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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
BUCKEYE PARTNERS, L.P.
(Name of Registrant as Specified in its Charter)
BUCKEYE PARTNERS, L.P.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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[BUCKEYE LOGO AND LETTERHEAD]
February 25, 1998
Dear Unitholder:
As we previously reported to you, 1997 was an excellent year for the
Partnership. We are determined to maintain this positive momentum into 1998 and
the years ahead.
One of our principal objectives for 1998 is to better position the
Partnership to participate in an increasing competitive environment for oil
pipelines. In the Consent Solicitation materials that are enclosed, we propose
several amendments to the Buckeye Partnership Agreement that will eliminate
restrictions on our ability to issue additional LP Units, incur debt and spend
capital. These amendments will provide the Partnership with the financial
flexibility to pursue growth and expansion opportunities in a timely and cost-
effective manner. These amendments will also make our Partnership Agreement
comparable to the partnership agreements of other publicly traded petroleum
products pipeline partnerships, none of which have similar restrictions on the
issuance of equity or debt or on capital spending.
We believe that these amendments are critical to our efforts to generate
increased cash flow for the Partnership and to build long-term value for our
Unitholders. The Board of Directors of the General Partner has recommended
unanimously that you approve the Proposed Amendments.
We urge you to read the Consent Solicitation materials carefully. Your
vote is extremely important. We must receive the affirmative consent of at
least two-thirds of the Unitholders for the amendments to be approved.
Thank you for your support. We look forward to the opportunity to continue
to build long-term value for our Unitholders.
Sincerely,
A. W. Martinelli
Chairman and Chief Executive Officer
Buckeye Management Company,
as General Partner
Enclosure
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[BUCKEYE LOGO AND LETTERHEAD]
March ____, 1998
NOTICE OF
CONSENT SOLICITATION
To our Unitholders:
We are soliciting your consent to amend certain provisions of the Amended
and Restated Agreement of Limited Partnership, dated as of December 23, 1986, as
amended and restated through February 25, 1998 (the "Partnership Agreement"), of
BUCKEYE PARTNERS, L.P., a Delaware limited partnership (the "Partnership").
We are proposing three amendments (the "Proposed Amendments") that require
the approval of the limited partners of the Partnership ("Unitholders"). The
Proposed Amendments would:
(1) remove the limitation on the number of limited partnership units
of the Partnership ("LP Units") that may be issued without the approval of
the Unitholders;
(2) eliminate the restrictions on the amount of debt that may be
incurred by the Partnership or its operating limited partnerships (the
"Operating Partnerships"); and
(3) remove the limitation on the amount of capital expenditures that
may be made by the Partnership and the Operating Partnerships in any
calendar year.
The Proposed Amendments are described in more detail in the accompanying Consent
Solicitation Statement.
Unitholders of record at the close of business on ____________, 1998, are
entitled to receive notice of and to vote in the Consent Solicitation. We are
asking the Unitholders to consider and vote on the Proposed Amendments as a
single proposal that will require the approval of Unitholders holding two-thirds
of the limited partnership units ("LP Units") outstanding. THE BOARD OF
DIRECTORS OF THE GENERAL PARTNER HAS VOTED UNANIMOUSLY TO RECOMMEND THAT THE
UNITHOLDERS VOTE FOR THE PROPOSED AMENDMENTS.
The Proposed Amendments can only be adopted following the approval by two-
thirds vote of the Unitholders. YOUR VOTE IS IMPORTANT. Failure to return the
enclosed Consent form will have the same effect as a vote against the Proposed
Amendments. We encourage you, therefore, to review the enclosed Consent
Solicitation materials and to complete, date, sign and mail your Consent in the
enclosed postage-paid envelope, or forward the enclosed letter of instruction to
your broker or nominee, as soon as possible.
This Consent Solicitation will expire at 5:00 p.m., eastern standard time,
on [May __, 1998,] (the "Expiration Date"). The Consent Solicitation may be
extended by the General Partner for a specified period of time or on a daily
basis until the Consents necessary to adopt the Proposed Amendments have been
received. You may revoke your Consent at any time up to the Expiration Date.
Stephen C. Muther
Secretary
Buckeye Management Company,
as General Partner
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[LOGO] BUCKEYE PARTNERS, L.P.
CONSENT SOLICITATION STATEMENT
TO APPROVE PARTNERSHIP AGREEMENT AMENDMENTS
Buckeye Partners, L.P. (the "Partnership") is furnishing this Consent
Solicitation Statement to the holders of the Partnership's limited partnership
units (the "Unitholders") as of __________, 1998, in connection with the
solicitation (the "Solicitation") of the consent (the "Consent") of the
Unitholders to approve certain amendments (the "Proposed Amendments") to the
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"). The Proposed Amendments have been approved
unanimously by the Board of Directors of Buckeye Management Company, the
Partnership's general partner (the "General Partner"), as being in the best
interests of the Partnership and the Unitholders.
The Proposed Amendments will
(1) remove the limitation on the number of limited partnership units of the
Partnership ("LP Units") that may be issued without the approval of the
Unitholders;
(2) eliminate the restrictions on the amount of debt that can be incurred by
the Partnership or its four operating limited partnerships (the "Operating
Partnerships"); and
(3) remove the limitations on the amount of capital expenditures that can be
made by the Partnership and the Operating Partnerships in any calendar year.
The Proposed Amendments will be considered and voted on by Unitholders as a
single proposal. A copy of the Partnership Agreement containing the Proposed
Amendments is attached to this Consent Solicitation Statement as Appendix A.
Only Unitholders of record at the close of business on ____________, 1998 (the
"Record Date"), are entitled to vote on the Proposed Amendments. Adoption of
the Proposed Amendments requires the affirmative vote of Unitholders holding
two-thirds of the LP Units outstanding.
THE BOARD OF DIRECTORS OF THE GENERAL PARTNER UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THE PROPOSED AMENDMENTS.
This Consent Solicitation will expire at 5:00 p.m., eastern standard time, on
[MAY __, 1998,] (the "Expiration Date"). The General Partner may extend this
Consent Solicitation for a specified period of time or on a daily basis until
the Consents necessary to adopt the Proposed Amendments have been received. You
may revoke your consent at any time before the Expiration Date.
If you have any questions about this Consent Solicitation Statement, please
call 1-800-628-8509.
This Consent Solicitation Statement is dated March __, 1998. The Consent
Solicitation Statement and the related form of Consent are being mailed to
Unitholders on or about March ___, 1998.
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QUESTIONS AND ANSWERS
ABOUT THE PROPOSED AMENDMENTS
The definitions of capitalized words used in the following Questions and Answers
appear on the first page of the Consent Solicitation Statement in the Summary
section that starts on page 5.
Q. WHAT ARE THE PROPOSED AMENDMENTS?
A. The Proposed Amendments will
(1) remove the limitation on the number of LP Units that may be issued
without the approval of the Unitholders;
(2) eliminate the restrictions on the amount of debt that can be incurred by
the Partnership or the Operating Partnerships; and
(3) remove the limitation on the amount of capital expenditures that can be
made by the Partnership and the Operating Partnerships in any calendar year.
Q. WHAT IS THE PURPOSE OF THE PROPOSED AMENDMENTS?
A. The Proposed Amendments will eliminate limitations on issuing additional LP
Units, borrowing funds and making capital expenditures that could otherwise
impair the Partnership's ability to take advantage of expansion and growth
opportunities and interfere with the Partnership's ability to raise capital
in the most efficient and cost-effective manner.
Q. WHAT ARE THE BENEFITS OF THE PROPOSED AMENDMENTS TO THE PARTNERSHIP?
A. The Partnership needs the flexibility to finance expansion and growth
opportunities in the most efficient and cost-effective manner given the
conditions that exist in the financial markets at the time those
opportunities arise. The Partnership also needs to be able to adjust its
capital structure from time to time to ensure continued availability of
capital at competitive rates. The existing restrictions on issuing
additional LP Units, borrowing funds and making capital expenditures
potentially impair the Partnership's ability to achieve these objectives. The
Proposed Amendments will also conform the Partnership Agreement with the
partnership agreements of other publicly traded petroleum products pipelines,
none of which have similar restrictions on the issuance of debt or equity or
on capital spending.
Q. WHAT ARE THE BENEFITS OF THE PROPOSED AMENDMENTS TO THE UNITHOLDERS?
A. The General Partner believes the Proposed Amendments will enhance the
Partnership's ability to remain competitive and to pursue expansion and other
opportunities that provide the prospect of increasing net income and cash
flow of the Partnership, and ultimately the level of cash distributions paid
to the Unitholders.
Q. WHAT ARE THE COSTS TO THE PARTNERSHIP AND THE UNITHOLDERS?
A. The General Partner believes the Proposed Amendments will not result in any
costs to the Partnership or the Unitholders, other than the costs of this
Consent Solicitation.
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TABLE OF CONTENTS
Page
----
SUMMARY................................................ 4
BACKGROUND AND REASONS FOR THE
AMENDMENTS............................................ 6
The Partnership........................................ 6
The General Partner and the Manager.................... 6
Consideration of Proposed Amendments to the
Partnership Agreement................................. 6
Text of the Amended and Restated Partnership
Agreement............................................. 8
Vote Required for Approval of the Proposed
Amendments............................................ 9
THE SOLICITATION....................................... 10
Voting Securities, Record Date and
Outstanding LP Units.................................. 10
Consent and Revocation of Consent...................... 10
Required Vote.......................................... 10
Solicitation of Consents............................... 11
No Appraisal Rights.................................... 11
Notice to Unitholders.................................. 11
BENEFITS OF THE PROPOSED
AMENDMENTS TO THE GENERAL PARTNER -
CONFLICTS OF INTEREST................................. 12
FEDERAL INCOME TAX CONSEQUENCES
OF THE PROPOSED AMENDMENTS............................ 12
PRICE RANGE OF LP UNITS AND
DISTRIBUTIONS......................................... 13
DESCRIPTION OF THE LP UNITS............................ 14
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS ANDMANAGEMENT....................... 15
WHERE YOU CAN FIND MORE
INFORMATION........................................... 16
APPENDIX A -
PARTNERSHIP AGREEMENT............................ A-1
APPENDIX B -
FORM OF CONSENT.................................. B-1
3
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SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
Proposed Amendments fully and for a more complete description of the specific
steps involved, you should read this entire document carefully (including its
appendices) and the documents that have been incorporated by reference in this
Consent Solicitation Statement. See "Where You Can Find More Information." (See
page 18).
THE PARTNERSHIP (SEE PAGE 6)
Buckeye Partners, L.P.
3900 Hamilton Boulevard
Allentown, Pennsylvania 18103
(610) 770-4000
The Partnership provides pipeline transportation service for refined petroleum
products, with approximately 3,500 miles of pipeline serving ten states. The
Partnership conducts its business through four operating limited partnerships
(the "Operating Partnerships").
THE GENERAL PARTNER AND THE MANAGER
(SEE PAGE 6)
The General Partner of the Partnership is Buckeye Management Company. The
general partner and manager of the Operating Partnerships is Buckeye Pipe Line
Company (the "Manager"), which is a wholly-owned subsidiary of the General
Partner.
THE PROPOSED AMENDMENTS (SEE PAGE 6)
The Proposed Amendments would amend the Partnership Agreement to:
(1) remove the limitation on the number of LP Units that may be issued by the
General Partner without the approval of the Unitholders;
(2) eliminate the restrictions on the amount of debt that can be incurred by
the Partnership or the Operating Partnerships; and
(3) remove the limitation on the amount of capital expenditures that can be
made by the Partnership and the Operating Partnerships in any calendar year.
The Board of Directors of the General Partner believes that the Proposed
Amendments are in your best interests and recommends that you vote FOR the
Proposed Amendments.
The Proposed Amendments will be adopted and the Partnership Agreement will be
amended only if the holders of two-thirds of the outstanding LP Units approve
the Proposed Amendments.
BENEFITS OF THE PROPOSED AMENDMENTS TO THE GENERAL PARTNER - CONFLICTS OF
INTEREST
(SEE PAGE 12)
The General Partner believes that the adoption of the Proposed Amendments
creates no potential or actual conflicts of interest.
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED AMENDMENTS (SEE PAGE 12)
Counsel to the General Partner will render its opinion that the Proposed
Amendments to the Partnership Agreement will not result in the loss of limited
liability of any limited partner or cause the Partnership or any Operating
Partnership to be treated as a corporation for federal income tax purposes.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended, that are
subject to risks and uncertainties.
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Forward-looking statements include certain information relating to the financing
of possible future expansion and growth opportunities for the Partnership's
operations and the Partnership's financing alternatives generally. Forward-
looking statements also include information in this Consent Solicitation
Statement where statements are preceded by, followed by or include the words
"projects," "estimates," "believes," "expects," "assumes," "anticipates" or
similar expressions. For such statements the Partnership claims the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of
various factors, including, without limitation, those discussed elsewhere in
this Consent Solicitation Statement.
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BACKGROUND AND REASONS FOR THE AMENDMENTS
THE PARTNERSHIP
The Partnership provides pipeline transportation service for refined
petroleum products. The Partnership owns and operates one of the largest and
oldest independent refined petroleum products pipeline systems in the United
States, with approximately 3,500 miles of pipeline serving ten states. The
Partnership also provides bulk storage service through leased facilities with an
aggregate capacity of 257,000 barrels of refined petroleum products. The
Partnership conducts all its operations through four subsidiary limited
partnerships (the "Operating Partnerships"). The Partnership owns a 99% limited
partnership interest in each of the Operating Partnerships.
The Partnership is a Delaware limited partnership formed in 1986 pursuant
to the Amended and Restated Agreement of Limited Partnership, dated as of
December 23, 1986, as amended (the "Partnership Agreement"). Limited partnership
interests in the Partnership are represented by publicly traded LP Units (the
"LP Units") and the limited partners are Unitholders (the "Unitholders").
THE GENERAL PARTNER AND THE MANAGER
The sole general partner of the Partnership is Buckeye Management Company
(the "General Partner"). The General Partner owns approximately a 1% general
partnership interest in the Partnership. The General Partner is a wholly-owned
subsidiary of Glenmoor, Ltd. ("Glenmoor"). A wholly-owned subsidiary of the
General Partner, Buckeye Pipe Line Company (the "Manager"), serves as the sole
general partner and manager of each Operating Partnership. The Manager owns
approximately a 1% general partnership interest in each of the Operating
Partnerships.
CONSIDERATION OF PROPOSED AMENDMENTS TO THE PARTNERSHIP AGREEMENT
REMOVAL OF THE LIMITATION ON THE ISSUANCE OF LP UNITS
General
Section 17.1 of the Partnership Agreement currently provides that, without
the prior approval of a two-thirds vote of the Unitholders, the General Partner
will not cause the Partnership to issue more than 9,600,000 additional LP Units
(after giving effect to the two-for-one split of the LP Units effective January
29, 1998) or issue any class or series of LP Units having preferences or other
special or senior rights over the LP Units. After subtracting the number of LP
Units issued to the Buckeye Pipe Line Services Company Employee Stock Ownership
Plan (the "ESOP") and the LP Units reserved for issuance under the Unit Option
and Distribution Equivalent Plan, the General Partner presently could issue up
to 6,306,854 additional LP Units without Unitholder approval.
The amendment would not eliminate the restrictions currently contained in
Section 17.1 prohibiting the issuance of LP Units having preferences or other
special or senior rights over the outstanding LP Units. Additionally, the
amendment would not affect the provisions of Section 17.1 (b) which prevents the
Partnership from issuing LP Units to the General Partner for consideration less
than "Net Agreed Value" (as defined in the Partnership Agreement), unless
approved by a two-thirds vote of the Unitholders.
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Proposal
Section 17.1 of the Partnership Agreement will be amended to remove the
limitation on the number of additional LP Units that may be issued without the
approval of the Unitholders.
Factors Considered by the Board
The Board believes that the removal of the limitation will provide the
General Partner with the flexibility to consider all available financing
alternatives in pursuing potential growth opportunities for the Partnership and
will facilitate raising capital for pipeline expansion, acquisitions or other
Partnership purposes. The Board believes it is important for the General
Partner to have the ability to consider all available methods of raising
capital, including the issuance of additional LP Units. The Board noted that
under applicable legal principles, the issuance of additional LP Units must be
for adequate consideration. The Board also noted that none of the other
publicly traded petroleum pipeline partnerships have restrictions on the
issuance of additional limited partnership interests in their partnership
agreements.
Finally, the Board considered that the General Partner has managed the
pipeline system in a prudent and responsible manner since 1986 when the
Partnership was formed. The General Partner has demonstrated a fiscally
conservative approach in connection with capital projects and expansion
opportunities. The Board determined, therefore, that providing the General
Partner with the flexibility to issue additional LP Units, without the present
restriction, would be in the best long-term interests of the Partnership and its
Unitholders.
ELIMINATION OF THE RESTRICTIONS ON INDEBTEDNESS
General
Section 17.2 of the Partnership Agreement currently provides that, without
the approval of a two-thirds vote of the Unitholders, the General Partner may
not permit the Partnership or the Operating Partnerships to incur indebtedness
for borrowed money, except for (1) senior notes issued by Buckeye Pipe Line
Company, L.P., (2) any additional indebtedness of the Operating Partnerships
permitted by the senior note indenture, (3) inter-company indebtedness, and (4)
additional indebtedness in an aggregate consolidated principal amount not to
exceed $25,000,000, plus an amount equal to the aggregate proceeds from the sale
of the additional LP Units.
Proposal
Section 17.2 of the Partnership Agreement will be amended to remove the
limitation on the amount of indebtedness that can be incurred by the Partnership
and the Operating Partnerships.
Factors Considered by the Board
The Board believes that the elimination of the restrictions on the amount
of debt that can be incurred by the Partnership and the Operating Partnership
will provide the General Partner with the flexibility to consider all available
financing alternatives in pursuing potential expansion and growth opportunities
for the Partnership. The current restrictions potentially impair the
Partnership's ability to raise capital for pipeline expansion, acquisitions and
other Partnership purposes in the most cost-effective manner. In certain
circumstances, these restrictions could cause the Partnership to forego such
opportunities or render them economically less attractive to the Partnership.
For example, the current debt restrictions could force the Partnership to raise
capital by issuing additional equity securities when it would be more efficient,
timely and cost-effective, based on conditions in the
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financial markets at the time, to borrow additional funds. Finally, the debt
restrictions may impair the Partnership's ability to adjust the Partnership's
capital structure from time to time to take advantage of market conditions.
The General Partner also considered, as in the case of the equity
restrictions discussed above, that none of the other publicly traded petroleum
pipeline partnerships have similar restrictions with respect to the type and
amount of debt that may be incurred by the Partnership.
REMOVAL OF THE LIMITATION ON CAPITAL EXPENDITURES
General
Section 17.3 of the Partnership Agreement currently provides that the
Partnership and the Operating Partnerships may not make capital expenditures
during any calendar year in excess of 20% of the sum of the Partnership's
consolidated operating income and depreciation and amortization for such year,
except to the extent that, in the good faith opinion of the General Partner,
capital expenditures in excess of such limit are required to sustain or improve
existing operations of the Partnership and the Operating Partnerships. If the
capital expenditure limit is exceeded, the General Partner is obligated to use
its best efforts to finance at least the amount of such excess within six months
through the issuance of additional LP Units not prohibited by Section 17.1 or
additional borrowings not prohibited by Section 17.2
Proposal
Section 17.3 of the Partnership Agreement will be amended to remove the
limitation on the amount of capital expenditures that can be made in any
calendar year.
Factors Considered by the Board
The Board believes that this limitation currently has the effect of
preventing significant asset acquisitions and expansion of the Partnership's
pipeline system. Expenditures relating to acquisitions may be deemed to be
capital expenditures, which, when added to normal sustaining capital
expenditures, may exceed the capital expenditure restriction in any calendar
year. This provision restricts the ability of the Partnership to acquire
additional assets and to make capital investments in the pipeline system that
would be in the best long-term interests of the Partnership and its Unitholders.
AMENDMENT AND RESTATEMENT OF THE PARTNERSHIP AGREEMENT
In connection with the adoption of the Proposed Amendments, the Partnership
Agreement will be amended and restated in its entirety to incorporate the
amendments.
TEXT OF THE AMENDED AND RESTATED PARTNERSHIP AGREEMENT
The full text of the Partnership Agreement, as amended and restated to
include all amendments to date and showing the Proposed Amendments separately,
is attached as Appendix A to this Consent Solicitation Statement. THE
----------
STATEMENTS MADE IN THIS CONSENT SOLICITATION STATEMENT WITH RESPECT TO THE
PROPOSED AMENDMENTS SHOULD BE READ IN CONJUNCTION WITH, AND ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO THE FULL
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TEXT OF THE PARTNERSHIP AGREEMENT ATTACHED AS APPENDIX A TO THIS CONSENT
----------
SOLICITATION STATEMENT.
VOTE REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENTs
Because the Board has determined that the Proposed Amendments will be
presented to the Unitholders as a single proposal, the adoption of the Proposed
Amendments requires the approval of the holders of two-thirds of the outstanding
LP Units. As required by Section 15.3 of the Partnership Agreement, the
Partnership has obtained an opinion of counsel to the General Partner that the
Proposed Amendments will not result in the loss of limited liability of any
Unitholder or result in the Partnership or any Operating Partnership being
taxable as a corporation for federal income tax purposes.
The Proposed Amendments and the subsequent amendment and restatement of the
Partnership Agreement will become effective if approved by the holders of two-
thirds of the outstanding LP Units. THE BOARD OF DIRECTORS OF THE GENERAL
PARTNER UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENTS.
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THE SOLICITATION
VOTING SECURITIES, RECORD DATE AND OUTSTANDING LP UNITS
This Consent Solicitation is being made pursuant to the provisions of
Section 16.4 of the Partnership Agreement and is subject to the conditions in
this Consent Solicitation Statement and the accompanying form of Consent. No
meeting of the Unitholders is contemplated to be held for the purpose of
considering the Proposed Amendments. Only Unitholders who are record holders of
LP Units on the Record Date will be taken into account for the purpose of
determining whether the requisite approval of the Proposed Amendments has been
obtained. Each record holder of a LP Unit has a vote according to his
percentage interest in the Partnership.
On the Record Date, there were a total of 26,731,006 LP Units outstanding,
which were held by approximately 17,500 Unitholders.
CONSENT AND REVOCATION OF CONSENT
The General Partner will accept forms of Consent at any time before the
Expiration Date, which is May __, 1998. The enclosed form of Consent, when
properly completed and returned, will constitute a Unitholder's consent, or the
withholding of consent, to the approval of the Proposed Amendments in accordance
with the instructions contained therein. If a Unitholder executes and returns a
form of Consent and does not specify otherwise, the LP Units represented by such
form of Consent will be voted "for" approval of the Proposed Amendments in
accordance with the recommendation of the General Partner.
A Unitholder who has executed and returned a form of Consent may revoke it
at any time before the Expiration Date by (i) executing and returning a form of
Consent bearing a later date, or (ii) filing written notice of such revocation
with the Secretary of the General Partner stating that the form of Consent is
revoked. Any such written notice or later dated form of Consent should be sent
to the principal executive offices of the Partnership at 3900 Hamilton
Boulevard, Allentown, Pennsylvania 18103, Attention: Stephen C. Muther, Senior
Vice President, General Counsel and Secretary.
REQUIRED VOTE
Pursuant to the Partnership Agreement, the Proposed Amendments require the
approval of holders of two-thirds of the outstanding LP Units as of the close of
business on the Record Date.
Because the approval of holders of two-thirds of the outstanding LP Units
is required to approve the Proposed Amendments, NOT RETURNING THE FORM OF
CONSENT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE PROPOSED AMENDMENTS.
Buckeye Pipe Line Services Company ("Services Company"), which is owned by
the Buckeye Pipe Line Services Company Employee Stock Ownership Plan, owned
2,573,146 LP Units as of February 17, 1998 (approximately 9.6 percent of the LP
Units outstanding). Services Company has advised the General Partner that it
intends to consent, as to the LP Units owned by Services Company, to the
Proposed Amendments. The executive officers and directors of the General
Partner owned 90,680 LP Units (approximately 0.3 percent of the LP Units
outstanding) as of February 17, 1998, and they have advised the Partnership that
they each intend to consent, as to their LP Units, to the Proposed Amendments.
For further information concerning the ownership of LP Units by the General
Partner's affiliates, executive officers and directors, see "Security Ownership
of Certain Beneficial Owners and Management."
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SOLICITATION OF CONSENTS
The cost of soliciting Consents will be borne by the Partnership. To
assist in the solicitation of Consents, the Partnership has engaged D.F. King &
Co., Inc. for a fee of approximately $8,000, plus reasonable out-of-pocket
expenses. In addition, the Partnership will reimburse brokers, banks and other
persons holding LP Units in their names, or in the names of nominees, for their
expenses in sending these Consent Solicitation materials to beneficial owners.
Other than as discussed above, the Partnership has made no arrangements and
has no understanding with any independent dealer, salesman or other person
regarding the solicitation of Consents hereunder, and no person has been
authorized by the Partnership to give any information or to make any
representation in connection with the solicitation of Consents to the Proposed
Amendments, other than those contained herein and, if given or made, such other
information or representations must not be relied upon as having been
authorized. In addition to solicitations by mail, consents may be solicited by
directors, officers and other employees of the General Partner, who will receive
no additional compensation therefor, and by representatives of D.F. King & Co.,
Inc. The delivery of this Consent Solicitation Statement shall not, under any
circumstances, create any implication that the information herein is correct as
of any time subsequent to the date hereof.
NO APPRAISAL RIGHTS
Holders of LP Units who object to the Proposed Amendments and the resulting
changes to the Partnership Agreement will have no appraisal, dissenters' or
similar rights (i.e., the right, instead of receiving LP Units, to seek a
judicial determination of the "fair value" of their LP Units and to compel the
purchase of their LP Units for cash in that amount) under Delaware law or the
Partnership Agreement, nor will such rights be voluntarily accorded to holders
of LP Units by the Partnership. Thus, approval of the Proposed Amendments by
holders of two-thirds of the outstanding LP Units will be binding on all holders
of LP Units, and objecting holders of LP Units will have no alternative other
than selling their LP Units prior to the effective date of the Proposed
Amendments.
NOTICE TO UNITHOLDERS
The General Partner will notify Unitholders of the results of this Consent
Solicitation promptly after the Expiration Date.
YOUR CONSENT IS IMPORTANT, REGARDLESS OF THE NUMBER OF LP UNITS YOU OWN.
ACCORDINGLY, PLEASE COMPLETE, SIGN AND RETURN YOUR CONSENT PROMPTLY.
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<PAGE>
BENEFITS OF THE PROPOSED AMENDMENTS
TO THE GENERAL PARTNER - CONFLICTS OF INTEREST
The General Partner does not believe that adoption of the Proposed
Amendments and the amendment and restatement of the Partnership Agreement will
create any potential or actual conflicts of interest with the General Partner.
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED AMENDMENTS
At the time of the original issuance of the LP Units, and, based upon
certain representations of the General Partner, counsel to the Partnership
rendered its opinion that under then current law and regulations, which are
subject to change, the Partnership and each Operating Partnership would be
classified as partnerships for federal income tax purposes. Upon the adoption
of the Proposed Amendments and based upon certain representations of the General
Partner, Morgan, Lewis & Bockius LLP, counsel to the General Partner
("Counsel"), will deliver an opinion to the Partnership that the Proposed
Amendments will not result in the loss of limited liability of any limited
partner or result in the Partnership or any Operating Partnership being treated
as an association taxable as a corporation for federal income tax purposes.
12
<PAGE>
PRICE RANGE OF LP UNITS AND DISTRIBUTIONS
The LP Units of the Partnership are listed and traded principally on the
New York Stock Exchange under the symbol "BPL." The following table presents
for the periods indicated the cash distributions declared on LP Units and the
high and low sales prices of the LP Units, as reported on the New York Stock
Exchange Composite Tape.
<TABLE>
<CAPTION>
PRICE RANGE /1/
-----------------
HIGH LOW CASH DISTRIBUTIONS /1/
-------- ------ ----------------------
<S> <C> <C> <C>
1995:
First quarter........................ $18.50 $16.00 $ 0.35
Second quarter....................... 18.00 15.00 0.35
Third quarter........................ 18.12 16.93 0.35
Fourth quarter....................... 18.37 16.81 0.35
1996:
First quarter........................ $19.88 $17.13 $0.375
Second quarter....................... 19.44 18.63 0.375
Third quarter........................ 19.81 18.81 0.375
Fourth quarter....................... 21.44 19.19 0.375
1997:
First quarter........................ $22.94 $20.13 $0.375
Second quarter....................... 22.63 21.25 $0.375
Third quarter........................ 26.75 22.56 $0.440
Fourth quarter....................... 30.00 24.69 $0.525
1998:
First quarter (through , 1998).. $0.525
</TABLE>
The closing price of the LP Units on the New York Stock Exchange on March
__, 1998, the most recent available price prior to mailing this Consent
Solicitation Statement, was $_________________ per LP Unit.
In general, the Partnership makes quarterly cash distributions of
substantially all of its available cash less permitted retentions. On January
20, 1998, the General Partner announced that its Board of Directors unanimously
approved a two-for-one split of LP Units of the Partnership, distributable to
all Unitholders of record at the close of business on January 29, 1998. On
February 5, 1998, the Partnership declared a regular quarterly cash distribution
of $0.525 per LP Unit payable on February 27, 1998.
- ------------------------
/1/ All prices for LP Units and cash distributions have been adjusted for the
two-for-one split of LP Units, which was effective on January 29, 1998
13
<PAGE>
DESCRIPTION OF THE LP UNITS
As of February 17, 1998, there are issued and outstanding 26,731,006 LP
Units representing an aggregate of approximately 99% limited partnership
interest in the Partnership. The LP Units and the 243,914 GP Units generally
participate pro rata in the Partnership's income, gains, losses, deductions,
credits and distributions.
The General Partner has the authority to issue additional LP Units, subject
to certain restrictions set forth in the Partnership Agreement, which is
attached as Appendix A to this Consent Solicitation Statement. The Partnership
----------
has a Unit Option and Distribution Equivalent Plan which authorizes the granting
of options to purchase up to 720,000 LP Units to selected employees of the
General Partner and the Manager. At February 17, 1998, there were 211,740 LP
Units issuable upon the exercise of options granted under the Plan.
In the event of a liquidation, dissolution and winding up of the
Partnership, the LP Units, along with the GP Units, will be entitled to receive
pro rata, to the extent of positive balances in their respective capital
accounts, any assets remaining after satisfaction of Partnership liabilities and
establishment of reasonable reserves.
The LP Units are registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Partnership is subject to the reporting
and proxy solicitation requirements of the Exchange Act and the rules and
regulations promulgated thereunder.
The Partnership has issued certificates ("LP Certificates") to evidence LP
Units. The LP Units are freely transferable by assignment of LP Certificates
except as restricted by federal or state securities laws. The Partnership is
entitled to treat the record holder of the LP Certificates as the owner for all
purposes.
No person is entitled to preemptive rights in respect of issuances of
securities by the Partnership.
The transfer agent and registrar for the LP Units is First Chicago Trust
Company of New York.
For additional description of the rights of Unitholders, see the full text
of the Partnership Agreement, as amended and restated to date, attached as
Appendix A to this Consent Solicitation Statement.
- ----------
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
No person or group, other than the Buckeye Pipe Line Services Company, is
known to be the beneficial owner of more than 5% of the LP Units as of February
17, 1998.
The following table sets forth certain information, as of February 17,
1998, concerning the beneficial ownership of LP Units by each director and
executive officer of the General Partner, and by all directors and executive
officers of the General Partner and the Manager as a group. Such information is
based on data furnished by the persons named. Based on information furnished to
the General Partner by such persons, no director or executive officer of the
General Partner or the Manager owned beneficially, as of February 17, 1998, more
than 1% of any class of equity securities of the Partnership or any of its
subsidiaries outstanding at that date.
The ownership information presented in the following table reflects the
two-for-one split of LP Units of the Partnership, which was effective at the
close of business on January 29, 1998.
NAME NUMBER OF LP UNITS(1)
---- ---------------------
Brian F. Billings...................................... 15,000(2)
Michael P. Epperly..................................... 80(2)
Neil M. Hahl........................................... 2,000(2)
Edward F. Kosnik....................................... 10,000(2)
Alfred W. Martinelli................................... 9,000(2)
Stephen C. Muther...................................... 9,400
Jonathan O'Herron...................................... 14,800
William C. Pierce...................................... 1,600(2)
Steven C. Ramsey....................................... 1,600(2)
William H. Shea, Jr.................................... 4,200(2)
Ernest R. Varalli...................................... 13,000(2)
C. Richard Wilson...................................... 5,000
Robert H. Young........................................ 5,000
All directors and executive officers as a group
(consisting of 14 persons, including those
named above).......................................... 90,680
__________
(1) Unless otherwise indicated, the persons named above have sole voting and
investment power over the LP Units reported.
(2) The LP Units owned by the persons indicated have shared voting and
investment power with their respective spouses.
15
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The Partnership files annual, quarterly and special reports and other
information with the Securities and Exchange Commission ("SEC"). These filings
are also available to the public at the SEC, from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
The SEC allows the Partnership to "incorporate by reference," which means
that important information may be disclosed to you by referring you to another
document filed separately by the Partnership with the SEC. The information
incorporated by reference is considered to be part of this Consent Solicitation
Statement, except for any information superseded by information in this Consent
Solicitation Statement. This Consent Solicitation Statement incorporates by
reference the documents set forth below that the Partnership has previously
filed with the SEC. These documents contain important information about the
Partnership and its finances.
SEC FILING PERIOD
---------- ------
Annual Report on Form 10-K Year ended December 31, 1997
The Partnership is also incorporating by reference additional documents
that are filed with the SEC between the date of this Consent Solicitation
Statement and the Expiration Date.
If you are a Unitholder, the Partnership may have already sent you some of
the documents incorporated by reference, but you can obtain any of them through
the Partnership or the SEC. A Unitholder may obtain documents incorporated by
reference without charge by calling or writing to the attention of Stephen C.
Muther, Senior Vice President, General Counsel and Secretary, at the following
address:
Buckeye Pipe Line Company
3900 Hamilton Boulevard
Allentown, PA 18103
Tel: (610) 770-4000
If you would like to request documents from the Partnership, please do so
by __________, 1998, to receive them before the Expiration Date.
PLEASE NOTE:
Attached as Appendix A is a copy of the Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended and restated through February
25, 1998, marked with traditional blacklining marks to show the Proposed
Amendments.
The blacklining shows text proposed to be deleted with a line through it
and the proposed new text underlined.
16
<PAGE>
APPENDIX A
================================================================================
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
BUCKEYE PARTNERS, L.P.
(As Amended and Restated Through _________, 1998)
================================================================================
A-1
<PAGE>
BUCKEYE PARTNERS, L.P.
TABLE OF CONTENTS
ARTICLE I
Definitions
"Affiliate"............................................................. 1
"Agent"................................................................. 1
"Agreed Value".......................................................... 1
"Agreement"............................................................. 2
"BMC"................................................................... 2
"Business Day".......................................................... 2
"Capital Accounts"...................................................... 2
"Capital Contribution".................................................. 2
"Carrying Value"........................................................ 2
"Certificate of Limited Partnership".................................... 2
"Code".................................................................. 2
"Contributed Property".................................................. 2
"Contributing Partner".................................................. 2
"Delaware Act".......................................................... 2
"Designated Expenses"................................................... 2
"Eighty Percent Interest"............................................... 3
"ESOP".................................................................. 3
"ESOP Loan"............................................................. 3
"Exchange Act".......................................................... 3
"Exchange Agreement".................................................... 3
"General Partner"....................................................... 3
"GP Unit"............................................................... 3
"Incentive Compensation Agreement"...................................... 3
"Indemnitee"............................................................ 4
"Issue Price"........................................................... 4
"Limited Partner"....................................................... 4
"Liquidator"............................................................ 4
"LP Certificate"........................................................ 4
"LP Unit"............................................................... 4
"Majority Interest"..................................................... 4
"Management Agreements"................................................. 4
i
<PAGE>
"Manager"............................................................... 4
"NASDAQ"................................................................ 4
"National Securities Exchange........................................... 4
"Net Agreed Value"...................................................... 4
"Operating Partnership Agreements"...................................... 5
"Operating Partnerships"................................................ 5
"Opinion of Counsel".................................................... 5
"Organizational Limited Partner"........................................ 5
"Partner"............................................................... 5
"Partnership"........................................................... 5
"Partnership Interest".................................................. 5
"Partnership Securities"................................................ 5
"Percentage Interest"................................................... 5
"Person"................................................................ 5
"Pipe Line"............................................................. 5
"Recapture Income"...................................................... 5
"Record Date"........................................................... 5
"Record Holder" or "Holder"............................................. 6
"Restricted Payment".................................................... 6
"Securities Act"........................................................ 6
"Time of Delivery"...................................................... 6
"Transfer Agent"........................................................ 6
"Two-Thirds Interest"................................................... 6
"Unit".................................................................. 6
"Unit Price"............................................................ 6
"Units Register"........................................................ 6
"Unrealized Gain"....................................................... 7
"Unrealized Loss"....................................................... 7
ARTICLE II
Organizational Matters
2.1 Formation.................................................. 7
2.2 Name....................................................... 7
2.3 Principal Office; Registered Office........................ 7
2.4 Power of Attorney.......................................... 8
2.5 Term....................................................... 9
2.6 Organizational Limited Partner............................. 9
2.7 Organizational Certificate................................. 9
ii
<PAGE>
ARTICLE III
Purpose
3.1 Purpose.................................................... 9
ARTICLE IV
Capital Contributions; Purchases Pursuant
to Purchase Agreements; Additional Issuances
4.1 General Partner Contributions............................. 10
4.2 Limited Partner Contributions............................. 10
4.3 Issuances of Additional LP Units and Other Securities..... 10
4.4 No Preemptive Rights...................................... 11
4.5 No Interest............................................... 11
4.6 Loans from Partners....................................... 11
4.7 No Withdrawal............................................. 11
ARTICLE V
Capital Accounts; Distributions
5.1 Capital Accounts.......................................... 11
5.2 Distributions in Respect of Units......................... 14
ARTICLE VI
Income Tax Matters
6.1 Tax Allocations........................................... 14
6.2 Preparation of Tax Returns................................ 15
6.3 Tax Elections............................................. 15
6.4 Tax Controversies......................................... 15
6.5 Withholding............................................... 16
ARTICLE VII
Management and Operation of Business; Indemnification
7.1 Powers of General Partner................................. 16
7.2 Duties of General Partner................................. 17
7.3 Reliance by Third Parties................................. 18
iii
<PAGE>
7.4 Compensation and Reimbursement of the General Partner..... 18
7.5 Purchase or Sale of LP Units and other Partnership
Securities.............................................. 18
7.6 Partnership Funds......................................... 19
7.7 Outside Activities; Contracts with Affiliates; Loans to
or from Affiliates...................................... 19
7.8 Tax Basis and Value Determinations........................ 20
7.9 Resolution of Conflicts of Interest; Standard of Care..... 20
7.10 Other Matters Concerning the General Partner.............. 21
7.11 Limited Liability; Indemnification........................ 21
ARTICLE VIII
Rights and Obligations of Limited Partners
8.1 Limitation of Liability................................... 23
8.2 Management of Business.................................... 23
8.3 Outside Activities........................................ 23
8.4 Return of Capital......................................... 23
8.5 Rights of Limited Partners Relating to the Partnership.... 23
ARTICLE IX
Books, Records, Accounting and Reports
9.1 Books, Records and Accounting............................. 24
9.2 Fiscal Year............................................... 24
9.3 Reports................................................... 24
ARTICLE X
Issuance of LP Certificates; Transfer and Exchange of LP Units
10.1 Initial Issuance of LP Certificates....................... 25
10.2 Registration, Registration of Transfer and Exchange....... 25
10.3 Mutilated, Destroyed, Lost or Stolen LP Certificates...... 26
10.4 Persons Deemed Owners..................................... 26
ARTICLE XI
Transfer of Gp Units
11.1 Transfer of GP Units...................................... 26
11.2 Successor General Partner................................. 27
iv
<PAGE>
ARTICLE XII
Admission of Initial, Substituted and Additional
Limited Partners and Successor General Partner
12.1 Admission of Initial Limited Partners..................... 28
12.2 Admission of Substituted Limited Partners................. 28
12.3 Admission of Successor General Partner.................... 28
12.4 Admission of Additional Limited Partners................. 28
12.5 Amendment of Agreement and Certificate of Limited
Partnership............................................. 29
ARTICLE XIII
Withdrawal or Removal of the General Partner
13.1 Withdrawal or Removal of the General Partner.............. 29
13.2 Sale of Former General Partner's Interest................. 30
ARTICLE XIV
Dissolution and Liquidation
14.1 Dissolution............................................... 30
14.2 Reconstitution............................................ 31
14.3 Liquidation............................................... 31
14.4 Distribution in Kind...................................... 32
14.5 Cancellation of Certificate of Limited Partnership........ 33
14.6 Return of Capital......................................... 33
14.7 Waiver of Partition....................................... 33
ARTICLE XV
Amendment of Partnership Agreement
15.1 Amendments Which May be Adopted Solely by the General
Partner................................................. 33
15.2 Other Amendments.......................................... 34
15.3 Amendment Requirements.................................... 34
v
<PAGE>
ARTICLE XVI
Meetings
16.1 Meetings................................................. 35
16.2 Record Date.............................................. 35
16.3 Conduct of Meeting....................................... 35
16.4 Action Without a Meeting................................. 35
ARTICLE XVII
Certain Restrictions
17.1 Additional Units......................................... 36
17.2 Certain Amendments....................................... 36
17.3 Sale of Assets........................................... 37
17.4 Restricted Payments by General Partner or Manager........ 37
ARTICLE XVIII
Right to Purchase Units
18.1 Right to Purchase Units.................................. 38
18.2 Notice of Election to Purchase........................... 38
18.3 Purchase and Transfer of Units........................... 38
ARTICLE XIX
General Provisions
19.1 Opinions Regarding Taxation as a Partnership............ 39
19.2 Personal Property....................................... 39
19.3 Addresses and Notices................................... 39
19.4 Headings................................................ 39
19.5 Binding Effect.......................................... 39
19.6 Integration............................................. 39
19.7 Waiver.................................................. 39
19.8 Counterparts............................................ 40
19.9 Severability............................................ 40
19.10 Applicable Law.......................................... 40
vi
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
BUCKEYE PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
___________________, 1998, is entered into by and among BUCKEYE MANAGEMENT
COMPANY, a Delaware corporation, PENNSYLVANIA COMPANY, a Delaware corporation,
and the additional Persons that become Partners of the Partnership as provided
herein.
ARTICLE I
Definitions
The following definitions shall for all purposes, unless otherwise clearly
indicated to the contrary, apply to the terms used in this Agreement.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with the Person in question; provided, however, that, for purposes of the
restrictive provisions of Sections 7.6, 7.7 and 7.9, neither the Partnership nor
any of the Operating Partnerships nor any of their respective subsidiaries shall
be deemed to be affiliates of the General Partner. As used herein, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise. For purposes
of this Agreement, Buckeye Pipe Line Services Company, a Pennsylvania
corporation which provides services to the General Partner and the Manager,
shall be deemed an Affiliate of the General Partner.
"Agent" has the meaning specified in Section 2.4
"Agreed Value" of any Contributed Property means the fair market value of
such property as of the time of contribution (or, in the case of cash, the
amount thereof), as determined by the General Partner using such reasonable
method of valuation as it may adopt.
1
<PAGE>
"Agreement" means this amended and restated agreement of limited
partnership, as amended or amended and restated from time to time.
"BMC" means Buckeye Management Company, a Delaware corporation.
"Business Day" means any day other than a Saturday, a Sunday, or a legal
holiday recognized as such by the Government of the United States or the State
of New York.
"Capital Accounts" mean the capital accounts maintained with respect to
Units pursuant to Section 5.1(a).
"Capital Contribution" means any Contributed Property which a Partner
contributes to the Partnership.
"Carrying Value" means (a) with respect to Contributed Property, the
Agreed Value of such property reduced as of the time of determination (but not
below zero) by (i) all depreciation, cost recovery and amortization deductions
charged to the Capital Accounts pursuant to Section 5.1(a) with respect to such
property and (ii) an appropriate amount to reflect any sales, retirements and
other dispositions of assets included in such property, and (b) with respect to
any other property, the adjusted basis of such property for federal income tax
purposes as of the time of determination, in any case as may be adjusted from
time to time pursuant to Section 5.1(f).
"Certificate of Limited Partnership" means the Amended and Restated
Certificate of Limited Partnership filed with the Secretary of State of the
State of Delaware as described in the first sentence of Section 2.7, as amended
or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Contributed Property" means any cash, property or other consideration (in
such form as may be permitted under the Delaware Act) contributed to the
Partnership.
"Contributing Partner" means any Partner contributing Contributed Property
to the Partnership in exchange for Units (or any transferee of such Units).
"Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, and any successor to such Act.
"Designated Expenses" mean all costs and expenses (direct or indirect)
incurred by the General Partner which are directly or indirectly related to the
formation, capitalization, business or activities of the Partnership and the
Operating Partnerships (including, without limitation, expenses, direct or
indirect, reasonably allocated to the General Partner by its Affiliates);
provided, however, that Designated Expenses shall not include (a) any cost or
expense for which the General Partner is not entitled to be reimbursed by reason
of the proviso at the end of Section
2
<PAGE>
7.11(b), (b) severance costs not permitted to be reimbursed pursuant to the
Management Agreements in connection with the withdrawal of the Manager, (c) any
amounts which the General Partner receives as incentive compensation under the
Incentive Compensation Agreement and pays over to officers or employees of the
Manager or (d) any cost or expense for which the General Partner and its
Affiliates are not entitled to be reimbursed pursuant to the terms of the
Exchange Agreement.
"Eighty Percent Interest" means Limited Partners holding an aggregate of
at least 80% of the outstanding LP Units.
"ESOP" means the Buckeye Pipe Line Services Company Employee Stock
Ownership Plan, as amended.
"ESOP Loan" means the loan to the ESOP due March 28, 2011 in the original
principal amount of $62,625,000 and guaranteed by the General Partner and
certain of its Affiliates, and shall include any loans refinancing such loan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor to such statute.
"Exchange Agreement" means the Exchange Agreement, dated as of August 12,
1997, among the General Partner, the Manager, the Partnership and each of the
Operating Partnerships and Glenmoor, Ltd., a Delaware corporation, as amended or
restated from time to time.
"General Partner" means BMC, in its capacity as the general partner of the
Partnership, and any successor to BMC as such general partner.
"GP Unit" means a Partnership Interest issued pursuant to Section 4.1 and
representing a general partner's interest in the Partnership.
"Incentive Compensation Agreement" means the incentive compensation
agreement, dated as of March 22, 1996, between BMC and the Partnership, as
amended or restated from time to time.
3
<PAGE>
"Indemnitee" means the General Partner, any Affiliate of the General
Partner, any Person who is or was a director, officer, employee or agent of the
General Partner or any such Affiliate, or any Person who is or was serving at
the request of the General Partner or any such Affiliate as a director, officer,
partner, trustee, employee or agent of another Person.
"Issue Price" means the price at which a Unit is purchased from the
Partnership.
"Limited Partner" means any limited partner of the Partnership.
"Liquidator" has the meaning specified in Section 14.3.
"LP Certificate" means a certificate issued by the Partnership,
substantially in the form of Annex A to this Agreement, evidencing ownership of
one or more LP Units.
"LP Unit" means a Partnership Interest issued pursuant to Section 4.2 or
4.3 and representing a limited partner's interest in the Partnership.
"Majority Interest" means Limited Partners holding an aggregate of more
than 50% of the outstanding LP Units.
"Management Agreements" mean the management agreements, dated as of
November 18, 1986, pursuant to which the Manager will manage the Operating
Partnerships, in each case as amended or restated from time to time.
"Manager" means Pipe Line, in its capacity as the general partner and
manager of the Operating Partnerships, and any successor to Pipe Line as such
general partner and manager.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Net Agreed Value" means (a) in the case of any Contributed Property, the
Agreed Value of such Contributed Property reduced by any indebtedness either
assumed by the Partnership upon contribution of such Contributed Property or to
which such Contributed Property is subject when contributed, (b) in the case of
any property distributed to a Partner pursuant to Section 5.2,
4
<PAGE>
14.3 or 14.4, the fair market value of such property at the time of such
distribution reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution.
"Operating Partnership Agreements" mean the amended and restated
agreements of limited partnership, dated as of December 23, 1986, governing the
rights and obligations of the partners of the Operating Partnerships and certain
related matters, as amended or restated from time to time.
"Operating Partnerships" mean Buckeye Pipe Line Company, L.P., Buckeye
Pipe Line Company of Michigan, L.P., Buckeye Tank Terminals Company, L.P.,
Everglades Pipe Line Company, L.P., and Laurel Pipe Line Company, L.P., each a
Delaware limited partnership.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel of the General Partner or any of its Affiliates) acceptable to
the General Partner.
"Organizational Limited Partner" means Pennsylvania Company, a Delaware
corporation, acting as the organizational limited partner pursuant to this
Agreement.
"Partner" means the General Partner or a Limited Partner.
"Partnership" means Buckeye Partners, L.P., a Delaware limited
partnership.
"Partnership Interest" means a general partner's or limited partner's
interest in the Partnership.
"Partnership Securities" has the meaning specified in Section 4.3.
"Percentage Interest" means, with respect to any Partner, the number of
Units held by such Partner divided by the number of Units outstanding.
"Person" means an individual, a corporation, a limited liability company,
a partnership, a trust, an unincorporated organization, an association or any
other entity.
"Pipe Line" means Buckeye Pipe Line Company, a Delaware corporation.
"Recapture Income" means any gain recognized by the Partnership upon the
disposition of any asset of the Partnership that is not a capital gain due to
the recapture of certain deductions previously taken with respect to such asset.
"Record Date" means the date established by the General Partner for
determining the identity of Limited Partners entitled (a) to notice of or to
vote at any meeting of Limited Partners, to vote by ballot or approve
Partnership action in writing without a meeting or to exercise rights
5
<PAGE>
in respect of any other lawful action of Limited Partners, or (b) to receive any
report or distribution.
"Record Holder" or "Holder" of (a) any LP Unit means the Person in whose
name such Unit is registered in the Units Register or (b) any GP Unit means the
General Partner.
"Restricted Payment" means any dividend, distribution or other payment in
respect of the capital stock of the General Partner or the Manager, as the case
may be.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor to such statute.
"Time of Delivery" means December 23, 1986.
"Transfer Agent" means the bank, trust company or other Person appointed
from time to time by the Partnership to act as successor transfer agent and
registrar for LP Units.
"Two-Thirds Interest" means Limited Partners holding an aggregate of at
least two-thirds of the outstanding LP Units.
"Unit" means a GP Unit or an LP Unit.
"Unit Price" of a Unit means, as of any date of determination, (a) if such
Unit is one of a class of Units listed or admitted to trading on a National
Securities Exchange, the average of the last reported sales prices per Unit
regular way or, in case no such reported sale takes place on any such day, the
average of the last reported bid and asked prices per Unit regular way, in
either case on the principal National Securities Exchange on which such class of
Units is listed or admitted to trading (or, if such class of Units is listed or
admitted to trading on the New York Stock Exchange, on the New York Stock
Exchange Composite Tape), for the five trading days immediately preceding the
date of determination; (b) if such Unit is not of a class of Units listed or
admitted to trading on a National Securities Exchange but is of a class quoted
by NASDAQ, the average of the last reported sales prices per Unit or, in case no
such reported sale takes place on any such day or in case last reported sales
prices are not quoted by NASDAQ, the average of the last bid and asked prices
per Unit, for the five trading days immediately preceding such date of
determination, as furnished by the National Quotation Bureau Incorporated or
such other nationally recognized quotation service as may be selected by the
General Partner for such purpose, if said Bureau is not at the time furnishing
quotations; or (c) if such Unit is not of a class of Units listed for trading on
a National Securities Exchange or quoted by NASDAQ, an amount equal to the fair
market value of such Unit as of such date of determination, as determined by the
General Partner using any reasonable method of valuation it may select.
"Units Register" has the meaning specified in Section 10.2.
6
<PAGE>
"Unrealized Gain" attributable to a Partnership property means, as of any
date of determination, the excess, if any, of the fair market value of such
property as of such date of determination over the Carrying Value of such
property as of such date of determination (prior to any adjustment to be made
pursuant to Section 5.1(f) as of such date).
"Unrealized Loss" attributable to a Partnership property means, as of any
date of determination, the excess, if any, of the Carrying Value of such
property as of such date of determination (prior to any adjustment to be made
pursuant to Section 5.1(f) as of such date) over the fair market value of such
property as of such date of determination.
ARTICLE II
Organizational Matters
2.1 Formation. Subject to the provisions of this Agreement, the General
Partner and the Organizational Limited Partner originally formed the Partnership
as a limited partnership pursuant to the provisions of the Delaware Act. The
General Partner, pursuant to the authority contained in Article XV of this
Agreement, does hereby amend and restate this Agreement in its entirety to
continue the Partnership as a limited partnership pursuant to the provisions of
the Delaware Act and to set forth the rights and obligations of the Partners and
certain matters related thereto. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Delaware
Act.
2.2 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "Buckeye Partners, L.P.";
provided, however, that (a) the Partnership's business may be conducted under
any other name or names deemed advisable by the General Partner, (b) the General
Partner in its sole discretion may change the name of the Partnership at any
time and from time to time and (c) the name under which the Partnership conducts
business shall include "Ltd." or "Limited Partnership" (or similar words or
letters) where necessary for purposes of maintaining the limited liability
status of each Limited Partner or otherwise complying with the laws of any
jurisdiction that so requires.
2.3 Principal Office; Registered Office. (a) The principal office of the
Partnership shall be 3900 Hamilton Boulevard, Allentown, Pennsylvania 18103, or
such other place as the General Partner may from time to time designate. The
Partnership may maintain offices at such other places as the General Partner
deems advisable.
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(b) The address of the Partnership's registered office in the State of
Delaware shall be Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801, and the name of the
Partnership's registered agent for service of process at such address shall be
The Corporation Trust Company.
2.4 Power of Attorney. (a) Each Limited Partner hereby constitutes and
appoints the General Partner or, if a Liquidator shall have been selected
pursuant to Section 14.3, the Liquidator, with full power of substitution, as
such Limited Partner's true and lawful agent and attorney-in-fact ("Agent"),
with full power and authority in such Limited Partner's name, place and stead
to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and any amendments or restatements
thereof) which the Agent deems appropriate or necessary to form or qualify,
or continue the existence or qualification of, the Partnership as a limited
partnership (or a partnership in which the Limited Partners have limited
liability) under the laws of any state or jurisdiction; (B) all
certificates, documents and other instruments which the Agent deems
appropriate or necessary to reflect any amendments, changes or
modifications of this Agreement in accordance with its terms; (C) all
conveyances and other documents or instruments which the Agent deems
appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement; (D) all certificates,
documents and other instruments relating to the admission, substitution,
withdrawal or removal of any Partner pursuant to Article XII, XIII or XIV
and other events described in Article XII, XIII or XIV; and (E) all
certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate of Limited Partnership and
any amendments or restatements thereof) relating to the determination of
the rights, preferences and privileges of any class or series of Units
issued pursuant to Section 4.4; and
(ii) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates, documents and other instruments which the
Agent deems appropriate or necessary in order to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action
which is made or given by the Partners hereunder, is deemed to be made or
given by the Partners hereunder, is consistent with the terms of this
Agreement or is deemed by the Agent to be appropriate or necessary to
effectuate the terms or intent of this Agreement or the purposes of the
Partnership; provided, however, that, if any vote or approval of Limited
Partners is specifically required for an action by any provision of this
Agreement, the Agent may exercise the power of attorney made in this
subsection (ii) to take such action only after such vote or approval is
obtained.
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(b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Limited Partner and the transfer of all or any
portion of such Limited Partner's Units and shall extend to such Limited
Partner's heirs, transferees, successors, assigns and personal representatives.
Each Limited Partner hereby agrees to be bound by any representations made by
the Agent acting in good faith pursuant to such power of attorney; and each
Limited Partner hereby waives any and all defenses which may be available to
contest, negate or disaffirm the action of the Agent taken in good faith
pursuant to such power of attorney. Each Limited Partner shall execute and
deliver to the Agent, within 15 days after receipt of the Agent's request
therefor, such further designations, powers of attorney and other instruments as
the Agent deems appropriate or necessary to effectuate the terms or intent of
this Agreement or the purposes of the Partnership.
2.5 Term. The Partnership shall continue in existence until the close of
Partnership business on December 31, 2036 or until the earlier termination of
the Partnership in accordance with the provisions of Article XIV.
2.6 Organizational Limited Partner. At and as of the Time of Delivery,
the Partnership interest of the Organizational Limited Partner shall be
terminated and the Partnership Interest of BMC shall be as described in Section
4.1.
2.7 Organizational Certificate. An Amended and Restated Certificate of
Limited Partnership of the Partnership has been filed with the Secretary of
State of the State of Delaware as required by the Delaware Act. The General
Partner shall cause to be filed such other certificates or documents as may be
required for the formation, operation and qualification of a limited partnership
in Delaware and any other state in which the Partnership may elect to do
business. The General Partner shall thereafter file any necessary amendments to
the Certificate of Limited Partnership and any such other certificates and
documents and do all things requisite to the maintenance of the Partnership as a
limited partnership (or as a partnership in which the Limited Partners have
limited liability) under the laws of Delaware and any other state in which the
Partnership may elect to do business. Subject to applicable law, the General
Partner may omit from the Certificate of Limited Partnership and any such other
certificates and documents, and from all amendments thereto, the names and
addresses of the Limited Partners and information relating to the Capital
Contributions and shares of profits and compensation of the Limited Partners, or
state such information in the aggregate rather than with respect to each
individual Limited Partner.
ARTICLE III
Purpose
3.1 Purpose. The purpose and business of the Partnership shall be to
engage in any lawful activity for which limited partnerships may be organized
under the Delaware Act.
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ARTICLE IV
Capital Contributions; Purchases Pursuant
to Purchase Agreements; Additional Issuances
4.1 General Partner Contributions. (a) At and as of the Time of
Delivery, the General Partner contributed to the Partnership, in exchange for
121,212 GP Units (i.e., a 1% Percentage Interest), an amount equal to
$2,424,240.
(b) Following the Time of Delivery, whenever a Limited Partner makes a
Capital Contribution to the Partnership pursuant to Section 4.3, the General
Partner shall contribute to the Partnership, in exchange for a number of GP
Units equal to 1/99th of the total number of LP Units then being purchased,
Contributed Property (which may include LP Units) having a Net Agreed Value
equal to 1/99th of the aggregate Net Agreed Value of all Capital Contributions
to the Partnership then being made pursuant to Section 4.3, unless the General
Partner receives an Opinion of Counsel that the failure to make such additional
Capital Contribution would not result in the Partnership or any of the Operating
Partnerships being treated as an association taxable as a corporation for
federal income tax purposes.
4.2 Limited Partner Contributions. At and as of the Time of Delivery,
each underwriting firm which entered into an underwriting agreement with the
Partnership contributed to the Partnership, in exchange for the number of LP
Units specified therein an amount in cash equal to the Issue Price for such LP
Units (as specified in such underwriting agreement) multiplied by the number of
LP Units being so purchased.
4.3 Issuances of Additional LP Units and Other Securities. (a) The
General Partner is hereby authorized to cause the Partnership to issue, in
addition to the LP Units issued pursuant to Section 4.2, additional LP Units, or
classes or series thereof, or options, rights, warrants or appreciation rights
relating thereto or any other type of equity security that the Partnership may
lawfully issue, any secured or unsecured debt obligations of the partnership, or
debt obligations of the Partnership convertible into any class or series of
equity securities of the Partnership (collectively, "Partnership Securities"),
for any Partnership purpose, at any time or from time to time, to Partners or to
other Persons (including, without limitation, to employee benefit plans
sponsored by the General Partner, the Partnership, any of the Operating
Partnerships, the Manager or any of their respective Affiliates), for such
consideration and on such terms and conditions, and entitling the holders
thereof to such relative rights and powers, as shall be established by the
General Partner in its sole discretion, all without the approval of any Limited
Partners, except as provided in Section 17.1.
(b) Without limiting the generality of the foregoing (but subject to the
provisions of Section 17.1), the additional Partnership Securities to be issued
by the Partnership under this Section 4.3 may contain provisions with respect to
(i) the allocation
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of items of Partnership income, gain, loss, deduction and credit; (ii) the
right to share in Partnership distributions; (iii) rights upon dissolution and
liquidation of the Partnership; (iv) whether any such issue of Partnership
Securities may be acquired by the Partnership, by purchase, redemption or
otherwise, and if so, the price at which, and the terms and conditions upon
which, such Partnership Securities may be purchased, redeemed or otherwise
acquired by the Partnership; (v) the conversion rights applicable to any such
issue of Partnership Securities, and if so, the rate at which, and the terms and
conditions upon which, such Partnership Securities may be converted into any
other class or series of Partnership Securities; (vi) the terms and conditions
upon which any such Partnership Securities will be issued, assigned, or
transferred; and (vii) the right, if any, of the holders of any such issue of
Partnership Securities to vote on Partnership matters.
(c) The General Partner is hereby authorized and directed to do all acts
which it deems appropriate or necessary in connection with each issuance of
Units or other securities by the Partnership and to amend this Agreement in any
manner which it deems appropriate or necessary to provide for each such
issuance, to admit additional limited partners in connection therewith and to
specify the relative rights, powers and duties of the holders of the Units or
other securities being so issued, all without the approval of any Limited
Partners, except as provided in Section 17.1.
4.4 No Preemptive Rights. No Partner shall have any preemptive right with
respect to the issuance or sale of Units or other securities that may be issued
by the Partnership.
4.5 No Interest. No interest shall be paid by the Partnership on Capital
Contributions.
4.6 Loans from Partners. Loans or other advances by a Partner to or for
the account of the Partnership shall not be considered Capital Contributions.
4.7 No Withdrawal. No Partner shall be entitled to withdraw any part of
its Capital Contributions or its Capital Account or to receive any distributions
from the Partnership except as provided herein.
ARTICLE V
Capital Accounts; Distributions
5.1 Capital Accounts. (a) The Partnership shall maintain for each
Partner a separate Capital Account with respect to Units in accordance with the
regulations issued pursuant to Section 704 of the Code. The Capital Account of
any Partner shall be increased by (i) the Net Agreed Value of all Capital
Contributions made by such Partner in exchange for Units and (ii) all items of
income and gain computed in accordance with Section 5.1 (b) and allocated to
such Partner pursuant to Section 5.1(c) and reduced by (iii) the Net Agreed
Value of all distributions of cash or property made to such Partner with respect
to Units and (iv) all items of deduction and
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loss computed in accordance with Section 5.1(b) and allocated to such Partner
pursuant to Section 5.1(c).
(b) For purposes of computing the amount of each item of income, gain,
loss or deduction to be reflected in the Capital Accounts, the determination,
recognition and classification of such item shall be the same as its
determination, recognition and classification for federal income tax purposes,
provided that:
(i) Any deductions for depreciation, cost recovery or amortization
attributable to any Partnership property shall be determined as if the
adjusted basis of such property was equal to the Carrying Value of such
property. Upon an adjustment to the Carrying Value of any Partnership
property subject to depreciation, cost recovery or amortization pursuant to
Section 5.1(e) or 7.8, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be determined
as if the adjusted basis of such property was equal to the Carrying Value
of such property immediately following such adjustment.
(ii) If the Partnership's adjusted basis in property subject to
depreciation, cost recovery or amortization is reduced for federal income
tax purposes pursuant to Section 48(q) (1) of the Code, the amount of such
reduction shall be deemed to be an additional item of deduction in the year
such property is placed in service. Any restoration of such basis pursuant
to Section 48(q) (2) of the Code shall be deemed to be an additional item
of income in the year of restoration.
(iii) Any income, gain or loss attributable to the taxable disposition of
any Partnership property shall be determined by the Partnership as if the
adjusted basis of such property as of such date of disposition was equal in
amount to the Carrying Value of such property as of such date.
(iv) All fees and other expenses incurred by the Partnership to promote
the sale of (or to sell) a Partnership Interest that can neither be
deducted nor amortized under Section 709 of the Code shall be treated as
items of deduction.
(v) The computation of all items of income, gain, loss and deduction shall
be made without regard to any election under Section 754 of the Code which
may be made by the Partnership and, as to those items described in Section
705(a)(1)(B) or Section 705(a)(2)(B) of the Code, without regard to the
fact that such items are not includible in gross income or are neither
currently deductible nor capitalizable for federal income tax purposes.
(c) (i) For purposes of maintaining the Capital Accounts and except as
otherwise provided in this Section 5.1 (c), each item of income, gain, loss and
deduction (computed in
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accordance with Section 5.1 (b)) shall be allocated to the Partners in
accordance with their respective Percentage Interests.
(ii) If any Partner unexpectedly receives any adjustment allocation or
distribution described in Treasury Regulation Sections 1.704-
1(b)(2)(ii)(d)(4), 1.704-1 (b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
items of Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate a deficit in its
Capital Account created by such adjustment, allocation or distribution as
quickly as possible.
(iii) To preserve uniformity of Units, the General Partner shall have
sole discretion pursuant to Section 6.1(c) to make special allocations of
income or deduction that do not have a material adverse effect on the
Limited Partners and are consistent with the principles of Section 704 of
the Code.
(iv) If there is a net decrease in Partnership minimum gain, within the
meaning of Treasury Regulation Section 1.704-1(b) (4) (iv), during a
Partnership taxable year, all Partners with deficit balances in their
Capital Accounts, computed as described in Treasury Regulation Section
1.704-1(b)(4)(iv)(c) at the end of such year, will be allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in the amounts and in the proportions needed to eliminate such
deficits as quickly as possible, before any other allocations are made
under Section 704(b) of the Code.
(d) (i) Except as otherwise provided in this Section 5.1(d), a transferee
of LP Units shall, upon becoming a Limited Partner, succeed to the portion of
the transferor's Capital Account maintained with respect to the Units
transferred.
(ii) If a transfer of Units causes a termination of the Partnership under
Section 708(b)(1)(B) of the Code, the Partnership properties shall be
deemed to have been distributed in liquidation of the Partnership to the
Partners (including the transferee of the Units) pursuant to Sections 14.4
and 14.5 and recontributed by such Partners and transferees in
reconstitution of the Partnership. The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with this
Article V.
(e) If any additional LP Units are to be issued pursuant to Section 4.3,
or if any Partnership Property is to be distributed, the Capital Accounts of the
Partners (and the Carrying Values of all Partnership properties) shall,
immediately prior to such issuance or distribution, be adjusted (consistent with
the provisions hereof and of Section 704(b) of the Code) upwards or downwards to
reflect any Unrealized Gain or Unrealized Loss attributable to all Partnership
properties (as if such Unrealized Gain or Unrealized Loss had been recognized
upon an actual sale of such properties immediately prior to such issuance). In
determining such Unrealized Gain or Unrealized Loss, the fair market value of
Partnership properties, as of any date of determination, (i) shall, in the case
of the issuance of additional LP Units, be deemed to be equal
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to (A) the number of Units outstanding, as of the date of determination, times
the Issue Price for which such additional LP Units are so issued, plus (B) the
amount of any Partnership indebtedness outstanding as of the date of
determination, and (ii) shall, in the case of the distribution of Partnership
property, be determined in the manner provided in Section 14.3.
5.2 Distributions in Respect of Units. (a) From time to time, not less
often than quarterly, the General Partner shall review the Partnership's
accounts to determine whether distributions are appropriate. The General
Partner may make such cash distributions as it, in its sole discretion, may
determine, without being limited to current or accumulated income or gains, from
any Partnership funds, including, without limitation, Partnership revenues,
Capital Contributions or borrowed funds. In its sole discretion, the General
Partner may also distribute to the Partners other Partnership property,
additional Units or other securities of the Partnership or other entities.
All distributions in respect of Units shall be made concurrently to all
Record Holders on the Record Date set for purposes of such distribution and
shall be prorated in accordance with such Record Holders' respective Percentage
Interests as of such Record Date.
(b) Amounts paid pursuant to Section 7.4, any Management Agreement, any
Operating Partnership Agreement or the Incentive Compensation Agreement shall
not be deemed to be distributions for purposes of this Agreement.
ARTICLE VI
Income Tax Matters
6.1 Tax Allocations. (a) For federal income tax purposes, each item of
income, gain, loss, deduction and credit of the Partnership shall be allocated
among the Partners in accordance with their Percentage Interests except that the
General Partner shall have the authority to make such other allocations as are
necessary and appropriate to comply with Section 704 of the Code and the
regulations issued pursuant thereto.
(b) Gain resulting from the sale or other taxable disposition of
Partnership assets and allocated to (or recognized by) a Partner (or its
successor in interest) for federal income tax purposes shall be deemed to be
Recapture Income to the extent such Partner has been allocated or has claimed
any deduction directly or indirectly giving rise to the treatment of such gain
as Recapture Income.
(c) To preserve uniformity of LP Units, the General Partner shall have
sole discretion to (i) adopt such conventions as it deems appropriate or
necessary in determining the amount of depreciation and cost recovery
deductions; (ii) make special allocations of income or deduction and (iii) amend
the provisions of this Agreement as appropriate (x) to reflect the proposal or
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promulgation of regulations under Section 704(c) of the Code or (y) otherwise to
preserve the uniformity of Units issued or sold from time to time. The General
Partner may adopt such conventions and make such allocations and amendments only
if they would not have a material adverse effect on the Limited Partners and are
consistent with the principles of Section 704 of the Code.
(d) Items of Partnership income, gain, loss, deduction and credit shall,
for federal income tax purposes, be determined on a monthly basis (or other
basis, as required or permitted by Section 706 of the Code) and shall be
allocated to the Persons who are Record Holders of Units as of the close of
business on the first day of such month; provided, however, that gain or loss on
a sale or other disposition of all or a substantial portion of the assets of the
Partnership shall be allocated to the Persons who are Record Holders of Units as
of the close of business on the date of sale.
(e) Pursuant to Section 704(c) of the Code, items of income, gain, loss,
deduction and credit attributable to Contributed Property shall be allocated in
such a manner as to take into account the variation between the basis of such
property to the Partnership and its Carrying Value.
6.2 Preparation of Tax Returns. The General Partner shall arrange for the
preparation and timely filing of all returns of Partnership income, gains,
losses, deductions, credits and other items necessary for federal and state
income tax purposes and shall use all reasonable efforts to furnish to the
Limited Partners within 90 days after the close of the taxable year the tax
information reasonably required for federal and state income tax reporting
purposes. The classification, realization and recognition of income, gains,
losses, deductions, credits and other items shall be on the accrual method of
accounting for federal income tax purposes, unless the General Partner shall
determine otherwise in its sole discretion.
6.3 Tax Elections. Except as otherwise provided herein, the General
Partner shall, in its sole discretion, determine whether to make any available
election. The General Partner shall elect under Section 754 of the Code to
cause the basis of Partnership property to be adjusted for federal income tax
purposes as provided by Sections 734 and 743 of the Code, but the General
Partner may seek to revoke this election if the General Partner determines that
such revocation is in the best interests of the Limited Partners.
6.4 Tax Controversies. Subject to the provisions hereof, the General
Partner is designated as the Tax Matters Partner (as defined in Section 6231 of
the Code) and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs
associated therewith. Each Limited Partner agrees to cooperate with the General
Partner and to do or refrain from doing any and all things reasonably required
by the General Partner to conduct such proceedings.
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6.5 Withholding. The General Partner is authorized to take any action
necessary to comply with any withholding requirements established by applicable
law, including, without limitation, with regard to (a) the sale of United States
real property interests, (b) the distributions of cash or property to any
Partner which is a foreign Person, and (c) the transfer of Units.
ARTICLE VII
Management and Operation of Business; Indemnification
7.1 Powers of General Partner. Except as otherwise expressly provided in
this Agreement, all powers to control and manage the business and affairs of the
Partnership shall be exclusively vested in the General Partner, and no Limited
Partner shall have any power to control or manage the business and affairs of
the Partnership.
In addition to the powers now or hereafter granted a general partner of a
limited partnership under applicable law or which are granted to the General
Partner under any other provisions of this Agreement, the General Partner is
hereby authorized and empowered, in the name of and on behalf of the
Partnership, to do and perform any and all acts and things which it deems
appropriate or necessary in the conduct of the business and affairs of the
Partnership, including, without limitation, the following:
(a) to lend or borrow money, to assume, guarantee or otherwise become
liable for indebtedness and other liabilities and to issue evidences of
indebtedness;
(b) to buy, lease (as lessor or lessee), sell, mortgage, encumber or
otherwise acquire or dispose of any or all of the assets of the
Partnership;
(c) to own, use and invest the assets of the Partnership;
(d) to purchase or sell products, services and supplies;
(e) to make tax, regulatory and other filings, and to render periodic
and other reports, to governmental agencies or bodies having jurisdiction
over the assets or business of the Partnership;
(f) to open, maintain and close bank accounts and to draw checks and
other orders for the payment of money;
(g) to negotiate, execute and perform any contracts, conveyances
or other instruments;
(h) to distribute Partnership cash;
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(i) to utilize the services of officers and employees of the General
Partner or of any other Persons and to select and dismiss employees (if
any) and outside attorneys, accountants, consultants and contractors;
(j) to maintain insurance for the benefit of the Partnership and the
Partners;
(k) to form, participate in or contribute or loan cash or property to
limited or general partnerships, joint ventures, corporations or similar
arrangements;
(1) to expand the business activities in which the Partnership is
engaged or engage in new business activities by acquisition or internal
development;
(m) to conduct litigation and incur legal expenses and otherwise deal
with or settle claims or disputes; and
(n) to purchase, sell or otherwise acquire or dispose of Units;
in each case at such times and upon such terms and conditions as the General
Partner deems appropriate or necessary, and subject to any express restrictions
contained elsewhere in this Agreement.
7.2 Duties of General Partner. The General Partner shall manage the
business and affairs of the Partnership in the manner the General Partner deems
appropriate or necessary. Without limiting the generality of the foregoing, the
General Partner's duties shall include the following:
(a) to take possession of the assets of the Partnership;
(b) to staff and operate the business of the Partnership with the
officers and employees of the General Partner or of other Persons;
(c) to render or cause to be rendered engineering, environmental and
other technical services and perform or cause to be performed financial,
accounting, logistical and other administrative functions for the
Partnership;
(d) to render such reports and make such periodic and other filings
as may be required under applicable federal, state and local laws, rules
and regulations;
(e) to provide or cause to be provided purchasing, procurement,
repair and other services for the Partnership; and
(f) to conduct the business of the Partnership in accordance with
this Agreement and all applicable laws, rules and regulations;
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in each case in such a manner as the General Partner deems appropriate or
necessary.
7.3 Reliance by Third Parties. Notwithstanding anything to the contrary
in this Agreement, any Person dealing with the Partnership shall be entitled to
assume that the General Partner has full power and authority to encumber, sell
or otherwise use in any manner any and all assets of the Partnership and to
enter into any contracts on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies which may be available against
such Person to contest, negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms
of this Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed on behalf of
the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
7.4 Compensation and Reimbursement of the General Partner. (a) Except as
provided in this Section 7.4 or elsewhere in this Agreement, the Incentive
Compensation Agreement or any other agreement contemplated or permitted hereby
or thereby, the General Partner shall not be compensated for its services as
General Partner to the Partnership.
(b) The General Partner shall be promptly reimbursed for all Designated
Expenses, in addition to any reimbursement as a result of indemnification in
accordance with Section 7.11. The General Partner shall determine such
Designated Expenses in any reasonable manner determined by it.
(c) The General Partner may propose and adopt without the approval of the
Limited Partners fringe benefit plans, including, without limitation, plans
comparable to those that covered employees employed by the predecessors to the
Operating Partnerships and plans involving the issuance of Units, for the
benefit of employees of the General Partner, Partnership, any of the Operating
Partnerships, the Manager or any of their respective Affiliates in respect of
services performed, or obligated to be performed, directly or indirectly, for
the benefit of the Partnership or any of the Operating Partnerships.
7.5 Purchase or Sale of LP Units and Other Partnership Securities. The
General Partner may, on behalf of the Partnership, purchase or otherwise acquire
or sell or otherwise dispose of LP Units and Other Partnership Securities. As
long as LP Units are held by the
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Partnership or any of the Operating Partnerships, such LP Units or Other
Partnership Securities shall not be considered outstanding for any purpose. The
General Partner or any of its Affiliates may also purchase or otherwise acquire
or sell or otherwise dispose of LP Units and Other Partnership Securities for
its own account.
7.6 Partnership Funds. The funds of the Partnership shall be deposited in
such account or accounts as shall be designated by the General Partner, and
shall not be commingled with the funds of the General Partner or any of its
Affiliates. All withdrawals from or charges against such accounts shall be made
by the General Partner or by its agents, which agents may be Affiliates of the
General Partner. Funds of the Partnership may be invested as determined by the
General Partner.
7.7 Outside Activities; Contracts with Affiliates; Loans to or from
Affiliates. (a) The General Partner shall not have or permit the Manager to
have any business interests or engage in any business activities except for
those relating to the Partnership and the Operating Partnerships.
(b) Any Affiliate of the General Partner (other than the Manager) and any
director, officer, partner or employee of the General Partner or any of its
Affiliates shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities in direct competition with the Partnership and
the Operating Partnerships, for their own account and for the account of others,
without having or incurring any obligation to offer any interest in such
businesses or activities to the Partnership, the Operating Partnerships or any
Partner. Neither the Partnership, the Operating Partnerships nor any of the
Partners shall have any rights by virtue of this Agreement or the partnership
relationship governed hereby in any such business interests.
(c) Each of the Limited Partners hereby approves, ratifies and confirms
the execution, delivery and performance of the Operating Partnership Agreements,
the Incentive Compensation Agreement, the Management Agreements, and the
Exchange Agreement and agrees that the General Partner is authorized to execute,
deliver and perform the other agreements, acts, transactions and matters
described therein on behalf of the Partnership without the approval or vote of
any Limited Partners, notwithstanding any other provision of this Agreement or
the Operating Partnership Agreements.
(d) Subject to the provisions of Section 7.4(a), the General Partner and
its Affiliates may enter into contracts with, or render services to, the
Partnership or any of the Operating Partnerships, provided that such contracts
or services are on terms that are fair and reasonable to the Partnership.
(e) Neither the General Partner nor any of its Affiliates shall sell,
transfer or convey property to, or purchase property from, the Partnership,
directly or indirectly, except pursuant to transactions that are fair and
reasonable to the Partnership.
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(f) The General Partner or any of its Affiliates may lend to the
Partnership funds needed by the Partnership for such periods of time as the
General Partner may determine; provided, however, that the General Partner or an
Affiliate may not charge the Partnership interest greater than the rate
(including points or other financing charges or fees) that would be charged to
the Partnership by unrelated lenders on comparable loans. The Partnership shall
reimburse the General Partner or its Affiliate, as the case may be, for any
costs incurred by the General Partner or Affiliate in connection with the
borrowing of funds obtained by such General Partner or Affiliate and loaned to
the Partnership.
(g) The Partnership may lend funds to the General Partner or any of its
Affiliates; provided, however, that the Partnership may not lend funds to the
General Partner or an Affiliate unless such funds consist of funds available
after provision for working capital and such reserves as the General Partner
deems appropriate and such loan shall bear interest at the rate (including
points or other financing charges or fees) that the General Partner would be
charged by unrelated lenders on comparable loans.
7.8 Tax Basis and Value Determinations. To the extent that the General
Partner is required pursuant to the provisions of this Agreement to establish
fair market values or allocate amounts realized, tax basis, Agreed Values or Net
Agreed Values, the General Partner shall establish such values and make such
allocations in a manner that is reasonable and fair to the Limited Partners,
taking into account all applicable laws, governmental regulations, rulings and
decisions. The General Partner may, in its sole discretion, modify or revise
such allocations in order to comply with such laws, governmental regulations,
rulings or decisions or to the extent it otherwise deems such modification or
revision appropriate or necessary. The General Partner is authorized, to the
extent deemed by it to be appropriate or necessary, to utilize the services of
an independent appraiser in establishing such values or allocations and the
General Partner shall in such cases be entitled to rely on the values or
allocations established by such independent appraiser.
7.9 Resolution of Conflicts of Interest; Standard of Care. (a) Unless
otherwise expressly provided in this Agreement or any other agreement
contemplated hereby, (i) whenever a conflict of interest exists or arises
between the General Partner or any of its Affiliates, on the one hand, and the
Partnership or any Limited Partner, on the other hand, or (ii) whenever this
Agreement or any other agreement contemplated hereby provides that the General
Partner or any of its Affiliates shall act in a manner which is, or provide
terms which are, fair and/or reasonable to the Partnership, any Operating
Partnership or any Limited Partner, the General Partner or such Affiliate shall
resolve such conflict of interest, take such action or provide such terms
considering, in each case, the relative interests of each Party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interests, any customary or accepted industry practices, and
any applicable generally accepted accounting or engineering practices or
principles, and in the absence of bad faith by the General Partner or such
Affiliate, the resolution, action or terms so made, taken or provided by the
General Partner or such Affiliate shall not constitute a breach of this
agreement or any other agreement contemplated
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hereby or a breach of any standard of care or duty imposed hereby or under the
Delaware Act or any other applicable law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that the General Partner or any of its Affiliates is permitted or
required to make a decision (i) in its "discretion" or under a grant of similar
authority or latitude, the General Partner or such Affiliate shall be entitled,
to the extent permitted by applicable law, to consider only such interests and
factors as it desires and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Partnership or the
Limited Partners, or (ii) in its "good faith" or under another express standard,
the General Partner or such Affiliate shall act under such express standard and,
except as required by applicable law, shall not be subject to any other or
different standards imposed by this Agreement, any other agreement contemplated
hereby or applicable law.
7.10 Other Matters Concerning the General Partner. (a) The General
Partner may rely and shall be protected in acting or refraining from acting upon
any certificate, document or other instrument believed by it to be genuine and
to have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisors selected by it and any opinion or advice of any such Person as to
matters which the General Partner believes to be within such Person's
professional or expert competence shall be full and complete authorization and
protection with respect to any action taken or suffered or omitted by the
General Partner hereunder in good faith and in accordance with such opinion or
advice.
(c) The General Partner may exercise any of the powers granted to it by
this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
7.11 Limited Liability; Indemnification. (a) Notwithstanding
anything to the contrary in this Agreement, and except to the extent required by
applicable law, no Indemnitee shall be liable to the Partnership or any Partner
for any action taken or omitted to be taken by such Indemnitee, provided that
such Indemnitee acted in good faith and such action or omission does not involve
the gross negligence or willful misconduct of such Indemnitee. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere, or its equivalent, shall not, of itself, create
a presumption that an Indemnitee did not act in good faith or that an action or
omission involves gross negligence or willful misconduct.
(b) The Partnership shall, to the extent permitted by applicable law,
indemnify each Indemnitee against expenses (including legal fees and expenses),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such Indemnitee, in connection with any
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threatened, pending or completed claim, demand, action, suit or proceeding to
which such Indemnitee was or is a party or is threatened to be made a party, by
reason of (i) such Indemnitee's status as a General Partner, any Affiliate of
the General Partner, any Person who is or was a director, officer, employee or
agent of the General Partner or any such Affiliate, or any Person who is or was
serving at the request of the General Partner or any such Affiliate as a
director, officer, partner, trustee, employee or agent of another Person or (ii)
any action taken or omitted to be taken by such Indemnitee in any capacity
referred to in clause (i) of this Section 7.11(b), relating to this Agreement or
the property, business, affairs or management of the Partnership or any of the
Operating Partnerships (provided the Indemnitee acted in good faith and the act
or omission which is the basis of such claim, demand, action, suit or proceeding
does not involve the gross negligence or willful misconduct of such Indemnitee).
(c) Expenses (including legal fees and expenses) incurred in defending any
claim, demand, action, suit or proceeding subject to Section 7.11(b) shall be
paid by the Partnership in advance of the final disposition of such claim,
demand, action, suit or proceeding upon receipt of an undertaking (which need
not be secured) by or on behalf of the Indemnitee to repay such amount if it
shall ultimately be determined, by a court of competent jurisdiction, that the
Indemnitee is not entitled to be indemnified by the Partnership as authorized
hereunder.
(d) The indemnification provided by Section 7.11(b) shall be in addition
to any other rights to which an Indemnitee may be entitled, and shall continue
as to an Indemnitee who has ceased to serve in a capacity for which the
Indemnitee is entitled to indemnification and shall inure to the benefit of the
heirs, successors, assigns, administrators and personal representatives of the
Indemnitee.
(e) To the extent commercially reasonable, the Partnership shall purchase
and maintain insurance on behalf of the Indemnitees against any liability which
may be asserted against or expense which may be incurred by an Indemnitee in
connection with the Partnership's activities, whether or not the Partnership
would have the power to indemnify an Indemnitee against such liability under the
provisions of this Agreement.
(f) An Indemnitee shall not be denied indemnification in whole or in part
under Section 7.11(b) because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 7.11 are for the benefit of the
Indemnitees and the heirs, successors, assigns, administrators and personal
representatives of the Indemnitees and shall not be deemed to create any rights
for the benefit of any other Persons.
ARTICLE VIII
Rights and Obligations of Limited Partners
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8.1 Limitation of Liability. The Limited Partners shall have no liability
under this Agreement (including, without limitation, liability under Section
7.11).
8.2 Management of Business. No Limited Partner shall, in its capacity as
a Limited Partner, take part in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by a
director, officer, employee or agent of a General Partner or an Affiliate of the
General Partner in such Person's capacity as such (whether or not such Person is
also a Limited Partner) shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners under this Agreement.
8.3 Outside Activities. Limited Partners shall be entitled to and may
have business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities in
direct competition with the Partnership or the Operating Partnerships. Neither
the Partnership, the Operating Partnerships nor any of the other Partners shall
have any rights by virtue of this Agreement or the partnership relationship
created hereby in any business ventures of any Limited Partner.
8.4 Return of Capital. No Limited Partner shall be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
8.5 Rights of Limited Partners Relating to the Partnership. In addition
to other rights provided by this Agreement or by applicable law, each Limited
Partner shall have the right for a proper purpose reasonably related to such
Limited Partner's interest in the Partnership, upon reasonable demand and at
such Limited Partner's own expense:
(a) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(b) promptly after becoming available, to obtain a copy of the
Partnership's federal and state income tax returns for each year;
(c) to obtain a current list of the name and address of each Partner
as set forth in the Units Register;
(d) to obtain a description and statement of the Net Agreed Value of
any Capital Contribution made or agreed to be made by each Partner, and the
date on which such Partner became a Partner;
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(e) to obtain a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with executed copies of
any powers of attorney pursuant to which this Agreement, the Certificate of
Limited Partnership and all amendments thereto have been executed; and
(f) to obtain such other information regarding the affairs of the
Partnership as may be just and reasonable;
provided, however, that the General Partner may keep confidential from the
Limited Partners, for such period of time as the General Partner deems
reasonable, any information which the General Partner reasonably believes to be
in the nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes could damage the Partnership or its
business or be in violation of applicable law, including, without limitation,
federal securities law, or which the Partnership is required by agreements with
third parties to keep confidential.
ARTICLE IX
Books, Records, Accounting and Reports
9.1 Books, Records and Accounting. The General Partner shall keep or
cause to be kept books and records with respect to the Partnership's business,
which books and records shall at all times be kept at the principal office of
the Partnership. Any books and records maintained by the Partnership in the
regular course of its business, including the Units Register, books of account
and records of Partnership proceedings, may be kept on, or be in the form of,
punch cards, disks, magnetic tape, photographs, micrographics or any other
information storage device, provided that the records so kept are convertible
into clearly legible written form within a reasonable period of time. The books
of the Partnership shall be maintained, for financial reporting purposes, on the
accrual basis, or on a cash basis adjusted periodically to an accrual basis, as
the General Partner shall determine in its sole discretion, in accordance with
generally accepted accounting principles and applicable law.
9.2 Fiscal Year. The fiscal year of the Partnership for financial
reporting purposes shall be the calendar year, unless the General Partner shall
determine otherwise in its sole discretion.
9.3 Reports. (a) As soon as practicable, but in no event later than 90
days after the close of each fiscal year, the General Partner shall cause to be
mailed to each Record Holder of LP Units as of the last day of that fiscal year
reports containing financial statements of the Partnership for the fiscal year,
presented in accordance with generally accepted accounting principles, including
a balance sheet, statement of income, statement of Partners' capital and
statement of changes in financial position, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner.
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(b) As soon as practicable, but in no event later than 45 days after the
close of each calendar quarter, except the last calendar quarter of each fiscal
year, the General Partner shall cause to be mailed to each Record Holder of LP
Units as of the last day of that calendar quarter a quarterly report for the
calendar quarter containing such financial and other information as the General
Partner deems appropriate.
ARTICLE X
Issuance of LP Certificates; Transfer and Exchange of LP Units
10.1 Initial Issuance of LP Certificates. Upon the issuance of LP
Units to any Person, the Partnership will issue one or more LP Certificates in
the name of such Person evidencing the number of such LP Units being so issued.
LP Certificates shall be executed on behalf of the Partnership by the General
Partner. No LP Certificate shall be valid for any purpose until manually
countersigned by the Transfer Agent.
10.2 Registration, Registration of Transfer and Exchange. (a) The
Partnership will cause to be kept a register (the "Units Register") in which,
subject to such reasonable regulations as it may prescribe and subject to the
provisions of Section 10.2(b), the Partnership will provide for the registration
of LP Units and of transfers of such LP Units. The Transfer Agent is hereby
appointed registrar for the purpose of registering LP Units and transfers of
such LP Units as herein provided.
Upon surrender for registration of transfer or exchange of any LP
Certificate, and subject to the provisions of Section 10.2(b), the General
Partner on behalf of the Partnership will execute, and the Transfer Agent will
countersign and deliver, in the name of the holder or the designated transferee
or transferees, as required pursuant to the holder's instructions, one or more
new LP Certificates evidencing the same aggregate number of LP Units as did the
LP Certificate so surrendered.
(b) Every LP Certificate surrendered for registration of transfer or
exchange shall be duly endorsed on the reverse side thereof, or be accompanied
by a written instrument of transfer in form satisfactory to the General Partner
or the Transfer Agent, as the case may be, duly executed, in either case by the
holder thereof or such holder's attorney duly authorized in writing. Every LP
Certificate surrendered for registration of transfer shall be duly accepted on
the reverse side thereof, or be accompanied by a written instrument of
acceptance to the same effect in form satisfactory to the General Partner or the
Transfer Agent, as the case may be, duly executed, in either case by the
transferee or such transferee's attorney duly authorized in writing. As a
condition to the issuance of any new LP Certificate under this Section 10.2, the
General Partner may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.
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10.3 Mutilated, Destroyed, Lost or Stolen LP Certificates. (a) If
any mutilated LP Certificate is surrendered to the Transfer Agent, the General
Partner on behalf of the Partnership shall execute and the Transfer Agent shall
countersign and deliver in exchange therefor a new LP Certificate evidencing the
same number of LP Units as did the LP Certificate so surrendered.
(b) If there shall be delivered to the General Partner and the Transfer
Agent (i) evidence to their satisfaction of the destruction, loss or theft of
any LP Certificate and (ii) such security or indemnity as may be required by
them to save each of them and any of their agents harmless, then, in the absence
of notice to the General Partner or the Transfer Agent that such LP Certificate
has been acquired by a bona fide purchaser, the General Partner on behalf of the
Partnership shall execute and upon its request the Transfer Agent shall
countersign and deliver, in lieu of any such destroyed, lost or stolen
Certificate, a new LP Certificate evidencing the same number of LP Units as did
the LP Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new LP Certificate under this
Section 10.3, the General Partner may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Transfer
Agent) connected therewith.
(d) Every new LP Certificate issued pursuant to this Section 10.3 in lieu
of any destroyed, lost or stolen LP Certificate shall evidence an original
additional Partnership Interest in the Partnership, whether or not the
destroyed, lost or stolen LP Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other LP Units duly issued hereunder.
10.4 Persons Deemed Owners. Prior to due presentment of an LP
Certificate for registration of transfer and satisfaction of the requirements of
Section 10.2(b) with respect thereto, (a) the Partnership, the General Partner,
the Transfer Agent and any agent of any of the foregoing may deem and treat the
Record Holder as the absolute owner thereof and of the LP Units evidenced
thereby for all purposes whatsoever and (b) a transferee shall not be entitled
to distributions or allocations or any other rights in respect of the LP Units
evidenced thereby other than the right to further transfer such LP Units.
ARTICLE XI
Transfer of GP Units
11.1 Transfer of GP Units. The General Partner may not transfer any
GP Units unless (a) all of its GP Units are being transferred and the transferee
assumes all of the rights and obligations of the General Partner hereunder, (b)
the transfer is to an Affiliate of the General Partner or is in connection with
the General Partner's merger or consolidation with, or a transfer of all or
substantially all of the General Partner's assets to, another Person, or the
transfer is approved by a Majority Interest, and (c) the Partnership receives an
Opinion of Counsel that such
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transfer would not result in the loss of limited liability of any Limited
Partner or cause the Partnership or any of the Operating Partnerships to be
treated as an association taxable as a corporation for federal income tax
purposes.
11.2 Successor General Partner. Any transferee of GP Units pursuant
to Section 11.1 shall automatically be admitted to the Partnership as the
successor General Partner, and the transferor of such GP Units shall
automatically cease to be the General Partner, effective at the time provided in
Section 12.3. No such transfer shall be deemed a withdrawal pursuant to Article
XIII.
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ARTICLE XII
Admission of Initial, Substituted and Additional
Limited Partners and Successor General Partner
12.1 Admission of Initial Limited Partners. At and as of the Time of
Delivery, the initial Record Holders of LP Units purchased pursuant to Section
4.2 shall automatically become Limited Partners and the Organizational Limited
Partner shall automatically cease to be a Limited Partner.
12.2 Admission of Substituted Limited Partners. A transferee of LP
Units shall automatically be admitted to the Partnership as a Limited Partner
(and the transferor of such LP Units shall, if such transferor is assigning all
of such transferor's LP Units, automatically cease to be a Limited Partner) at
and as of the time the transfer is registered on the Units Register pursuant to
Section 10.2.
12.3 Admission of Successor General Partner. A successor General
Partner approved pursuant to Section 13.1 or the proviso to Section 14.1 or the
transferee of all of the GP Units pursuant to Section 11.1 shall be admitted to
the Partnership as the successor General Partner, effective as of the date an
amendment or restatement of the Certificate of Limited Partnership is filed with
the Secretary of State of the State of Delaware affecting such substitution;
provided, however, that no such successor shall be so admitted to the
Partnership until it has agreed in writing to assume the former General
Partner's obligations hereunder. This Agreement and the Certificate of Limited
Partnership shall be amended as appropriate to reflect the termination of the
former General Partner as a general partner and the admission of the successor
General Partner.
12.4 Admission of Additional Limited Partners. (a) A Person (other
than the initial Record Holders of LP Units pursuant to Section 4.2 or a
transferee of LP Units) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
additional Limited Partner only upon furnishing to the General Partner (i) a
written instrument of acceptance in a form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof, and (ii) such
other documents and instruments as may be required in the discretion of the
General Partner to affect such Person's admission as an additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this Section 12.4, no
Person shall be admitted as an additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole discretion. The admission of any Person as an additional Limited
Partner shall become effective at and as of the time the name of such Person is
recorded on the books and records of the Partnership, following the consent of
the General Partner to such admission.
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12.5 Amendment of Agreement and Certificate of Limited Partnership.
The General Partner shall take all steps necessary and appropriate under the
Delaware Act to amend the records of the Partnership and, if necessary, this
Agreement and the Certificate of Limited Partnership to reflect the admission of
any Partner.
ARTICLE XIII
Withdrawal or Removal of the General Partner
13.1 Withdrawal or Removal of the General Partner. (a) BMC agrees to
act as General Partner of the Partnership until the later of (i) the date which
is twenty-five years after the Time of Delivery or (ii) the date the ESOP Loan
is paid in full, subject to its right to transfer all of its GP Units pursuant
to Section 11.1. At any time after the later of (i) date which is twenty-five
years after the Time of Delivery or (ii) the date the ESOP Loan is paid in full,
the General Partner may withdraw from the Partnership effective upon at least 90
days' advance written notice to the Limited Partners, such withdrawal to take
effect on the date specified in such notice, provided that such withdrawal is
approved by an Eighty Percent Interest or the Partnership has received an
Opinion of Counsel that such withdrawal would not result in the loss of limited
liability of any Limited Partner or result in the Partnership or any Operating
Partnership being treated as an association taxable as a corporation for federal
income tax purposes. Any such withdrawal shall also constitute the withdrawal
of the Manager from the Operating Partnerships, as provided in the Operating
Partnership Agreements. If the General Partner gives a notice of withdrawal, a
Majority Interest may, prior to the effective date of such withdrawal, approve a
successor General Partner. The Person so approved (or its designated
Affiliates) shall become the successor general partner or partners of the
Operating Partnerships, as provided in the Operating Partnership Agreements. If
no successor General Partner is so approved, the Partnership shall be dissolved
pursuant to Section 14.1. BMC further agrees that it shall not permit the
Manager to withdraw as general partner of any Operating Partnership, except in
connection with the withdrawal of BMC as General Partner.
(b) The General Partner may be removed only by an Eighty Percent Interest,
and only if (i) in connection therewith, a successor General Partner is approved
by a Majority Interest, (ii) the Partnership shall have received an Opinion of
Counsel that the removal of the General Partner and the approval of a successor
General Partner will not result in the loss of limited liability of any Limited
Partner or cause the Partnership or any of the Operating Partnerships to be
treated as an association taxable as a corporation for federal income tax
purposes, (iii) the successor General Partner or an Affiliate thereof assumes
the liabilities and obligations of the General Partner and its Affiliates under
the Exchange Agreement and agrees to indemnify and hold harmless the General
Partner and its Affiliates from any liability or obligation arising out of, or
causes the General Partner and its Affiliates to be released from, any and all
liabilities and obligations (including loan guarantees) under fringe benefit
plans sponsored by the General Partner or any of its Affiliates in connection
with the business of the Partnership or any of the Operating Partnerships,
except as otherwise prohibited by this Agreement, and (iv) all required
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regulatory approvals for removal of the Manager shall have been obtained. Such
removal shall be effective upon the admission of the successor General Partner
pursuant to Section 12.3. The Person so approved (or its designated Affiliates)
shall become the successor general partner or partners of the Operating
Partnerships, as provided in the Operating Partnership Agreements.
13.2 Sale of Former General Partner's Interest. If a successor
General Partner is approved pursuant to Section 13.1 or 14.2 or the proviso to
Section 14.1, such successor shall purchase the GP Units of the former General
Partner for an amount in cash equal to the fair market value thereof, determined
as of the date the successor General Partner is admitted pursuant to Section
12.3. The fair market value of the GP Units shall include the value of all
rights associated with being the General Partner, including, without limitation,
the General Partner's pro rata interest in the Partnership, the right to receive
incentive compensation pursuant to the Incentive Compensation Agreement or
compensation under any other agreement between the Partnership and the General
Partner in effect on the date the successor General Partner is so admitted, and
shall be reduced by the value of the assumption by the successor General Partner
or its Affiliate of the obligations of the General Partner and its Affiliates
pursuant to Section 13.1(b)(iii). Such fair market value shall be determined by
agreement between the former General Partner and its successor or, failing
agreement within 30 days after the date the successor General Partner is so
admitted, by a firm of independent appraisers jointly selected by the former
General Partner and its successor (or, if the former General Partner and its
successor cannot agree on the selection of such a firm within 45 days after the
date the successor General Partner is so admitted, by a firm of independent
appraisers selected by two firms, one of which will be selected by the former
General Partner and the other of which will be selected by the successor).
ARTICLE XIV
Dissolution and Liquidation
14.1 Dissolution. The Partnership shall be dissolved, and its affairs
shall be wound up, upon:
(a) expiration of the term as provided in Section 2.5;
(b) withdrawal of the General Partner pursuant to Section 13.1 (unless a
Person becomes a successor General Partner prior to or on the effective date of
such withdrawal);
(c) bankruptcy or dissolution of the General Partner, or any other event
that results in the General Partner ceasing to be a general partner in the
Partnership (other than by reason of a withdrawal or removal pursuant to Section
13.1 or a transfer pursuant to Section 11.1); or
(d) an election by the General Partner to dissolve the Partnership which
is approved by a Two-Thirds Interest;
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provided, however, that the Partnership shall not be dissolved upon an event
described in Section 14.1(b) if, within 90 days of such event, all Partners
agree in writing to continue the business of the Partnership and to the
appointment of a successor General Partner.
For purposes of this Section 14.1, bankruptcy of the General Partner shall
be deemed to have occurred when (i) it commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (ii) it seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for it or for
all or any substantial part of its properties, (iii) it is adjudged a bankrupt
or insolvent, or has entered against it a final and nonappealable order for
relief, under any bankruptcy, insolvency or similar law now or hereafter in
effect, (iv) it executes and delivers a general assignment for the benefit of
its creditors, (v) it files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
involuntary proceeding of the nature described in clause (i) above, or (vi) (1)
any involuntary proceeding of the nature described in clause (i) above has not
been dismissed 120 days after the commencement thereof, (2) the appointment
without its consent or acquiescence of a trustee, receiver or liquidator for it
or for all or any substantial part of its properties has not been vacated or
stayed within 90 days of such appointment, or (3) such appointment has been
stayed but is not vacated within 90 days after the expiration of any such stay.
14.2 Reconstitution. Upon dissolution of the Partnership in accordance
with Section 14.1(b) or (c), and a failure of all Partners to agree to continue
the business of the Partnership and to the appointment of a successor General
Partner as provided in the proviso to Section 14.1, then within 180 days after
the event described in Section 14.1(b) or (c), a Majority Interest may elect to
reconstitute the Partnership and continue its business by forming a new
partnership on terms identical to those set forth in this Agreement and having
as a general partner a Person approved by a Majority Interest. Upon any such
election by a Majority Interest, all Partners shall be bound thereby and shall
be deemed to have consented thereto. Unless such an election is made within
such 180-day period, the Partnership shall conduct only activities necessary to
wind up its affairs. If such an election is made within such 180-day period,
then (a) the reconstituted partnership shall continue until the end of the term
set forth in Section 2.5 unless earlier dissolved in accordance with this
Article XIV and (b) all necessary steps shall be taken to cancel this Agreement
and the Certificate of Limited Partnership and to enter into a new partnership
agreement and certificate of limited partnership, and the successor general
partner may for this purpose exercise the powers of attorney granted the General
Partner pursuant to this Agreement; provided that the right of a Majority
Interest to reconstitute and to continue the business of the Partnership shall
not exist and may not be exercised unless the Partnership has received an
Opinion of Counsel that (i) the exercise of the right would not result in the
loss of limited liability of any Limited Partner and (ii) neither the
Partnership nor the reconstituted partnership would be treated as an association
taxable as a corporation for federal income tax purposes.
14.3 Liquidation. Upon dissolution of the Partnership, unless the
Partnership is reconstituted pursuant to Section 14.2, the General Partner, or
in the event the General Partner
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has withdrawn from the Partnership, been removed or dissolved or become bankrupt
(as defined in Section 14.1), a liquidator or liquidating committee approved by
a Majority Interest shall be the liquidator of the Partnership (the
"Liquidator"). The Liquidator (if other than the General Partner) shall be
entitled to receive such compensation for its services as may be approved by a
Majority Interest. The Liquidator shall agree not to resign at any time without
15 days' prior written notice and (if other than the General Partner) may be
removed at any time, with or without cause, by notice of removal approved by a
Majority Interest upon dissolution, resignation or removal of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all rights,
powers and obligations of the original Liquidator) shall, within 30 days
thereafter, be approved by a Majority Interest. Except as expressly provided in
this Article XIV, the Liquidator approved in the manner provided herein shall
have and may exercise, without further authorization or approval of any of the
parties hereto, all of the powers conferred upon the General Partner under the
terms of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers, other than the
restrictions set forth in Article XVII) to the extent appropriate or necessary
in the good faith judgment of the Liquidator to carry out the duties and
functions of the Liquidator hereunder for and during such period of time as
shall be reasonably required in the good faith judgment of the Liquidator to
complete the winding-up and liquidation of the Partnership as provided for
herein. The Liquidator shall liquidate the assets of the Partnership and apply
and distribute the proceeds of such liquidation in the following order of
priority, unless otherwise required by mandatory provisions of applicable law:
(a) to creditors of the Partnership (including Partners); and
(b) to the Partners, in proportion to and to the extent of the
positive balances in their respective Capital Accounts;
provided, however, that the Liquidator may place in escrow a reserve of cash
or other assets of the Partnership for contingent liabilities in an amount
determined by the Liquidator to be appropriate for such purposes.
14.4 Distribution in Kind. Notwithstanding the provisions of Section
14.3 requiring the liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if on dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole discretion, defer for a reasonable
time the liquidation of any assets except those necessary to satisfy liabilities
of the Partnership and may, in its sole discretion, distribute to the Partners,
or to specific classes of Partners, as tenants in common, in lieu of cash, and
as their interests may appear in accordance with the provisions of Section 14.3
(b), undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any distributions in kind shall be subject to such
conditions relating to the disposition and management thereof as the Liquidator
deems reasonable and equitable and to any joint ownership agreements or other
agreements governing the ownership and operation of such
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properties at such time. The Liquidator shall determine the fair market value of
any property distributed in kind using such reasonable method of valuation as it
may adopt.
14.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership property pursuant to Sections 14.3
and 14.4, the Partnership shall be terminated, and the Liquidator (or the
Limited Partners if necessary) shall cause the cancellation of the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware and shall
take such other actions as may be necessary to terminate the Partnership.
14.6 Return of Capital. The General Partner shall not be personally
liable for the return of the Capital Contributions of the Limited Partners, or
any portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.
14.7 Waiver of Partition. Each Partner hereby waives any rights to
partition of the Partnership property.
ARTICLE XV
Amendment of Partnership Agreement
15.1 Amendments Which May be Adopted Solely by the General Partner.
Subject to Section 15.3, the General Partner may amend any provision of this
Agreement without the consent of any Limited Partner, and may execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect:
(a) a change in the name of the Partnership, in the location of the
principal place of business of the Partnership or in the registered office
or registered agent of the Partnership;
(b) a change that the General Partner deems appropriate or necessary
to (i) qualify, or continue the qualification of, the Partnership as a
limited partnership (or a partnership in which the Limited Partners have
limited liability) under the laws of any state or jurisdiction or (ii)
ensure that neither the Partnership nor any of the Operating Partnerships
will be treated as an association taxable as a corporation for federal
income tax purposes;
(c) a change to divide outstanding Units into a greater number of
Units, to combine outstanding Units into a smaller number of Units or to
reclassify Units in a manner that in the good faith opinion of the General
Partner, does not adversely affect any class of Limited Partners in any
material respect;
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(d) a change that the General Partner in its sole discretion deems
appropriate or necessary to (i) satisfy any requirements, conditions or
guidelines contained in any order, rule or regulation of any federal or
state agency or contained in any federal or state statute or (ii)
facilitate the trading of any Units or comply with any rule, regulation,
requirement, condition or guideline of any National Securities Exchange on
which any Units are or will be listed or admitted to trading, or NASDAQ if
any Units are or will be quoted on NASDAQ;
(e) a change that is appropriate or necessary, as stated in an
Opinion of Counsel, to prevent the Partnership, the Operating Partnerships,
the General Partner, its Affiliates and their respective directors and
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisers Act of
1940, as amended, or "plan asset" regulations adopted under the Employee
Retirement Income Security Act of 1974, as amended, whether or not
substantially similar to plan asset regulations currently applied or
proposed by the United States Department of Labor;
(f) a change that is required or contemplated by any provision of
this Agreement, including, without limitation, Sections 4.3, 12.3 and 12.5;
(g) a change that in the good faith opinion of the General Partner
does not adversely affect the Limited Partners in any material respect; or
(h) any changes or events similar to the foregoing.
15.2 Other Amendments. Amendments to this Agreement may be proposed
only by the General Partner. Subject to Section 15.3, a proposed amendment
(other than amendments adopted pursuant to Section 15.1) shall be effective only
when approved by a Majority Interest. The General Partner shall notify all
Limited Partners upon final adoption of any proposed amendment.
15.3 Amendment Requirements. Notwithstanding the provisions of
Sections 15.1 and 15.2, (i) the approval of an Eighty Percent Interest shall be
required for any amendment unless the Partnership has received an Opinion of
Counsel that such amendment would not result in the loss of limited liability of
any Limited Partner or result in the Partnership or any Operating Partnership
being treated as an association taxable as a corporation for federal income tax
purposes, (ii) no provision of this Agreement which establishes a percentage of
the Limited Partners required to take or approve any action shall be amended in
any respect which would have the affect of reducing the voting requirement,
unless such amendment is approved by at least such percentage of Limited
Partners, and (iii) this Section 15.3 shall be amended only with the approval of
an Eighty Percent Interest.
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ARTICLE XVI
Meetings
16.1 Meetings. Meetings of Limited Partners may be called by the
General Partner or by Limited Partners holding an aggregate of at least 20% of
the outstanding LP Units. Within 60 days after receipt by the General Partner
of a written proposal to call a meeting signed by Limited Partners holding the
requisite number of LP Units and indicating the purpose for which the meeting is
to be called (or such longer period as shall be reasonably required by the
General Partner in order to prepare documents required therefor), the General
Partner shall cause a notice of the meeting to be given to each Limited Partner.
A meeting shall be held at a time and place determined by the General Partner
within 60 days after the giving of notice of the meeting. A Majority Interest
represented in person or by proxy shall constitute a quorum at a meeting of the
Partners.
16.2 Record Date. For purposes of determining the Limited Partners
entitled to notice of or to vote at any meeting or to give approvals without a
meeting as provided in Section 16.4, the General Partner may set a Record Date,
which date for purposes of notice of a meeting shall not be less than 10 days
nor more than 60 days before the date of the meeting.
16.3 Conduct of Meeting. (a) The General Partner shall have full
power and authority concerning the manner of conducting any meeting of Limited
Partners or the solicitation of proxies or consents in writing, including,
without limitation, the determination of Persons entitled to vote, the existence
of a quorum, the conduct of voting, the validity and effect of any proxies, and
the determination of any controversies, votes or challenges arising in
connection with or during the meeting or voting. The General Partner shall
designate an individual to serve as chairman of any meeting and shall further
designate an individual to take the minutes of any meeting, which individuals
may be directors or officers of the General Partner. All minutes shall be kept
with the records of the Partnership maintained by the General Partner.
(b) The General Partner may vote its LP Units in such manner as it in its
sole discretion may determine.
16.4 Action Without a Meeting. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if approvals in
writing setting forth the action so taken are signed by Limited Partners holding
in the aggregate at least the minimum number of LP Units that would be necessary
to authorize or take such action at a meeting at which all the Limited Partners
were present and voted. Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners who have not approved in writing. If
approvals to the taking of any action by the Limited Partners is solicited by
any Person other than by or on behalf of the General Partner, the approvals
shall have no force and effect unless and until (a) they are deposited with the
Partnership in care of the General Partner, (b) approvals sufficient to
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take the action proposed are dated as of a date not more than 90 days prior to
the date sufficient consents are deposited with the Partnership, and (c) the
Partnership receives an Opinion of Counsel that giving effect to such approvals
would not result in the loss of limited liability of any Limited Partner or
cause the Partnership or any of the Operating Partnerships to be treated as an
association taxable as a corporation for federal income tax purposes.
ARTICLE XVII
Certain Restrictions
17.1 Additional Units. (a) Without the prior approval of a Two-Thirds
Interest, the General Partner shall not cause the Partnership to issue any class
or series of LP Units having preferences or other special or senior rights over
the LP Units issued pursuant to Section 4.2.
(b) The General Partner shall not cause the Partnership to issue Units to
the General Partner or any of its Affiliates (other than pursuant to Section
4.1) unless (i) the Units are of a class which is, prior to such issuance,
listed or admitted to trading on a National Securities Exchange or quoted by
NASDAQ and the Net Agreed Value of the Contributed Property being contributed in
exchange for such Units is at least equal to the number of Units being so issued
times the Unit Price of such Units or (ii) such issuance is approved by a
Majority Interest.
17.2 Certain Amendments. (a) Without the prior approval of a Two-Thirds
Interest, the General Partner shall not amend the Incentive Compensation
Agreement or permit the Partnership or any Operating Partnership to amend any
compensation arrangement for the General Partner or the Manager, unless, in any
case, such amendment does not, in the good faith opinion of the General Partner,
adversely affect the Limited Partners in any material respect.
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(b) The General Partner shall not cause the Partnership to approve any
amendment to an Operating Partnership Agreement pursuant to Section 13.2 thereof
unless such amendment is approved by a Majority Interest.
17.3 Sale of Assets. Without the prior approval of a Two-Thirds
Interest, the General Partner shall not permit the sale or other disposition of
all or substantially all of the consolidated assets owned by the Partnership and
the Operating Partnerships.
17.4 Restricted Payments by General Partner or Manager. (a) The
General Partner shall not declare or make any Restricted Payment unless (i)
after giving effect thereto, the General Partner's assets that can be reached by
creditors (excluding its Partnership Interest and any notes receivable from or
payable to the Partnership) would have a fair market value (using such
reasonable method of valuation as the General Partner may adopt) equal to or
greater than $5,000,000, (ii) the Partnership has received an Opinion of Counsel
that such Restricted Payment would not result in the Partnership or any
Operating Partnership being treated as an association taxable as a corporation
for federal income tax purposes, or (iii) such Restricted Payment is approved by
an Eighty Percent Interest.
(b) The General Partner shall not permit the Manager to declare or make
any Restricted Payment unless (i) after giving effect thereto, the Manager's
assets that can be reached by creditors (excluding its partnership interest in
any Operating Partnership and any notes receivable from or payable to such
Operating Partnership) would have a fair market value (using such reasonable
method of calculation as the General Partner may adopt) equal to or greater than
$5,000,000, (ii) the Partnership has received an Opinion of Counsel that such
Restricted Payment would not result in the Partnership or any Operating
Partnership being treated as an association taxable as a corporation for federal
income tax purposes, or (iii) such Restricted Payment is approved by an Eighty
Percent Interest.
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ARTICLE XVIII
Right to Purchase Units
18.1 Right to Purchase Units. If fewer than 10% of the outstanding LP
Units are held by Persons other than the General Partner and its Affiliates, the
General Partner shall have the right, which it may assign to the Partnership or
any Affiliate, to purchase all, but not less than all, of the LP Units that
remain outstanding and are held by Persons other than the General Partner and
its Affiliates. Any such purchase shall be at a price per LP Unit in cash (the
"Purchase Price") equal to the greater of the Unit Price on the date of purchase
(the "Purchase Date") or the Issue Price for such LP Units, in either case
multiplied by (a)1.2, if the Purchase Date is after December 31, 1996 and on or
prior to December 31, 2001, (b) 1.1, if the Purchase Date is after December 31,
2001 and on or prior to December 31, 2006, or (c) 1.0, if the Purchase Date is
after December 31, 2006.
18.2 Notice of Election to Purchase. In the event the General
Partner, any Affiliate of the General Partner or the Partnership elects to
exercise such right to purchase LP Units pursuant to Section 18.1, the General
Partner shall cause the Transfer Agent to give written notice of such election
to purchase (the "Notice of Election to Purchase") to the Record Holders at
least 10, but not more than 60, days prior to the Purchase Date. Such Notice of
Election to Purchase shall also be published in daily newspapers of general
circulation printed in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the Purchase Price and state that the General Partner, its
Affiliate or the Partnership, as the case may be, has elected to purchase such
LP Units, upon surrender thereof in exchange for payment, and at such place as
specified. Any such Notice of Election to Purchase mailed to a Record Holder of
LP Units at his address as reflected in the Units Register shall be conclusively
presumed to have been given whether or not the owner receives such notice.
18.3 Purchase and Transfer of Units. On or prior to the Purchase
Date, the General Partner, its Affiliate or the Partnership, as the case may be,
shall deposit with the Transfer Agent cash in an amount equal to the amount
required to purchase all outstanding LP Units held by Persons other than the
General Partner or its Affiliates. If the Notice of Election to Purchase shall
have been duly given as aforesaid and if on or prior to the Purchase Date the
cash shall have been deposited with the Transfer Agent in trust for the benefit
of the holders of LP Units subject to purchase as provided herein, then from and
after the Purchase Date, whether or not any LP Units shall have been surrendered
for purchase, all rights of the holders of such LP Units (including, without
limitation, any rights pursuant to Articles V, VI and XIV) shall thereupon
cease, except the right to receive the Purchase Price therefor, without
interest, upon surrender to the Transfer Agent of the LP Certificates
representing such LP Units, and such LP Units shall thereupon be transferred to
the General Partner, its Affiliate or the Partnership, as the case may be, on
the Units Register, and the General Partner, its Affiliate or the Partnership,
as the case
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may be, shall be deemed to be the owner of all such LP Units from and after the
Purchase Date and shall have all rights as the owner of such LP Units.
ARTICLE XIX
General Provisions
19.1 Opinions Regarding Taxation as a Partnership. Notwithstanding
any other provisions of this Agreement, the requirement, as a condition to any
action proposed to be taken under this Agreement, that the Partnership receive
an Opinion of Counsel that the proposed action would not result in the
Partnership or any of the Operating Partnerships being treated as an association
taxable as a corporation for federal income tax purposes (a) shall not be
applicable to the extent that the Partnership or any of the Operating
Partnerships is at such time treated in all material respects as an association
taxable as a corporation for federal income tax purposes and (b) shall be deemed
satisfied by an Opinion of Counsel containing conditions, limitations and
qualifications which are acceptable to the General Partner in its sole
discretion.
19.2 Personal Property. The Partnership Interest of any Partner shall
be personal property for all purposes.
19.3 Addresses and Notices. Any notice, demand, request, payment or
report required or permitted to be given or made to a Limited Partner under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person or when sent by first class mail or by other means of written
communication to the Limited Partner at such Limited Partner's address as shown
on the Units Register. Any notice to the Partnership or the General Partner
shall be deemed given if received in writing by the General Partner at the
principal office of the Partnership designated pursuant to Section 2.3.
19.4 Headings. All article or section headings in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof.
19.5 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto (including the additional Persons that
become Limited Partners as provided herein) and their heirs, executors,
administrators, successors, legal representatives and assigns.
19.6 Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
19.7 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy
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consequent upon a breach thereof shall constitute a waiver of any such breach or
of any other covenant, duty, agreement or condition.
19.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto (including the additional Persons that become Limited
Partners as provided herein).
19.9 Severability. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions hereof, or of such provision in other
respects, shall not be affected thereby.
19.10 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.
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In Witness Whereof, this Agreement has been duly executed by the General
Partner on behalf of itself and as agent and attorney-in-fact for the Limited
Partners, as of the date first above written.
Buckeye Management Company,
as General Partner
By:
------------------------------------------
Title:
Limited Partners,
All Limited Partners now or hereafter admitted
as limited partners of the Partnership,
pursuant to powers of attorney now or
hereafter executed in favor of, and
delivered to, the General Partner.
By Buckeye Management Company,
as General Partner
By:
------------------------------------------
Title:
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APPENDIX B
FORM OF CONSENT
BUCKEYE PARTNERS, L.P.
3900 Hamilton Boulevard
Allentown, Pennsylvania 18103
CONSENT AND VOTE FOR ADOPTION
OF PROPOSED AMENDMENTS TO THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
The undersigned Unitholder of Buckeye Partners, L.P., a Delaware limited
partnership, hereby revokes all prior consents given with respect to the matters
covered hereunder, and acknowledges receipt of the Consent Solicitation
Statement dated __________, 1998.
THE LP UNITS REPRESENTED BY THIS SIGNED CONSENT WILL BE TREATED AS HAVING
CAST A VOTE IN ACCORDANCE WITH THE BOX YOU MARK ON THE REVERSE SIDE.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS CONSENT USING THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
THE GENERAL PARTNER RECOMMENDS Please mark your votes as /X/
A VOTE FOR THE PROPOSAL indicated in this example
Proposal: To amend and restated the Amended and Restated Agreement of
Limited Partnership by approving and adopting the proposed amendments described
in the Consent Solicitation Statement to the Amended and Restated Agreement of
Limited Partnership. A copy of the Amended and Restated Agreement of Limited
Partnership is included in the accompanying Consent Solicitation Statement as
Appendix A.
FOR AGAINST
/ / / /
If no box is marked above, but this Consent is otherwise properly completed and
signed, the LP Units will be voted "for" the Proposal.
The solicitation of Consents will expire at 5:00 p.m., Eastern Standard Time, on
May __, 1998, unless extended. Failure to return this Consent will have the same
effect as a vote against the Proposal.
Dated ______________________, 1998
Signature
---------------------------------
Title or Authorization
(if signing in a representative
capacity)
---------------------------------
Signature if jointly held
B-1
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Please execute this consent as your name appears on this form. When partnership
units are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
B-2
