EXHIBIT 10.4
CONFORMED COPY
AMENDED AND RESTATED EXCHANGE AGREEMENT
THIS AMENDED AND RESTATED EXCHANGE AGREEMENT (this
"Agreement"), dated as of August 12, 1997, as amended and
restated as of May 6, 2002, is entered into among BUCKEYE PIPE
LINE COMPANY, a Delaware corporation (the "General Partner"),
BUCKEYE MANAGEMENT COMPANY, a Delaware corporation and owner of
all of the outstanding common stock of the General Partner
("BMC"), BUCKEYE PARTNERS, L.P., a Delaware limited partnership
(the "Partnership"), and BUCKEYE PIPE LINE COMPANY L.P., a
Delaware limited partnership, BUCKEYE PIPE LINE COMPANY OF
MICHIGAN, L.P., a Delaware limited partnership LAUREL PIPE LINE
COMPANY, L.P., a Delaware limited partnership, EVERGLADES PIPE
LINE COMPANY, L.P., a Delaware limited partnership and BUCKEYE
PIPE LINE HOLDINGS, L.P., a Delaware limited partnership
(formerly Buckeye Tank Terminals Company, L.P.) (together, the
"Operating Partnerships"), and GLENMOOR, LTD., a Delaware
corporation (formerly BMC Acquisition Company) and owner of all
of the outstanding common stock of BMC ("Glenmoor").
WITNESSETH:
WHEREAS, BMC, the Partnership, the General Partner, the
Operating Partnerships and Glenmoor entered into the Exchange
Agreement, dated as of August 12, 1997 (the "Prior Agreement"),
which was consummated on such date effective as of 11:59 P.M.;
WHEREAS, the parties to the Prior Agreement desire to amend
and restate the Prior Agreement in its entirety to reflect that
(i) the General Partner has replaced BMC as the general partner
of the Partnership, (ii) the parties desire that Section 3.01 of
the Prior Agreement be revised to eliminate the "Forfeiture
Payment," and (iii) the names of certain parties have been
changed;
WHEREAS, the General Partner is the general partner of the
Partnership and the Operating Partnerships;
WHEREAS, the Operating Partnerships are owned 99% by the
Partnership, and 1% by the General Partner (except that Buckeye
Pipe Line Company of Michigan, L.P., is owned 98.01% by Laurel
Pipe Line Company, L.P., and 1.99% by the General Partner);
WHEREAS, the Partnership is governed pursuant to an Amended
and Restated Agreement of Limited Partnership (the "Master
Partnership Agreement"), dated as of December 31, 1998, between
the General Partner and the limited partners of the Partnership
(the "Limited Partners"); the Operating Partnerships, other than
Laurel Pipe Line Company, L.P., are governed pursuant to similar
Amended and Restated Agreements of Limited Partnership, each
dated as of December 23, 1986, as amended, between the General
Partner and the Partnership; and Laurel Pipe Line Company, L.P.
is governed pursuant to an Amended and Restated Agreement of
Limited Partnership dated October 21, 1992, between the General
Partner and the Partnership (collectively, the "Operating
Partnership Agreements");
WHEREAS, in connection with the Prior Agreement, a special
committee (the "Special Committee") of the disinterested
directors of BMC (as the former general partner of the
Partnership), determined it to be in the best interests of the
Partnership (i) to issue limited partnership units of the
Partnership ("LP Units") to Buckeye Pipe Line Services Company, a
Pennsylvania corporation (the "Company") whose shares of capital
stock were owned by the Glenmoor Employee Stock Ownership Plan
(now known as the Buckeye Pipe Line Services Company Employee
Stock Ownership Plan, and referred to herein as the "ESOP"), in
exchange for 63,000 shares of Glenmoor Series A Convertible
Preferred Stock, stated value $1,000 per share (the "Glenmoor
Preferred Stock"), (ii) to have the Partnership convert the
Glenmoor Preferred Stock into Glenmoor Common Stock ("Glenmoor
Common Stock"), and (iii) to contribute the Glenmoor Common Stock
to the Operating Partnerships (collectively, the
"Restructuring");
WHEREAS, pursuant to the LP Unit Subscription Agreement,
dated as of the date of the Prior Agreement (the "LP Unit
Subscription Agreement"), the Partnership issued 1,286,573 LP
Units to the Company in exchange for the Glenmoor Preferred
Stock;
WHEREAS, pursuant to a notice to Glenmoor as of the date of
the Prior Agreement, the Partnership converted the Glenmoor
Preferred Stock received pursuant to the LP Unit Subscription
Agreement into 484,616 shares of Glenmoor Common Stock (the
"Exchange Shares");
WHEREAS, the Partnership contributed an undivided interest
in the Exchange Shares to the Operating Partnerships as of the
date of the Prior Agreement; and
WHEREAS, the Operating Partnerships transferred and assigned
the Exchange Shares to the General Partner as of the date of the
Prior Agreement in exchange for the release of certain
obligations that the Partnership had to BMC (as the former
general partner of the Partnership) and the General Partner, and
the Operating Partnerships had to the General Partner; Glenmoor
and BMC caused the General Partner to receive the Exchange Shares
and to release such obligations of the Partnership and the
Operating Partnerships; and the Exchange Shares were further
transferred by the General Partner to BMC and by BMC to Glenmoor.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
THE EXCHANGE
Upon the terms and subject to the conditions of this
Agreement, the Operating Partnerships have transferred and
assigned the Exchange Shares to the General Partner in exchange
for the release of certain obligations of the Partnership to BMC
(as the former general partner of the Partnership) and the
General Partner, and of the Operating Partnerships to the General
Partner, as set forth in Article II below.
ARTICLE II
RELEASE OF OBLIGATIONS
2.01 Obligations to Reimburse for Executive Compensation. (a)
Upon the terms and subject to the conditions of this Agreement,
Glenmoor, BMC and the General Partner, for themselves and their
affiliates, successors and assigns, hereby and irrevocably
release, relinquish and discharge the Partnership and the
Operating Partnerships from any and all liability, obligation,
claim, demand, action or suit of any kind or nature, in law or in
equity, whatsoever, known or unknown, which may be asserted for
or on account of or arising out of or in any manner relating to
the Partnership's and/or the Operating Partnerships' obligations
pursuant to Section 7.4(b) of the Master Partnership Agreement
and the Operating Partnership Agreements or otherwise to
reimburse Glenmoor, BMC, or the General Partner for total
compensation paid for executive level duties performed for BMC or
the General Partner with respect to the functions of operations,
finance, legal, marketing and business development, and treasury,
as well as President of the General Partner following the date of
the Prior Agreement. The parties hereto acknowledge that the
individuals who performed those executive level functions as of
the date of the Prior Agreement were: Michael P. Epperly, Steven
C. Ramsey, Stephen C. Muther, William H. Shea, Jr., David J.
Martinelli and C. Richard Wilson, respectively, and their total
compensation in all forms on a pro forma annualized basis for
1996 was $2,300,000; the parties further acknowledge that Michael
P. Epperly and C. Richard Wilson have resigned and their
respective duties have been assumed by the remaining executives.
Nothing in this Section 2.01(a) shall be deemed to waive the
obligations of the Partnership and the Operating Partnerships to
reimburse BMC and the General Partner for (i) employee fringe
benefits and retirement benefits for their executives relating to
services performed prior to the date of the Prior Agreement, (ii)
obligations under severance agreements with their executives to
the extent currently reimbursable under the Master Partnership
Agreement or (iii) any obligations in respect of their executives
which are not related to compensation, including, without
limitation, indemnification obligations.
(b) Glenmoor, BMC and the General Partner agree, unless the
General Partner is removed as general partner of the Partnership,
to perform the executive level functions referred to in Section
2.01(a) for the benefit of the Partnership and the Operating
Partnerships in a manner satisfactory to the board of directors
of the General Partner.
2.02 ESOP Contributions Generally. (a) From the date of the
Prior Agreement until all principal, interest and premium is paid
in full under the Amended and Restated Note Agreement, dated as
of the date of the Prior Agreement, among the ESOP, The
Prudential Insurance Company of America and Pruco Life Insurance
Company (the "Note Agreement") (the "ESOP Period"), and only
following the exhaustion of the "Top Up Reserve Fund" provided
for in paragraph (b) below, the Partnership and the Operating
Partnerships shall reimburse the General Partner and BMC for (i)
cash contributions made by the Company to the ESOP pursuant to
the terms thereof, as necessary for the ESOP to make all payments
of principal, interest (including additional interest payable as
the result of an interest rate increase under paragraph 7 of the
Note Agreement) and premium due under the Note Agreement
(excluding, however, the accelerated portion of any payments
which have become due and payable upon acceleration of such
indebtedness as the result of a default under the Note
Agreement), (ii) any income taxes incurred by the Company on the
sale of LP Units made to satisfy the redemption obligations
described in Section 2.03 below, and (iii) routine administrative
charges and expenses common to employee stock ownership plans
incurred in connection with the operation of the ESOP, in each
case, to the extent distributions from LP Units owned by the
Company are not sufficient to make all such payments. Following
the ESOP Period, the Partnership and the Operating Partnerships
shall have no further obligations to reimburse BMC or the General
Partner for contributions to the ESOP.
(b) Top Up Reserve Fund. For purposes of this Agreement, the
"Top Up Reserve Fund" shall mean the amount set forth on a
statement delivered by BMC (as the former general partner of the
Partnership) to the Partnership on the date of the Prior
Agreement which is equal to the amount of all reimbursements
associated with the ESOP made to BMC (as the former general
partner of the Partnership) by the Partnership prior to the date
of the Prior Agreement, minus the actual cash payments by the
ESOP for principal and interest payments and routine
administrative charges and expenses actually incurred by the ESOP
as of the date of the Prior Agreement.
2.03 No ESOP Contributions for Departing Employees. BMC and the
General Partner acknowledge that neither the Partnership nor the
Operating Partnerships shall be obligated to reimburse Glenmoor,
BMC or the General Partner for obligations to redeem the ESOP
accounts of departing employees upon the termination of their
employment with the Company, or for any other costs or expenses
of or relating to the operation of the ESOP other than those
specified in Section 2.02(a) above.
2.04 Representations and Warranties. Glenmoor, BMC and the
General Partner hereby represent and warrant to the Partnership
and the Operating Partnerships, as of the date of the Prior
Agreement, that (a) neither the Company nor any entity treated as
a single employer with the Company under Sections 414(b), 414(c),
414(m), or 414(o) of the Internal Revenue Code of 1986, as
amended (the "Code"), or Section 4001(b) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), has
incurred any liability under any provision of ERISA or other
applicable law relating to the ESOP; (b) the ESOP has been
administered, in all material respects, in compliance with its
terms and complies, both in form and operation, with the
applicable provisions of ERISA (including, without limitation,
the funding and prohibited transactions provisions thereof), the
Code and other applicable laws; (c) the ESOP has been determined
by the Internal Revenue Service to be qualified within the
meaning of Section 401 of the Code, and none of Glenmoor or BMC
or the General Partner is aware of any fact or circumstances
which would adversely affect the qualified status of the ESOP;
and (d) the restructuring of the ESOP contemplated by this
Agreement does not constitute a "prohibited transaction" under
ERISA.
2.05 Certain Agreements. (a) The parties acknowledge that
nothing in the Services Agreement, dated as of the date of the
Prior Agreement (the "Services Agreement"), among BMC, the
General Partner and the Company shall be deemed to enlarge the
obligation of the Partnership to reimburse BMC or the General
Partner under the Master Partnership Agreement or the obligation
of the Operating Partnerships to reimburse the General Partner
under the Operating Partnership Agreements. Furthermore, the
Partnership and the Operating Partnerships shall have no
obligation to reimburse BMC or the General Partner for the
amounts paid to the Company pursuant to Article V of the Services
Agreement unless such amounts were paid as reimbursement for
costs and expenses for which BMC or the General Partner would be
entitled to reimbursement under the Master Partnership Agreement
or the Operating Partnership Agreements, as such agreements have
been modified by the terms hereof, if BMC or the General Partner
had incurred such costs and expenses directly. In addition, the
Partnership and the Operating Partnerships shall have no
obligation to reimburse BMC or the General Partner for amounts
paid to the Company pursuant to Article VI of the Services
Agreement unless such amounts were paid as indemnification for
damages and expenses for which BMC or the General Partner would
be entitled to indemnification under the Master Partnership
Agreement or the Operating Partnership Agreements if BMC or the
General Partner had incurred such damages or expenses directly.
(b) The Partnership and each of the Operating Partnerships
waive, as of the date of the Prior Agreement, any right of offset
or counterclaim or similar right it may have against BMC or the
General Partner with respect to their respective obligations to
reimburse BMC or the General Partner, as the case may be, for
contributions to the ESOP pursuant to Section 2.02 hereof.
(c) The parties acknowledge that the Partnership and the
Operating Partnerships are not obligated to reimburse BMC or the
General Partner if any tax is owed by Glenmoor, BMC or the
General Partner pursuant to Section 83 of the Internal Revenue
Code as a result of the Restructuring.
ARTICLE III
FORFEITURE
3.01 Failure to Act as General Partner Over the ESOP Period.
Except to the extent this obligation is assumed by a successor
general partner pursuant to Section 3.02, the General Partner
shall continue to serve as the general partner of the Partnership
and the Operating Partnerships until the end of the ESOP Period
unless the Partnership shall be sooner dissolved under
Section 14.1(d) of the Master Partnership Agreement.
3.02 Assumption of Obligations by a Successor General Partner.
If the General Partner is removed as general partner of the
Partnership or one or more of the Operating Partnerships during
the ESOP Period (but not if the General Partner voluntarily
withdraws as general partner) pursuant to Section 13.1(b) of the
Master Partnership Agreement, the General Partner may cause the
successor general partner of the Partnership and the Operating
Partnerships to assume its respective obligations, liabilities
and duties under this Agreement.
3.03 ESOP Loan Secured. The Partnership and the Operating
Partnerships acknowledge that Glenmoor, BMC and the General
Partner have each executed and delivered a Guaranty Agreement
pursuant to which each has guaranteed the payment and performance
of all obligations under the Note Agreement and related documents
(the "Note Obligations"), and that such guaranty obligations are
secured by substantially all assets of Glenmoor, BMC and the
General Partner, respectively.
ARTICLE IV
TAX INDEMNITY AGREEMENT
4.01 Indemnification by the General Partner. Glenmoor, BMC and
the General Partner shall, jointly and severally, reimburse and
indemnify and hold the Partnership and each Operating Partnership
harmless against and in respect of any and all damage, loss,
liability, deficiency, settlement payments, interest (including
any increase in the rate of interest paid on any loan to the
ESOP), penalties, obligations, levies or expenses (including
without limitation reasonable legal fees and expenses)
(collectively, "Damages") in connection with, resulting from or
relating to one of (i) the failure of the lenders to the ESOP to
qualify pursuant to Section 133 of the Internal Revenue Code for
the interest received exclusion in connection with the loan to
the ESOP as a result of the Restructuring or (ii) any excise tax
imposed as a result of the Restructuring (each, a "Tax Risk").
The Partnership and the Operating Partnerships shall pay to the
ESOP or the lenders to the ESOP (in the case of the Tax Risk
described above in clause (i) of this Section 4.01), or to the
appropriate taxing authority or other third party (in the case of
the Tax Risk described above in clause (ii) of this Section 4.01)
any Damages in the event that a Tax Risk is incurred, subject to
the foregoing reimbursement obligation. None of Glenmoor, BMC,
the General Partner or their respective affiliates shall be
entitled to reimbursement from the Partnership or any Operating
Partnership for any indemnification payment made pursuant to this
Article IV.
4.02 Selection of Tax Risk. The disinterested directors of the
board of directors of the General Partner shall determine the Tax
Risk for which the Partnership and the Operating Partnerships
shall be entitled to indemnification from Glenmoor, BMC and the
General Partner and such directors may make such determination at
any time. Such determination shall be communicated to the entire
board of directors in writing and once so communicated may not be
modified or revoked.
4.03 Loan From Partnership. Subject to Section 7.7(g) of the
Master Partnership Agreement, in the event that a Tax Risk is
incurred, and the Partnership or the Operating Partnerships incur
the Damages associated therewith, the General Partner shall issue
to the Partnership a promissory note (the "Note") for the amount
of the Damages, with interest calculated at the rate (including
points or other financing charges or fees) that the General
Partner would be charged by an unrelated lender on a comparable
loan. The Note shall be payable by right of offset of the
amounts due to the General Partner under the Amended and Restated
Incentive Compensation Agreement dated as of March 22, 1996, as
amended from time to time, until the Note is paid in full.
ARTICLE V
GENERAL PROVISIONS
5.01 Entire Agreement. This Agreement supersedes all prior
discussions and agreements among the parties hereto with respect
to the subject matter hereof and contains the sole and entire
agreement among the parties hereto with respect to the subject
matter hereof.
5.02 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or
limit the provisions hereof.
5.03 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
consequent 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.
5.04 Severability. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
hereof, or of such provision in other respects, shall not be
affected thereby.
5.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable to a contract executed and performed in such State,
without giving effect to the conflicts of laws principles
thereof.
5.06 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, each party hereto has caused this
Agreement amending and restating the Prior Agreement to be signed
by its officer duly authorized as of the date first above
written.
BUCKEYE MANAGEMENT COMPANY
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and CFO
BUCKEYE PARTNERS, L.P.
By: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and CFO
BUCKEYE PIPE LINE COMPANY
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and CFO
BUCKEYE PIPE LINE COMPANY
OF MICHIGAN, L.P.
By: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and CFO
[SIGNATURES CONTINUE ONTO NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
LAUREL PIPE LINE COMPANY, L.P.
By: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and
CFO
EVERGLADES PIPE LINE COMPANY, L.P.
By: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and
CFO
BUCKEYE PIPE LINE HOLDINGS, L.P.
By: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and
CFO
BUCKEYE PIPE LINE COMPANY, L.P.
By: BUCKEYE PIPE LINE COMPANY,
as General Partner
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and
CFO
GLENMOOR, LTD.
By: /s/ Steven C. Ramsey
Name: Steven C. Ramsey
Title: Senior V.P. Finance and
CFO