SECOND AMENDED AND RESTATED INCENTIVE COMPENSATION AGREEMENT
This Amended and Restated Incentive Compensation Agreement, dated as of
April 23, 2001 (this "Agreement"), is entered into between BUCKEYE PIPE LINE
COMPANY, a Delaware corporation (the "General Partner"), and BUCKEYE PARTNERS,
L.P., a Delaware limited partnership (the "Partnership").
WHEREAS, Buckeye Management Company ("BMC") and the Partnership entered
into an Amended and Restated Incentive Compensation Agreement dated March 22,
1996, Amendment No. 1 to the Amended and Restated Incentive Compensation
Agreement dated August 12, 1997 and Amendment No. 2 to the Amended and Restated
Incentive Compensation Agreement dated January 20, 1998 (the March 22, 1996
Agreement, as so amended, the "Prior Agreement");
WHEREAS, pursuant to the Contribution, Assignment and Assumption
Agreement dated December 31, 1998, BMC assigned its interest in the Prior
Agreement to the General Partner;
WHEREAS, Section 3.6 of the Prior Agreement provides that the Prior
Agreement may be amended only after complying with Section 17.2(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 Prior 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, a Special Committee of disinterested members of the Board of
Directors of the General Partner has approved the amendment and restatement of
the Prior Agreement in the form set out in this Agreement and has further
determined that, in its good faith opinion, this amendment and restatement of
the Prior Agreement does not adversely affect the Limited Partners in any
material respect.
NOW THEREFORE, the parties hereto, intending to be legally bound,
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 24,000,000 LP Units
representing limited partnership interests (after giving effect to the
two-for-one LP Unit split effective January 29, 1998). All capitalized terms
used herein and not otherwise defined herein shall have the meanings provided
therefor in the Partnership Agreement.
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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
Indenture under which the Pipeline Partnership's senior notes were issued.
1.4 "ESOP LP Units" means the LP Units issued to Buckeye Pipe Line
Services Company, regardless of whether such LP Units continue to be held by
Buckeye Pipe Line Services Company.
1.5 "IPO Price" is $10.00 per LP Unit.
1.6 "Pipeline Partnership" means the limited partnership subsidiaries
and the other 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 and less cash
distributed by the Partnership to the holders of the ESOP LP Units.
1.8 "Special Cash To Be Distributed" means the cash or fair market
value of securities to be distributed in a Special Distribution, less the cash
or fair market value of securities distributed by the Partnership to the holders
of ESOP LP Units.
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; provided, however, that no special
distribution from the proceeds of a financing shall be made without the approval
of the disinterested directors of the Board of Directors of the General Partner
or a committee thereof.
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1.10 "Target Quarterly Amount" is $.325 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) 15% of the portion of the
Quarterly Cash To Be Distributed which (i) exceeds $.325 per LP Unit and (ii)
does not exceed $.35 per LP Unit; (b) 25% of the portion of the Quarterly Cash
To Be Distributed which (i) exceeds $.35 per LP Unit and (ii) does not exceed
$.375 per LP Unit; (c) 30% of the portion of the Quarterly Cash To Be
Distributed which (i) exceeds $.375 per LP Unit and (ii) does not exceed $.40
per LP Unit; (d) 35% of the portion of the Quarterly Cash To Be Distributed
which (i) exceeds $.40 per LP Unit and (ii) does not exceed $.425 per LP Unit;
(e) 40% of the portion of the Quarterly Cash To Be Distributed which (i) exceeds
$.425 per LP Unit and (ii) does not exceed $.525 per LP Unit; and (f) 45% of the
portion of the Quarterly Cash To Be Distributed which exceeds $.525 per LP Unit.
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 or 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 (including incentive compensation payments and distributions paid to BMC
as general partner of the Partnership prior to December 31, 1998) 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 Pipeline
Partnership and (b) the total incentive compensation payments made to the
General Partner pursuant to Sections 2.1 and 2.2. This Section 2.3 shall expire
and be of no further force and effect on the earlier of December 31, 2005, or
the date that Quarterly Cash To be Distributed equals or exceeds $.6375 per LP
Unit for four consecutive quarterly periods.
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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.
2.5 Certain Events. If there is a change in the LP Units to divide the
outstanding LP Units into a greater number of LP Units or to combine outstanding
LP Units into a smaller number of LP Units, in each case in accordance with the
terms and conditions of the Partnership Agreement, the amounts reflected in
Sections 1.5, 1.10 and 2.1 hereof shall be adjusted automatically to reflect
such division or combination and shall apply to all subsequent calculations of
incentive compensation payable to the General Partner.
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 17.2(a) of the Partnership Agreement.
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IN WITNESS WHEREOF, this Second Amended and Restated Incentive
Compensation Agreement has been duly executed by the parties hereto as of the
date first above written.
BUCKEYE PIPE LINE COMPANY
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Sr. VP Administration,
General Counsel and Secretary
BUCKEYE PARTNERS, L.P.
BY: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior VP Finance and CFO
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