sv3za
As filed with the Securities and Exchange Commission on
March 9, 2007
Registration
No. 333-139978
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WILLIAMS PARTNERS
L.P.
(Exact name of registrants as
specified in their charter)
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Delaware
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20-2485124
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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
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 MARCH 9, 2007
PROSPECTUS
9,710,522 COMMON
UNITS
WILLIAMS PARTNERS
L.P.
REPRESENTING LIMITED PARTNER
INTERESTS
Up to 9,710,522 common units may be offered and sold from
time to time by the selling unitholders named in this prospectus
or in any supplement to this prospectus. The selling unitholders
may sell the common units at various times and in various types
of transactions, including sales in the open market, sales in
negotiated transactions and sales by a combination of these
methods. The common units covered by this prospectus may be sold
at market prices prevailing at the time or at negotiated prices.
We will not receive any proceeds from the sale of the common
units by the selling unitholders.
Our common units are listed for trading on the New York Stock
Exchange under the ticker symbol WPZ.
Investing in our securities involves a high degree of risk.
Limited partnerships are inherently different from corporations.
Please read Risk Factors beginning on page 2 of
this prospectus 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 ,
2007.
TABLE OF
CONTENTS
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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 SEC using a shelf
registration process. Under this shelf registration process, the
selling unitholders may, from time to time, sell up to 9,710,522
common units.
This prospectus provides you with a general description of us
and the common units that may be offered by the selling
unitholders. In connection with any offer or sale of common
units by the selling unitholders under this prospectus, the
selling unitholders are required to provide this prospectus and,
in certain cases, a prospectus supplement that will contain
specific information about the selling unitholders, the terms of
the applicable offering and the securities being offered. The
prospectus supplement also may add to, update or change
information in this prospectus. If there is any inconsistency
between the information in this prospectus and any prospectus
supplement, you should rely on the information in the prospectus
supplement.
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.
ii
ABOUT
WILLIAMS PARTNERS L.P.
We are 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 three business
segments:
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Gathering and Processing-West. Our Gathering
and Processing-West segment includes Williams Four Corners LLC,
or Four Corners. 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. These
assets generate revenues by providing natural gas gathering,
transporting and processing services to customers under a range
of contractual arrangements.
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Gathering and Processing-Gulf. Our Gathering
and Processing-Gulf segment includes our equity investment in
Discovery Producer Services LLC, or Discovery, and the Carbonate
Trend gathering pipeline. We own a 40% interest in Discovery.
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. Our Carbonate
Trend gathering pipeline is an unregulated sour gas gathering
pipeline consisting of approximately 34 miles of pipeline
of the coast of Alabama. These assets generate revenues by
providing natural gas gathering, transporting and processing
services and integrated natural gas fractionating services to
customers under a range of contractual arrangements.
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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 our 40% interest in Discovery as an equity
investment and, therefore, do not consolidate its financial
results.
Williams Partners GP LLC, our general partner, is an indirect
wholly owned subsidiary of Williams, and holds no assets other
than its 2% general partner interest and incentive distribution
rights in us.
Our principal executive offices are located at One Williams
Center, Tulsa, Oklahoma
74172-0172,
and our phone number is
918-573-2000.
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RISK
FACTORS
Limited partner interests are inherently different from the
capital stock of a corporation, although many of the business
risks to which we are subject are similar to those that would be
faced by a corporation engaged in a similar business. Before you
invest in our securities, you should 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.
USE OF
PROCEEDS
The common units to be offered and sold pursuant to this
prospectus will be offered and sold by the selling unitholders.
We will not receive any proceeds from the sale of common units
by the selling unitholders.
DESCRIPTION
OF THE COMMON UNITS
General
The common units, the Class B units and the subordinated
units are each separate classes of limited partner interests in
us. The holders of each class 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, Class B 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
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.
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.
2
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.
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.
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. 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,
in part, on Discoverys ability to make cash distributions
to us. Discoverys management committee, on which we are
represented, has broad discretion to establish reserves for the
prudent conduct of its business. The establishment of those
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reserves could result in a reduction in Discoverys 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 December 31, 2006, Williams owned
approximately 4.9% of the outstanding common units, 100% of the
outstanding subordinated units and none of the outstanding
Class B 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 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 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
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.
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; 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. The gas purchase contract will terminate on
December 31, 2007, and we will not receive any partial
credit for general and administrative expenses after 2009.
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
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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 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, Class B units (while
outstanding) 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, Class B units (while
outstanding) 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, Class B unit (while outstanding)
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, Class B units (while
outstanding) 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.
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, if any Class B units remain outstanding, 98%
to the Class B unitholders, pro rata, and 2% to our general
partner, until we distribute for each outstanding Class B
unit an amount equal to the minimum quarterly distribution for
that quarter;
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fourth, if any Class B units remain outstanding, 98%
to the Class B unitholders, pro rata, and 2% to our general
partner, until we distribute for each outstanding Class B
unit an amount equal to any arrearages in payment of the minimum
quarterly distribution on the Class B units for any prior
quarters;
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fifth, if any subordinated units remain outstanding, 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.
7
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 (other than Class B
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;
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second, if any Class B units remain outstanding, 98%
to the Class B unitholders, pro rata, and 2% to our general
partner, until we distribute for each outstanding Class B
unit an amount equal to the minimum quarterly distribution for
that quarter;
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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, Class B 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 and Class B 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 or
Class B 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.
8
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 Interest in
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Total Quarterly Distribution
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Distributions
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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;
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third, if any Class B units remain outstanding, 98%
to the Class B unitholders, pro rata, and 2% to our general
partner, until we distribute for each Class B unit, an
amount of available cash from capital surplus equal to any
unpaid arrearages in payment of the minimum quarterly
distribution on the Class B 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
9
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.
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.
10
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, if any Class B units remain outstanding, 98%
to the Class B 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
Class B 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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fourth, 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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fifth, 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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sixth, 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
(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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seventh, 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
11
(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 and, if
outstanding, Class B 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
and, if any Class B units remain outstanding, Class B
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 Class B
units, on the one hand, and subordinated units, on the other
hand, 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.
Class B
Units
The description of distributions payable on the Class B
units above reflect the distributions payable on the
Class B units within 180 days of their issuance on
December 13, 2006.
The Class B units will convert into common units on a
one-for-one
basis upon the approval of a majority of the votes cast by
common unitholders provided that the total number of votes cast
is at least a majority of common units eligible to vote
(excluding common units held by Williams and its affiliates). We
are required to seek such approval as promptly as practicable
and not later than 180 days from December 13, 2006. If
we have not obtained the requisite unitholder approval of the
conversion of the Class B units within 180 days
12
from December 13, 2006, the Class B units will be
entitled to receive 115% of the quarterly distribution and
distributions on liquidation payable on each common unit.
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 Consequences.
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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.
13
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.
14
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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The Class B units have the same voting rights as if they
were common units but are entitled to vote as a separate class
on any matters that adversely affect the rights or preferences
of the Class B units in relation to other classes of
partnership interests or as required by law. The Class B
units will not be entitled to vote on the approval of the
conversion of the Class B units into common units
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
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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 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.
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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 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 December 31, 2006, our general
partner and its affiliates owned approximately 21.0% 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;
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(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;
(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.
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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 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.
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 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.
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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 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.
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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
Consequences 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 distribute
the votes on those common units in the same ratios as the votes
of limited partners on other units are cast.
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
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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.
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.
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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;
(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.
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.
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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.
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.
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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
should be tax-free to unitholders and us so long as we, at that
time, do not have liabilities in excess of the tax basis of our
assets. Thereafter, we would be treated as a corporation for
federal income tax purposes.
If we were 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 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 do not pay
any federal income tax. Instead, each unitholder is 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
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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 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.
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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
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.
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Specified items of our income, gain, loss and deduction will be
allocated under Section 704(c) of the Internal Revenue Code
to account for the difference between the tax basis and fair
market value of our assets at the time we issue units in 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
such an 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 such 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.
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 treated as 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 borrowing 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.
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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 applies to a
person who purchases units in this offering from the selling
unitholders but 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
under Section 168 of the Internal Revenue Code 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. 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
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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.
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 the time we issue units in an offering will be borne by our
general partner, its affiliates and our other unitholders as of
that time. 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.
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
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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, 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 and
losses will be determined annually, will be prorated on a
monthly basis and will be subsequently apportioned among the
unitholders in proportion to the number of units owned by each
of them as of the opening of the applicable exchange on the
first business day of the month, 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 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.
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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, 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.
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.
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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 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.
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(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
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.
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.
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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, excluding church plans (that have not been elected under
Section 410(d) to have participation, vesting, funding,
etc. provisions of the Code apply to such plans) or 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.
SELLING
UNITHOLDERS
This prospectus covers the offering for resale of up to
9,710,522 common units by the selling unitholders identified
below. These common units represent common units purchased by
and common units issuable upon conversion of Class B units
purchased by such selling unitholders in our equity private
placement which closed on December 13, 2006. The total
amount of common units that may be sold hereunder will not
exceed the number of units offered hereby. Please read
Plan of Distribution.
The following table sets forth information about the maximum
number of common units that may be offered from time to time by
each selling unitholder under this prospectus. The selling
unitholders identified below may currently hold or acquire at
any time common units in addition to those registered hereby. In
addition, the selling unitholders identified below may sell,
transfer or otherwise dispose of some or all of their common
units or Class B units in private placement in transactions
exempt from or not subject to the
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registration requirements of the Securities Act. Accordingly, we
cannot give an estimate as to the amount of units that will be
held by the selling unitholders upon termination of this
offering.
Information concerning the selling unitholders may change from
time to time and, if necessary, we will supplement this
prospectus accordingly.
To our knowledge, none of the selling unitholders has, or has
had within the past three years, any position, office or other
material relationship with us or any of our predecessors or
affiliates, other than their ownership of our common units
and/or
Class B units.
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Percentage of
|
|
|
|
Common Units
|
|
|
Common Units
|
|
Selling Unitholder
|
|
that may be sold(1)
|
|
|
Outstanding(2)
|
|
|
Alerion Equities, LLC
|
|
|
138,847
|
|
|
|
*
|
|
Cohen & Steers REIT and
Utility Income Fund, Inc.
|
|
|
221,000
|
|
|
|
*
|
|
Cohen & Steers Select
Utility Fund, Inc.
|
|
|
309,000
|
|
|
|
*
|
|
Cohen & Steers Utility
Fund, Inc.
|
|
|
16,600
|
|
|
|
*
|
|
The Cushing MLP Opportunity
Fund I, LP
|
|
|
555,389
|
|
|
|
1.7
|
|
Goldman, Sachs & Co.
|
|
|
1,388,747
|
|
|
|
4.1
|
|
GPS High Yield Equities
Fund LP
|
|
|
77,754
|
|
|
|
*
|
|
GPS Income Fund (Cayman) LTD
|
|
|
311,018
|
|
|
|
*
|
|
GPS Income Fund LP
|
|
|
249,925
|
|
|
|
*
|
|
Jennison Utility Fund
|
|
|
2,776,949
|
|
|
|
8.6
|
|
Kayne Anderson Energy Development
Company
|
|
|
30,856
|
|
|
|
*
|
|
Kayne Anderson MLP Investment
Company
|
|
|
246,838
|
|
|
|
*
|
|
Perry Commitment
Fund L.P.
|
|
|
22,215
|
|
|
|
*
|
|
Perry Partners L.P.
|
|
|
672,021
|
|
|
|
2.1
|
|
RCH Energy MLP Fund, L.P.
|
|
|
416,542
|
|
|
|
1.3
|
|
Royal Bank of Canada
|
|
|
333,233
|
|
|
|
1.0
|
|
Strome MLP Fund, LP
|
|
|
138,847
|
|
|
|
*
|
|
Structured Finance Americas,
LLC
|
|
|
416,542
|
|
|
|
1.3
|
|
Swank MLP Convergence Fund, LP
|
|
|
138,847
|
|
|
|
*
|
|
Tortoise Energy Capital Corporation
|
|
|
416,539
|
|
|
|
1.3
|
|
Tortoise Energy Infrastructure
Corporation
|
|
|
1,835,392
|
|
|
|
5.7
|
|
ZLP Fund, L.P.
|
|
|
277,694
|
|
|
|
*
|
|
|
|
|
(*) |
|
Percentage of common units owned is less than 1.0% |
|
|
|
() |
|
Affiliate of a broker-dealer |
|
|
|
(1) |
|
Includes an aggregate of 6,805,492 common units underlying
Class B units that are convertible into common units on a
one-for-one
basis upon the approval of our common unitholders. Please read
How We Make Cash Distributions Class B
Units. |
|
(2) |
|
Calculated based on 25,553,306 common units outstanding as of
December 31, 2006 plus the 6,805,492 common units
underlying Class B units that are included in this
registration statement. |
PLAN OF
DISTRIBUTION
We are registering the common units on behalf of the selling
unitholders. As used in this prospectus, selling
unitholders includes donees and pledgees selling common
units received from a named selling unitholder after the date of
this prospectus.
Under this prospectus, the selling unitholders intend to offer
our securities to the public:
|
|
|
|
|
through one or more broker-dealers;
|
|
|
|
through underwriters; and
|
40
The selling unitholders may price the common units offered from
time to time:
|
|
|
|
|
at market prices prevailing at the time of any sale under this
registration statement;
|
|
|
|
at prices related to market prices; or
|
|
|
|
at negotiated prices.
|
We will pay the costs and expenses of the registration and
offering of the common units offered hereby. We will not pay any
underwriting fees, discounts and selling commissions allocable
to each selling unitholders sale of its respective or
common units, which will be paid by the selling unitholders.
Broker-dealers may act as agent or may purchase securities as
principal and thereafter resell the securities from time to time:
|
|
|
|
|
in or through one or more transactions (which may involve
crosses and block transactions) or distributions;
|
|
|
|
on the New York Stock Exchange;
|
|
|
|
in the
over-the-counter
market; or
|
|
|
|
in private transactions.
|
Broker-dealers or underwriters may receive compensation in the
form of underwriting discounts or commissions and may receive
commissions from purchasers of the securities for whom they may
act as agents. If any broker-dealer purchases the securities as
principal, it may effect resales of the securities from time to
time to or through other broker-dealers, and other
broker-dealers may receive compensation in the form of
concessions or commissions from the purchasers of securities for
whom they may act as agents. In no event will the compensation
to be paid to NASD members in connection with this offering
exceed 10% plus 0.5% for bona fide due diligence.
To the extent required, the names of the specific managing
underwriter or underwriters, if any, as well as other important
information, will be set forth in prospectus supplements. In
that event, the discounts and commissions the selling
unitholders will allow or pay to the underwriters, if any, and
the discounts and commissions the underwriters may allow or pay
to dealers or agents, if any, will be set forth in, or may be
calculated from, the prospectus supplements. Any underwriters,
brokers, dealers and agents who participate in any sale of the
securities may also engage in transactions with, or perform
services for, us or our affiliates in the ordinary course of
their businesses.
In addition, the selling unitholders have advised us that they
may sell the common units in compliance with Rule 144, if
available, or pursuant to other available exemptions from the
registration requirements under the Securities Act, rather than
pursuant to this prospectus.
To the extent required, this prospectus may be amended or
supplemented from time to time to describe a specific plan of
distribution.
We have agreed to indemnify the selling unitholder and each
underwriter, selling agent or other securities professional, if
any, against certain liabilities to which they may become
subject in connection with the sale of the common units owned by
the selling unitholder and registered under this prospectus,
including liabilities arising under the Securities Act of 1933.
LEGAL
MATTERS
The validity of the units will be passed upon for us by Andrews
Kurth LLP.
EXPERTS
The consolidated financial statements of Williams Partners L.P.,
appearing in Williams Partners L.P.s Annual Report
(Form 10-K)
for the year ended December 31, 2006, and Williams Partners
L.P.s managements assessment of the effectiveness of
internal control over financial reporting as of
December 31,
41
2006, included therein, have been audited by Ernst &
Young LLP, independent registered public accounting firm, as set
forth in their reports thereon, included therein, and
incorporated herein by reference. Such consolidated financial
statements and managements assessment are incorporated
herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
The consolidated balance sheet of Williams Partners GP LLC,
appearing in Williams Partners L.P.s Annual Report
(Form 10-K)
for the year ended December 31, 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. Such consolidated
balance sheet is incorporated herein by reference in reliance
upon such report given on the authority of such firm as experts
in accounting and auditing.
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 common units covered by this prospectus. The
registration statement, including the exhibits, contains
additional relevant information about us. In addition, we file
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 by reference is an important part of this
prospectus. Information that we later provide to the SEC, and
which is deemed to be filed with the SEC, will
automatically update information previously filed with the SEC,
and may replace information in this prospectus and information
previously filed with the SEC.
We incorporate by reference in this prospectus the following
documents that we have previously filed with the SEC:
|
|
|
|
|
Annual Report on
Form 10-K
(File
No. 1-32599)
for the year ended December 31, 2006 filed on
February 28, 2007;
|
|
|
|
|
|
Current Report on
Form 8-K
(File
No. 1-32599)
filed on February 22, 2007 and our amended Current Report
on
Form 8-K/A
(File
No. 1-32599)
filed on January 12, 2007; and
|
|
|
|
|
|
The description of our common units contained in our
registration statement on
Form 8-A
(File
No. 1-32599)
filed on August 9, 2005, amendment no. 1 thereto filed
on December 20, 2006, and any subsequent amendments or
reports filed for the purpose of updating such description.
|
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 this
offering will also be deemed to be incorporated herein by
reference and will automatically update and supersede
information in this prospectus. 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
42
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. 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 is accurate as of any date other
than the date on the front of each document.
Williams is also subject to the information requirements of the
Exchange Act, and in accordance therewith files reports and
other information with the SEC. You may read Williams
filings on the SECs web site and at the SECs Public
Reference Room described above. Williams common stock
trades on the NYSE under the symbol WMB. Reports
that Williams files with the NYSE may be inspected and copied at
the offices of the NYSE described above.
43
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:
|
|
|
|
|
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.
|
|
|
|
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.
|
|
|
|
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.
|
|
|
|
Lower natural gas and oil prices could adversely affect our
fractionation and storage businesses.
|
|
|
|
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.
|
|
|
|
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.
|
|
|
|
Our future financial and operating flexibility may be adversely
affected by restrictions in our indenture and by our leverage.
|
|
|
|
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.
|
|
|
|
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.
|
|
|
|
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.
|
|
|
|
Even if unitholders are dissatisfied, they cannot currently
remove our general partner without its consent.
|
|
|
|
You may be required to pay taxes on your share of our income
even if you do not receive any cash distributions from us.
|
|
|
|
Our operations are subject to operational hazards and unforeseen
interruptions for which we may or may not be adequately insured.
|
44
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 in the documents incorporated herein 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 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.
45
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
Item 14.
|
Other
Expenses of Issuance and Distribution.
|
Set forth below are the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered
hereby. With the exception of the SEC registration fee and the
NASD filing fee, the amounts set forth below are estimates:
|
|
|
|
|
SEC registration fee
|
|
$
|
40,241.48
|
|
NASD Filing Fee
|
|
|
38,109.00
|
|
Legal fees and expenses
|
|
|
30,000.00
|
|
Accounting fees and expenses
|
|
|
80,000.00
|
|
Printing and engraving expenses
|
|
|
20,000.00
|
|
Miscellaneous
|
|
|
4,849.52
|
|
|
|
|
|
|
Total
|
|
$
|
213,200.00
|
|
|
|
|
|
|
|
|
Item 15.
|
Indemnification
of Directors and Officers.
|
Each of Williams Partners L.P. and its subsidiaries 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 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
II-1
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 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.
II-2
(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.
In the underwriting agreement entered into in connection with
any underwritten offering of securities pursuant to this
registration statement, the underwriters may be obligated, under
certain circumstances and as applicable, to indemnify directors
and officers of Williams Partners GP LLC and Williams Partners
Finance Corporation against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
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.
|
|
|
|
|
|
|
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 Current Report on
Form 8-K
(File
No. 1-32599)
filed with the SEC on April 7, 2006).
|
|
2
|
.2#
|
|
|
|
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 Current
Report on
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 (incorporated by reference to Exhibit 4.2 to Williams
Partners L.P.s Registration Statement on
Form S-3
(File
No. 333-137562)
filed with the SEC on September 22, 2006).
|
|
4
|
.3
|
|
|
|
Amendment No. 3 to the
Amended and Restated Agreement of Limited Partnership of
Williams Partners L.P. (incorporated by reference to
Exhibit 3.1 to Williams Partners L.P.s Current Report
on
Form 8-K
(File
No. 1-32599)
filed with the SEC on December 19, 2006).
|
|
4
|
.4
|
|
|
|
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
|
.5
|
|
|
|
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
|
.6
|
|
|
|
Common Unit and Class B Unit
Purchase Agreement, dated December 1, 2006, by and among
Williams Partners L.P. and the purchasers named therein
(incorporated by reference to Exhibit 1.1 to Williams
Partners L.P.s Current Report on
Form 8-K
(File
No. 001-32599)
filed with the SEC on December 4, 2006).
|
|
4
|
.7
|
|
|
|
Registration Rights Agreement,
dated December 13, 2006, among Williams Partners L.P. and
the other parties named therein (incorporated by reference to
Exhibit 4.4 to Williams Partners L.P.s Current Report
on
Form 8-K
(File
No. 1-32599)
filed with the SEC on December 19, 2006).
|
|
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.
|
|
23
|
.1+
|
|
|
|
Consent of Ernst & Young
LLP.
|
II-3
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
23
|
.2**
|
|
|
|
Consent of Andrews Kurth LLP
(contained in Exhibit 5.1 hereto).
|
|
23
|
.3**
|
|
|
|
Consent of Andrews Kurth LLP
(contained in Exhibit 8.1 hereto).
|
|
24
|
.1**
|
|
|
|
Power of Attorney (included on
signature page hereto).
|
|
99
|
.1
|
|
|
|
The unaudited pro forma balance
sheet of Williams Partners L.P. as of September 30, 2006
and the unaudited pro forma statements of income of Williams
Partners L.P. for the year ended December 31, 2005 and the
nine months ended September 30, 2006 (incorporated by
reference to Exhibit 99.2 of Williams Partners L.P.s
Current Report on
Form 8-K/A
(File
No. 1-32599)
filed on January 12, 2007).
|
|
|
|
+
|
|
Filed herewith.
|
|
*
|
|
To be filed as an exhibit to a
current report on
Form 8-K
in connection with a specific underwritten offering, if any.
|
|
**
|
|
Previously filed.
|
|
#
|
|
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-4
(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-5
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 March 9, 2007.
Williams Partners L.P.
|
|
|
|
By:
|
Williams Partners GP LLC, its general partner
|
|
|
|
|
By:
|
/s/ Alan
S. Armstrong
|
Alan S. Armstrong
Chief Operating Officer
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
|
|
*
Steven
J. Malcolm
|
|
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
|
|
March 9, 2007
|
|
|
|
|
|
*
Donald
R. Chappel
|
|
Chief Financial Officer and
Director (Principal Financial Officer)
|
|
March 9, 2007
|
|
|
|
|
|
*
Ted
T. Timmermans
|
|
Vice President, Chief Accounting
Officer and Controller
(Principal Accounting Officer)
|
|
March 9, 2007
|
|
|
|
|
|
*
Alan
S. Armstrong
|
|
Chief Operating Officer and
Director
|
|
March 9, 2007
|
|
|
|
|
|
*
Thomas
C. Knudson
|
|
Director
|
|
March 9, 2007
|
|
|
|
|
|
*
Bill
Z. Parker
|
|
Director
|
|
March 9, 2007
|
|
|
|
|
|
*
Alice
M. Peterson
|
|
Director
|
|
March 9, 2007
|
|
|
|
|
|
*
Phillip
D. Wright
|
|
Director
|
|
March 9, 2007
|
|
|
|
|
|
|
|
* By:
|
|
/s/ Richard
M. Carson
Richard
M. Carson
Attorney-In-Fact
|
|
|
|
|
II-6
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 Current Report on
Form 8-K
(File
No. 1-32599)
filed with the SEC on April 7, 2006)..
|
|
2
|
.2#
|
|
|
|
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 Current
Report on
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 (incorporated by reference to Exhibit 4.2 to Williams
Partners L.P.s Registration Statement on
Form S-3
(File
No. 333-137562)
filed with the SEC on September 22, 2006).
|
|
4
|
.3
|
|
|
|
Amendment No. 3 to the
Amended and Restated Agreement of Limited Partnership of
Williams Partners L.P. (incorporated by reference to
Exhibit 3.1 to Williams Partners L.P.s Current Report
on
Form 8-K
(File
No. 1-32599)
filed with the SEC on December 19, 2006).
|
|
4
|
.4
|
|
|
|
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
|
.5
|
|
|
|
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
|
.6
|
|
|
|
Common Unit and Class B Unit
Purchase Agreement, dated December 1, 2006, by and among
Williams Partners L.P. and the purchasers named therein
(incorporated by reference to Exhibit 1.1 to Williams
Partners L.P.s Current Report on
Form 8-K
(File
No. 001-32599)
filed with the SEC on December 4, 2006).
|
|
4
|
.7
|
|
|
|
Registration Rights Agreement,
dated December 13, 2006, among Williams Partners L.P. and
the other parties named therein (incorporated by reference to
Exhibit 4.4 to Williams Partners L.P.s Current Report
on
Form 8-K
(File
No. 1-32599)
filed with the SEC on December 19, 2006).
|
|
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.
|
|
23
|
.1+
|
|
|
|
Consent of Ernst & Young
LLP.
|
|
23
|
.2**
|
|
|
|
Consent of Andrews Kurth LLP
(contained in Exhibit 5.1 hereto).
|
|
23
|
.3**
|
|
|
|
Consent of Andrews Kurth LLP
(contained in Exhibit 8.1 hereto).
|
|
24
|
.1**
|
|
|
|
Power of Attorney (included on
signature page hereto).
|
|
99
|
.1
|
|
|
|
The unaudited pro forma balance
sheet of Williams Partners L.P. as of September 30, 2006
and the unaudited pro forma statements of income of Williams
Partners L.P. for the year ended December 31, 2005 and the
nine months ended September 30, 2006 (incorporated by
reference to Exhibit 99.2 of Williams Partners L.P.s
Current Report on
Form 8-K/A
(File
No. 1-32599)
filed on January 12, 2007).
|
|
|
|
+ |
|
Filed herewith. |
|
* |
|
To be filed as an exhibit to a current report on
Form 8-K
in connection with a specific underwritten offering, if any. |
|
|
|
# |
|
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. |