or such affiliate has first presented the opportunity to engage in such
business or activity to the Company and the General Partner (with the
concurrence of the Audit and Conflicts Committee) has elected not to have
the Company pursue such opportunity. There can be no assurance, however,
that there will not be competition between the Company and affiliates of
the General Partner in the future.
. The availability to a Common Unitholder of the federal income tax
benefits of an investment in the Company depends on the classification of
the Company as a partnership for federal income tax purposes. Assuming
the accuracy of certain factual matters as to which the General Partner
and the Company have made representations, Vinson & Elkins L.L.P.,
special counsel to the General Partner and the Company, is of the opinion
that, under current law, the Company will be classified as a partnership
for federal income tax purposes.
. No ruling has been requested from the Internal Revenue Service (the
"IRS") with respect to classification of the Company as a partnership for
federal income tax purposes or any other matter affecting the Company.
. A Unitholder will be required to pay income taxes on his allocable share
of the Company's income, whether or not he receives cash distributions
from the Company.
. Investment in Common Units by certain tax-exempt entities, regulated
investment companies and foreign persons raises issues unique to such
persons. For example, much of the taxable income derived from the
ownership of a Common Unit by most organizations exempt from federal
income tax (including individual retirement accounts ("IRAs") and other
retirement plans) will be unrelated business taxable income and, thus,
will be taxable to such a Unitholder.
. In the case of taxpayers subject to the passive loss rules (generally,
individuals and closely-held corporations), losses generated by the
Company will generally only be available to offset future income
generated by the Company and cannot be used to offset income from other
activities, including other passive activities or investments. Passive
losses which are not deductible because they exceed the Unitholder's
income generated by the Company may be deducted in full when the
Unitholder disposes of his entire investment in the Company to an
unrelated party in a fully taxable transaction.
. The General Partner has applied for registration of the Company with the
Secretary of the Treasury as a "tax shelter." No assurance can be given
that the Company will not be audited by the IRS or that tax adjustments
will not be made. Any adjustments in the Company's tax returns will lead
to adjustments in the Unitholders' tax returns and may lead to audits of
the Unitholders' tax returns and adjustments of items unrelated to the
. A Unitholder likely will be required to file state and local income tax
returns and pay state and local income taxes in some or all of the
various jurisdictions in which the Company does business or owns
property. The Company will initially own property and conduct business in
Alabama, Louisiana, Mississippi and Texas.
See "Risk Factors," "Cash Distribution Policy," "Cash Available for
Distribution," "Conflicts of Interest and Fiduciary Responsibilities," "The
Partnership Agreement" and "Tax Considerations" for a more detailed
description of these and other risk factors and conflicts of interest that
should be considered in evaluating an investment in the Common Units.