EXHIBIT 10.01

 

NUSTAR GP, LLC SECOND AMENDED AND RESTATED

2000 LONG-TERM INCENTIVE PLAN

 

Amended and Restated as of April 1, 2007

SECTION 1.

Purpose of the Plan.

The NuStar GP, LLC 2000 Long-Term Incentive Plan (the “Plan”) is intended to
promote the interests of NuStar Energy L.P., a Delaware limited partnership (the
“Partnership”), by providing to employees and directors of NuStar GP, LLC, a
Delaware limited liability company (the “Company”), and its Affiliates who
perform services for the Partnership and its subsidiaries Unit-based incentive
awards for superior performance. The Plan is also intended to enhance the
Company’s and its Affiliates’ ability to attract and retain employees whose
services are key to the growth and profitability of the Partnership, and to
encourage them to devote their best efforts to the business of the Partnership,
thereby advancing the Partnership’s interests.

SECTION 2.

Definitions.

As used in the Plan, the following terms shall have the meanings set forth
below:

 

2.1

“Affiliate ” means, with respect to any Person, any other Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise. Notwithstanding the
immediately preceding two sentences, to the extent that Section 409A of the Code
applies to Options or other equity-based Awards granted under the Plan, the term
“Affiliate” means all persons with whom the Company could be considered a single
employer under Section 414(b) or Section (c) of the Code, substituting (for the
purpose of determining whether Options or other equity-based Awards that may be
subject to Section 409A of the Code are derived in respect of Units of the
service recipient in order to comply with any applicable requirements of
Section 1.409A-1(b)(5)(iii) of the proposed regulations issued under
Section 409A of the Code or any successor regulation or other regulatory
guidance relating thereto) “20 percent” in place of “80 percent” in determining
a controlled group under Section 414(b) of the Code and in determining trades or
businesses that are under common control for purposes of Section 414(c) of the
Code.

 

2.2

“Award ” means a grant of one or more Options, Performance Units, Performance
Cash or Restricted Units pursuant to the Plan, and any tandem DERs granted with
respect to such Award.

 

2.3

“Board ” means the Board of Directors of the Company.

 

2.4

“Cause ” shall mean the (i) conviction of the Participant by a state or federal
court of a felony involving moral turpitude, (ii) conviction of the Participant
by a state or federal court of embezzlement or misappropriation of funds of the
Company, (iii) the Company’s (or applicable Affiliate’s) reasonable
determination that the Participant has committed an act of fraud, embezzlement,
theft, or misappropriation of funds in connection with such Participant’s duties
in the course of his or her employment with the Company (or applicable
Affiliate), (iv) the Company’s (or its applicable Affiliate’s) reasonable
determination that the Participant has engaged in gross mismanagement,
negligence or misconduct which causes or could potentially cause material loss,
damage or injury to the Company, any of its Affiliates or their respective
employees, or (v) the Company’s (or applicable Affiliate’s) reasonable
determination that (a) the Participant has violated any policy of the Company
(or applicable Affiliate), including but not limited to, policies regarding
sexual harassment, insider trading, confidentiality, substance abuse and/or
conflicts of interest, which violation could result in the termination of the
Participant’s employment or service as a non-employee Director of the Company
(or applicable Affiliate), or (b) the Participant has failed to satisfactorily
perform the material duties of Participant’s position with the Company or any of
its Affiliates.

 

2.5

“Change of Control” means, and shall be deemed to have occurred upon the
occurrence of one or more of the following events: (i) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all or substantially all of the assets of the Company or the Partnership to any
Person or its Affiliates, unless immediately following such sale, lease,
exchange or other transfer such assets are owned, directly or indirectly, by
NuStar GP Holdings, LLC and its Affiliates or the Company; (ii) the
consolidation or merger of the Partnership or the Company with or into another
Person pursuant to a transaction in which the outstanding voting interests of
the Company are changed into or exchanged for cash, securities or other
property, other than any such transaction where, in the case of the Company, (a)
all outstanding voting interests of the Company are changed into or exchanged
for voting stock or interests of the surviving corporation or entity or its
parent and (b) the holders of the voting interests of the Company immediately
prior to such transaction own, directly or indirectly, not less than a majority
of the voting stock or interests of the surviving corporation or entity or its
parent immediately after such transaction and, in the case of the Partnership,
NuStar GP Holdings, LLC retains operational control, whether by way of holding a
general partner interest, managing member interest or a majority of the
outstanding voting interests of the surviving corporation or entity or its
parent; NuStar GP Holdings, LLC or (iii) a “person” or “group” (within the
meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) being or becoming the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act)
of more than 50% of all voting interests of NuStar GP Holdings, LLC or the
Company then outstanding, other than, in the case of the Company, (a) in a
merger or consolidation which would not constitute a Change of Control under
clause (ii) above and (b) Valero Energy Corporation and its Affiliates; or
(iv) in the case of NuStar GP Holdings, LLC, the consummation of a
reorganization, merger, consolidation or other form of business transaction or
series of business transactions, in each case, with respect to which more than
50% of the voting power of the outstanding equity interests in NuStar GP
Holdings, LLC cease to be owned by the persons who owned such interests
immediately prior to such reorganization, merger, consolidation or other form of
business transaction or series of business transactions.

Solely with respect to any Award that is subject to Section 409A of the Code and
to the extent that the definition of change of control under Section 409A
applies to limited liability companies, this definition is intended to comply
with the definition of change of control under Section 409A of the Code and, to
the extent that the above definition does not so comply, such definition shall
be void and of no effect and, to the extent required to ensure that this
definition complies with the requirements of Section 409A of the Code, the
definition of such term set forth in regulations or other regulatory guidance
issued under Section 409A of the Code by the appropriate governmental authority
is hereby incorporated by reference into and shall form part of this Plan as
fully as if set forth herein verbatim and the Plan shall be operated in
accordance with the above definition of Change of Control as modified to the
extent necessary to ensure that the above definition complies with the
definition prescribed in such regulations or other regulatory guidance insofar
as the definition relates to any Award that is subject to Section 409A of the
Code.

 

2.6

“Code ” means the Internal Revenue Code of 1986, as amended.

 

2.7

“Committee ” means the Compensation Committee of the Board or such other
committee of the Board appointed to administer the Plan.

 

2.8

“Covered Participants” means a Participant who is a “covered employee” as
defined in Section 162(m)(3) of the Code, and the regulations promulgated
thereunder, and any individual the Committee determines should be treated like
such a covered employee.

 

2.9

“Date of Grant” means the effective date on which an Award is made to a
Participant as set forth in the applicable Award Agreement.

 

 

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2.10

“DER ” means a contingent right, granted in tandem with a specific Award, to
receive an amount in cash equal to the cash distributions made by the
Partnership with respect to a Unit during the period such Award is outstanding.

 

2.11

“Director ” means a “non-employee director” of the Company, as defined in Rule
16b-3.

 

2.12

“Employee ” means any employee of the Company or an Affiliate, as determined by
the Committee.

 

2.13

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

2.14

“Fair Market Value” means the closing sales price of a Unit on the New York
Stock Exchange on the applicable date (or if there is no trading in the Units on
such date, on the next preceding date on which there was trading). If Units are
not publicly traded at the time a determination of fair market value is required
to be made hereunder, the determination of fair market value shall be made in
good faith by the Committee.

 

2.15

“Good Reason” means:

 

(i)

a reduction in the Participant’s annual base salary;

 

(ii)

failure to pay the Participant any compensation due under an employment
agreement, if any;

 

(iii)

failure to continue to provide benefits substantially similar to those then
enjoyed by the Participant unless the Partnership, the Company or their
Affiliates provide aggregate benefits equivalent to those then in effect; or

 

(iv)

failure to continue a compensation plan or to continue the Participant’s
participation in a plan on a basis not materially less favorable to the
Participant, subject to the power of the Partnership, the Company or their
Affiliates to amend such plans in their reasonable discretion; or

 

(v)

the Partnership, the Company or their Affiliates purported termination of the
Participant’s employment for Cause or disability not pursuant to a procedure
indicating the specific provision of the definition of Cause contained in this
Plan as the basis for such termination of employment;

The Participant may not terminate for Good Reason unless he has given written
notice delivered to the Partnership, the Company or their Affiliates, as
appropriate, of the action or inaction giving rise to Good Reason, and if such
action or inaction is not corrected within thirty (30) days thereafter, such
notice to state with specificity the nature of the breach, failure or refusal.

 

2.16

“Option ” means an option to purchase Units as described in Section 6.1.

 

2.17

“Participant ” means any Employee or Director granted an Award under the Plan.

 

2.18

“Performance Award” means an Award made pursuant to this Plan to a Participant
which Award is subject to the attainment of one or more Performance Goals.
Performance Awards may be in the form of either Performance Units, Performance
Cash or DERs.

 

2.19

“Performance Cash” means an Award, designated as Performance Cash and
denominated in cash, granted to a Participant pursuant to Section 6.4 hereof,
the value of which is conditioned, in whole

 

 

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or in part, by the attainment of Performance Goals in a manner deemed
appropriate by the Committee and described in the Award agreement.

 

2.20

“Performance Criteria” or “Performance Goals” or “Performance Measures” mean the
objectives established by the Committee for a Performance Period, for the
purpose of determining when an Award subject to such objectives is earned.

 

2.21

“Performance Period” means the time period designated by the Committee during
which performance goals must be met.

 

2.22

“Performance Unit” means an Award, designated as a Performance Unit in the form
of Units or other securities of the Company, granted to a Participant pursuant
to Section 6.4 hereof, the value of which is determined, in whole or in part, by
the value of Units and/or conditioned on the attainment of Performance Goals in
a manner deemed appropriate by the Committee and described in the Award
agreement.

 

2.23

“Person ” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.

 

2.24

“Restricted Period” means the period established by the Committee with respect
to the vesting of an Award during which the Award either remains subject to
forfeiture or is not exercisable by the Participant.

 

2.25

“Restricted Unit” means a phantom unit granted under the Plan which is
equivalent in value and in divided and interest rights to a Unit, and which upon
or following vesting entitles the Participant to receive a Unit.

 

2.26

“Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, or
any successor rule or regulation thereof as in effect from time to time.

 

2.27

“SEC ” means the Securities and Exchange Commission.

 

2.28

“Unit ” means a common unit of the Partnership.

SECTION 3.

Administration.

Annual grant levels for Participants will be recommended by the Chief Executive
Officer of the Company, subject to the review and approval of the Committee. The
Plan shall be administered by the Committee. A majority of the Committee shall
constitute a quorum, and the acts of the members of the Committee who are
present at any meeting thereof at which a quorum is present, or acts unanimously
approved by the members of the Committee in writing, shall be the acts of the
Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to a
Participant; (iii) determine the number of Units to be covered by Awards; (iv)
determine the terms and conditions of any Award (including but not limited to
performance requirements for such Award); (v) determine whether, to what extent,
and under what circumstances Awards may be settled, exercised, canceled, or
forfeited; (vi) interpret and administer the Plan and any instrument or
agreement relating to an Award made under the Plan; (vii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (viii) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive, and binding upon all Persons, including the Company, the
Partnership, any Affiliate, any Participant, and any beneficiary of any Award.

 

 

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SECTION 4.

Units Available for Awards.

 

4.1

Units Available. Subject to adjustment as provided in Section 4.3, the number of
Units with respect to which Awards may be granted under the Plan is 1,500,000.
If any Award expires, is canceled, exercised, paid or otherwise terminates
without the delivery of Units, then the Units covered by such Award, to the
extent of such expiration, cancellation, exercise, payment or termination, shall
again be Units with respect to which Awards may be granted. In the event that
Units issued under the Plan are reacquired by the Partnership or the Company
pursuant to any forfeiture provision, such Units shall again be available for
the purposes of the Plan. In the event a Participant pays for any Award through
the delivery of previously acquired Units, the number of Units available shall
be increased by the number of Units delivered by the Participant.

 

4.2

Sources of Units Deliverable Under Awards. Any Units delivered pursuant to an
Award shall consist, in whole or in part, of Units acquired in the open market,
from any Affiliate, the Partnership or any other Person, or any combination of
the foregoing, as determined by the Committee in its discretion.

 

4.3

Adjustments. If the Committee determines that any distribution (whether in the
form of cash, Units, other securities, or other property), recapitalization,
split, reverse split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Units or other securities of the
Partnership, issuance of warrants or other rights to purchase Units or other
securities of the Partnership, or other similar transaction or event affects the
Units such that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the number and
type of Units (or other securities or property) with respect to which Awards may
be granted, (ii) the number and type of Units (or other securities or property)
subject to outstanding Awards, and (iii) if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award; provided, that the
number of Units subject to any Award shall always be a whole number.

SECTION 5.

Eligibility.

Any Employee or Director shall be eligible to be designated a Participant.

SECTION 6.

Awards.

 

6.1

Options. The Committee shall have the authority to determine the Employees and
Directors to whom Options shall be granted, the number of Units to be covered by
each Option, the purchase price therefor and the conditions and limitations
applicable to the exercise of the Option, including the following terms and
conditions and such additional terms and conditions, as the Committee shall
determine, that are not inconsistent with the provisions of the Plan.

 

(i)

Exercise Price. The purchase price per Unit purchasable under an Option shall be
determined by the Committee at the time the Option is granted but shall not be
less than its Fair Market Value as of the date of grant.

 

(ii)

Time and Method of Exercise. The Committee shall determine the Restricted Period
(i.e., the time or times at which an Option may be exercised in whole or in
part) and the method or methods by which payment of the exercise price with
respect thereto may be made or deemed to have been made which may include,
without limitation, cash, check acceptable to the Company, a “cashless-broker”
exercise (through procedures approved by the Company), other securities or other
property, a note from the Participant (in a form acceptable to the Company), or
any combination thereof, having a value on the exercise date equal to the
relevant exercise price.

 

 

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(iii)

Term. Subject to earlier termination as provided in the grant agreement or the
Plan, each Option shall expire on the 10th anniversary of its date of grant.

 

(iv)

Forfeiture. Except as otherwise provided in this Plan, in the terms of an Award
agreement, or in a written employment agreement (if any) between the Participant
and the Company or one of its Affiliates, upon termination of a Participant’s
employment with the Company or its Affiliates or membership on the Board of the
Company or its Affiliates, whichever is applicable, involuntarily for Cause or
on a voluntary basis (other than for retirement, death or disability of the
Participant (see Section 6.3(ix) below)) during the applicable Restricted
Period, (i) that portion of any Option that has not vested on or prior to such
date of termination shall automatically lapse and be forfeited by the
Participant at the close of business on the date of the Participant’s
termination and (ii) all vested but unexercised Options previously granted shall
automatically lapse and be forfeited by the Participant at the close of business
on the 30th day following the date of such Participant’s termination, unless an
Option expires earlier according to its original terms. If a Participant’s
employment or service as a Director is involuntarily terminated by the Company
other than for Cause: (i) that portion of any Option that has not vested on or
prior to such date of termination shall automatically lapse and be forfeited by
the Participant at the close of business on the date of the Participant’s
termination and (ii) all vested but unexercised Options previously granted shall
automatically lapse and be forfeited by the Participant at the close of business
on last day of the twelfth month following the date of such Participant’s
termination, unless an Option expires earlier according to its original terms.
The Committee or the Chief Executive Officer may waive in whole or in part such
forfeiture with respect to a Participant’s Options.

 

(v)

In connection with the sale by Valero Energy Corporation (“VEC”) of its
ownership interest in NuStar GP Holdings, LLC to public unitholders in a series
of public offerings, VEC ceased to be an Affiliate of the Company effective
December 22, 2006. Employees of VEC were deemed to have experienced a
termination of employment as a result of the loss of the Affiliate relationship.
However, notwithstanding the provisions in Section 6.1(iv) above, immediately
prior to the closing of the public offering of the Units on December 22, 2006,
all Options that (a) were granted under the Plan and are held by VEC Employees,
and (b) are in full force and effect on December 22, 2006, shall remain
outstanding, shall be fully vested and shall not be subject to lapse and
forfeiture as provided in Section 6.1(iv) above. Such Options shall remain
outstanding and in full force and shall expire on the close of business on
December 22, 2007.

 

6.2

Restricted Units. The Committee shall have the authority to determine the
Employees and Directors to whom Restricted Units shall be granted, the number of
Restricted Units to be granted to each such Participant, the duration of the
Restrict Period (if any), the conditions under which the Restricted Units may
become vested (which may be immediate upon grant) or forfeited, and such other
terms and conditions as the Committee may establish respecting such Awards,
including whether DERs are granted with respect to such Restricted Units.

 

(i)

DERs. To the extent provided by the Committee, in its discretion, a grant of
Restricted Units may include a tandem DER grant, which may provide that such
DERs shall be paid directly to the Participant, be credited to a bookkeeping
account (with or without interest in the discretion of the Committee) subject to
the same restrictions as the tandem Award, or be subject to such other
provisions or restrictions as determined by the Committee in its discretion.

 

(ii)

Forfeiture. Except as otherwise provided in this Plan, in the terms of an Award
agreement, or in a written employment agreement (if any) between the Participant
and the Company or one of its Affiliates, upon termination of a Participant’s
employment with the Company or its Affiliates for any reason (other than for
retirement, death or disability of the Participant (see Section 6.3(ix) below))
during the applicable Restricted Period, all

 

 

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Restricted Units shall be forfeited by the Participant at the close of business
on the date of the Participant’s termination of employment. The Committee or the
Chief Executive Officer may waive in whole or in part such forfeiture with
respect to a Participant’s Restricted Units.

 

(iii)

Lapse of Restrictions. Upon the vesting of each Restricted Unit, the Participant
shall be entitled to receive from the Company one Unit subject to the provisions
of Section 8.2.

 

(iv)

As described in Section 6.1(v) above, Employees of VEC were deemed to have
experienced a termination of employment as a result of the loss of the Affiliate
relationship with VEC in connection with the sale by VEC of its ownership
interest in NuStar GP Holdings, LLC. However, notwithstanding the provisions in
Section 6.2(ii) above, any Restricted Unit granted under the terms of the Plan
to, and held by, any VEC Employee which remains unvested as of December 22, 2006
shall immediately vest and become non-forfeitable as of December 22, 2006.

 

6.3

General.

 

(i)

Awards May be Granted Separately or Together. Awards may, in the discretion of
the Committee, be granted either alone or in addition to, in tandem with, or in
substitution for any other Award granted under the Plan or any award granted
under any other plan of the Company or any Affiliate, including the Annual
Incentive Plan or the Intermediate Incentive Compensation Plan. Awards granted
in addition to or in tandem with other Awards or awards granted under any other
plan of the Company or any Affiliate may be granted either at the same time as
or at a different time from the grant of such other Awards or awards.

 

(ii)

Limits on Transfer of Awards. No Award and no right under any such Award may be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of descent and
distribution and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the
Company or any Affiliate.

 

(iii)

Terms of Awards. The term of each Award shall be for such period as may be
determined by the Committee.

 

(iv)

Unit Certificates. All certificates for Units or other securities of the
Partnership delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the SEC, any stock exchange upon which such Units or other
securities are then listed, and any applicable federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

 

(v)

Consideration for Grants. Awards may be granted for no cash consideration or for
such consideration as the Committee determines including, without limitation,
such minimal cash consideration as may be required by applicable law.

 

(vi)

Delivery of Units or other Securities and Payment by Participant of
Consideration. Notwithstanding anything in the Plan or any grant agreement to
the contrary, delivery of Units pursuant to the exercise or vesting of an Award
may be deferred for any period during which, in the good faith determination of
the Committee, the Company is not reasonably able to obtain Units to deliver
pursuant to such Award without violating the rules or regulations of any
applicable law or securities exchange. No Units or other securities shall be
delivered pursuant to any Award until payment in full of any amount

 

 

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required to be paid pursuant to the Plan or the applicable Award agreement
(including, without limitation, any exercise price or any tax withholding) is
receivable by the Company. Such payment may be made by such method or methods
and in such form or forms as the Committee shall determine, including, without
limitation, cash, other Awards, withholding of Units, or any combination
thereof; provided that the combined value, as determined by the Committee, of
all cash and cash equivalent and the value of any such Units or other property
so tendered to the Company, as of the date of such tender, is at least equal to
the full amount required to be paid to the Company pursuant to the Plan or the
applicable Award agreement.

 

(vii)

Change of Control. Upon a Change of Control, all Awards shall automatically vest
and become payable or exercisable, as the case may be, in full. In this regard,
all Restricted Periods shall terminate and all performance criteria, if any,
shall be deemed to have been achieved at the maximum level.

 

(viii)

Sale of Significant Assets. In the event the Company or the Partnership sells or
otherwise disposes of a significant portion of the assets under its control,
(such significance to be determined by action of the Board of the Company in its
sole discretion) and as a consequence of such disposition (a) a Participant’s
employment is terminated by the Partnership, the Company or their affiliates
without Cause or by the Participant for Good Reason or (b) as a result of such
sale or disposition, the Participant’s employer shall no longer be the
Partnership, the Company or one of their Affiliates, then all of such
Participant’s Awards shall automatically vest and become payable or exercisable,
as the case may be, in full. In this regard, all Restricted Periods shall
terminate and all performance criteria, if any, shall be deemed to have been
achieved at the maximum level.

 

(ix)

Retirement, Death, Disability. Except as otherwise determined by the Committee
and included in the Participant’s Award agreement, if a Participant’s employment
is terminated because of retirement, death or disability (with the determination
of disability to be made within the sole discretion of the Committee), any Award
held by the Participant shall remain outstanding and vest or become exercisable
according to the Award’s original terms, provided, however, that any Restricted
Units held by such Participant which remain unvested as of the date of
retirement, death or disability shall immediately vest and become
non-forfeitable as of such date.

 

6.4

Performance Based Awards.

 

(i)

Grant of Performance Awards. The Committee may issue Performance Awards in the
form of Performance Units, Performance Cash, or DERs to Participants subject to
the Performance Goals and Performance Period as it shall determine. The terms
and conditions of each Performance Award will be set forth in the related Award
agreement. The Committee shall have complete discretion in determining the
number and/or value of Performance Awards granted to each Participant. Any
Performance Units granted under the Plan shall have a minimum Restricted Period
of one year from the Date of Grant, provided that the Committee may provide for
earlier vesting following a Change in Control or upon an Employee’s termination
of employment by reason of death, disability or retirement. Participants
receiving Performance Awards are not required to pay the Company therefor
(except for applicable tax withholding) other than the rendering of services.

 

(ii)

Value of Performance Awards. The Committee shall set Performance Goals in its
discretion for each Participant who is granted a Performance Award. Such
Performance Goals may be particular to a Participant, may relate to the
performance of the Affiliate which employs him or her, may be based on the
division which employs him or her, may be based on the performance of the
Partnership generally, or a combination of the

 

 

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foregoing. The Performance Goals may be based on achievement of balance sheet or
income statement objectives, or any other objectives established by the
Committee. The Performance Goals may be absolute in their terms or measured
against or in relationship to other companies comparably, similarly or otherwise
situated. The extent to which such Performance Goals are met will determine the
number and/or value of the Performance Award to the Participant.

 

(iii)

Form of Payment. Payment of the amount to which a Participant shall be entitled
upon the settlement of a Performance Award shall be made in a lump sum or
installments in cash, Units, or a combination thereof as determined by the
Committee.

SECTION 7.

Amendment and Termination.

Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award agreement or in the Plan.

 

7.1

Amendments to the Plan. Except as required by applicable law or the rules of the
principal securities exchange on which the Units are traded and subject to
Section 7(ii) below, the Board or the Committee may amend, alter, suspend,
discontinue, or terminate the Plan in any manner, including increasing the
number of Units available for Awards under the Plan, without the consent of any
partner, Participant, other holder or beneficiary of an Award, or other Person.

 

7.2

Amendments to Awards. The Committee may waive any conditions or rights under,
amend any terms of, or alter any Award therefore granted, provided no change,
other than pursuant to Section 7(iii), in any Award shall materially reduce the
benefit to Participant without the consent of such Participant.

 

7.3

Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee is hereby authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.3 of the Plan) affecting the Partnership or the financial statements
of the Partnership, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.

SECTION 8.

General Provisions.

 

8.1

No Rights to Awards. No Person shall have any claim to be granted any Award, and
there is no obligation for uniformity of treatment of Participants. The terms
and conditions of Awards need not be the same with respect to each Participant.

 

8.2

Withholding. The Company or any Affiliate is authorized to withhold from any
Award, from any payment due or transfer made under any Award or from any
compensation or other amount owing to a Participant the amount (in cash, Units,
other securities, Units that would otherwise be issued pursuant to such Award or
other property) of any applicable taxes payable in respect of the grant of an
Award, the lapse of restrictions thereon, or any payment or transfer under an
Award or under the Plan and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such taxes.

 

8.3

No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any
Affiliate or to remain on the Board, as applicable. Further, the Company or an
Affiliate may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan, unless otherwise expressly provided in
the Plan or in any Award agreement.

 

 

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8.4

Governing Law. The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable federal law.

 

8.5

Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any
Person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to the applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.

 

8.6

Other Laws. The Committee may refuse to issue or transfer any Units or other
consideration under an Award if, in its sole discretion, it determines that the
issuance or transfer of such Units or such other consideration might violate any
applicable law or regulation, the rules of the principal securities exchange on
which the Units are then traded, or entitle the Partnership or an Affiliate to
recover the entire then Fair Market Value thereof under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such Award shall be
promptly refunded to the relevant Participant, holder or beneficiary.

 

8.7

No Trust or Fund Created. Neither the Plan nor the Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any general unsecured creditor of the Company or any
Affiliate.

 

8.8

No Fractional Units. No fractional Units shall be issued or delivered pursuant
to the Plan or any Award, and the Committee shall determine whether cash, other
securities, or other property shall be paid or transferred in lieu of any
fractional Units or whether such fractional Units or any rights thereto shall be
canceled, terminated, or otherwise eliminated.

 

8.9

Headings. Headings are given to the Sections and subsections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or interpretation of the Plan
or any provision thereof.

 

8.10

Gender and Number. Words in the masculine gender shall include the feminine
gender, the plural shall include the singular and the singular shall include the
plural.

 

8.11

Code Section 409A. Notwithstanding anything in this Plan to the contrary, Awards
granted under the Plan shall contain terms that (i) are designed to avoid
application of Section 409A of the Code to the Award or (ii) are designed to
avoid adverse tax consequences under Section 409A of the Code should that
section apply to the Award. If any Plan provision or Award under the Plan would
result in the imposition of an applicable tax under Code Section 409A and
related regulations and Treasury pronouncements (“Section 409A ”), that Plan
provision or Award may be reformed to avoid imposition of the applicable tax and
no action taken to comply with Section 409A shall be deemed to adversely affect
the Participant’s rights to an Award.

SECTION 9.

Term of the Plan.

The Plan was amended and restated effective January 26, 2006. The current
amendment and restatement was approved by the holders of Units and became
effective on October 1, 2006. The Plan shall continue until the date terminated
by the Board or Units are no longer available for grants of Awards under the
Plan, whichever occurs first, provided, however, that notwithstanding the
foregoing, no Award shall be made under the Plan after the tenth anniversary of
the Effective Date. However, unless otherwise expressly provided in the Plan or
in an applicable Award agreement, any Award granted prior to such termination,
and the authority of the Board or the Committee to

 

 

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amend, alter, adjust, suspend, discontinue, or terminate any such Award or to
waive any conditions or rights under such Award, shall extend beyond such
termination date.

SECTION 10.

Special Provisions Applicable to Covered Participants.

Awards subject to Performance Criteria paid to Covered Participants under this
Plan shall be governed by the conditions of this Section 10 in addition to the
requirements of Section 6.4, above. Should conditions set forth under this
Section 10 conflict with the requirements of Section 6.4, the conditions of this
Section 10 shall prevail.

 

10.1

Establishment of Performance Measures, Goals or Criteria. All Performance
Measures, Goals, or Criteria relating to Covered Participants for a relevant
Performance Period shall be established by the Committee in writing prior to the
beginning of the Performance Period, or by such other later date for the
Performance Period as may be permitted under Section 162(m) of the Code. The
Performance Goals may be identical for all Participants or, at the discretion of
the Committee, may be different to reflect more appropriate measures of
individual performance.

 

10.2

Performance Goals. The Committee shall establish the Performance Goals relating
to Covered Participants for a Performance Period in writing. Performance Goals
may include alternative and multiple Performance Goals and may be based on one
or more business and/or financial criteria. In establishing the Performance
Goals for the Performance Period, the Committee in its discretion may include
one or any combination of the following criteria in either absolute or relative
terms, for the Partnership or any Affiliate:

 

(i)

Increased revenue;

 

(ii)

Net income measures (including but not limited to income after capital costs and
income before or after taxes);

 

(iii)

Unit price measures (including but not limited to growth measures and total
unitholder return);

 

(iv)

Market share;

 

(v)

Earnings per unit (actual or targeted growth);

 

(vi)

Earnings before interest, taxes, depreciation, and amortization (“EBITDA”);

 

(vii)

Economic value added (“EVA®”);

 

(viii)

Cash flow measures (including but not limited to net cash flow and net cash flow
before financing activities);

 

(ix)

Return measures (including but not limited to return on equity, return on
average assets, return on capital, risk-adjusted return on capital, return on
investors’ capital and return on average equity);

 

(x)

Operating measures (including operating income, funds from operations, cash from
operations, after-tax operating income, sales volumes, production volumes, and
production efficiency);

 

(xi)

Expense measures (including but not limited to overhead cost and general and
administrative expense);

 

(xii)

Margins;

 

 

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(xiii)

Unitholder value;

 

(xiv)

Total unitholder return;

 

(xv)

Proceeds from dispositions;

 

(xvi)

Pipeline and terminal utilization;

 

(xvii)

Total market value; and

 

(xviii)

Corporate values measures (including ethics compliance, environmental, and
safety).

 

10.3

Compliance with Section 162(m). The Performance Goals must be objective and must
satisfy third party “objectivity” standards under Section 162(m) of the Code,
and the regulations promulgated thereunder. In interpreting Plan provisions
relating to Awards subject to Performance Goals paid to Covered Participants, it
is the intent of the Plan to conform with the standards of Section 162(m) of the
Code and Treasury Regulation §1.162-27(e)(2)(i), and the Committee in
establishing such goals and interpreting the Plan shall be guided by such
provisions.

 

10.4

Adjustments. The Committee is authorized to make adjustments in the method of
calculating attainment of Performance Goals in recognition of: (i) extraordinary
or non-recurring items, (ii) changes in tax laws, (iii) changes in generally
accepted accounting principles or changes in accounting principles, (iv) charges
related to restructured or discontinued operations, (v) restatement of prior
period financial results, and (vi) any other unusual, non-recurring gain or loss
that is separately identified and quantified in the Company’s financial
statements. Notwithstanding the foregoing, the Committee may, at its sole
discretion, reduce the performance results upon which Awards are based under the
Plan, to offset any unintended result(s) arising from events not anticipated
when the Performance Goals were established, or for any other purpose, provided
that such adjustment is permitted by Section 162(m) of the Code.

 

10.5

Discretionary Adjustments. The Performance Goals shall not allow for any
discretion by the Committee as to an increase in any Award, but discretion to
lower an Award is permissible.

 

10.6

Certification. The Award and payment of any Award under this Plan to a Covered
Participant with respect to a relevant Performance Period shall be contingent
upon the attainment of the Performance Goals that are applicable to such Covered
Participant. The Committee shall certify in writing prior to payment of any such
Award that such applicable Performance Goals relating to the Award are
satisfied. Approved minutes of the Committee may be used for this purpose.

 

10.7

Other Considerations. All Awards to Covered Participants under this Plan shall
be further subject to such other conditions, restrictions, and requirements as
the Committee may determine to be necessary to carry out the purpose of this
Section 10.

 

 

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