EXHIBIT 10.1

Targa Resources Partners

Long Term Incentive Plan

Performance Unit Grant Agreement

 

Grantee:    ___________ Date of Grant:    ___________,  ____ Number of
Performance Units Granted:    ___________

1. Performance Unit Grant. I am pleased to inform you that you have been granted
the above number of Performance Units with respect to Common Units (“Common
Units” or “Units”) of Targa Resources Partners LP (the “MLP”) under the Targa
Resources Partners Long-Term Incentive Plan (the “Plan”). A Performance Unit is
a notional Common Unit of the MLP. Each Performance Unit also includes a tandem
Distribution Equivalent Right (“DER”). A DER is a right to receive an amount
equal to the cash distributions made with respect to a Common Unit during the
Performance Period (set forth on Attachment A) as described in Section 4. The
terms of the grant are subject to the terms of the Plan and this Performance
Unit Grant Agreement (this “Agreement”), which includes Attachment A hereto.

2. Performance Goal and Payment. Subject to the further provisions of this
Agreement, if, and to the extent, the Performance Goal (set forth on Attachment
A) is achieved for the Performance Period, then as soon as reasonably practical
following the end of the Performance Period (but in no event later than the last
day of the calendar year during which the Performance Period ends), you will
receive a number of Units calculated as the product of: (i) the number of vested
Performance Units granted hereunder, times (ii) the Performance Percentage (set
forth in Item II on Attachment A) for the Performance Period. Any earned
fractional Units shall be rounded up to the nearest whole Unit. In addition, you
will receive cash relating to the amount of the DER that you are entitled to as
described in Section 4. If, however, the minimum Performance Goal is not
achieved for the Performance Period, all of your Performance Units and DERs will
be cancelled automatically without payment at the end of the Performance Period.

3. Vesting.

(a) If you cease to be employed by Targa Resources Corp. and its Affiliates
(collectively, the “Company”) during the Performance Period for any reason other
than as provided below, all Performance Units and tandem DERs awarded to you
shall be automatically forfeited without payment upon your termination. For
purposes of this Agreement, you shall be considered to be in the employment of
the Company as long as (i) you remain an employee or a Director of, or a
Consultant to, the Company, or (ii) following any voluntary termination of your
employment as an employee of the Company (or following any voluntary termination
of your service as a Director of or Consultant to the Company), you refrain from
accepting other employment with, or providing other services to, (A) any
competitor of the Company or (B) any other organization if the employment or
services to be provided thereto are in a substantially similar capacity, role,
or function as has been provided to the Company (but excluding the ability to
provide services as a director of such other organizations).

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(b) If you cease to be employed by the Company during the Performance Period as
a result of your death or a disability that entitles you to disability benefits
under the Company’s long-term disability plan, or your employment is terminated
by the Company other than for Cause, you will be vested in any Performance Units
that you are otherwise qualified to receive payment for based on achievement of
the Performance Goal at the end of the Performance Period. If you are a party to
an agreement with the Company in which the term “cause” is defined, that
definition of cause shall apply for purposes of the Plan and this Agreement.
Otherwise, “Cause” means (i) failure to perform assigned duties and
responsibilities (ii) engaging in conduct which is injurious (monetarily or
otherwise) to the Company or any of its Affiliates, (iii) breach of any
corporate policy or code of conduct established by the Company or breach of any
agreement between the Company and you, or (iv) conviction of a misdemeanor
involving moral turpitude or a felony.

4. DERs. Beginning on the later of the Date of Grant and the first day of the
Performance Period and ending on the last day of the Performance Period, on each
date during such period that the MLP makes a cash distribution with respect to
its Units, you will be credited with an amount of cash equal to the product of
(i) the cash distributions paid with respect to a Common Unit times (ii) your
number of Performance Units. Your DERs shall be credited to a bookkeeping
account by the Company. As soon as reasonably practical following the end of the
Performance Period (but in no event later than the last day of the calendar year
during which the Performance Period ends), your DER account will be paid
(without interest) to you in cash or forfeited, as the case may be. The amount
of your DER account to be paid to you will be equal to the product of the
Performance Percentage times the amount credited to your DER account. DERs shall
not be payable with respect to any Performance Unit that is forfeited or as to
which you are not otherwise qualified to receive payment for based on the
Performance Goal at the end of the Performance Period.

5. Change of Control. Upon the occurrence of a Change of Control during the
Performance Period, the Performance Percentage shall be deemed to be 100% and
your Performance Units and all DER amounts, if any, then credited to you shall
be cancelled on such date and you will be paid (i) one Unit for each Performance
Unit granted to you under this Agreement, plus (ii) an amount of cash equal to
the amount of DERs then credited to you, if any. Notwithstanding anything else
contained in this Section 5 to the contrary, the Committee may elect, at its
sole discretion by resolution adopted prior to the occurrence of the Change of
Control, to have the Company satisfy your rights in respect of the Performance
Units (as determined pursuant to the foregoing provisions of this Section 5), in
whole or in part, by having the Company make a cash payment to you within five
business days of the occurrence of the Change of Control in respect of all such
Performance Units or such portion of such Performance Units as the Committee
shall determine. Any cash payment made pursuant to the foregoing sentence for
any Performance Units shall be equal to the Fair Market Value of a Common Unit
on the date of the Change of Control, times the number of Performance Units
granted to you under this Agreement.

 

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6. Nontransferability of Award. The Performance Units and DERs may not be
transferred, assigned, encumbered or pledged by you in any manner otherwise than
by will or by the laws of descent or distribution. The terms of the Plan and
this Agreement shall be binding upon your executors, administrators, heirs,
successors and assigns.

7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and, except as expressly
provided in this Agreement, supersede in their entirety all prior undertakings
and agreements between you and Targa Resources GP LLC and its Affiliates with
respect to the same. This Agreement is governed by the internal substantive
laws, but not the choice of law rules, of the State of Texas.

8. Withholding of Taxes. To the extent that the vesting or payment of
Performance Units or DERs results in the receipt of compensation by you with
respect to which the Company or an Affiliate has a tax withholding obligation
pursuant to applicable law, the Company or Affiliate shall withhold from the
cash and from the Units otherwise to be delivered to you, that amount of cash
and that number of Units having a Fair Market Value equal to the Company’s or
Affiliate’s tax withholding obligations with respect to such cash and Unit
payments, respectively, unless you deliver to the Company or Affiliate (as
applicable) at the time such cash or Units are delivered to you such amount of
money as the Company or Affiliate may require to meet such tax withholding
obligations. No payment of a vested Performance Unit or a cash distribution with
respect to DERs shall be made pursuant to this Agreement until the applicable
tax withholding requirements with respect to such event have been satisfied in
full.

9. Amendments. This Agreement may be modified only by a written agreement signed
by you and an authorized person on behalf of Targa Resources GP LLC who is
expressly authorized to execute such document; provided, however,
notwithstanding the foregoing, Targa Resources GP LLC may make any change to
this Agreement without your consent if such change is not materially adverse to
your rights under this Agreement.

10. Plan Controls. By accepting this grant, you agree that the Performance Units
and DERs are granted under and governed by the terms and conditions of the Plan
and this Agreement. In the event of any conflict between the Plan and this
Agreement, the terms of the Plan shall control. Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings in this
Agreement.

 

TARGA RESOURCES GP LLC         By:             Name: Joe Bob Perkins
        Title: Chief Executive Officer

 

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ATTACHMENT A

 

I. The Performance Period shall begin on June 30,              and end on
June 30,         .

 

II. Performance Goal

The payment of a Performance Unit will be determined based on the comparison of
(i) the Total Return (as defined below) of a Common Unit for the Performance
Period to (ii) the Total Return of a share of the common stock/unit of each
member of the Peer Group for the Performance Period. Total Return shall be
measured by (i) subtracting the average closing price per share/unit for the
first ten trading days of the Performance Period (the “Beginning Price”) from
the sum of (a) the average closing price per share/unit for the last ten trading
days ending on the date that is the last day of the Performance Period plus
(b) the aggregate amount of dividends/distributions paid with respect to a
share/unit during such period (the result being referred to as the “Value
Increase”) and (ii) dividing the Value Increase by the Beginning Price.

 

Total Return compared to

Peer Group Total Return

   Performance
Percentage1  

75th Percentile

     150 % 

50th Percentile

     100 % 

25th Percentile

     25 % 

Below 25th Percentile2

     0 % 

 

1 

The Performance Percentage between the 25th Percentile and the 50th Percentile
is a percentage based on a straight-line interpolation between 25% and 100%
based on a comparison of the Total Returns described above, and the Performance
Percentage between the 50th Percentile and the 75th Percentile is a percentage
based on a straight-line interpolation between 100% and 150% based on a
comparison of the Total Returns described above.

2 

The 25th Percentile is the minimum Performance Goal for which there is a
Performance Percentage.

 

III. Adjustments to Performance Goals for Certain Events

If, during the Performance Period, there is a change in accounting standards
required by the Financial Accounting Standards Board, the above performance
goals shall be adjusted by the Committee as appropriate, in its discretion, to
disregard the effect of such change. For the sake of clarity, any such
adjustment made by the Committee may be effectuated without the Grantee’s
consent and will not be treated (for purposes of Section 7(b) of the Plan) as an
amendment to the Agreement that materially reduces the benefit of the Grantee
without his or her consent.

 

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IV. The Peer Group shall consist of the following companies:

 

Company    Ticker

Energy Transfer Partners

   ETP

Oneok Partners

   OKS

Atlas Pipeline Partners LP

   APL

DCP Midstream

   DPM

Regency Energy Partners

   RGNC

Plains All American Pipeline

   PAA

MarkWest Energy Partners

   MWE

Williams Energy Partners

   WPZ

Magellan Midstream

   MMP

Martin Midstream

   MMLP

Enbridge Energy Partners

   EEP

Crosstex Energy

   XTEX

Targa Resources Partners LP

   NGLS   

 

The Committee may add or delete companies from the Peer Group (and if deleting a
company, the Committee may also substitute a new company in the Peer Group) and
provide a related adjustment in the rankings at any time during the Performance
Period, wherever, in its discretion, such deletion or adjustment is appropriate
to reflect that such peer company is no longer publicly traded or is determined
by the Committee to no longer be a peer of the MLP (for example due to a member
no longer being publicly traded) or to reflect any other significant event. For
the sake of clarity, any such deletion or adjustment made by the Committee may
be effectuated without the Grantee’s consent and will not be treated (for
purposes of Section 7(b) of the Plan) as an amendment to the Agreement that
materially reduces the benefit of the Grantee without his or her consent.

 

V. Committee Certification

As soon as reasonably practical following the end of the Performance Period, the
Committee shall review the results for the Performance Period and certify those
results in writing to the Board. No Performance Units or DERs shall be paid
prior to the Committee’s certification. However, Committee certification shall
not apply in the event of a Change of Control.

 

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