EXHIBIT 10.13
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BUCKEYE MANAGEMENT COMPANY
UNIT OPTION LOAN PROGRAM
Adopted on April 24, 1991
(Amended and Restated as of February 1, 2002)
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BUCKEYE MANAGEMENT COMPANY
UNIT OPTION LOAN PROGRAM
1. Purpose.
The purpose of the Unit Option Loan Program (the "Loan Program") is to
assist in the exercise of options ("Options") granted under the Buckeye
Partners, L.P. (the "Partnership") Unit Option and Distribution Equivalent Plan
(the "Plan"). Consistent with this purpose, the Loan Program authorizes Buckeye
Management Company, the Partnership's general partner (the "General Partner"),
to make loans to Optionees on the terms and conditions hereinafter set forth.
Unless otherwise defined herein, terms defined in the Plan shall have the same
meaning herein as in the Plan.
2. Administration.
The Loan Program shall be administered by the Compensation Committee or a
successor committee or subcommittee (the "Committee") of the Board of Directors
(the "Board") of the General Partner. Subject to the express provisions of the
Loan Program, the Committee shall have exclusive power to determine those
individuals who shall be eligible to participate in the Loan Program and the
terms and conditions to which loans under the Loan Program (the "Loans") may be
subject. Subject again to the express provisions of the Loan Program, the
Committee shall have full and final authority to interpret the Loan Program and
establish, adopt or revise such rules and regulations and to make all
determinations relating to the Loan Program as it may, from time to time, deem
necessary or advisable for the administration of the Loan Program. The
Committee's interpretation of the Loan Program and all of its actions and
decisions with respect to the Loan Program shall be final, binding and
conclusive on all parties.
3. Options For Which Loan Program is Available.
The Loan Program may be available in connection with the exercise by
designated Eligible Participants (as defined in Section 4 hereof) of certain
Options granted under the Plan.
4. Eligible Participants.
"Eligible Participants" shall be designated employees of the Partnership,
the General Partner and Subsidiaries who are Participants in the Plan, as such
Eligible Participants may be determined from time to time by the Committee. The
term "Employee" shall mean any person (including any officer) employed by the
Partnership, the General Partner or Subsidiaries on a full-time salaried basis.
The term "Participant" shall mean an Eligible Participant who obtains a Loan
pursuant to this Loan Program.
5. Terms and Conditions of Loans.
Each Loan shall be evidenced by a written secured promissory note (a
"Note") from the Participant payable to the order of the General Partner in such
form as shall comply with the applicable terms and conditions of the Loan
Program. In addition, any Note may include or contain other terms and conditions
that are not consistent with the provisions of the Loan Program.
(a) Timing and Amount of Loan. Except as otherwise provided in the last
sentence of this subsection (a), an Eligible Participant may obtain a Loan only
at the time of, and in connection with, the exercise of an Option for which the
Loan Program is available, as described in Section 3 hereof. An Eligible
Participant may borrow up to 95% of the purchase price of the Units (net of any
Distribution Equivalents to which the Eligible Participant may be entitled in
respect of such Option) with respect to which the Option is being exercised and
up to 100% of the applicable federal, state or local taxes for which the
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Partnership, the General Partner, or any Subsidiary has a withholding obligation
in connection with such exercise, and the proceeds of the Loan may be used only
for such purposes. An Eligible Participant may obtain a Loan at a time
subsequent to the time of exercise of an Option for the purpose of satisfying
any applicable taxes for which there is a withholding obligation which arises at
such subsequent time rather than at the time of exercise.
(b) Interest Rate and Payments. Each Note shall accrue and bear interest
compounded on each June 30 and December 31 at the 5-year Treasury Bond rate plus
200 basis points, compounded semiannually. Interest shall be payable at the same
time as the principal of the Note shall be payable.
(c) Term of Loan. Each Loan shall become due and payable upon the first
to occur of any of the following events:
(i) Upon the completion of the period specified for repayment by
the Participant as of the date of the Loan, which date, as determined by the
Participant, may be as of a date specified from six (6) months to sixty (60)
months from the date of the Loan;
(ii) failure of the Participant to maintain a margin of collateral
pledged with the General Partner, consisting of the Units, the purchase of which
is being financed by the Loan to the Participant (or other collateral acceptable
to the chief financial officer of the General Partner), sufficient to cause the
Loan (including the accrued and unpaid interest thereon to the end of the most
recent calendar quarter of a year) not to exceed 95% of the value of the pledged
collateral, or such other ratio of the Loan and the interest thereon to the
value of the collateral as may be required by any law, rule or regulation of the
United States, any state, or any federal or state board, commission, agency or
service;
(iii) the voluntary bankruptcy or insolvency of the Partnership
(or admission thereof by the Participant), or the seeking of relief by the
Partnership under a statute for the relief of debtors, or the failure of the
Participant promptly to cause the discharge of a creditor action brought against
the Participant under the Bankruptcy Code or other bankruptcy or insolvency law;
(iv) thirty (30) days after the termination of the employment of
the Participant as an employee of the Partnership, the General Partner or any
Subsidiary, unless the Committee authorizes the extension of such thirty (30)
day period; provided, however, that (a) transfer of employment of an employee
between or among the Partnership, the General Partner and a Subsidiary or
between or among Affiliates of the Partnership shall not constitute a
termination of employment, (b) the Committee may determine whether a leave of
absence is for the purpose of the Loan a termination of employment, and (c) in
the event of the death of a Participant while employed the Partnership, the
General Partner or any Subsidiary, the personal representative of the
Participant will be afforded a period of time (to be specified in the Note) in
which to assume the obligations provided for in the Note, and upon such
assumption the payment date of the Loan will not be accelerated by reason of the
death of the Participant; or
(v) failure of the Participant to observe or perform any other
provision of the Note applicable to it.
(d) Pledge of Units. The Units purchased upon exercise of the Option with
respect to which the Loan is made shall be pledged by the Participant to the
General Partner in order to secure the payment of the principal of and interest
on the Loan including any taxes required to be withheld by the Partnership, the
General Partner or any Subsidiary. The Participant shall be entitled to all
distributions which may be paid on the Units pledged (except that distributions
payable in Units of the Partnership shall be retained by the Partnership and
pledged to secure the Loan) and to any voting rights with respect to such Units.
The Partnership may place a legend on any Unit certificate to reflect any
restrictions provided for in this Loan Program.
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(e) Prepayment. The Loan may be prepaid in whole or in part by the
Participant at any time and pledged Units shall be released from pledge in
approximate proportion to the amount of the Loan prepaid except to the extent
that the retention of Units by the General Partner is necessary to maintain the
required ratio of the value of the pledged Units to the unpaid amount of the
Loan and the accrued interest thereon.
(f) Default. In the event the Participant shall fail to pay any amount
due under the terms of the Note, including any amount becoming due and payable
by acceleration of its payment date, the General Partner upon giving notice to
the Participant may sell the pledged Units (or other pledged collateral) and
shall be entitled to deduct from the proceeds thereof the sum of its costs and
expenses of enforcing payment of the Note and liquidation of the collateral, the
accrued and unpaid interest on the Note and the unpaid principal of the Note
before remitting the balance to the Participant. In the event the liquidation of
the pledged collateral shall not provide funds sufficient to pay the costs and
expenses of enforcing payment of the Note and the accrued and unpaid interest on
and the entire unpaid principal of the Note, the Participant shall be liable to
the General Partner for the amount of such deficiency.
6. Miscellaneous.
(a) Governmental Regulations. The obligation of the General Partner to
make Loans to certain Eligible Participants, and each Loan made to an Eligible
Participant, shall be subject to all applicable laws, rules and regulations and
to any required approvals by governmental agencies.
(b) No Employment Rights. Neither this Loan Program nor any action taken
hereunder shall be construed as conferring on any Employee any right to continue
in the employ of the Partnership, the General Partner or any Subsidiary or
affect in any way the right of the Partnership, the General Partner or any
Subsidiary to terminate the employment of any Employee at any time.
(c) Nontransferability. A Participant's rights and interests under the
Loan Program may not be assigned, pledged or transferred except that in the
event of the death of a Participant, while an employee, the Participant's
personal representative may assume and succeed to the rights and obligations of
the Participant under any Loan outstanding.
(d) Applicable Law. The Loan Program and all other governing documents,
agreements and instruments and all actions taken hereunder shall be governed by
the laws of the Commonwealth of Pennsylvania.
7. Amendment and Termination.
The Committee or the Board may at any time terminate the Loan Program.
The Board or Committee may at any time, or from time to time, amend or suspend
and, if suspended reinstate, the Loan Program in whole or in part.
Notwithstanding the foregoing, the Loan Program shall continue in effect to the
extent necessary to settle all matters relating to Loans made prior to any such
termination or suspension.
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BUCKEYE MANAGEMENT COMPANY
UNIT OPTION LOAN PROGRAM AND PROMISSORY NOTES
SUMMARY OF TERMS AND PROCEDURE
Eligible Participants
In general, specified officers or key employees of Buckeye Partners, L.P.
(the "Partnership"), Buckeye Management Company, the Partnership's general
partner (the "General Partner"), or any subsidiary of the Partnership or the
General Partner ("Subsidiary") who are Optionees under the Partnership's Unit
Option and Distribution Equivalent Plan.
Time of Participation and Options to Which Applicable
A loan can be obtained at the time of exercise for certain specified
Options.
Procedure to Obtain a Unit Option Loan and Amount of Loan
Notify Secretary of the General Partner of intention to exercise a
specified Option, as of a specified date, and request a loan for (1) a specified
dollar amount or percentage (not in excess of 95%) of the Option exercise price
(net of any Distribution Equivalents in respect of such Option) and (2) a
specified dollar amount or percentage (up to 100%) of any taxes required to be
withheld. The loan will be evidenced by a promissory note or notes ("Note" or
"Notes") executed and delivered to the General Partner by the Optionee
("Borrower") and will be secured by the pledge to the General Partner of the
Units being purchased. In the case of an officer subject to Section 16 of the
Securities Exchange Act of 1934, as amended, the taxes required to be withheld
will be determined, and any loan of the amount of such taxes will be made, as of
the date of exercise of the Option or as of a subsequent date, if applicable.
Interest Rate
Interest rate will be the 5-year Treasury Bond rate plus 200 basis
points, as of the date of the loan.
Interest Payments
Interest is compounded semiannually and is payable when all or any part
of the principal of the Note is payable.
Required Collateral
If the principal amount of the Note and its accrued and unpaid interest
through the end of the preceding calendar quarter exceed 95% of the market value
of the pledged Units of the Partnership, the General may require the Borrower to
remedy the deficiency within 48 hours (not including hours of a day not a
business day) by providing additional collateral of a kind acceptable to the
General Partner or by paying part of the unpaid principal and accrued interest.
If additional collateral (or a partial payment) is not timely provided, the
General Partner may liquidate the Note by selling the pledged Units and applying
the proceeds to pay the liquidation expenses, the accrued and unpaid interest on
the Note, and the unpaid principal of the Note. Any excess of proceeds would be
paid to the Borrower, and any deficiency in proceeds would be an obligation of
the Borrower to the General Partner.
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Payment of Principal
The principal amount of the Note is required to be paid:
(1) Six (6) months to sixty (60) months after the date of the Note, as
specified by the Participant at the time the Note is issued.
(2) Upon the occurrence of an "Acceleration Event." The Acceleration
Events are (i) failure to maintain the required ratio of collateral value to
loan amount, (ii) bankruptcy or insolvency of the Borrower, or (iii) the
expiration of thirty (30) days after termination of employment of the Borrower
by the General Partner, the Partnership or any Subsidiary, unless a longer
period is approved by the Plan Committee ("Committee"); provided, however, that
(A) a transfer of employment between or among the Partnership, the General
Partner or any Subsidiary or between or among affiliates of the Partnership
shall not constitute a termination of employment, (B) the Committee shall
determine whether a leave of absence represents a termination of employment, and
(C) the Borrower's personal representative will be afforded a period of time to
assume the obligations of the Note following the Borrower's termination of
employment due to death.
Death of the Borrower while employed will not be an Acceleration Event,
if the Borrower's personal representative assumes the Note obligations within 60
days after the Borrower's death.
Optional Prepayment
The Note can be prepaid in whole or in part at any time and a portion of
the pledged Units will be released which is equivalent to the portion of the
indebtedness being prepaid, unless the market value of the remaining pledged
Units will not exceed 95% of the unpaid indebtedness. Optional prepayments must
be in an amount sufficient to pay $1,000 of principal and the interest accrued
thereon, unless the Notes are being prepaid in full or a deficiency in
collateral is being remedied.
Reports and Notices
Each Borrower will be furnished quarterly with a statement showing the
accrued interest for the preceding calendar quarter, the outstanding balance of
the Notes, the total accrued and unpaid interest as of such date, and the market
price for the Partnership Units at which a request would be made on the Borrower
to furnish additional collateral. Advance notice will also be given to each
Borrower of the date of maturity of the Notes. If necessary, notice will be
given of the need for additional collateral or of an Acceleration Event.
Supplements to Notes
In the case of an officer or director subject to Section 16 of the
Securities Exchange Act of 1934, the original Note executed by the Borrower may
be supplemented six months after its issuance, or a second Note may be executed
by the Borrower, to provide for financing of withholding taxes computed at such
time and required to be withheld by the Partnership, the General Partner or any
Subsidiary in connection with the exercise of an Option. In addition, the
General Partner may require any Note to be supplemented, if necessary, to make
the Note conform to any federal, state or local law, rule or regulation,
including, if required, securing the Note by collateral having a greater value
in relation to the unpaid principal amount of, and accrued interest on, the Note
than previously required by the terms of the Note.
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Rights to Distributions
All distributions on the pledged Units will be paid to the Borrower,
except that distributions payable in additional Units will be added to each
Borrower's pledged Units. Each Borrower will be entitled to vote the Borrower's
pledged Units.
Amendment and Termination
The Program is subject to amendment, suspension or termination by the
General Partner at any time.
Governing Documents
This Summary is not intended to be a complete description of the Unit
Option Loan Program or the Notes. Reference is made to such documents for
additional and more complete information. In the event of any conflict or
discrepancy between this Summary and the terms of the Program or the Notes, the
provisions of the Program or the Notes will govern.
Dated: April 25, 1991 (Amended and restated as of February 1, 2002)
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