UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934*

PetroLogistics LP

(Name of Issuer)

Common Units representing limited partner interests

(Title of Class of Securities)

71672U101

(CUSIP Number)

Richard P. Swanson, Esq.

YSOF Propylene Investor, LLC
c/o York Capital Management
767 Fifth Avenue, 17^th Floor

New York, New York 10153

Telephone: (212) 300-1300

With copies to:

Robert E. Holton, Esq.

Lily J. Lu, Esq.

Arnold & Porter LLP

399 Park Avenue

New York, New York 10022

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

June 18, 2012

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §240.13d-1(e), §240.13d-1(f) or §240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

1) NAMES OF REPORTING PERSONS

YSOF Propylene Investor, LLC

2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE

INSTRUCTIONS)

(a) ¨

(b) x

3) SEC USE ONLY

4) SOURCE OF FUNDS (SEE INSTRUCTIONS)

WC

5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

¨

6) CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

16,557,081

12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES OF COMMON STOCK (SEE INSTRUCTIONS)

¨

13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

Approximately 11.9%

14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

OO

This statement on Schedule 13D (this “Statement”) relates to the Common Units representing limited partner interests (the “Common Units”) in PetroLogistics LP (the “Partnership”).

The principal executive offices of the Partnership are located at 600 Travis Street, Suite 3250, Houston, Texas 77002.

(a)                           This Statement is being filed by YSOF Propylene Investor, LLC, a Delaware limited liability company (“YSOF” or the “Reporting Person”).

This Statement is being filed by YSOF with respect to 16,557,081 Common Units directly owned by YSOF.

York Special Opportunities Fund AIV II, L.P., a Delaware limited partnership (“Special Opportunities”), York Special Opportunities Fund (PIV-A), L.P., a Delaware limited partnership (“Special Opportunities PIV-A”), and YSOF (PIV-B) Sub II, LLC, a Delaware limited liability company (“Special Opportunities PIV-B”), are the members of YSOF. Special Opportunities owns 60% of YSOF, Special Opportunities PIV-A owns 5% of YSOF and Special Opportunities PIV-B owns 35% of YSOF.

York Special Opportunities Fund (PIV-B), L.P., a Cayman Islands exempted limited partnership (“YSOF PIV-B”), is the sole member of Special Opportunities PIV-B.

York Special Opportunities Domestic Holdings, LLC, a New York limited liability company (“Domestic Holdings”), is the general partner of each of Special Opportunities, Special Opportunities PIV-A and YSOF PIV-B.

York Capital Management Global Advisors, LLC, a New York limited liability company (“YGA”), is the sole managing member of Domestic Holdings.

James G. Dinan is the chairman and one of two senior managers of YGA. Daniel A. Schwartz is also a senior manager of YGA.

The name of each director and each executive officer of YGA is set forth on Exhibit 1 to this Statement, which is incorporated herein by reference.

(b)                          The principal business office address of each of YSOF, Special Opportunities, Special Opportunities PIV-A, Special Opportunities PIV-B, YSOF PIV-B, Domestic Holdings, YGA, James G. Dinan and Daniel A. Schwartz is:

c/o York Capital Management

767 Fifth Avenue, 17th Floor

New York, New York 10153

The business address of each other person named in Item 2(a) above is set forth on Exhibit 1 to this Statement, which is incorporated herein by reference.

(c)                           YSOF is a privately owned investment limited liability company in the principal business of investing in the business operated by the Partnership’s wholly owned subsidiary PL Propylene LLC, a Delaware limited liability company (the “Operating Company”), including, without limitation, by purchasing for investment purposes securities and other financial instruments issued by the Partnership and certain of its affiliates.

Each of Special Opportunities, Special Opportunities PIV-A, Special Opportunities PIV-B and YSOF PIV-B is a privately owned investment limited partnership or limited liability company, as the case may be, in the principal business of investing in portfolio companies, including, without limitation, by purchasing for investment purposes securities and other financial instruments.

Domestic Holdings is a privately owned limited liability company in the principal business of acting as the general partner of Special Opportunities, Special Opportunities PIV-A and YSOF PIV-B.

YGA provides investment management services to certain investment funds and accounts for which it has discretionary investment authority.

The present principal occupation or employment of each other person named in Item 2(a) above is set forth on Exhibit 1 to this Statement, which is incorporated herein by reference.

(d)-(e)                      Neither the Reporting Person nor, to the knowledge of the Reporting Person, any other person named in Item 2(a) above has during the last five years been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)                            The citizenship of each natural person named in Item 2(a) above is set forth on Exhibit 1 to this Statement, which is incorporated herein by reference.

On May 3, 2012, the Partnership commenced an initial public offering of 35,000,000 Common Units pursuant to a Registration Statement on Form S-1, as amended (File No. 333-175035) (the “IPO”), which IPO was completed on May 9, 2012. The transactions described below in this Item 3 were effected in connection with the IPO. Immediately prior to giving effect to the transactions described below: (i) the Reporting Person held 20% of the issued and outstanding Class A Units (the “20% Interest”) of PL Manufacturing LLC, a Delaware limited liability company (“PL Manufacturing”); (ii) PL Manufacturing was the sole member of Propylene Holdings LLC, a Delaware limited liability company (“Propylene Holdings”); (iii) Propylene Holdings was the sole member of the Operating Company and the sole member of PetroLogistics GP LLC, a Delaware limited liability company (the “GP”); and (iv) GP was the sole general partner of the Partnership and held a non-economic general partner interest in the Partnership, and Propylene Holdings was the sole limited partner of the Partnership and held 100% of the issued and outstanding limited partner interests (the “Limited Partner Interests”) in the Partnership. The source of the funds used by the Reporting Person to acquire the 20% Interest was the working capital of the Reporting Person, which was provided by capital contributions of its members.

On March 30, 2012, Propylene Holdings contributed to the Partnership all of the equity interests in the Operating Company, and Propylene Holdings distributed 1% of the Limited Partner Interests to PL Manufacturing. Immediately following the distribution of such 1% of the Limited Partner Interests to PL Manufacturing, PL Manufacturing distributed 0.8% of the Limited Partner Interests to LG Propylene LLC, a Delaware limited liability company (“LGP”), and 0.2% of the Limited Partner Interests to the Reporting Person, which distributions were made in accordance with the terms of the limited liability company agreement of PL Manufacturing. The contribution and distributions described in this paragraph were made pursuant to the Contribution, Conveyance and Assumption Agreement, dated as of March 30, 2012 (the “Contribution Agreement”), by and among the Partnership, PL Manufacturing and Propylene Holdings.

On May 3, 2012, the Limited Partner Interests were recapitalized pursuant to the First Amended and Restated Agreement of Limited Partnership of PetroLogistics LP, dated as of May 3, 2012 (the “Limited Partnership Agreement”). Pursuant to the Limited Partnership Agreement, the Limited Partner Interests held by the Reporting Person were reclassified into 275,000 Common Units, representing 0.2% of the issued and outstanding Common Units at such time, the Limited Partner Interests held by LGP were reclassified into 1,100,000 Common Units, representing 0.8% of the issued and outstanding Common Units at such time, and the Limited Partner Interests held by Propylene Holdings was recapitalized into 136,125,000 Common Units, representing 99.0% of the issued and outstanding Common Units at such time.

On May 9, 2012, which was the closing date of the IPO, the Partnership issued and sold 1,500,000 Common Units, and Propylene Holdings sold 33,500,000 of the Common Units owned by it. Immediately following such closing, Propylene Holdings distributed 102,625,000 Common Units to PL Manufacturing. In addition, on the closing date of the IPO, the following agreements were executed and delivered: (i) the Registration Rights Agreement, dated as of May 9, 2012 (the “Registration Rights Agreement”), by and among the Partnership, David Lumpkins, Nathan Ticatch, LGP and the Reporting Person; (ii) the Omnibus Agreement, dated as of May 9, 2012 (the “Omnibus Agreement”), by and among the Partnership, the GP, Propylene Holdings, PL Manufacturing and the Operating Company; and (iii) the Pledge Agreement, dated as of May 9, 2012 (the “Pledge Agreement”), by and among the holders of Common Units who are also members of PL Manufacturing, including the Reporting Person and LGP, in favor or PL Manufacturing.

On June 18, 2012, PL Manufacturing distributed 97,493,750 Common Units to all of its members, including the Reporting Person and LGP (collectively, the “PL Manufacturing Members”), in accordance with the distribution provisions of the limited liability company agreement of PL Manufacturing.

Under the Registration Rights Agreement, YSOF has the right to request that the Partnership register the sale of Common Units held by YSOF, and YSOF may exercise certain piggy back registration rights with respect to its Common Units if the Partnership elects to register any of its equity interests.

The Omnibus Agreement and the Pledge Agreement relate to certain propane swap transactions, dated October 7, 2011, between the Operating Company and J. Aron & Company, which propane swap transactions are intended to reduce the Operating Company’s exposure to propane prices for the years ended December 31, 2012 and 2013 (the “Propane Swaps”). The Omnibus Agreement and the Pledge Agreement will remain in place for so long as the Propane Swaps are outstanding.

Pursuant to the Omnibus Agreement, the parties agreed as follows: (i) the GP assumed all of the Operating Company’s obligations under the Propane Swaps and was allocated all of the Operating Company’s rights under the Propane Swaps; (ii) all payments received under the Propane Swaps shall be distributed to the GP on a quarterly basis, and as soon as reasonably practicable after its receipt of each such distribution, the GP shall distribute such amount to Propylene Holdings, which shall distribute such amount to PL Manufacturing, which shall then, among other things, distribute such amount (or portion thereof) attributable to the Common Units pledged pursuant to the Pledge Agreement (collectively, the “Pledged Units”) to the PL Manufacturing Members, on a pro rata basis according to the respective percentage ownership of Pledged Units held by the PL Manufacturing Members; (iii) in the event any amount is required to be paid to J. Aron & Company pursuant to the Propane Swaps (each such amount, the “Propane Swap Payment Obligation”), then PL Manufacturing shall pay to the GP an amount equal to such Propane Swap Payment Obligation, which amount will be contributed by the GP to the Partnership; and (iv) any amounts required to be paid by PL Manufacturing pursuant to the foregoing clause (iii) will be funded primarily by quarterly distributions in respect of (A) the Pledged Units to which PL Manufacturing, as collateral agent, is entitled pursuant to the Pledge Agreement and (B) the Common Units held by PL Manufacturing and subject to the Omnibus Agreement.

Pursuant to the Pledge Agreement, the PL Manufacturing Members agreed to pledge to PL Manufacturing, as collateral agent, a number of Common Units such that at all times the market value of all Pledged Units and all Common Units owned by PL Manufacturing that are subject to the Omnibus Agreement are equal to or greater than 10 times the mark-to-market value of the Propane Swaps, but in no event shall the number of Pledged Units be greater than the amount of Common Units distributed to PL Manufacturing and the PL Manufacturing Members in the transactions described above. PL Manufacturing will receive all quarterly distribution payments that the Partnership makes in respect of any Pledged Units and any Common Units owned by it that are subject to the Omnibus Agreement. Of this distribution amount, PL Manufacturing will (i) first, contribute to the Partnership an amount equal to the total sum of all Propane Swap Payment Obligations paid during the quarter, (ii) second, establish and maintain a cash reserve as reasonably necessary, (iii) third, distribute any excess cash attributable to the then Pledged Units to the PL Manufacturing Members and (iv) fourth, retain or distribute any excess cash attributable to the Common Units owned by it that are then subject to the Omnibus Agreement.

In any quarter in which the aggregate distributions paid on the then Pledged Units and the Common Units owned by PL Manufacturing that are then subject to the Omnibus Agreement are less than the Propane Swap Payment Obligations for such quarter, PL Manufacturing will apply any cash reserve toward the shortfall. PL Manufacturing and each of the PL Manufacturing Members will have the option to fund its pro rata portion of any remaining shortfall (after application of the cash reserve) with cash. In the event that a PL Manufacturing Member elects not to fully fund its pro rata portion of the remaining shortfall, PL Manufacturing, acting as collateral agent, will liquidate a number of such PL Manufacturing Member’s then Pledged Units sufficient to cover its remaining share of the shortfall. Similarly, if PL Manufacturing fails to fund its pro rata portion of the remaining shortfall with cash, PL Manufacturing shall liquidate a number of its Common Units that are then subject to the Omnibus Agreement sufficient to cover its share of the remaining shortfall.

The preceding description of the Contribution Agreement, the Limited Partnership Agreement, the Registration Rights Agreement, the Omnibus Agreement and the Pledge Agreement is a summary only and is qualified in its entirety by reference to the copies of the Contribution Agreement, the Limited Partnership Agreement, the Registration Rights Agreement, the Omnibus Agreement and the Pledge Agreement filed as exhibits to this Statement and incorporated herein by this reference. In addition, the preceding description of the Contribution Agreement, the Limited Partnership Agreement, the Registration Rights Agreement, the Omnibus Agreement and the Pledge Agreement is qualified in its entirety by reference to, and is based on, the summaries of such documents set forth in the Partnership’s prospectus (the “Prospectus”) filed pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended (the “Securities Act”), with the Securities and Exchange Commission (the “SEC”) on May 7, 2012 and the Partnership’s Current Report on Form 8-K filed with the SEC on May 14, 2012.

The Reporting Person acquired the securities of the Partnership described in Item 5 of this Statement for investment purposes. The Reporting Person intends to review the Reporting Person’s investment in the Partnership on a continuing basis. The Reporting Person reserves the right to purchase or acquire additional Common Units, including without limitation in connection with any of the transactions described in Item 3 of this Statement, either separately or together with other persons, to sell all or some of the Common Units beneficially owned by it, including, without limitation, pursuant to any registration statement under the Securities Act to be filed and kept effective by the Partnership under the Registration Rights Agreement, or to otherwise trade in the Common Units, in open market or private transactions, provided that in its judgment such transactions present an attractive (long- or short-term) opportunity for profit. The Reporting Person also reserves the right to acquire or dispose of derivatives or other instruments related to Common Units or other securities of the Partnership, provided that in its judgment such transactions are advisable.

Pursuant to the Limited Partnership Agreement, all management powers over the business and affairs of the Partnership are exclusively vested in the GP, and pursuant to the Limited Liability Company Agreement of PetroLogistics GP LLC, dated as of June 9, 2011 (the “Operating Agreement”), made by Propylene Holdings, the business and affairs of the GP are managed by or under the direction of a Board of Directors (the “GP Board”). By virtue of the Reporting Person’s 20% Interest in PL Manufacturing at such time, the Reporting Person designated one person who was appointed in June 2011 as a member of the GP Board, and as of the date hereof, the GP Board consists of a total of nine directors.

Pursuant to the Limited Partnership Agreement, the GP may only be removed from its position as general partner if such removal is approved by the holders of not less than 66 2/3% of the outstanding Common Units, including Common Units held by the GP and its affiliates, voting as a single class.

The Limited Partnership Agreement contains specific provisions that are intended to discourage a person or group from attempting to remove the GP as the general partner of the Partnership. If any person or group, other than the GP and its affiliates, acquires beneficial ownership of 20% or more of any class of partnership interests, that person or group loses voting rights with respect to all of such partnership interests. This loss of voting rights does not apply to any person or group that acquires partnership interests directly from the GP or its affiliates (except the Partnership) and any transferees of that person or group approved by the GP or to any person or group who acquires partnership interests with the prior approval of the GP.

The preceding description of the Operating Agreement and the Limited Partnership Agreement is a summary only and is qualified in its entirety by reference to the copies of the Operating Agreement and the Limited Partnership Agreement filed as exhibits to this Statement and incorporated herein by this reference. In addition, the preceding description of the Operating Agreement and the Limited Partnership Agreement is qualified in its entirety by reference to, and is based on, the summaries of such documents set forth in the Prospectus.

Except as set forth herein, the Reporting Person does not have any plans or proposals which relate to or would result in any of the matters described in Items 4(a)-(j) of Schedule 13D.

The Reporting Person reserves the right to consider, either separately or together with other persons, plans or proposals relating to or resulting in the occurrence of one or more of the transactions described in Items 4(a)-(j) of Schedule 13D in the future depending upon then existing factors, including without limitation the market for the Common Units, the Partnership’s then prospects, alternative investment opportunities, general economic and money-market investment conditions and other factors deemed relevant from time to time.

(a)                           (i) YSOF may, pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), be deemed to be the beneficial owner of 16,557,081 Common Units, which constitute approximately 11.9% of the issued and outstanding Common Units.

(ii) As the member of YSOF owning 60% of YSOF, Special Opportunities may be deemed to be the beneficial owner of the Common Units beneficially owned by YSOF.

(iii) As the general partner of Special Opportunities, Domestic Holdings may be deemed to be the beneficial owner of the Common Units beneficially owned by YSOF.

(iv) As the sole managing member of Domestic Holdings, YGA may be deemed to be the beneficial owner of the Common Units beneficially owned by YSOF.

The number of Common Units beneficially owned and the percentage of outstanding Common Units represented thereby, for each person named above, have been computed in accordance with Rule 13d-3 under the Exchange Act. The percentages of ownership described above are based on 139,576,539 Common Units outstanding as of June 15, 2012 as reported in the Partnership’s Quarterly Report on Form 10-Q filed with the SEC on June 18, 2012.

(b)                           (i) YSOF may be deemed to have the sole power to dispose of, direct the disposition of, vote or direct the vote of 16,557,081 Common Units.

(ii) As the member of YSOF owning 60% of YSOF, Special Opportunities may be deemed to have the sole power to dispose of, direct the disposition of vote or direct the vote of the Common Units beneficially owned by YSOF.

(iii) As the general partner of Special Opportunities, Domestic Holdings may be deemed to have the sole power to dispose of, direct the disposition of, vote or direct the vote of the Common Units beneficially owned by YSOF.

(iv) As the sole managing member of Domestic Holdings, YGA may be deemed to have the sole power to dispose of, direct the disposition of, vote or direct the vote of the Common Units beneficially owned by YSOF.

(v) To the knowledge of the Reporting Person, except as described above, none of the persons named in Item 2(a) above has, or may be deemed to have, any power to dispose of, direct the disposition of, vote or direct the vote of any shares of Common Units.

(c)                            Except as set forth herein or in Exhibits filed herewith, neither the Reporting Person nor, to the knowledge of the Reporting Person, any other person named in Item 2(a) above has effected any transaction in the Common Units within the past sixty days.

(d)                            The right to receive dividends from, or the proceeds from the sale of, all Common Units reported in this Statement as beneficially owned by the Reporting Person is held by the Reporting Person. Each of Special Opportunities, Special Opportunities PIV-A, Special Opportunities PIV-B, YSOF Piv-B, Domestic Holdings and YGA disclaims beneficial ownership of all Common Units reported in this Statement pursuant to Rule 13d-4 under the Exchange Act.

Except as set forth in this Item 5(d), to the knowledge of the Reporting Person, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any other Common Units deemed to be beneficially owned by the Reporting Person.

(e)                            Not applicable.

The information provided in response to Item 3 and Item 4 above is incorporated herein by reference.

The exhibits listed on the Index of Exhibits of this Statement are filed herewith.

SIGNATURE

After reasonable inquiry and to the best of the knowledge and belief of the undersigned Reporting Person, the undersigned Reporting Person certifies that the information set forth in this statement with respect to it is true, complete and correct.

Dated:  June 28, 2012

INDEX OF EXHIBITS

EXHIBIT 1

DIRECTORS AND EXECUTIVE OFFICERS OF YORK CAPITAL MANAGEMENT GLOBAL ADVISORS, LLC.

EXHIBIT 6

Execution Copy

PLEDGE AGREEMENT

This Pledge Agreement dated as of May 9, 2012 (this “Agreement”), is made by each of the parties listed in Schedule 1 hereto (each a “Pledgor,” and together, the “Pledgors”) in favor of PL Manufacturing LLC, a Delaware limited liability company (the “Collateral Agent”).

INTRODUCTION

The Collateral Agent has entered into an Omnibus Agreement (the “Omnibus Agreement”) with PetroLogistics LP (the “Partnership”), PetroLogistics GP LLC (the “General Partner”), Propylene Holdings LLC, (“Propylene Holdings”), and PL Propylene LLC (“PL Propylene”) as of the date hereof. The above-named entities and individual are sometimes referred to herein as a “party” and collectively as the “parties.”

Pursuant to the Omnibus Agreement, the Partnership allocated to the General Partner all of its rights and obligations under certain propane swap transactions (the “Hedging Arrangements”).

The Omnibus Agreement contemplates that the Pledgors will pledge to the Collateral Agent common units representing limited partner interests in the Partnership (“Common Units”), distributions on which shall be paid by PL Manufacturing to the General Partner as the primary means for funding any contributions that shall be made by the General Partner to the Partnership pursuant to the Omnibus Agreement

The Pledgors desire to grant certain security interests to the Collateral Agent in the Common Units owned by them, in order to secure the payment and performance of the Collateral Agent’s obligations under the Omnibus Agreement.

Therefore, in consideration of the foregoing and for other good and valuable consideration received, the parties hereby agree as follows:

SECTION 1.
DEFINITIONS

1.1 Defined Terms. Capitalized terms used herein but not defined herein shall have the meanings specified in the Omnibus Agreement. As used herein, the following terms shall have the following meanings:

“Agreement” means this Agreement, as modified from time to time.

“Collateral” means all of each Pledgor’s present and future rights, titles and interests in the Common Units owned by the Pledgor as of the date of this Agreement, as set forth in Schedule 1 hereto, including any quarterly distributions paid by the Partnership in respect of such Common Units, subject to the limitations set forth in Section 2.2 of this Agreement, provided that such Common Units have not been released from this Agreement pursuant to Section 2.3 of this Agreement. In the event that Collateral is released from this Pledge Agreement, it shall no longer constitute Collateral hereunder.

“Collateral Agent” has the meaning specified in the preamble hereto.

“Omnibus Agreement” has the meaning specified in the preamble hereto.

“Pledgor” has the meaning specified in the preamble hereto.

“UCC” means the Uniform Commercial Code as in effect in the State of New York from time to time.

SECTION 2.
GRANTING AND PERFECTION

Each Pledgor represents, warrants, and agrees with Collateral Agent as follows:

2.1 Grant of Security Interest. Such Pledgor hereby grants to Collateral Agent, for the benefit of the parties to the Omnibus Agreement, a security interest in the Collateral to secure the payment and performance of the obligations of the Collateral Agent, Propylene Holdings and the General Partner under the Omnibus Agreement. To the extent that the Collateral is not subject to the UCC, such Pledgor collaterally assigns such Collateral to Collateral Agent to secure the payment and performance of the obligations under the Omnibus Agreement to the full extent that such a collateral assignment is possible under applicable law.

2.2 Rights Retained by Pledgor. Notwithstanding the pledge in Section 2.1:

(a) Such Pledgor shall be entitled to receive and retain any quarterly cash distributions in respect of the Collateral owned by such Pledgor to the extent that such quarterly cash distribution exceeds the Quarterly Hedge Payment Obligation for such quarter and to the extent that any such amounts are not held by the Collateral Agent to establish, maintain or augment the Cash Reserve;

(b) Such Pledgor shall be entitled to exercise any voting and other consensual rights pertaining to the Collateral owned by such Pledgor;

(c) In the event of the liquidation of a Pledgor’s Collateral, such Pledgor shall be entitled to excess proceeds as provided in Section 3.2 hereof; and

(d) Upon the termination of the Omnibus Agreement, such Pledgor shall be entitled to the return of its pro-rata share of the Cash Reserve, if any.

2.3 Rights Transferred to Collateral Agent. In addition to the rights granted in Section 3 hereof, until the termination or expiration of the Omnibus Agreement:

(a) The Collateral Agent shall be entitled to receive the quarterly distributions on any Collateral and, to the extent necessary, pay such amount to the General Partner to fund the GP Capital Contribution; and

(b) The Collateral Agent retain such amount in order to establish, maintain or augment a Cash Reserve, as provided in the Omnibus Agreement.

2.3 Release of Pledged Units. From time to time, the Collateral Agent may release Pledged Units from this Agreement, provided, however, that the market value of all Pledged Units and all PL Manufacturing Units must at all times be equal to or greater than ten (10) times the mark-to-market value of the Hedging Arrangements. If, after the Collateral Agent has released Common Units pursuant to this Section 2.3, the mark-to-market value of the Hedging Arrangements exceeds 1/10th of the value of all then Pledged Units and PL Manufacturing Units, the Collateral Agent shall require the Pledgors to re- pledge a number of Common Units such that the market value of all Pledged Units and PL Manufacturing Units is equal to or greater than ten (10) times the mark-to-market value of the Hedging Arrangements, provided, however, that no Pledgor shall be required to pledge a number of Common Units that exceeds its pro rata share of the Initially Pledged Units, and the number of PL Manufacturing Units that are subject to this Agreement shall not exceed the Initial PL Manufacturing Units.

SECTION 3.
REMEDIES

3.1 Remedies. In the event that the Quarterly Hedge Payment Obligation for any quarter exceeds the sum of (1) the total quarterly distribution that is paid on the Collateral of all Pledgors and the PL Manufacturing Units in respect of such quarter, and (2) the Cash Reserve, each Pledgor shall have the right to fund its pro rata share of the shortfall by making a cash payment to the Collateral Agent, which the Collateral Agent shall pay to the General Partner to fund a portion of the GP Capital Contribution. If any Pledgor fails to so fund its pro rata portion of any such shortfall:

(a) Collateral Agent may exercise all the rights and remedies of a secured party under the UCC.

(b) Collateral Agent may foreclose on any Collateral in any manner permitted by the courts of or in the State of New York or the state in which any Collateral is located or deemed located.

(c) Collateral Agent may sell any Collateral at one or more public or private sales, at the office of Collateral Agent or elsewhere, for cash, upon such terms as Collateral Agent deems appropriate. In the event that any sale hereunder is not completed or is defective in the opinion of Collateral Agent, Collateral Agent shall have the right to cause subsequent sales to be made hereunder. Collateral Agent may delegate to any agent the performance of any acts in connection with any sale hereunder, including the sending of notices and the conduct of the sale. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.

(d) Collateral Agent may, in its discretion, if in its reasonable opinion there is any question that a public sale or distribution of any Collateral will violate any state or federal securities law, to the extent permitted by law, (A) offer and sell membership interests privately to purchasers who will agree to take them for investment purposes and not with a view to distribution, or (B) if lawful, sell such membership interests in an intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as amended, and no sale so made in good faith by Collateral Agent shall be deemed to be not “commercially reasonable” because so made. In addition, each party hereto shall fully comply with applicable securities laws and take such actions as Collateral Agent may reasonably request to permit Collateral Agent to sell or otherwise dispose of any Collateral in compliance with such laws. Collateral Agent shall be under no obligation to delay a sale of any Collateral for a period of time necessary to permit the issuer of any securities contained therein to register such securities under the federal securities laws or under applicable state securities laws.

3.2 Application of Proceeds. Cash received by Collateral Agent from the sale of any Collateral hereunder shall be (a) paid to the General Partner to fund a portion of the GP Capital Contribution or, (b) to the extent that such amount exceeds the Pledgor’s pro rata share of the Quarterly Hedge Payment Obligation, paid to the Pledgor.

SECTION 4.
MISCELLANEOUS

4.1 Amendments. No amendment, waiver, or other modification in respect of this Agreement will be effective unless in writing (including a writing evidenced by an electronic transmission) and executed by the party to be bound thereby.

4.2 Counterparts. This Agreement (and each amendment, waiver, or modification of it) may be executed and delivered in counterparts (including by electronic transmission), each of which will be deemed an original.

5.6 Governing Law. This Agreement shall be subject to and governed by the laws of the State of New York, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.

5.7 Transfer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. Neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by any Pledgor without the prior written consent of Collateral Agent, but Collateral Agent may transfer this Agreement without the consent of any Pledgor. Any purported transfer that is not in compliance with this Section will be void.

5.8 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

5.9 Termination; Releases of Liens.

(a) This Agreement shall remain in force until the Hedging Arrangements expire or are terminated. Upon the expiration or termination of the Hedging Arrangements, the Collateral Agent shall distribute the Cash Reserve, if any, and all remaining Collateral to the Pledgors.

(b) If any of the Collateral shall be sold, transferred, or otherwise disposed of by any Pledgor in a transaction permitted by the Loan Documents, the security interest created hereby in any Collateral that is so sold, transferred, or otherwise disposed of shall automatically terminate and be released upon the closing of such sale, transfer, or other disposition, and such Collateral shall be sold free and clear of the lien and security interest created hereby.

5.10 Notice. Notices, requests, and demands to or upon Collateral Agent or any Pledgor hereunder shall be effected in the manner set forth in the Omnibus Agreement

(signatures follow)

IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first written above.