Limited Liability Company Agreement of Wood River Pipelines LLC, Dated As of September 27, 2004

EXHIBIT 10.3


LIMITED LIABILITY COMPANY AGREEMENT


OF


WOOD RIVER PIPE LINES LLC


This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of Wood River Pipe Lines LLC (the "Company"), dated as of September 27, 2004, is adopted, executed and agreed to by Buckeye Partners, L.P., a Delaware limited partnership ("BPL"), as a sole member.


RECITALS


WHEREAS, this Agreement is made and entered into for the purpose of setting forth various terms and provisions regarding the management, ownership and governance of Wood River Pipe Lines LLC, a limited liability company organized under the laws of the State of Delaware (the "Company");


WHEREAS, Wood River Pipe Lines, L.P., a Delaware limited partnership ("Wood River LP"), was formed on August 12, 2004, under the Delaware Revised Uniform Limited Partnership Act (the "DRULPA");


WHEREAS, on the date hereof, Wood River LP converted (the "Conversion") into a limited liability company pursuant to and in accordance with Section 17-219 of the DRULPA and Section 18-214 of the Delaware Limited Liability Company Act, as amended from time to time (the "Act"); and


WHEREAS, BPL, the sole limited partner of Wood River LP prior to the Conversion shall be the sole owner of Membership Interests in the Company (the "Initial Member") upon the effectiveness of the Conversion.


1. DEFINITIONS


1.1. Definitions.


(a) As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Sections referred
to below:


"Act" has the meaning given such term in the Recitals.


"Adjusted Capital Account Deficit" means, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:


(i) Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or
pursuant to Treasury


Regulation Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and


(ii) Debit to such Capital Account the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).


The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.


"Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.


"Agreement" has the meaning given such term in the Recitals, as the same may be amended from time to time.


"Applicable Law" means any United States Federal, state or local law, statute, rule, regulation, order, writ, injunction, judgment, decree or permit of any Governmental Authority.


"Assignee" means any Person that acquires a Member's share of the income, gain, loss, deduction and credits of, and the right to receive distributions from, the Company or any portion thereof through a Disposition; provided, however, that an Assignee shall have no right to be admitted to the Company as a Member except in accordance with Article 4. The Assignee of a dissolved Member is the shareholder, partner, member or other equity owner or owners of the dissolved Member to whom such Member's Membership Interest is assigned by the Person conducting the liquidation or winding up of such Member.


"Bankruptcy" or "Bankrupt" means, with respect to any Person, that (a) such Person (i) makes a general assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for such Person a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Applicable Law; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person's properties; or (b) a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Applicable Law has been commenced against such Person and 120 Days have expired without dismissal thereof or with respect to which, without such Person's consent or acquiescence, a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person's properties has been appointed and 90 Days have expired without the appointment's having been vacated or stayed, or


2


90 Days have expired after the date of expiration of a stay, if the appointment has not previously been vacated. The foregoing definition of "Bankruptcy" is intended to replace and shall supercede and replace the definition of "Bankruptcy" set forth in the Act.


"Board" has the meaning given such term in Section 7.1.


"BPL" has the meaning given such term in the Preamble.


"Business Day" means any day other than a Saturday, a Sunday, or a day when banks in New York, New York are authorized or required by Applicable Law to be closed.


"Capital Account" means, with respect to any Member, the Capital Account maintained for such Member in accordance with the following provisions:


(i) To each Member's Capital Account there shall be credited such
Member's Capital Contributions, such Member's distributive share of
Profits and any items in the nature of income or gain which are specially
allocated pursuant to Section 6.3 hereof, and the amount of any Company
liabilities assumed by such Member or which are secured by any property
(other than money) distributed to such Member.


(ii) To each Member's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any property (other than
money) distributed to such Member pursuant to any provision of this
Agreement, such Member's distributive share of Losses and any items in the
nature of expenses or losses which are specially allocated pursuant to
Section 6.3 hereof, and the amount of any liabilities of such Member
assumed by the Company or which are secured by any property (other than
money) contributed by such Member to the Company.


(iii) In the event all or a portion of a Membership Interest is
transferred in accordance with the terms of this Agreement, the transferee
shall succeed to the Capital Account of the transferor to the extent it
relates to the Membership Interest so transferred.


(iv) In determining the amount of any liability for purposes of the
foregoing subparagraphs (i) and (ii) of this definition of "Capital
Account," there shall be taken into account Section 752(c) of the Code and
any other applicable provisions of the Code and Treasury Regulations.


The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Treasury Regulations.


"Capital Contribution" means, with respect to any Member, the amount of money and the net agreed value of any property (other than money) contributed to the Company by such Member. Any reference in this Agreement to the Capital Contribution of a Member shall include a Capital Contribution of its predecessors in interest.


3


"Certified Public Accountants" means a firm of independent public accountants selected from time to time by the Board.


"Claim" means any and all judgments, claims, causes of action, demands, lawsuits, suits, proceedings, Governmental investigations or audits, losses, assessments, fines, penalties, administrative orders, obligations, costs, expenses, liabilities and damages (whether actual, consequential or punitive), including interest, penalties, reasonable attorneys' fees, disbursements and costs of investigations, deficiencies, levies, duties and imposts.


"Code" means the Internal Revenue Code of 1986, as amended from time to time.


"Company" has the meaning given such term in the Preamble.


"Conversion" has the meaning given such term in the Recitals.


"Day" means a calendar day; provided, however, that if any period of Days referred to in this Agreement shall end on a Day that is not a Business Day, then the expiration of such period shall be automatically extended until the end of the next succeeding Business Day.


"Depreciation" means, for each fiscal year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the Federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Tax Matters Officer.


"DRULPA" has the meaning given such term in the Recitals.


"Dispose," "Disposing" or "Disposition" means with respect to any asset (including a Membership Interest or any portion thereof), a sale, assignment, transfer, conveyance, gift, exchange or other disposition of such asset, whether such disposition be voluntary, involuntary or by operation of Applicable Law.


"Disposing Member" has the meaning given such term in Section 4.2.


"Dissolution Event" has the meaning given such term in Section 12.1(a).


"Encumber," "Encumbering," or "Encumbrance" means the creation of a security interest, lien, pledge, mortgage or other encumbrance, whether such encumbrance be voluntary, involuntary or by operation of Applicable Law.


"GAAP" means generally accepted accounting principles.


4


"Governmental Authority" or "Governmental" means any Federal, state or local court or governmental or regulatory agency or authority or any arbitration board, tribunal or mediator having jurisdiction over the Company or its assets or Members.


"Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for Federal income tax purposes, except as follows:


(i) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of said asset,
as determined by the contributing Member and the Board, in a manner that
is consistent with Section 7701(g) of the Code;


(ii) The Gross Asset Values of all Company assets shall be adjusted
to equal their respective gross fair market values, as determined by the
Board, in a manner that is consistent with Section 7701(g) of the Code, as
of the following times: (a) the acquisition of an additional Membership
Interest by any new or existing Member in exchange for more than a de
minimis Capital Contribution; (b) the distribution by the Company to a
Member of more than a de minimis amount of property other than money as
consideration for an Membership Interest; and (c) the liquidation of the
Company within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the Tax Matters Officer
reasonably determines that such adjustments are necessary or appropriate
to reflect the relative economic interests of the Members in the Company;


(iii) The Gross Asset Value of any Company asset distributed to any
Member shall be the gross fair market value (taking Section 7701(g) of the
Code into account) of such asset on the date of distribution; and


(iv) The Gross Asset Values of any Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Section 734(b) of the Code or Section 743(b) of the
Code, but only to the extent that such adjustments are taken into account
in determining Capital Accounts pursuant to Treasury Regulations Section
1.704-1 (b)(2)(iv)(m) and the definition of Capital Account hereof;
provided, however, that Gross Asset Values shall not be adjusted pursuant
to this subparagraph (iv) to the extent the Tax Matter Officer determines
that an adjustment pursuant to the foregoing subparagraph (ii) of this
definition is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this subparagraph
(iv).


If the Gross Asset Value of an asset has been determined or adjusted pursuant to the foregoing subparagraphs (i), (ii) or (iv), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.


"Incentive Plan" means any plan or arrangement pursuant to which the Company may compensate its employees, consultants, managers and/or service providers.


5


"Indemnitee" means (a) any Person who is or was an Affiliate of the Company, (b) any Person who is or was a member, partner, officer, manager, employee, agent or trustee of the Company or any Affiliate of the Company and (c) any Person who is or was serving at the request of the Company or any Affiliate of the Company as an officer, manager, employee, member, partner, agent, fiduciary or trustee of another Person; provided, however, that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services.


"Initial Member" has the meaning given such term in the Recitals.


"Majority Interest" means greater than 50% of the Sharing Ratios.


"Manager" or "Managers" has the meaning given such term in Section 7.2.


"Member" means any Person executing this Agreement as of the date of this Agreement as a member of the Company or hereafter admitted to the Company as a member as provided in this Agreement, but such term does not include any Person who has ceased to be a member in the Company.


"Membership Interest" means, with respect to any Member, (a) that Member's status as a Member; (b) that Member's share of the income, gain, loss, deduction and credits of, and the right to receive distributions from, the Company; (c) all other rights, benefits and privileges enjoyed by that Member (under the Act, this Agreement, or otherwise) in its capacity as a Member, including that Member's rights to vote, consent and approve and otherwise to participate in the management of the Company, including through the Board; and (d) all obligations, duties and liabilities imposed on that Member (under the Act, this Agreement or otherwise) in its capacity as a Member, including any obligations to make Capital Contributions.


"Notices" has the meaning given such term in Section 13.2.


"Person" means any individual, firm, partnership, corporation, limited liability company, association, joint-stock company, unincorporated organization, joint venture, trust, court, governmental agency or any political subdivision thereof, or any other entity.


"Profits" and "Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:


(i) Any income of the Company that is exempt from Federal income tax
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;


(ii) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code, and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall be
subtracted from such taxable income or loss;


6


(iii) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (ii) or (iv) of the definition of Gross
Asset Value hereof, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses;


(iv) Gain or loss resulting from any disposition of property (other
than money) with respect to which gain or loss is recognized for Federal
income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of notwithstanding that the adjusted tax
basis of such property differs from its Gross Asset Value;


(v) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year
or other period, computed in accordance with the definition of
Depreciation hereof; and


(vi) Notwithstanding any other provision of this definition of
"Profits and Losses," any items which are specially allocated pursuant to
Section 6.3(d) and Section 6.3(e) hereof shall not be taken into account
in computing Profits or Losses.


"Proper Officer" or "Proper Officers" means those officers authorized by the Board to act on behalf of the Company.


"Sharing Ratio" means, subject in each case to adjustments in accordance with this Agreement or in connection with Dispositions of Membership Interests, (a) in the case of a Member executing this Agreement as of the date of this Agreement or a Person acquiring such Member's Membership Interest, the percentage specified for that Member as its Sharing Ratio on Exhibit A, and (b) in the case of Membership Interests issued pursuant to Section 3.1, the Sharing Ratio established pursuant thereto; provided, however, that the total of all Sharing Ratios shall always equal 100%.


"Subsidiary" means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of managers or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the managers or other governing body of such Person.


7


"Target Capital Account Amount" means, with respect to a Member, the distribution the Member would receive pursuant to Section 6.2 if the amount to be distributed to the Member equaled the product of (i) the amount described in Section 12.2(a)(iii)(C) multiplied by (ii) the Member's Sharing Ratio.


"Tax Matters Officer" has the meaning given such term in Section 10.3(a).


"Term" has the meaning given such term in Section 2.6.


"Treasury Regulations" means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.


"Units" has the meaning given such term in Section 3.1(a).


"Withdraw," "Withdrawing" or "Withdrawal" means the withdrawal, resignation or retirement of a Member from the Company as a Member. Such terms shall not include any Dispositions of Membership Interest (which are governed by Article 4), even though the Member making a Disposition may cease to be a Member as a result of such Disposition.


(b) Other terms defined herein have the meanings so given them.


"Wood River LP" has the meaning given such term in the Recitals.


1.2. Construction. Whenever the context requires, (a) the gender of all words used in this Agreement includes the masculine, feminine and neuter, (b) the singular forms of nouns, pronouns and verbs shall include the plural and vice versa, (c) all references to Articles and Sections refer to articles and sections in this Agreement, each of which is made a part for all purposes and (d) the term "include" or "includes" means includes, without limitation, and "including" means including, without limitation.


2. ORGANIZATION


2.1. Formation. By execution of this Agreement and upon the filing of the Certificate of Formation (the "Delaware Certificate"), the Certificate of Conversion with the Secretary of State of the State of Delaware, the Initial Member hereby forms the Company in connection with the Conversion pursuant to the Act for the purposes set forth in this Agreement. The parties intend that the Company shall be taxed as a partnership. Promptly following the execution hereof, the Members shall execute or cause to be executed all necessary certificates and documents, and shall make all such filings and recordings, and shall do all other acts as may be necessary or appropriate from time to time to comply with all requirements for the formation, continued existence and operation of a limited liability company in the State of Delaware. This Agreement is intended to serve as a "limited liability company agreement" as such term is defined in Section 18-101(7) of the Act.


8


2.2. Name. The name of the Company is "Wood River Pipe Lines LLC" and all Company business must be conducted in that name or such other names that comply with Applicable Law as the Board may select.


2.3. Registered Office; Registered Agent; Principal Office. The initial registered agent for the Company shall be The Corporation Trust Company. The initial registered office of the Company in the State of Delaware shall be Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The registered office and the registered agent may be changed from time to time by action of the Managers by filing notice of such change with the Secretary of State of the State of Delaware. The Managers shall promptly notify the Members of any change of the registered office or registered agent. The Company may also have offices in such other places within or outside of the State of Delaware as the Managers may from time to time determine.


2.4. Purposes.


(a) The Company may carry on any lawful business or activity permitted by the Act.


(b) Subject to the limitations expressly set forth in this Agreement, the Company shall have the power and authority to do any and all acts and things deemed necessary or desirable by the Board to further the Company's purposes and carry on its business, including, without limitation, the following:


(i) entering into any kind of activity and performing
contracts of any kind necessary or desirable for the accomplishment of its
business;


(ii) acquiring any property, real or personal, in fee or under
lease or license, or any rights therein or appurtenant thereto, necessary
or desirable for the accomplishment of its business;


(iii) borrowing money, issuing evidences of indebtedness,
issuing guarantees of indebtedness and securing any such indebtedness by
mortgage or pledge of, or other lien on, the assets of the Company;


(iv) entering into any such instruments and agreements as the
Board may deem necessary or desirable for the ownership, management,
operation, leasing and sale of the Company's property and for the
accomplishment of its business; and


(v) negotiating and concluding agreements for the sale,
exchange or other disposition of all or substantially all of the
properties of the Company, or for the refinancing of any loan or payment
obtained by the Company.


9


2.5. Foreign Qualification. Prior to the Company's conducting business in any jurisdiction other than Delaware, the Proper Officers shall cause the Company to comply, to the extent procedures are available and those matters are reasonably within the control of such officers, with all requirements necessary to qualify the Company as a foreign limited liability company in that jurisdiction. At the request of the Proper Officers, the Members shall execute, acknowledge, swear to, and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue, and, if applicable, terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business or in which it has ceased to conduct business.


2.6. Term. The period of existence of the Company (the "Term") commenced upon effectiveness of the Conversion and shall end ...