distribution of Available Cash from Operating
Surplus is made to the Subordinated Unitholders.
This subordination feature will enhance the
Company's ability to distribute the Minimum
Quarterly Distribution on the Common Units during
the Subordination Period. Subordinated Units will
not accrue distribution arrearages. Upon
expiration of the Subordination Period, Common
Units will no longer accrue distribution
arrearages. See "Cash Distribution Policy."
Subordination Period........ The Subordination Period will generally extend
from the closing of this offering until the first
day of any quarter beginning after June 30, 2003
when the Conversion Test has been satisfied.
Generally, the Conversion Test will have been
satisfied when the Company has paid from
Operating Surplus, and generated from Adjusted
Operating Surplus, the Minimum Quarterly
Distribution on all Units for the three preceding
Upon expiration of the Subordination Period, all
remaining Subordinated Units will convert into
Common Units on a one-for-one basis and will
thereafter participate pro rata with the other
Common Units in distributions of Available Cash.
See "Cash Distribution Policy--Distributions from
Operating Surplus during Subordination Period."
Early Conversion of
Subordinated Units......... If the Conversion Test has been met for any
quarter ending on or after June 30, 2001, 25% of
the Subordinated Units will convert into Common
Units. If the Conversion Test has been met for
any quarter ending on or after June 30, 2002, an
additional 25% of the Subordinated Units will
convert into Common Units.
The early conversion of the second 25% of
Subordinated Units may not occur until at least
one year following the early conversion of the
first 25% of Subordinated Units. See "Cash
Distribution Policy--Distributions from Operating
Surplus during Subordination Period."
Incentive Distributions..... If quarterly distributions of Available Cash
exceed the Target Distribution Levels, the
General Partner will receive distributions which
are generally equal to 15%, then 25% and then 50%
of the distributions of Available Cash that
exceed such Target Distribution Levels. The
Target Distribution Levels are based on the
amounts of Available Cash from Operating Surplus
distributed with respect to a given quarter that
exceed distributions made with respect to the
Minimum Quarterly Distribution and Common Unit
Arrearages, if any. See "Cash Distribution
Annualized Yield." The distributions to the
General Partner described above that are in
excess of its combined 2% interest are referred
to herein as the "Incentive Distributions."