Exhibit
10.3


FIFTH AMENDED AND RESTATED INCENTIVE
COMPENSATION AGREEMENT


This Fifth Amended and Restated Incentive Compensation
Agreement, dated as of August 9, 2006 (this “Agreement”), is entered into
between BUCKEYE GP LLC, a Delaware limited liability company (“General Partner”),
and BUCKEYE PARTNERS, L.P., a Delaware limited partnership (the “Partnership”).


WHEREAS, the Partnership and MainLine Sub LLC (“Holdco”)
entered into a Fourth Amended and Restated Incentive Compensation Agreement
dated December 15, 2004 (the “Prior Agreement”);


WHEREAS, pursuant to an agreement between Holdco and
the General Partner, dated the date hereof, Holdco assigned the Prior Agreement
to the General Partner;


WHEREAS, the parties hereto desire to amend and
restate the Prior Agreement in its entirety to supplement the Partnership
Agreement (defined below) as the context requires and recharacterize payments
pursuant to this Agreement as distributions pursuant to Section 5.2(c) of the
Partnership Agreement and to adopt the law of the State of Delaware as the
governing law of this Agreement;


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 as of the date hereof (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; and


WHEREAS, 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.  All
capitalized terms used herein and not otherwise defined herein shall have the
meanings provided therefor in the Partnership Agreement.


Section 1.1                                      “Aggregate
Target Quarterly Amount” means the Target Quarterly Amount per LP Unit
times the number of Units, other than ESOP LP Units, outstanding.









 



Section 1.2                                      “Aggregate
Target Special Distribution Amount” means the Target Special Distribution
Amount times the number of Units outstanding.


Section 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 for working
capital, anticipated cash expenditures (including capital expenditures and debt
service) and contingencies as the General Partner, in its sole discretion,
deems appropriate.


Section 1.4                                      “ESOP
LP Units” means the 2,573,146 LP Units issued to Buckeye Pipe Line Services
Company in connection with the transactions contemplated by the Exchange
Agreement, regardless of whether such LP Units continue to be held by Buckeye
Pipe Line Services Company.


Section 1.5                                      “IPO
Price” is $10.00 per LP Unit.


Section 1.6                                      “Pipeline
Partnership” means the limited partnership subsidiaries and the other
subsidiaries of the Partnership, collectively.


Section 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 make distributions pursuant to this
Agreement and less cash distributed by the Partnership to the holders of the
ESOP LP Units or the GP Units with respect to their ESOP LP Units and GP Units.


Section 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 or
the GP Units with respect to their ESOP LP Units and GP Units.


Section 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.


Section 1.10                                “Target
Quarterly Amount” is $.325 per quarter.


Section 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.



 2
 






 



Section 1.12                                “Target
Rate” is 13% per annum.


Section 1.13                                “Unitholders”
means the holders of record collectively of the LP Units and the GP Units.


ARTICLE
II

INCENTIVE COMPENSATION AGREEMENT


Section 2.1                                      Quarterly
Incentive Distribution.  If Quarterly
Cash To Be Distributed for any calendar quarter exceeds the Aggregate Target
Quarterly Amount and such Quarterly Cash To Be Distributed is distributed to
the Limited Partners as provided in the Partnership Agreement, the Partnership
shall, subject to Section 2.3 and Section 2.5, distribute to the General
Partner an amount 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. For
purposes of this Section 2.1, “LP Units” shall not include ESOP LP Units.


Section 2.2                                      Special
Incentive Distribution.  If the
Special Cash To Be Distributed in a Special Distribution exceeds the Aggregate
Target Special Distribution Amount for such Special Distribution and such
Special Cash To Be Distributed is distributed to the Limited Partners as
provided in the Partnership Agreement, the Partnership shall, subject to
Section 2.3 and Section 2.5, distribute to the General Partner, out of Special
Cash To Be Distributed, an amount 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.


Section 2.3                                      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
distributions as provided in this Article II shall be included in determining
the fair market value of the GP Units and other Partnership Interests pursuant
to Section 13.2 of the Partnership Agreement.


Section 2.4                                      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 distributions to the General Partner hereunder.



 3
 






 



Section 2.5                                      Distribution
Upon Liquidation.  Any distribution
to the General Partner pursuant to Sections 2.1 and 2.2 during the period in
which a liquidation of the Partnership occurs pursuant to Section 14.3 of the
Partnership Agreement shall equal the amounts allocated pursuant to Section
5.1(c)(vi) of the Partnership Agreement.


ARTICLE
III

MISCELLANEOUS


Section 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.


Section 3.2                                      Binding
Effect; Benefit of Agreement; Assignment. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.  Absent the written consent of each party
hereto and, this Agreement may not be assigned by either party.  Notwithstanding the foregoing, the General
Partner may assign this Agreement, and the Partnership Interests represented
hereby, to (i) an entity which, directly or indirectly, wholly owns or is
wholly owned by the General Partner, (ii) any entity wholly owned by any entity
which wholly owns the General Partner or (iii) a transferee of the GP Units
under Section 11.1 of the Partnership Agreement; provided that, any such
transferee must be admitted to the Partnership as an additional or successor
general partner of the Partnership.  For
so long as the Executive Employment Agreement, dated as of December 15, 2004,
between the General Partner, Holdco and Buckeye Pipe Line Services Company is
in effect, the General Partner may not assign this Agreement without the prior
written consent of the Trustee of the ESOP, which consent will not be unreasonably
withheld.


Section 3.3                                      Integration.  This Agreement, together with the Partnership
Agreement, constitutes the entire agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements and understandings
pertaining thereto.  This Agreement shall
constitute a supplement to the Partnership Agreement.


Section 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.


Section 3.5                                      Applicable
Law.  This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware.


Section 3.6                                      Amendment.  This Agreement may be amended only after
complying with Section 17.2(a) of the Partnership Agreement.



 4














 


IN WITNESS WHEREOF, this Fifth Amended and Restated
Incentive Compensation Agreement has been duly executed by the parties hereto
as of the date first above written.


	
   

  	
  BUCKEYE GP LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. Wallace

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert B. Wallace

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President,

  
	
   

  	
   

  	
   

  	
  Finance and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BUCKEYE PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BUCKEYE GP LLC,

  
	
   

  	
   

  	
  as General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stephen C. Muther

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Stephen C. Muther

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President—

  
	
   

  	
   

  	
   

  	
   

  	
  Administration and Secretary

  
								



 


[Fifth Amended and
Restated Incentive Compensation Agreement]