Exhibit 10.5
CONFORMED COPY
ACKNOWLEDGEMENT AND AGREEMENT
THIS ACKNOWLEDGEMENT AND AGREEMENT (the "Agreement") is
made as of May 6, 2002, by and between Glenmoor, Ltd., a
Delaware corporation ("Glenmoor"), and Buckeye Partners,
L.P., a Delaware limited partnership (the "Partnership"),
with reference to the following background:
A. A provision was included as Section 3.01 in the
Exchange Agreement (the "Exchange Agreement"), dated as of
August 12, 1997, among Buckeye Pipe Line Company, a Delaware
corporation ("BPL"), Glenmoor and certain other parties,
that had the effect of delaying the recognition for income
tax purposes of certain income by BPL and Glenmoor.
Management of BPL now desires to amend and restate the
Exchange Agreement to reflect that BPL is now the general
partner of the Partnership, to delete the forfeiture payment
provision in Section 3.01 of the Exchange Agreement (which
will bring greater certainty to the tax planning of BPL and
Glenmoor, and will better align the interests of BPL, as
general partner of the Partnership, and the limited partners
of the Partnership), and to reflect that the names of
certain parties have changed (the "Amendment"). The form of
the Amendment is attached hereto as Exhibit A.
B. Glenmoor, as the indirect owner of BPL, desires
that the Amendment be authorized, executed and delivered by
the Partnership, the Operating Partnerships and the other
parties named therein.
C. As a condition to recommending the Amendment, a
special committee of the board of directors of BPL (the
"Special Committee") has required that Glenmoor enter into
this Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as
follows:
1. Definitions. Terms used herein that are not otherwise
defined shall have the meanings assigned to them or referred
to in the Amendment.
2. Acknowledgements, Representations and Warranties of
Glenmoor.
(a) Glenmoor acknowledges and agrees that:
(i) The Amendment will result in an acceleration
and possible increase in the federal, state and local
income tax liabilities of Glenmoor and its
shareholders.
(ii) Payment of the tax liabilities of Glenmoor
and its shareholders is solely the responsibility of
Glenmoor and its shareholders, and neither the
Partnership nor the Operating Partnerships are
obligated to reimburse Glenmoor, Buckeye Management
Company ("BMC") or BPL for or on account of any such
income tax liabilities.
(iii) Repayment of any loan to Glenmoor or its
shareholders used in whole or in part to pay any of the
tax liabilities of Glenmoor or its shareholders (the
"Tax Loan") shall be solely the liability of Glenmoor,
its shareholders and its wholly-owned subsidiaries.
(iv) Neither the Partnership nor the Operating
Partnerships shall have any direct or indirect
liability or obligation for or in respect of the Tax
Loan, and neither the Partnership nor the Operating
Partnerships shall be asked to provide any security for
repayment of the Tax Loan or otherwise provide any
credit support to Glenmoor or its shareholders in
connection with the Tax Loan; provided, however, that
the parties recognize and acknowledge that the lenders
under the Note Agreement for the ESOP have, and the
lender under the Tax Loan will have, certain security
interests, pledges and other rights in the stock or
assets of Glenmoor, BMC and BPL, including, without
limitation, amounts payable to such entities by the
Partnership.
(v) All costs and expenses of Glenmoor, BMC and
BPL in connection with the Amendment and the Tax Loan,
including, without limitation, the fees and expenses of
attorneys and accountants in rendering tax and other
advice to Glenmoor and its shareholders, the loan
placement fees payable to the lender of the Tax Loan
and other costs incurred in connection with the Tax
Loan and the Amendment shall be payable by Glenmoor and
shall not be subject to reimbursement directly or
indirectly by the Partnership. All costs associated
with the Special Committee, including, without
limitation, the fees payable to members of the Special
Committee, the fees and expenses of its attorneys, and
other costs incurred by or at the request of the
Special Committee shall be payable by BPL, and such
costs shall be reimbursed by the Partnership.
(b) Glenmoor represents and warrants to the
Partnership that the manner in which the Partnership will
recognize and report on the execution, delivery and
performance of the Amendment will not:
(i) result in the creation or incurrence of any
material liability or obligation of the Partnership or
the Operating Partnerships that would be required to be
reflected in accordance with generally accepted
accounting principles consistently applied in the
financial statements of the Partnership or the
Operating Partnerships, other than the costs to be
reimbursed by the Partnership as set forth in
subsection (a)(v) above and appropriate disclosure of
the execution and delivery of the Amendment in the
footnotes to such financial statements;
(ii) negatively affect the cash flow of the
Partnership or the Operating Partnerships, other than
the effects of the reimbursement of costs by the
Partnership as set forth in subsection (a)(v) above;
and
(iii) adversely affect in any material respect
the income tax liabilities to be recognized by the
Partnership, its limited partners and the Operating
Partnerships under present law.
(c) Nothing in this Agreement shall constitute a
representation or warranty by Glenmoor regarding the
accounting or income tax treatment of the transactions
effected in 1997 by the Exchange Agreement except as
specifically set forth in Article IV thereof.
3. Glenmoor Liability.
(a) Glenmoor shall be liable to the Partnership for
(i) any damages directly resulting from or arising out of
any breach of this Agreement, and (ii) any costs incurred by
the Partnership in enforcing this Agreement if the
Partnership is successful in obtaining a judgment or
settlement that provides some benefit to the Partnership.
(b) A claim under this section must be brought by the
Partnership within one year after the date that the
independent directors of BPL first have actual knowledge of
facts that reasonably give them notice that the Partnership
may have a claim for breach of this Agreement. As used in
this subsection, the term "independent directors" means
directors who (i) are not officers or employees of BPL or
affiliates or associates of any such officer or employee,
and (ii) do not have a direct or indirect ownership interest
in BPL or Glenmoor. This subsection shall be tolled during
any period when there are no independent directors of BPL.
4. Governing Law. This Agreement is made pursuant to, and
shall be construed and enforced in accordance with, the laws
of the State of Delaware, without reference to that state's
conflict of laws provisions.
5. Severability. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect
the other provisions of this Agreement, and this Agreement
shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.
6. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an orig
inal; and any person may become a party hereto by executing
a counterpart hereof, but all of such counterparts together
shall be deemed to be one and the same instrument. It shall
not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the
other counterparts.
7. Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not
define or limit the provisions hereof.
8. Waiver and Amendment. 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 upon a breach thereof shall constitute a
waiver of any such breach or of any other covenant, duty,
agreement or condition. Any amendment to this Agreement
shall be effective only if in a writing signed by each of
the parties hereto.
9. Assignment; No Third Party Benefit. This Agreement and
all of the provisions hereof shall be binding upon and inure
to the benefit of the parties and their respective
successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder
shall be assigned by any party without the prior written
consent of the other parties. This Agreement is not
intended and shall not be construed to confer upon any other
person except the parties hereto any rights, interests,
benefits, obligations or remedies hereunder. Any assignment
in contravention of this Section shall be null and void and
without legal effect on the rights and obligations of the
parties hereunder.
10. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to
the subject matter hereof
IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Agreement.
GLENMOOR, LTD.
By: /s/ Xxxxxxx X. Xxxx, Xx.
Xxxxxxx X. Xxxx, Xx.
President and Chief Executive Officer
BUCKEYE PARTNERS, L.P.
By: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Senior VP Admin., General Counsel
and Secretary
