that gain previously suspended by the at risk or
basis limitations is no longer utilizable.
In general, a unitholder will be at risk to the extent of the
tax basis of his units, excluding any portion of that basis
attributable to his share of our nonrecourse liabilities,
reduced by any amount of money he borrows to acquire or hold his
units, if the lender of those borrowed funds owns an interest in
us, is related to the unitholder or can look only to the units
for repayment. A unitholders at risk amount will increase
or decrease as the tax basis of the unitholders units
increases or decreases, other than tax basis increases or
decreases attributable to increases or decreases in his share of
our nonrecourse liabilities.
The passive loss limitations generally provide that individuals,
estates, trusts and some closely-held corporations and personal
service corporations are permitted to deduct losses from passive
activities, which are generally corporate or partnership
activities in which the taxpayer does not materially
participate, only to the extent of the taxpayers income
from those passive activities. The passive loss limitations are
applied separately with respect to each publicly traded
partnership. Consequently, any passive losses we generate will
only be available to offset our passive income generated in the
future and will not be available to offset income from other
passive activities or investments, including our investments or
investments in other publicly traded partnerships, or a
unitholders salary or active business income. Passive
losses that are not deductible because they exceed a
unitholders share of income we generate may be deducted in
full when the unitholder disposes of his entire investment in us
in a fully taxable transaction with an unrelated party. The
passive activity loss rules are applied after other applicable
limitations on deductions, including the at risk rules and the
basis limitation.
A unitholders share of our net earnings 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.
Limitations 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 attributed 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.
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The computation of a unitholders investment interest
expense will take into account interest on any margin account
borrowing or other loan incurred to purchase or carry a unit.
Net investment income includes gross income from property held
for investment and amounts treated as portfolio income under the
passive loss rules, less deductible expenses, other than
interest, directly connected with the production of investment
income, but generally does not include gains attributable to the
disposition of property held for investment. The IRS has
indicated that net passive income earned by a publicly traded
partnership will be treated as investment income to its
unitholders. In addition, the 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, local or foreign income tax on behalf of any unitholder
or our general partner or any former unitholder, we are
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authorized to pay those taxes from our funds. That payment, if
made, will be treated as a distribution of cash to the partner
on whose behalf the payment was made. If the payment is made on
behalf of a person whose identity cannot be determined, we are
authorized to treat the payment as a distribution to all current
unitholders. We are authorized to amend the partnership
agreement in the manner necessary to maintain uniformity of
intrinsic tax characteristics of units and to adjust later
distributions, so that after giving effect to these
distributions, the priority and characterization of
distributions otherwise applicable under the partnership
agreement is maintained as nearly as is practicable. Payments by
us as described above could give rise to an overpayment of tax
on behalf of an individual partner in which event the partner
would be required to file a claim in order to obtain a credit or
refund.
Allocation of Income, Gain, Loss and
Deduction. In general, if we have a net profit,
our items of income, gain, loss and deduction will be allocated
among our general partner and the unitholders in accordance with
their percentage interests in us. At any time that distributions
are made to the common units in excess of distributions to the
subordinated units, or incentive distributions are made to our
general partner, gross income will be allocated to the
recipients to the extent of these distributions. If we have a
net loss for the entire year, that loss will be allocated first
to our general partner and the unitholders in accordance with
their percentage interests in us to the extent of their positive
capital accounts and, second, to our general partner.
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 of an offering, 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 unitholder purchasing common units in this offering will be
essentially the same as if the tax basis of Contributed Property
was equal to its fair market value at the time of this offering.
In the event we issue additional common units or engage in
certain other transactions in the future, reverse
Section 704(c) allocations, similar to the
Section 704(c) allocations described above, will be made to
all holders of partnership interests, including purchasers of
common units in this offering, 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 partner who was allocated the deduction giving rise to the
treatment of that gain as recapture income in order to minimize
the recognition of ordinary income by some unitholders. Finally,
although we do not expect that our operations will result in the
creation of negative capital accounts, if negative capital
accounts nevertheless result, items of our income and gain will
be allocated in an amount and manner to eliminate the negative
balance as quickly as possible.
An allocation of items of our income, gain, loss or deduction,
other than an allocation required by Section 704(c), will
generally be given effect for federal income tax purposes in
determining a partners share of an item of income, gain,
loss or deduction only if the allocation has substantial
economic effect. In any other case, a partners 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 partners in profits and losses;
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the interest of all the partners in cash flow; and
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the rights of all the partners to distributions of capital upon
liquidation.
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Andrews Kurth LLP is of the opinion that, with the exception of
the issues described in Tax Consequences of
Unit Ownership Section 754 Election,
Uniformity of Units and
Disposition of Common Units
Allocations Between Transferors and Transferees,
allocations under our partnership agreement will be given effect
for federal income tax purposes in determining a partners
share of an item of income, gain, loss or deduction.
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Treatment of Short Sales. A unitholder whose
units are loaned to a short seller to cover a short
sale of units may be considered as having disposed of those
units. If so, he would no longer be a partner for 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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any of our income, gain, loss or deduction with respect to those
units would not be reportable by the unitholder;
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any cash distributions received by the unitholder as to those
units would be fully taxable; and
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all of these distributions would appear to be ordinary income.
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Andrews Kurth LLP has not rendered an opinion regarding the
treatment of a unitholder where common units are loaned to a
short seller to cover a short sale of common units; therefore,
unitholders desiring to assure their status as partners and
avoid the risk of gain recognition from a loan to a short seller
are urged to modify any applicable brokerage account agreements
to prohibit their brokers from loaning their 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 Common Units
Recognition of Gain or Loss.
Alternative Minimum Tax. Each unitholder will
be required to take into account his distributive share of any
items of our income, gain, loss or deduction for purposes of the
alternative minimum tax. The current minimum tax rate for
non-corporate taxpayers is 26% on the first $175,000 of
alternative minimum taxable income in excess of the exemption
amount and 28% on any additional alternative minimum taxable
income. Prospective unitholders are urged to consult with their
tax advisors as to the impact of an investment in units on their
liability for the alternative minimum tax.
Tax Rates. In general, the highest effective
United States federal income tax rate for individuals is
currently 35% and the maximum United States federal income tax
rate for net capital gains of an individual is currently 15% if
the asset disposed of was held for more than 12 months at
the time of disposition.
Section 754 Election. We have made the
election permitted by Section 754 of the Internal Revenue
Code. That election is irrevocable without the consent of the
IRS. The election will generally permit us to adjust a common
unit purchasers tax basis in our assets (inside
basis) under Section 743(b) of the Internal Revenue
Code to reflect his purchase price. This election does not apply
to a person who purchases common units directly from us. The
Section 743(b) adjustment belongs to the purchaser and not
to other unitholders. For purposes of this discussion, a
unitholders inside basis in our assets will be considered
to have two components: (1) his share of our tax basis in
our assets (common basis) and (2) his
Section 743(b) adjustment to that basis.
Treasury Regulations under Section 743 of the Internal
Revenue Code require, if the remedial allocation method is
adopted (which we have adopted), a portion of the
Section 743(b) adjustment attributable to recovery property
to be depreciated over the remaining cost recovery period for
the Section 704(c) built-in gain. Under Treasury
Regulation Section 1.167(c)-1(a)(6),
a Section 743(b) adjustment attributable to property
subject to depreciation under Section 167 of the Internal
Revenue Code, rather than cost recovery deductions under
Section 168, is generally required to be depreciated using
either the straight-line method or the 150% declining balance
method. Under our partnership agreement, our general partner is
authorized to take a position to preserve the uniformity of
units even if that position is not consistent with these
Treasury Regulations. Please read Uniformity
of Units.
Although Andrews Kurth LLP is unable to opine as to the validity
of this approach because there is no clear authority on this
issue, we intend to depreciate the portion of a
Section 743(b) adjustment attributable to unrealized
appreciation in the value of Contributed Property, to the extent
of any unamortized Book-Tax Disparity, using a rate of
depreciation or amortization derived from the depreciation or
amortization method and useful life applied to the common basis
of the property, or treat that portion as
non-amortizable
to the extent attributable to property the common basis of which
is not amortizable. This method is consistent with the
regulations under Section 743 of the Internal Revenue Code
but is arguably inconsistent with Treasury
Regulation Section 1.167(c)-1(a)(6),
which is not expected to directly apply to a material portion of
our assets.
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To the extent this Section 743(b) adjustment is
attributable to appreciation in value in excess of the
unamortized Book-Tax Disparity, we will apply the rules
described in the Treasury Regulations and legislative history.
If we determine that this position cannot reasonably be taken,
we may take a depreciation or amortization position under which
all purchasers acquiring units in the same month would receive
depreciation or amortization, whether attributable to common
basis or a Section 743(b) adjustment, based upon the same
applicable rate as if they had purchased a direct interest in
our assets. This kind of aggregate approach may result in lower
annual depreciation or amortization deductions than would
otherwise be allowable to some unitholders. Please read
Uniformity of Units.
A Section 754 election is advantageous if the
transferees tax basis in his units is higher than the
units share of the aggregate tax basis of our assets
immediately prior to the transfer. In that case, as a result of
the election, the transferee would have, among other items, a
greater amount of depreciation deductions and his 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 units is lower than those
units share of the aggregate tax basis of our assets
immediately prior to the transfer. Thus, the fair market value
of the units may be affected either favorably or unfavorably by
the election. 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
basis reduction or a built-in loss 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
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, an intangible asset, is
generally either nonamortizable 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 and that the
deductions resulting from them will not be reduced or disallowed
altogether. Should the IRS require a different basis adjustment
to be made, and should, in our opinion, the expense of
compliance exceed the benefit of the election, we may seek
permission from the IRS to revoke our Section 754 election.
If permission is granted, a subsequent purchaser of units may be
allocated more income than he would have been allocated had the
election not been revoked.
Tax
Treatment of Operations
Accounting Method and Taxable Year. We use the
year ending December 31 as our taxable year and the accrual
method of accounting for federal income tax purposes. Each
unitholder will be required to include in income his share of
our income, gain, loss and deduction for our taxable year ending
within or with his taxable year. In addition, a unitholder who
has a taxable year different than our taxable year and who
disposes of all of his 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
one year of our income, gain, loss and deduction. Please read
Disposition of Common Units
Allocations Between Transferors and Transferees.
Initial Tax Basis, Depreciation and
Amortization. We use the tax basis of our assets
for purposes of computing depreciation and cost recovery
deductions and, ultimately, gain or loss on the disposition of
these assets. The federal income tax burden associated with the
difference between the fair market value of our assets and their
tax basis immediately prior to this offering will be borne by
our general partner, its affiliates and our other unitholders as
of the time of the offering. Please read Tax
Consequences of Unit Ownership Allocation of Income,
Gain, Loss and Deduction.
To the extent allowable, we may elect to use the depreciation
and cost recovery methods that will result in the largest
deductions being taken in the early years after assets are
placed in service. Property we subsequently acquire or construct
may be depreciated using accelerated methods permitted by the
Internal Revenue Code.
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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
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 Ownership
Allocation of Income, Gain, Loss and Deduction and
Disposition of Common Units
Recognition of Gain or Loss.
The costs incurred in selling our units (called
syndication expenses) must be capitalized and cannot
be deducted currently, ratably or upon our termination. There
are uncertainties regarding the classification of costs as
organization expenses, which we may 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
federal income tax consequences of the ownership and disposition
of units will depend in part on our estimates of the relative
fair market values, and the 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
deductions previously reported by unitholders might change, and
unitholders might be required to adjust their tax liability for
prior years and incur interest and penalties with respect to
those adjustments.
Disposition
of Common Units
Recognition of Gain or Loss. Gain or loss will
be recognized on a sale of units equal to the difference between
the unitholders amount realized and the unitholders
tax basis for the units sold. A unitholders amount
realized will be measured by the sum of the cash or the fair
market value of other property received by him plus his share of
our nonrecourse liabilities. Because the amount realized
includes a unitholders share of our nonrecourse
liabilities, the gain recognized on the sale of units could
result in a tax liability in excess of any cash received from
the sale.
Prior distributions from us in excess of cumulative net taxable
income for a common unit that decreased a unitholders tax
basis in that common unit will, in effect, become taxable income
if the common unit is sold at a price greater than the
unitholders tax basis in that common unit, even if the
price received is less than his original cost.
Except as noted below, gain or loss recognized by a unitholder,
other than a dealer in units, on the sale or
exchange of a unit held for more than one year will generally be
taxable as capital gain or loss. Capital gain recognized by an
individual on the sale of units held more than 12 months
will generally be taxed at a maximum rate of 15%. However, a
portion of this gain or loss will be separately computed and
taxed as ordinary income or loss under Section 751 of the
Internal Revenue Code to the extent attributable to assets
giving rise to depreciation recapture or other unrealized
receivables or to inventory items we own. The
term unrealized receivables includes potential
recapture items, including depreciation recapture. Ordinary
income attributable to unrealized receivables, inventory items
and depreciation recapture may exceed net taxable gain realized
on the sale of a unit and may be recognized even if there is a
net taxable loss realized on the sale of a unit. Thus, a
unitholder may recognize both ordinary income and a capital loss
upon a sale of units. Net capital losses may offset capital
gains and no more than $3,000 of ordinary income, in the case of
individuals, and may only be used to offset capital gains in the
case of corporations.
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
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,
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a common unitholder will be unable to select high or low basis
common units to sell as would be the case with corporate stock,
but, according to the regulations, may designate specific common
units sold for purposes of determining the holding period of
units transferred. A unitholder electing to use the actual
holding period of common units transferred must consistently use
that identification method for all subsequent sales or exchanges
of common units. A unitholder considering the purchase of
additional units or a sale of common units purchased in separate
transactions is urged to consult his tax advisor as to the
possible consequences of this ruling and application of the
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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a short sale;
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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 that enters into transactions or positions that have
substantially the same effect as the preceding transactions as
having constructively sold the financial position.
Allocations Between Transferors and
Transferees. In general, our taxable income or
loss will be determined annually, will be prorated on a monthly
basis and will be subsequently apportioned among the unitholders
in proportion to the number of units owned by each of them as of
the opening of the applicable exchange on the first business day
of the month, which we refer to in this discussion as the
Allocation Date. However, gain or loss realized on a
sale or other disposition of our assets other than in the
ordinary course of business will be allocated among the
unitholders on the Allocation Date in the month in which that
gain or loss is recognized. As a result, a unitholder
transferring units may be allocated income, gain, loss and
deduction realized after the date of transfer.
The use of this method may not be permitted under existing
Treasury Regulations. Accordingly, Andrews Kurth LLP is unable
to opine on the validity of this method of allocating income and
deductions between unitholders. If this method is not allowed
under the Treasury Regulations, or only applies to transfers of
less than all of the unitholders interest, our taxable
income or losses might be reallocated among the unitholders. We
are authorized to revise our method of allocation between
unitholders, as well as among unitholders whose interests vary
during a taxable year, to conform to a method permitted under
future Treasury Regulations.
A unitholder who owns units at any time during a quarter and who
disposes of them prior to the record date set for a cash
distribution for that quarter will be allocated items of our
income, gain, loss and deductions attributable to that quarter
but will not be entitled to receive that cash distribution.
Notification Requirements. A unitholder who
sells any of his 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 units who purchases
units from another unitholder is required to notify us in
writing of that purchase within 30 days after the purchase,
unless a broker or nominee will satisfy such requirement. We are
required to notify the IRS of any such transfers of units and to
furnish specified information to the transferor and transferee.
Failure to notify us of a transfer of units may, in some cases,
lead to the imposition of penalties.
Constructive Termination. We will be
considered to have been terminated for tax purposes if there is
a sale or exchange of 50% or more of the total interests in our
capital and profits within a
12-month
period. A constructive termination results in the closing of our
taxable year for all unitholders. In the case of a unitholder
reporting on a taxable year different from our taxable year, the
closing of our taxable year may result in more
59
than 12 months of our taxable income or loss being
includable in his taxable income for the year of termination. We
would be required to make new tax elections after a termination,
including a new election under Section 754 of the Internal
Revenue Code, and a termination would result in a deferral of
our deductions for depreciation. A termination could also result
in penalties if we were unable to determine that the termination
had occurred. Moreover, a termination might either accelerate
the application of, or subject us to, any tax legislation
enacted before the termination.
Uniformity
of Units
Because we cannot match transferors and transferees of units, we
must maintain uniformity of the economic and tax characteristics
of the units to a purchaser of these units. In the absence of
uniformity, we may be unable to completely comply with a number
of federal income tax requirements, both statutory and
regulatory. A lack of uniformity can result from a literal
application of Treasury
Regulation Section 1.167(c)-1(a)(6).
Any non-uniformity could have a negative impact on the value of
the units. Please read Tax Consequences of
Unit Ownership Section 754 Election.
We intend to depreciate the portion of a Section 743(b)
adjustment attributable to unrealized appreciation in the value
of Contributed Property, to the extent of any unamortized
Book-Tax Disparity, using a rate of depreciation or amortization
derived from the depreciation or amortization method and useful
life applied to the common basis of that property, or treat that
portion as nonamortizable, to the extent attributable to
property the common basis of which is not amortizable,
consistent with the regulations under Section 743 of the
Internal Revenue Code, even though that position may be
inconsistent with Treasury
Regulation Section 1.167(c)-1(a)(6),
which is not expected to directly apply to a material portion of
our assets. Please read Tax Consequences of
Unit Ownership Section 754 Election. To
the extent that the Section 743(b) adjustment is
attributable to appreciation in value in excess of the
unamortized Book-Tax Disparity, we will apply the rules
described in the Treasury Regulations and legislative history.
If we determine that this position cannot reasonably be taken,
we may adopt a depreciation and amortization position under
which all purchasers acquiring units in the same month would
receive depreciation and amortization deductions, whether
attributable to a common basis or Section 743(b)
adjustment, based upon the same applicable rate as if they had
purchased a direct interest in our property. If this position is
adopted, it may result in lower annual depreciation and
amortization deductions than would otherwise be allowable to
some unitholders and risk the loss of depreciation and
amortization deductions not taken in the year that these
deductions are otherwise allowable. This position will not be
adopted if we determine that the loss of depreciation and
amortization deductions will have a material adverse effect on
the unitholders. If we choose not to utilize this aggregate
method, we may use any other reasonable depreciation and
amortization method to preserve the uniformity of the intrinsic
tax characteristics of any units that would not have a material
adverse effect on the unitholders. Our counsel, Andrews Kurth
LLP, is unable to opine on the validity of any of these
positions. The IRS may challenge any method of depreciating the
Section 743(b) adjustment described in this paragraph. If
this challenge were sustained, the uniformity of units might be
affected, and the gain from the sale of units might be increased
without the benefit of additional deductions. Please read
Disposition of Common Units
Recognition of Gain or Loss.
Tax-Exempt
Organizations and Other Investors
Ownership of units by employee benefit plans, other tax-exempt
organizations, regulated investment companies, 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.
Employee benefit plans and most other organizations exempt from
federal income tax, including individual retirement accounts and
other retirement plans, are subject to federal income tax on
unrelated business taxable income. Virtually all of our income
allocated to a unitholder that is a tax-exempt organization will
be unrelated business taxable income and will be taxable to them.
A regulated investment company or mutual fund is
required to derive 90% or more of its gross income from certain
permitted sources. The American Jobs Creation Act of 2004
generally treats net income from the
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ownership of publicly traded partnerships as derived from such a
permitted source. We anticipate that all of our net income will
be treated as derived from such a permitted source.
Non-resident aliens and foreign corporations, trusts or estates
that own units will be considered to be engaged in business in
the United States because of the ownership of units. As a
consequence, they will be required to file federal tax returns
to report their share of our income, gain, loss or deduction and
pay federal income tax at regular rates on their share of our
net income or gain. Moreover, under rules applicable to publicly
traded partnerships, we will withhold tax at the highest
applicable effective tax rate from cash distributions made
quarterly to foreign unitholders. Each foreign unitholder must
obtain a taxpayer identification number from the IRS and submit
that number to our transfer agent on a
Form W-8BEN
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 federal income tax,
on its share of our income and gain, as adjusted for changes in
the foreign corporations U.S. net equity,
that 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 unitholder is a
qualified resident. In addition, this type of
unitholder is subject to special information reporting
requirements under Section 6038C of the Internal Revenue
Code.
Under a ruling of the IRS, a foreign unitholder who sells or
otherwise disposes of a unit will be subject to federal income
tax on gain realized on the sale or disposition of that unit to
the extent that this gain is effectively connected with a United
States trade or business of the foreign unitholder. Apart from
the ruling, a foreign unitholder will not be taxed or subject to
withholding upon the sale or disposition of a unit if he has
owned less than 5% in value of the units during the five-year
period ending on the date of the disposition and if the units
are regularly traded on an established securities market at the
time of the sale or disposition.
Administrative
Matters
Information Returns and Audit Procedures. We
intend to furnish to each unitholder, within 90 days after
the close of each taxable 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 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 unitholders that the
IRS will not successfully contend in court that those positions
are impermissible. Any challenge by the IRS could negatively
affect the value of the units.
The IRS may audit our federal income tax information returns.
Adjustments resulting from an IRS audit may require each
unitholder to adjust a prior years tax liability, and
possibly may result in an audit of his return.
Any audit of a unitholders return could result in
adjustments not related to our returns as well as those related
to our returns.
Partnerships generally are treated as separate entities for
purposes of federal tax audits, judicial review of
administrative adjustments by the IRS and tax settlement
proceedings. The tax treatment of partnership items of income,
gain, loss and deduction are determined in a partnership
proceeding rather than in separate proceedings with the
partners. The Internal Revenue Code requires that one partner be
designated as the Tax Matters Partner for these
purposes. The partnership agreement names Williams Partners GP
LLC as our Tax Matters Partner.
The Tax Matters Partner will make some elections on our behalf
and on behalf of unitholders. In addition, the Tax Matters
Partner can extend the statute of limitations for assessment of
tax deficiencies against unitholders for items in our returns.
The Tax Matters Partner may bind a unitholder with less than a
1% profits
61
interest in us to a settlement with the IRS unless that
unitholder elects, by filing a statement with the IRS, not to
give that authority to the Tax Matters Partner. The Tax Matters
Partner may seek judicial review, by which all the unitholders
are bound, of a final partnership administrative adjustment and,
if the Tax Matters Partner fails to seek judicial review,
judicial review may be sought by any unitholder having at least
a 1% interest in profits or by any group of unitholders having
in the aggregate at least a 5% interest in profits. However,
only one action for judicial review will go forward, and each
unitholder with an interest in the outcome may participate.
A unitholder must file a statement with the IRS identifying the
treatment of any item on his federal income tax return that is
not consistent with the treatment of the item on our return.
Intentional or negligent disregard of this consistency
requirement may subject a unitholder to substantial penalties.
Nominee Reporting. Persons who hold an
interest in us as a nominee for another person are required to
furnish to us:
(a) the name, address and taxpayer identification number of
the beneficial owner and the nominee,
(b) whether the beneficial owner is:
(1) a person that is not a United States person.
(2) a foreign government, an international organization or
any wholly owned agency or instrumentality of either of the
foregoing; or
(3) a tax-exempt entity;
(c) the amount and description of units held, acquired or
transferred for the beneficial owner; and
(d) specific information including the dates of
acquisitions and transfers, means of acquisitions and transfers,
and acquisition cost for purchases, as well as the amount of net
proceeds from sales.
Brokers and financial institutions are required to furnish
additional information, including whether they are United States
persons and specific information on units they acquire, hold or
transfer for their own account. A penalty of $50 per
failure, up to a maximum of $100,000 per calendar year, is
imposed by the Internal Revenue Code for failure to report that
information to us. The nominee is required to supply the
beneficial owner of the units with the information furnished to
us.
Accuracy-related Penalties. An additional tax
equal to 20% of the amount of any portion of an underpayment of
tax that is attributable to one or more specified causes,
including negligence or disregard of rules or regulations,
substantial understatements of income tax and substantial
valuation misstatements, is imposed by the Internal Revenue
Code. No penalty will be imposed, however, for any portion of an
underpayment if it is shown that there was a reasonable cause
for that portion and that the taxpayer acted in good faith
regarding that portion.
For individuals, a substantial understatement of income tax in
any taxable year exists if the amount of the understatement
exceeds the greater of 10% of the tax required to be shown on
the return for the taxable year or $5,000. The amount of any
understatement subject to penalty generally is reduced if any
portion is attributable to a position adopted on the return:
(a) for which there is, or was, substantial
authority; or
(b) as to which there is a reasonable basis and the
pertinent facts of that position are disclosed on the return.
If any item of income, gain, loss or deduction included in the
distributive shares of unitholders might result in that kind of
an understatement of income for which no
substantial authority exists, we must disclose the
pertinent facts on our return. In addition, we will make a
reasonable effort to furnish sufficient information for
unitholders to make adequate disclosure on their returns to
avoid liability for this penalty. More stringent rules apply to
tax shelters, but we believe we are not a tax
shelter.
A substantial valuation misstatement exists if the value of any
property, or the adjusted basis of any property, claimed on a
tax return is 200% or more of the amount determined to be the
correct amount of the valuation or adjusted basis. No penalty is
imposed unless the portion of the underpayment attributable to a
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substantial valuation misstatement exceeds $5,000 ($10,000 for
most corporations). If the valuation claimed on a return is 400%
or more than the correct valuation, the penalty imposed
increases to 40%.
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 tax avoidance transaction publicly
identified by the IRS as a listed transaction or
that it produces certain kinds of losses in excess of
$2 million. Our participation in a reportable transaction
could increase the likelihood that our federal income tax
information return (and possibly your tax return) would be
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 in any
listed transaction, you may 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, nondeductibility of interest on any
resulting tax liability, and
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in the case of a listed transaction, an extended statute of
limitations.
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We do not expect to engage in any reportable
transactions.
State,
Local and Other Tax Considerations
In addition to federal income taxes, you likely will be subject
to other taxes, such as state and local income taxes,
unincorporated business taxes, and estate, inheritance or
intangible taxes that may be imposed by the various
jurisdictions in which we do business or own property or in
which you are a resident. Although an analysis of those various
taxes is not presented here, each prospective unitholder should
consider their potential impact on his investment in us.
Although you may not be required to file a return and pay taxes
in some jurisdictions because your income from that jurisdiction
falls below the filing and payment requirement, you will be
required to file income tax returns and to pay income taxes in
many of the jurisdictions in which we do business or own
property and may be subject to penalties for failure to comply
with those requirements. In some jurisdictions, tax losses may
not produce a tax benefit in the year incurred and may not be
available to offset income in subsequent taxable years. Some
jurisdictions may require us, or we may elect, to withhold a
percentage of income from amounts to be distributed to a
unitholder who is not a resident of the jurisdiction.
Withholding, the amount of which may be greater or less than a
particular unitholders income tax liability to the
jurisdiction, generally does not relieve a nonresident
unitholder from the obligation to file an income tax return.
Amounts withheld will be treated as if distributed to
unitholders for purposes of determining the amounts distributed
by us. Please read Tax Consequences of Unit
Ownership Entity-Level Collections. Based
on current law and our estimate of our future operations, our
general partner anticipates that any amounts required to be
withheld will not be material.
It is the responsibility of each unitholder to investigate
the legal and tax consequences, under the laws of pertinent
jurisdictions, of his investment in us. Accordingly, each
prospective unitholder is urged to consult, and depend on, his
own tax counsel or other advisor with regard to those matters.
Further, it is the responsibility of each unitholder to file all
state and local, as well as United States federal tax returns,
that may be required of him. Andrews Kurth LLP has not rendered
an opinion on the state, local or foreign tax consequences of an
investment in us.
Tax
Consequences of Ownership of Debt Securities
A description of the material federal income tax consequences of
the acquisition, ownership and disposition of debt securities
will be set forth in the prospectus supplement relating to the
offering of debt securities.
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INVESTMENT
IN WILLIAMS PARTNERS L.P. BY EMPLOYEE BENEFIT PLANS
An investment in us by an employee benefit plan is subject to
additional considerations to the extent that the investments by
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, certain qualified pension,
profit-sharing and stock bonus plans, Keogh plans, simplified
employee pension plans and individual retirement annuities or
accounts (IRAs) established or maintained by an employer or
employee organization. Incident to making an investment in us,
among other things, consideration should be given by an employee
benefit plan 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.
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In addition, the person with investment discretion with respect
to the assets of an employee benefit plan or other arrangement
that is covered by the prohibited transactions restrictions of
the Internal Revenue Code 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 or arrangement.
Section 406 of ERISA and Section 4975 of the Internal
Revenue Code prohibit certain employee benefit plans, and
Section 4975 of the Internal Revenue Code prohibits IRAs
and certain other arrangements 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 or other arrangement that is covered by
ERISA or the Internal Revenue Code.
In addition to considering whether the purchase of common units
is a prohibited transaction, a fiduciary of an employee benefit
plan or other arrangement should consider whether the plan or
arrangement 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 considered to be a fiduciary of
the plan and our operations would be subject to the regulatory
restrictions of ERISA, including its prohibited transaction
rules and/or
the prohibited transaction rules of the Internal Revenue Code.
The U.S. Department of Labor regulations provide guidance
with respect to whether the assets of an entity in which
employee benefit plans or other arrangements described above
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 or other
arrangements described above 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 any such interests held
by our general partner, its affiliates, and some other persons,
is held by the employee benefit plans referred to above, IRAs
and other employee benefit plans or arrangements not subject to
ERISA, including governmental plans.
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Our assets should not be considered plan assets
under these regulations because it is expected that the
investment in our common units 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 of
such purchase under ERISA and the Internal Revenue Code in light
of possible personal liability for any breach of fiduciary
duties and the imposition of serious penalties on persons who
engage in prohibited transactions under ERISA or the Internal
Revenue Code.
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PLAN OF
DISTRIBUTION
Distribution
by Us
We may sell the securities being offered hereby directly to
purchasers, through agents, through underwriters and through
dealers.
We, or agents designated by us, may directly solicit, from time
to time, offers to purchase the securities. Any such agent may
be deemed to be an underwriter as that term is defined in the
Securities Act. We will name the agents involved in the offer or
sale of the securities and describe any commissions payable by
us to these agents in the prospectus supplement. Unless
otherwise indicated in the prospectus supplement, these agents
will be acting on a best efforts basis for the period of their
appointment. The agents may be entitled under agreements which
may be entered into with us to indemnification by us against
specific civil liabilities, including liabilities under the
Securities Act. The agents and their affiliates may also be our
customers or may engage in transactions with or perform services
for us or Williams or its affiliates in the ordinary course of
business.
If we utilize any underwriters in the sale of the securities in
respect of which this prospectus is delivered, we will enter
into an underwriting agreement with those underwriters at the
time of sale to them. We will set forth the names of these
underwriters and the terms of the transaction in the prospectus
supplement, which will be used by the underwriters to make
resales of the securities in respect of which this prospectus is
delivered to the public. We may indemnify the underwriters under
the relevant underwriting agreement against specific
liabilities, including liabilities under the Securities Act. The
underwriters and their affiliates may also be our customers or
may engage in transactions with or perform services for us or
Williams or its affiliates in the ordinary course of business.
If we utilize a dealer in the sale of the securities in respect
of which this prospectus is delivered, we will sell those
securities to the dealer, as principal. The dealer may then
resell those securities to the public at varying prices to be
determined by the dealer at the time of resale. We may indemnify
the dealers against specific liabilities, including, liabilities
under the Securities Act. The dealers may also be our customers
or may engage in transactions with or perform services for us or
Williams or its affiliates in the ordinary course of business.
Common units and debt securities may also be sold directly by
us, and we may directly sell our securities to institutional or
other investors. In this case, no underwriters or agents would
be involved. We may use electronic media, including the
Internet, to sell offered securities directly.
Distribution
by Selling Unitholders
Distributions of common units by the selling unitholders may
from time to time be offered for sale either directly by such
person or entities, or through underwriters, dealers or agents
or on any exchange on which the common units may from time to
time be traded, in the
over-the-counter
market, or in independently negotiated transactions or
otherwise. The methods by which the common units may be sold
include:
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|
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|
|
a block trade (which may involve crosses) in which the broker or
dealer so engaged will attempt to sell the securities as agent
but may position and resell a portion of the block as principal
to facilitate the transaction;
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purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account pursuant to this prospectus;
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exchange distributions
and/or
secondary distributions;
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underwritten transactions;
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ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
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direct sales or privately negotiated transactions.
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65
Such transactions may be effected by the selling unitholders at
market prices prevailing at the time of sale, at prices related
to the prevailing market prices, at negotiated prices or at
fixed prices. The selling unitholders may effect such
transactions by selling the common units to underwriters or to
or through broker-dealers, and such underwriters or
broker-dealers may receive compensation in the form of discounts
or commissions from the selling unitholders and may receive
commissions from the purchasers of the common units for whom
they may act as agent.
In addition, the selling unitholders may from time to time sell
its common units in transactions permitted by Rule 144
under the Securities Act.
The selling unitholders may agree to indemnify any underwriter,
broker-dealer or agent that participates in transactions
involving sales of the common units against certain liabilities,
including liabilities arising under the Securities Act. We have
agreed to register the common units for sale under the
Securities Act and to indemnify the selling unitholders against
certain civil liabilities, including certain liabilities under
the Securities Act.
As of the date of this prospectus, neither we nor the selling
unitholders have engaged any underwriter, broker, dealer or
agent in connection with the distribution of common units
pursuant to this prospectus by the selling unitholders. To the
extent required, the number of common units to be sold, the
purchase price, the name of any applicable agent, broker, dealer
or underwriter and any applicable commissions with respect to a
particular offer will be set forth in the applicable prospectus
supplement. The aggregate net proceeds to the selling
unitholders from the sale of their common units offered hereby
will be the sale price of those shares, less any underwriting
discounts and commissions, and less any other expenses of
issuance and distribution not borne by us.
The selling unitholders and any brokers, dealers, agents or
underwriters that participate with the selling unitholders in
the distribution of common units may be deemed to be
underwriters within the meaning of the Securities
Act, in which event any underwriting discounts and commissions
received by such brokers, dealers, agents or underwriters and
any profit on the resale of the common units purchased by them
may be deemed to be underwriting discounts and commissions under
the Securities Act.
To the extent required, this prospectus may be amended or
supplemented from time to time to describe a specific plan of
distribution. The place and time of delivery for the securities
in respect of which this prospectus is delivered will be set
forth in the applicable prospectus supplement.
Because the NASD views our common units as interests in a direct
participation program, any offering of common units under the
registration statement of which this prospectus forms a part
will be made in compliance with Rule 2810 of the NASD
Conduct Rules. The aggregate maximum compensation that
underwriters will receive in connection with the sale of any
securities under this prospectus and the registration statement
of which it forms a part will not exceed 10% of the gross
proceeds from the sale.
LEGAL
MATTERS
Certain legal matters in connection with the securities will be
passed upon by Andrews Kurth LLP, as our counsel. Any
underwriter will be advised about other issues relating to any
offering by its own legal counsel.
66
EXPERTS
The consolidated financial statements of Williams Partners L.P.
as of December 31, 2005 and 2004 and for each of the three
years in the period ended December 31, 2005 appearing in
our current report on
Form 8-K
filed on September 22, 2006 have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their report thereon included
therein and incorporated herein by reference, and are
incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Discovery Producer
Services LLC as of December 31, 2005 and 2004 and for each
of the three years in the period ended December 31, 2005
appearing in our annual report on
Form 10-K
for the year ended December 31, 2005 have been audited by
Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein
by reference, and are incorporated herein by reference in
reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The financial statements of Williams Four Corners LLC as of
December 31, 2005 and 2004 and for each of the three years
in the period ended December 31, 2005 appearing in our
current report on
Form 8-K/A
filed on August 10, 2006 have been audited by
Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein
by reference, and are incorporated herein by reference in
reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The consolidated balance sheet of Williams Partners GP LLC as of
December 31, 2005 appearing in our current report on
Form 8-K
filed on September 22, 2006 has been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their report thereon included
therein and incorporated herein by reference, and are
incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and
auditing.
67
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
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Item 14.
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Other
Expenses of Issuance and Distribution.
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Set forth below are the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered
hereby. With the exception of the SEC registration fee and the
NASD filing fee, the amounts set forth below are estimates:
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SEC registration fee
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$
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165,187
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NASD filing fee
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75,500
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Legal fees and expenses
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75,000
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Accounting fees and expenses
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75,000
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Printing and engraving expenses
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50,000
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Trustee fees and expenses
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20,000
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Miscellaneous
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14,313
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Total
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$
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475,000
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Item 15.
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Indemnification
of Directors and Officers.
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Each of Williams Partners L.P., Williams Partners Operating LLC,
Carbonate Trend Pipeline LLC and Mid-Continent Fractionation and
Storage, LLC has no employees, officers or directors, but is
managed and operated by the employees, officers and directors of
Williams Partners L.P.s general partner, Williams Partners
GP LLC, and its affiliates.
The section of the prospectus entitled The Partnership
Agreement Indemnification discloses that
Williams Partners L.P. will generally indemnify officers,
directors and affiliates of its general partner to the fullest
extent permitted by the law against all losses, claims, damages
or similar events and is incorporated herein by this reference.
Section 17-108
of the Delaware Revised Uniform Limited Partnership Act provides
that, subject to such standards and restrictions, if any, as are
set forth in its partnership agreement, a Delaware limited
partnership may, and shall have the power to, indemnify and hold
harmless any partner or other person from and against any and
all claims and demands whatsoever.
Section 145 of the General Corporation Law of the State of
Delaware (the DGCL) empowers a Delaware corporation,
subject to the procedures and limitations stated therein, to
indemnify any person against expenses (including attorneys
fees), judgments, fines, and amounts paid in settlement actually
and reasonably incurred by them in connection with any
threatened, pending, or completed action, suit, or proceeding in
which such person is made party by reason of their being or
having been a director, officer, employee, or agent thereof. The
statute provides that indemnification pursuant to its provisions
is not exclusive of other rights of indemnification to which a
person may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. In
addition, Section 102(b)(7) of the DGCL permits a
corporation to provide in its certificate of incorporation,
which the certificate of incorporation of Williams Partners
Finance Corporation does so provide, that a director of the
corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach
of the directors duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of law, (iii) in respect of certain unlawful dividend
payments or stock redemptions or repurchases, or (iv) for
any transaction from which the director derived an improper
personal benefit.
The bylaws of Williams Partners Finance Corporation contains the
following provisions relating to indemnification of, among
others, its officers and directors:
ARTICLE TENTH: The corporation
shall indemnify any person (including the heirs, executors or
administrators of such a person) who was or is a party or is
threatened to be made a party to any
II-1
threatened, pending or completed proceeding (defined below), by
reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, in accordance with and
to the fullest extent permitted by the General Corporation Law
of the State of Delaware, as same may be amended from time to
time. To the extent the present or former spouse(s) of any party
indemnified hereunder is made a party or is threatened to be
made a party to any threatened, pending or completed action,
suit or proceeding solely by virtue of his or her marital
relationship to such indemnified party, such spouse shall be
indemnified hereunder to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as same may be
amended from time to time. Such indemnification as hereinabove
provided shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors, or
otherwise. The corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any
such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify
him or her against such liability.
As used herein, the term proceeding means any
threatened, pending or completed action, suit, or proceeding,
whether civil, criminal, administrative, arbitrative or
investigative (other than an action by or in the right of the
corporation), any appeal in such an action, suit, or proceeding,
or any inquiry or investigation that could lead to such an
action, suit, or proceeding.
Section 18-108
of the Delaware Limited Liability Company Act provides that,
subject to such standards and restrictions, if any, as are set
forth in its limited liability company agreement, a Delaware
limited liability company may, and shall have the power to,
indemnify and hold harmless any member or manager or other
person from and against any and all claims and demands
whatsoever.
The amended and restated limited liability company agreement of
Williams Partners GP LLC contains the following provisions
relating to indemnification of, among others, its officers and
directors:
Section 10.01 Indemnification. To
the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all
Indemnitees shall be indemnified and held harmless by the
Company from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including legal fees
and expenses), judgments, fines, penalties, interest,
settlements or other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as an Indemnitee; provided,
that the Indemnitee shall not be indemnified and held harmless
if there has been a final and non-appealable judgment entered by
a court of competent jurisdiction determining that, in respect
of the matter for which the Indemnitee is seeking
indemnification pursuant to this Section 10.01, the
Indemnitee acted in bad faith or engaged in fraud or willful
misconduct or, in the case of a criminal matter, acted with
knowledge that the Indemnitees conduct was unlawful. Any
indemnification pursuant to this Section 10.01 shall be
made only out of the assets of the Company, it being agreed that
the Members shall not be liable for such indemnification and
shall have no obligation to contribute or loan any monies or
property to the Company to enable it to effectuate such
indemnification.
(b) To the fullest extent permitted by law, expenses
(including legal fees and expenses) incurred by an Indemnitee
who is indemnified pursuant to Section 10.01(a) in
defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Company prior to a
determination that the Indemnitee is not entitled to be
indemnified upon receipt by the Company of any undertaking by or
on behalf of the Indemnitee to repay such amount if it shall be
determined that the Indemnitee is not entitled to be indemnified
as authorized in this Section 10.01.
(c) The indemnification provided by this Section 10.01
shall be in addition to any other rights to which an Indemnitee
may be entitled under any agreement, as a matter of law or
otherwise, both as to actions in the Indemnitees capacity
as an Indemnitee and as to actions in any other capacity, and
shall continue as to an
II-2
Indemnitee who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance on
behalf of the Company, its Affiliates and such other Persons as
the Company shall determine, against any liability that may be
asserted against, or expense that may be incurred by, such
Person in connection with the Companys activities or such
Persons activities on behalf of the Company, regardless of
whether the Company would have the power to indemnify such
Person against such liability under the provisions of this
Agreement.
(e) For purposes of this Section 10.01, (i) the
Company shall be deemed to have requested an Indemnitee to serve
as fiduciary of an employee benefit plan whenever the
performance by it of its duties to the Company also imposes
duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; (ii) excise
taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute
fines within the meaning of Section 10.01(a);
and (iii) action taken or omitted by the Indemnitee with
respect to any employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the best
interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose that is in the best interests of
the Company.
(f) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 10.01 because the
Indemnitee had an interest in the transaction with respect to
which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 10.01 are for the
benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for
the benefit of any other Persons.
(h) No amendment, modification or repeal of this
Section 10.01 or any provision hereof shall in any manner
terminate, reduce or impair the right of any past, present or
future Indemnitee to be indemnified by the Company, nor the
obligations of the Company to indemnify any such Indemnitee
under and in accordance with the provisions of this
Section 10.01 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
Section 10.02 Liability
of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, no Indemnitee shall be liable for monetary
damages to the Company or any other Persons who have acquired
membership interests in the Company, for losses sustained or
liabilities incurred as a result of any act or omission of an
Indemnitee unless there has been a final and non-appealable
judgment entered by a court of competent jurisdiction
determining that, in respect of the matter in question, the
Indemnitee acted in bad faith or engaged in fraud or willful
misconduct or, in the case of a criminal matter, acted with
knowledge that the Indemnitees conduct was criminal.
(b) To the extent that, at law or in equity, an Indemnitee
has duties (including fiduciary duties) and liabilities relating
thereto to the Company, such Indemnitee acting in connection
with the Companys business or affairs shall not be liable
to the Company or to any Member for its good faith reliance on
the provisions of this Agreement. The provisions of this
Agreement, to the extent that they restrict or otherwise modify
the duties and liabilities of an Indemnitee otherwise existing
at law or in equity, are agreed by the Members to replace such
other duties and liabilities of such Indemnitee.
(c) Any amendment, modification or repeal of this
Section 10.02 or any provision hereof shall be prospective
only and shall not in any way affect the limitations on the
liability of the Indemnitees under this Section 10.02 as in
effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise
or be asserted.
Under the underwriting agreement(s) to be entered into in
connection with the offering of securities pursuant to this
registration statement, the underwriters will be obligated,
under certain circumstances and as applicable, to indemnify
directors and officers of Williams Partners GP LLC and Williams
Partners Finance
II-3
Corporation against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. Reference is made
to the form of underwriting agreement filed as Exhibit 1.1
hereto.
The Williams Companies, Inc. has purchased insurance designed to
protect Williams Partners L.P. and the directors and officers of
Williams Partners GP LLC against losses arising from certain
claims, including claims under the Securities Act of 1933, as
amended.
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Exhibit
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Number
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Description
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1
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.1*
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Form of Underwriting Agreement.
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2
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.1#
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Purchase and Sale Agreement, dated
April 6, 2006, by and among Williams Energy Services, LLC,
Williams Field Services Group, LLC, Williams Field Services
Company, LLC, Williams Partners GP LLC, Williams Partners L.P.
and Williams Partners Operating LLC (incorporated by reference
to Exhibit 2.1 to Williams Partners L.P.s
Form 8-K
(File No. 1-32599) filed with the SEC on April 7,
2006).
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4
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.1
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Certificate of Limited Partnership
of Williams Partners L.P. (attached as Exhibit 3.1 to Williams
Partners L.P.s registration statement on
Form S-1
(File
No. 333-124517)
filed with the SEC on May 2, 2005).
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4
|
.2
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Amended and Restated Agreement of
Limited Partnership of Williams Partners L.P. (including form of
common unit certificate), as amended by Amendments No. 1
and 2.
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4
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.3
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Certificate of Formation of
Williams Partners GP LLC (incorporated by reference to
Exhibit 3.3 to Williams Partners L.P.s registration
statement on
Form S-1
(File No.
333-124517)
filed on May 2, 2005).
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4
|
.4
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Amended and Restated Limited
Liability Company Agreement of Williams Partners GP LLC
(incorporated by reference to Exhibit 3.2 to Williams
Partners L.P.s current report on
Form 8-K
(File No. 1-32599) filed on August 26, 2005).
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4
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.5
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Certificate of Incorporation of
Williams Partners Finance Corporation.
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4
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.6
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Bylaws of Williams Partners
Finance Corporation.
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4
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.7
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Indenture, dated June 20,
2006, by and among Williams Partners L.P., Williams Partners
Finance Corporation and JPMorgan Chase Bank, N.A. (attached as
Exhibit 4.1 to Williams Partners L.P.s current report on
Form 8-K
(File No. 1-32599) filed with the SEC on June 20,
2006).
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4
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.8
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Form of
71/2% Senior
Note due 2011 (included as Exhibit 1 to Rule144A/Regulation
S Appendix of Exhibit 4.1 attached to Williams Partners
L.P.s current report on
Form 8-K
(File No. 1-32599) filed with the SEC on June 20,
2006).
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4
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.9
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Registration Rights Agreement,
dated June 20, 2006, by and between Williams Partners L.P.,
Williams Partners Finance Corporation, Citigroup Global Markets
Inc. and Lehman Brothers Inc. (attached as Exhibit 4.3 to
Williams Partners L.P.s current report on
Form 8-K
(File No. 1-32599) filed with the SEC on June 20,
2006).
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4
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.10
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Form of Senior Debt Indenture.
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4
|
.11
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Form of Subordinated Debt
Indenture.
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5
|
.1
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Opinion of Andrews Kurth LLP as to
the legality of the securities being registered.
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8
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.1
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Opinion of Andrews Kurth LLP
relating to tax matters.
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12
|
.1
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Statement Regarding Computation of
Ratio of Earnings to Fixed Charges for the years ended
December 31, 2001, 2002, 2003, 2004 and 2005 and the six
months ended June 30, 2006.
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23
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.1
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Consent of Ernst & Young
LLP.
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23
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.2
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Consent of Ernst & Young
LLP.
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23
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.3
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Consent of Andrews Kurth LLP
(contained in Exhibit 5.1 hereto).
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23
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.4
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Consent of Andrews Kurth LLP
(contained in Exhibit 8.1 hereto).
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24
|
.1
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Power of Attorney (included on
signature page hereto).
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II-4
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Exhibit
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Number
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Description
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25
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.1
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Statement of Eligibility of
Trustee on
Form T-1
with respect to the Senior Debt Indenture and the Subordinated
Debt Indenture.
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99
|
.1
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|
Restated consolidated financial
statements and notes of Williams Partners L.P. (incorporated by
reference to Exhibit 99.1 of Williams Partners L.P.s
Current Report on
Form 8-K
(File
No. 1-32599)
filed on September 22, 2006).
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99
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.2
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Restated audited balance sheet of
Williams Partners GP LLC as of December 31, 2005 and
unaudited balance sheet of Williams Partners GP LLC as of
June 30, 2006 (incorporated by reference to
Exhibit 99.2 of Williams Partners L.P.s Current
Report on
Form 8-K
(File
No. 1-32599)
filed on September 22, 2006).
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Filed herewith. |
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* |
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To be filed as an exhibit to a current report on
Form 8-K
in connection with a specific offering. |
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# |
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Pursuant to Item 601(b)(2) of
Regulation S-K,
the Registrant agrees to furnish supplementally a copy of any
omitted exhibit or schedule to the SEC upon request. |
(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 Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i),
(a)(1)(ii) and (a)(1)(iii) above do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to
the Commission by the registrant pursuant to section 13 or
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, 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
past-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(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-5
(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.
(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 therein, 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 foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Tulsa, State of Oklahoma, on September 22, 2006.
Williams Partners L.P.
|
|
|
|
By:
|
Williams Partners GP LLC, its general partner
|
|
|
By:
|
/s/ Alan
S. Armstrong
|
Alan S. Armstrong
Chief Operating Officer
POWER OF
ATTORNEY
The undersigned directors and officers of Williams Partners GP
LLC hereby constitute and appoint James J. Bender,
Brian K. Shore, William H. Gault and Richard M. Carson, each
with full power to act and with full power of substitution and
resubstitution, our true and lawful
attorneys-in-fact
and agents with full power to execute in our name and behalf in
the capacities indicated below any and all amendments (including
post-effective amendments and amendments thereto) to this
registration statement and to file the same, with all exhibits
and other documents relating thereto and any registration
statement relating to any offering made pursuant to this
registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act with the
Securities and Exchange Commission and hereby ratify and confirm
all that such
attorney-in-fact
or his substitute shall lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
/s/ Steven
J. Malcolm
Steven
J. Malcolm
|
|
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Donald
R. Chappel
Donald
R. Chappel
|
|
Chief Financial Officer and
Director (Principal Financial Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Ted
T.
Timmermans
Ted
T. Timmermans
|
|
Vice President, Chief Accounting
Officer and Controller
(Principal Accounting Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Alan
S.
Armstrong
Alan
S. Armstrong
|
|
Chief Operating Officer and
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Thomas
C. Knudson
Thomas
C. Knudson
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Bill
Z. Parker
Bill
Z. Parker
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Alice
M. Peterson
Alice
M. Peterson
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Phillip
D. Wright
Phillip
D. Wright
|
|
Director
|
|
September 22, 2006
|
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Tulsa, State of Oklahoma, on September 22, 2006.
Williams Partners Finance Corporation
|
|
|
|
By:
|
/s/ Donald
R. Chappel
|
Donald R. Chappel
Vice President and Chief Financial Officer
POWER OF
ATTORNEY
The undersigned directors and officers of Williams Partners
Finance Corporation hereby constitute and appoint James J.
Bender, Brian K. Shore, William H. Gault and Richard M. Carson,
each with full power to act and with full power of substitution
and resubstitution, our true and lawful
attorneys-in-fact
and agents with full power to execute in our name and behalf in
the capacities indicated below any and all amendments (including
post-effective amendments and amendments thereto) to this
registration statement and to file the same, with all exhibits
and other documents relating thereto and any registration
statement relating to any offering made pursuant to this
registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act with the
Securities and Exchange Commission and hereby ratify and confirm
all that such
attorney-in-fact
or his substitute shall lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
/s/ Steven
J. Malcolm
Steven
J. Malcolm
|
|
Chairman of the Board, Chief
Executive Officer and Director
(Principal Executive Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Donald
R. Chappel
Donald
R. Chappel
|
|
Vice President, Chief Financial
Officer and Director
(Principal Financial Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Ted
T.
Timmermans
Ted
T. Timmermans
|
|
Vice President, Chief Accounting
Officer and Controller
(Principal Accounting Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Alan
S.
Armstrong
Alan
S. Armstrong
|
|
Senior Vice President, Chief
Operating Officer and Director
|
|
September 22, 2006
|
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Tulsa, State of Oklahoma, on September 22, 2006.
Williams Partners Operating LLC
|
|
|
|
By:
|
Williams Partners L.P., its sole member
|
|
|
|
|
By:
|
Williams Partners GP LLC, its general partner
|
|
|
|
|
By:
|
/s/ Alan
S. Armstrong
|
Alan S. Armstrong
Chief Operating Officer
POWER OF
ATTORNEY
The undersigned directors and officers of Williams Partners GP
LLC hereby constitute and appoint James J. Bender, Brian K.
Shore, William H. Gault and Richard M. Carson, each with full
power to act and with full power of substitution and
resubstitution, our true and lawful
attorneys-in-fact
and agents with full power to execute in our name and behalf in
the capacities indicated below any and all amendments (including
post-effective amendments and amendments thereto) to this
registration statement and to file the same, with all exhibits
and other documents relating thereto and any registration
statement relating to any offering made pursuant to this
registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act with the
Securities and Exchange Commission and hereby ratify and confirm
all that such
attorney-in-fact
or his substitute shall lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
/s/ Steven
J. Malcolm
Steven
J. Malcolm
|
|
Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Donald
R. Chappel
Donald
R. Chappel
|
|
Chief Financial Officer and
Director (Principal Financial Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Ted
T.
Timmermans
Ted
T. Timmermans
|
|
Vice President, Chief Accounting
Officer and Controller
(Principal Accounting Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Alan
S.
Armstrong
Alan
S. Armstrong
|
|
Chief Operating Officer and
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Thomas
C. Knudson
Thomas
C. Knudson
|
|
Director
|
|
September 22, 2006
|
II-9
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
/s/ Bill
Z. Parker
Bill
Z. Parker
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Alice
M. Peterson
Alice
M. Peterson
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Phillip
D. Wright
Phillip
D. Wright
|
|
Director
|
|
September 22, 2006
|
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrants certify that they have reasonable
grounds to believe that they meet all of the requirements for
filing on
Form S-3
and have duly caused this registration statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in
the City of Tulsa, State of Oklahoma, on September 22, 2006.
Carbonate Trend Pipeline LLC
Mid-Continent Fractionation and Storage, LLC
|
|
|
|
By:
|
Williams Partners Operating LLC, its sole member
|
|
|
|
|
By:
|
Williams Partners L.P., its sole member
|
|
|
|
|
By:
|
Williams Partners GP LLC,
its general partner
|
|
|
|
|
By:
|
/s/ Alan
S. Armstrong
|
Alan S. Armstrong
Chief Operating Officer
POWER OF
ATTORNEY
The undersigned directors and officers of Williams Partners GP
LLC hereby constitute and appoint James J. Bender, Brian K.
Shore, William H. Gault and Richard M. Carson, each with full
power to act and with full power of substitution and
resubstitution, our true and lawful
attorneys-in-fact
and agents with full power to execute in our name and behalf in
the capacities indicated below any and all amendments (including
post-effective amendments and amendments thereto) to this
registration statement and to file the same, with all exhibits
and other documents relating thereto and any registration
statement relating to any offering made pursuant to this
registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act with the
Securities and Exchange Commission and hereby ratify and confirm
all that such
attorney-in-fact
or his substitute shall lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
/s/ Steven
J. Malcolm
Steven
J. Malcolm
|
|
Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Donald
R. Chappel
Donald
R. Chappel
|
|
Chief Financial Officer and
Director (Principal Financial Officer)
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Ted
T.
Timmermans
Ted
T. Timmermans
|
|
Vice President, Chief Accounting
Officer and Controller
(Principal Accounting Officer)
|
|
September 22, 2006
|
II-11
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
/s/ Alan
S.
Armstrong
Alan
S. Armstrong
|
|
Chief Operating Officer and
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Thomas
C. Knudson
Thomas
C. Knudson
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Bill
Z. Parker
Bill
Z. Parker
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Alice
M. Peterson
Alice
M. Peterson
|
|
Director
|
|
September 22, 2006
|
|
|
|
|
|
/s/ Phillip
D. Wright
Phillip
D. Wright
|
|
Director
|
|
September 22, 2006
|
II-12
EXHIBIT INDEX
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
|
|
|
|
|
|
|
1
|
.1*
|
|
|
|
Form of Underwriting Agreement.
|
|
|
|
|
|
|
|
|
2
|
.1#
|
|
|
|
Purchase and Sale Agreement, dated
April 6, 2006, by and among Williams Energy Services, LLC,
Williams Field Services Group, LLC, Williams Field Services
Company, LLC, Williams Partners GP LLC, Williams Partners L.P.
and Williams Partners Operating LLC (incorporated by reference
to Exhibit 2.1 to Williams Partners L.P.s
Form 8-K
(File No. 1-32599) filed with the SEC on April 7,
2006).
|
|
|
|
|
|
|
|
|
4
|
.1
|
|
|
|
Certificate of Limited Partnership
of Williams Partners L.P. (attached as Exhibit 3.1 to Williams
Partners L.P.s registration statement on
Form S-1
(File
No. 333-124517)
filed with the SEC on May 2, 2005).
|
|
|
|
|
|
|
|
|
4
|
.2
|
|
|
|
Amended and Restated Agreement of
Limited Partnership of Williams Partners L.P. (including form of
common unit certificate), as amended by Amendments No. 1
and 2.
|
|
|
|
|
|
|
|
|
4
|
.3
|
|
|
|
Certificate of Formation of
Williams Partners GP LLC (incorporated by reference to
Exhibit 3.3 to Williams Partners L.P.s registration
statement on
Form S-1
(File No.
333-124517)
filed on May 2, 2005).
|
|
|
|
|
|
|
|
|
4
|
.4
|
|
|
|
Amended and Restated Limited
Liability Company Agreement of Williams Partners GP LLC
(incorporated by reference to Exhibit 3.2 to Williams
Partners L.P.s current report on
Form 8-K
(File No. 1-32599) filed on August 26, 2005).
|
|
|
|
|
|
|
|
|
4
|
.5
|
|
|
|
Certificate of Incorporation of
Williams Partners Finance Corporation.
|
|
|
|
|
|
|
|
|
4
|
.6
|
|
|
|
Bylaws of Williams Partners
Finance Corporation.
|
|
|
|
|
|
|
|
|
4
|
.7
|
|
|
|
Indenture, dated June 20,
2006, by and among Williams Partners L.P., Williams Partners
Finance Corporation and JPMorgan Chase Bank, N.A. (attached as
Exhibit 4.1 to Williams Partners L.P.s current report on
Form 8-K
(File No. 1-32599) filed with the SEC on June 20,
2006).
|
|
|
|
|
|
|
|
|
4
|
.8
|
|
|
|
Form of
71/2% Senior
Note due 2011 (included as Exhibit 1 to Rule144A/Regulation
S Appendix of Exhibit 4.1 attached to Williams Partners
L.P.s current report on
Form 8-K
(File No. 1-32599) filed with the SEC on June 20,
2006).
|
|
|
|
|
|
|
|
|
4
|
.9
|
|
|
|
Registration Rights Agreement,
dated June 20, 2006, by and between Williams Partners L.P.,
Williams Partners Finance Corporation, Citigroup Global Markets
Inc. and Lehman Brothers Inc. (attached as Exhibit 4.3 to
Williams Partners L.P.s current report on
Form 8-K
(File No. 1-32599) filed with the SEC on June 20,
2006).
|
|
|
|
|
|
|
|
|
4
|
.10
|
|
|
|
Form of Senior Debt Indenture.
|
|
|
|
|
|
|
|
|
4
|
.11
|
|
|
|
Form of Subordinated Debt
Indenture.
|
|
|
|
|
|
|
|
|
5
|
.1
|
|
|
|
Opinion of Andrews Kurth LLP as to
the legality of the securities being registered.
|
|
|
|
|
|
|
|
|
8
|
.1
|
|
|
|
Opinion of Andrews Kurth LLP
relating to tax matters.
|
|
|
|
|
|
|
|
|
12
|
.1
|
|
|
|
Statement Regarding Computation of
Ratio of Earnings to Fixed Charges for the years ended
December 31, 2001, 2002, 2003, 2004 and 2005 and the six
months ended June 30, 2006.
|
|
|
|
|
|
|
|
|
23
|
.1
|
|
|
|
Consent of Ernst & Young
LLP.
|
|
|
|
|
|
|
|
|
23
|
.2
|
|
|
|
Consent of Ernst & Young
LLP.
|
|
|
|
|
|
|
|
|
23
|
.3
|
|
|
|
Consent of Andrews Kurth LLP
(contained in Exhibit 5.1 hereto).
|
|
|
|
|
|
|
|
|
23
|
.4
|
|
|
|
Consent of Andrews Kurth LLP
(contained in Exhibit 8.1 hereto).
|
|
|
|
|
|
|
|
|
24
|
.1
|
|
|
|
Power of Attorney (included on
signature page hereto).
|
|
|
|
|
|
|
|
|
25
|
.1
|
|
|
|
Statement of Eligibility of
Trustee on
Form T-1
with respect to the Senior Debt Indenture and the Subordinated
Debt Indenture.
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
|
|
|
|
|
|
|
99
|
.1
|
|
|
|
Restated consolidated financial
statements and notes of Williams Partners L.P. (incorporated by
reference to Exhibit 99.1 of Williams Partners L.P.s
Current Report on
Form 8-K
(File
No. 1-32599)
filed on September 22, 2006).
|
|
|
|
|
|
|
|
|
99
|
.2
|
|
|
|
Restated audited balance sheet of
Williams Partners GP LLC as of December 31, 2005 and
unaudited balance sheet of Williams Partners GP LLC as of
June 30, 2006 (incorporated by reference to
Exhibit 99.2 of Williams Partners L.P.s Current
Report on
Form 8-K
(File
No. 1-32599)
filed on September 22, 2006).
|
|
|
|
|
|
Filed herewith. |
|
* |
|
To be filed as an exhibit to a current report on
Form 8-K
in connection with a specific offering. |
|
# |
|
Pursuant to Item 601(b)(2) of
Regulation S-K,
the Registrant agrees to furnish supplementally a copy of any
omitted exhibit or schedule to the SEC upon request. |