e424b3
Filed
pursuant to Rule 424(b)(3)
File
No. 333-169408
PROSPECTUS
Martin
Midstream Partners L.P.
Martin Midstream Finance Corp.
Offer
to Exchange
up to
$200,000,000 of
87/8% Senior
Notes due 2018
that have been registered under
the Securities Act of 1933
for
$200,000,000 of
87/8% Senior
Notes due 2018
that have not been registered
under the Securities Act of 1933
Martin Midstream Partners L.P. (Martin) is offering
to exchange (this exchange offer) up to $200,000,000
aggregate principal amount of its registered
87/8% Senior
Notes due 2018, which are referred to herein as the
exchange notes, for $200,000,000 aggregate principal
amount of its outstanding unregistered
87/8% Senior
Notes due 2018, which are referred to as the outstanding
notes. The terms of the exchange notes are identical in
all material respects to the terms of the outstanding notes,
except that the exchange notes have been registered under the
Securities Act of 1933 and, therefore, the terms relating to the
transfer restrictions, registration rights and additional
interest applicable to the outstanding notes are not applicable
to the exchange notes, and the exchange notes will bear
different CUSIP numbers. The exchange offer expires at
5:00 p.m., New York City time, on November 3, 2010,
unless extended.
The exchange notes, like the outstanding notes, will be jointly
and severally guaranteed by all of our current wholly-owned
subsidiaries and by certain of our future subsidiaries, who we
refer to as our subsidiary guarantors.
Please read Risk
Factors beginning on page 7 for a discussion of
factors you should consider before participating in the exchange
offer.
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.
Each broker-dealer that receives the notes for its own account
pursuant to this exchange offer must acknowledge by way of the
letter of transmittal that it will deliver a prospectus in
connection with any resale of the notes. This prospectus, as it
may be amended or supplemented from time to time, may be used by
a broker-dealer in connection with resales of the notes received
in exchange for outstanding notes where such outstanding notes
were acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed to make
this prospectus available for a period ending on the earlier of
April 3, 2011 and the date on which a broker-dealer is no
longer required to deliver a prospectus in connection with
market-making or other trading activities. See Plan of
Distribution.
The date of this prospectus is October 5, 2010.
This prospectus is part of a registration statement we filed
with the Securities and Exchange Commission, or the
Commission. In making your investment decision, you
should rely only on the information contained in or incorporated
by reference into this prospectus and in the letter of
transmittal accompanying this prospectus. We have not authorized
anyone to provide you with any other information. If you receive
any unauthorized information, you must not rely on it. We are
not making an offer to sell these securities in any state where
the offer is not permitted. You should not assume that the
information contained in this prospectus or in the documents
incorporated by reference into this prospectus are accurate as
of any date other than the date on the front cover of this
prospectus or the date of such incorporated documents, as the
case may be.
This prospectus incorporates by reference business and financial
information about us that is not included in or delivered with
this prospectus. This information is available without charge
upon written or oral request directed to: Investor Relations,
Martin Midstream Partners L.P., 4200 Stone Road, Kilgore, Texas
75662; telephone number:
(903) 983-6200.
To obtain timely delivery, you must request the information
no later than October 27, 2010.
TABLE OF
CONTENTS
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ii
SUMMARY
This summary highlights information included or incorporated
by reference in this prospectus. It may not contain all of the
information that is important to you. This prospectus includes
information about the exchange offer and includes or
incorporates by reference information about our business and our
financial and operating data. Before deciding to participate in
the exchange offer, you should read this entire prospectus
carefully, including the financial data and related notes
incorporated by reference in this prospectus and the Risk
Factors section beginning on page 7 of this
prospectus.
Except as otherwise indicated, references to the
Partnership, we, our,
us, or like terms refer to Martin Midstream Partners
L.P. and its subsidiaries collectively, including Martin
Midstream Finance Corp., as the context requires. Capitalized
terms used in this prospectus and not otherwise defined herein
shall have the meanings given to them in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
Martin
Midstream Partners L.P.
We are a publicly traded limited partnership with a diverse set
of operations focused primarily in the United States Gulf Coast
region. Our four primary business lines include:
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Terminalling and storage services for petroleum products and
by-products;
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Natural gas services;
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Sulfur and sulfur-based products gathering, processing,
marketing, manufacturing and distribution; and
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Marine transportation services for petroleum products and
by-products.
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The petroleum products and by-products we gather, process,
transport, store and market are produced primarily by major and
independent oil and gas companies who often turn to third
parties, such as us, for the transportation and disposition of
these products. In addition to these major and independent oil
and gas companies, our primary customers include independent
refiners, large chemical companies, fertilizer manufacturers and
other wholesale purchasers of these products. We generate the
majority of our cash flow from fee-based contracts with these
customers. Our location in the Gulf Coast region of the United
States provides us strategic access to a major hub for petroleum
refining, natural gas gathering and processing and support
services for the exploration and production industry.
We were formed in 2002 by Martin Resource Management Corporation
(Martin Resource Management), a privately-held
company whose initial predecessor was incorporated in 1951 as a
supplier of products and services to drilling rig contractors.
Since then, Martin Resource Management has expanded its
operations through acquisitions and internal expansion
initiatives as its management identified and capitalized on the
needs of producers and purchasers of hydrocarbon products and
by-products and other bulk liquids. As of August 31, 2010,
Martin Resource Management owns an approximate 34.7% limited
partnership interest in us. Furthermore, it owns and controls
our general partner, which owns a 2.0% general partner interest
and incentive distribution rights in us.
The historical operation of our business segments by Martin
Resource Management provides us with several decades of
experience and a demonstrated track record of customer service
across our operations. Our current lines of business have been
developed and systematically integrated over this period of more
than 50 years, including natural gas services (1950s);
sulfur (1960s); marine transportation (late 1980s) and
terminalling and storage (early 1990s). This development of a
diversified and integrated set of assets and operations has
produced a complementary portfolio of midstream services that
facilitates the maintenance of long-term customer relationships
and encourages the development of new customer relationships.
Our
Offices
Our executive offices are located at 4200 Stone Road, Kilgore,
Texas 75662, and our telephone number is
(903) 983-6200.
Our website address is www.martinmidstream.com. Information on
our website is not incorporated in this prospectus.
1
Exchange
Offer
On March 26, 2010, we completed a private offering of
the outstanding notes. As part of this private offering, we
entered into a registration rights agreement with the initial
purchasers of the outstanding notes in which we agreed, among
other things, to deliver this prospectus to you and to use our
reasonable best efforts to complete the exchange offer no later
than 270 days after March 26, 2010. The following is a
summary of the exchange offer.
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Outstanding Notes |
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On March 26, 2010, we issued $200 million aggregate principal
amount of
87/8% Senior
Notes due 2018. |
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Exchange Notes |
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87/8% Senior
Notes due 2018. The terms of the exchange notes are identical to
those terms of the outstanding notes, except that the transfer
restrictions, registration rights and provisions for additional
interest relating to the outstanding notes do not apply to the
exchange notes. |
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Exchange Offer |
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We are offering to exchange up to $200 million principal
amount of our
87/8% Senior
Notes due 2018 that have been registered under the Securities
Act of 1933, or the Securities Act, for an equal amount of our
outstanding
87/8% Senior
Notes due 2018 issued on March 26, 2010 to satisfy our
obligations under the registration rights agreement that we
entered into when we issued the outstanding notes in a
transaction exempt from registration under the Securities Act. |
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Expiration Date |
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The exchange offer will expire at 5:00 p.m., New York City
time, on November 3, 2010, unless we decide to extend it. |
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Conditions to the Exchange Offer |
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The registration rights agreement does not require us to accept
outstanding notes for exchange if the exchange offer or the
making of any exchange by a holder of the outstanding notes
would violate any applicable law or Commission policy. A minimum
aggregate principal amount of outstanding notes being tendered
is not a condition to the exchange offer. Please read
Exchange Offer Conditions to the Exchange
Offer for more information about the conditions to the
exchange offer. |
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Procedures for Tendering Outstanding Notes |
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All of the outstanding notes are held in book-entry form through
the facilities of The Depository Trust Company, or DTC. To
participate in the exchange offer, you must follow the automatic
tender offer program, or ATOP, procedures established by DTC for
tendering outstanding notes held in book-entry form. The ATOP
procedures require that the exchange agent receive, prior to the
expiration date of the exchange offer, a computer-generated
message known as an agents message that is
transmitted through ATOP and that DTC confirm that: |
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DTC has received instructions to exchange your
outstanding notes; and
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you agree to be bound by the terms of the letter of
transmittal in Annex A hereto.
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For more details, please read Exchange Offer
Terms of the Exchange Offer and Exchange
Offer Procedures for Tendering. |
2
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Guaranteed Delivery Procedures |
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None. |
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Withdrawal of Tenders |
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You may withdraw your tender of outstanding notes at any time
prior to the expiration date. To withdraw, you must submit a
notice of withdrawal to the exchange agent using ATOP procedures
before 5:00 p.m., New York City time, on the expiration
date of the exchange offer. Please read Exchange
Offer Withdrawal of Tenders. |
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Acceptance of Outstanding notes and Delivery of Exchange Notes |
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If you fulfill all conditions required for proper acceptance of
outstanding notes, we will accept any and all outstanding notes
that you properly tender in the exchange offer before
5:00 p.m., New York City time, on the expiration date. We
will return any outstanding notes that we do not accept for
exchange to you without expense promptly after the expiration
date. We will deliver the exchange notes promptly after the
expiration date. Please read Exchange Offer
Terms of the Exchange Offer. |
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Fees and Expenses |
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We will bear all expenses related to the exchange offer. Please
read Exchange Offer Fees and Expenses. |
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Use of Proceeds |
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The issuance of the exchange notes will not provide us with any
new proceeds. We are making the exchange offer solely to satisfy
our obligations under the registration rights agreement. |
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Consequences of Failure to Exchange Outstanding Notes |
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If you do not exchange your outstanding notes in the exchange
offer, you will no longer be able to require us to register the
outstanding notes under the Securities Act, except in the
limited circumstances provided under the registration rights
agreement. In addition, you will not be able to resell, offer to
resell or otherwise transfer the outstanding notes unless we
have registered the outstanding notes under the Securities Act,
or unless you resell, offer to resell or otherwise transfer them
under an exemption from the registration requirements of, or in
a transaction not subject to, the Securities Act. |
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U.S. Federal Income Tax Consequences |
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The exchange of exchange notes for outstanding notes in the
exchange offer will not be a taxable event for U.S. federal
income tax purposes. Please read Material Federal Income
Tax Consequences. |
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Exchange Agent |
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We have appointed Wells Fargo Bank, N.A. as the exchange agent
for the exchange offer. You should direct questions and requests
for assistance and requests for additional copies of this
prospectus (including the letter of transmittal) to the exchange
agent addressed as follows: |
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By Registered or Certified Mail
Wells Fargo Bank, N.A.
MAC N9303-121
P.O. Box 1517
Minneapolis, Minnesota 55480 |
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By Overnight Delivery
Wells Fargo Bank, N.A.
MAC N9303-121
6th & Marquette Avenue
Minneapolis, Minnesota 55479 |
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By Hand Delivery
Wells Fargo Bank, N.A.
608 2nd Avenue South
Northstar East Building 12th Floor
Minneapolis, Minnesota |
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Facsimile Transmission
612-667-6282
Attn: Corporate Trust Operations
Confirm by Telephone:
800-344-5128 |
Terms of
the Exchange Notes
The exchange notes will be identical to the outstanding
notes, except that the exchange notes are registered under the
Securities Act and will not have restrictions on transfer,
registration rights or provisions for additional interest. The
exchange notes will evidence the same debt as the outstanding
notes, and the same indenture will govern the exchange notes and
the outstanding notes. We sometimes refer to both the exchange
notes and the outstanding notes as the notes.
The following summary contains basic information about the
exchange notes and is not intended to be complete. It does not
contain all the information that is important to you. For a more
complete understanding of the exchange notes, please read
Description of Exchange Notes.
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Issuers |
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Martin Midstream Partners L.P. and Martin Midstream Finance Corp. |
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Securities Offered |
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$200,000,000 principal amount of
87/8% Senior
Notes due 2018. |
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Interest Rate |
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87/8%
per annum. |
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Interest Payment Dates |
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Interest on the exchange notes will accrue from March 26,
2010 and will be paid semi-annually on April 1 and October 1 of
each year, commencing October 1, 2010, to holders of record
as of the immediately preceding March 15 and September 15,
respectively. The initial interest payment on the exchange notes
will include all accrued and unpaid interest on the outstanding
notes exchanged therefor. See Description of Exchange
Notes Principal, Maturity and Interest. |
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Maturity Date |
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April 1, 2018 |
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Subsidiary Guarantee |
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The exchange notes will be jointly and severally guaranteed by
all of our current wholly-owned subsidiaries and by certain of
our future subsidiaries, who we refer to as our subsidiary
guarantors. See Description of Exchange
Notes Subsidiary Guarantees. |
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Optional Redemption |
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We will have the option to redeem the notes, in whole or in
part, at any time on or after April 1, 2014 at the
redemption prices described in this prospectus under the heading
Description of Exchange Notes Optional
Redemption, together with any accrued and unpaid interest
to the date of redemption. |
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Prior to April 1, 2014, we may redeem the notes, in whole
or in part, at a make-whole redemption price
described under Description of Exchange Notes
Optional Redemption, together with any accrued and unpaid
interest to the date of redemption. |
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In addition, before April 1, 2013, we may, at any time or
from time to time, redeem up to 35% of the aggregate principal
amount of the notes with the net proceeds of a public or private
equity offering at 108.875% of the principal amount of the
notes, plus any accrued and unpaid interest to the date of
redemption, if at least 65% of the aggregate principal amount of
the notes issued under the indenture remains outstanding after
such redemption and the redemption occurs within 120 days
of the date of the closing of such equity offering. |
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Change of Control |
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When a change of control event occurs, each holder of notes may
require us to repurchase all or a portion of its notes at a
price equal to 101% of the principal amount of the exchange
notes, plus any accrued and unpaid interest to the date of
repurchase. |
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Ranking |
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The exchange notes will be our general unsecured obligations.
The exchange notes will: |
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rank equally in right of payment with all of our
existing and future senior indebtedness;
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be effectively junior to all of our secured
indebtedness to the extent of the value of the assets securing
such indebtedness;
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be effectively junior to all existing and future
indebtedness and other liabilities, including trade payables, of
our non-guarantor subsidiaries (other than indebtedness and
other liabilities owed to us, if any); and
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rank senior in right of payment to all of our future
subordinated indebtedness.
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Certain Covenants |
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The indenture governing the notes contains covenants that, among
other things, limits our ability and the ability of our
restricted subsidiaries to: |
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sell assets including equity interests in our
subsidiaries;
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pay distributions on, redeem or repurchase our units
or redeem or repurchase our subordinated debt;
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make investments;
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incur or guarantee additional indebtedness or issue
preferred units;
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create or incur certain liens;
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enter into agreements that restrict distributions or
other payments from our restricted subsidiaries to us;
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consolidate, merge or transfer all or substantially
all of our assets;
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engage in transactions with affiliates;
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create unrestricted subsidiaries;
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enter into sale and leaseback transactions; and
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engage in certain business activities.
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These covenants are subject to important exceptions and
qualifications that are described under the heading
Description of Exchange Notes in this prospectus. If
the exchange notes achieve an investment grade rating from each
of Moodys Investors Service, Inc. and Standard &
Poor Ratings Services, many of these covenants will terminate. |
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For more details, see Description of Exchange
Notes Certain Covenants. |
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Transfer Restrictions; Absence of a Public Market for the Notes |
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The exchange notes generally will be freely transferable, but
will also be new securities for which there will not initially
be a market. We do not intend to make a trading market in the
exchange notes after the exchange offer. Therefore, we cannot
assure you as to the development of an active market for the
exchange notes or as to the liquidity of any such market. |
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Form of Exchange Notes |
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The exchange notes will be represented initially by one or more
global notes. The global exchange notes will be deposited with
the trustee, as custodian for DTC. |
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Same-Day
Settlement |
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The global exchange notes will be shown on, and transfers of the
global exchange notes will be effected only through, records
maintained in book-entry form by DTC and its direct and indirect
participants. |
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The exchange notes are expected to trade in DTCs Same Day
Funds Settlement System until maturity or redemption. Therefore,
secondary market trading activity in the exchange notes will be
settled in immediately available funds. |
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Trading |
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We do not expect to list the exchange notes for trading on any
securities exchange. |
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Trustee, Registrar and Exchange Agent |
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Wells Fargo Bank, N.A. |
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Governing Law |
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The exchange notes and the indenture relating to the exchange
notes will be governed by, and construed in accordance with, the
laws of the State of New York. |
6
RISK
FACTORS
Before deciding to participate in the exchange offer, you
should consider carefully the risks and uncertainties described
below and in Item 1A Risk Factors in our annual
report on
Form 10-K
for the year ended December 31, 2009 and our quarterly
reports on
Form 10-Q
for the quarters ended March 31, 2010 and June 30,
2010, as updated by annual, quarterly and other reports and
documents we file with the SEC after the date of this
prospectus, together with all of the other information included
or incorporated by reference in this prospectus. While these are
the risks and uncertainties we believe are most important for
you to consider, you should know that they are not the only
risks or uncertainties facing us or which may adversely affect
our business. If any of the following risks or uncertainties
actually were to occur, our business, financial condition or
results of operations could be affected materially and
adversely.
Risks
Related to the Exchange Offer
If you
fail to exchange outstanding notes, existing transfer
restrictions will remain in effect and the market value of
outstanding notes may be adversely affected because they may be
more difficult to sell.
If you fail to exchange outstanding notes for exchange notes
under the exchange offer, then you will continue to be subject
to the existing transfer restrictions on the outstanding notes.
In general, the outstanding notes may not be offered or sold
unless they are registered or exempt from registration under the
Securities Act and applicable state securities laws. Except in
connection with this exchange offer or as required by the
registration rights agreement, we do not intend to register
resales of the outstanding notes.
The tender of outstanding notes under the exchange offer will
reduce the principal amount of the currently outstanding notes.
Due to the corresponding reduction in liquidity, this may have
an adverse effect upon, and increase the volatility of, the
market price of any currently outstanding notes that you
continue to hold following completion of the exchange offer.
Risks
Related to the Notes
Our
substantial indebtedness could limit our flexibility, adversely
affect our financial health and prevent us from making payments
on the notes.
We have a substantial amount of indebtedness. As of
June 30, 2010, we and the subsidiary guarantors had
$303.5 million of senior indebtedness outstanding,
including $106.2 million of secured indebtedness, which
includes $6.2 million in capital lease obligations and
$100.0 million outstanding under our senior secured credit
facility. The notes will be effectively subordinated to all of
our secured indebtedness, including indebtedness under our
credit facility, to the extent of the value of the collateral
securing such indebtedness.
Our substantial indebtedness could have important consequences
to you. For example, it could:
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make it difficult for us to satisfy our obligations, including
those with respect to the notes;
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make us more vulnerable to general adverse economic and industry
conditions;
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require us to dedicate a substantial portion of our cash flow
from operations to payments on our indebtedness, thereby
reducing the availability of our cash flow for operations and
other purposes;
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limit our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate; and
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place us at a competitive disadvantage compared to competitors
that may have proportionately less indebtedness.
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In addition, our ability to make scheduled payments or to
refinance our obligations depends on our successful financial
and operating performance. We cannot assure you that our
operating performance will generate sufficient cash flow or that
our capital resources will be sufficient for payment of our
indebtedness obligations in the future. Our financial and
operating performance, cash flow and capital resources depend
7
upon prevailing economic conditions and certain financial,
business and other factors, many of which are beyond our control.
If our cash flow and capital resources are insufficient to fund
our debt service obligations, we may be forced to sell material
assets or operations, obtain additional capital or restructure
our debt. In the event that we are required to dispose of
material assets or operations or restructure our debt to meet
our debt service and other obligations, we cannot assure you as
to the terms of any such transaction or how quickly any such
transaction could be completed, if at all.
Despite
our substantial indebtedness, we and our subsidiaries may still
be able to incur significantly more debt. This could increase
the risks associated with our substantial indebtedness,
including our ability to service our indebtedness.
The terms of the indenture governing the notes contains
restrictions on our or our restricted subsidiaries ability
to incur additional indebtedness. These restrictions are subject
to a number of important qualifications and exceptions, and the
indebtedness incurred in compliance with these restrictions
could be substantial. Accordingly, we and our subsidiaries could
incur significant additional indebtedness in the future, much of
which could constitute secured or senior indebtedness. As of
June 30, 2010, we had $275.0 million in commitments
under our credit facility, of which we have drawn
$100.1 million, and $174.9 million available for
additional borrowing and potential letters of credit under our
credit facility, all of which would be secured. In addition, we
have $6.2 million in outstanding capital lease obligations.
Subject to the financial covenants contained in our credit
facility and based on our existing EBITDA (as defined in our
credit facility) calculations, as of June 30, 2010, we have
the ability to incur approximately $174.9 million of that
amount. The more leveraged we become, the more we, and in turn
our security holders, become exposed to the risks described
below under Restrictive covenants under our
indenture may adversely affect our operations.
We
have a holding company structure in which our subsidiaries
conduct our operations and own our operating
assets.
We are a holding company, and our subsidiaries conduct all of
our operations and own all of our operating assets. We have no
significant assets other than the partnership interests, stock
and other equity interests in our subsidiaries. As a result, our
ability to make required payments on the notes will depend on
the performance of our subsidiaries and their ability to
distribute funds to us. The ability of our subsidiaries to make
distributions to us may be restricted by, among other things,
our credit facility and other debt agreements and applicable
state laws and other laws and regulations. If we are unable to
obtain the funds necessary to pay the principal amount at
maturity of the notes, or to repurchase the notes upon the
occurrence of a change of control or from the proceeds of
certain asset sales, we may be required to adopt one or more
alternatives, such as a refinancing of the notes. We cannot
assure you that we would be able to refinance the notes or
obtain the funds to pay principal or interest on the notes.
In the
future, one or more of our subsidiaries may not be required to
guarantee the notes. Your right to receive payments on the notes
could be adversely affected if any of our non-guarantor
subsidiaries declares bankruptcy, liquidates or
reorganizes.
All of our wholly-owned subsidiaries, other than Martin
Midstream Finance Corp., the co-issuer of the notes, will
guarantee the notes. None of Waskom Gas Processing Company
(WGPC), Matagorda Offshore Gathering System
(Matagorda) nor Panther Interstate Pipeline Energy,
LLC (PIPE), which are not wholly owned by us, will
be considered a subsidiary under the indenture governing the
notes, and accordingly none of them will guarantee the notes.
Although all of our wholly-owned subsidiaries, other than Martin
Midstream Finance Corp., the co-issuer of the notes, will
initially guarantee the notes, in the future, under certain
circumstances, the guarantees are subject to release, and we may
have other subsidiaries that are not guarantors. Thus, the notes
will be structurally junior to the claims of all creditors,
including trade creditors and tort claimants, of our
subsidiaries that are not guarantors. In the event of the
liquidation, dissolution, reorganization, bankruptcy or similar
proceedings respecting the business of a subsidiary that is not
a guarantor, creditors of that subsidiary would generally have
the right to be paid in full before any distribution
8
is made to us or the holders of the notes. Accordingly, there
may not be sufficient funds remaining to pay amounts due on all
or any of the notes.
Unless
restricted by our debt agreements, we distribute all of our
available cash to our unitholders and we are not required to
accumulate cash for the purpose of meeting our future
obligations to our noteholders, which may limit the cash
available to service the notes.
Subject to the limitations on restricted payments contained in
the indenture governing the notes and in our credit facility and
any other indebtedness, we will distribute all of our
available cash each quarter to our unitholders.
Available cash is defined in our partnership
agreement, and it generally means, for each fiscal quarter:
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all cash and cash equivalents on hand at the end of the quarter;
plus
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all cash and cash equivalents on hand on the date of
determination of available cash for the quarter resulting from
working capital borrowings (generally borrowings that are made
under our credit facility and in all cases are used solely for
working capital purposes or to pay distributions to partners)
made after the end of the quarter;
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less the amount of cash that our general partner determines in
its reasonable discretion is necessary or appropriate to:
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provide for the proper conduct of our business;
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comply with applicable law, any of our debt instruments, or
other agreements; or
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provide funds for distributions to our unitholders and to our
general partner for any one or more of the next four quarters.
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As a result, we do not expect to accumulate significant amounts
of cash. Depending on the timing and amount of our cash
distributions, these distributions could significantly reduce
the cash available to us in subsequent periods to make payments
on the notes.
We may
not be able to fund a change of control offer.
In the event of a change of control, we would be required,
subject to certain conditions, to offer to purchase all
outstanding notes at a price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest thereon to the
date of purchase. If a change of control were to occur today, we
would not have sufficient funds available to purchase all of the
outstanding notes were they to be tendered in response to an
offer made as a result of a change of control. We cannot assure
you that we will be permitted by our other debt instruments to
fulfill these obligations upon a change of control in the
future. Furthermore, certain change of control events would
constitute an event of default under our credit facility. See
Description of Exchange Notes Repurchase at
the Option of Holders Change of Control.
Many
of the covenants contained in the indenture will terminate if
the notes are rated investment grade by both
Standard & Poors Ratings Services and
Moodys Investors Service, Inc.
Many of the covenants governing the notes will terminate if the
notes are rated investment grade by both Standard &
Poors Ratings Services and Moodys Investors Service,
Inc., provided at such time no default under the indenture has
occurred and is continuing. These covenants will restrict, among
other things, our ability to pay distributions, incur debt and
to enter into certain other transactions. There can be no
assurance that the notes will ever be rated investment grade, or
that if they are rated investment grade, that the notes will
maintain such ratings. However, termination of these covenants
would allow us to engage in certain transactions that would not
be permitted while these covenants were in force. See
Description of Exchange Notes Certain
Covenants Covenant Termination.
9
Your
ability to transfer the notes may be limited by the absence of a
trading market.
The exchange notes will be new securities for which currently
there is no trading market. We do not currently intend to apply
for listing of the exchange notes on any securities exchange or
stock market. The liquidity of any market for the exchange notes
will depend on the number of holders of those notes, the
interest of securities dealers in making a market in those notes
and other factors. Accordingly, we cannot assure you as to the
development or liquidity of any market for the exchange notes.
Historically, the market for non-investment grade debt has been
subject to disruptions that have caused substantial volatility
in the prices of securities similar to the exchange notes. We
cannot assure you that the market, if any, for the exchange
notes will be free from similar disruptions. Any such disruption
may adversely affect the note holders.
Future trading prices of the exchange notes will depend on many
factors, including:
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our subsidiaries operating performance and financial
condition;
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our ability to complete the offer to exchange the outstanding
notes for the exchange notes;
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the interest of the securities dealers in making a market in the
exchange notes; and
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the market for similar securities.
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Restrictive
covenants under our indenture may adversely affect our
operations.
The indenture governing the notes contains, and any future
indebtedness we incur may contain, a number of restrictive
covenants that will impose significant operating and financial
restrictions on us, including restrictions on our ability to,
among other things:
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sell assets, including equity interests in our subsidiaries;
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pay distributions on, redeem or repurchase our units or redeem
or repurchase our subordinated debt;
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make investments;
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incur or guarantee additional indebtedness or issue preferred
units;
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create or incur certain liens;
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enter into agreements that restrict distributions or other
payments from our restricted subsidiaries to us;
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consolidate, merge or transfer all or substantially all of our
assets;
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engage in transactions with affiliates;
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create unrestricted subsidiaries;
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enter into sale and leaseback transactions; and
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engage in certain business activities.
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As a result of these covenants, we will be limited in the manner
in which we conduct our business, and we may be unable to engage
in favorable business activities or finance future operations or
capital needs.
A failure to comply with the covenants in the indenture
governing the notes or any future indebtedness could result in
an event of default under the indenture governing the notes or
the future indebtedness, which, if not cured or waived, could
have a material adverse affect on our business, financial
condition and results of operations. In the event of any default
under the indenture governing the notes or our other
indebtedness, our debt holders and lenders:
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will not be required to lend any additional amounts to us;
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could elect to declare all borrowings outstanding, together with
accrued and unpaid interest and fees, to be due and payable;
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may have the ability to require us to apply all of our available
cash to repay these borrowings; or
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may prevent us from making debt service payments under our other
agreements, any of which could result in an event of default
under the notes.
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If the indebtedness under the notes were to be accelerated,
there can be no assurance that our assets would be sufficient to
repay such indebtedness in full.
The
guarantees of the notes could be deemed fraudulent conveyances
under certain circumstances, and a court may try to subordinate
or void the guarantees.
Under the federal bankruptcy laws and comparable provisions of
state fraudulent transfer laws, a subsidiary guarantee could be
voided, or claims in respect of a subsidiary guarantee could be
subordinated to all other debts of that subsidiary guarantor if,
among other things, the subsidiary guarantor, at the time it
incurred the indebtedness evidenced by its guarantee:
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received less than reasonably equivalent value or fair
consideration for the incurrence of such subsidiary
guarantee; and
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was insolvent or rendered insolvent by reason of such
incurrence; or
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was engaged in a business or transaction for which the
subsidiary guarantors remaining assets constituted
unreasonably small capital; or
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intended to incur, or believed that it would incur, debts beyond
its ability to pay such debts as they mature.
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In addition, any payment by that subsidiary guarantor pursuant
to its guarantee of the notes could be voided and required to be
returned to the subsidiary guarantor, or to a fund for the
benefit of the creditors of the subsidiary guarantor. The
measures of insolvency for purposes of these fraudulent transfer
laws will vary depending upon the law applied in any proceeding
to determine whether a fraudulent transfer has occurred.
Generally, however, a subsidiary guarantor would be considered
insolvent if:
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the sum of its debts, including contingent liabilities, was
greater than the fair saleable value of all of its assets;
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the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability,
including contingent liabilities, on its existing debts, as they
become absolute and mature; or
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it could not pay its debts as they become due.
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Tax
Risks
The
IRS could treat us as a corporation for tax purposes, which
would substantially reduce the amount of cash available for
payment of principal and interest on the notes.
If we were classified as a corporation for federal income tax
purposes, we would be required to pay federal income tax on our
taxable income at the corporate tax rate, which is currently a
maximum of 35%, and would likely pay state income tax at varying
rates. Treatment of us as a corporation would cause a material
reduction in our anticipated cash flow, which could materially
and adversely affect our ability to make payments on the notes.
Current law may change so as to cause us to be treated as a
corporation for federal income tax purposes or otherwise subject
us to entity-level taxation. For example, at the federal level,
legislation previously has been proposed that would eliminate
partnership tax treatment for certain publicly traded
partnerships. Although such proposed legislation would not have
applied to us as proposed, it is possible that modified versions
of such legislation could be enacted which would apply to us. We
are unable to predict whether any of these changes, or other
proposals, will ultimately be enacted. Any such changes could
materially and adversely affect our ability to make payments on
the notes. At the state level, because of widespread state
budget deficits
11
and for other reasons, several states are evaluating ways to
subject partnerships to entity-level taxation through the
imposition of state income, franchise and other forms of
taxation. For example, as a partnership operating in Texas we
are required to pay franchise tax at a maximum effective rate of
0.7% of our gross income apportioned to Texas. If any other
state were to impose a tax on us, the cash we have available to
make payments on the notes could be materially reduced.
Our partnership agreement provides that if a law is enacted or
existing law is modified or interpreted in a manner that
subjects us to taxation as a corporation or otherwise subjects
us to entity-level taxation for federal, state or local income
tax purposes, then the minimum quarterly distribution amount and
the target distribution amount will be adjusted to reflect the
impact of that law on us.
12
USE OF
PROCEEDS
The exchange offer is intended to satisfy our obligations under
the registration rights agreement. We will not receive any cash
proceeds from the issuance of the exchange notes in the exchange
offer. In consideration for issuing the exchange notes as
contemplated by this prospectus, we will receive outstanding
notes in a like principal amount. The form and terms of the
exchange notes are identical in all respects to the form and
terms of the outstanding notes, except the exchange notes do not
include certain transfer restrictions, registration rights or
provisions for additional interest. Outstanding notes
surrendered in exchange for the exchange notes will be retired
and cancelled and will not be reissued. Accordingly, the
issuance of the exchange notes will not result in any change in
our outstanding indebtedness.
RATIO OF
EARNINGS TO FIXED CHARGES
The table below sets forth the Ratios of Earnings to Fixed
Charges for us for each of the periods indicated.
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Fiscal Year Ended
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Six Months Ended
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December 31,
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June 30,
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2005
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2006
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2007
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2008
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2009
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2010
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Ratio of Earnings to Fixed Charges
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2.41
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2.17
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2.64
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2.52
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1.97
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1.28
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Earnings included in the calculation of this ratio consist of
pre-tax income before minority interest and equity in earnings
of the partnership, distributions from unconsolidated entities,
fixed charges and amortization of capitalized interest less
capitalized interest. Fixed charges included in the calculation
of this ratio consist of fixed charges interest expense,
capitalized interest and estimated interest element of rentals.
13
EXCHANGE
OFFER
We sold the outstanding notes on March 26, 2010 pursuant to
the purchase agreement, dated as of March 23, 2010, by and
among us, Martin Midstream Finance Corp., our subsidiary
guarantors and the initial purchasers named therein. The
outstanding notes were subsequently offered by the initial
purchasers to qualified institutional buyers pursuant to
Rule 144A under the Securities Act and to
non-U.S. persons
pursuant to Regulation S under the Securities Act.
Purpose
of the Exchange Offer
We sold the outstanding notes in transactions that were exempt
from or not subject to the registration requirements under the
Securities Act. Accordingly, the outstanding notes are subject
to transfer restrictions. In general, you may not offer or sell
the outstanding notes unless either they are registered under
the Securities Act or the offer or sale is exempt from or not
subject to registration under the Securities Act and applicable
state securities laws.
In connection with the sale of the outstanding notes, we entered
into a registration rights agreement with the initial purchasers
of the outstanding notes. We are offering the exchange notes
under this prospectus in an exchange offer for the outstanding
notes to satisfy our obligations under the registration rights
agreement. The exchange offer will be open for at least 20
business days. During the exchange offer period, we will
exchange the exchange notes for all outstanding notes properly
surrendered and not withdrawn before the expiration date. The
exchange notes will be registered and the transfer restrictions,
registration rights and provisions for additional interest
relating to the outstanding notes will not apply to the exchange
notes.
Resale of
Exchange Notes
Based on no-action letters of the Commission staff issued to
third parties, we believe that exchange notes may be offered for
resale, resold and otherwise transferred by you without further
compliance with the registration and prospectus delivery
provisions of the Securities Act if:
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you are not an affiliate of us or Martin Midstream
Finance Corp. within the meaning of Rule 405 under the
Securities Act;
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such exchange notes are acquired in the ordinary course of your
business; and
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you do not intend to participate in a distribution of the
exchange notes.
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The Commission staff, however, has not considered the exchange
offer for the exchange notes in the context of a no-action
letter, and the Commission staff may not make a similar
determination as in the no-action letters issued to these third
parties.
If you tender in the exchange offer with the intention of
participating in any manner in a distribution of the exchange
notes, you
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cannot rely on such interpretations by the Commission
staff; and
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must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction.
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Unless an exemption from registration is otherwise available,
any securityholder intending to distribute exchange notes should
be covered by an effective registration statement under the
Securities Act. The registration statement should contain the
selling securityholders information required by
Item 507 or 508, as applicable, of
Regulation S-K
under the Securities Act.
This prospectus may be used for an offer to resell, resale or
other transfer of exchange notes only as specifically described
in this prospectus. If you are a broker-dealer, you may
participate in the exchange offer only if you acquired the
outstanding notes as a result of market-making activities or
other trading activities. Each broker-dealer that receives
exchange notes for its own account in exchange for outstanding
notes, where such outstanding notes were acquired by such
broker-dealer as a result of market-making activities or other
14
trading activities, must acknowledge by way of the letter of
transmittal that it will deliver this prospectus in connection
with any resale of the exchange notes. Please read the section
captioned Plan of Distribution for more details
regarding the transfer of exchange notes.
Terms of
the Exchange Offer
Subject to the terms and conditions described in this prospectus
and in the letter of transmittal, we will accept for exchange
any outstanding notes properly tendered and not withdrawn prior
to 5:00 p.m., New York City time, on the expiration date of
the exchange offer. We will issue exchange notes in principal
amount equal to the principal amount of outstanding notes
surrendered in the exchange offer. Outstanding notes may be
tendered only for exchange notes and only in denominations of
$2,000 and integral multiples of $1,000 in excess thereof.
The exchange offer is not conditioned upon any minimum aggregate
principal amount of outstanding notes being tendered in the
exchange offer.
As of the date of this prospectus, $200,000,000 in aggregate
principal amount of
87/8% Senior
Notes due 2018 are outstanding. This prospectus is being sent to
DTC, the sole registered holder of the outstanding notes. There
will be no fixed record date for determining registered holders
of outstanding notes entitled to participate in the exchange
offer.
We intend to conduct the exchange offer in accordance with the
provisions of the registration rights agreement, the applicable
requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended, or the Exchange Act, and
the rules and regulations of the Commission. Outstanding notes
whose holders do not tender for exchange in the exchange offer
will remain outstanding and continue to accrue interest. These
outstanding notes will be entitled to the rights and benefits
such holders have under the indenture relating to the
outstanding notes and the registration rights agreement.
We will be deemed to have accepted for exchange properly
tendered outstanding notes when we have given oral or written
notice of the acceptance to the exchange agent and complied with
the applicable provisions of the registration rights agreement.
The exchange agent will act as agent for the tendering holders
for the purposes of receiving the exchange notes from us.
If you tender outstanding notes in the exchange offer, you will
not be required to pay brokerage commissions or fees or, subject
to the letter of transmittal, transfer taxes with respect to the
exchange of outstanding notes. We will pay all charges and
expenses, other than certain applicable taxes described below,
in connection with the exchange offer. Please read
Fees and Expenses for more details
regarding fees and expenses incurred in connection with the
exchange offer.
We will return any outstanding notes that we do not accept for
exchange for any reason without expense to their tendering
holders promptly after the expiration or termination of the
exchange offer.
Expiration
Date
The exchange offer will expire at 5:00 p.m., New York City
time, on November 3, 2010, unless, in our sole discretion,
we extend it.
Extensions,
Delays in Acceptance, Termination or Amendment
We expressly reserve the right, at any time or various times, to
extend the period of time during which the exchange offer is
open. We may delay acceptance of any outstanding notes by giving
oral or written notice of such extension to their holders at any
time until the exchange offer expires or terminates. During any
such extensions, all outstanding notes previously tendered will
remain subject to the exchange offer, and we may accept them for
exchange.
To extend the exchange offer, we will notify the exchange agent
orally or in writing of any extension. We will notify the
holders of outstanding notes of the extension via a press
release issued no later than 9:00 a.m. New York City
time on the business day after the previously scheduled
expiration date.
15
If any of the conditions described below under
Conditions to the Exchange Offer have
not been satisfied, we reserve the right, in our sole discretion
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to delay accepting for exchange any outstanding notes,
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to extend the exchange offer, or
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to terminate the exchange offer,
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by giving oral or written notice of such delay, extension or
termination to the exchange agent. Subject to the terms of the
registration rights agreement, we also reserve the right to
amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or
amendment will be followed promptly by oral or written notice
thereof to holders of the outstanding notes. If we amend the
exchange offer in a manner that we determine to constitute a
material change, we will promptly disclose such amendment by
means of a prospectus supplement. The prospectus supplement will
be distributed to holders of the outstanding notes. Depending
upon the significance of the amendment and the manner of
disclosure to holders, we will extend the exchange offer if it
would otherwise expire during such period. If an amendment
constitutes a material change to the exchange offer, including
the waiver of a material condition, we will extend the exchange
offer, if necessary, to remain open for at least five business
days after the date of the amendment. In the event of any
increase or decrease in the consideration we are offering for
the outstanding notes or in the percentage of outstanding notes
being sought by us, we will extend the exchange offer to remain
open for at least 10 business days after the date we provide
notice of such increase or decrease to the registered holders of
outstanding notes.
Conditions
to the Exchange Offer
We will not be required to accept for exchange, or exchange any
exchange notes for, any outstanding notes if the exchange offer,
or the making of any exchange by a holder of outstanding notes,
would violate applicable law or Commission policy. Similarly, we
may terminate the exchange offer as provided in this prospectus
before accepting outstanding notes for exchange in the event of
such a potential violation.
We will not be obligated to accept for exchange the outstanding
notes of any holder that has not made to us the representations
described under Procedures for Tendering
and Plan of Distribution and such other
representations as may be reasonably necessary under applicable
Commission rules, regulations or interpretations to allow us to
use an appropriate form to register the exchange notes under the
Securities Act.
Additionally, we will not accept for exchange any outstanding
notes tendered, and will not issue exchange notes in exchange
for any such outstanding notes, if at such time any stop order
has been threatened or is in effect with respect to the exchange
offer registration statement of which this prospectus
constitutes a part or the qualification of the indenture under
the Trust Indenture Act of 1939.
We expressly reserve the right to amend or terminate the
exchange offer, and to reject for exchange any outstanding notes
not previously accepted for exchange, upon the occurrence of any
of the conditions to the exchange offer specified above. We will
promptly give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the
outstanding notes.
These conditions are for our sole benefit, and we may assert
them or waive them in whole or in part at any time or at various
times prior to the expiration of the exchange offer in our sole
discretion. If we fail at any time to exercise any of these
rights, this failure will not mean that we have waived our
rights. Each such right will be deemed an ongoing right that we
may assert at any time or at various times prior to the
expiration of the exchange offer.
Procedures
for Tendering
To participate in the exchange offer, you must properly tender
your outstanding notes to the exchange agent as described below.
We will only issue exchange notes in exchange for outstanding
notes that you timely
16
and properly tender. Therefore, you should allow sufficient time
to ensure timely delivery of the outstanding notes, and you
should follow carefully the instructions on how to tender your
outstanding notes. It is your responsibility to properly tender
your outstanding notes. We have the right to waive any defects.
However, we are not required to waive defects, and neither we
nor the exchange agent is required to notify you of any defects
in your tender.
If you have any questions or need help in exchanging your
outstanding notes, please call the exchange agent whose address
and phone number are described in the letter of transmittal
included as Annex A to this prospectus.
All of the outstanding notes were issued in book-entry form, and
all of the outstanding notes are currently represented by global
certificates registered in the name of Cede & Co., the
nominee of DTC. We have confirmed with DTC that the outstanding
notes may be tendered using ATOP. The exchange agent will
establish an account with DTC for purposes of the exchange offer
promptly after the commencement of the exchange offer, and DTC
participants may electronically transmit their acceptance of the
exchange offer by causing DTC to transfer their outstanding
notes to the exchange agent using the ATOP procedures. In
connection with the transfer, DTC will send an
agents message to the exchange agent. The
agents message will state that DTC has received
instructions from the participant to tender outstanding notes
and that the participant agrees to be bound by the terms of the
letter of transmittal.
By using the ATOP procedures to exchange outstanding notes, you
will not be required to deliver a letter of transmittal to the
exchange agent. However, you will be bound by its terms just as
if you had signed it.
There is no procedure for guaranteed late delivery of the
outstanding notes.
Determinations Under the Exchange Offer. We
will determine in our sole discretion all questions as to the
validity, form, eligibility, time of receipt, acceptance of
tendered outstanding notes and withdrawal of tendered
outstanding notes. Our determination will be final and binding.
We reserve the absolute right to reject any outstanding notes
not properly tendered or any outstanding notes our acceptance of
which would, in the opinion of our counsel, be unlawful. We also
reserve the right to waive any defect, irregularities or
conditions of tender as to particular outstanding notes. Our
interpretation of the terms and conditions of the exchange
offer, including the instructions in the letter of transmittal,
will be final and binding on all parties. Unless waived, all
defects or irregularities in connection with tenders of
outstanding notes must be cured within such time as we shall
determine. Although we intend to notify holders of defects or
irregularities with respect to tenders of outstanding notes,
neither we, the exchange agent nor any other person will incur
any liability for failure to give such notification. Tenders of
outstanding notes will not be deemed made until such defects or
irregularities have been cured or waived. Any outstanding notes
received by the exchange agent that are not properly tendered
and as to which the defects or irregularities have not been
cured or waived will be returned to the tendering holder
promptly following the expiration date of the exchange.
When We Will Issue Exchange Notes. In all
cases, we will issue exchange notes for outstanding notes that
we have accepted for exchange under the exchange offer only
after the exchange agent receives, prior to 5:00 p.m., New
York City time, on the expiration date,
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a book-entry confirmation of such outstanding notes into the
exchange agents account at DTC; and
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a properly transmitted agents message.
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Such notes will be issued promptly following the expiration or
termination of the offer.
Return of Outstanding Notes Not Accepted or
Exchanged. If we do not accept any tendered
outstanding notes for exchange or if outstanding notes are
submitted for a greater principal amount than the holder desires
to exchange, the unaccepted or non-exchanged outstanding notes
will be returned without expense to their tendering holder. Such
non-exchanged outstanding notes will be credited to an account
maintained with DTC. These actions will occur promptly after the
expiration or termination of the exchange offer.
17
Your Representations to Us. By agreeing to be
bound by the letter of transmittal, you will represent to us
that, among other things:
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any exchange notes that you receive will be acquired in the
ordinary course of your business;
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you are not engaged in and do not intend to engage in the
distribution of the exchange notes;
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you have no arrangement or understanding with any person or
entity to participate in the distribution of the exchange notes;
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you are not an affiliate, as defined in
Rule 405 under the Securities Act, of us, Martin Midstream
Finance Corp. or our subsidiary guarantors; and
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if you are a broker-dealer that will receive exchange notes for
your own account in exchange for outstanding notes, you acquired
those outstanding notes as a result of market-making activities
or other trading activities and you will deliver this
prospectus, as required by law, in connection with any resale of
the exchange notes.
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Withdrawal
of Tenders
Except as otherwise provided in this prospectus, you may
withdraw your tender at any time prior to 5:00 p.m., New
York City time, on the expiration date of the exchange offer.
For a withdrawal to be effective you must comply with the
appropriate ATOP procedures. Any notice of withdrawal must
specify the name and number of the account at DTC to be credited
with withdrawn outstanding notes and otherwise comply with the
ATOP procedures.
We will determine all questions as to the validity, form,
eligibility and time of receipt of a notice of withdrawal. Our
determination shall be final and binding on all parties. We will
deem any outstanding notes so withdrawn not to have been validly
tendered for exchange for purposes of the exchange offer.
Any outstanding notes that have been tendered for exchange but
that are not exchanged for any reason will be credited to an
account maintained with DTC for the outstanding notes. This
return or crediting will take place promptly after withdrawal,
rejection of tender, expiration or termination of the exchange
offer. You may retender properly withdrawn outstanding notes by
following the procedures described under
Procedures for Tendering above at any
time on or prior to the expiration date of the exchange offer.
Fees and
Expenses
We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, we may make
additional solicitation by
e-mail,
telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the
exchange offer and will not make any payments to broker-dealers
or others soliciting acceptances of the exchange offer. We will,
however, pay the exchange agent reasonable and customary fees
for its services and reimburse it for its related reasonable
out-of-pocket expenses.
We will pay the cash expenses to be incurred in connection with
the exchange offer. They include:
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Commission registration fees;
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fees and expenses of the exchange agent and trustee;
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accounting and legal fees and printing costs; and
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related fees and expenses.
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Transfer
Taxes
We will pay all transfer taxes, if any, applicable to the
exchange of outstanding notes under the exchange offer. Each
tendering holder, however, will be required to pay any transfer
taxes, whether imposed on the
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registered holder or any other person, if a transfer tax is
imposed for any reason other than the exchange of outstanding
notes under the exchange offer.
Consequences
of Failure to Exchange
If you do not exchange your outstanding notes for exchange notes
under the exchange offer, the outstanding notes you hold will
continue to be subject to the existing restrictions on transfer.
In general, you may not offer or sell the outstanding notes
except under an exemption from, or in a transaction not subject
to, the Securities Act and applicable state securities laws. We
do not intend to register outstanding notes under the Securities
Act unless the registration rights agreement requires us to do
so.
Accounting
Treatment
We will record the exchange notes in our accounting records at
the same carrying value as the outstanding notes. This carrying
value is the face value of the outstanding notes, less the
original issue discount (net of amortization) as reflected in
our accounting records on the date of exchange. Accordingly, we
will not recognize any gain or loss for accounting purposes in
connection with the exchange offer, other than the recognition
of the fees and expenses of the offering as stated under
Fees and Expenses.
Other
Participation in the exchange offer is voluntary, and you should
consider carefully whether to accept. You are urged to consult
your financial and tax advisors in making your own decision on
what action to take.
We may in the future seek to acquire untendered outstanding
notes in open market or privately negotiated transactions,
through subsequent exchange offers or otherwise. We have no
present plans to acquire any outstanding notes that are not
tendered in the exchange offer or to file a registration
statement to permit resales of any untendered outstanding notes.
19
DESCRIPTION
OF EXCHANGE NOTES
You can find the definitions of certain terms used in this
description under the subheading Certain
Definitions. In this description, the term
Company, us, our or
we refers only to Martin Midstream Partners L.P. and
not to any of its subsidiaries, the term Finance
Corp. refers to Martin Midstream Finance Corp. and the
term Issuers refers to the Company and Finance Corp.
References to the notes in this section of the
prospectus include both the outstanding notes issued on
March 26, 2010 and the exchange notes, unless the context
otherwise requires.
The exchange notes will be issued and the outstanding notes were
issued under an indenture dated as of March 26, 2010, among
Martin Midstream Partners L.P. and Martin Midstream Finance
Corp., as issuers, the Guarantors (as defined below) party
thereto and Wells Fargo Bank, National Association, as trustee.
You can find the definition of various terms used in this
Description of Exchange Notes under Certain
Definitions below.
The following description is a summary of the material
provisions of the indenture and the exchange notes. It does not
restate those documents in their entirety. We urge you to read
the indenture and the exchange notes because they, and not this
description, define the rights of Holders of the notes. Certain
defined terms used in this description but not defined below
under Certain Definitions have the
meanings assigned to them in the indenture.
If the exchange offer is consummated, Holders of notes who do
not exchange their notes for exchange notes will vote together
with the Holders of the exchange notes for all relevant purposes
under the indenture. In that regard, the indenture requires that
certain actions by the Holders under the indenture (including
acceleration after an Event of Default) must be taken, and
certain rights must be exercised, by specified minimum
percentages of the aggregate principal amount of all outstanding
notes issued under the indenture. In determining whether Holders
of the requisite percentage in principal amount have given any
notice, consent or waiver or taken any other action permitted
under the indenture, any notes that remain outstanding after the
exchange offer will be aggregated with the exchange notes, and
the Holders of these notes and exchange notes will vote together
as a single series for all such purposes. Accordingly, all
references in this Description of Exchange Notes to specified
percentages in aggregate principal amount of the outstanding
notes mean, at any time after the exchange offer for the notes
is consummated, such percentage in aggregate principal amount of
such notes and the exchange notes then outstanding.
The registered Holder of a note will be treated as the owner of
it for all purposes. Only registered Holders will have rights
under the indenture.
Brief
Description of the Notes and the Subsidiary Guarantees
The notes. The notes:
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are general unsecured obligations of the Issuers;
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are equal in right of payment with all existing and future
Senior Debt (as defined below) of either of the Issuers;
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are senior in right of payment to any future subordinated debt
of the Issuers; and
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are unconditionally guaranteed by the Guarantors on a senior
unsecured basis.
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The Subsidiary Guarantees. The notes are
currently guaranteed by all of the Companys existing
Subsidiaries (other than Finance Corp.).
Each guarantee of the notes:
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is a general unsecured obligation of the Guarantor;
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is equal in right of payment with all existing and future Senior
Debt of that Guarantor; and
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is senior in right of payment to any future subordinated debt of
that Guarantor
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As of June 30, 2010, the Company and the Guarantors had:
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total Senior Debt of approximately $303.5 million,
consisting of the notes and approximately $106.2 million of
secured Senior Debt, which includes $6.2 million in capital
lease obligations and $100 million outstanding under the
Companys senior secured credit facility; and
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no Indebtedness contractually subordinated to the notes or the
guarantees, as applicable.
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The indenture permits us and the Guarantors to incur additional
Indebtedness, including additional Senior Debt.
All of our existing Subsidiaries (other than Finance Corp.),
guarantee the notes. Under the circumstances described below
under the subheading Certain
Covenants Additional Subsidiary Guarantees, in
the future one or more of our newly created or acquired
Subsidiaries may not guarantee the notes. In the event of a
bankruptcy, liquidation or reorganization of any of these
non-guarantor Subsidiaries, the non-guarantor Subsidiaries will
pay current outstanding obligations to the holders of their debt
and their trade creditors before they will be able to distribute
any of their assets to us.
As of the date of the indenture, all of our Subsidiaries were
Restricted Subsidiaries. However, under the
circumstances described below under the subheading
Certain Covenants Designation of
Restricted and Unrestricted Subsidiaries, we will be
permitted to designate certain of our Subsidiaries as
Unrestricted Subsidiaries. Our Unrestricted
Subsidiaries will not be subject to many of the restrictive
covenants in the indenture. Our Unrestricted Subsidiaries will
not guarantee the notes.
We own a 50% interest in WGPC, Matagorda and PIPE. None of these
joint ventures will be classified as our Subsidiary, and
therefore none of them will guarantee the notes so long as they
are not so classified.
Principal,
Maturity and Interest
The Issuers have issued $200.0 million aggregate principal
amount of notes. In addition to the exchange notes offered
hereby, the Issuers may issue additional notes from time to
time. Any offering of additional notes is subject to the
covenant described below under the caption
Certain Covenants Incurrence of
Indebtedness and Issuance of Preferred Stock. The
outstanding notes and any additional notes subsequently issued
under the indenture, together with the exchange notes, will be
treated as a single class for all purposes under the indenture,
including, without limitation, for waivers, amendments and
offers to purchase. The Issuers will issue notes in
denominations of $2,000 and integral multiples of $1,000 in
excess of $2,000. The notes will mature on April 1, 2018.
Interest on the notes accrues at the rate of
87/8%
per annum, and is payable semi-annually in arrears on April 1
and October 1, commencing on October 1, 2010. The
Issuers will make each interest payment to the Holders of record
on the March 15 and September 15 immediately preceding each
interest payment date.
Interest on the notes accrues from March 26, 2010 or, if
interest has already been paid, from the date it was most
recently paid. Interest will be computed on the basis of a
360-day year
comprised of twelve
30-day
months.
Methods
of Receiving Payments on the Notes
If a Holder has given wire transfer instructions to the Issuers,
the Issuers will pay all principal, interest and premium, if
any, on that Holders notes in accordance with those
instructions. All other payments on the notes will be made at
the office or agency of the paying agent and registrar within
the City and State of New York unless the Issuers elect to make
interest payments by check mailed to the Holders at their
addresses set forth in the register of Holders.
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Paying
Agent and Registrar for the Notes
The trustee will initially act as paying agent and registrar.
The Issuers may change the paying agent or registrar without
prior notice to the Holders of the notes, and the Company or any
of its Subsidiaries may act as paying agent or registrar.
Transfer
and Exchange
A Holder may transfer or exchange notes in accordance with the
indenture. The registrar and the trustee may require a Holder to
furnish appropriate endorsements and transfer documents in
connection with a transfer of notes. No service charge will be
imposed by the Issuers, the trustee or the registrar for any
registration of transfer or exchange of notes, but Holders will
be required to pay all taxes due on transfer. The Issuers are
not required to transfer or exchange any note selected for
redemption. Also, the Issuers are not required to transfer or
exchange any note for a period of 15 days before a
selection of notes to be redeemed.
Subsidiary
Guarantees
Currently, all of our existing Subsidiaries, excluding Finance
Corp., have guaranteed the notes on a senior unsecured basis. In
the future, the Restricted Subsidiaries of the Company will be
required to guarantee the notes under the circumstances
described under Certain Covenants
Additional Subsidiary Guarantees. These Subsidiary
Guarantees are joint and several obligations of the Guarantors.
The obligations of each Guarantor under its Subsidiary Guarantee
will be limited as necessary to prevent that Subsidiary
Guarantee from constituting a fraudulent conveyance under
applicable law. See Risk Factors Risks Related
to the notes The guarantees of the notes could be
deemed fraudulent conveyances under certain circumstances, and a
court may try to subordinate or void the guarantees.
A Guarantor may not sell or otherwise dispose of all or
substantially all of its properties or assets to, or consolidate
with or merge with or into (whether or not such Guarantor is the
surviving Person), another Person, other than the Company or
another Guarantor, unless:
(1) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(2) either:
(a) the Person acquiring the properties or assets in any
such sale or other disposition or the Person formed by or
surviving any such consolidation or merger (if other than the
Guarantor) unconditionally assumes, pursuant to a supplemental
indenture substantially in the form specified in the indenture,
all the obligations of that Guarantor under the notes, the
indenture and its Subsidiary Guarantee on terms set forth
therein; or
(b) the Net Proceeds of such sale or other disposition are
applied in accordance with the Asset Sales
provisions of the indenture.
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all
or substantially all of the properties or assets of that
Guarantor (including by way of merger or consolidation) to a
Person that is not (either before or after giving effect to such
transaction) a Restricted Subsidiary of the Company, if the sale
or other disposition complies with the Asset Sales
provisions of the indenture;
(2) in connection with any sale or other disposition of all
of the Capital Stock of that Guarantor to a Person that is not
(either before or after giving effect to such transaction) a
Restricted Subsidiary of the Company, if the sale or other
disposition complies with the Asset Sales provisions
of the indenture;
(3) if the Company designates any Restricted Subsidiary
that is a Guarantor as an Unrestricted Subsidiary in accordance
with the applicable provisions of the indenture;
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(4) upon Legal Defeasance or Covenant Defeasance as
described below under the caption Legal
Defeasance and Covenant Defeasance or upon satisfaction
and discharge of the indenture as described below under the
caption Satisfaction and Discharge;
(5) upon the liquidation or dissolution of such Guarantor
provided no Default or Event of Default has occurred that is
continuing; or
(6) in the case of any Guarantor other than the Operating
Partnership, any Guarantor , or the Operating
Partnership; or
(7) in the case of the Operating Partnership, at such time
as the Operating Partnership ceases to guarantee any other
Indebtedness of either of the Issuers, provided that it is then
no longer an obligor with respect to any Indebtedness under any
Credit Facility.
Optional
Redemption
At any time prior to April 1, 2013, the Issuers may on any
one or more occasions redeem up to 35% of the aggregate
principal amount of the notes issued under the indenture, upon
not less than 30 nor more than 60 days notice, at a
redemption price of 108.875% of the principal amount, plus
accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant
record date to receive interest due on an interest payment date
that is on or prior to the redemption date), with the net cash
proceeds of one or more Equity Offerings, provided that:
(1) at least 65% of the aggregate principal amount of the
notes issued under the indenture remains outstanding immediately
after the occurrence of such redemption (excluding notes held by
the Company and its Subsidiaries); and
(2) the redemption occurs within 120 days of the date
of the closing of each such Equity Offering.
On and after April 1, 2014, the Issuers may on any one or
more occasions redeem all or a part of the notes upon not less
than 30 nor more than 60 days notice, at the
redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest, if any, on
the notes redeemed to the applicable redemption date (subject to
the right of Holders of record on the relevant record date to
receive interest due on an interest payment date that is on or
prior to the redemption date), if redeemed during the
twelve-month period beginning on April 1 of the years indicated
below:
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Year
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Percentages
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2014
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104.438
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2015
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102.219
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2016 and thereafter
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100.000
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Prior to April 1, 2014, the Issuers may redeem all or part
of the notes upon not less than 30 nor more than
60 days notice, at a redemption price equal to the
sum of:
(1) the principal amount thereof, plus
(2) the Make Whole Premium at the redemption date,
plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant
record date to receive interest due on an interest payment date
that is on or prior to the redemption date).
Selection
and Notice
If less than all of the notes are to be redeemed at any time,
the trustee will select notes for redemption as follows:
(1) if the notes are listed on any national securities
exchange, in compliance with the requirements of the principal
national securities exchange on which the notes are
listed; or
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(2) if the notes are not listed on any national securities
exchange, on a pro rata basis.
No notes of $2,000 or less can be redeemed in part. Notices of
optional redemption will be mailed by first class mail at least
30 but not more than 60 days before the redemption date to
each Holder of notes to be redeemed at its registered address,
except that optional redemption notices may be mailed more than
60 days prior to a redemption date if the notice is issued
in connection with a defeasance of the notes or a satisfaction
and discharge of the indenture. Notices of redemption may not be
conditional, except that any redemption pursuant to the first
paragraph under this Optional Redemption
section, may, at the Companys discretion, be subject to
completion of the related Equity Offering.
If any note is to be redeemed in part only, the notice of
redemption that relates to that note will state the portion of
the principal amount of that note that is to be redeemed. A new
note in principal amount equal to the unredeemed portion of the
original note will be issued in the name of the Holder of notes
upon cancellation of the original note. notes called for
redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on notes or
portions of them called for redemption.
Mandatory
Redemption
Except as set forth below under Repurchase at
the Option of Holders, neither of the Issuers is required
to make mandatory redemption or sinking fund payments with
respect to the notes or to repurchase the notes at the option of
the Holders.
Repurchase
at the Option of Holders
Change
of Control
If a Change of Control occurs, unless the Issuers have
previously or concurrently exercised their right to redeem all
of the notes as described under Optional
Redemption, each Holder of notes will have the right to
require the Company to repurchase all or any part (equal to
$2,000 or an integral multiple of $1,000 in excess of $2,000) of
that Holders notes pursuant to a Change of Control Offer
on the terms set forth in the indenture. In the Change of
Control Offer, the Company will offer a Change of Control
Payment in cash equal to 101% of the aggregate principal amount
of notes repurchased plus accrued and unpaid interest, if any,
on the notes repurchased, to the date of settlement (the
Change of Control Settlement Date), subject to the
right of Holders of record on the relevant record date to
receive interest due on an interest payment date that is on or
prior to the Change of Control Settlement Date. Within
30 days following any Change of Control, unless the Issuers
have previously or concurrently exercised their right to redeem
all of the notes as described under Optional
Redemption, the Company will mail a notice to each Holder
and the trustee describing the transaction or transactions that
constitute the Change of Control and offering to repurchase
notes as of the Change of Control Settlement Date specified in
the notice, which date will be no earlier than 30 days and
no later than 60 days from the date such notice is mailed,
pursuant to the procedures required by the indenture and
described in such notice.
The Company will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with the repurchase of the notes as
a result of a Change of Control. To the extent that the
provisions of any securities laws or regulations conflict with
the Change of Control provisions of the indenture, the Company
will comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations under
the Change of Control provisions of the indenture by virtue of
such conflict.
On the Change of Control Settlement Date, the Company will, to
the extent lawful, accept for payment all notes or portions of
notes properly tendered pursuant to the Change of Control Offer.
Promptly thereafter on the Change of Control Settlement Date,
the Company will:
(1) deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all notes or portions of
notes properly tendered; and
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(2) deliver or cause to be delivered to the trustee the
notes properly accepted together with an officers
certificate stating the aggregate principal amount of notes or
portions of notes being purchased by the Company.
On the Change of Control Settlement Date, the paying agent will
mail to each Holder of notes properly tendered the Change of
Control Payment for such notes (or, if all the notes are then in
global form, make such payment through the facilities of DTC),
and the trustee will authenticate and mail (or cause to be
transferred by book entry) to each Holder a new note equal in
principal amount to any unpurchased portion of the notes
surrendered, if any; provided, however, that each new note will
be in a principal amount of $2,000 or an integral multiple of
$1,000 in excess of $2,000. The Company will publicly announce
the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Credit Agreement provides that certain change of control
events with respect to the Company would constitute an event of
default thereunder, entitling the lenders, among other things,
to accelerate the maturity of all Indebtedness outstanding
thereunder. Any future credit agreements or other agreements
relating to Indebtedness to which the Company or any Guarantor
becomes a party may contain similar restrictions and provisions.
The provisions described above that require the Company to make
a Change of Control Offer following a Change of Control will be
applicable whether or not any other provisions of the indenture
are applicable. Except as described above with respect to a
Change of Control, the indenture does not contain provisions
that permit the Holders of the notes to require that the Company
repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction.
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change
of Control Offer in the manner, at the time and otherwise in
compliance with the requirements set forth in the indenture
applicable to a Change of Control Offer made by the Company and
purchases all notes properly tendered and not withdrawn under
the Change of Control Offer. Notwithstanding anything to the
contrary contained herein, a Change of Control Offer by the
Company or a third party may be made in advance of a Change of
Control, conditioned upon the consummation of such Change of
Control, if a definitive agreement is in place for the Change of
Control at the time the Change of Control Offer is made.
The definition of Change of Control includes a phrase relating
to the direct or indirect sale, lease, transfer, conveyance or
other disposition of all or substantially all of the
properties or assets of the Company and its Restricted
Subsidiaries taken as a whole. Although there is a limited body
of case law interpreting the phrase substantially
all, there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a
Holder of notes to require the Company to repurchase its notes
as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the properties or assets of the
Company and its Subsidiaries taken as a whole to another Person
or group may be uncertain.
In the event that Holders of not less than 90% of the aggregate
principal amount of the outstanding notes accept a Change of
Control Offer and the Company purchases all of the notes held by
such Holders, the Company will have the right, upon not less
than 30 nor more than 60 days prior notice, given not
more than 30 days following the purchase pursuant to the
Change of Control Offer described above, to redeem all of the
notes that remain outstanding following such purchase at a
redemption price equal to the Change of Control Payment plus, to
the extent not included in the Change of Control Payment,
accrued and unpaid interest on the notes that remain
outstanding, to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive
interest due on an interest payment date that is on or prior to
the redemption date).
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Asset
Sales
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or a Restricted Subsidiary, as the case
may be) receives consideration at the time of the Asset Sale at
least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of,
(2) the fair market value is determined by (a) an
executive officer of the General Partner if the value is less
than $20.0 million and evidenced by an officers
certificate delivered to the trustee, or (b) the
Companys Board of Directors if the value is
$20.0 million or more and evidenced by a resolution of the
Board of Directors set forth in an officers certificate
delivered to the trustee; and
(3) at least 75% of the aggregate consideration received by
the Company and its Restricted Subsidiaries in the Asset Sale
and all other Asset Sales since the date of the indenture is in
the form of cash. For purposes of this provision, each of the
following will be deemed to be cash:
(a) any liabilities, as shown on the Companys or any
Restricted Subsidiarys most recent balance sheet, of the
Company or such Subsidiary (other than contingent liabilities
and liabilities that are by their terms subordinated to the
notes or any Subsidiary Guarantee) that are assumed by the
transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Subsidiary from
further liability; and
(b) any securities, notes or other obligations received by
the Company or any Restricted Subsidiary from such transferee
that are, within 90 days after the Asset Sale, converted by
the Company or such Subsidiary into cash, to the extent of the
cash received in that conversion.
Within 360 days after the receipt of any Net Proceeds from
an Asset Sale, the Company or any Restricted Subsidiary may
apply those Net Proceeds at its option to any combination of the
following:
(1) to repay Senior Debt;
(2) to acquire all or substantially all of the properties
or assets of a Person primarily engaged in a Permitted Business;
(3) to acquire a majority of the Voting Stock of a Person
primarily engaged in a Permitted Business;
(4) to make capital expenditures; or
(5) to acquire other long-term assets that are used or
useful in a Permitted Business.
Pending the final application of any Net Proceeds, the Company
or any Restricted Subsidiary may invest the Net Proceeds in any
manner that is not prohibited by the indenture. Any Net Proceeds
from Asset Sales that are not applied or invested as provided in
the preceding paragraph will constitute Excess
Proceeds.
On the 361st day after the Asset Sale (or, at the
Companys option, any earlier date), if the aggregate
amount of Excess Proceeds then exceeds $20.0 million, the
Company will make an Asset Sale Offer to all Holders of notes,
and all holders of other Indebtedness that is pari passu with
the notes containing provisions similar to those set forth in
the indenture with respect to offers to purchase or redeem with
the proceeds of sales of assets, to purchase the maximum
principal amount of notes and such other pari passu Indebtedness
that may be purchased out of the Excess Proceeds. The offer
price in any Asset Sale Offer will be equal to 100% of the
principal amount plus accrued and unpaid interest, if any, to
the date of settlement, subject to the right of Holders of
record on the relevant record date to receive interest due on an
interest payment date that is on or prior to the date of
settlement, and will be payable in cash. If any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company or
any Restricted Subsidiary may use those Excess Proceeds for any
purpose not otherwise prohibited by the indenture. If the
aggregate principal amount of notes and other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the trustee will select the notes and
such other pari passu Indebtedness to be purchased on a pro rata
basis. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds will be reset at zero.
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The Company will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent those laws and regulations
are applicable in connection with each repurchase of notes
pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the Asset Sales provisions of the indenture, the
Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its
obligations under the Asset Sales provisions of the
indenture by virtue of such conflict.
Certain
Covenants
Restricted
Payments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment
or distribution on account of the Companys or any of its
Restricted Subsidiaries Equity Interests (including,
without limitation, any payment in connection with any merger or
consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the
Companys or any of its Restricted Subsidiaries
Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or payable to the Company or
a Restricted Subsidiary of the Company);
(2) purchase, redeem or otherwise acquire or retire for
value (including, without limitation, in connection with any
merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the
Company;
(3) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the notes or the Subsidiary
Guarantees (excluding any intercompany Indebtedness between or
among the Company and any of its Restricted Subsidiaries),
except a payment of interest or principal at the Stated Maturity
thereof; or
(4) make any Restricted Investment (all such payments and
other actions set forth in these clauses (1) through
(4) above being collectively referred to as
Restricted Payments),
unless, at the time of and after giving effect to such
Restricted Payment, no Default (except a Reporting Default) or
Event of Default has occurred and is continuing or would occur
as a consequence of such Restricted Payment and either:
(1) if the Fixed Charge Coverage Ratio for the
Companys most recently ended four full fiscal quarters for
which internal financial statements are available at the time of
such Restricted Payment (the Trailing Four Quarters)
is not less than 1.75 to 1.0, such Restricted Payment, together
with the aggregate amount of all other Restricted Payments made
by the Company and its Restricted Subsidiaries (excluding
Restricted Payments permitted by clauses (2), (3), (4),
(5) and (6) of the next succeeding paragraph) with
respect to the quarter for which such Restricted Payment is
made, is less than the sum, without duplication, of:
(a) Available Cash from Operating Surplus with respect to
the Companys preceding fiscal quarter, plus
(b) 100% of the aggregate net cash proceeds received by the
Company (including the fair market value of any Permitted
Business or long-term assets that are used or useful in a
Permitted Business to the extent acquired in consideration of
Equity Interests of the Company (other than Disqualified Stock))
after the date of the indenture as a contribution to its common
equity capital or from the issue or sale of Equity Interests of
the Company (other than Disqualified Stock) or from the issue or
sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the Company that
have been converted into or exchanged for such Equity Interests
(other than Equity Interests (or Disqualified Stock or debt
securities) sold to a Restricted Subsidiary of the Company), plus
27
(c) to the extent that any Restricted Investment that was
made after the date of the indenture is sold for cash or
otherwise liquidated or repaid for cash, the cash return of
capital with respect to such Restricted Investment (less the
cost of disposition, if any), plus
(d) the net reduction in Restricted Investments resulting
from dividends, repayments of loans or advances, or other
transfers of assets in each case to the Company or any of its
Restricted Subsidiaries from any Person (including, without
limitation, Unrestricted Subsidiaries) or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries, to the
extent such amounts have not been included in Available Cash
from Operating Surplus for any period commencing on or after the
date of the indenture (items (b), (c) and (d) being
referred to as Incremental Funds), minus
(e) the aggregate amount of Incremental Funds previously
expended pursuant to this clause (1) and clause (2)
below; or
(2) if the Fixed Charge Coverage Ratio for the Trailing
Four Quarters is less than 1.75 to 1.0, such Restricted Payment,
together with the aggregate amount of all other Restricted
Payments made by the Company and its Restricted Subsidiaries
(excluding Restricted Payments permitted by clauses (2), (3),
(4), (5) and (6) of the next succeeding paragraph)
with respect to the quarter for which such Restricted Payment is
made (such Restricted Payments for purposes of this
clause (2) meaning only distributions on the Companys
common units, preferred units, subordinated units, or incentive
distribution rights, plus the related distribution to the
General Partner), is less than the sum, without duplication, of:
(a) $65.5 million less the aggregate amount of all
prior Restricted Payments made by the Company and its Restricted
Subsidiaries pursuant to this clause (2)(a) since the date of
the indenture, plus
(b) Incremental Funds to the extent not previously expended
pursuant to this clause (2) or clause (1) above.
So long as no Default (except a Reporting Default) or Event of
Default has occurred and is continuing or would be caused
thereby (except with respect to clause (1) below under
which the payment of a distribution or dividend is permitted),
the preceding provisions will not prohibit:
(1) the payment of any dividend or distribution within
60 days after the date of its declaration, if at the date
of declaration the payment would have complied with the
provisions of the indenture;
(2) the purchase, redemption, defeasance or other
acquisition or retirement of any subordinated Indebtedness of
the Company or any Guarantor or of any Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the
substantially concurrent (a) contribution (other than from
a Restricted Subsidiary of the Company) to the equity capital of
the Company or (b) sale (other than to a Restricted
Subsidiary of the Company) of, Equity Interests of the Company
(other than Disqualified Stock), with a sale being deemed
substantially concurrent if such purchase, redemption,
defeasance or other acquisition or retirement occurs not more
than 120 days after such sale; provided, however, that the
amount of any such net cash proceeds that are utilized for any
such purchase, redemption, defeasance or other acquisition or
retirement will be excluded (or deducted, if included) from the
calculation of Available Cash from Operating Surplus and
Incremental Funds;
(3) the purchase, redemption, defeasance or other
acquisition or retirement of subordinated Indebtedness of the
Company or any Guarantor with the net cash proceeds from an
incurrence of, or in exchange for, Permitted Refinancing
Indebtedness;
(4) the payment of any dividend or distribution by a
Restricted Subsidiary of the Company to the holders of its
Equity Interests on a pro rata basis;
(5) the purchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company pursuant to any
director or employee equity subscription agreement or equity
option agreement or other employee benefit plan or to satisfy
obligations
28
under any Equity Interests appreciation rights or option plan or
similar arrangement; provided, however, that the aggregate price
paid for all such purchased, redeemed, acquired or retired
Equity Interests may not exceed $5.0 million in any
calendar year; or
(6) the purchase, repurchase, redemption or other
acquisition or retirement for value of Equity Interests deemed
to occur upon the exercise of unit options, warrants,
incentives, rights to acquire Equity Interests or other
convertible securities if such Equity Interests represent a
portion of the exercise or exchange price thereof, and any
purchase, repurchase, redemption or other acquisition or
retirement for value of Equity Interests made in lieu of
withholding taxes in connection with any exercise or exchange of
unit options, warrants, incentives or rights to acquire Equity
Interests.
The amount of all Restricted Payments (other than cash) will be
the fair market value on the date of the Restricted Payment of
the Restricted Investment proposed to be made or the asset(s) or
securities proposed to be transferred or issued by the Company
or such Restricted Subsidiary, as the case may be, pursuant to
the Restricted Payment. The fair market value of any Restricted
Investment, assets or securities that are required to be valued
by this covenant will be determined, in the case of amounts
under $20.0 million, by an officer of the General Partner
and, in the case of amounts over $20.0 million, by the
Board of Directors of the Company, whose determination shall be
evidenced by a Board Resolution. Not later than the date of
making any Restricted Payment (excluding any Restricted Payment
described in the preceding clause (2), (3), (4), (5) or
(6)) the Company will deliver to the trustee an officers
certificate stating that such Restricted Payment is permitted
and setting forth the basis upon which the calculations required
by this Restricted Payments covenant were computed.
Incurrence
of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to
(collectively, incur) any Indebtedness (including
Acquired Debt), the Company will not, and will not permit any of
its Restricted Subsidiaries to, issue any Disqualified Stock,
and the Company will not permit any of its Restricted
Subsidiaries to issue any preferred securities; provided,
however, that the Company and any of its Restricted Subsidiaries
may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock or preferred securities, if, for the
Companys most recently ended four full fiscal quarters for
which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or preferred securities are
issued, the Fixed Charge Coverage Ratio would have been at least
2.0 to 1.0, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or Disqualified Stock
or preferred securities had been issued, as the case may be, at
the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness
(collectively, Permitted Debt) or the issuance of
any preferred securities described in clause (11) below:
(1) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness (including letters of
credit) under one or more Credit Facilities, provided that,
after giving effect to any such incurrence, the aggregate
principal amount of all Indebtedness incurred under this
clause (1) and then outstanding does not exceed the greater
of (a) $300 million or (b) $200 million plus
20.0% of the Companys Consolidated Net Tangible Assets;
(2) the incurrence by the Company or its Restricted
Subsidiaries of the Existing Indebtedness;
(3) the incurrence by the Company and the Guarantors of
Indebtedness represented by (a) the outstanding notes and
the related Subsidiary Guarantees issued on the date of the
indenture and (b) the exchange notes and the related
Subsidiary Guarantees issued pursuant to any registration rights
agreement;
29
(4) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money obligations,
in each case, incurred for the purpose of financing all or any
part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business
of the Company or such Restricted Subsidiary, including all
Permitted Refinancing Indebtedness incurred to extend,
refinance, renew, replace, defease or refund any Indebtedness
incurred pursuant to this clause (4), provided that after giving
effect to any such incurrence, the principal amount of all
Indebtedness incurred pursuant to this clause (4) and then
outstanding does not exceed the greater of
(a) $30.0 million or (b) 6.0% of the
Companys Consolidated Net Tangible Assets at such time;
(5) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange
for, or the net proceeds of which are used to, extend,
refinance, renew, replace, defease or refund Indebtedness that
was permitted by the indenture to be incurred under the first
paragraph of this covenant or clause (2) or (3) of
this paragraph or this clause (5);
(6) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the
Company and any of its Restricted Subsidiaries; provided,
however, that:
(a) if the Company is the obligor on such Indebtedness and
a Guarantor is not the obligee, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of
all Obligations with respect to the notes, or if a Guarantor is
the obligor on such Indebtedness and neither the Company nor
another Guarantor is the obligee, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of
all Obligations with respect to the Subsidiary Guarantee of such
Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary of the
Company and (ii) any sale or other transfer of any such
Indebtedness to a Person that is neither the Company nor a
Restricted Subsidiary of the Company will be deemed, in each
case, to constitute an incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be, that
was not permitted by this clause (6);
(7) the incurrence by the Company or any of its Restricted
Subsidiaries of obligations under Hedging Contracts in the
ordinary course of business and not for speculative purposes;
(8) the guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or any of its
Restricted Subsidiaries that was permitted to be incurred by
another provision of this covenant;
(9) the incurrence by the Company or any of its Restricted
Subsidiaries of obligations relating to net Hydrocarbon
balancing positions arising in the ordinary course of business
and consistent with past practice;
(10) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in respect of bid, performance,
surety and similar bonds issued for the account of the Company
and any of its Restricted Subsidiaries in the ordinary course of
business, including guarantees and obligations of the Company or
any of its Restricted Subsidiaries with respect to letters of
credit supporting such obligations (in each case other than an
obligation for money borrowed);
(11) the issuance by any of the Companys Restricted
Subsidiaries to the Company or to any of its Restricted
Subsidiaries of any preferred securities; provided, however,
that:
(a) any subsequent issuance or transfer of Equity Interests
that results in any such preferred securities being held by a
Person other than the Company or a Restricted Subsidiary of the
Company; and
(b) any sale or other transfer of any such preferred
securities to a Person that is not either the Company or a
Restricted Subsidiary of the Company
30
shall be deemed, in each case, to constitute an issuance of such
preferred securities by such Restricted Subsidiary that was not
permitted by this clause (11);
(12) the incurrence by the Company or any of its Restricted
Subsidiaries of liability in respect of the Indebtedness of any
Unrestricted Subsidiary of the Company or any Joint Venture but
only to the extent that such liability is the result of the
Companys or any such Restricted Subsidiarys being a
general partner of such Unrestricted Subsidiary or Joint Venture
and not as guarantor of such Indebtedness and provided that,
after giving effect to any such incurrence, the aggregate
principal amount of all Indebtedness incurred under this
clause (12) and then outstanding does not exceed
$35.0 million;
(13) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt in connection with a merger or
consolidation meeting either one of the financial tests set
forth in clause (4) under the caption
Merger, Consolidation or Sale of
Assets; and
(14) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness, provided that, after
giving effect to any such incurrence, the aggregate principal
amount of all Indebtedness incurred under this clause (14)
and then outstanding does not exceed the greater of
(a) $30.0 million or (b) 5.0% of the
Companys Consolidated Net Tangible Assets.
For purposes of determining compliance with this
Incurrence of Indebtedness and Issuance of Preferred
Stock covenant, in the event that an item of Indebtedness
(including Acquired Debt) meets the criteria of more than one of
the categories of Permitted Debt described in clauses (1)
through (14) above, or is entitled to be incurred pursuant
to the first paragraph of this covenant, the Company will be
permitted to classify (or later classify or reclassify in whole
or in part in its sole discretion) such item of Indebtedness in
any manner that complies with this covenant. Any Indebtedness
under Credit Facilities on the date of the indenture shall be
considered incurred under the first paragraph of this covenant.
The accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified Stock
in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes
of this covenant, provided, in each such case, that the amount
thereof is included in Fixed Charges of the Company as accrued.
Further, the accounting reclassification of any obligation of
the Company or any of its Restricted Subsidiaries as
Indebtedness will not be deemed an incurrence of Indebtedness
for purposes of this covenant.
Liens
The Company will not and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind (other
than Permitted Liens) securing Indebtedness or Attributable Debt
upon any of their property or assets, now owned or hereafter
acquired, unless the notes or any Subsidiary Guarantee of such
Restricted Subsidiary, as applicable, is secured on an equal and
ratable basis with (or on a senior basis to, in the case of
obligations subordinated in right of payment to the notes or
such Subsidiary Guarantee, as the case may be) the obligations
so secured until such time as such obligations are no longer
secured by a Lien.
Dividend
and Other Payment Restrictions Affecting
Subsidiaries
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to
exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its
Capital Stock to the Company or any of its Restricted
Subsidiaries, or pay any Indebtedness or other obligations owed
to the Company or any of its Restricted Subsidiaries;
(2) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries.
31
However, the preceding restrictions will not apply to
encumbrances or restrictions existing under or by reason of:
(1) agreements as in effect on the date of the indenture
and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
of those agreements or the Indebtedness to which they relate,
provided that the amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings are no more restrictive, taken as a whole, with
respect to such dividend, distribution and other payment
restrictions than those contained in those agreements on the
date of the indenture;
(2) the indenture, the notes and the Subsidiary Guarantees;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition, which
encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, provided
that, in the case of Indebtedness, such Indebtedness was
otherwise permitted by the terms of the indenture to be incurred;
(5) customary non-assignment provisions in Hydrocarbon
purchase and sale or exchange agreements or similar operational
agreements or in licenses, easements or leases, in each case
entered into in the ordinary course of business and consistent
with past practices;
(6) Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case for property acquired
in the ordinary course of business that impose restrictions on
that property of the nature described in clause (3) of the
preceding paragraph;
(7) any agreement for the sale or other disposition of a
Restricted Subsidiary of the Company that restricts
distributions by that Restricted Subsidiary pending its sale or
other disposition;
(8) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive,
taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness otherwise permitted to be
incurred under the provisions of the covenant described above
under the caption Liens that limit the
right of the debtor to dispose of the assets subject to such
Liens;
(10) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements,
asset sale agreements, stock sale agreements and other similar
agreements entered into in the ordinary course of business;
(11) any agreement or instrument relating to any property
or assets acquired after the date of the indenture, so long as
such encumbrance or restriction relates only to the property or
assets so acquired and is not and was not created in
anticipation of such acquisitions;
(12) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business; and
(13) any other agreement governing Indebtedness of the
Company or any Guarantor that is permitted to be incurred by the
covenant described under Incurrence of
Indebtedness and Issuance of Preferred Stock; provided,
however, that such encumbrances or restrictions are not
materially more restrictive, taken as a whole, than those
contained in the indenture or the Credit Agreement as it exists
on the date of the indenture.
32
Merger,
Consolidation or Sale of Assets
Neither of the Issuers may, directly or indirectly:
(1) consolidate or merge with or into another Person
(whether or not such Issuer is the survivor); or (2) sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more
related transactions, to another Person, unless:
(1) either: (a) such Issuer is the survivor; or
(b) the Person formed by or surviving any such
consolidation or merger (if other than such Issuer) or to which
such sale, assignment, transfer, lease, conveyance or other
disposition has been made is a Person organized or existing
under the laws of the United States, any state of the United
States or the District of Columbia; provided, however, that
Finance Corp. may not consolidate or merge with or into any
Person other than a corporation satisfying such requirement so
long as the Company is not a corporation;
(2) the Person formed by or surviving any such
consolidation or merger (if other than such Issuer) or the
Person to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made assumes all the
obligations of such Issuer under the notes, the indenture and
the registration rights agreement pursuant to agreements
reasonably satisfactory to the trustee;
(3) immediately after such transaction no Default or Event
of Default exists;
(4) in the case of a transaction involving the Company and
not Finance Corp., either
(a) the Company or the Person formed by or surviving any
such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or
other disposition has been made will, on the date of such
transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at
the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of the covenant described above under the
caption Incurrence of Indebtedness and
Issuance of Preferred Stock; or
(b) immediately after giving effect to such transaction on
a pro forma basis and any related financing transactions as if
the same had occurred at the beginning of the applicable
four-quarter period, the Fixed Charge Coverage Ratio of the
Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which
such sale, assignment, transfer, lease, conveyance or other
disposition has been made, will be equal to or greater than the
Fixed Charge Coverage Ratio of the Company immediately before
such transactions; and
(5) such Issuer has delivered to the trustee an
officers certificate and an opinion of counsel, each
stating that such consolidation, merger or disposition and such
supplemental indenture (if any) comply with the indenture.
Notwithstanding the restrictions described in the foregoing
clause (4), any Restricted Subsidiary (other than Finance Corp.)
may consolidate with, merge into or dispose of all or part of
its properties and assets to the Company without complying with
the preceding clause (4) in connection with any such
consolidation, merger or disposition.
Notwithstanding the second preceding paragraph, the Company is
permitted to reorganize as any other form of entity in
accordance with the following procedures provided that:
(1) the reorganization involves the conversion (by merger,
sale, contribution or exchange of assets or otherwise) of the
Company into a form of entity other than a limited partnership
formed under Delaware law;
(2) the entity so formed by or resulting from such
reorganization is an entity organized or existing under the laws
of the United States, any state thereof or the District of
Columbia;
(3) the entity so formed by or resulting from such
reorganization assumes all the obligations of the Company under
the notes, the indenture and the registration rights agreement
pursuant to agreements reasonably satisfactory to the trustee;
33
(4) immediately after such reorganization no Default or
Event of Default exists; and
(5) such reorganization is not materially adverse to the
Holders or Beneficial Owners of the notes (for purposes of this
clause (5) a reorganization will not be considered
materially adverse to the Holders or Beneficial Owners of the
notes solely because the successor or survivor of such
reorganization (a) is subject to federal or state income
taxation as an entity or (b) is considered to be an
includible corporation of an affiliated group of
corporations within the meaning of Section 1504(b) of the
Code or any similar state or local law).
Although there is a limited body of case law interpreting the
phrase substantially all, there is no precise
established definition of the phrase under applicable law.
Accordingly, in certain circumstances there may be a degree of
uncertainty as to whether a particular transaction would involve
all or substantially all of the properties or assets
of a Person.
Transactions
with Affiliates
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate
(each, an Affiliate Transaction), unless:
(1) the Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with an
unrelated Person; and
(2) the Company delivers to the trustee, with respect to
any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of
$15.0 million, a resolution of the Board of Directors of
the Company set forth in an officers certificate
certifying that such Affiliate Transaction complies with this
covenant and that such Affiliate Transaction or series of
related Affiliate Transactions has been approved by a majority
of the disinterested members of the Board of Directors.
The following items will not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the
provisions of the prior paragraph:
(1) any employment, equity award, equity option or equity
appreciation agreement or plan entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of
business;
(2) transactions between or among any of the Company and
its Restricted Subsidiaries;
(3) transactions with a Person that is an Affiliate of the
Company solely because the Company owns an Equity Interest in
such Person;
(4) transactions effected in accordance with the terms of
(a) corporate sharing agreements that are with Martin
Resource Management and its subsidiaries with respect to general
overhead and other administrative matters and (b) other
agreements that are identified in the indenture, in each case as
such agreements are in effect on the date of the indenture, and
any amendment or replacement of any of such agreements so long
as such amendment or replacement agreement is no less
advantageous to the Company in any material respect than the
agreement so amended or replaced;
(5) customary compensation, indemnification and other
benefits made available to officers, directors or employees of
the Company or a Restricted Subsidiary or Affiliate of the
Company, including reimbursement or advancement of out-of-pocket
expenses and provisions of officers and directors
liability insurance;
(6) sales of Equity Interests (other than Disqualified
Stock) to Affiliates of the Company;
(7) Permitted Investments or Restricted Payments that are
permitted by the provisions of the indenture described above
under the caption Restricted Payments;
34
(8) payments to the General Partner with respect to
reimbursement for expenses in accordance with the Partnership
Agreement as in effect on the date of the indenture and as it
may be amended, provided that any such amendment is not less
favorable to the Company in any material respect than the
agreement prior to such amendment; and
(9) in the case of contracts for gathering, transporting,
treating, processing, prilling, refining, marketing,
distributing, storing, terminalling or otherwise handling
Hydrocarbons, or activities or services reasonably related or
ancillary thereto, or other operational contracts, any such
contracts are entered into in the ordinary course of business on
terms substantially similar to those contained in similar
contracts entered into by the Company or any Restricted
Subsidiary and third parties.
Designation
of Restricted and Unrestricted Subsidiaries
The Board of Directors of the Company may designate any
Restricted Subsidiary of the Company to be an Unrestricted
Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary of the Company is designated as an
Unrestricted Subsidiary, the aggregate fair market value of all
outstanding Investments owned by the Company and its Restricted
Subsidiaries in the Subsidiary properly designated will be
deemed to be either an Investment made as of the time of the
designation that will reduce the amount available for Restricted
Payments under the first paragraph of the covenant described
above under the caption Restricted
Payments or represent Permitted Investments, as determined
by the Company. That designation will only be permitted if the
Investment would be permitted at that time and if the Subsidiary
so designated otherwise meets the definition of an Unrestricted
Subsidiary.
The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary,
provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation will only be permitted if
(1) such Indebtedness is permitted under the covenant
described above under the caption Incurrence
of Indebtedness and Issuance of Preferred Stock,
calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period,
and (2) no Default or Event of Default would be in
existence following such designation.
Additional
Subsidiary Guarantees
If, after the date of the indenture, any Restricted Subsidiary
of the Company that is not already a Guarantor guarantees any
other Indebtedness of either of the Issuers or any Guarantor or
the Operating Partnership, or the Operating Partnership, if then
not a Guarantor, guarantees any other Indebtedness of either of
the Issuers or incurs any Indebtedness under a Credit Facility,
then in either case, that Subsidiary will become a Guarantor by
executing a supplemental indenture and delivering it to the
trustee within 20 Business Days of the date on which it
guaranteed such Indebtedness; provided, however, that the
preceding shall not apply to Subsidiaries of the Company that
have properly been designated as Unrestricted Subsidiaries in
accordance with the indenture for so long as they continue to
constitute Unrestricted Subsidiaries. Notwithstanding the
preceding, any Subsidiary Guarantee of a Restricted Subsidiary
that was incurred pursuant to this paragraph will be released in
the circumstances described under Subsidiary
Guarantees.
Sale
and Leaseback Transactions
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction;
provided, however, that the Company or any of its Restricted
Subsidiaries may enter into a sale and leaseback transaction if:
(1) the Company or that Restricted Subsidiary, as
applicable, could have (a) incurred Indebtedness in an
amount equal to the Attributable Debt relating to such sale and
leaseback transaction under the Fixed Charge Coverage Ratio test
in the first paragraph of the covenant described above under the
caption Incurrence of Indebtedness and
Issuance of Preferred Stock and (b) incurred a Lien
to secure such Indebtedness pursuant to the covenant described
above under the caption Liens;
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(2) the gross cash proceeds of that sale and leaseback
transaction are at least equal to the fair market value, as
determined in accordance with the definition of that term and
set forth in an officers certificate delivered to the
trustee, of the property that is the subject of that sale and
leaseback transaction; and
(3) the transfer of assets in that sale and leaseback
transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with, the covenant
described above under the caption Repurchase
at the Option of Holders Asset Sales.
Business
Activities
The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business other than a Permitted
Business, except to such extent as would not be material to the
Company and its Restricted Subsidiaries taken as a whole.
Finance Corp. may not incur Indebtedness unless (1) the
Company is a co-obligor or guarantor of such Indebtedness or
(2) the net proceeds of such Indebtedness are loaned to the
Company, used to acquire outstanding debt securities issued by
the Company or used to repay Indebtedness of the Company as
permitted under the covenant described about under the caption
Incurrence of Indebtedness and Issuance of
Preferred Stock. Finance Corp. may not engage in any
business not related directly or indirectly to obtaining money
or arranging financing for the Company or its Restricted
Subsidiaries.
Reports
Whether or not required by the Commission, so long as any notes
are outstanding, the Company will file with the Commission for
public availability within the time periods specified in the
Commissions rules and regulations (unless the Commission
will not accept such a filing), and the Company will furnish to
the trustee and, upon its prior request, to any of the Holders
or Beneficial Owners of notes, within five Business Days of
filing, or attempting to file, the same with the Commission:
(1) all quarterly and annual financial and other
information with respect to the Company and its Subsidiaries
that would be required to be contained in a filing with the
Commission on
Forms 10-Q
and 10-K if
the Company were required to file such Forms, including a
Managements Discussion and Analysis of Financial
Condition and Results of Operations and, with respect to
the annual information only, a report on the annual financial
statements by the Companys certified independent
accountants; and
(2) all current reports that would be required to be filed
with the Commission on
Form 8-K
if the Company were required to file such reports.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then, to the extent material, the
quarterly and annual financial information required by the
preceding paragraph will include a reasonably detailed
presentation, either on the face of the financial statements or
in the footnotes thereto, and in Managements Discussion
and Analysis of Financial Condition and Results of Operations,
of the financial condition and results of operations of the
Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the
Unrestricted Subsidiaries of the Company.
In addition, the Company and the Guarantors have agreed that,
for so long as any notes remain outstanding, they will furnish
to the Holders and Beneficial Owners of the notes and to
securities analysts and prospective investors in the notes, upon
their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
Covenant
Termination
If at any time (a) the rating assigned to the notes by both
S&P and Moodys is an Investment Grade Rating,
(b) no Default has occurred and is continuing under the
indenture and (c) the Issuers have delivered to the trustee
an officers certificate certifying to the foregoing
provisions of this sentence, the Company and its Restricted
Subsidiaries will no longer be subject to the provisions of the
indenture described above under the
36
caption Repurchase at the Option of
Holders Asset Sales and the following
provisions of the indenture described above under the caption
Certain Covenants:
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Restricted Payments,
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Incurrence of Indebtedness and Issuance of
Preferred Stock,
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Dividend and Other Payment Restrictions
Affecting Subsidiaries,
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Transactions with Affiliates, and
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Business Activities.
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However, the Company and its Restricted Subsidiaries will remain
subject to the provisions of the indenture described above under
the caption Repurchase at the Option of
Holders Change of Control, and the following
provisions of the indenture described above under the caption
Covenants:
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Liens,
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Merger, Consolidation or Sale of Assets
(other than the financial tests set forth in clause (4) of
such covenant),
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Designation of Restricted and Unrestricted
Subsidiaries,
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Additional Subsidiary Guarantees,
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Sale and Leaseback Transactions (other
than the financial tests set forth in clauses (1)(a) and
(3) of such covenant),
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Reports, and
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the covenant respecting payments for consent described below in
the last paragraph under the caption
Amendment, Supplement and Waiver.
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Events of
Default and Remedies
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of
interest on the notes;
(2) default in payment when due of the principal of, or
premium, if any, on the notes;
(3) failure by the Company to comply with the provisions
described under the captions Repurchase at the
Option of Holders Asset Sales,
Repurchase at the Option of
Holders Change of Control or
Certain Covenants Merger,
Consolidation or Sale of Assets;
(4) failure by the Company for 180 days after notice
to comply with the provisions described under
Certain Covenants Reports;
(5) failure by the Company for 60 days after notice to
comply with any of its other agreements in the indenture;
(6) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company
or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Restricted
Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the date of the indenture, if that
default:
(a) is caused by a failure to pay principal of, or interest
or premium, if any, on such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness (a
Payment Default); or
(b) results in the acceleration of such Indebtedness prior
to its Stated Maturity,
37
and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default
or the maturity of which has been so accelerated, aggregates
$20.0 million or more; provided, however, that if any such
Payment Default is cured or waived or any such acceleration
rescinded, or such Indebtedness is repaid, within a period of
60 days from the continuation of such Payment Default
beyond the applicable grace period or the occurrence of such
acceleration, as the case may be, such Event of Default and any
consequential acceleration of the notes shall be automatically
rescinded, so long as such rescission does not conflict with any
judgment or decree;
(7) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of
$20.0 million (to the extent not covered by insurance by a
reputable and creditworthy insurer as to which the insurer has
not disclaimed coverage), which judgments are not paid,
discharged or stayed for a period of 60 days;
(8) except as permitted by the indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations
under its Subsidiary Guarantee; and
(9) certain events of bankruptcy, insolvency or
reorganization described in the indenture with respect to
Finance Corp., the Company or any of the Companys
Restricted Subsidiaries that is a Significant Subsidiary or any
group of its Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary of the Company.
In the case of an Event of Default arising from certain events
of bankruptcy, insolvency or reorganization, with respect to
Finance Corp., the Company, any Restricted Subsidiary of the
Company that is a Significant Subsidiary or any group of its
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary of the Company, all outstanding notes
will become due and payable immediately without further action
or notice. If any other Event of Default occurs and is
continuing, the trustee or the Holders of at least 25% in
principal amount of the then outstanding notes may declare all
the notes to be due and payable immediately.
Holders of the notes may not enforce the indenture or the notes
except as provided in the indenture. Subject to certain
limitations, Holders of a majority in principal amount of the
then outstanding notes may direct the trustee in its exercise of
any trust or power. The trustee may withhold notice of any
continuing Default or Event of Default from Holders of the notes
if it determines that withholding notice is in their interest,
except a Default or Event of Default relating to the payment of
principal of, or interest or premium, if any, on, the notes.
The Holders of a majority in principal amount of the notes then
outstanding by notice to the trustee may on behalf of the
Holders of all of the notes waive any existing Default or Event
of Default and its consequences under the indenture except a
continuing Default or Event of Default in the payment of
principal of, or interest or premium, if any, on, the notes.
The Issuers are required to deliver to the trustee annually a
statement regarding compliance with the indenture. Upon any
officer of the General Partner or Finance Corp. becoming aware
of any Default or Event of Default, the Issuers are required to
deliver to the trustee a statement specifying such Default or
Event of Default.
No
Personal Liability of Directors, Officers, Employees and
Unitholders and No Recourse to General Partners
None of the General Partner or any director, officer, partner,
employee, incorporator, manager or unitholder or other owner of
Capital Stock of the General Partner, Issuers or any Guarantor,
as such, will have any liability for any obligations of the
Issuers or any Guarantor under the notes, the indenture or the
Subsidiary Guarantees, or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder
of notes by accepting a note waives and releases all such
liability. The waiver and
38
release are part of the consideration for issuance of the notes.
The waiver may not be effective to waive liabilities under the
federal securities laws.
Legal
Defeasance and Covenant Defeasance
The Issuers may, at their option and at any time, elect to have
all of their obligations discharged with respect to the
outstanding notes and all obligations of the Guarantors
discharged with respect to their Subsidiary Guarantees
(Legal Defeasance), except for:
(1) the rights of Holders of outstanding notes to receive
payments in respect of the principal of, and interest or
premium, if any, on, such notes when such payments are due from
the trust referred to below;
(2) the Issuers obligations with respect to the notes
concerning issuing temporary notes, registration of notes,
mutilated, destroyed, lost or stolen notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
(3) the rights, powers, trusts, duties and immunities of
the trustee, and the Issuers obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, the Issuers may, at their option and at any time,
elect to have their obligations released with respect to certain
covenants that are described in the indenture (Covenant
Defeasance) and thereafter any omission to comply with
those covenants will not constitute a Default or Event of
Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment,
bankruptcy, insolvency or reorganization events) described under
Events of Default and Remedies will no
longer constitute an Event of Default with respect to the notes.
If the Issuers exercise either their Legal Defeasance or
Covenant Defeasance option, each Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee and
any security for the notes (other than the trust) will be
released.
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(1) the Issuers must irrevocably deposit with the trustee,
in trust, for the benefit of the Holders of the notes, cash in
U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable
Government Securities, in amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, and interest and premium,
if any, on, the outstanding notes on the date of fixed maturity
or on the applicable redemption date, as the case may be, and
the Issuers must specify whether the notes are being defeased to
the date of fixed maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, the Issuers must
deliver to the trustee an opinion of counsel reasonably
acceptable to the trustee confirming that:
(a) the Issuers have received from, or there has been
published by, the Internal Revenue Service a ruling; or
(b) since the date of the indenture, there has been a
change in the applicable federal income tax law,
in either case to the effect that, and based thereon such
opinion of counsel will confirm that, the Holders of the
outstanding notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuers must
deliver to the trustee an opinion of counsel reasonably
acceptable to the trustee confirming that the Holders of the
outstanding notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
39
(4) no Default or Event of Default has occurred and is
continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be
applied to such deposit);
(5) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default
under, any material agreement or instrument (other than the
indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is
bound;
(6) the Issuers must deliver to the trustee an
officers certificate stating that the deposit was not made
by the Issuers with the intent of preferring the Holders of
notes over the other creditors of the Issuers with the intent of
defeating, hindering, delaying or defrauding creditors of the
Issuers or others; and
(7) the Issuers must deliver to the trustee an
officers certificate and an opinion of counsel, each
stating that all conditions precedent relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
Amendment,
Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the
indenture or the notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal
amount of the then outstanding notes (including, without
limitation, consents obtained in connection with a purchase of,
or tender offer or exchange offer for, notes), and any existing
default or compliance with any provision of the indenture or the
notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding notes
(including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for,
notes).
Without the consent of each Holder affected, an amendment,
supplement or waiver may not (with respect to any notes held by
a non-consenting Holder):
(1) reduce the principal amount of notes whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of
any note or alter the provisions with respect to the redemption
or repurchase of the notes (other than provisions relating to
the covenants described above under the caption
Repurchase at the Option of Holders);
(3) reduce the rate of or change the time for payment of
interest on any note;
(4) waive a Default or Event of Default in the payment of
principal of, or interest or premium, if any, on the notes
(except a rescission of acceleration of the notes by the Holders
of at least a majority in principal amount of the notes and a
waiver of the payment default that resulted from such
acceleration);
(5) make any note payable in currency other than that
stated in the notes;
(6) make any change in the provisions of the indenture
relating to waivers of past Defaults or the rights of Holders of
notes to receive payments of principal of, or interest or
premium, if any, on the notes (other than as permitted in
clause (7) below);
(7) waive a redemption or repurchase payment with respect
to any note (other than a payment required by one of the
covenants described above under the caption
Repurchase at the Option of Holders);
(8) release any Guarantor from any of its obligations under
its Subsidiary Guarantee or the indenture, except in accordance
with the terms of the indenture; or
(9) make any change in the preceding amendment, supplement
and waiver provisions.
40
Notwithstanding the preceding, without the consent of any Holder
of notes, the Issuers, the Guarantors and the trustee may amend
or supplement the indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or
in place of certificated notes;
(3) to provide for the assumption of an Issuers
obligations to Holders of notes in the case of a merger or
consolidation or sale of all or substantially all of such
Issuers properties or assets;
(4) to make any change that would provide any additional
rights or benefits to the Holders of notes or that does not
adversely affect the legal rights under the indenture of any
such Holder, provided that any change to conform the indenture
to this prospectus will not be deemed to adversely affect such
legal rights;
(5) to secure the notes or the Subsidiary Guarantees
pursuant to the requirements of the covenant described above
under the subheading Certain
Covenants Liens;
(6) to provide for the issuance of additional notes in
accordance with the limitations set forth in the indenture;
(7) to add any additional Guarantor or to evidence the
release of any Guarantor from its Subsidiary Guarantee, in each
case as provided in the indenture;
(8) to comply with requirements of the Commission in order
to effect or maintain the qualification of the indenture under
the Trust Indenture Act; or
(9) to evidence or provide for the acceptance of
appointment under the indenture of a successor trustee.
Neither the Company nor any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Beneficial
Owner or Holder of any notes for or as an inducement to any
consent to any waiver, supplement or amendment of any terms or
provisions of the indenture or the notes, unless such
consideration is offered to be paid or agreed to be paid to all
Beneficial Owners and Holders of the notes which so consent in
the time frame set forth in solicitation documents relating to
such consent.
Satisfaction
and Discharge
The indenture will be discharged and will cease to be of further
effect as to all notes issued thereunder (except as to surviving
rights of registration of transfer or exchange of the notes and
as otherwise specified in the indenture), when:
(1) either:
(a) all notes that have been authenticated, except lost,
stolen or destroyed notes that have been replaced or paid and
notes for whose payment money has been deposited in trust and
thereafter repaid to the Issuers, have been delivered to the
trustee for cancellation; or
(b) all notes that have not been delivered to the trustee
for cancellation have become due and payable or will become due
and payable within one year by reason of the mailing of a notice
of redemption or otherwise and the Issuers or any Guarantor has
irrevocably deposited or caused to be deposited with the trustee
as trust funds in trust solely for the benefit of the Holders,
cash in U.S. dollars, non-callable Government Securities,
or a combination of cash in U.S. dollars and non-callable
Government Securities, in amounts as will be sufficient without
consideration of any reinvestment of interest, to pay and
discharge the entire indebtedness on the notes not delivered to
the trustee for cancellation for principal, premium, if any, and
accrued interest to the date of fixed maturity or redemption;
41
(2) no Default or Event of Default has occurred and is
continuing on the date of the deposit or will occur as a result
of the deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such
deposit) and the deposit will not result in a breach or
violation of, or constitute a default under, any material
agreement or instrument (other than the indenture) to which the
Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(3) the Issuers or any Guarantor has paid or caused to be
paid all sums payable by it under the indenture; and
(4) the Issuers have delivered irrevocable instructions to
the trustee to apply the deposited money toward the payment of
the notes at fixed maturity or the redemption date, as the case
may be.
In addition, the Issuers must deliver an officers
certificate and an opinion of counsel to the trustee stating
that all conditions precedent to satisfaction and discharge have
been satisfied.
Concerning
the Trustee
Wells Fargo Bank, National Association, an affiliate of Wells
Fargo Securities, LLC, which was an initial purchaser of the
outstanding notes, is a lender under our credit facility.
If the trustee becomes a creditor of an Issuer or any Guarantor,
the indenture limits its right to obtain payment of claims in
certain cases, or to realize on certain property received in
respect of any such claim as security or otherwise. The trustee
will be permitted to engage in other transactions; however, if
it acquires any conflicting interest (as defined in the
Trust Indenture Act) after a Default has occurred and is
continuing, it must eliminate such conflict within 90 days,
apply to the Commission for permission to continue as trustee
(if the indenture has been qualified under the
Trust Indenture Act) or resign.
The Holders of a majority in principal amount of the then
outstanding notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the trustee, subject to certain exceptions. The
indenture provides that in case an Event of Default occurs and
is continuing, the trustee will be required, in the exercise of
its powers, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the
trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any
Holder of notes, unless such Holder has offered to the trustee
security or indemnity satisfactory to it against any loss,
liability or expense.
Governing
Law
The indenture, the outstanding notes and the Subsidiary
Guarantees are, and the exchange notes will be, governed by, and
construed in accordance with, the laws of the State of New York.
Additional
Information
Anyone who receives this prospectus may obtain a copy of the
indenture and registration rights agreement without charge by
writing to Martin Midstream Partners, L.P., 4200 Stone Road,
Kilgore, Texas 75662, Attention: Chief Financial Officer.
Book-Entry,
Delivery and Form
The exchange notes will be issued initially only in the form of
one or more global notes (collectively, the Global
Notes). The Global Notes will be deposited upon issuance
with the trustee as custodian for The Depository
Trust Company (DTC), in New York, New York, and
registered in the name of DTCs nominee, Cede &
Co., in each case for credit to an account of a direct or
indirect participant in DTC as described below. Beneficial
interests in the Global Notes may be held through the Euroclear
System (Euroclear) and Clearstream Banking, S.A.
(Clearstream) (as indirect participants in DTC).
The Global Notes may be transferred, in whole but not in part,
only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be
exchanged for notes in
42
registered, certificated form (Certificated Notes)
except in the limited circumstances described below. See
Exchange of Global Notes for Certificated
Notes.
In addition, transfers of beneficial interests in the Global
Notes will be subject to the applicable rules and procedures of
DTC and its direct or indirect participants (including, if
applicable, those of Euroclear and Clearstream), which may
change from time to time.
Depository
Procedures
The following description of the operations and procedures of
DTC, Euroclear and Clearstream are provided solely as a matter
of convenience. These operations and procedures are solely
within the control of the respective settlement systems and are
subject to changes by them. We take no responsibility for these
operations and procedures and urge investors to contact the
system or their participants directly to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company
created to hold securities for its participating organizations
(collectively, the Participants) and to facilitate
the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in
accounts of its Participants. The Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Access to
DTCs system is also available to other entities such as
banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the Indirect
Participants). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in,
each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised us that, pursuant to procedures established
by it:
(1) upon deposit of the Global Notes, DTC will credit the
accounts of Participants designated by the exchange agent with
portions of the principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will
be shown on, and the transfer of ownership of these interests
will be effected only through, records maintained by DTC (with
respect to the Participants) or by the Participants and the
Indirect Participants (with respect to other owners of
beneficial interests in the Global Notes).
Investors in the Global Notes who are Participants in DTCs
system may hold their interests therein directly through DTC.
Investors in the Global Notes who are not Participants may hold
their interests therein indirectly through organizations
(including Euroclear and Clearstream) which are Participants in
such system. Euroclear and Clearstream may hold interests in the
Global Notes on behalf of their participants through
customers securities accounts in their respective names on
the books of their depositories, which are Euroclear Bank
S.A./N.V., as operator of Euroclear, and Citibank, N.A., as
operator of Clearstream. All interests in a Global Note,
including those held through Euroclear or Clearstream, may be
subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Clearstream may also be
subject to the procedures and requirements of such systems.
The laws of some states require that certain Persons take
physical delivery in definitive form of securities that they
own. Consequently, the ability to transfer beneficial interests
in a Global Note to such Persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in
turn act on behalf of Indirect Participants, the ability of a
Person having beneficial interests in a Global Note to pledge
such interests to Persons that do not participate in the DTC
system, or otherwise take actions in respect of such interests,
may be affected by the lack of a physical certificate evidencing
such interests.
Except as described below, owners of beneficial interests in
the Global Notes will not have notes registered in their names,
will not receive physical delivery of Certificated Notes and
will not be considered the registered owners or
Holders thereof under the indenture for any
purpose.
43
Payments in respect of the principal of, and interest and
premium, if any, on, a Global Note registered in the name of DTC
or its nominee will be payable to DTC in its capacity as the
registered Holder under the indenture. Under the terms of the
indenture, the Issuers, the Guarantors and the trustee will
treat the Persons in whose names the notes, including the Global
Notes, are registered as the owners of the notes for the purpose
of receiving payments and for all other purposes. Consequently,
neither the Issuers, the Guarantors, the trustee nor any agent
of an Issuer or the trustee has or will have any responsibility
or liability for:
(1) any aspect of DTCs records or any
Participants or Indirect Participants records
relating to or payments made on account of beneficial ownership
interests in the Global Notes or for maintaining, supervising or
reviewing any of DTCs records or any Participants or
Indirect Participants records relating to the beneficial
ownership interests in the Global Notes; or
(2) any other matter relating to the actions and practices
of DTC or any of its Participants or Indirect Participants.
DTC has advised us that its current practice, at the due date of
any payment in respect of securities such as the notes, is to
credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it
will not receive payment on such payment date. Each relevant
Participant is credited with an amount proportionate to its
beneficial ownership of an interest in the principal amount of
the notes as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial
owners of notes will be governed by standing instructions and
customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the
responsibility of DTC, the trustee or the Issuers. Neither the
Issuers nor the trustee will be liable for any delay by DTC or
any of its Participants in identifying the beneficial owners of
the notes, and the Issuers and the trustee may conclusively rely
on and will be protected in relying on instructions from DTC or
its nominee for all purposes.
Transfers between Participants in DTC will be effected in
accordance with DTCs procedures, and will be settled in
same-day
funds, and transfers between participants in Euroclear and
Clearstream will be effected in accordance with their respective
rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the
one hand, and Euroclear or Clearstream participants, on the
other hand, will be effected through DTC in accordance with
DTCs rules on behalf of Euroclear or Clearstream, as the
case may be, by its depository; however, such cross-market
transactions will require delivery of instructions to Euroclear
or Clearstream, as the case may be, by the counterparty in such
system in accordance with the rules and procedures and within
the established deadlines (Brussels time) of such system.
Euroclear or Clearstream, as the case may be, will, if the
transaction meets its settlement requirements, deliver
instructions to its respective depository to take action to
effect final settlement on its behalf by delivering or receiving
interests in the relevant Global Note in DTC, and making or
receiving payment in accordance with normal procedures for
same-day
funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly
to the depositories for Euroclear or Clearstream.
DTC has advised us that it will take any action permitted to be
taken by a Holder of notes only at the direction of one or more
Participants to whose account DTC has credited the interests in
the Global Notes and only in respect of such portion of the
aggregate principal amount of the notes as to which such
Participant or Participants has or have given such direction.
However, if there is an Event of Default under the notes, DTC
reserves the right to exchange the Global Notes for Certificated
Notes, and to distribute such notes to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the
foregoing procedures to facilitate transfers of interests in the
Global Notes among participants in DTC, Euroclear and
Clearstream, they are under no obligation to perform or to
continue to perform such procedures, and may discontinue such
procedures at any time. None of the Issuers, the trustee or any
of their respective agents will have any responsibility for the
performance by DTC, Euroclear or Clearstream or their respective
participants or indirect participants of their respective
obligations under the rules and procedures governing their
operations.
44
Exchange
of Global Notes for Certificated Notes
A Global Note is exchangeable for Certificated Notes in minimum
denominations of $2,000 and in integral multiples of $1,000 in
excess of $2,000, if:
(1) DTC (a) notifies the Issuers that it is unwilling
or unable to continue as depositary for the Global Note or
(b) has ceased to be a clearing agency registered under the
Exchange Act and in either event the Issuers fail to appoint a
successor depositary within 90 days; or
(2) there has occurred and is continuing an Event of
Default and DTC notifies the trustee of its decision to exchange
the Global Note for Certificated Notes.
Beneficial interests in a Global Note may also be exchanged for
Certificated Notes in the other limited circumstances permitted
by the indenture, including if an affiliate of ours acquires
such interests. In all cases, Certificated Notes delivered in
exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the
depositary (in accordance with its customary procedures).
Exchange
of Certificated Notes for Global Notes
Certificated Notes may not be exchanged for beneficial interests
in any Global Note, except in the limited circumstances provided
in the indenture.
Same-Day
Settlement and Payment
The Issuers will make payments in respect of the notes
represented by the Global Notes (including principal, premium,
if any, and interest) by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. The
Issuers will make all payments of principal, interest and
premium, if any, with respect to Certificated Notes by wire
transfer of immediately available funds to the accounts
specified by the Holders of the Certificated Notes or, if no
such account is specified, by mailing a check to each such
Holders registered address. The notes represented by the
Global Notes are eligible to trade in DTCs
Same-Day
Funds Settlement System, and any permitted secondary market
trading activity in such notes will, therefore, be required by
DTC to be settled in immediately available funds. We expect that
secondary trading in any Certificated Notes will also be settled
in immediately available funds.
Because of time zone differences, the securities account of a
Euroclear or Clearstream participant purchasing an interest in a
Global Note from a Participant in DTC will be credited, and any
such crediting will be reported to the relevant Euroclear or
Clearstream participant, during the securities settlement
processing day (which must be a business day for Euroclear and
Clearstream) immediately following the settlement date of DTC.
DTC has advised us that cash received in Euroclear or
Clearstream as a result of sales of interests in a Global Note
by or through a Euroclear or Clearstream participant to a
Participant in DTC will be received with value on the settlement
date of DTC but will be available in the relevant Euroclear or
Clearstream cash account only as of the business day for
Euroclear or Clearstream following DTCs settlement date.
Certain
Definitions
Set forth below are certain defined terms used in the indenture.
Reference is made to the indenture for a full disclosure of all
such terms, as well as any other capitalized terms used herein
for which no definition is provided.
Acquired Debt means, with respect to any
specified Person:
(1) Indebtedness of any other Person existing at the time
such other Person was merged with or into or became a Subsidiary
of such specified Person, whether or not such Indebtedness is
incurred in connection with, or in contemplation of, such other
Person merging with or into, or becoming a Subsidiary of, such
specified Person, but excluding Indebtedness which is
extinguished, retired or repaid
45
in connection with such Person merging with or into or becoming
a Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
Affiliate of any specified Person means any
other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person. For purposes of this definition, control, as
used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of
the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of
the Voting Stock of a Person will be deemed to be control by the
other Person; and further, that any third Person which also
beneficially owns 10% or more of the Voting Stock of a specified
Person shall not be deemed to be an Affiliate of either the
specified Person or the other Person merely because of such
common ownership in such specified Person. For purposes of this
definition, the terms controlling, controlled
by and under common control with have
correlative meanings.
Asset Sale means:
(1) the sale, lease, conveyance or other disposition of any
properties or assets (including by way of a sale and leaseback
transaction); provided, however, that the disposition of all or
substantially all of the properties or assets of the Company and
its Restricted Subsidiaries taken as a whole will be governed by
the provisions of the indenture described above under the
caption Repurchase at the Option of
Holders Change of Control
and/or the
provisions described above under the caption
Certain Covenants Merger,
Consolidation or Sale of Assets and not by the provisions
of the Asset Sales covenant; and
(2) the issuance of Equity Interests in any of the
Companys Restricted Subsidiaries or the sale of Equity
Interests in any of its Restricted Subsidiaries:
Notwithstanding the preceding, the following items will not be
deemed to be Asset Sales:
(1) any single transaction or series of related
transactions that involves properties or assets having a fair
market value of less than $5.0 million;
(2) a transfer of properties or assets between or among any
of the Company and its Restricted Subsidiaries;
(3) an issuance or sale of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary;
(4) the sale, lease or other disposition of equipment,
inventory, accounts receivable or other properties or assets in
the ordinary course of business;
(5) the sale or other disposition of cash or Cash
Equivalents, Hedging Contracts or other financial instruments in
the ordinary course of business;
(6) a Restricted Payment that is permitted by the covenant
described above under the caption Certain
Covenants Restricted Payments or a Permitted
Investment;
(7) the creation or perfection of a Lien that is not
prohibited by the covenant described above under the caption
Certain Covenants Liens;
(8) dispositions in connection with Permitted Liens;
(9) surrender or waiver of contract rights or the
settlement, release or surrender of contract, tort or other
claims of any kind;
(10) the grant in the ordinary course of business of any
non-exclusive license of patents, trademarks, registrations
therefor and other similar intellectual property; and
(11) an Asset Swap.
46
Asset Swap means any substantially
contemporaneous (and in any event occurring within 180 days
of each other) purchase and sale or exchange of any assets or
properties used or useful in a Permitted Business between the
Company or any of its Restricted Subsidiaries and another
Person; provided that any cash received must be applied in
accordance with the covenant described above under the caption
Repurchase at the Option of
Holders Asset Sales as if the Asset Swap were
an Asset Sale.
Attributable Debt in respect of a sale and
leaseback transaction means, at the time of determination, the
present value of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which
such lease has been extended or may, at the option of the
lessor, be extended. Such present value shall be calculated
using a discount rate equal to the rate of interest implicit in
such transaction, determined in accordance with GAAP. As used in
the preceding sentence, the net rental payments
under any lease for any such period shall mean the sum of rental
and other payments required to be paid with respect to such
period by the lessee thereunder, excluding any amounts required
to be paid by such lessee on account of maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges.
In the case of any lease that is terminable by the lessee upon
payment of penalty, such net rental payment shall also include
the amount of such penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first
date upon which it may be so terminated.
Available Cash has the meaning assigned to
such term in the Partnership Agreement, as in effect on the date
of the indenture.
Beneficial Owner has the meaning assigned to
such term in
Rule 13d-3
and
Rule 13d-5
under the Exchange Act, except that in calculating the
beneficial ownership of any particular person (as
that term is used in Section 13(d)(3) of the Exchange Act),
such person will be deemed to have beneficial
ownership of all securities that such person has the
right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition. The terms
Beneficially Owns and Beneficially Owned
have correlative meanings.
Board of Directors means:
(1) with respect to Finance Corp., its board of directors;
(2) with respect to the Company, the Board of Directors of
the General Partner or any authorized committee thereof; and
(3) with respect to any other Person, the board or
committee of such Person serving a similar function.
Board Resolution means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
applicable Person to have been duly adopted by the Board of
Directors of such Person and to be in full force and effect on
the date of such certification, and delivered to the trustee.
Business Day means each day that is not a
Saturday, Sunday or other day on which banking institutions or
in New York, New York or another place of payment are authorized
or required by law to close.
Capital Lease Obligation means, at the time
any determination is to be made, the amount of the liability in
respect of a capital lease that would at that time be required
to be capitalized on a balance sheet in accordance with GAAP.
Capital Stock means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership interests (whether general or limited) or
membership interests; and
47
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
Cash Equivalents means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality of the United States government (provided that
the full faith and credit of the United States is pledged in
support of those securities) having maturities of not more than
six months from the date of acquisition;
(3) marketable general obligations issued by any state of
the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within
one year from the date of acquisition thereof and, at the time
of acquisition thereof, having a credit rating of A
or better from either S&P or Moodys;
(4) certificates of deposit, demand deposits and Eurodollar
time deposits with maturities of one year or less from the date
of acquisition, bankers acceptances with maturities not
exceeding one year and overnight bank deposits, in each case,
with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of
$500 million and a Thomson Bank Watch Rating of
B or better;
(5) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in
clauses (2), (3) and (4) above entered into with any
financial institution meeting the qualifications specified in
clause (4) above;
(6) commercial paper having one of the two highest ratings
obtainable from Moodys or S&P and in each case
maturing within six months after the date of
acquisition; and
(7) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in
clauses (1) through (6) of this definition.
Change of Control means the occurrence of any
of the following:
(1) the direct or indirect sale, lease, transfer,
conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of
all or substantially all of the properties or assets (including
Capital Stock of the Restricted Subsidiaries) of the Company and
its Restricted Subsidiaries taken as a whole, to any
person (as that term is used in
Section 13(d)(3) of the Exchange Act);
(2) the adoption of a plan relating to the liquidation or
dissolution of the Company or removal of the General Partner by
the limited partners of the Company;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation), the result of which is
that any person (as that term is used in
Section 13(d)(3) of the Exchange Act), excluding the
Qualifying Owners, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the General
Partner, measured by voting power rather than number of shares,
units or the like;
(4) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is
that any person (as that term is used in
Section 13(d)(3) of the Exchange Act), excluding the
Qualifying Owners identified in clause (1) of the
definition of Qualifying Owners, becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Stock of
Martin Resource Management, measured by voting power rather than
number of shares, units or the like, at a time when Martin
Resource Management Beneficially Owns a majority of the Voting
Stock of the Managing General Partner or the General
Partner; or
(5) the first day on which a majority of the members of the
Board of Directors of the General Partner are not Continuing
Directors.
48
Notwithstanding the preceding, a conversion of the Company or
any of its Restricted Subsidiaries from a limited partnership,
corporation, limited liability company or other form of entity
to a limited liability company, corporation, limited partnership
or other form of entity or an exchange of all of the outstanding
Equity Interests in one form of entity for Equity Interests in
another form of entity shall not constitute a Change of Control,
so long as following such conversion or exchange the
persons (as that term is used in
Section 13(d)(3) of the Exchange Act) who Beneficially
Owned the Capital Stock of the Company immediately prior to such
transactions continue to Beneficially Own in the aggregate more
than 50% of the Voting Stock of such entity, or continue to
Beneficially Own sufficient Equity Interests in such entity to
elect a majority of its directors, managers, trustees or other
persons serving in a similar capacity for such entity or its
general partner, as applicable, and, in either case no
person Beneficially Owns more than 50% of the Voting
Stock of such entity or its general partner, as applicable.
Code means the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
Commission or SEC means the
Securities and Exchange Commission.
Consolidated Cash Flow means, with respect to
any specified Person for any period, the Consolidated Net Income
of such Person for such period plus:
(1) an amount equal to any net loss realized by such Person
or any of its Restricted Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing
such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such
Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing
such Consolidated Net Income; plus
(3) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of
letter of credit or bankers acceptance financings), and
net of the effect of all payments made or received pursuant to
interest rate Hedging Contracts, to the extent that any such
expense was deducted in computing such Consolidated Net Income;
plus
(4) depreciation and amortization (including amortization
of intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period), impairment, non-cash
equity based compensation expense and other non-cash items
(excluding any such non-cash item to the extent that it
represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted
Subsidiaries for such period to the extent that such
depreciation and amortization, impairment and other non-cash
items that were deducted in computing such Consolidated Net
Income; plus
(5) unrealized non-cash losses resulting from foreign
currency balance sheet adjustments required by GAAP to the
extent such losses were deducted in computing such Consolidated
Net Income; plus
(6) all extraordinary, unusual or non-recurring items of
gain or loss, or revenue or expense; minus
(7) non-cash items increasing such Consolidated Net Income
for such period, other than items that were accrued in the
ordinary course of business,
in each case, on a consolidated basis and determined in
accordance with GAAP.
49
Consolidated Net Income means, with respect
to any specified Person for any period, the aggregate of the Net
Income of such Person and its Restricted Subsidiaries for such
period, on a consolidated basis, determined in accordance with
GAAP, provided that:
(1) the Net Income (but not loss) of any Person that is not
a Restricted Subsidiary or that is accounted for by the equity
method of accounting will be included, but only to the extent of
(a) the amount of dividends or distributions paid in cash
to the specified Person or a Restricted Subsidiary of the Person
and (b) the fair market value of Hydrocarbons that are
readily convertible to cash delivered to the specified Person or
a Restricted Subsidiary of the Person;
(2) the Net Income of any Restricted Subsidiary will be
excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary
of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the terms
of its charter or any judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary
or its stockholders, partners or members;
(3) the cumulative effect of a change in accounting
principles will be excluded;
(4) unrealized losses and gains under derivative
instruments included in the determination of Consolidated Net
Income, including, without limitation those resulting from the
application of the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 815 will be
excluded; and
(5) any nonrecurring charges relating to any premium or
penalty paid, write off of deferred finance costs or other
charges in connection with redeeming or retiring any
Indebtedness prior to its Stated Maturity will be excluded.
Consolidated Net Tangible Assets means, with
respect to any Person at any date of determination, the
aggregate amount of total assets included in such Persons
most recent quarterly or annual consolidated balance sheet
prepared in accordance with GAAP less applicable reserves
reflected in such balance sheet, after deducting the following
amounts: (a) all current liabilities reflected in such
balance sheet, and (b) all goodwill, trademarks, patents,
unamortized debt discounts and expenses and other like
intangibles reflected in such balance sheet.
Continuing Directors means, as of any date of
determination, any member of the Board of Directors of the
General Partner who:
(1) was a member of such Board of Directors on the date of
the indenture; or
(2) was nominated for election or elected to such Board of
Directors with the approval of any of the Qualifying Owners or
of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.
Credit Agreement means that certain Amended
and Restated Credit Agreement, dated as of November 15,
2005, as amended, among the Company, Bank of Canada, N.A., as
Administrative Agent and L/C Issuer, and the other lenders party
thereto, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection
therewith, and in each case as amended, restated, modified,
renewed, refunded, replaced or refinanced from time to time.
Credit Facilities means one or more debt
facilities (including, without limitation, the Credit
Agreement), commercial paper facilities or secured capital
markets financings, in each case with banks or other
institutional lenders or institutional investors providing for
revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders
against such receivables), letters of credit or secured capital
markets financings, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced (including
refinancing with any capital markets transaction) in whole or in
part from time to time.
50
Default means any event that is, or with the
passage of time or the giving of notice or both would be, an
Event of Default.
Disqualified Stock means any Capital Stock
that, by its terms (or by the terms of any security into which
it is convertible, or for which it is exchangeable, in each case
at the option of the holder of the Capital Stock), or upon the
happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder of the Capital Stock, in
whole or in part, on or prior to the date that is 91 days
after the date on which the notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute
Disqualified Stock solely because the holders of the Capital
Stock have the right to require the Company to repurchase or
redeem such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock
if the terms of such Capital Stock provide that the Company may
not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with
the covenant described above under the caption
Certain Covenants Restricted
Payments.
Equity Interests means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
Equity Offering means any public or private
sale of Capital Stock (other than Disqualified Stock) made for
cash on a primary basis by the Company after the date of the
indenture, provided that at any time on or after a Change of
Control, any sale of Capital Stock to an Affiliate of the
Company shall not be deemed an Equity Offering.
exchange notes means the notes issued in an
Exchange Offer pursuant to the indenture.
Exchange Offer has the meaning set forth for
such term in the applicable registration rights agreement.
Existing Indebtedness means the aggregate
principal amount of Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the
Credit Agreement, which is considered incurred under the first
paragraph under the covenant entitled Incurrence of
Indebtedness and Issuance of Preferred Stock and other
than intercompany Indebtedness) in existence on the date of the
indenture, until such amounts are repaid.
The term fair market value means the value
that would be paid by a willing buyer to an unaffiliated willing
seller in a transaction not involving distress or necessity of
either party.
Fixed Charge Coverage Ratio means with
respect to any specified Person for any four-quarter reference
period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such
period. In the event that the specified Person or any of its
Restricted Subsidiaries incurs, assumes, guarantees, repays,
repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems
preferred stock subsequent to the commencement of the applicable
four-quarter reference period and on or prior to the date on
which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the Calculation Date), then
the Fixed Charge Coverage Ratio will be calculated giving pro
forma effect to such incurrence, assumption, guarantee,
repayment, repurchase or redemption of Indebtedness, or such
issuance, repurchase or redemption of preferred stock, and the
use of the proceeds therefrom as if the same had occurred at the
beginning of such period.
In addition, for purposes of calculating the Fixed Charge
Coverage Ratio:
(1) acquisitions that have been made by the specified
Person or any of its Restricted Subsidiaries, including through
mergers, consolidations or otherwise (including acquisitions of
assets used in a Permitted Business), and including in each case
any related financing transactions (including repayment of
Indebtedness) during the four-quarter reference period or
subsequent to such reference period and on or prior to the
Calculation Date, will be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period,
including any Consolidated Cash Flow and any pro forma expense
and cost reductions that have occurred or are reasonably
expected to occur within the next 12 months, in the
reasonable judgment of the chief financial or accounting officer
of the General Partner (regardless of whether those cost savings
or operating improvements could then be reflected in pro forma
financial
51
statements in accordance with
Regulation S-X
promulgated under the Securities Act or any other regulation or
policy of the Commission related thereto);
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation
Date, will be excluded;
(3) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation
Date, will be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date; and
(4) interest income reasonably anticipated by such Person
to be received during the applicable four-quarter period from
cash or Cash Equivalents held by such Person or any Restricted
Subsidiary of such Person, which cash or Cash Equivalents exist
on the Calculation Date or will exist as a result of the
transaction giving rise to the need to calculate the Fixed
Charge Coverage Ratio, will be included.
Fixed Charges means, with respect to any
specified Person for any period, the sum, without duplication,
of:
(1) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment
obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers
acceptance financings), and net of the effect of all payments
made or received pursuant to interest rate Hedging Contracts;
plus
(2) the consolidated interest expense of such Person and
its Restricted Subsidiaries that was capitalized during such
period; plus
(3) any interest expense on Indebtedness of another Person
that is guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or
one of its Restricted Subsidiaries, whether or not such
guarantee or Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or
accrued and whether or not in cash, on any series of
Disqualified Stock of such Person or any of its Restricted
Subsidiaries, other than dividends on Equity Interests payable
solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a Restricted Subsidiary
of the Company, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal,
in each case, on a consolidated basis and determined in
accordance with GAAP.
GAAP means generally accepted accounting
principles in the United States, which are in effect on the date
of the indenture.
General Partner means Martin Midstream GP
LLC, a Delaware limited liability company, and its successors
and permitted assigns as general partner of the Company.
The term guarantee means a guarantee other
than by endorsement of negotiable instruments for collection in
the ordinary course of business, direct or indirect, in any
manner including, without limitation, by way of a pledge of
assets, acting as co-obligor or through letters of credit or
reimbursement agreements in respect thereof, of all or any part
of any Indebtedness. When used as a verb, guarantee
has a correlative meaning.
Guarantors means each of:
(1) the Subsidiaries of the Company, other than Finance
Corp., executing the indenture as initial Guarantors; and
52
(2) any other Restricted Subsidiary of the Company that
becomes a Guarantor in accordance with the provisions of the
indenture;
and their respective successors and assigns.
Hedging Contracts means, with respect to any
specified Person:
(1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements entered into with
one or more financial institutions and designed to protect the
Person or any of its Restricted Subsidiaries entering into the
agreement against fluctuations in interest rates with respect to
Indebtedness incurred;
(2) foreign exchange contracts and currency protection
agreements entered into with one or more financial institutions
and designed to protect the Person or any of its Restricted
Subsidiaries entering into the agreement against fluctuations in
currency exchanges rates with respect to Indebtedness incurred;
(3) any commodity futures contract, commodity option or
other similar agreement or arrangement designed to protect
against fluctuations in the price of Hydrocarbons used,
produced, processed or sold by that Person or any of its
Restricted Subsidiaries at the time; and
(4) other agreements or arrangements designed to protect
such Person or any of its Restricted Subsidiaries against
fluctuations in interest rates, commodity prices or currency
exchange rates.
Holder means a Person in whose name a Note is
registered.
Hydrocarbons means crude oil, natural gas,
casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons, sulfur,
sulfur derivative products and all constituents, elements or
compounds thereof and products or byproducts refined or
processed therefrom.
Indebtedness means, with respect to any
specified Person, any indebtedness of such Person, whether or
not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar
instruments;
(3) in respect of all outstanding letters of credit issued
for the account of such Person that support obligations that
constitute Indebtedness (provided that the amount of such
letters of credit included in Indebtedness shall not exceed the
amount of the Indebtedness being supported) and, without
duplication, the unreimbursed amount of all drafts drawn under
letters of credit issued for the account of such Person;
(4) in respect of bankers acceptances;
(5) representing Capital Lease Obligations;
(6) representing the balance deferred and unpaid of the
purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable; or
(7) representing any obligations under Hedging Contracts,
if and to the extent any of the preceding items (other than
letters of credit and obligations under Hedging Contracts) would
appear as a liability upon a balance sheet of the specified
Person prepared in accordance with GAAP. In addition, the term
Indebtedness includes all Indebtedness of others
secured by a Lien on any asset of the specified Person (whether
or not such Indebtedness is assumed by the specified Person)
and, to the extent not otherwise included, the guarantee by the
specified Person of any Indebtedness of any other Person. For
the avoidance of doubt, the term Indebtedness
excludes any obligation arising from any agreement providing for
indemnities, purchase price adjustments, holdbacks, contingency
payment obligations based on the performance of the acquired or
disposed assets or similar obligations (other than guarantees of
Indebtedness) incurred by the specified Person in connection
with the acquisition or disposition of assets.
53
The amount of any Indebtedness outstanding as of any date will
be:
(1) the accreted value of the Indebtedness, in the case of
any Indebtedness issued with original issue discount;
(2) in the case of obligations under any Hedging Contracts,
the termination value of the agreement or arrangement giving
rise to such obligations that would be payable by such Person at
such date; and
(3) the principal amount of the Indebtedness, together with
any interest on the Indebtedness that is more than 30 days
past due, in the case of any other Indebtedness.
Investment Grade Rating means a rating equal
to or higher than Baa3 (or the equivalent) by Moodys and
BBB- (or the equivalent) by S&P.
Investments means, with respect to any
Person, all direct or indirect investments by such Person in
other Persons (including Affiliates) in the forms of loans
(including guarantees or other obligations), advances or capital
contributions (excluding (1) commission, travel and similar
advances to officers and employees made in the ordinary course
of business and (2) advances to customers in the ordinary
course of business that are recorded as accounts receivable on
the balance sheet of the lender), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests
or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale
or disposition, such Person is no longer a Restricted Subsidiary
of the Company, the Company will be deemed to have made an
Investment on the date of any such sale or disposition in an
amount equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant
described above under the caption Certain
Covenants Restricted Payments. The acquisition
by the Company or any Subsidiary of the Company of a Person that
holds an Investment in a third Person will be deemed to be an
Investment made by the Company or such Subsidiary in such third
Person in an amount equal to the fair market value of the
Investment held by the acquired Person in such third Person on
the date of any such acquisition in an amount determined as
provided in the final paragraph of the covenant described above
under the caption Certain
Covenants Restricted Payments.
Joint Venture means any Person that is not a
direct or indirect Subsidiary of the Company in which the
Company or any of its Restricted Subsidiaries makes any
Investment.
Lien means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction
other than a precautionary financing statement respecting a
lease not intended as a security agreement.
Make Whole Premium means, with respect to a
note at any time, the excess, if any, of (a) the present
value at such time of (i) the redemption price of such note
at April 1, 2014 plus (ii) any required interest
payments due on such note through April 1, 2014 (except for
currently accrued and unpaid interest), computed using a
discount rate equal to the Treasury Rate plus 50 basis
points, discounted to the redemption date on a semi-annual basis
(assuming a
360-day year
consisting of twelve
30-day
months), over (b) the principal amount of such note.
Martin Resource Management means Martin
Resource Management Corporation, a Texas corporation, and any
successor thereto.
Moodys means Moodys Investors
Service, Inc. or any successor to the rating agency business
thereof.
54
Net Income means, with respect to any
specified Person, the net income (loss) of such Person,
determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in
connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such Person or the
extinguishment of any Indebtedness of such Person; and
(2) any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but
not loss).
Net Proceeds means the aggregate cash
proceeds received by the Company or any of its Restricted
Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition
of any non-cash consideration received in any Asset Sale), net
of:
(1) the direct costs relating to such Asset Sale,
including, without limitation, legal, accounting and investment
banking fees and sales commissions, severance costs and any
relocation expenses incurred as a result of the Asset Sale;
(2) taxes paid or payable as a result of the Asset Sale, in
each case, after taking into account any available tax credits
or deductions and any tax sharing arrangements;
(3) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the properties or assets that
were the subject of such Asset Sale; and
(4) any amounts to be set aside in any reserve established
in accordance with GAAP or any amount placed in escrow, in
either case for adjustment in respect of the sale price of such
properties or assets or for liabilities associated with such
Asset Sale and retained by the Company or any of its Restricted
Subsidiaries until such time as such reserve is reversed or such
escrow arrangement is terminated, in which case Net Proceeds
shall include only the amount of the reserve so reversed or the
amount returned to the Company or its Restricted Subsidiaries
from such escrow arrangement, as the case may be.
Non-Recourse Debt means Indebtedness:
(1) as to which neither the Company nor any of its
Restricted Subsidiaries (a) provides credit support of any
kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or
indirectly liable as a guarantor or otherwise, or (c) is
the lender;
(2) no default with respect to which (including any rights
that the holders of the Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any
other Indebtedness (other than the notes) of the Company or any
of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment of the Indebtedness to
be accelerated or payable prior to its Stated Maturity; and
(3) as to which the lenders have been notified in writing
that they will not have any recourse to the Capital Stock or
assets of the Company or any of its Restricted Subsidiaries
except as contemplated by clause (9) of the definition of
Permitted Liens.
For purposes of determining compliance with the covenant
described under Certain Covenants
Incurrence of Indebtedness and Issuance of Preferred Stock
above, in the event that any Non-Recourse Debt of any of the
Companys Unrestricted Subsidiaries ceases to be
Non-Recourse Debt of such Unrestricted Subsidiary, such event
will be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company.
Obligations means any principal, premium, if
any, interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization,
whether or not a claim for post-filing interest is allowed in
such proceeding), penalties, fees, charges, expenses,
indemnifications, reimbursement obligations, damages,
guarantees, and other liabilities or amounts payable under the
documentation governing any Indebtedness or in respect thereto.
55
Operating Surplus has the meaning assigned to
such term in the Partnership Agreement, as in effect on the date
of the indenture.
Operating Partnership means Martin Operating
Partnership L.P., a Delaware limited partnership, and any
successor thereto.
Partnership Agreement means the Second
Amended and Restated Agreement of Limited Partnership of the
Company dated as of November 25, 2009 as in effect on the
date of the indenture and as such may be further amended,
modified or supplemented from time to time.
Permitted Business means either
(1) gathering, transporting, compressing, treating,
processing, prilling, refining, marketing, distributing,
storing, terminalling or otherwise handling Hydrocarbons, or
activities or services reasonably related or ancillary thereto
including entering into Hedging Contracts in the ordinary course
of business and not for speculative purposes to support these
businesses and the development, manufacture and sale of
equipment or technology related to these activities, or
(2) any other business that generates gross income that
constitutes qualifying income under
Section 7704(d) of the Code.
Permitted Business Investments means
Investments by the Company or any of its Restricted Subsidiaries
in any Unrestricted Subsidiary of the Company or in any Joint
Venture, provided that:
(1) either (a) at the time of such Investment and
immediately thereafter, the Company could incur $1.00 of
additional Indebtedness under the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described
under Certain Covenants Incurrence
of Indebtedness and Issuance of Preferred Stock above or
(b) such Investment does not exceed the aggregate amount of
Incremental Funds (as defined in the covenant described under
Certain Covenants Restricted
Payments) not previously expended at the time of making
such Investment;
(2) if such Unrestricted Subsidiary or Joint Venture has
outstanding Indebtedness at the time of such Investment, either
(a) all such Indebtedness is Non-Recourse Debt or
(b) any such Indebtedness of such Unrestricted Subsidiary
or Joint Venture that is recourse to the Company or any of its
Restricted Subsidiaries (which shall include, without
limitation, all Indebtedness of such Unrestricted Subsidiary or
Joint Venture for which the Company or any of its Restricted
Subsidiaries may be directly or indirectly, contingently or
otherwise, obligated to pay, whether pursuant to the terms of
such Indebtedness, by law or pursuant to any guarantee,
including, without limitation, any claw-back,
make-well or keep-well arrangement)
could, at the time such Investment is made, be incurred at that
time by the Company and its Restricted Subsidiaries under the
Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described under
Certain Covenants Incurrence of
Indebtedness and Issuance of Preferred Stock; and
(3) such Unrestricted Subsidiarys or Joint
Ventures activities are not outside the scope of the
Permitted Business.
Permitted Investments means:
(1) any Investment in the Company (including, without
limitation, through purchases of Notes) or in a Restricted
Subsidiary of the Company;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such
Investment:
(a) such Person becomes a Restricted Subsidiary of the
Company; or
(b) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its
properties or assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company;
56
(4) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with the covenant described above under the
caption Repurchase at the Option of
Holders Asset Sales;
(5) any Investment in any Person solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of
the Company;
(6) any Investments received in compromise of obligations
of trade creditors or customers that were incurred in the
ordinary course of business, including pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of any trade creditor or customer, or as a result of
a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment in default;
(7) Hedging Contracts entered into in the ordinary course
of business and not for speculative purposes;
(8) Permitted Business Investments; and
(9) other Investments in any Person having an aggregate
fair market value (measured on the date each such Investment was
made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to
this clause (9) that are at the time outstanding, do not
exceed the greater of $25.0 million or 5.0% of the
Companys Consolidated Net Tangible Assets.
Permitted Liens means:
(1) any Lien with respect to the Credit Agreement or any
other Credit Facilities;
(2) Liens in favor of the Company or the Guarantors;
(3) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company
or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets (other
than improvements thereon, accessions thereto and proceeds
thereof) other than those of the Person merged into or
consolidated with the Company or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition
of the property by the Company or any Restricted Subsidiary of
the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition;
(5) any interest or title of a lessor to the property
subject to a Capital Lease Obligation;
(6) Liens for the purpose of securing the payment of all or
a part of the purchase price of, or Capital Lease Obligations,
purchase money obligations or other payments incurred to finance
the acquisition, lease, improvement or construction of or
repairs or additions to, assets or property acquired or
constructed in the ordinary course of business; provided that:
(a) the aggregate principal amount of Indebtedness secured
by such Liens is otherwise permitted to be incurred under the
indenture and does not exceed the cost of the assets or property
so acquired or constructed; and
(b) such Liens are created within 180 days of the
later of the acquisition, lease, completion of improvements,
construction, repairs or additions or commencement of full
operation of the assets or property subject to such Lien and do
not encumber any other assets or property of the Company or any
Restricted Subsidiary other than such assets or property and
assets affixed or appurtenant thereto;
(7) Liens existing on the date of the indenture;
(8) Liens to secure the performance of tenders, bids,
statutory obligations, surety or appeal bonds, trade contracts,
government contracts, operating leases, performance bonds or
other obligations of a like nature incurred in the ordinary
course of business;
57
(9) Liens on and pledges of the Equity Interests of any
Unrestricted Subsidiary or any Joint Venture owned by the
Company or any Restricted Subsidiary of the Company to the
extent securing Non-Recourse Debt or other Indebtedness of such
Unrestricted Subsidiary or Joint Venture;
(10) Liens on storage facilities, pipelines, pipeline
facilities or marine vessels that arise by operation of law;
(11) Liens arising under operating agreements, joint
venture agreements, partnership agreements, oil and gas leases,
farmout agreements, division orders, contracts for sale,
transportation or exchange of crude oil and natural gas,
unitization and pooling declarations and agreements, area of
mutual interest agreements and other agreements arising in the
ordinary course of business of the Company and its Restricted
Subsidiaries that are customary in the Permitted Business;
(12) Liens upon specific items of inventory, receivables or
other goods or proceeds of the Company or any of its Restricted
Subsidiaries securing such Persons obligations in respect
of bankers acceptances or receivables securitizations
issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory, receivables
or other goods or proceeds and permitted by the covenant
Certain Covenants Incurrence of
Indebtedness and Issuance of Preferred Stock;
(13) Liens securing Obligations of the Issuers or any
Guarantor under the notes or the Subsidiary Guarantees, as the
case may be;
(14) Liens securing any Indebtedness equally and ratably
with all Obligations due under the notes or any Subsidiary
Guarantee pursuant to a contractual covenant that limits Liens
in a manner substantially similar to the covenant described
above under Certain Covenants
Liens;
(15) Liens to secure performance of Hedging Contracts of
the Company or any of its Restricted Subsidiaries entered into
in the ordinary course of business and not for speculative
purposes;
(16) Liens securing any insurance premium financing under
customary terms and conditions, provided that no such Lien may
extend to or cover any assets or property other than the
insurance being acquired with such financing, the proceeds
thereof and any unearned or refunded insurance premiums related
thereto;
(17) other Liens incurred by the Company or any Restricted
Subsidiary of the Company, provided that, after giving effect to
any such incurrence, the aggregate principal amount of all
Indebtedness then outstanding and secured by any Liens incurred
pursuant to this clause (17) does not exceed the greater of
$20.0 million or 4.0% of the Companys Consolidated
Net Tangible Assets; and
(18) any Lien renewing, extending, refinancing or refunding
a Lien permitted by clauses (1) through (16) above,
provided that (a) the principal amount of the Indebtedness
secured by such Lien is not increased except by an amount equal
to a reasonable premium or other reasonable amount paid, and
fees and expenses reasonably incurred, in connection therewith
and by an amount equal to any existing commitments unutilized
thereunder and (b) no assets encumbered by any such Lien
other than the assets permitted to be encumbered immediately
prior to such renewal, extension, refinance or refund are
encumbered thereby (other than improvements thereon, accessions
thereto and proceeds thereof).
Permitted Refinancing Indebtedness means any
Indebtedness of the Company or any of its Restricted
Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its
Restricted Subsidiaries (other than intercompany Indebtedness),
provided that:
(1) the principal amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of the
Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded (plus all accrued interest on the
Indebtedness and the amount of all expenses and premiums
incurred in connection therewith);
58
(2) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right
of payment to the notes or the Subsidiary Guarantees, such
Permitted Refinancing Indebtedness is subordinated in right of
payment to the notes or the Subsidiary Guarantees on terms at
least as favorable to the Holders of notes as those contained in
the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is not incurred (other than by way of
a guarantee) by a Restricted Subsidiary of the Company (other
than Finance Corp.) if the Company is the issuer or other
primary obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
Notwithstanding the preceding, any Indebtedness incurred under
the Credit Agreement pursuant to the covenant Incurrence
of Indebtedness and Issuance of Preferred Stock shall be
subject only to the refinancing provision in the definition of
Credit Agreement and not pursuant to the requirements set forth
in the definition of Permitted Refinancing Indebtedness.
Person means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company or
government or other entity.
Qualifying Owners means, collectively,
(1) the significant owners of the parent company of General
Partner, Martin Resource Management, on the date of the
indenture, consisting of Ruben S. Martin, III, Scott D.
Martin, Donald R. Neumeyer, Wesley M. Skelton, Robert D.
Bondurant, Martin Resource Management Corporation Employee Stock
Ownership Trust, certain related partnerships and trusts
identified in a schedule to the indenture, and any of their
respective Affiliates, family, family trusts and beneficiaries
of such trusts and (2) Martin Resource Management and its
Subsidiaries.
Reporting Default means a Default described
in clause (4) under Events of Default and
Remedies.
Restricted Investment means an Investment
other than a Permitted Investment.
Restricted Subsidiary of a Person means any
Subsidiary of the referent Person that is not an Unrestricted
Subsidiary. Notwithstanding anything in the indenture to the
contrary, Finance Corp. shall be a Restricted Subsidiary of the
Company.
S&P refers to Standard &
Poors Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor to the rating agency business
thereof.
Senior Debt means
(1) all Indebtedness of the Company or any Restricted
Subsidiary outstanding under the Credit Agreement and all
obligations under Hedging Contracts with respect thereto;
(2) any other Indebtedness of the Company or any Restricted
Subsidiary permitted to be incurred under the terms of the
indenture, unless the instrument under which such Indebtedness
is incurred expressly provides that it is subordinated in right
of payment to the notes or any Subsidiary Guarantee; and
(3) all Obligations with respect to the items listed in the
preceding clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding
sentence, Senior Debt will not include:
(a) any intercompany Indebtedness of the Company or any of
its Restricted Subsidiaries to the Company or any of its
Affiliates; or
(b) any Indebtedness that is incurred in violation of the
indenture.
For the avoidance of doubt, Senior Debt will not
include any trade payables or taxes owed or owing by the Company
or any Restricted Subsidiary.
59
Significant Subsidiary means any Subsidiary
that would be a significant subsidiary as defined in
Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date of the indenture.
Stated Maturity means, with respect to any
installment of interest or principal on any series of
Indebtedness, the date on which the payment of interest or
principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment
thereof.
Subsidiary means, with respect to any
specified Person:
(1) any corporation, association or other business entity
(other than a partnership or limited liability company) of which
more than 50% of the total voting power of Voting Stock is at
the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person
(or a combination thereof); and
(2) any partnership (whether general or limited) or limited
liability company (a) the sole general partner or member of
which is such Person or a Subsidiary of such Person, or
(b) if there is more than a single general partner or
member, either (x) the only managing general partners or
managing members of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof) or
(y) such Person owns or controls, directly or indirectly, a
majority of the outstanding general partner interests, member
interests or other Voting Stock of such partnership or limited
liability company, respectively.
Subsidiary Guarantee means any guarantee by a
Guarantor of the Issuers Obligations under the indenture
and on the notes.
Treasury Rate means the yield to maturity at
the time of computation of United States Treasury securities
with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15(519) which has
become publicly available at least two Business Days prior to
the date fixed for redemption (or, if such Statistical Release
is no longer published, any publicly available source of similar
market data)) most nearly equal to the period from the
redemption date to April 1, 2014; provided, however, that
if such period is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is
given, the Company shall obtain the Treasury Rate by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the
period from the redemption date to April 1, 2014 is less
than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant
maturity of one year shall be used. The Company will
(a) calculate the Treasury Rate on the second Business Day
preceding the applicable redemption date and (b) prior to
such redemption date file with the trustee an officers
certificate setting forth the Make Whole Premium and the
Treasury Rate and showing the calculation of each in reasonable
detail.
Unrestricted Subsidiary means any Subsidiary
of the Company (other than Finance Corp. or the Operating
Partnership) that is designated by the Board of Directors of the
Company as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary:
(1) except to the extent permitted by subclause (2)(b) of
the definition of Permitted Business Investments,
has no Indebtedness other than Non-Recourse Debt owing to any
Person other than the Company or any of its Restricted
Subsidiaries;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the
Company;
(3) is a Person with respect to which neither the Company
nor any of its Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional Equity
Interests or (b) to maintain or
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preserve such Persons financial condition or to cause such
Person to achieve any specified levels of operating
results; and
(4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or
any of its Restricted Subsidiaries.
All Subsidiaries of an Unrestricted Subsidiary shall also be
Unrestricted Subsidiaries.
Any designation of a Subsidiary of the Company as an
Unrestricted Subsidiary will be evidenced to the trustee by
filing with the trustee a Board Resolution giving effect to such
designation and an officers certificate certifying that
such designation complied with the preceding conditions and was
permitted by the covenant described above under the caption
Certain Covenants Restricted
Payments. If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it will thereafter cease to be an Unrestricted
Subsidiary for purposes of the indenture and any Indebtedness of
such Subsidiary will be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date and, if such
Indebtedness is not permitted to be incurred as of such date
under the covenant described under the caption
Certain Covenants Incurrence of
Indebtedness and Issuance of Preferred Stock, the Company
will be in default of such covenant.
Voting Stock of any Person as of any date
means the Capital Stock of such Person that is at the time
entitled (without regard to the occurrence of any contingency)
to vote in the election of the Board of Directors of such Person.
Weighted Average Life to Maturity means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing:
(1) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect of the
Indebtedness, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the
making of such payment; by
(2) the then outstanding principal amount of such
Indebtedness.
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MATERIAL
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. federal
income tax considerations and, in the case of a
non-U.S. holder
(as defined below), certain U.S. federal estate tax
considerations, that may be relevant to the exchange of
outstanding notes for exchange notes and the ownership and
disposition of the notes. Except as specifically discussed below
(see Recent Legislative Developments),
this discussion is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the Code),
applicable Treasury Regulations promulgated thereunder, judicial
authority and administrative interpretations, each as in effect
as of the date of this document, and all of which are subject to
change, possibly with retroactive effect, or are subject to
different interpretations. We cannot assure you that the
Internal Revenue Service, or IRS, will not challenge one or more
of the tax consequences described in this discussion, and we
have not obtained, nor do we intend to obtain, a ruling from the
IRS or an opinion of counsel with respect to the
U.S. federal tax consequences of acquiring, holding or
disposing of the notes.
In this discussion, we do not purport to address all tax
considerations that may be important to a particular holder in
light of the holders circumstances, or to certain
categories of investors that may be subject to special rules,
such as financial institutions, insurance companies, regulated
investment companies, tax-exempt organizations, real estate
investment trusts, traders in securities or commodities that
elect mark to market treatment, governmental bodies or agencies
or instrumentalities thereof, certain former citizens and
residents of the United States, persons whose functional
currency is not the U.S. dollar, dealers in
securities or currencies, persons liable for alternative minimum
tax, or persons who hold the notes as part of a hedge,
conversion transaction, straddle or other risk reduction
transaction. This discussion is limited to holders who purchase
the notes in this offering at their issue price (the
first price at which a substantial amount of the notes is sold
other than to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement
agents or wholesalers) and who hold the notes as capital assets
(generally, property held for investment). This discussion also
does not address any aspect of foreign, state, or local taxation.
Investors considering the purchase of notes are urged to
consult their own tax advisors regarding the application of the
U.S. federal income tax laws to their particular situations
and the applicability and effect of state, local or foreign tax
laws and tax treaties.
Exchange
Offer
The exchange of outstanding notes for exchange notes pursuant to
the exchange offer should not constitute a taxable event for
United States federal income tax purposes. As a result,
(1) a holder should not recognize a taxable gain or loss as
a result of exchanging such holders outstanding notes for
exchange notes; (2) the holding period of the exchange
notes should include the holding period of the outstanding notes
exchanged therefor; and (3) the adjusted tax basis of the
exchange notes should be the same as the adjusted tax basis of
the outstanding notes exchanged therefor immediately before such
exchange.
Tax
Consequences to U.S. Holders
You are a U.S. holder for purposes of this
discussion if you are a beneficial owner of a note and you are
for U.S. federal income tax purposes:
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an individual who is a U.S. citizen or U.S. resident
alien;
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a corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, that was created or
organized in or under the laws of the United States, any state
thereof or the District of Columbia;
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an estate whose income is subject to U.S. federal income
taxation regardless of its source; or
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a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more United States persons have the authority to control all
substantial decisions of the trust, or that has a valid election
in effect under applicable U.S. Treasury Regulations to be
treated as a United States person.
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If a partnership or other entity treated as a partnership for
U.S. federal income tax purposes holds notes, the tax
treatment of a partner of the partnership generally will depend
upon the status of the partner and the activities of the
partnership. If you are a partner of a partnership acquiring the
notes, you are urged to consult your own tax advisor about the
U.S. federal income tax consequences of acquiring, holding
and disposing of the notes.
Stated Interest on the Notes. You will
generally be required to recognize as ordinary income any stated
interest paid or accrued on the notes, in accordance with your
regular method of accounting for federal income tax purposes.
Thus, if you are on the accrual method of accounting for
U.S. federal income tax purposes, stated interest on a note
will be taxable to you as ordinary income at the time it
accrues. If you are on the cash method of accounting for
U.S. federal income tax purposes, stated interest on a note
will be taxable to you as ordinary income at the time it is
received.
On March 30, 2010, President Obama signed into law new
legislation that imposes a surtax on the net investment income
of individuals, trusts and estates for tax years beginning after
December 31, 2012. The surtax for individuals is 3.8% of
the lesser of (1) the individuals net investment
income or (2) the excess of the individuals modified
adjusted gross income over a threshold amount. The threshold
amount is $250,000 for a joint return or surviving spouse,
$125,000 for a married individual filing a separate return, and
$200,000 in any other case. An individuals modified
adjusted gross income is adjusted gross income increased
by the amount excluded from income as foreign earned income, net
of the deductions and exclusions disallowed with respect to the
foreign earned income. Net investment income generally includes
interest, dividends, annuities, royalties and rents (other than
from a trade or business not involving a passive activity),
gross income from a trade or business involving a passive
activity, and gain from disposition of property (other than
property held in a trade or business not involving a passive
activity), net of expenses attributable to such income. Thus,
beginning in 2013, if you are an individual, trust or estate,
your interest income on the notes, as well as any gain on the
sale, exchange, redemption, or other disposition of the notes,
may be subject to this surtax.
In certain circumstances (see Description of
Notes Optional Redemption and
Repurchase at the Option of
Holders Change of Control), we may pay amounts
on the notes that are in excess of the stated interest or
principal of the notes. We intend to take the position that the
possibility that any such payment will be made is remote so that
such possibility will not affect the timing or amount of
interest income that you recognize unless and until any such
payment is made. Our determination that these contingencies are
remote is binding on you unless you disclose your contrary
position to the IRS in the manner that is required by applicable
Treasury regulations. Our determination is not, however, binding
on the IRS. It is possible that the IRS might take a different
position from that described above, in which case the timing,
character and amount of taxable income in respect of the notes
may be different from that described herein.
Disposition of the Notes. You will generally
recognize capital gain or loss on the sale, redemption,
exchange, retirement or other taxable disposition of a note.
This gain or loss will equal the difference between your
adjusted tax basis in the note and the proceeds you receive,
excluding any proceeds attributable to accrued interest, which
will be recognized as ordinary interest income to the extent you
have not previously included the accrued interest in income. The
proceeds you receive will include the amount of any cash and the
fair market value of any other property received for the note.
The adjusted basis in a note generally will be its cost,
decreased by any payments received by you (other than qualified
stated interest) and the amount of any amortizable bond premium
previously deducted. Subject to the discussion above regarding
market discount, any gain or loss will generally be long-term
capital gain or loss if you held the note for more than one
year. Long-term capital gains of individuals, estates and trusts
currently are taxed at a maximum rate of 15% (this rate is
scheduled to increase to 20% beginning January 1, 2011).
The deductibility of capital losses is subject to limitation.
Information Reporting and Backup
Withholding. Information reporting will apply to
payments of interest on, or the proceeds of the sale or other
disposition of, notes held by you, and backup withholding
(currently at a rate of 28%, but this rate is scheduled to
increase to 31% effective January 1, 2011) may apply
unless you provide the appropriate intermediary with a taxpayer
identification number, certified under penalties of perjury, as
well as certain other information, or otherwise establish an
exemption from backup withholding. Backup
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withholding is not an additional tax. Any amount withheld under
the backup withholding rules is allowable as a credit against
your actual U.S. federal income tax liability, if any, and
a refund may be obtained if the amounts withheld exceed your
actual U.S. federal income tax liability and you provide
the required information to
and/or file
the appropriate returns with the IRS.
Tax
Consequences to
Non-U.S.
Holders
Except as otherwise modified for U.S. federal estate tax
purposes, you are a
non-U.S. holder
for purposes of this discussion if you are a beneficial owner of
notes that is an individual, corporation, estate or trust and is
not a U.S. holder.
Stated Interest on the Notes. Payments of
stated interest on the notes generally will be exempt from
U.S. federal income or withholding tax under the
portfolio interest exemption if you properly certify
as to your foreign status as described below, and:
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you do not own, directly or indirectly, actually or
constructively, 10% or more of our capital or profits interests;
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you are not a bank whose receipt of interest on the notes is in
connection with an extension of credit made pursuant to a loan
agreement entered into in the ordinary course of business;
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you are not a controlled foreign corporation that is
related (directly or indirectly) to us through equity
ownership; and
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interest on the notes is not effectively connected with your
conduct of a U.S. trade or business (and, if an income tax
treaty applies to you, is not attributable to a permanent
establishment maintained by you in the United States).
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The portfolio interest exemption and several of the special
rules for
non-U.S. holders
described below generally apply only if you appropriately
certify as to your foreign status. You can generally meet this
certification requirement by providing a properly executed IRS
Form W-8BEN
or appropriate substitute form to us or our paying agent. If you
hold the notes through a financial institution or other agent
acting on your behalf, you may be required to provide
appropriate certifications to the agent. Your agent will then
generally be required to provide appropriate certifications to
us or our paying agent, either directly or through other
intermediaries. Special rules apply to foreign partnerships,
estates and trusts, and in certain circumstances certifications
as to foreign status of partners, trust owners or beneficiaries
may have to be provided to us or our paying agent. In addition,
special rules apply to qualified intermediaries that enter into
withholding agreements with the IRS.
If you cannot satisfy the requirements described above, payments
of interest made to you will be subject to U.S. federal
withholding tax at a 30% rate, unless you provide certain
documentation evidencing your entitlement to an exemption from
(or a reduction of) withholding under an applicable income tax
treaty, or the payments of interest are effectively connected
with your conduct of a trade or business in the United States
and you meet the certification requirements described below. See
Income or Gain Effectively Connected with a
U.S. Trade or Business.
Disposition of Notes. You generally will not
be subject to U.S. federal income tax on any gain realized
on the sale, redemption, exchange, retirement or other taxable
disposition of a note unless:
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the gain is effectively connected with the conduct by you of a
U.S. trade or business (and, if an income tax treaty
applies to you, is attributable to a permanent establishment
maintained by you in the United States); or
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you are an individual who has been present in the United States
for 183 days or more in the taxable year of disposition and
certain other requirements are met.
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If the first bullet point above describes you, you generally
will be subject to U.S. federal income tax in the manner
described under Income or Gain Effectively
Connected with a U.S. Trade or Business. If the
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second bullet point above describes you, you will be subject to
a flat 30% U.S. federal income tax on the gain derived from
the sale or other disposition, which may be offset by
U.S. source capital losses.
Income or Gain Effectively Connected with a U.S. Trade
or Business. The preceding discussion of the tax
consequences of the ownership and disposition of notes by
non-U.S. holders
generally assumes that income and gain from the notes is not
effectively connected with a trade or business conducted by you
in the United States. If any interest on the notes or gain from
the sale, exchange or other taxable disposition of the notes is
effectively connected with a trade or business conducted by you
in the United States (and, if an income tax treaty applies to
you, is attributable to a permanent establishment maintained by
you in the United States), then the income or gain will be
subject to U.S. federal income tax at regular graduated
income tax rates applicable to U.S. holders, but will not
be subject to withholding tax if certain certification
requirements are satisfied. You can generally meet the
certification requirements by providing a properly executed IRS
Form W-8ECI
or appropriate substitute form to us or our paying agent.
If you are a corporation, that portion of your earnings and
profits that is effectively connected with your U.S. trade
or business (and, if an income tax treaty applies to you, is
attributable to your permanent establishment in the United
States) also may be subject to a branch profits tax
at a 30% rate, unless an applicable income tax treaty provides
for a lower rate.
U.S. Federal Estate Tax. If you are an
individual and are not a resident of the United States (as
specially defined for U.S. federal estate tax purposes) at
the time of your death, the notes will not be included in your
estate for U.S. federal estate tax purposes, provided that,
at the time of your death, interest on the notes qualifies for
the portfolio interest exemption under the rules described above
in Stated Interest on the Notes (without regard to
the certification requirement).
Information Reporting and Backup
Withholding. Payments of interest on a note, and
amounts withheld from such payments, if any, generally will be
required to be reported to the IRS and to you. U.S. backup
withholding tax generally will not apply to payments to you of
interest on a note if you certify as to your
non-U.S. status
by providing a properly executed IRS
Form W-8BEN,
W-8ECI,
W-8EXP,
W-8IMY (or
acceptable substitute form), provided that we do not have actual
knowledge or reason to know that you are a United States person.
Payment of the proceeds of a disposition of a note effected by
the U.S. office of a U.S. or foreign broker will be
subject to information reporting requirements and backup
withholding, unless you properly certify under penalties of
perjury as to your foreign status (by providing a properly
executed IRS
Form W-8BEN,
W-8ECI
ORW-8IMY or acceptable substitute form) and certain other
conditions are met, or you otherwise establish an exemption.
Information reporting requirements and backup withholding
generally will not apply to any payment of the proceeds of the
disposition of a note effected outside the United States by a
foreign office of a broker. However, unless such a broker has
documentary evidence in its records that you are a
non-U.S. holder
and certain other conditions are met, or you otherwise establish
an exemption, information reporting will apply to a payment of
the proceeds of the disposition of a note effected outside the
U.S. by such a broker if the broker is a U.S. person
or has certain specified connections with the United States.
Backup withholding is not an additional tax. Any amount withheld
under the backup withholding rules may be credited against your
actual U.S. federal income tax liability and any excess may
be refundable if the proper information is timely provided to
and/or
returns are filed with the IRS.
The preceding discussion of material U.S. federal income
and estate tax considerations is for general information only
and is not tax advice. We urge each prospective investor to
consult its own tax advisor regarding the particular federal,
state, local and foreign tax consequences of purchasing,
holding, and disposing of our notes, including the consequences
of any proposed change in applicable laws.
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PLAN OF
DISTRIBUTION
Based on interpretations by the staff of the Commission in
no-action letters issued to third parties, we believe that you
may transfer exchange notes issued under the exchange offer in
exchange for the outstanding notes if:
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you acquire the exchange notes in the ordinary course of your
business; and
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you are not engaged in, and do not intend to engage in, and have
no arrangement or understanding with any person to participate
in, a distribution of such exchange notes.
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You may not participate in the exchange offer if you are:
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an affiliate within the meaning of Rule 405
under the Securities Act of us or Martin Midstream Finance
Corp.; or
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a broker-dealer that acquired outstanding notes directly from us.
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Each broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it
will deliver this prospectus in connection with any resale of
such exchange notes. To date, the staff of the Commission has
taken the position that broker-dealers may fulfill their
prospectus delivery requirements with respect to transactions
involving an exchange of securities such as this exchange offer,
other than a resale of an unsold allotment from the original
sale of the outstanding notes, with this prospectus. This
prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales
of exchange notes received in exchange for outstanding notes
where such outstanding notes were acquired as a result of
market-making activities or other trading activities. We have
agreed that, for a period ending on the earlier of April 3,
2011 and the date on which a broker-dealer is no longer required
to deliver a prospectus in connection with market-making or
other trading activities, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until such
date, all dealers effecting transactions in exchange notes may
be required to deliver this prospectus.
Any broker-dealer or holder using the exchange offer to
participate in a distribution of the securities to be acquired
in the exchange offer (1) could not, under SEC staff
policy, rely on the position of the SEC staff enunciated in
Morgan Stanley and Co., Inc. (available June 5,
1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the SEC
staffs letter to Shearman & Sterling
dated July 2, 1993, and similar no-action letters, and
(2) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a
secondary resale transaction and that such a secondary resale
transaction should be covered by an effective registration
statement containing the selling security holder information
required by Item 507 or 508, as applicable, of
Regulation S-K.
If you wish to exchange notes for your outstanding notes in the
exchange offer, you will be required to make representations to
us as described in Exchange Offer Procedures
for Tendering Your Representations to Us in
this prospectus. As indicated in the letter of transmittal, you
will be deemed to have made these representations by tendering
your outstanding notes in the exchange offer. In addition, if
you are a broker-dealer who receives exchange notes for your own
account in exchange for outstanding notes that were acquired by
you as a result of market-making activities or other trading
activities, you will be required to acknowledge, in the same
manner, that you will deliver this prospectus in connection with
any resale by you of such exchange notes.
We will not receive any proceeds from any sale of exchange notes
by broker-dealers. Exchange notes received by broker-dealers for
their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions:
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in the over-the-counter market;
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in negotiated transactions;
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through the writing of options on the exchange notes; or
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a combination of such methods of resale;
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at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices.
Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the
form of commissions or concessions from any such broker-dealer
or the purchasers of any such exchange notes. Any broker-dealer
that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer
that participates in a distribution of such exchange notes may
be deemed to be an underwriter within the meaning of
the Securities Act. Each letter of transmittal states that by
acknowledging that it will deliver and by delivering this
prospectus, a broker-dealer will not be deemed to admit that it
is an underwriter within the meaning of the
Securities Act.
For the period described in Section 4(3) of and
Rule 174 under the Securities Act that is applicable to
transactions by brokers or dealers with respect to the exchange
notes, we will promptly send additional copies of this
prospectus and any amendment or supplement to this prospectus to
any broker-dealer that requests such documents. We have agreed
to pay all reasonable expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the
outstanding notes) other than commissions or concessions of any
broker-dealers and will indemnify the holders of the outstanding
notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL
MATTERS
Locke Lord Bissell & Liddell LLP has issued an opinion
about the legality of the exchange notes.
EXPERTS
The following financial statements and managements
assessment have been incorporated in this prospectus by
reference in reliance upon the reports of KPMG LLP, independent
registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in
accounting and auditing: (i) the consolidated financial
statements of Martin Midstream Partners L.P. and subsidiaries as
of December 31, 2009 and 2008, and for each of the years in
the three year period ended December 31, 2009, and
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2009,
(ii) the balance sheet of Martin Midstream GP LLC, our
general partner, as of December 31, 2009, and 2008, and
(iii) the financial statements of Waskom Gas Processing
Company, one of our unconsolidated entities, as of and for the
years ended December 31, 2009 and 2008, and for each of the
years in the three year period ended December 31, 2009.
WHERE YOU
CAN FIND MORE INFORMATION
We are required to file annual, quarterly and current reports,
proxy statements and other information with the SEC. Our SEC
filings are available over the Internet at the SECs web
site at
http://www.sec.gov.
You may also read and copy any document that we file at the
SECs public reference room at 100 F. Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for more information on the public reference room and its copy
charges.
We incorporate by reference information into this
prospectus, which means that we disclose important information
to you by referring you to another document filed separately
with the SEC. The information incorporated by reference is
deemed to be part of this prospectus, except for any information
superseded by information contained expressly in this
prospectus, and the information we file later with the SEC will
automatically supersede this information. You should not assume
that the information in this prospectus is current as of any
date other than the date on the front page of this prospectus.
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We incorporate by reference the documents listed below:
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Our annual report on
Form 10-K
for the year ended December 31, 2009 as filed on
March 4, 2010, and our Amendment No. 1 on
Form 10-K/A
as filed on May 4, 2010;
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Our quarterly reports on
Form 10-Q
for the periods ended March 31, 2010 and June 30,
2010; and
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Our current reports on
Form 8-K
filed on January 19, 2010, January 29, 2010,
February 3, 2010, February 8, 2010, March 1,
2010, March 12, 2010, March 16, 2010, March 23,
2010, March 26, 2010, May 28, 2010, June 15,
2010, June 23, 2010, June 25, 2010, July 27,
2010, July 29, 2010, August 4, 2010, August 12,
2010 and August 17, 2010 (in each case to the extent filed
and not furnished).
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Until the termination of the exchange offer described in this
prospectus, we will also incorporate by reference all documents
that we may file in the future under Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, excluding any information
therein that was furnished to (and not filed with) the SEC. In
addition, all documents filed by us pursuant to the Securities
Exchange Act of 1934 after the date of the initial registration
statement and prior to the effectiveness of the registration
statement, and that is deemed filed with the SEC,
shall be deemed to be incorporated by reference into this
prospectus.
You may request a copy of any document incorporated by reference
in this prospectus and any exhibit specifically incorporated by
reference in those documents, at no cost, by writing or
telephoning us at the following address or phone number:
Martin Midstream Partners L.P.
4200 Stone Road
Kilgore, Texas 75662
(903) 983-6200
Attention: Joe McCreery
We also make available free of charge on our internet website at
http://www.martinmidstream.com
our annual reports on
Form 10-K,
our quarterly reports on
Form 10-Q,
our current reports on
Form 8-K
and any amendments to those reports, as soon as reasonably
practicable after we electronically file such material with, or
furnish it to, the SEC. Information contained on our web site is
not incorporated by reference into this prospectus and you
should not consider information on our web site as part of this
prospectus.
INFORMATION
REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended, that are based on information currently
available to management as well as managements assumptions
and beliefs. All statements, other than statements of historical
fact, included in this prospectus constitute forward-looking
statements, including but not limited to statements identified
by the words may, will,
should, plan, predict,
anticipate, believe, intend,
estimate and expect and similar
expressions. Such statements reflect our current views with
respect to future events, based on what we believe are
reasonable assumptions; however, such statements are subject to
certain risks and uncertainties. In addition to the specific
uncertainties discussed elsewhere in this prospectus, the risk
factors set forth in Risk Factors may affect our
performance and results of operations. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may differ
materially from those in the forward-looking statements. We
disclaim any intention or obligation to update or review any
forward-looking statements or information, whether as a result
of new information, future events or otherwise.
68
ANNEX A
LETTER
OF TRANSMITTAL
To
Tender
Outstanding
87/8% Senior
Notes due 2018
of
MARTIN
MIDSTREAM PARTNERS L.P.
and
MARTIN
MIDSTREAM FINANCE CORP.
Pursuant
to the Exchange Offer and Prospectus dated October 5,
2010
The Exchange Agent for the Exchange Offer is:
By Registered or Certified Mail
Wells Fargo Bank, N.A.
MAC N9303-121
P.O. Box 1517
Minneapolis, Minnesota 55480
By Overnight Delivery
Wells Fargo Bank, N.A.
MAC N9303-121
6th & Marquette Avenue
Minneapolis, Minnesota 55479
By Hand Delivery
Wells Fargo Bank, N.A.
608 2nd Avenue South
Northstar East
Building 12th Floor
Minneapolis, Minnesota
Facsimile Transmission
612-667-6282
Attn: Corporate Trust Operations
Confirm by Telephone:
800-344-5128
IF YOU WISH TO EXCHANGE CURRENTLY OUTSTANDING
87/8%
SENIOR NOTES DUE 2018 (THE OUTSTANDING NOTES)
FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF
87/8%
SENIOR NOTES DUE 2018 PURSUANT TO THE EXCHANGE OFFER, YOU
MUST VALIDLY TENDER (AND NOT WITHDRAW) OUTSTANDING NOTES TO
THE EXCHANGE AGENT PRIOR TO 5:00 P.M. NEW YORK CITY
TIME ON NOVEMBER 3, 2010 (THE EXPIRATION DATE)
BY CAUSING AN AGENTS MESSAGE TO BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO SUCH TIME.
The undersigned hereby acknowledges receipt of the prospectus,
dated October 5, 2010 (the Prospectus), of
Martin Midstream Partners L.P., a Delaware limited partnership
(the Company), and Martin Midstream Finance Corp., a
Delaware corporation (Finance Corp.), and this
Letter of Transmittal (the Letter of Transmittal),
which together describe the Companys and Finance
Corp.s offer (the Exchange Offer) to exchange
their
87/8% Senior
Notes due 2018 (the Exchange Notes) that have been
registered under the Securities Act of 1933, as amended (the
Securities Act), for a like principal amount of
their issued and outstanding
87/8% Senior
Notes due 2018 (the Outstanding Notes). Capitalized
terms used but not defined herein have the respective meaning
given to them in the Prospectus.
A-1
The Company and Finance Corp. reserve the right, at any time or
from time to time, to extend the Exchange Offer at their
discretion, in which event the term Expiration Date
shall mean the latest date to which the Exchange Offer is
extended. To extend the Exchange Offer, the Company and Finance
Corp. will notify the Exchange Agent orally or in writing of any
extension. The Company and Finance Corp. will notify the holders
of Outstanding Notes of the extension via a press release issued
no later than 9:00 a.m. New York City time on the
business day after the previously scheduled Expiration Date.
This Letter of Transmittal is to be used by holders of the
Outstanding Notes. Tender of Outstanding Notes is to be made
according to the Automated Tender Offer Program
(ATOP) of The Depository Trust Company
(DTC) pursuant to the procedures set forth in the
prospectus under the caption The Exchange
Offer Procedures for Tendering. DTC
participants that are accepting the Exchange Offer must transmit
their acceptance to DTC, which will verify the acceptance and
execute a book-entry delivery to the Exchange Agents DTC
account. DTC will then send a computer-generated message known
as an agents message to the exchange agent for
its acceptance. For you to validly tender your Outstanding Notes
in the Exchange Offer, the Exchange Agent must receive, prior to
the Expiration Date, an agents message under the ATOP
procedures that confirms that:
DTC has received your instructions to tender your Outstanding
Notes; and
You agree to be bound by the terms of this Letter of Transmittal.
By using the ATOP procedures to tender Outstanding Notes, you
will not be required to deliver this Letter of Transmittal to
the Exchange Agent. However, you will be bound by its terms, and
you will be deemed to have made the acknowledgments and the
representations and warranties it contains, just as if you had
signed it.
A-2
PLEASE
READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
1. By tendering Outstanding Notes in the Exchange Offer,
you acknowledge receipt of the Prospectus and this Letter of
Transmittal.
2. By tendering Outstanding Notes in the Exchange Offer,
you represent and warrant that you have full authority to tender
the Outstanding Notes described above and will, upon request,
execute and deliver any additional documents deemed by the
Company to be necessary or desirable to complete the tender of
Outstanding Notes.
3. The tender of the Outstanding Notes pursuant to all of
the procedures set forth in the Prospectus will constitute an
agreement between you and the Company as to the terms and
conditions set forth in the Prospectus.
4. The Exchange Offer is being made in reliance upon
interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission
(the Commission), including Exxon Capital Holdings
Corp., Commission No-Action Letter (available May 13,
1988), Morgan Stanley & Co., Inc., Commission
No-Action Letter (available June 5, 1991) and
Shearman & Sterling, Commission No-Action Letter
(available July 2, 1993), that the Exchange Notes issued in
exchange for the Outstanding Notes pursuant to the Exchange
Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than a broker-dealer who
purchased Outstanding Notes exchanged for such Exchange Notes
directly from the Company to resell pursuant to Rule 144A
or any other available exemption under the Securities Act of
1933, as amended (the Securities Act) and any such
holder that is an affiliate of the Company or
Finance Corp. within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of
such holders business and such holders are not
participating in, and have no arrangement with any person to
participate in, the distribution of such Exchange Notes.
5. By tendering Outstanding Notes in the Exchange Offer,
you represent and warrant that:
a. the Exchange Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary course of your
business, whether or not you are the holder;
b. neither you nor any such other person is engaging in or
intends to engage in a distribution of such Exchange Notes;
c. neither you nor any such other person has an arrangement
or understanding with any person to participate in the
distribution of such Exchange Notes;
d. neither you nor any such other person is an
affiliate, as such term is defined under
Rule 405 promulgated under the Securities Act, of the
Company, Finance Corp. or the Guarantors; and
e. if you are a broker-dealer that will receive exchange
notes for your own account in exchange for outstanding notes,
you acquired those outstanding notes as a result of
market-making activities or other trading activities and you
will deliver the prospectus, as required by law, in connection
with any resale of the exchange notes.
6. If you are a broker-dealer that will receive Exchange
Notes for your own account in exchange for Outstanding Notes
that were acquired as a result of market-making activities or
other trading activities, you acknowledge, by tendering
Outstanding Notes in the Exchange Offer, that you will deliver a
prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, you
will not be deemed to admit that you are an
underwriter within the meaning of the Securities
Act. If you are a broker-dealer and Outstanding Notes held for
your own account were not acquired as a result of market-making
or other trading activities, such Outstanding Notes cannot be
exchanged pursuant to the Exchange Offer.
7. Any of your obligations hereunder shall be binding upon
your successors, assigns, executors, administrators, trustees in
bankruptcy and legal and personal representatives.
A-3
INSTRUCTIONS
FORMING
PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE
OFFER
|
|
1.
|
Book-Entry
Confirmations.
|
Any confirmation of a book-entry transfer to the Exchange
Agents account at DTC of Outstanding Notes tendered by
book-entry transfer (a Book-Entry Confirmation), as
well as an agents message, and any other documents
required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein prior to
5:00 P.M. New York City time on the Expiration Date.
Tenders of Outstanding Notes will be accepted only in
denominations of $2,000 and integral multiples of $1,000 in
excess thereof. The entire principal amount of Outstanding Notes
delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise communicated to the Exchange Agent. If
the entire principal amount of all Outstanding Notes is not
tendered, then Outstanding Notes for the principal amount of
Outstanding Notes not tendered and Exchange Notes issued in
exchange for any Outstanding Notes accepted will be delivered to
the holder via the facilities of DTC promptly after the
Outstanding Notes are accepted for exchange.
All questions as to the validity, form, eligibility (including
time of receipt), acceptance, and withdrawal of tendered
Outstanding Notes will be determined by the Company, in its sole
discretion, which determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders
not in proper form or the acceptance for exchange of which may,
in the opinion of counsel for the Company, be unlawful. The
Company also reserves the absolute right to waive any of the
conditions of the Exchange Offer or any defect or irregularity
in the tender of any Outstanding Notes. The Companys
interpretation of the terms and conditions of the Exchange Offer
(including the instructions on this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects
or irregularities in connection with tenders of Outstanding
Notes must be cured within such time as the Company shall
determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Outstanding
Notes, neither the Company, the Exchange Agent, nor any other
person shall be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for
failure to give such notification. Tenders of Outstanding Notes
will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Outstanding Notes
received by the Exchange Agent that are not properly tendered
and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the
tendering holders via the facilities of DTC, promptly following
the Expiration Date.
A-4
Until November 14, 2010 all dealers that effect
transactions in the exchange notes, whether or not participating
in this offering, may be required to deliver a prospectus. This
is in addition to the dealers obligation to deliver a
prospectus when acting as underwriters with respect to their
unsold allotments or subscriptions.
Martin Midstream Partners L.P.
Martin Midstream Finance Corp.
Offer to Exchange
Registered
$200,000,000
87/8% Senior
Notes due 2018
for
Outstanding
$200,000,000
87/8% Senior
Notes due 2018