SCHEDULE 14A
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 ý
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ Preliminary Proxy Statement
¨ Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Under Rule 14a-12
BUCKEYE PARTNERS, L.P.
Payment of Filing Fee (Check the appropriate box):
ý No fee required.
¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
¨ 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:
January 18, 2005
NOTICE OF
To our Unitholders:
We are soliciting your consent to amend certain provisions of the Unit Option and Distribution Equivalent Plan, as amended and restated through April 24, 2002 (the Plan), of BUCKEYE PARTNERS, L.P., a Delaware limited partnership (we, us, or the Partnership).
We are proposing certain amendments (the Proposed Amendments) that require the approval of the limited partners of the Partnership (Unitholders). The Proposed Amendments would, among other things, increase the number of Units authorized for issuance under the Plan from 720,000 Units (of which 680,400 have been granted to date) to 1,400,000 Units. The Proposed Amendments are described in more detail in the accompanying Consent Solicitation Statement.
Unitholders of record at the close of business on December 31, 2004 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 a majority of our limited partnership units (Units) outstanding as of the close of business on the record date. THE BOARD OF DIRECTORS OF BUCKEYE GP LLC, OUR GENERAL PARTNER, HAS VOTED UNANIMOUSLY TO RECOMMEND THAT THE UNITHOLDERS VOTE FOR THE PROPOSED AMENDMENTS.
The Proposed Amendments can only be adopted following the required approval 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 Statement 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.
The Consent Solicitation will expire at, and your Consent must be received by, 5:00 p.m., eastern standard time, on February 28, 2005 (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 5:00 p.m., eastern standard time, on the Expiration Date.
William H. Shea, Jr. | |
Chief Executive Officer and President | |
Buckeye GP LLC, as General Partner |
BUCKEYE PARTNERS, L.P.
CONSENT SOLICITATION STATEMENT
This Consent Solicitation Statement is being furnished to the holders of limited partnership units (Units) of Buckeye Partners, L.P. (the Partnership) as of the close of business on December 31, 2004 (the Record Date) in connection with the solicitation (the Solicitation) of consents of the holders of Units (Unitholders) to approve Proposed Amendments (as defined below under The Plan and Proposed Amendments) to the Partnerships Unit Option and Distribution Equivalent Plan (the Plan). This Consent Solicitation Statement and the enclosed form of Consent are being mailed to Unitholders on or about January 20, 2005.
The enclosed consent is being solicited by and on behalf of the Board of Directors of Buckeye GP LLC, the general partner of the Partnership (the General Partner). The Proposed Amendments will be considered and voted on by Unitholders as a single proposal. A copy of the Plan containing the Proposed Amendments is attached to this Consent Solicitation Statement as Appendix A.
Only Unitholders of record at the close of business on the Record Date are entitled to vote on the Proposed Amendments. Adoption of the Proposed Amendments requires the receipt of affirmative consents of Unitholders holding a majority of the Units outstanding.
The Proposed Amendments have been approved unanimously by the Board of Directors of the General Partner, as being in the best interests of the Partnership and the Unitholders. The Board of Directors of the General Partner unanimously recommends that you vote FOR the Proposed Amendments.
This Solicitation will expire at, and your consent must be received by, 5:00 p.m., eastern standard time, on February 28, 2005 (the Expiration Date). The General Partner may extend this 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 5:00 p.m., eastern standard time, on the Expiration Date.
If you have any questions about this Consent Solicitation Statement, please call MacKenzie Partners, Inc. at 800-322-2885 (toll free) or 212-929-5500 (collect) or Stephen R. Milbourne, the Partnerships Manager of Investor Relations, at 800-422-2825.
This Consent Solicitation Statement is dated January 18, 2005.
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).
The Partnership
The Partnership is a publicly traded master limited partnership organized in 1986 under the laws of the State of Delaware. Its principal line of business is the transportation, terminalling and storage of refined petroleum products in the United States for major integrated oil companies, large refined products marketing companies and major end users of petroleum products on a fee basis through facilities that it owns and operates.
The Partnership owns and operates one of the largest independent refined petroleum products pipeline systems in the United States in terms of volumes delivered, with approximately 4,500 miles of pipeline serving 13 states. It also operates approximately 1,300 miles of pipeline under agreements with major oil and chemical companies. Further, it owns and operates 38 refined petroleum products terminals with aggregate storage capacity of approximately 15.4 million barrels in Illinois, Indiana, Massachusetts, Michigan, Missouri, New York, Ohio and Pennsylvania.
The Plan
The Buckeye Partners, L.P. Unit Option and Distribution Equivalent Plan (the Plan) is intended to benefit the Partnership in attracting and retaining selected officers and key employees of the Partnership, the General Partner and affiliates by enabling such persons to acquire or increase their proprietary interest in the Partnership and encouraging them to perform effectively and to use their best efforts to promote the growth and profitability of the Partnership. The Plan provides for the grant of options to acquire Units. In certain cases options may be granted with distribution equivalents, which provide the optionee with an accrual of an amount equal to the regular quarterly Partnership distribution on the number of unvested Units subject to the option, subject to certain adjustments.
The Proposed Amendments
The Proposed Amendments would amend the Plan to increase the number of Units authorized for issuance under the Plan from 720,000 Units (of which 680,400 have been granted to date) to 1,400,000 Units. The Proposed Amendments also (i) update the description of which employees are eligible to receive option grants under the Plan, (ii) eliminate references to the loan program of the General Partner, which is no longer in effect, (iii) permit participants to pay the exercise price of options through a broker-assisted exercise under Regulation T of the Federal Reserve Board, (iv) extend the term of the Plan to the earlier of the 20th anniversary of the effective date of the Proposed Amendments or the date on which all Units available for issuance under the Plan have been issued, (v) limit the increase in distribution equivalents based on achievement of corporate performance goals to a maximum of 200% of the distribution equivalents otherwise credited to the optionees account, and (vi) make other clarifying and updating changes consistent with current applicable law.
Required Vote
The Proposed Amendments will be considered and voted on by Unitholders as a single proposal. Adoption of the Proposed Amendments requires the receipt of affirmative consents of Unitholders holding a majority of the Units outstanding.
Interest of Directors and Executive Officers
Since July 14, 1998, members of the Board of Directors and executive officers of the General Partner have not been eligible to receive grants of Unit options under the Plan or to receive any material increases in benefits with respect to previously granted Unit options as a result of Plan amendments. The Proposed Amendments do not change these limitations on eligibility. Accordingly, apart from the interests of the Partnership in having the Proposed Amendments approved, the members of the Board of Directors and the executive officers of the General Partner do not have a substantial interest in the passage of the Proposed Amendments.
2
THE PLAN AND PROPOSED AMENDMENTS
Approval of the 2005 Amendment and Restatement of the Partnerships Unit Option and Distribution Equivalent Plan
The Partnership maintains the Buckeye Partners, L.P. Unit Option and Distribution Equivalent Plan. The Board of Directors of the General Partner (the Board) approved an amendment and restatement of the Plan that, assuming it is approved by the Unitholders as a result of this Solicitation, will be effective as of March 1, 2005. The amendments contained in the amended and restated Plan are referred to in this document as the Proposed Amendments. The essential features of the Plan, as amended by the Proposed Amendments, are summarized below.
Proposed Amendments
The Proposed Amendments to the Plan will increase the number of Units authorized for issuance under the Plan from 720,000 Units (of which 680,400 have been granted to date) to 1,400,000 Units. The Proposed Amendments to the Plan also (i) update the description of which employees are eligible to receive option grants under the Plan, (ii) eliminate references to the loan program of the General Partner, which is no longer in effect, (iii) permit participants to pay the exercise price of options through a broker-assisted exercise under Regulation T of the Federal Reserve Board, (iv) extend the term of the Plan to the earlier of the 20th anniversary of the effective date of the Proposed Amendments or the date on which all Units available for issuance under the Plan have been issued, (v) limit the increase in distribution equivalents based on achievement of corporate performance goals to a maximum of 200% of the distribution equivalents otherwise credited to the optionees account, and (vi) make other clarifying and updating changes consistent with current applicable law.
Purpose
The Plan is intended to benefit the Partnership in attracting and retaining selected officers and key employees of the Partnership, the General Partner and affiliates by enabling such persons to acquire or increase their proprietary interest in the Partnership and encouraging them to perform effectively and to use their best efforts to promote the growth and profitability of the Partnership.
The Partnership is seeking Unitholder approval of the Plan in order to comply with New York Stock Exchange requirements and the Plan requirements.
Plan Provisions
The Plan provides for the grant of options to acquire Units. In certain cases options may be granted with distribution equivalents, which provide the optionee with an accrual of an amount, subject to adjustment in the discretion of the Committee, equal to the regular quarterly Partnership distribution on the number of unvested Units subject to the option.
Options granted under the Plan are non-statutory options, which are not intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the Code). The Plan is
3
Administration. The Plan may be administered by the Board or by a committee consisting of at least two members of the Board. The Board or committee that administers the Plan is referred to as the Committee. The Board currently administers the Plan.
The Committee may authorize one or more officers of the General Partner to designate optionees and determine the number of options to be received by such optionees, provided that the authorizing resolution specifies the total number of options that may be so awarded.
Subject to the express provisions of the Plan, the Committee is authorized to construe and interpret the Plan, to establish rules for administering the Plan and to make all determinations necessary or appropriate for the administration of the Plan, including determinations concerning the officers and key employees to whom options will be granted, the time or times at which options will be granted, the terms and provisions of the respective option agreements, the number of Units subject to each option, and the extent to which options may be granted with distribution equivalents. Grants of options under the Plan need not be uniform among optionees.
Eligibility. Persons eligible to receive options under the Plan are officers and key employees of the Partnership, the General Partner and affiliates, as determined by the Committee. However, the following individuals are not eligible to receive options under the Plan or material increases in benefits with respect to previously approved options: (1) a member of the Board, or (2) an officer of the General Partner whose compensation is not reimbursed by the Partnership pursuant to the terms and conditions of the Third Amended and Restated Exchange Agreement, dated as of December 15, 2004. The Partnerships workforce is employed by Buckeye Pipe Line Services Company (Services Company), which is owned by the Buckeye Pipe Line Services Company Employee Stock Ownership Plan Trust. For the purposes of the Plan, Services Company is considered an affiliate of the Partnership, and therefore, its employees are eligible for grants under the Plan.
Securities Subject to the Plan. The equity securities subject to options under the Plan are Units. The number of Units issuable under the Plan may not exceed 1,400,000, subject to certain adjustments, as provided below under Changes in Units. If an option, or any portion thereof, expires, terminates, or is surrendered or cancelled for any reason without the full number of Units being issued to the optionee (including pursuant to a cancellation and new grant of options as described in Cancellation and New Grant of Awards below), the Units subject to the expired, terminated, surrendered or canceled portion of the option will again be available for subsequent grant under the Plan. Units issuable upon exercise of options may be previously issued and outstanding Units reacquired by the Partnership or certain of its affiliates or may be authorized but unissued Units, or may be partly of each.
Options. Each option granted under the Plan will be evidenced by an option agreement in such form as the Committee prescribes, which sets forth the terms of the option and the rights and obligations of the Partnership and the optionee.
In general, the Plan provides that the option price per Unit may not be less than 100% of the fair market value of a Unit on the date of the option grant.
Although option agreements may provide for a different vesting schedule, the Plan provides that options in general will vest in accordance with a schedule which provides that 100% of the Units subject to the options may be purchased beginning three years after the date of grant, provided the optionee remains an employee of the Partnership, General Partner, or any affiliate. An option shall become fully vested upon (i) the optionees termination of employment upon death, disability or retirement, (ii) the optionees termination of employment by the Partnership, General Partner of an affiliate without cause within one year after a merger or consolidation of the Partnership, a sale of substantially all the Partnerships assets or the acquisition of effective voting control of the Partnership by another individual or entity, (iii) a determination by the Committee that acceleration of vesting is desirable for the Partnership or (iv) acceleration of vesting upon an Extraordinary Transaction as described in Changes in Partnership Structure or Control below.
4
Once an option (or any portion) becomes vested in accordance with the foregoing schedule, the option (or such portion) remains exercisable for a period of seven years from the date of vesting, or for a shorter period specified by the Committee.
The Committee may require, as a term of an option agreement, that the optionee accumulate and retain a minimum number of Units, as specified by the Committee in its discretion. The Committee shall permit an optionee to satisfy the unit retention requirement over a prescribed period. An optionee who fails to comply with the unit retention requirement after expiration of the prescribed period will not be eligible to receive further grants of options under the Plan.
An optionee may pay the option price to the Partnership in the following forms: (i) cash, or (ii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board.
An option is not assignable or transferable by the optionee other than by will, by the laws of descent and distribution, or pursuant to a qualified domestic relations order. During the lifetime of the optionee, an option is exercisable only by the optionee. The Plan provides that options may be exercised in certain circumstances following an optionees termination of employment, including termination as a result of the optionees death, disability or retirement.
No optionee will have any rights of a Unitholder with respect to any Units covered by an option until the optionee has exercised the option, paid the option purchase price and been issued such Units.
Distribution Equivalents. The Committee may grant, in its discretion and subject to such conditions, if any, as it may determine, options with a distribution equivalent feature that provides for the accrual of an amount equal to the regular quarterly Partnership distribution on the number of unvested Units subject to the options. Distribution equivalents are maintained in distribution equivalent accounts on the Partnerships records. Distribution equivalents cease to accrue with respect to vested Units subject to an option. No interest accrues or is payable to the balance in any distribution equivalent account. Any special Unit distributions declared by the Board will be credited to the distribution equivalent accounts only upon specific Committee approval.
As a term of an option agreement, the Committee may condition the optionees receipt of the distribution equivalent account value upon continued service and upon the achievement of such corporate performance goals as the Committee may establish in its discretion. If the Committee conditions the receipt of distribution equivalents on the achievement of performance goals, the Committee shall establish a performance period and goals on such terms as it deems appropriate. At the end of the specified period, the Committee shall (i) adjust the accumulated distribution equivalents to reflect the achievement of such performance goals, which may result in an increase or decrease in distribution equivalents credited to an optionees account, and (ii) distribute the distribution equivalents, as adjusted, in cash to the optionees who have met the applicable service requirement. The Committee may increase the distribution equivalents credited to an optionees account based on achievement of performance goals to a maximum of 200% of the distribution equivalents otherwise credited to the optionees account. Distribution equivalents shall be paid on specified dates in accordance with the requirements of Section 409A of the Code, if applicable.
Changes in Units. If any change is made to the Units issuable under the Plan or the Partnership makes a distribution of cash, Units, assets or other property to Unitholders which results from the sale or disposition of a major asset or separate operating division of the Partnership or any other extraordinary event, and in the judgment of the Committee, such change or distribution would significantly dilute the rights of optionees, then the Committee may make appropriate adjustments in the maximum number of Units issuable under the Plan to reflect such change or distribution on the Partnerships capital structure, and may make appropriate adjustments to the number of Units and the purchase price subject to outstanding options to prevent the dilution of benefits intended for optionees under the Plan. The adjustments, if any, determined by the Committee will be final, binding and conclusive.
Changes in Partnership Structure or Control. Under the Plan, an Extraordinary Transaction will occur if (i) the Unitholders approve a merger or consolidation of the Partnership with any other entity, other
5
In the event of an Extraordinary Transaction, each option outstanding under the Plan and not fully exercisable will become fully exercisable during the ten business day period immediately prior to the specified effective date of the Extraordinary Transaction, all Units purchased upon the exercise of such options will be delivered to the optionee immediately prior to the specified effective date of the Extraordinary Transaction, and all accumulated distribution equivalents, if any and without adjustment, will be paid to the optionee in cash. No such acceleration or payment will occur in connection with an Extraordinary Transaction if the terms of the agreement for the Extraordinary Transaction require as a condition to the consummation of the Extraordinary Transaction that outstanding options will be assumed by, or replaced with comparable options (as determined by the Committee) to purchase or receive securities of, the successor entity or its affiliate. The determination of comparability, if any, by the Committee will be final, binding and conclusive. Upon consummation of an Extraordinary Transaction, each outstanding option, to the extent not previously exercised or paid in full or assumed by a successor entity, will terminate.
Further, in the event of an Extraordinary Transaction, the Committee shall have the discretion to cancel outstanding options in whole or in part, subject to such conditions as the Committee may determine, upon payment to the optionees with respect to options then exercisable of an amount in cash equal to the excess of (i) the fair market value (at the effective date of the Extraordinary Transaction) of the consideration the optionee would have received in the Extraordinary Transaction if the option had been exercised immediately prior to the effective date of such Extraordinary Transaction, over (ii) the aggregate exercise price of such option. The Committee may determine that accumulated distribution equivalents will be paid to optionees in cash.
Amendment and Termination. The Committee has complete and exclusive power and authority to terminate or amend the Plan and may amend outstanding options issued under the Plan in any or all respects whatsoever, subject to the terms of the Plan. However, no such termination or amendment may adversely affect the rights of an optionee with respect to outstanding options under the Plan unless the optionee consents to such amendment or modification. Furthermore, the Committee may not amend the Plan without approval of the Unitholders if such amendment would (i) materially increase the maximum number of Units issuable thereunder (except for certain adjustments in the event of changes in the Partnerships capital structure as described generally above), (ii) materially modify the eligibility requirements for the grant of options under the Plan, or (iii) materially increase the benefits accruing to individuals who participate in the Plan. However, the Committee may amend the Plan in such a manner as the Committee deems necessary or appropriate to comply with the requirements of Code Section 409A, which imposes requirements with respect to deferred compensation.
Unless the Plan is sooner terminated by the Board, no option may be granted under the Plan after the earlier of (i) the 20th anniversary of the effective date of the Proposed Amendments to the Plan, or (ii) the date on which all Units available for issuance under the Plan have been issued.
Federal Tax Consequences
The following is a general description of the federal income tax consequences of options granted under the Plan. It does not purport to be complete. In particular, this general description does not discuss the applicability of the income tax laws of any state or foreign country.
6
Options granted under the Plan are non-statutory options under the Code. There are no federal income tax consequences to optionees, the Partnership or the General Partner upon the grant of an option under the Plan. Generally, upon the exercise of options, optionees will recognize ordinary compensation income in an amount equal to the excess of the fair market value of the Units at the time of exercise over the purchase price of the option. The optionee will recognize ordinary compensation income when distribution equivalents are paid to the optionee. The Partnership generally will be entitled to a corresponding federal income tax deduction.
Upon the sale of Units acquired by exercise of an option, an optionee generally will have gain or loss (which may consist of both ordinary and capital gain and loss elements depending upon the Partnerships taxable income and loss during the period in which the Units were held). The optionees adjusted tax basis in the Units will be the purchase price plus the amount of ordinary income recognized by the optionee at the time of exercise of the option, adjusted for intervening Partnership gains or losses and distributions.
Options Granted Under the Plan
As of January 18, 2005, out of the 720,000 Units authorized for grant under the Plan, an aggregate of 680,400 Units (net of cancellations) subject to options had been awarded, and 39,600 Units remained available for grant. If the Proposed Amendments to the Plan are approved, the total number of Units that may be issued will be 1,400,000 Units, meaning that 719,600 Units will be available for grant under the Plan, as amended by the Proposed Amendments.
No grants have been made that are subject to Unitholder approval of the Proposed Amendments to the Plan. Because grants under the Plan are discretionary, it is not possible at present to predict the number of grants or the persons to whom grants will be made in the future under the Plan.
The last sales price of the Partnerships Units on January 14, 2005, was $43.38 per Unit.
Text of the Plan
The full text of the Plan, marked to show the Proposed Amendments, 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 text of the Plan attached as Appendix A to this Consent Solicitation Statement.
7
THE CONSENT SOLICITATION
Voting Securities, Record Date and Outstanding Units
This 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 record holders of Units at the close of business on December 31, 2004 will be taken into account for the purpose of determining whether the requisite approval of the Proposed Amendments has been obtained. Each Unitholder entitled to vote shall have one vote for each Unit outstanding in such Unitholders name.
On the Record Date, there were a total of 34,281,246 Units outstanding, which were held by approximately 34,000 Unitholders.
Consent and Revocation of Consent
The General Partner will accept forms of Consent at any time before 5:00 p.m., eastern standard time, on the Expiration Date, which is February 28, 2005. The enclosed form of Consent, when properly completed and returned, will constitute a Unitholders 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 Units represented by such form of Consent will be voted for approval of the Proposed Amendments in accordance with the recommendation of the Board of Directors of the General Partner.
A Unitholder who has executed and returned a form of Consent may revoke it at any time before 5:00 p.m., eastern standard time, on 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 5002 Buckeye Road, Emmaus, Pennsylvania 18049, Attention: Stephen C. Muther, Senior Vice President Administration, General Counsel and Secretary.
Required Vote
The Proposed Amendments require the approval of holders of a majority of the outstanding Units as of the close of business on the Record Date.
Because the approval of holders of a majority of the outstanding 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.
Services Company, which is owned by the Buckeye Pipe Line Services Company Employee Stock Ownership Plan Trust, owned 2,395,173 Units as of the Record Date (approximately 7 percent of the Units outstanding), and MainLine Sub LLC (MainLine Sub), which is the parent company of the General Partner, owned 80,000 Units as of the Record Date (approximately 0.2 percent of the Units outstanding). The executive officers and directors of the General Partner owned 112,300 Units (approximately 0.3 percent of the Units outstanding) as of the Record Date. Each of Services Company, MainLine Sub, and each executive officer and director of the General Partner who holds Units has advised the General Partner that it intends to consent, as to the Units it owns, to the Proposed Amendments. Therefore, in addition to the Units held by Services Company, MainLine Sub and the executive officers and directors of the General Partner, the consent of holders of an additional 14,553,151 Units is required to approve the Proposed Amendments. For further information concerning the ownership of Units by the General Partners affiliates, executive officers and directors, see Security Ownership of Certain Beneficial Owners and Management on page 11.
8
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 MacKenzie Partners, Inc. for a fee of approximately $7,500, plus reasonable out-of-pocket expenses. In addition, the Partnership will reimburse brokers, banks and other persons holding Units in their names, or in the names of nominees, for their expenses in sending these 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 MacKenzie Partners, Inc.
No Appraisal Rights
Unitholders who object to the Proposed Amendments and the resulting changes to the Plan will have no appraisal, dissenters or similar rights (i.e., the right to seek a judicial determination of the fair value of their Units and to compel the purchase of their Units for cash in that amount) under Delaware law or the Partnership Agreement, nor will such rights be voluntarily accorded to holders of Units by the Partnership. Thus, approval of the Proposed Amendments by holders of a majority of the outstanding Units will be binding on all holders of Units, and objecting holders of Units will have no alternative other than selling their Units prior to the effective date of the Proposed Amendments.
Notice to Unitholders
The General Partner will notify Unitholders of the results of this Solicitation promptly after the Expiration Date.
9
INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS IN PROPOSED AMENDMENTS
Since July 14, 1998, members of the Board of Directors and executive officers of the General Partner have not been eligible to receive grants of Unit options under the Plan or to receive any material increases in benefits with respect to previously granted Unit options as a result of Plan amendments. The Proposed Amendments do not change these limitations on eligibility. On January 1, 2005, Eric A. Gustafson became the General Partners Senior Vice President Operations and Technology. Prior to such date, Mr. Gustafson was an employee of Services Company and was not an executive officer of the General Partner, making him eligible for grants under the Plan. Mr. Gustafson currently holds 11,100 Unit options, which were granted to him between February 2002 and February 2004. The exercise price of these Unit options varies between $36.56 and $42.10 per Unit option. The Proposed Amendments would not allow Mr. Gustafson to receive any additional Unit options, nor would they allow any material increases in benefits with respect to the previously granted Unit options. No other director or executive officer of the General Partner holds Unit options. Accordingly, apart from the interests of the Partnership in having the Proposed Amendments approved, the members of the Board of Directors and the executive officers of the General Partner do not have a substantial interest in the passage of the Proposed Amendments.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The General Partner is wholly owned by MainLine Sub, which is in turn wholly owned by MainLine L.P., a Delaware limited partnership (MainLine). MainLine Sub also owns 80,000 of the Partnerships Units. The General Partner owns approximately a 1 percent general partner interest in the Partnership and approximately a 1 percent general partner interest in each of the Partnerships operating partnership subsidiaries (the Operating Partnerships). MainLine Sub also has certain rights to incentive compensation under the Incentive Compensation Agreement, dated as of December 15, 2004, between MainLine Sub and the Partnership (the Incentive Compensation Agreement).
As of December 31, 2004, Services Company owned 2,395,173 Units, or approximately 7 percent of the outstanding Units. No other person or group is known to be the beneficial owner of more than 5 percent of the Units as of December 31, 2004.
The following table sets forth certain information, as of December 31, 2004, concerning the beneficial ownership of Units by each director of the General Partner, the Chief Executive Officer of the General Partner, the three other officers of the General Partner and by all directors and executive officers of the General Partner 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
10
Name | Number of Units(1) | |||
Brian F. Billings
|
17,500 | |||
Eric A. Gustafson
|
11,200 | |||
Michael B. Hoffman
|
80,000 | (3) | ||
Edward F. Kosnik
|
14,000 | |||
David M. Leuschen
|
80,000 | (3) | ||
Joseph A. LaSala, Jr.
|
0 | |||
Stephen C. Muther
|
23,100 | |||
Jonathan OHerron
|
20,800 | (2) | ||
William H. Shea, Jr.
|
100,200 | (2)(3) | ||
Frank S. Sowinski
|
5,500 | |||
Robert B. Wallace
|
0 | |||
Andrew W. Ward
|
80,000 | (3) | ||
All directors and executive officers as a group
(consisting of 12 persons)
|
192,300 | (4) |
(1) | Unless otherwise indicated, the persons named above have sole voting and investment power over the Units reported. |
(2) | The Units owned by the persons indicated have shared voting and investment power with their respective spouses. |
(3) | Includes the 80,000 Units owned by MainLine Sub, over which the indicated persons share voting and investment power by virtue of their membership on the Board of Managers of MainLine Management LLC, which is the general partner of the sole member of MainLine Sub. Such individuals expressly disclaim beneficial ownership of such Units. |
(4) | The 80,000 Units owned by MainLine Sub are included in this total only once. |
Changes of Control
On May 4, 2004, the owners of MainLine Sub (which was then known as Glenmoor LLC) sold all of the outstanding limited liability company interests of MainLine Sub to MainLine (which was then known as BPL Acquisition L.P.). MainLine is owned by Carlyle/ Riverstone Global Energy and Power Fund II, L.P. and certain members of the General Partners senior management. MainLine paid to the prior owners of MainLine Sub an aggregate of approximately $235 million in cash, subject to various adjustments.
MainLine financed the purchase price through a combination of (a) equity capital from the Carlyle/ Riverstone Global Energy and Power Fund II, L.P. and certain members of senior management and (b) the proceeds from a $100.0 million secured credit and guaranty agreement (the Original Credit Agreement), entered into at the closing of the sale by MainLine, Goldman Sachs Credit Partners L.P., as administrative agent (GSCP) and the various lenders party thereto. On December 17, 2004, the loans under the Original Credit Agreement were refinanced with a portion of the proceeds from a secured credit and guaranty agreement (the Credit Agreement), entered into by MainLine, GSCP and the various lenders party thereto. The Partnership was not a party to the Original Credit Agreement and is not a party to the Credit Agreement. The Credit Agreement is secured by pledges of substantially all of the assets of MainLine and MainLine Sub, including all of the outstanding limited liability company interests of each of MainLine Sub and the General Partner. If MainLine and MainLine Sub default on their obligations under the Credit Agreement, the lenders could exercise their rights under these pledges, which could result in a future change of control of the Partnership.
11
PLEASE NOTE:
Attached as Appendix A is a copy of the Plan, marked to show the Proposed Amendments. The redlining shows text proposed to be deleted with a line through it and text proposed to be added as bolded.
Your Consent is important, regardless of the number of Units you own.
12
BUCKEYE PARTNERS, L.P.
UNIT OPTION AND DISTRIBUTION EQUIVALENT PLAN
Amended and Restated
UNIT OPTION AND DISTRIBUTION EQUIVALENT PLAN
1. | Purpose. |
The Unit Option and Distribution Equivalent Plan
(the Plan) of Buckeye Partners, L.P., a Delaware
limited partnership (the Partnership), is designed
to assist the Partnership, Buckeye [Pipe Line
Company]GP LLC, the Partnerships general
partner (the General Partner), and
Affiliates[ of the Partnership and the General
Partner] in attracting and retaining employees of
outstanding competence and to enable selected officers and key
employees of the Partnership, the General Partner and Affiliates
to acquire or increase ownership interests in the Partnership on
a basis that will encourage them to perform at increasing levels
of effectiveness and to use their best efforts to promote the
growth and profitability of the Partnership. Consistent with
these objectives, the Plan authorizes the granting of options
(the Options) to acquire limited partnership
interests in the Partnership represented by units (the
Units) to selected officers and key employees (the
Optionees) pursuant to the terms and conditions
hereinafter set forth. As used herein, the terms
Affiliate and Affiliates refer to any
domestic or foreign corporation, partnership, limited liability
company or other entity that directly or indirectly controls, is
controlled by or is under common control with either the
Partnership or the General Partner. For purposes of this Plan,
Buckeye Pipe Line Services Company shall be considered an
Affiliate of the General Partner.
2. | Effective Date of the Plan. |
Effective Date; Unitholder
Approval. The Plan originally
became effective April 25, 1991 [(the
Effective Date) ]and was amended and
restated as of April 24, 2002. This 2005 amendment and
restatement was approved [on October 22,
1991, at a special meeting of]by the holders of
Units (the Unitholders) [by a majority of
the Unitholders then entitled to vote in person or by proxy at
such meeting.]and became effective on March 1,
2005.
3. | Administration. |
(a) Administration by Committee. The
Plan shall be administered by either the Board of Directors of
the General Partner (the Board), or a committee of
the Board consisting of at least two (2) members of the
Board (the Committee)[, provided that no
member of the Board, if the Board is then administering the
Plan, or member of the Committee, if the Committee is then
administering the Plan, within the one (1) year period
preceding the later of the Effective Date or such members
appointment to the Board or the Committee, received an Option
under the Plan or an option or similar award under any other
Partnership plan or plan of an affiliate (as such term is
defined in Rule 405 under the Securities Act of 1933, as
amended), of the Partnership where any such award was made on a
discretionary basis. Any member of the Board or Committee
administering the Plan who does not satisfy the foregoing
requirement shall not serve in any capacity in administering the
Plan until one year has elapsed from the date such option or
award was granted]. For purposes of the Plan, the term
Committee, as used hereinafter, shall refer to the
Board if the Board has not appointed the Committee to administer
the Plan. The Committee shall have and exercise all of the
powers and authority granted to it by the provisions of the
Plan. Members of the Committee shall serve, and may be removed,
at the pleasure of the Board.
(b) Quorum. For purposes of administration of the Plan, a majority of the members of the Committee eligible to serve as such shall constitute a quorum, and any action taken by a majority of the members of the Committee present at any meeting at which a quorum is present, or acts approved in writing by a majority of such members of the Committee, shall be the acts of the Committee.
(c) Committee Power. Subject to the
express provisions of the Plan, the Committee shall have full
authority (i) to decide when Options will be granted under
the Plan, (ii) to select Optionees under the
Plan[,] and (iii[) to determine
which Optionees may be entitled to the benefits of the General
Partners Unit Option Loan Program adopted as of the
Effective Date (the Loan Program), and
(iv]) to determine the number of Units to be covered by
each Option, the price at which such Units may be purchased and
any other terms and conditions of such Option, including the
applicability of the Distribution Equivalent feature described in
2
(d) Plan Interpretation. Subject to the express provisions of the Plan, the Committee shall have full and express discretionary authority to interpret the Plan and any option agreements evidencing Options granted hereunder (the Option Agreements), to issue rules for administering the Plan, to change, alter, amend or rescind such rules, and to make all other determinations necessary or appropriate for the administration of the Plan. All determinations, interpretations and constructions made by the Committee pursuant to this Section 3 shall be final and conclusive. No member of the Committee shall be liable for any action, determination or omission taken or made in good faith with respect to the Plan or any Option granted hereunder. All Options shall be granted conditional upon the Optionees acknowledgement, in writing or by acceptance of the Option, that all decisions and determinations of the Committee shall be final and binding on the Optionee, his or her beneficiaries and any other person having or claiming an interest under such Option. Grants need not be uniform as among the Optionees.
4. | Units Subject to Options. |
(a) Number, Source and Use of Units.
The equity securities to be subject to Options granted under the
Plan shall be limited partnership interests in the Partnership
represented by Units. The aggregate number of Units which may be
issued under Options granted pursuant to the Plan shall not
exceed [720,000 (giving effect to the Unit split
effective in January 1998)]1,400,000 Units,
subject to further adjustment as provided in Sections 4(b)
and 8(b) of the Plan. If an Option, or any portion thereof,
expires, terminates or is surrendered or canceled for any reason
(including pursuant to a cancellation and new grant of Options
pursuant to Section 10) without the full number of Units
being issued to the Optionee, the Units subject to such expired,
terminated, surrendered or canceled portion of the Option shall
be available for subsequent Option grants under this Plan. Units
which are the subject of Options may be previously issued and
outstanding Units reacquired by the Partnership or certain of
its Affiliates and held in treasury, or may be authorized but
unissued Units, or may be partly of each.
(b) Adjustment Provisions. In the event that (i) any change is made to the Units issuable under the Plan pursuant to Section 8 or otherwise, or (ii) the Partnership makes any distribution of cash, Units, assets or other property to Unitholders which result from the sale or disposition of a major asset or separate operating division of the Partnership or any other extraordinary event and, in the judgment of the Committee, such change or distribution would significantly dilute the rights of Optionees hereunder then, subject to the provisions of Section 8 of the Plan, the Committee may make appropriate adjustments in the maximum number of Units issuable under the Plan to reflect the effect of such change or distribution upon the Partnerships capital structure, and may make appropriate adjustments to the number of Units and the purchase price subject to each outstanding Option. The adjustments determined by the Committee shall be final, binding and conclusive.
[(c) Further Authorization of
Units; Conditional Option Grants. Options may be granted
under this Plan with respect to Units in excess of the number
specified in Section 4(a) hereof, provided that (i) an
amendment to increase such maximum number of Units is adopted by
the Committee prior to the initial grant of any such Options and
such amendment, if material in amount, is thereafter submitted
and approved by a majority of the Unitholders, and
(ii) each Option so granted is not to become exercisable,
in whole or in part, at any time prior to obtaining required
approval.]
5. | Eligibility. |
[The]Subject to the
immediately succeeding sentence, the persons who shall be
eligible to receive Options pursuant to the Plan shall be such
officers and key employees of the Partnership, the General
Partner, or any Affiliate who can make a meaningful contribution
to the Partnerships success, as determined by the
3
6. | Options. |
(a) Grant of Options. Subject to the provisions of Section 4, Options may be granted at any time and from time to time as may be determined by the Committee. The Committee shall have complete discretion in determining the number of Options granted and the number of Units subject to such Options. The grant of Options under the Plan shall in no way affect the Partnerships or the General Partners right to adjust, reclassify, reorganize or otherwise change the Partnerships capital or business structure, nor shall the grant of any Option affect the Partnerships or the General Partners right to merge, consolidate, dissolve, liquidate or sell or transfer any part of the Partnerships business or assets.
(b) Nature of Options. Options granted pursuant to the Plan shall be authorized by the Committee and shall be non-statutory options which are not intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the Code).
(c) Terms and Conditions of Options. Each Option granted pursuant to the Plan shall be evidenced by an Option Agreement between the Partnership and the Optionee in such form or forms as the Committee, from time to time, shall prescribe, which agreements need not be identical to each other but shall comply, inter alia, with and be subject to the terms and conditions of this Section 6(c). In addition, the Committee may, in its absolute discretion, include in any Option Agreement other terms, conditions and provisions that are not inconsistent with the express provisions of the Plan.
(i) Option Price. The price at which each Unit may be purchased pursuant to an Option granted under the Plan shall be not less than 100% of the higher of the fair market value for each such Unit (A) on the date the Committee approves the grant of such Option (the Date of Grant), or (B) on a future date if such is fixed on the Date of Grant by the Committee. The fair market value of the Units on any date shall be the mean between the high and the low prices of the Units on such date on the New York Stock Exchange (or the principal market in which the Units are traded, if the Units are not listed on that Exchange on such date), or if the Units were not traded on such date, the mean between the high and the low prices of the Units on the next preceding trading day during which the Units were traded. Anything contained in this subsection (i) to the contrary notwithstanding, in the event that the number of Units subject to any Option is adjusted pursuant to 4(b) or 8(b) hereof, a corresponding adjustment shall be made in the price at which the Units subject to such Option may be purchased thereafter.
(ii) Duration of Options. An Option (or portion thereof) granted under the Plan shall expire and all rights to purchase Units pursuant to the Option (or portion thereof) shall cease at the end of the day which is seven years following the date such Option (or portion thereof) became exercisable for the first time, or such lesser period as may be prescribed by the Committee and specified in the Option Agreement (the Expiration Date).
(iii) Vesting of Options. The Units
subject to each option granted hereunder may only be purchased
to the extent that the Optionee is vested in such Option. An
Optionee shall vest separately in each Option granted hereunder
in accordance with a schedule determined by the Committee in its
sole discretion, which will be appended to the Option Agreement.
In the absence of any special circumstances, including the
circumstances described in Sections 8 and
[13]12 of the Plan or the terms of any
vesting schedule contained
4
Number of Anniversaries the Optionee Has Remained in the Employ of the Partnership, the General | Extent to Which the | |||
Partner or Any Affiliate Following the Date of the Grant | Optionee is Vested | |||
Under three
|
0 | % | ||
Three or more
|
100 | % |
At the time an Option (or portion thereof)
becomes vested in accordance with the foregoing schedule, the
Option (or such portion) shall remain exercisable for a period
of seven (7) years following the date the Option (or such
portion) became vested. Anything contained in this
subsection (iii) to the contrary notwithstanding, an
Optionee shall become fully (100%) vested in each of his or her
Options upon (A) his or her termination of employment with
the Partnership, the General Partner or an Affiliate for reasons
of death, Disability or Retirement (as such terms are defined in
Section [13]12); (B) his or her
termination of employment by the Partnership, the General
Partner or an Affiliate within one year after the merger of the
Partnership into, consolidation of the Partnership with, or sale
or transfer of all or substantially all the Partnerships
assets to, another entity, or within one year after the
acquisition of effective voting control of the Partnership by
any individual or entity or by any individuals or entities
acting in concert (a good faith determination by the Committee
that such control has been acquired shall be final and
conclusive), in any such case for a reason other than discharge
for cause; (C) a determination by the Committee in its sole
discretion that acceleration of the Option vesting schedule
would be desirable for the Partnership; or (D) such Options
becoming vested pursuant to Section 8 of the Plan.
(iv) Unit Retention Requirement. The
Committee may require, as a term of an Option Agreement, that
the Optionee accumulate and retain a minimum number of Units, as
specified by the Committee in its discretion (Unit
Retention Requirement). The Committee shall permit an
Optionee to satisfy the Unit Retention Requirement over a
[prescribed ]period [of at least five
years]determined by the Committee. An Optionee
who fails to comply with the Unit Retention Requirement after
expiration of the prescribed period shall not be eligible to
receive further grants of Options under the Plan.
(d) Purchase of Units Pursuant to
Options. An Optionee may purchase Units subject to the
vested portion of an Option in whole at any time, or in part
from time to time, by delivering to the Secretary of the General
Partner, or his designee, written notice specifying the
number of Units with respect to which the Option is being
exercised[, together with payment in full
of]. The Optionee shall pay the purchase price
of such Units in full, plus any applicable federal, state
or local taxes for which the Partnership, the General Partner or
any Affiliate has a withholding obligation in connection with
such purchase. Such payment shall be payable to the Partnership
in full [(i) ]in cash[,] or
[with the proceeds of a promissory note
payable ]by [the Optionee to the General
Partner, but only]payment through a broker in
accordance with [the provisions of, and from a person
otherwise eligible under, the Loan Program, or any successor
program as in effect from time to time, (A) in a principal
amount of up to 95% of the payment due upon the purchase of
Units subject to the Option, or such applicable lower percentage
as may be specified]procedures permitted by
[the Committee pursuant to the Loan Program, and
(B) bearing interest at a rate not less than the applicable
federal rate prescribed by Section 1274 of the Code, or any
successor provision, or such higher rate as may be specified by
the Committee pursuant to the Loan Program, and
(iii) through any combination of (i) and
(ii) above]Regulation T of the Federal
Reserve Board. During the lifetime of the Optionee, the
Option shall be exercised only by the Optionee and shall not be
assignable or transferable by the Optionee other than
(1) by will, (2) by the laws of descent and
distribution, (3) pursuant to the terms of the Plan, or
(4) pursuant to the terms of a qualified domestic relations
order.
(e) Unitholder Rights. An Optionee shall have none of the rights of a Unitholder with respect to any Units issuable pursuant to an Option under the Plan until such Optionee shall have been issued such Units upon the exercise or partial exercise of such Option.
(f) Compliance with Rule 16b-3. The Committee may impose such conditions on the exercise of an Option as may be necessary to satisfy the requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the 1934 Act), or any other comparable provisions in effect at the time.
5
7. | Distribution Equivalents. |
(a) Distribution Equivalents. The Committee may grant, in its discretion and subject to such conditions, if any, as it shall determine, certain Options with a feature which would allow Optionees to accumulate accrued credit balances as adjusted in subsection (c) (the Distribution Equivalents). Only those Options which have been specifically awarded with Distribution Equivalents, as evidenced by the terms of the Option Agreement relating to such Option, shall be deemed to have the Distribution Equivalent feature. The Partnership shall maintain records with respect to each Option granted to an Optionee with Distribution Equivalents, calculated in accordance with subsection (b) (the Distribution Equivalent Account).
(b) Calculation of Distribution
Equivalents. From the date an Option is granted with a
Distribution Equivalent feature until the earlier of
(i) the date in which the Option (or portion thereof)
becomes exercisable in accordance with Section 6(c)
or 8, or (ii) the date of the Optionees
termination of employment for any reason including death,
Disability or Retirement, as such terms are defined as in
Section [13,]12, the Partnership shall
record in each Distribution Equivalent Account on the date of
each regular quarterly Partnership distribution, an amount equal
to (x) the Partnerships per Unit regular quarterly
distribution as declared from time to time by the Board,
multiplied by (y) the number of Units subject to such
Option that have not vested. No interest shall be payable or
credited to the balance in any Distribution Equivalent Account.
Any special per Unit distributions declared by the Board may be
credited to the Distribution Equivalent Accounts only upon
specific Committee approval.
(c) Use of Distribution Equivalents.
As a term of an Option Agreement, the Committee may condition
the Optionees receipt of the Distribution Equivalent
Account value upon continued service and upon the
achievement of such corporate performance goals as the Committee
may establish in its discretion. If the Committee conditions
receipt of Distribution Equivalents on performance goals, the
Committee shall establish a performance period and performance
goals with such terms as the Committee determines. At the
end of the specified period[ described in
subsection (b)], the Committee shall
(i) adjust the accumulated Distribution Equivalents to
reflect the achievement of such performance goals (which may
result in an increase or decrease in the Distribution
Equivalents credited to the Distribution Equivalent Account)
and (ii) distribute [to each Optionee
any]the Distribution Equivalents, as adjusted,
in cash to each Optionee who has met the applicable service
requirements. If the Committee increases an Optionees
Distribution Equivalents based on achievement of performance
goals, the maximum amount that may be credited to the
Optionees Distribution Equivalent Account for a specified
period is 200% of the Distribution Equivalents otherwise
credited to the Distribution Equivalent Account pursuant to
subsection (b) above for the applicable performance
period. Notwithstanding anything in the Plan to the contrary,
Distribution Equivalents shall be paid on specified dates or as
otherwise required in order to comply with the requirements of
Section 409A of the Code, if applicable.
8. | Adjustments Upon Extraordinary Transactions or Changes in Partnership Control. |
(a) Extraordinary Transaction. In the event of one or more of the following transactions (an Extraordinary Transaction):
(1) the Unitholders approve a merger or consolidation of the Partnership with any other entity, other than a merger or consolidation which would result in the Unitholders retaining at least 75% of the total equity interest of the surviving entity, as represented by the percentage of Units or equity securities of the Partnership or such surviving entity held by the Unitholders immediately after such merger or consolidation; | |
(2) a plan of complete dissolution of the Partnership is adopted or the Unitholders approve an agreement for the sale or disposition by the Partnership (in one transaction or a series of transactions) of all or substantially all the Partnerships assets; or | |
(3) the General Partner is removed, or any
person or entity except one or more of the
[ |
6
organized, appointed or established by the
General Partner for or pursuant to the terms of any such
employee benefit plan), together with all
[ |
then (i) each Option at the time outstanding under the Plan and not then otherwise fully exercisable shall, during the ten (10) business day period immediately prior to the specified effective date for the Extraordinary Transaction, become fully exercisable for up to the total number of Units purchasable or issuable thereunder and may be exercised for all or any portion of the Units for which the Option is so accelerated, (ii) all Units issuable upon the exercise of Options under this Section 8(a) of the Plan shall be delivered to the Optionee immediately prior to the specified effective date for the Extraordinary Transaction, and (iii) all accumulated Distribution Equivalents, without adjustment pursuant to Section 7(c), shall be paid to the Optionee in cash. Notwithstanding the foregoing, if the Extraordinary Transaction is abandoned, (A) any Units not purchased upon exercise of such Option shall continue to be available for purchase in accordance with the other provisions of the Plan, and (B) to the extent that any Option not exercised prior to such amendment shall have vested solely by operation of this Section 8, such vesting shall be deemed annulled, and the vesting schedule set forth in Section 6(c), or in the Option Agreement if different from the vesting schedule in Section 6(c), shall be reinstituted as of the date of such abandonment.
In no event shall any such acceleration or
payment in connection with an Extraordinary Transaction
occur if the terms of the agreement governing the Extraordinary
Transaction require, as a condition to consummation, that the
outstanding Options shall either be assumed by the successor
entity, or its [Affiliate]affiliate, or
be replaced with a comparable option or right to purchase or
receive securities of the successor entity or
[Affiliate]affiliate. The determination
of such comparability shall be made by the Committee, and its
determination shall be final, binding and conclusive. Upon
consummation of an Extraordinary Transaction, all outstanding
Options under the Plan shall, to the extent not previously
exercised or assumed by the successor entity or its
[Affiliate]affiliate, terminate. For
purposes of this Section 8, the term affiliate
means any domestic or foreign corporation, partnership, limited
liability company or other entity that directly or indirectly
controls, is controlled by or is under common control with the
party in question.
Notwithstanding the above, in the event of any
Extraordinary Transaction, the Committee shall have the
discretion to cancel outstanding Options in whole or in part,
subject to such conditions as the Committee may determine, upon
payment to Optionees with respect to each Option then
exercisable an amount in cash equal to the [difference
between]excess of (i) the fair market value
(at the effective date of such Extraordinary Transaction) of the
consideration the Optionee would have received in the
Extraordinary Transaction if the Option had been exercised
immediately prior to the effective date of such Extraordinary
Transaction [and]over (ii) the
aggregate exercise price of such Option. In that event, the
Committee may determine that accumulated Distribution
Equivalents shall be paid to the Optionees in cash.
(b) If any change is made to the Units issuable under the Plan by reason of an Extraordinary Transaction that does not result in the termination of all outstanding Options, the Committee may adjust the maximum number of Units issuable under the Plan, the number of Units subject to Options, and the Option price of any outstanding Options.
9. | Valuation. |
For purposes of the Plan, the term fair market value, when used in connection with a discussion concerning the value of a Unit, shall represent the value described in Section 6(c)(i). When used in connection with a discussion concerning the value of a right, an asset or other property, other than a Unit, the term fair market value shall mean, on any relevant date, the market value of such asset, as determined by the Committee in accordance with such method of valuation as the Committee shall determine to be reasonable and appropriate.
7
[10. Cancellation and New Grant of
Awards.]
[ The Committee shall have the authority
to effect, at any time and from time to time, with the consent
of the affected Optionees, the cancellation of any or all
outstanding Options under the Plan and to grant in substitution
therefor new Options under the Plan covering the same or
different number and class of Units but having a purchase price
per Unit not less than fair market value of a Unit on the new
Date of Grant. The Committee may permit the voluntary surrender
of all or a portion of any Option to be conditioned upon the
granting to the Optionee under the Plan of a new Option for the
same or a different number of Units as the Option surrendered,
or may require such voluntary surrender as a condition precedent
to a grant of a new Option to such Optionee. Such new Option
shall be exercisable at the price, during the period, and in
accordance with any other terms or conditions specified by the
Committee at the time the new Option is granted, all determined
in accordance with the provisions of the Plan without regard to
the price, period of exercise, or any other terms or conditions
of the Options surrendered.]
[11.]10. Term
of Plan.
Unless the Plan is sooner terminated in
accordance with Section 8 or by the Committee, no further
Options shall be granted under the Plan after the earlier of
(i) the twentieth (20th) anniversary of the
[Effective Date,]effective date of the 2005
amendment and restatement of the Plan, as described in
Section 2 above or (ii) the date on which all
Units available for issuance under the Plan have been issued.
[12.]11. Amendment
of the Plan and Awards.
The Committee shall have complete and exclusive power and authority to terminate or amend the Plan and the Committee may amend outstanding Options issued under the Plan in any or all aspects whatsoever not inconsistent with the terms of the Plan; provided, however, that no such termination or amendment shall adversely affect the rights of an Optionee with respect to Options at the time outstanding under the Plan unless the Optionee consents to such amendment; and provided, further, that the Committee shall not, without the approval of the Unitholders, amend the Plan to (i) materially increase the maximum number of Units which may be issued under the Plan, except for permissible adjustments under Section 4(b), (ii) materially increase the benefits accruing to individuals who participate in the Plan, or (iii) materially modify the eligibility requirements for the grant of Options under the Plan. Notwithstanding the foregoing, the Committee may amend the Plan in such manner as the Committee deems necessary or appropriate to comply with the requirements of Section 409A of the Code.
[13.]12. Treatment
of Options Upon Optionees Termination of
Employment.
Unless otherwise determined by the Committee, the following rules shall apply in the event of an Optionees termination of employment with the Partnership, the General Partner or any Affiliate:
(a) Termination for Cause; Voluntary
Termination Without Consent. In the event of an
Optionees termination of employment with the Partnership,
the General Partner or any Affiliate either (i) for cause
or (ii) voluntarily on the part of the Optionee and without
the written consent of [ |
|
(b) Termination in Special
Circumstances. In the event of an Optionees
termination of employment with the Partnership, the General
Partner or any Affiliate under circumstances other than those
specified in subsection (a) hereof and for reasons
other than death, Disability or Retirement (as defined in
subsection (d) hereof), such Option shall terminate on
the date which is 90 days from the date of such termination
of employment or on its Expiration Date, whichever shall first
occur; provided, however, that if the Optionee is a former
officer of the [ |
8
or any derivative security thereto prior to his or her ceasing to be such an officer, or (ii) their Expiration Date, whichever shall first occur. | |
(c) Death of Optionee. In the event of the death of an Optionee (i) while he or she is employed by the Partnership, the General Partner or any Affiliate, or (ii) if subsections (b) or (d) hereof is applicable, during the respective periods of time specified therein following his or her termination of employment, such Option shall become fully exercisable, but shall terminate on the first anniversary of the Optionees death, Disability or Retirement (as such terms are defined in subsection (d) hereof) or on its Expiration Date, whichever shall first occur. | |
(d) Disability or Retirement of Optionee. In the event of the Optionees termination of employment with the Partnership, the General Partner or any Affiliate for reasons of the inability, due to mental or physical infirmity, of the Optionee to discharge the regular responsibilities and duties of his or her employment with the Partnership, the General Partner or any Affiliate, as the case may be (Disability), or for reasons of termination of employment other than discharge for cause (i) at or after age 65, or (ii) before age 65 provided the Optionee has at the time of such termination satisfied the age and vesting requirements for normal or early retirement pursuant to the terms of any defined benefit plan (as such term is defined in Section 3(35) of the Employee Retirement Income Security Act of 1974, as amended, or any successor provision) maintained by the Partnership, the General Partner or any Affiliate in which the Optionee participates, or (iii) if the Optionee does not participate at the time of such termination in such a defined benefit plan, at or after age 55 and before age 65 provided the Optionee has been employed by the Partnership, the General Partner or any Affiliate for at least five full years (any of which terminations in clauses (i)-(iii) above shall constitute Retirement), such Option shall become fully exercisable, but shall terminate on the date which is a number of years after the date of such termination of employment as shall be fixed by the Committee or on its Expiration Date, whichever shall first occur. | |
(e) Limitations of Option Acceleration
Upon Termination of Employment of Optionee. Anything
contained in this Section [ |
|
(f) Certain Transfers of Employment.
An Optionees transfer of employment between or among the
Partnership, the General Partner and an Affiliate or between or
among Affiliates[ |
[14.]13. Issuance
of Units; Restrictions.
(a) Subject to the conditions and
restrictions provided in this Section
[14,]13, the Partnership shall, within
twenty (20) business days after an Option has been duly
exercised in whole or in part, deliver to the person who
exercised the Option a certificate, registered in the name of
such person, for the number of Units with respect to which the
Option has been exercised. The Partnership may legend any
certificate issued hereunder to reflect any restrictions
provided for in this Section [14.]13.
(b) Unless the Units subject to Options
granted under the Plan have been registered under the Securities
Act of 1933, as amended (the 1933 Act), (and,
in the case of any Optionee who may be deemed an
[Affiliate]affiliate of the Partnership
for purposes of the 1933 Act, such Units have been
registered under the 1933 Act for resale by such Optionee),
or the Partnership has determined that an exemption from
registration is available, the Partnership may require prior to
and as a condition of the issuance of any Units that the person
exercising an Option hereunder furnish the Partnership with a
written representation in a form prescribed by the Committee to
the effect that such person is acquiring said Units solely with
a view to investment for his or her own account and not with a
view to the resale or distribution of all or any part thereof,
and that such person will not dispose of any of such Units
otherwise than in accordance with the provisions of
9
(c) Anything contained herein to the contrary notwithstanding, the Partnership shall not be obligated to sell or issue any Units under the Plan unless and until the Partnership is satisfied that such sale or issuance complies with (i) all applicable requirements of the New York Stock Exchange (or the governing body of the principal market in which such Units are traded, if such Units are not then listed on such Exchange), (ii) all applicable provisions of the 1933 Act, and (iii) all other laws or regulations by which the Partnership is bound or to which the Partnership is subject.
[15.]14. General
Provisions.
(a) No Right to Employment. Nothing contained in the Plan or any Option Agreement shall confer, and no grant of an Option shall be construed as conferring, upon any Optionee any right to continue in the employ of the Partnership, the General Partner or any Affiliate or to interfere in any way with the right of the Partnership, the General Partner or any Affiliate to terminate his or her employment at any time or increase or decrease his or her compensation from the rate in effect at the Date of Grant.
(b) No Limit on Other Compensatory Arrangements. Nothing contained in this Plan shall prevent the Partnership, the General Partner or any Affiliate from adopting other or additional compensation arrangements (which may include arrangements which relate to Options under the Plan), and such arrangements may be either generally applicable or applicable only in specific cases.
10
FOLD AND DETACH HERE
C
O
N
S
E
N
T
BUCKEYE PARTNERS, L.P.
5002 Buckeye Rd.
Emmaus, Pennsylvania 18049
CONSENT SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE GENERAL PARTNER FOR ADOPTION OF PROPOSED AMENDMENTS TO THE UNIT OPTION AND DISTRIBUTION EQUIVALENT PLAN
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 January 18, 2005.
THE LIMITED PARTNERSHIP 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.
HAS YOUR ADDRESS CHANGED?
DO YOU HAVE ANY COMMENTS?
Buckeye Partners, L.P.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
Your vote is important. Please vote immediately.
Vote-by-Internet | ||
Log on to the Internet and go to the web site http://www.eproxyvote.com/bpl. |
OR
Vote-by-Telephone | ||
Call toll-free 1-877-PRX-VOTE (1-877-779-8683) |
If you vote over the Internet or by telephone, please do not mail your card.
FOLD AND DETACH HERE
þ
|
Please mark your votes as in this example. |
The General Partner recommends a vote FOR the proposal
Buckeye Partners, L.P.
FOR | AGAINST | |||
Proposal: To approve the amended and restated Unit Option and Distribution
Equivalent Plan of Buckeye Partners, L.P., which incorporates the Proposed
Amendments described in the Consent Solicitation Statement. A copy of the
amended and restated Unit Option and Distribution Equivalent Plan, marked to
show the Proposed Amendments, is included in the accompanying Consent
Solicitation Statement as Appendix A.
|
o | o | ||
If no box at the right is marked, but this Consent is otherwise properly completed
and signed, the limited partnership units will be voted FOR the Proposal. |
||||
The solicitation of Consents will expire at 5:00 p.m., eastern standard time, on
February 28, 2005, unless extended. Failure to return this Consent will have the
same effect as a vote against the Proposal. |
Mark box at right if an address change or comment has been noted on the reverse side of this card.
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.
Signature: | Date: | Signature: | Date: |