EXHIBIT 10.4
AMENDED AND RESTATED INCENTIVE COMPENSATION AGREEMENT
This Amended and Restated Incentive Compensation Agreement, dated as of
March 22, 1996 (this "Agreement"), is entered into between Buckeye Management
Company, a Delaware corporation (the "General Partner"), and Buckeye Partners,
L.P., a Delaware limited partnership (the "Partnership").
Whereas, the General Partner, the Partnership and American Financial Group,
Inc., previously known as The Penn Central Corporation ("AFG") have entered
into a Distribution Support, Incentive Compensation and APU Redemption
Agreement, dated as of December 15, 1986, as amended as of July 18, 1995 (the
"Agreement");
Whereas, Pennsylvania Company, a wholly owned subsidiary of AFG and the
owner of all of the outstanding shares of capital stock of the General Partner
(the "Shares"), has agreed to sell the Shares to BMC Acquisition Company, a
company to be owned by certain investors including management of the General
Partner and an employee stock ownership plan (the "ESOP") for the benefit of
the employees of the General Partner and its subsidiary;
Whereas, Section 5.8 of the Agreement provides that the Agreement may be
amended only after complying with Section 17.4(a) of the Amended and Restated
Agreement of Limited Partnership dated as of December 15, 1986, as amended
(the "Partnership Agreement"), which provides that, without the prior approval
of a two-thirds interest of the limited partners of the Partnership, the
General Partner shall not amend the Agreement, unless such amendment does not,
in the good faith opinion of the General Partner, adversely affect the limited
partners of the Partnership (the "Limited Partners") in any material respect;
Whereas, the Board of Directors of the General Partner, on behalf of the
General Partner, and a special committee of disinterested directors of the
Board of Directors of the General Partner (the "Special Committee"), on behalf
of the Partnership, have approved the amendment and restatement of the
Agreement in accordance with the terms and conditions set forth below; and
Whereas, the Special Committee has further determined that this amended and
restated Agreement does not adversely affect the Limited Partners in any
material respect.
The parties hereto hereby agree as follows:
ARTICLE I
Definitions
Set forth below are definitions of certain capitalized terms used in this
Agreement. These definitions are intended to restate the definitions for such
terms in the Partnership's Prospectus, dated December 16, 1986 (the
"Prospectus"), relating to the initial offering and sale of 12,000,000 LP
Units representing limited partnership interests. All capitalized terms used
herein and not otherwise defined herein shall have the meanings provided
therefor in the Partnership Agreement.
1.1 "Aggregate Target Quarterly Amount" means the Target Quarterly Amount
per LP Unit times the number of Units outstanding.
1.2 "Aggregate Target Special Distribution Amount" means the Target Special
Distribution Amount times the number of Units outstanding.
1.3 "Available Cash" for any quarter means the Partnership's consolidated
cash receipts during such quarter (including, for this purpose, amounts
retained as described in clause (b) below during prior quarters and determined
by the General Partner, in its sole discretion, to no longer be required to be
so retained) less (a) its consolidated cash expenditures during such quarter
(other than distributions of Available Cash for the prior quarter and
expenditures of amounts received in prior quarters) and (b) such retentions
(i) for working capital, anticipated cash expenditures (including capital
expenditures and debt service) and contingencies as the General Partner, in
its sole discretion, deems appropriate or (ii) as are required by the terms of
the Mortgage Note Indenture.
1.4 "IPO Price" is $20.00 per LP Unit.
1.5 "Manager" means Buckeye Pipe Line Company, a wholly-owned subsidiary of
the General Partner.
1.6 "Pipe Line Partnership" means the limited partnership subsidiaries of
the Partnership, collectively.
1.7 "Quarterly Cash To Be Distributed" for any quarter means the Available
Cash for such quarter (excluding cash to be distributed in a Special
Distribution) less retentions of Available Cash necessary to pay the General
Partner incentive compensation pursuant to this Agreement.
1.8 "Special Cash To Be Distributed" means the cash or fair market value of
securities to be distributed in a Special Distribution.
1.9 "Special Distribution" means any special cash distribution to
Unitholders in excess of $10 million from the proceeds of a financing, sale of
assets or disposition (or a series of related financings, sales of assets or
dispositions) or a special distribution of marketable securities with a fair
market value in excess of $10 million.
1.10 "Target Quarterly Amount" is $.65 per quarter.
1.11 "Target Special Distribution Amount" means the amount which, together
with all amounts distributed per LP Unit prior to the Special Distribution
compounded quarterly from the respective dates of distribution to the date of
such Special Distribution at the Target Rate, would equal the IPO Price
compounded quarterly at the Target Rate from December 23, 1986 to the date of
such Special Distribution.
1.12 "Target Rate" is 13% per annum.
ARTICLE II
Incentive Compensation Agreement
2.1 Quarterly Incentive Compensation. If Quarterly Cash To Be Distributed
for any calendar quarter exceeds the Aggregate Target Quarterly Amount, the
Partnership shall, subject to Section 2.3, pay the General Partner incentive
compensation equal to the sum of (a) 25% of the portion of the Quarterly Cash
To Be Distributed which (i) exceeds $.65 per LP Unit and (ii) is not more than
$.70 per LP Unit; (b) 30% of the portion of the Quarterly Cash To Be
Distributed which (i) exceeds $.70 per LP Unit and (ii) does not exceed $.80
per LP Unit; (c) 40% of the portion of the Quarterly Cash To Be Distributed
which (i) exceeds $.80 per LP Unit per quarter and (ii) does not exceed $.90
per LP Unit; and (d) 50% of the portion of the Quarterly Cash To Be
Distributed which exceeds $.90 per LP Unit per quarter.
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2.2 Special Distribution Incentive Compensation. If the Special Cash To Be
Distributed in a Special Distribution exceeds the Aggregate Target Special
Distribution Amount for such Special Distribution, the Partnership shall,
subject to Section 2.3, pay the General Partner, out of Special Cash To Be
Distributed, incentive compensation equal to (a) 15% of the portion of the
Special Cash To Be Distributed which (i) exceeds 100% of the Aggregate Target
Special Distribution Amount and (ii) is not more than 115% of the Aggregate
Target Special Distribution Amount, plus (b) 25% of the amount (if any) by
which the Special Cash To Be Distributed exceeds 115% of the Aggregate Target
Special Distribution Amount.
2.3 Limitation on Incentive Compensation. The General Partner shall not be
entitled to incentive compensation at any time pursuant to Section 2.1 and 2.2
to the extent that the aggregate incentive compensation payments and
distributions made by the Partnership or the Pipeline Partnership to the
General Partner or the Manager after the closing of the offering made by the
Prospectus would exceed 10% of the sum of (a) the total distributions made by
the Partnership or the Pipeline Partnership to Unitholders and to the Manager
as general partner of the Operating Partnership and (b) the total incentive
compensation payments made to the General Partner pursuant to Sections 2.1 and
2.2.
2.4 Termination Upon Removal of General Partner. The agreement contained in
this Article II shall terminate if the General Partner is removed as general
partner of the Partnership pursuant to the Partnership Agreement, effective
upon the date of such removal. However, the value of the right to receive
incentive compensation as provided in this Article II shall be included in
determining the fair market value of the GP Units pursuant to Section 13.2 of
the Partnership Agreement.
ARTICLE III
Miscellaneous
3.1 Headings. All article or section headings in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof.
3.2 Binding Effect; Benefit of Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
3.3 Integration. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
3.4 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
3.5 Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
3.6 Amendment. This Agreement may be amended only after complying with
Section 17.4(a) of the Partnership Agreement.
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In Witness Whereof, this Amended and Restated Incentive Compensation
Agreement has been duly executed by the parties hereto as of the date first
above written.
Buckeye Management Company
/s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: _________________________________
Buckeye Partners, L.P.
By: Buckeye Management Company, as
General Partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: _________________________________
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