RIGHTS

 

 

 

·	common units;

 

·	other partnership securities;

 

·	debt securities, which may be secured or unsecured senior or subordinated debt securities.

 

·	warrants to purchase common units, other partnership securities, rights or debt securities; and/or

 

·	rights to purchase common units, other partnership securities, warrants or debt securities.

 

 

 

 

 

 

About this Prospectus	i
Incorporation by Reference	ii
Where You Can Find More Information	ii
Cautionary Statement Regarding Forward-Looking Statements	iii
Cheniere Energy Partners, L.P.	1
Risk Factors	1
Use of Proceeds	1
Ratios of Earnings to Fixed Charges	1
Cash Distribution Policy and Restrictions on Distributions	2
How We Make Cash Distributions	4
Conflicts of Interest and Fiduciary Duties	13
Description of the Common Units	21
The Partnership Agreement	23
Description of Partnership Securities	36
Description of Debt Securities	37
Description of Warrants	47
Description of Rights	47
Selling Unitholder	49
Material Tax Consequences	53
Investment in Cheniere Energy Partners, L.P.  by Employee Benefit Plans	67
Plan of Distribution	68
Legal Matters	70
Experts	70

 

 

 

 

 

 

 

 

 

·	our Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the SEC on February 26, 2010;

 

·	our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010, as filed with the SEC on May 7, 2010 and August 6, 2010, respectively;

 

·	our Current Reports on Form 8-K, as filed with the SEC on January 21, 2010, March 31, 2010,  April 20, 2010, June 4, 2010, June 28, 2010, July 21, 2010 and August 6, 2010; and

 

·	the description of our common units contained in our registration statement on Form 8-A filed with the SEC on March 15, 2007, including any amendments and reports filed for the purpose of updating such description.

 

 

 

 

 

 

 

 

 

 

 

 

 

·	statements regarding our ability to pay distributions to our unitholders;

 

·	our expected receipt of cash distributions from Sabine Pass LNG, L.P. (“Sabine Pass LNG”);

 

·

statements regarding future levels of domestic natural gas production, supply or consumption; future levels of liquefied natural gas (“LNG”) imports into North America; sales of natural gas in North America; exports of natural gas from North America; and the transportation, other infrastructure or prices related to natural gas, LNG or other energy sources;

 

·	statements regarding any financing transactions or arrangements, or ability to enter into such transactions or arrangements;

 

·

statements regarding any terminal use agreement (“TUA”) or other agreements to be entered into or performed substantially in the future, including any cash distributions and revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total LNG regasification, liquefaction, or storage capacity that are, or may become, subject to TUAs or other contracts;

 

·	statements regarding counterparties to our TUAs, construction contracts and other contracts;

 

·	statements relating to the construction or operation of our proposed liquefaction facilities, including statements concerning the completion or expansion thereof by certain dates or at all, the costs related thereto and certain characteristics thereof;

 

·	statements regarding any business strategy, any business plans or any other plans, forecasts, projections or objectives, any or all of which are subject to change;

 

·	statements regarding legislative, governmental, regulatory, administrative or other public body actions, requirements, permits, investigations, proceedings or decisions; and

 

·	any other statements that relate to non-historical or future information.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	Six Months Ended June 30, 2010		Year Ended December 31,
			2009		2008		2007		2006		2005
Ratio of earnings to fixed charges	3.37x		2.75x		(a)		(a)		(a)		(a)

 

(a)	Earnings were inadequate to cover fixed charges.  The coverage deficiency totaled $10.2 million, $32.6 million, $78.7 million and $96.9 million for the years ended December 31, 2005, 2006, 2007 and 2008, respectively.

 

 

 

 

 

 

 

 

 

 

·	Our ability to pay distributions to our unitholders will depend on the performance of Sabine Pass LNG and its ability to distribute funds to us. In general, Sabine Pass LNG may make distributions under its indenture if:

 

·	no default or event of default under the indenture has occurred and is continuing or would occur as a consequence of such distribution; and

 

·

Sabine Pass LNG would, at the time of such distribution and after giving pro forma effect thereto as if such distribution had been made at the beginning of the applicable four-quarter period have been permitted to incur at least $1.00 of additional indebtedness pursuant to the 2.0 to 1.0 fixed charge coverage ratio test described in the indenture; and

 

·	Sabine Pass LNG has on deposit in a debt payment account an amount equal to 1/6th of the amount of interest due on the Sabine Pass LNG notes on the next interest payment date (plus any shortfall from any such month subsequent to the preceding interest payment date); and

 

·	Sabine Pass LNG has on deposit in a debt service reserve account an amount no less than the amount required to make the interest payments on the Sabine Pass LNG notes on the next succeeding interest payment date.

 

·	We may lack sufficient cash to pay distributions to our unitholders due to a number of factors that could adversely affect us. Please read “Risk Factors” for more information regarding these factors.

 

·	Our general partner has broad discretion to establish reserves for the prudent conduct of our business, and the establishment of those reserves could result in a reduction of our cash distributions to you from levels we currently anticipate pursuant to our stated distribution policy.

 

·	Even if our cash distribution policy is not modified, the amount of distributions that we pay under our cash distribution policy and the decision to pay any distribution is determined by our general partner, taking into consideration the terms of our partnership agreement.

 

·

Although our partnership agreement requires us to distribute our available cash, our partnership agreement may be amended. During the subordination period, with certain exceptions, our partnership agreement may not be amended without the approval of nonaffiliated common unitholders. However, our partnership agreement can be amended with the consent of our general partner and the approval of a majority of the outstanding common units after the subordination period has ended. Affiliates of our general partner own approximately 41.2% of the outstanding common units as of the date of this prospectus. If the subordinated units were converted into common units, affiliates of our general partner would own approximately 90.6% of the outstanding common units as of the date of this prospectus.

 

·	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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·	less the amount of cash reserves established by our general partner to:

 

·	provide for the proper conduct of our business;

 

·	comply with applicable law, any of our debt instruments, or other agreements; and

 

·	provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters;

 

·

plus all additional cash and cash equivalents on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under a credit facility, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to partners and with the intent of the borrower to repay such borrowings within 12 months.

 

 

 

 

 

 

 

 

 

 

 

·	$30 million (as described below); plus

 

·	all of our cash receipts, excluding cash from:

 

·	borrowings that are not working capital borrowings,

 

·	sales of equity securities and debt securities,

 

·	sales or other dispositions of assets outside the ordinary course of business,

 

·	the termination of commodity hedge contracts or interest rate swap agreements prior to the termination date specified therein,

 

·	capital contributions received, and

 

·	corporate reorganizations or restructurings; plus

 

·	working capital borrowings made after the end of a quarter but on or before the date of determination of operating surplus for the quarter; plus

 

·

cash distributions paid on equity issued in connection with the construction or development of a capital improvement or replacement asset during the period beginning on the date that we enter into a binding commitment to commence the construction or development of such capital improvement or replacement asset and ending on the earlier to occur of the date the capital improvement or replacement asset is placed into service and the date that it is abandoned or disposed of; less

 

·	all of our operating expenditures (as defined below); less

 

·	the amount of cash reserves established by our general partner to provide funds for future operating expenditures; less

 

·	all working capital borrowings not repaid within twelve months after having been incurred or repaid within such twelve-month period with the proceeds of additional working capital borrowings.

 

 

 

·	repayment of working capital borrowings deducted from operating surplus pursuant to the last bullet point of the definition of operating surplus above when such repayment actually occurs;

 

·	payments (including prepayments) of principal of and premium on indebtedness other than working capital borrowings;

 

·	expansion capital expenditures;

 

·	investment capital expenditures;

 

·	payment of transaction expenses (including taxes) relating to interim capital transactions;

 

·	distributions to our partners; and

 

·	non-pro rata repurchases of units of any class made with the proceeds of an interim capital transaction (as defined below).

 

 

 

 

 

 

 

 

 

·	borrowings other than working capital borrowings;

 

·	sales of debt and equity securities;

 

·	sales or other dispositions of assets for cash, other than inventory, accounts receivable and other assets sold in the ordinary course of business or as part of normal retirements or replacements of assets;

 

·	the termination of commodity hedge contracts or interest rate swap agreements prior to the termination date specified therein;

 

·	capital contributions received; and

 

·	corporate reorganizations or restructurings.

 

 

 

 

 

 

 

 

 

 

·

distributions of available cash from operating surplus on each of the outstanding common units, subordinated units and general partner units equaled or exceeded the initial quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;

 

·

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 initial quarterly distributions on all of the outstanding common units, subordinated units and general partner units during those periods on a fully diluted basis; and

 

·	there are no arrearages in payment of the initial quarterly distribution on the common units.

 

 

 

·	the subordination period will end and each subordinated unit will immediately convert into one common unit;

 

·	any existing arrearages in payment of the initial quarterly distribution on the common units will be extinguished; and

 

·	the general partner will have the right to convert its general partner units and its incentive distribution rights into common units or to receive cash in exchange for those interests.

 

 

 

·	distributions of available cash from operating surplus on each outstanding common unit, subordinated unit and general partner unit equaled or exceeded $2.55 (150% of the annualized initial quarterly distribution) for the four-quarter period immediately preceding that date;

 

·

the “adjusted operating surplus” (as defined below) generated during the four-quarter period immediately preceding that date equaled or exceeded the sum of a distribution of $2.55 (150% of the annualized initial quarterly distribution) on all of the outstanding common units, subordinated units and general partner units on a fully diluted basis; and

 

·	there are no arrearages in payment of the initial quarterly distribution on the common units.

 

 

 

·	operating surplus generated with respect to that period (other than amounts released from the distribution reserve); less

 

·	any net increase in working capital borrowings with respect to that period; less

 

·	any net reduction in cash reserves for operating expenditures with respect to that period not relating to an operating expenditure made with respect to that period; plus

 

·	any net decrease in working capital borrowings with respect to that period; plus

 

·	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.

 

 

 

 

·	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 initial quarterly distribution for that quarter;

 

·	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 initial quarterly distribution on the common units for any prior quarters during the subordination period;

 

·	Third, 98% to the subordinated unitholders, pro rata, and 2% to our general partner, until we distribute for each outstanding subordinated unit an amount equal to the initial quarterly distribution for that quarter; and

 

·	Thereafter, in the manner described in “—Incentive Distribution Rights” below.

 

 

 

 

·	First, 98% to all unitholders, pro rata, and 2% to the general partner, until we distribute for each outstanding unit an amount equal to the initial quarterly distribution for that quarter; and

 

·	Thereafter, in the manner described in “—Incentive Distribution Rights” below.

 

 

 

 

 

·	we have distributed available cash from operating surplus to the unitholders in an amount equal to the initial quarterly distribution; and

 

·	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 initial quarterly distribution to the common units;

 

 

·	First, 98% to all unitholders, pro rata, and 2% to our general partner, until each unitholder receives a total of $0.489 per unit for that quarter (the “first target distribution”);

 

·	Second, 85% to all unitholders, pro rata, and 15% to our general partner, until each unitholder receives a total of $0.531 per unit for that quarter (the “second target distribution”);

 

·	Third, 75% to all unitholders, pro rata, and 25% to our general partner, until each unitholder receives a total of $0.638 per unit for that quarter (the “third target distribution”); and

 

·	Thereafter, 50% to all unitholders, pro rata, and 50% to our general partner.

 

 

 

	Total Quarterly Distribution		Marginal Percentage Interest in Distributions
	Target Amount		Common and Subordinated Unitholders		General Partner
Initial quarterly distribution	$0.425		98%		2%
First Target Distribution	above $0.425 up to $0.489		98%		2%
Second Target Distribution	above $0.489 up to $0.531		85%		15%
Third Target Distribution	above $0.531 up to $0.638		75%		25%
Thereafter	above $0.638		50%		50%

 

 

 

 

 

·	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;

 

·	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 initial quarterly distribution on the common units; and

 

·	Thereafter, we will make all distributions of available cash from capital surplus as if they were from operating surplus.

 

 

 

 

 

 

 

·	the initial quarterly distribution;

 

·	the target distribution levels;

 

·	the unrecovered initial unit price; and

 

·	the number of common units into which a subordinated unit is convertible.

 

 

 

 

 

 

 

 

 

·	First, to the general partner and the holders of units who have negative balances in their capital accounts to the extent of and in proportion to those negative balances;

 

·	Second, 98% to the common unitholders, pro rata, and 2% to our general partner, until the capital account for each common unit is equal to the sum of:

 

(1)

the unrecovered initial unit price;

 

(2)

the amount of the initial quarterly distribution for the quarter during which our liquidation occurs; and

 

(3)

any unpaid arrearages in payment of the initial quarterly distribution;

 

·	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:

 

(1)

the unrecovered initial unit price; and

 

(2)

the amount of the initial quarterly distribution for the quarter during which our liquidation occurs;

 

·	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:

 

(1)

the sum of the excess of the first target distribution per unit over the initial 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 initial 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;

 

·	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:

 

(1)

the sum of the excess of the second target distribution per unit over the first target distribution per unit for each quarter of our existence; less

 

(2)

the cumulative amount per unit of any distributions 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;

 

·	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:

 

(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

 

·	Thereafter, 50% to all unitholders, pro rata, and 50% to our general partner.

 

 

 

 

 

·	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;

 

·	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

 

·	Thereafter, 100% to our general partner.

 

 

 

 

 

 

 

 

 

 

·	approved by a majority of the conflicts committee, although our general partner is not obligated to seek such approval;

 

·	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;

 

·	on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or

 

·	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.

 

 

 

 

 

·	amount and timing of asset purchases and sales;

 

·	cash expenditures;

 

·	borrowings;

 

·	issuance of additional units; and

 

·	the creation, reduction or increase of reserves in any quarter.

 

 

·	enabling our general partner or its affiliates to receive distributions on any subordinated units or incentive distribution rights held by them; or

 

·	hastening the expiration of the subordination period.

 

 

 

 

 

 

 

 

 

·	provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as it acted in good faith, meaning that it believed that the decision was in the best interests of our partnership;

 

·

generally provides that affiliated transactions and resolutions of conflicts of interest not approved by a majority of 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 our general partner in 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 favorable or advantageous to us;

 

·

provides that our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or those other persons acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that such conduct was criminal; and

 

·

provides that in resolving conflicts of interest, it will be presumed that in making its decision the conflicts committee or the general partner acted in good faith, and in any proceeding brought by or on behalf of any limited partner or us, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.

 

 

 

 

 

 

 

·

under a services agreement, we pay an affiliate of Cheniere a quarterly services fee equal to the lesser of (i) $2.5 million (subject to adjustment for inflation), plus fee arrearages (the "Maximum Quarterly Fee"), or (ii) such amount of our unrestricted cash and cash equivalents as remains after (x) we have distributed in respect of that quarter for each common unit then outstanding an amount equal to the initial quarterly distribution plus any common unit arrearages and the related general partner distribution and (y) adjusting for any cash needed to provide for the proper conduct of our business other than adjustments for operating cash flow from Sabine Pass LNG reserved for distributions under our partnership agreement for any one or more of the next four quarters (the "Minimum Quarterly Fee").  In the event that the services fee paid on any date is less than the Maximum Quarterly Fee, an amount equal to the difference between the Maximum Quarterly Fee and the Minimum Quarterly Fee will accrue as a fee arrearage up to a maximum aggregate amount of $20 million in fee arrearages. This fee does not include reimbursements by us of direct expenses that the affiliate incurs on our behalf, such as salaries of operational personnel performing services on-site at the Sabine Pass LNG receiving terminal and the cost of their employee benefits, including 401(k) plan, pension and health insurance benefits;

 

·

under an operation and maintenance agreement, Sabine Pass LNG pays an affiliate of Cheniere a fixed monthly fee of $130,000 (indexed for inflation) and reimburses such affiliate for its operating expenses, which consist primarily of labor expenses. The Cheniere affiliate will, under certain circumstances, be entitled to a bonus equal to 50% of the salary component of labor costs; and

 

·

under a management services agreement, Sabine Pass LNG pays its general partner a monthly fixed fee of $520,000 (indexed for inflation). The general partner of Sabine Pass LNG, in turn, pays an affiliate of Cheniere all amounts that it receives from Sabine Pass LNG under the management services agreement.

 

 

 

 

 

 

 

 

·	on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or

 

·	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).

 

 

 

 

 

·

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 our partnership, and the incurring of any other obligations;

 

·	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;

 

·	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 subject to any prior approval that may be required under our partnership agreement;

 

·	the use of our assets for any purpose consistent with the terms of our partnership agreement;

 

·	the negotiation, execution and performance of any contracts, conveyances or other instruments;

 

·	the distribution of partnership cash;

 

·	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;

 

·	the maintenance of insurance for our benefit and the benefit of our partners;

 

·	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 subject to the restrictions in our partnership agreement;

 

·	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;

 

·	the indemnification of any person against liabilities and contingencies to the extent permitted by law;

 

·	the entering into of listing arrangements with any national securities exchange and the delisting of some or all of our securities from, or requesting that trading be suspended on, any such exchange subject to the limitations specified in our partnership agreement;

 

·	the purchase, sale or other acquisition or disposition of our securities, or the issuance of options, rights, warrants and appreciation rights relating to our securities;

 

·	the undertaking of any action in connection with our participation in any affiliate; and

 

·	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.

 

 

 

 

 

 

 

 

 

 

 

·	the fiduciary duties imposed on our general partner by the Delaware Act;

 

·	material modifications of these duties contained in our partnership agreement; and

 

·	certain rights and remedies of unitholders contained in the Delaware Act.

 

State law fiduciary duty standards	Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. The duty of care, in the absence of a provision in a partnership agreement providing otherwise, would generally require a general partner to act for the partnership in the same manner as a prudent person would act on his own behalf. The duty of loyalty, in the absence of a provision in a partnership agreement providing otherwise, would generally 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.
Partnership agreement modified standards	Our partnership agreement contains provisions that waive or consent to conduct by our general partner and its affiliates that might otherwise raise issues as to compliance with fiduciary duties or applicable law. For example, 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 our unitholders whatsoever. These standards reduce the obligations to which our general partner would otherwise be held.
	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 a majority of the conflicts committee of the board of directors of our general partner must be:

 

	•on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or •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).
	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.   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 their officers and directors will not be liable for monetary damages to us or our limited partners for errors of judgment or 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 or, in the case of a criminal matter, acted with knowledge that the indemnitees’ conduct was criminal.
Rights and remedies of unitholders	The Delaware Act generally provides that a limited partner may institute legal action on behalf of the partnership to recover damages from a third party where a general partner has refused to institute the action or where an effort to cause a general partner to do so is not likely to succeed. These actions include actions against a general partner for breach of its fiduciary duties or of our partnership agreement. In addition, the statutory or case law of some jurisdictions may permit a limited partner to institute legal action on behalf of itself and all other similarly situated limited partners to recover damages from a general partner for violations of its fiduciary duties to the limited partners

 

 

 

 

 

 

 

 

 

·	surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges;

 

·	special charges for services requested by a holder of a common unit; and

 

·	other similar fees or charges.

 

 

 

 

 

 

·	becomes the record holder of our common units and is an assignee until admitted into our partnership as a substituted limited partner;

 

·	requests admission as a substituted limited partner in our partnership;

 

·	executes and agrees to comply with and be bound by the terms and conditions of our partnership agreement;

 

·	represents that the transferee has the right, power and authority and, if an individual, the capacity to enter into our partnership agreement;

 

·	grants powers of attorney to the officers of our general partner and any liquidator of us as specified in our partnership agreement; and

 

·	makes the waivers and gives the consents and approvals contained in our partnership agreement.

 

 

 

 

·	the right to negotiate the common units to a purchaser or other transferee; and

 

·	the right to transfer the right to request admission as a substituted limited partner in our partnership for the transferred common units.

 

 

·	will not receive cash distributions;

 

·	will not be allocated any of our income, gain, deduction, losses or credits for federal income tax or other tax purposes;

 

·	may not receive some federal income tax information or reports furnished to record holders of common units; and

 

·	will have no voting rights;

 

 

 

 

 

 

 

·	with regard to distributions of available cash, please read “How We Make Cash Distributions;”

 

·	with regard to the fiduciary duties of our general partner, please read “Conflicts of Interest and Fiduciary Duties;”

 

·	with regard to the transfer of common units, please read “Description of the Common Units—Transfer of Common Units;” and

 

·	with regard to allocations of taxable income and taxable loss, please read “Material Tax Consequences.”

 

 

 

 

 

 

 

 

 

 

 

·	during the subordination period, the approval of a majority of the outstanding 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

 

·	after the subordination period, the approval of a majority of the outstanding common units.

 

 

 

Issuance of additional units	During the subordination period, we may not issue any additional common units or units senior to or pari passu with our common units without the approval of the conflicts committee of the board of directors of our general partner.
Amendment of our partnership agreement	Certain amendments may be made by our general partner without the approval of the limited partners. Other amendments generally require the approval of a unit majority. Please read “—Amendment of Our Partnership Agreement.”
Merger or conversion of our partnership or the sale of all or substantially all of our assets	Unit majority in certain circumstances. Please read “—Merger, Conversion, Sale or Other Disposition of Assets.”
Dissolution of our partnership	Unit majority. Please read “—Termination and Dissolution.”
Continuation of our partnership upon dissolution	Unit majority. Please read “—Termination and Dissolution.”
Withdrawal of our general partner	Under most circumstances, the approval of a majority of the common units, excluding common units held by our general partner and its affiliates, is required for the withdrawal of our general partner prior to March 31, 2017 in a manner that would cause a dissolution of our partnership. Please read “—Withdrawal or Removal of Our General Partner.”
Removal of our general partner	Not less than 66⅔% of the outstanding common and subordinated units, voting as a single class, including common and subordinated units held by our general partner and its affiliates. Please read “—Withdrawal or Removal of Our General Partner.”
Transfer of our general partner interest	Our general partner may transfer all, but not less than all, of its general partner interest in us, without a vote of our limited partners, to an affiliate or to 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 affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to March 31, 2017. Please read “—Transfer of General Partner Interest.”
Transfer of incentive distribution rights	Except for transfers to an affiliate or to another person in connection with our general partner’s 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 affiliates, is required in most circumstances for a transfer of the incentive distribution rights to a third party prior to March 31, 2017. Please read “—Transfer of Incentive Distribution Rights.”
Transfer of ownership interests in our general partner	No approval required at any time. Please read “—Transfer of Ownership Interests in Our General Partner.”

 

 

 

·	to remove or replace our general partner,

 

·	to approve some amendments to our partnership agreement, or

 

·	to take other action under our partnership agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·	a change in our name, the location of our principal place of business, our registered agent or our registered office;

 

·	the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;

 

·

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 we and our subsidiaries will not be treated as an association taxable as a corporation or otherwise taxed as an entity for federal income tax purposes;

 

·

an amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors, officers, trustees or agents from in any manner being subjected to the provisions of the Investment Company Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;

 

·	an amendment that our general partner determines to be necessary or appropriate for the creation, authorization or issuance of additional partnership securities;

 

·	any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone;

 

·	an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our partnership agreement;

 

·	any amendment that our general partner determines to be necessary or appropriate to reflect and account for our formation of, or our investment in, any corporation, partnership, joint venture, limited liability company or other entity, as otherwise permitted by our partnership agreement;

 

·	a change in our fiscal year or taxable year and related changes;

 

·	mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the merger or conveyance other than those that it receives by way of the merger or conveyance; or

 

·	any other amendments substantially similar to any of the matters described above.

 

 

·	do not adversely affect in any material respect the limited partners considered as a whole or any particular class of limited partners;

 

·	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;

 

·	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;

 

·	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

 

·	are required to effect the intent of the provisions of our partnership agreement or are otherwise contemplated by our partnership agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·	the action would not result in the loss of limited liability under Delaware law of any limited partner; and

 

·	neither our partnership nor any of our 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 (to the extent not already so treated or taxed).

 

 

 

 

 

 

 

 

·	the subordination period will end and all outstanding subordinated units will immediately convert into common units on a one-for-one basis;

 

·	any existing arrearages in payment of the initial quarterly distribution on the common units will be extinguished; and

 

·	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.

 

 

 

 

 

 

·	an affiliate of our general partner (other than an individual), or

 

·	another entity in connection with the merger or consolidation of our general partner with or into such other entity or the transfer by our general partner of all or substantially all of its assets to such other entity,

 

 

 

 

 

 

 

 

 

 

·	the subordination period will end and all outstanding subordinated units will immediately convert into common units on a one-for-one basis;

 

·	any existing arrearages in payment of the initial quarterly distribution on the common units will be extinguished; and

 

·	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.

 

 

·	prior to the time the unitholder becomes an interested unitholder, our general partner approved either the business combination or the transaction that resulted in the unitholder becoming an interested unitholder;

 

·

upon consummation of the transaction that resulted in the unitholder’s becoming an interested unitholder, the interested unitholder owned at least 85% of our outstanding limited partner units at the time the transaction commenced, excluding for purposes of determining the number of limited partner units outstanding those limited partner units owned:

 

·	by persons who are directors and also officers; and

 

·	by employee unit plans in which employee participants do not have the right to determine confidentially whether units held subject to the plan will be tendered in a tender or exchange offer; or

 

·

at or subsequent to such time the business combination is approved by our general partner and authorized at an annual or special meeting of holders of our limited partner units, and not by written consent, by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting limited partner units that are not owned by the interested unitholder.

 

 

·	any merger or consolidation involving the partnership and the interested unitholder;

 

·	any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the partnership involving the interested unitholder;

 

·	subject to certain exceptions, any transaction that results in the issuance or transfer by the partnership of any limited partner units of the partnership to the interested unitholder;

 

·	any transaction involving the partnership that has the effect of increasing the proportionate share of the units of any class or series of the partnership beneficially owned by the interested unitholder; or

 

·	the receipt by the interested unitholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the partnership.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·	obtain proof of the federal income tax status of our limited partners (and their owners, to the extent relevant); and

 

·

permit our general partner to redeem the units held by any limited partner whose tax status has or is reasonably likely to have such a material adverse effect or who fails to comply with the procedures instituted by our general partner to obtain proof of the federal income tax status. The redemption price in the case of such a redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for redemption.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

·	the maximum number of securities to constitute the series and the designation and ranking thereof;

 

·

the annual distribution rate, if any, on securities of the series, whether such rate is fixed or variable or both, the dates from which distributions will begin to accrue or accumulate, whether distributions will be cumulative and whether such distributions will be paid in cash, securities or otherwise;

 

·

whether the securities of the series will be redeemable and, if so, the price and the terms and conditions on which the securities of the series may be redeemed, including the time during which securities of the series may be redeemed and any accumulated distributions thereof that the holders of the securities of the series will be entitled to receive upon the redemption thereof;

 

·	the liquidation preference, if any, applicable to securities of the series;

 

·

the terms and conditions, if any, on which the securities of the series will be convertible into, or exchangeable for, securities of any other class or classes of partnership securities, including the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same; and

 

·	the voting rights, if any, of the securities of the series.

 

 

 

 

 

 

 

 

 

 

 

·	the title and type of the debt securities;

 

·	the total principal amount of the debt securities;

 

·	the percentage of the principal amount at which the debt securities will be issued and any payments due if the maturity of the debt securities is accelerated;

 

·	the dates on which the principal of the debt securities will be payable;

 

·	the interest rate which the debt securities will bear and the interest payment dates for the debt securities;

 

·	any conversion or exchange features;

 

·	any optional redemption periods;

 

·	any sinking fund or other provisions that would obligate us to repurchase or otherwise redeem some or all of the debt securities;

 

·	any provisions granting special rights to holders when a specified event occurs;

 

·	any changes to or additional events of default or covenants;

 

·	any special tax implications of the debt securities, including provisions for original issue discount securities, if offered; and

 

·	any other terms of the debt securities.

 

 

 

 

 

·	will pay the principal of, and interest and any premium on, the debt securities when due;

 

·	will maintain a place of payment;

 

·	will deliver a certificate to the trustee each fiscal year reviewing our compliance with our obligations under the indentures;

 

·	will preserve our corporate existence; and

 

·	will segregate or deposit with any paying agent sufficient funds for the payment of any principal, interest or premium on or before the due date of such payment.

 

 

 

·

either: (a) we are the surviving Person; or (b) the Person formed by or surviving any such consolidation, amalgamation or merger or resulting from such conversion (if other than us) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership organized or existing under the laws of the United States, any State thereof or the District of Columbia;

 

·

the Person formed by or surviving any such conversion, consolidation, amalgamation or merger (if other than us) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all of our obligations under such indenture and the debt securities governed thereby pursuant to agreements reasonably satisfactory to the trustee, which may include a supplemental indenture;

 

·	we or the successor will not immediately be in default under such indenture; and

 

·

we deliver an officer’s certificate and opinion of counsel to the trustee stating that such consolidation, amalgamation, merger, conveyance, sale, transfer or lease and any supplemental indenture comply with Article Eight of the indenture and that all conditions precedent set forth in such indenture relating to such transaction have been complied with.

 

 

 

 

 

(1)

default in the payment of any interest upon any debt security of that series when it becomes due and payable, and continuance of such default for a period of 30 days;

 

(2)

default in the payment of the principal of (or premium, if any, on) any debt security of that series at its maturity;

 

(3)

default in the performance, or breach, of any covenant set forth in Article Ten of the applicable indenture (other than a covenant, a default in the performance of which or the breach of which is elsewhere specifically dealt with as an event of default or which has expressly been included in such indenture solely for the benefit of one or more series of debt securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to us by the trustee or to us and the trustee by the holders of at least 25% in principal amount of the then-outstanding debt securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” thereunder;

 

(4)

default in the performance, or breach, of any covenant in the applicable indenture (other than a covenant set forth in Article Ten of such indenture or any other covenant, a default in the performance of which or the breach of which is elsewhere specifically dealt with as an event of default or which has expressly been included in such indenture solely for the benefit of one or more series of debt securities other than that series), and continuance of such default or breach for a period of 180 days after there has been given, by registered or certified mail, to us by the trustee or to us and the trustee by the holders of at least 25% in principal amount of the then-outstanding debt securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” thereunder;

 

(5)

we, pursuant to or within the meaning of any bankruptcy law, (i) commence a voluntary case, (ii) consent to the entry of any order for relief against us in an involuntary case, (iii) consent to the appointment of a custodian of us or for all or substantially all of our property, or (iv) make a general assignment for the benefit of our creditors;

 

(6)

a court of competent jurisdiction enters an order or decree under any bankruptcy law that (i) is for relief against us in an involuntary case, (ii) appoints a custodian of us or for all or substantially all of our property, or (iii) orders the liquidation of us, and the order or decree remains unstayed and in effect for 60 consecutive days;

 

(7)

default in the deposit of any sinking fund payment when due; or

 

(8)

any other event of default provided with respect to debt securities of that series in accordance with provisions of the indenture related to the issuance of such debt securities.

 

 

 

 

 

 

 

(1)

change the stated maturity of the principal of, or any installment of principal of or interest on, any debt security, reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, reduce the amount of the principal of an original issue discount security that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to the applicable indenture, change the coin or currency in which any debt security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the redemption date therefor);

 

(2)

reduce the percentage in principal amount of the then-outstanding debt securities of any series, the consent of the holders of which is required for any such amendment or supplemental indenture, or the consent of the holders of which is required for any waiver of compliance with certain provisions of the applicable indenture or certain defaults thereunder and their consequences provided for in the applicable indenture;

 

(3)

modify any of the provisions set forth in (i) the provisions of the applicable indenture related to the holder’s unconditional right to receive principal, premium, if any, and interest on the debt securities or (ii) the provisions of the applicable indenture related to the waiver of past defaults under such indenture;

 

(4)

waive a redemption payment with respect to any debt security; provided, however, that any purchase or repurchase of debt securities shall not be deemed a redemption of the debt securities;

 

(5)

release any guarantor from any of its obligations under its guarantee or the applicable indenture, except in accordance with the terms of such indenture (as amended or supplemented); or

 

(6)

make any change in the foregoing amendment and waiver provisions, except to increase any percentage provided for therein or to provide that certain other provisions of the applicable indenture cannot be modified or waived without the consent of the holder of each then-outstanding debt security affected thereby.

 

 

(1)

cure any ambiguity or defect or to correct or supplement any provision therein that may be inconsistent with any other provision therein;

 

(2)

evidence the succession of another Person to us and the assumption by any such successor of our covenants therein and, to the extent applicable, of the debt securities;

 

(3)

provide for uncertificated debt securities in addition to or in place of certificated debt securities;  provided that the uncertificated debt securities are issued in registered form for purposes of Section 163(f) of the Internal Revenue Code of 1986, as amended (the “Code”), or in the manner such that the uncertificated debt securities are described in Section 163(f)(2)(B) of the Code;

 

(4)

add a guarantee and cause any Person to become a guarantor, and/or to evidence the succession of another Person to a guarantor and the assumption by any such successor of the guarantee of such guarantor therein and, to the extent applicable, endorsed upon any debt securities of any series;

 

(5)

secure the debt securities of any series;

 

(6)

add to our covenants such further covenants, restrictions, conditions or provisions as we shall consider to be appropriate for the benefit of the holders of all or any series of debt securities (and if such covenants, restrictions, conditions or provisions are to be for the benefit of less than all series of debt securities, stating that such covenants are expressly being included solely for the benefit of such series), to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an event of default permitting the enforcement of all or any of the several remedies provided in the applicable indenture as set forth therein, or to surrender any right or power therein conferred upon us;  provided, that in respect of any such additional covenant, restriction, condition or provision, such amendment or supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an event of default or may limit the remedies available to the trustee upon such an event of default or may limit the right of the holders of a majority in aggregate principal amount of the debt securities of such series to waive such an event of default;

 

(7)

make any change to any provision of the applicable indenture that does not adversely affect the rights or interests of any holder of debt securities issued thereunder;

 

(8)

provide for the issuance of additional debt securities in accordance with the provisions set forth in the applicable indenture on the date of such indenture;

 

(9)

add any additional defaults or events of default in respect of all or any series of debt securities;

 

(10)

add to, change or eliminate any of the provisions of the applicable indenture to such extent as shall be necessary to permit or facilitate the issuance of debt securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons;

 

(11)

change or eliminate any of the provisions of the applicable indenture; provided that any such change or elimination shall become effective only when there is no debt security outstanding of any series created prior to the execution of such amendment or supplemental indenture that is entitled to the benefit of such provision;

 

(12)

establish the form or terms of debt securities of any series as permitted thereunder, including to reopen any series of any debt securities as permitted thereunder;

 

(13)

evidence and provide for the acceptance of appointment thereunder by a successor trustee with respect to the debt securities of one or more series and to add to or change any of the provisions of the applicable indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one trustee, pursuant to the requirements of such indenture;

 

(14)

conform the text of the applicable indenture (and/or any supplemental indenture) or any debt securities issued thereunder to any provision of a description of such debt securities appearing in a prospectus or prospectus supplement or an offering memorandum or offering circular to the extent that such provision appears on its face to have been intended to be a verbatim recitation of a provision of such indenture (and/or any supplemental indenture) or any debt securities issued thereunder; or

 

(15)

modify, eliminate or add to the provisions of the applicable indenture to such extent as shall be necessary to effect the qualification of such indenture under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), or under any similar federal statute subsequently enacted, and to add to such indenture such other provisions as may be expressly required under the Trust Indenture Act.

 

 

 

 

(1)

the rights of holders of outstanding debt securities to receive payments in respect of the principal of, or interest or premium, if any, on, such debt securities when such payments are due from the trust referred to below;

 

(2)

our obligations with respect to the debt securities concerning temporary debt securities, registration of debt securities, mutilated, destroyed, lost or stolen debt securities, the maintenance of an office or agency for payment and money for security payments held in trust;

 

(3)

the rights, powers, trusts, duties and immunities of the trustee and our and each guarantor’s obligations in connection therewith; and

 

(4)

the Legal Defeasance and Covenant Defeasance (as defined below) provisions of the applicable indenture.

 

 

 

(1)

we must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the debt securities, cash in U.S. dollars, non-callable government securities, or a combination of cash in U.S. dollars and non-callable U.S. government securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, and interest and premium, if any, on, the outstanding debt securities on the stated date for payment thereof or on the applicable redemption date, as the case may be, and we must specify whether the debt securities are being defeased to such stated date for payment or to a particular redemption date;

 

(2)

in the case of Legal Defeasance, we must deliver to the trustee an opinion of counsel to the trustee confirming that (a) we have received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the issue date of the debt securities, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the holders of the outstanding debt securities will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such Legal Defeasance had not occurred;

 

(3)

in the case of Covenant Defeasance, we must deliver to the trustee an opinion of counsel to the trustee confirming that the holders of the outstanding debt securities will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

 

(4)

no default or event of default shall have occurred and be continuing on the date of such deposit (other than a default or event of default resulting from the borrowing of funds to be applied to such deposit);

 

(5)

the deposit must not result in a breach or violation of, or constitute a default under, any other instrument to which we or any guarantor is a party or by which we or any guarantor is bound;

 

(6)

such Legal Defeasance or Covenant Defeasance must not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the applicable indenture) to which we are, or any of our subsidiaries is, a party or by which we are, or any of our subsidiaries is, bound;

 

(7)

we must deliver to the trustee an officer’s certificate stating that the deposit was not made by us with the intent of preferring the holders of debt securities over our other creditors with the intent of defeating, hindering, delaying or defrauding our creditors or the creditors of others;

 

(8)

we must deliver to the trustee an officer’s certificate stating that all conditions precedent set forth in clauses (1) through (6) of this paragraph have been complied with; and

 

(9)

we must deliver to the trustee an opinion of counsel (which opinion of counsel may be subject to customary assumptions, qualifications, and exclusions) stating that all conditions precedent set forth in clauses (2), (3) and (6) of this paragraph have been complied with.

 

 

 

(1)

either (a) all of the debt securities theretofore authenticated and delivered under such indenture (except lost, stolen or destroyed debt securities that have been replaced or paid and debt securities for the payment of which money has theretofore been deposited in trust or segregated and held in trust by us and thereafter repaid to us or discharged from such trust) have been delivered to the trustee for cancellation or (b) all debt securities not theretofore delivered to the trustee for cancellation have become due and payable, will become due and payable at their stated maturity within one year, or are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the expense, of us, and we or the guarantors, if any, have irrevocably deposited or caused to be deposited with the trustee funds, in an amount sufficient to pay and discharge the entire indebtedness on the debt securities not theretofore delivered to the trustee for cancellation, for principal of and premium, if any, and interest on the debt securities to the date of deposit (in the case of debt securities that have become due and payable) or to the stated maturity or redemption date, as the case may be, together with instructions from us irrevocably directing the trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

 

(2)

we have paid all other sums then due and payable under such indenture by us; and

 

(3)

we have delivered to the trustee an officer’s certificate and an opinion of counsel, which state that all conditions precedent under such indenture relating to the satisfaction and discharge of such indenture have been complied with.

 

 

 

 

 

 

 

 

 

 

 

 

·	a default in the payment of all or any portion of the obligations on any designated senior debt (“payment default”) occurs that has not been cured or waived, or

 

·

any other default occurs and is continuing with respect to designated senior debt pursuant to which the maturity thereof may be accelerated (“non-payment default”) and, solely with respect to this clause, the trustee for the subordinated debt securities receives a notice of the default (a “payment blockage notice”) from the trustee or other representative for the holders of such designated senior debt.

 

 

 

 

 

 

 

 

 

·	by the applicable depositary to a nominee of the depositary;

 

·	by any nominee to the depositary itself or another nominee; or

 

·	by the depositary or any nominee to a successor depositary or any nominee of the successor.

 

 

 

 

·	will not be entitled to have any of the underlying debt securities registered in their names;

 

·	will not receive or be entitled to receive physical delivery of any of the underlying debt securities in definitive form; and

 

·	will not be considered the owners or holders under the indenture relating to those debt securities.

 

 

 

 

 

 

 

 

 

 

 

 

 

·	the title of the warrants;

 

·	the securities purchasable upon the exercise of such warrants;

 

·	the exercise price;

 

·	the aggregate number of warrants to be issued;

 

·	the principal amount of securities purchasable upon exercise of each warrant;

 

·	the price or prices at which each warrant will be issued;

 

·	the procedures for exercising the warrants;

 

·	the date upon which the exercise of warrants will commence;

 

·	the expiration date, and any other material terms of the warrants; and

 

·	any other terms of such warrants, including the terms, procedures and limitations relating to the exchange and exercise of such warrants.

 

 

 

 

 

 

·	the price, if any, per right;

 

·	the exercise price payable for each common unit, partnership security, debt security or warrant upon the exercise of the rights;

 

·	the number of rights issued or to be issued to each unitholder;

 

·	the number and terms of the common units, partnership securities, debt securities or warrants that may be purchased per each right;

 

·	the extent to which the rights are transferable;

 

·	any other terms of the rights, including the terms, procedures and limitations relating to the exchange and exercise of the rights;

 

·	the respective dates on which the holder’s ability to exercise the rights will commence and will expire;

 

·	the extent to which the rights may include an over-subscription privilege with respect to unsubscribed securities; and

 

·	if applicable, the material terms of any standby underwriting or purchase arrangement entered into by us in connection with the offering of such rights.

 

 

 

 

 

 

 

 

 

	Common Units Beneficially Owned Immediately Prior to this Offering		Common Units to be Offered	Common Units Beneficially Owned After this Offering		Subordinated Units Beneficially Owned Prior to and Immediately After this Offering	Percentage of Total Common and Subordinated Units to be Beneficially Owned Immediately After this Offering
	Number	Percentage		Number	Percentage
Cheniere Energy, Inc.(1)(2)	10,891,357(3)	41%(4)	10,891,357	0	0%	135,383,831	84%(4)

 

(1)

Cheniere Energy, Inc., a Delaware corporation (“Cheniere”), is the sole stockholder of Cheniere LNG, Inc., a Delaware corporation (“CLNG”).  CLNG is the sole stockholder of Cheniere LNG Terminals, Inc., a Delaware corporation (“Terminals”). Terminals is the sole member of Cheniere LNG Holdings, LLC, a Delaware limited liability company (“Holdings”).  Holdings is (i) the sole member of Cheniere Energy Partners GP, LLC, a Delaware limited liability company (“General Partner”) and our sole general partner, (ii) the sole member of Cheniere Common Units Holding, LLC, a Delaware limited liability company (“CCUH”) and holder of 10,891,357 of our common units, and (iii) the sole member of Cheniere Subsidiary Holdings, LLC, a Delaware limited liability company (“CSHL”) and holder of all of our outstanding subordinated units.  The business address of Cheniere, CLNG, Terminals, Holdings, General Partner, CCUH and CSHL is 700 Milam Street, Suite 800, Houston, Texas 77002.

 

(2)

Each of Cheniere, CLNG and Terminals, as indirect owners of CCUH, and Holdings, as direct owner of CCUH, may be deemed to be the beneficial owner of the common units set forth in the table above. CCUH is the record and beneficial owner of the common units. CSHL is the record and beneficial owner of 135,383,831 subordinated units (which represent all of the outstanding subordinated units), which may be converted into common units on a one-for-one basis upon the termination of the subordination period under certain circumstances set forth in our partnership agreement. Please read “How We Make Cash Distributions—Subordination Period.”

 

(3)	Does not include 135,383,831 common units issuable upon conversion of the subordinated units. As of October 6, 2010, none of the 135,383,831 subordinated units were convertible within 60 days.

 

(4)	Based on 26,416,357 common units outstanding as of October 5, 2010.