Exhibit 10.5

 

K-SEA TRANSPORTATION PARTNERS L.P.
LONG-TERM INCENTIVE PLAN

 

DIRECTOR PHANTOM UNIT AWARD AGREEMENT

 

THIS AGREEMENT (“Agreement”), effective as of the [        ] day
of [                      ], 2010 (the “Grant Date”), evidences an award by
K-Sea General Partner GP LLC, a Delaware limited liability company (the
“Company”) and general partner of the general partner of K-Sea Transportation
Partners L.P., a Delaware limited partnership (the “Partnership”), to
[                                 ] (the “Grantee”) pursuant to the Amended and
Restated K-Sea Transportation Partners L.P. Long-Term Incentive Plan (the
“Plan”).  Capitalized terms used and not otherwise defined herein shall have the
meaning ascribed to them in the Plan.

 

1.             Grant of Phantom Units.  Effective as of the Grant Date, but
subject to the approval of an amendment to the Plan by the Partnership’s
unitholders before October 1, 2011 increasing the number of units available for
delivery under the Plan (the “Plan Amendment”), pursuant to Section 6(b) of the
Plan, the Company has awarded to the Grantee [             ] Phantom Units,
subject to the conditions and restrictions set forth below and in the Plan (the
“Phantom Units”).  In the event the Partnership’s unitholders do not approve the
Plan Amendment, the Phantom Units shall be forfeited as of immediately prior to
October 1, 2011, without consideration.

 

2.             Restrictions; Vesting Schedule.  The Phantom Units granted
hereunder to the Grantee may not be sold, assigned, transferred, pledged or
otherwise encumbered and are subject to forfeiture as described in Section 3. 
Subject to the terms of the Plan, the Grantee shall have a vested right: (i)
with respect to one-fifth (1/5) of the Phantom Units on October 1, 2011; (ii)
with respect to an additional one-fifth (1/5) of the Phantom Units on October 1,
2012; (iii) with respect to an additional one- fifth (1/5) of the Phantom Units
on October 1, 2013; (iv) with respect to an additional one-fifth (1/5) on
October 1, 2014; and (v) with respect to the remaining one-fifth (1/5) of the
Phantom Units on October 1, 2015; provided in all cases that as of each such
date the Grantee has been in continuous service as a Director since the Grant
Date.  The number of Phantom Units that vest as of each date described above
will be rounded down to the nearest whole Phantom Unit, with any remaining
Phantom Units to vest with the final one-fifth (1/5) installment. 
Notwithstanding the foregoing:

 

(a) Grantee shall have a vested right to all of the Phantom Units upon Grantee’s
Separation from Service due to death, Disability or Retirement; and

 

(b) Grantee shall have a vested right to all of the Phantom Units upon a Change
in Control.

 

The period of time between the Grant Date and the date that the Grantee obtains
a vested right to a Phantom Unit shall be referred to herein as the “Restricted
Period” as to that Phantom Unit.  In the event that any day on which the Grantee
would otherwise obtain a vested right to a Phantom Unit is a Saturday, Sunday or
holiday, the Grantee shall instead obtain that vested right on the first
business day immediately following such date.  As soon as reasonably practicable
(but in all events with 60 days) following vesting with respect to a Phantom
Unit, the Grantee shall be entitled to receive a Unit, and the Company shall
deliver to the Grantee a certificate evidencing the Unit. Upon delivery of a
Unit in respect of a Phantom Unit, such Phantom Unit shall cease to be
outstanding in the Grantee’s notional account described in Section 4.  For
purposes of this Agreement:

 

“Retirement” shall mean Grantee’s termination of services as a Director on or
after age 70.

 

“Disability” shall mean total and permanent disability of the Grantee as
determined by the Committee in its discretion, provided that such total and
permanent disability constitutes a Disability within the meaning of Treasury
Regulation Section 1.409A-3(i)(4) or any successor regulation.

 

“Change in Control” shall mean the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one or a series of
related transactions) of all or substantially all of the assets of the Company
or the Partnership to any Person and/or its Affiliates, other than to the
Company, the Partnership or any of their Affiliates or (ii) any merger,
reorganization, consolidation or other transaction pursuant to which more than
50% of the combined voting power of the equity interests in the Company cease to
be owned by Persons who own such interests as of the date of the initial public
offering

 

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of Units. Phantom Units awarded hereunder shall not vest as provided in
Section 6(c)(vii) of the Plan, but only upon the occurrence of events which meet
the definition of Change in Control as provided in this Agreement. 
Notwithstanding the foregoing, if the Phantom Units constitute nonqualified
deferred compensation within the meaning of Section 409A and are subject to the
requirements of Section 409A, no event shall constitute a Change in Control for
purposes of this Agreement unless such event also constitutes a “change in
control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)
or any successor regulation.

 

“Separation from Service” shall mean the Grantee’s “separation from service”
with the Company within the meaning of Treasury Regulation Section 1.409A-1(h).

 

3.             Forfeiture.  If Grantee’s service as a Director terminates under
circumstances other than those provided in Section 2 prior to all or a portion
of the Phantom Units having become vested pursuant to the provisions of
Section 2, the Grantee shall forfeit all right to any Phantom Units not yet
vested as of the date of termination of service.  Such forfeiture shall apply to
Beneficiaries (as defined below) as well as the Grantee.

 

4.             DER.  During the Restricted Period, the Award of Phantom Units
hereunder shall be evidenced by entry in a bookkeeping account and shall include
a tandem DER.  Pursuant to the DER, as of each date that a cash distribution is
made with respect to Units (i.e., within 45 days following the last day of each
calendar quarter if a distribution is made with respect to Units for that
calendar quarter), the Grantee shall be entitled to receive a cash payment with
respect to each Phantom Unit then outstanding equal to the cash distribution
made by the Partnership with respect to each Unit.

 

5.             Beneficiary Designations.  The Grantee shall file with the
Company on such form as may be prescribed by the Company, a designation of one
or more beneficiaries and, if desired, one or more contingent beneficiaries
(each referred to herein as a “Beneficiary”) to whom Units or cash otherwise due
the Grantee under the terms of this Agreement shall be distributed in the event
of the death of the Grantee.  The Grantee shall have the right to change the
Beneficiary or Beneficiaries from time to time; provided, however, that any
change shall not become effective until received in the Grantee’s handwriting by
the Vice President of Administration.  If any designated Beneficiary survives
the Grantee but dies after the Grantee’s death, any remaining benefits due such
deceased Beneficiary under this Agreement shall be distributed to the personal
representative or executor of the deceased Beneficiary’s estate.  If there is no
effective Beneficiary designation on file at the time of the Grantee’s death, or
if the designated Beneficiary or Beneficiaries have all predeceased such
Grantee, the payment of any remaining benefits under this Agreement shall be
made to the personal representative or executor of the Grantee’s estate.  If one
or more but not all the Beneficiaries have predeceased such Grantee, the
benefits under this Agreement shall be paid according to the Grantee’s
instructions in his designation of Beneficiaries.  If the Grantee has not given
instructions, or if the instructions are not clear, the benefits under this
Agreement which would have been paid to the deceased Beneficiary or
Beneficiaries will be paid to the personal representative or executor of
Grantee’s estate.

 

6.             Nonalienation of Benefits.  Except as contemplated by Section 5
above, no right or benefit under this Agreement shall be subject to transfer,
anticipation, alienation, sale, assignment, pledge, encumbrance or charge,
whether voluntary, involuntary or by operation of law, and any attempt to
transfer, anticipate, alienate, sell, assign, pledge, encumber or charge the
same shall be void.  No right or benefit hereunder shall in any manner be liable
for or subject to any debts, contracts, liabilities or torts of the person
entitled to such benefits.  If the Grantee or the Grantee’s Beneficiary
hereunder shall become bankrupt or attempt to transfer, anticipate, alienate,
assign, sell, pledge, encumber or charge any right or benefit hereunder, other
than as contemplated by Section 5 above, or if any creditor shall attempt to
subject the same to a writ of garnishment, attachment, execution, sequestration
or any other form of process or involuntary lien or seizure, then such right or
benefit shall cease and terminate.

 

7.             Prerequisites to Benefits.  Neither the Grantee, nor any person
claiming through the Grantee, shall have any right or interest in Phantom Units
or the associated rights to delivery of Units or cash awarded hereunder, unless
and until all the terms, conditions and provisions of this Agreement and the
Plan which affect the Grantee or such other person shall have been complied with
as specified herein.

 

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8.             Delivery of Units.  The Company shall not be obligated to deliver
any Units if counsel to the Company determines that such delivery would violate
any applicable law or any rule or regulation of any governmental authority or
any rule or regulation of, or agreement of the Partnership or the Company with,
any securities exchange or association upon which the Units are listed or
quoted. If necessary to comply with any such law, rule, regulation or agreement,
neither the Company nor the Partnership shall be obligated to take any
affirmative action in order to cause the delivery of Units, provided that no
payment shall be delayed under this Section 8 if such delay will result in a
violation of Section 409A.

 

9.             Rights as a Unitholder.  Except for the DER described in
Section 4 above, the Grantee (or Beneficiary) shall have no rights as a
unitholder with respect to the Units potentially deliverable pursuant to the
Phantom Units unless and until such Units have been issued and registered in the
Grantee’s name or issued for the benefit of the Grantee hereunder.

 

10.           Taxes. The Company shall have the right to withhold an appropriate
amount of cash or number of Units, or combination thereof, for payment of taxes
or other amounts required by law or to take such action as may be necessary in
the opinion of the Company to satisfy all obligations for withholding of taxes. 
Withholding may be satisfied by the transfer to the Company of Units theretofore
owned by the Grantee, subject to such terms and conditions as the Committee
shall prescribe.

 

11.           Adjustments.  Certain adjustments may be made to the Phantom Units
upon the occurrence of certain corporate transactions or other events as
described in Section 7 of the Plan.  In addition, Phantom Units may be settled
in cash as described in Section 4 of the Plan.

 

12.           Notice.  Unless the Company notifies the Grantee in writing of a
different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be delivered personally
or sent by first class mail, postage prepaid to the following address:

 

K-Sea General Partner GP LLC

c/o Vice President of Administration

3245 Richmond Terrace

Staten Island, New York 10303

 

Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee’s address as listed in the records of
the Partnership on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.

 

13.           Amendment. Without the consent of the Grantee, this Agreement may
be amended or supplemented (i) to cure any ambiguity or to correct or supplement
any provision herein which may be defective or inconsistent with any other
provision herein, or (ii) to add to the covenants and agreements of the Company
or the Partnership for the benefit of Grantee or to add to the rights of the
Grantee or to surrender any right or power reserved to or conferred upon the
Company or the Partnership in this Agreement, subject, however, to any required
approval of the partners of the Partnership and, provided, in each case, that
such changes or corrections shall not adversely affect the rights of Grantee
with respect to the Award evidenced hereby without the Grantee’s consent, or
(iii) to make such other changes as the Company, upon advice of counsel,
determines are necessary or advisable because of the adoption or promulgation
of, or change in or of the interpretation of, any law or governmental rule or
regulation, including any applicable federal or state securities laws.

 

14.           Grantee Service.  Nothing contained in this Agreement, and no
action of the Company, the Partnership or the Committee with respect hereto,
shall confer or be construed to confer on the Grantee any right to continue as a
Director.

 

15.           Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware.

 

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16.           Construction.  References in this Agreement to “this Agreement”
and the words “herein,” “hereof,” “hereunder” and similar terms include the
Plan.  The headings of the Sections of this Agreement have been included for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.

 

17.           Relationship to the Plan and the Deferred Compensation Plan.  In
addition to the terms and conditions described in this Agreement, grants of
Phantom Units are subject to all other applicable provisions of the Plan and the
Deferred Compensation Plan.  The decisions of the Committee with respect to
questions arising as to the interpretation of the Plan, the Deferred
Compensation Plan, or this Agreement and as to findings of fact, shall be final,
conclusive and binding.  In the event of any inconsistency between this
Agreement and the Plan, the Plan shall control.  In the event of any
inconsistency between this Agreement and the Deferred Compensation Plan, this
Agreement shall control.

 

18.           Section 409A. The intent of the parties is that the payments and
benefits under this Agreement comply with Section 409A and the regulations and
guidance promulgated thereunder and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted to be in compliance therewith. 
For the avoidance of doubt, any references herein to a Grantee’s termination of
service shall mean the Grantee’s Separation from Service.  Notwithstanding
anything to the contrary in this Agreement, no Phantom Unit shall be distributed
or paid to the Grantee during the 6-month period following the Grantee’s
Separation from Service if the Company determines that paying such amounts at
the time or times indicated in this Agreement would be a prohibited distribution
under Section 409A(a)(2)(B)(i) of the Code.  If the distribution or payment of
any of the Grantee’s Phantom Units is delayed as a result of the previous
sentence, then the Phantom Units shall be distributed on the first business day
following the end of such 6-month period (or such earlier date upon which such
amount can be paid under Section 409A without resulting in a prohibited
distribution, including as a result of the Participant’s death).

 

 

 

K-SEA GENERAL PARTNER GP LLC

 

 

 

 

 

By

 

 

 

[Name]

 

 

[Title]

 

 

 

 

 

GRANTEE

 

 

 

 

 

 

 

[Name]

 

 

 

Date

 

 

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