**Exhibit 10.7**

 

**OSGAMERICA L.P.2007 OMNIBUS INCENTIVE COMPENSATION PLAN**

 

# SECTION 1.  Purpose.  The purpose of this OSG America L.P. 2007 OmnibusIncentive Compensation Plan is to promote the interests of OSG America L.P., aDelaware limited partnership (the “Partnership”), and its unitholders by (a) attractingand retaining exceptional directors, officers, employees and consultants (includingprospective directors, officers, employees and consultants) of the Partnershipand its Affiliates (as defined below), including Overseas Shipholding Group, Inc.,and the Partnership’s general partner, OSG America LLC (the “General Partner”) and(b) enabling such individuals to participate in the long-term growth andfinancial success of the Partnership.

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# SECTION 2.  Definitions.  As used herein, the following terms shallhave the meanings set forth below:

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“Affiliate” means(a) any entity that, directly or indirectly, is controlled by, controls oris under common control with, the Partnership and (b) any entity in which thePartnership has a significant equity interest, in either case as determined bythe Board.

 

“Award” meansany award that is permitted under Section 6 and granted under the Plan.

 

“AwardAgreement” means any written agreement, contract or other instrument ordocument evidencing any Award, which may, but need not, require execution oracknowledgment by a Participant.

 

“Board” meansthe Board of Directors of the General Partner.

 

“CashIncentive Award” shall have the meaning specified in Section 6(f).

 

“Change ofControl” shall (a) have the meaning set forth in an Award Agreement or (b) ifthere is no definition set forth in an Award Agreement, mean, with respect tothe Partnership or the General Partner (the “Applicable Person”), any of thefollowing events:  (a) any sale,lease, exchange or other transfer (in one transaction or a series of relatedtransactions) of all or substantially all of the Applicable Person’s assets toany other Person, unless immediately following such sale, lease, exchange orother transfer such assets are owned, directly or indirectly, by the ApplicablePerson; (b) the consolidation or merger of the Applicable Person or anySubsidiary thereof with or into another Person pursuant to a transaction inwhich the outstanding Voting Securities of the Applicable Person are changedinto or exchanged for cash, securities or other property, other than any suchtransaction where (i) the outstanding Voting Securities of the ApplicablePerson are changed into or exchanged for Voting Securities of the survivingPerson or its parent and (ii) the holders of the Voting Securities of theApplicable Person immediately prior to such transaction own, directly orindirectly, not less than a majority of the outstanding Voting Securities ofthe surviving Person or its parent immediately after such transaction; and (c) a“person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) ofthe Exchange Act) (other than Overseas Shipholding Group,

 

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Inc., or its Affiliates, with respect to the General Partner), being orbecoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 underthe Exchange Act) of more than 50% of all of the then outstanding VotingSecurities of the Applicable Person, except in a merger or consolidation whichwould not constitute a Change of Control under clause (b) above.

 

“Code” meansthe Internal Revenue Code of 1986, as amended from time to time, or anysuccessor statute thereto, and the regulations promulgated thereunder.

 

“Common Units”means “Common Units”, as defined in the Partnership Agreement.

 

“Exchange Act”means the Securities Exchange Act of 1934, as amended from time to time, or anysuccessor statute thereto, and the regulations promulgated thereunder.

 

“ExercisePrice” means (a) in the case of Options, the price specified in theapplicable Award Agreement as the price-per-Unit at which Units may bepurchased pursuant to such Option or (b) in the case of UARs, the pricespecified in the applicable Award Agreement as the reference price-per-Unitused to calculate the amount payable to the Participant.

 

“Fair MarketValue” means (a) with respect to any property other than Units, the fairmarket value of such property determined by such methods or procedures as shallbe established from time to time by the Board and (b) with respect to the Units,as of any date, (i) the closing price of Units (A) as reported by theNYSE for such date or (B) if the Units are listed on any other nationalstock exchange, as reported on the stock exchange composite tape for securitiestraded on such stock exchange for such date or, with respect to each of clauses (A) and(B), if there were no sales on such date, on the closest preceding date onwhich there were sales of Units or (ii) in the event there shall be nopublic market for the Units on such date, the fair market value of the Units asdetermined in good faith by the Board.

 

“IRS” meansthe Internal Revenue Service or any successor thereto and includes the staffthereof.

 

“NYSE” meansthe New York Stock Exchange or any successor thereto.

 

“Option” meansan option to purchase Units from the Partnership that is granted under Section 6.

 

“Participant” meansany director, officer, employee or consultant (including any prospective director,officer, employee or consultant) of the Partnership or its Affiliates who is eligiblefor an Award under Section 5 and who is selected by the Board to receivean Award under the Plan or who receives a Substitute Award pursuant to Section 4(c).

 

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“PartnershipAgreement” means the Amended and Restated Agreement of Limited Partnership ofOSG America L.P., as amended from time to time.

 

“Performance Criteria” means the criterion or criteria that the Boardshall select for purposes of establishing a Performance Goal for a PerformancePeriod with respect to any Performance Unit or Cash Incentive Award under thePlan.

 

“Performance Formula” means, for a Performance Period, the one or moreobjective formulas applied against the relevant Performance Goal to determine,with regard to the Performance Unit or Cash Incentive Award of a particularParticipant, whether all, a portion or none of the Award has been earned forthe Performance Period.

 

“PerformanceGoal” means, for a Performance Period, the one or more goals established by theBoard for the Performance Period based upon the Performance Criteria.

 

“PerformancePeriod” means the one or more periods of time as the Board may select overwhich the attainment of one or more Performance Goals will be measured for thepurpose of determining a Participant’s right to and the payment of a PerformanceUnit or Cash Incentive Award.

 

“PerformanceUnit” means an Award under Section 6(e) that has a value set by the Board(or that is determined by reference to a valuation formula specified by the Boardor to the Fair Market Value of Units), which value may be paid to theParticipant by delivery of such property as the Board shall determine,including without limitation, Units, cash, other securities, other Awards orother property, or any combination thereof, upon achievement of such PerformanceGoals during the relevant Performance Period as the Board shall establish atthe time of such Award or thereafter.

 

“Person” meansany natural person, corporation, limited partnership, limited liabilitycompany, unlimited liability company, partnership, joint venture, trust,business association, governmental entity or other entity.

 

“Plan” meansthis OSG America L.P. 2007 Omnibus Incentive Compensation Plan, as in effectfrom time to time.

 

“Restricted Unit”means a Unit delivered under the Plan that is subject to certain transferrestrictions, forfeiture provisions and/or other terms and conditions specifiedherein and in the applicable Award Agreement.

 

“RUA” means a restrictedunit Award that is designated as such in the applicable Award Agreement andthat represents an unfunded and unsecured promise to deliver Units, cash, othersecurities, other Awards or other property in accordance with the terms of theapplicable Award Agreement.

 

“SEC” meansthe Securities and Exchange Commission or any successor thereto and shallinclude the staff thereof.

 

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“Subsidiary”means any entity in which the Partnership, directly or indirectly, possesses50% or more of the total combined voting power of all classes of its stock.

 

“Substitute Awards”shall have the meaning specified in Section 4(c).

 

“UAR” means aunit appreciation right Award that represents an unfunded and unsecured promiseto deliver Units, cash, other securities, other Awards or other property equalin value to the excess, if any, of the Fair Market Value per Unit over theExercise Price per Unit of the UAR, subject to the terms of the applicableAward Agreement.

 

“Units” meansthe Common Units of the Partnership or such other securities of the Partnership(a) into which such units shall be changed by reason of arecapitalization, merger, consolidation, split-up, combination, exchange of unitsor other similar transaction or (b) as may be determined by the Boardpursuant to Section 4(b).

 

“VotingSecurities” means securities of any class of any Person entitling the holdersthereof to vote in the election of members of the board of directors or othersimilar governing body of the Person.

 

# SECTION 3.  Administration.  (a)  Authority of Board.  The Plan shall be administered by the Boardor such committee of the Board as may be designated by the Board from time totime.  Subject to the terms of the Planand applicable law, and in addition to other express powers and authorizationsconferred on the Board by the Plan, the Board shall have sole and plenary authorityto administer the Plan, including the authority to (i) designateParticipants, (ii) determine the type or types of Awards to be granted toa Participant, (iii) determine the number of Units to be covered by, orwith respect to which payments, rights or other matters are to be calculated inconnection with, Awards, (iv) determine the terms and conditions of any Awards,(v) determine the vesting schedules of Awards and, if certain performanceconditions must be attained in order for an Award to vest or be settled or paid,establish such performance conditions and certify whether, and to what extent, suchperformance conditions have been attained, (vi) determine whether, to whatextent and under what circumstances Awards may be settled or exercised in cash,Units, other securities, other Awards or other property, or canceled, forfeitedor suspended and the method or methods by which Awards may be settled,exercised, canceled, forfeited or suspended, (vii) determine whether, towhat extent and under what circumstances cash, Units, other securities, other Awards,other property and other amounts payable with respect to an Award shall bedeferred either automatically or at the election of the holder thereof or ofthe Board, (viii) interpret, administer, reconcile any inconsistency in,correct any default in and supply any omission in, the Plan and any instrumentor agreement relating to, or Award made under, the Plan, (ix) establish,amend, suspend or waive such rules and regulations and appoint such agentsas it shall deem appropriate for the proper administration of the Plan, (x) acceleratethe vesting or exercisability of, payment for or lapse of restrictions on,Awards, (xi) amend an outstanding Award or grant a replacement Award for anAward previously granted under the Plan if, in its sole discretion, the Boarddetermines that (A)

 

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# the tax consequences of suchAward to the Partnership or the Participant differ from those consequences thatwere expected to occur on the date the Award was granted or (B) clarificationsor interpretations of, or changes to, tax law or regulations permit Awards tobe granted that have more favorable tax consequences than initially anticipatedand (xii) make any other determination and take any other action that the Boarddeems necessary or desirable for the administration of the Plan.

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## (b)  BoardDecisions.  Unless otherwiseexpressly provided in the Plan, and not withstanding any delegation of itspowers, authority or function under the Plan to a duly designated committee ofthe Board, all designations, determinations, interpretations and otherdecisions under or with respect to the Plan or any Award shall be within the soleand plenary discretion of the Board, may be made at any time and shall befinal, conclusive and binding upon all Persons, including the Partnership, anyAffiliate, any Participant, any holder or beneficiary of any Award and any unitholder.

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## (c)  Indemnification.  No member of the Board or any employee of thePartnership or any of its Affiliates (each such Person, a “Covered Person”) shallbe liable for any action taken or omitted to be taken or any determination madein good faith with respect to the Plan or any Award hereunder.  Each Covered Person shall be indemnified andheld harmless by the Partnership against and from (i) any loss, cost,liability or expense (including attorneys’ fees) that may be imposed upon orincurred by such Covered Person in connection with or resulting from anyaction, suit or proceeding to which such Covered Person may be a party or inwhich such Covered Person may be involved by reason of any action taken oromitted to be taken under the Plan or any Award Agreement and (ii) any andall amounts paid by such Covered Person, with the Partnership’s approval, insettlement thereof, or paid by such Covered Person in satisfaction of anyjudgment in any such action, suit or proceeding against such Covered Person; providedthat the Partnership shall have the right, at its own expense, to assume anddefend any such action, suit or proceeding, and, once the Partnership givesnotice of its intent to assume the defense, the Partnership shall have solecontrol over such defense with counsel of the Partnership’s choice.  The foregoing right of indemnification shallnot be available to a Covered Person to the extent that a court of competentjurisdiction in a final judgment or other final adjudication, in either casenot subject to further appeal, determines that the acts or omissions of suchCovered Person giving rise to the indemnification claim resulted from suchCovered Person’s bad faith, fraud or wilful criminal act or omission or thatsuch right of indemnification is otherwise prohibited by law or by the PartnershipAgreement.  The foregoing right ofindemnification shall not be exclusive of any other rights of indemnificationto which Covered Persons may be entitled under the Partnership Agreement, as amatter of law, or otherwise, or any other power that the Partnership may haveto indemnify such Persons or hold them harmless.

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# SECTION 4.  Units Available for Awards; Other Limits.  (a)  Units Available.  Subject to adjustment as provided in Section 4(b),the aggregate number of Units that may be delivered pursuant to Awards grantedunder the Plan shall be 250,000.  If,after the effective date of the Plan, any Award granted under the Plan isforfeited, or otherwise expires, terminates or is canceled without the deliveryof Units, then the Units covered by such forfeited, expired, terminated orcanceled Award shall again become

 

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# available to be deliveredpursuant to Awards under the Plan.  If Unitsissued upon exercise, vesting or settlement of an Award, or Units owned by aParticipant (which are not subject to any pledge or other security interest),are surrendered or tendered to the Partnership in payment of the Exercise Priceof an Award or any taxes required to be withheld in respect of an Award, ineach case, in accordance with the terms and conditions of the Plan and anyapplicable Award Agreement, such surrendered or tendered Units shall againbecome available to be delivered pursuant to Awards under the Plan.

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## (b)  Adjustmentsfor Changes in Capitalization and Similar Events.  In the event that the Board determines thatany dividend or other distribution (whether in the form of cash, Units, othersecurities or other property), recapitalization, unit split, reverse unitsplit, 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 ofthe Partnership, or other similar corporate transaction or event that affectsthe value of the Units, then the Board shall (i) in such manner as it maydetermine equitable or desirable, adjust (A) the number of Units or othersecurities of the Partnership (or number and kind of other securities orproperty) with respect to which Awards may be granted, including (1) theaggregate number of Units that may be delivered pursuant to Awards grantedunder the Plan and (2) the maximum number of Units or other securities ofthe Partnership (or number and kind of other securities or property) withrespect to which Awards may be granted to any Participant in any fiscal year ofthe Partnership, and (B) the terms of any outstanding Award, including (1) thenumber of Units or other securities of the Partnership (or number and kind ofother securities or property) subject to outstanding Awards or to whichoutstanding Awards relate and (2) the Exercise Price with respect to anyAward, (ii) if deemed appropriate or desirable by the Board, makeprovision for a cash payment to the holder of an outstanding Award inconsideration for the cancelation of such Award, including, in the case of anoutstanding Option or UAR, a cash payment to the holder of such Option or UARin consideration for the cancelation of such Option or UAR in an amount equalto the excess, if any, of the Fair Market Value (as of a date specified by theBoard) of the Units subject to such Option or UAR over the aggregate ExercisePrice of such Option or UAR and (iii) if deemed appropriate or desirableby the Board, cancel and terminate any Option or UAR having a per Unit ExercisePrice equal to, or in excess of, the Fair Market Value of a Unit subject tosuch Option or UAR without any payment or consideration therefor.

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## (c)  SubstituteAwards.  Awards may, in thediscretion of the Board, be granted under the Plan in assumption of, or insubstitution for, outstanding awards previously granted by the Partnership or anyof its Affiliates or a company acquired by the Partnership or any of itsAffiliates or with which the Partnership or any of its Affiliates combines (“SubstituteAwards”).  The number of Units underlyingany Substitute Awards shall be counted against the aggregate number of Unitsavailable for Awards under the Plan; provided, however, thatSubstitute Awards issued in connection with the assumption of, or insubstitution for, outstanding awards previously granted by an entity that isacquired by the Partnership or any of its Affiliates or with which the

 

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## Partnership or any of itsAffiliates combines shall not be counted against the aggregate number of Unitsavailable for Awards under the Plan.

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## (d)  Sourcesof Units Deliverable Under Awards. Any Units delivered pursuant to an Award may consist, in whole or inpart, of authorized and unissued Units or of treasury Units.

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# SECTION 5.  Eligibility.  Any director, officer, employee or consultant(including any prospective director, officer, employee or consultant) of the Partnershipor any of its Affiliates shall be eligible to be designated a Participant.

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# SECTION 6.  Awards.  (a)  Types of Awards.  Awards may be made under the Plan in the formof (i) Options, (ii) UARs, (iii) Restricted Units, (iv) RUAs,(v) Performance Units, (vi) Cash Incentive Awards and (vii) otherequity-based or equity-related Awards that the Board determines are consistentwith the purpose of the Plan and the interests of the Partnership.  Awards may be granted in tandem with otherAwards.

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## (b)  Options.  (i)  Grant.  Subject to the provisions of the Plan, the Boardshall have sole and plenary authority to determine the Participants to whomOptions shall be granted, the number of Units to be covered by each Option andthe conditions and limitations applicable to the vesting and exercise of theOption.

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### (ii)  ExercisePrice.  Except as otherwiseestablished by the Board at the time an Option is granted and set forth in theapplicable Award Agreement, the Exercise Price of each Unit covered by anOption shall be not less than 100% of the Fair Market Value of such Unit(determined as of the date the Option is granted).

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### (iii)  Vestingand Exercise.  Each Option shall bevested and exercisable at such times, in such manner and subject to such termsand conditions as the Board may, in its sole and plenary discretion, specify inthe applicable Award Agreement or thereafter. Except as otherwise specified by the Board in the applicable AwardAgreement, an Option may only be exercised to the extent that it has already vestedat the time of exercise.  Except asotherwise specified by the Board in the Award Agreement, Options shall becomevested and exercisable with respect to one-third of the Units subject to suchOptions on each of the first three anniversaries of the date of grant.  An Option shall be deemed to be exercisedwhen written or electronic notice of such exercise has been given to the Partnershipin accordance with the terms of the Award by the Person entitled to exercise theAward and full payment pursuant to Section 6(b)(iv) for the Unitswith respect to which the Award is exercised has been received by the Partnership.  Exercise of a vested Option may be for someor all of the portion of the Option that is then exercisable and any suchpartial exercise shall decrease the number of Units that thereafter may beavailable for sale under the Option.  TheBoard may impose such conditions with respect to the exercise of Options,including, without limitation, any relating to the application of Federal orstate securities laws, as it may deem necessary or advisable.

 

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### (iv)  Payment.  (A)  No Units shall be deliveredpursuant to any exercise of an Option until payment in full of the aggregate ExercisePrice therefor is received by the Partnership, and the Participant has paid tothe Partnership an amount equal to any Federal, state, local and foreign incomeand employment taxes required to be withheld. Such payments may be made in cash (or its equivalent) or, in the Board’ssole and plenary discretion, (1) by exchanging Units owned by the Participant(which are not the subject of any pledge or other security interest) or (2) ifthere shall be a public market for the Units at such time, subject to such rules asmay be established by the Board, through delivery of irrevocable instructionsto a broker to sell the Units otherwise deliverable upon the exercise of theOption and to deliver promptly to the Partnership an amount equal to the aggregateExercise Price, or by a combination of the foregoing; provided that thecombined value of all cash and cash equivalents and the Fair Market Value ofany such Units so tendered to the Partnership as of the date of such tender isat least equal to such aggregate Exercise Price and the amount of any Federal,state, local or foreign income or employment taxes required to be withheld.

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#### (B)  Whereverin the Plan or any Award Agreement a Participant is permitted to pay theExercise Price of an Option or taxes relating to the exercise of an Option bydelivering Units, the Participant may, if permitted by the Board, and subjectto procedures satisfactory to it, in its discretion, satisfy such deliveryrequirement by presenting proof of beneficial ownership of such Units, in whichcase the Partnership shall treat the Option as exercised without furtherpayment and shall withhold such number of Units from the Units acquired by theexercise of the Option.

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### (v)  Expiration.  Except as otherwise set forth in the applicableAward Agreement, each Option shall expire immediately, without any payment,upon the earlier of (A) the tenth anniversary of the date the Option isgranted and (B) either (x) 90 days after the date the Participant whois holding the Option ceases to be a director, officer, employee or consultantof the Partnership or one of its Affiliates for any reason other than theParticipant’s death or (y) six months after the date the Participant whois holding the Option ceases to be a director, officer, employee or consultantof the Partnership or one of its Affiliates by reason of the Participant’sdeath.  In no event may an Option beexercisable after the tenth anniversary of the date the Option is granted.

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## (c)  UARs.  (i)  Grant.  Subject to the provisions of the Plan, the Boardshall have sole and plenary authority to determine the Participants to whom UARsshall be granted, the number of Units to be covered by each UAR, the ExercisePrice thereof and the conditions and limitations applicable to the exercisethereof.  UARs may be granted in tandemwith another Award, in addition to another Award or freestanding and unrelatedto another Award.  UARs granted in tandemwith, or in addition to, an Award may be granted either at the same time as theAward or at a later time.

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### (ii)  ExercisePrice.  Except as otherwiseestablished by the Board at the time a UAR is granted and set forth in theapplicable Award Agreement, the Exercise Price of each Unit covered by a UARshall be not less than 100% of the Fair Market Value of such Unit (determinedas of the date the UAR is granted).

 

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### (iii)  Exercise.  A UAR shall entitle the Participant toreceive an amount equal to the excess, if any, of the Fair Market Value of a Uniton the date of exercise of the UAR over the Exercise Price thereof.  The Board shall determine, in its sole andplenary discretion, whether a UAR shall be settled in cash, Units, othersecurities, other Awards, other property or a combination of any of theforegoing.

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### (iv)  OtherTerms and Conditions.  Subject to theterms of the Plan and any applicable Award Agreement, the Board shalldetermine, at or after the grant of a UAR, the vesting criteria, term, methodsof exercise, methods and form of settlement and any other terms and conditionsof any UAR.  Any such determination bythe Board may be changed by the Board from time to time and may govern theexercise of UARs granted or exercised thereafter.  The Board may impose such conditions orrestrictions on the exercise of any UAR as it shall deem appropriate ordesirable.

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## (d)  RestrictedUnits and RUAs.  (i)  Grant.  Subject to the provisions of the Plan, the Boardshall have sole and plenary authority to determine the Participants to whom RestrictedUnits and RUAs shall be granted, the number of Restricted Units and RUAs to begranted to each Participant, the duration of the period during which, and theconditions, if any, under which, the Restricted Units and RUAs may vest or may beforfeited to the Partnership and the other terms and conditions of such Awards.

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### (ii)  TransferRestrictions.  Restricted Units and RUAsmay not be sold, assigned, transferred, pledged or otherwise encumbered except asprovided in the Plan or as may be provided in the applicable Award Agreement; provided,however, that the Board may in its discretion determine that Restricted Unitsand RUAs may be transferred by the Participant. Certificates issued in respect of Restricted Units shall be registeredin the name of the Participant and deposited by such Participant, together witha unit power endorsed in blank, with the Partnership or such other custodian asmay be designated by the Board or the Partnership, and shall be held by the Partnershipor other custodian, as applicable, until such time as the restrictionsapplicable to such Restricted Units lapse. Upon the lapse of the restrictions applicable to such Restricted Units,the Partnership or other custodian, as applicable, shall deliver suchcertificates to the Participant or the Participant’s legal representative.

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### (iii)  Payment/Lapseof Restrictions.  Each RUA shall begranted with respect to one Unit or shall have a value equal to the Fair MarketValue of one Unit.  RUAs shall be paid incash, Units, other securities, other Awards or other property, as determined inthe sole and plenary discretion of the Board, upon the lapse of restrictionsapplicable thereto, or otherwise in accordance with the applicable AwardAgreement.

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## (e)  PerformanceUnits.  (i)  Grant.  Subject to the provisions of the Plan, the Boardshall have sole and plenary authority to determine the Participants to whomPerformance Units shall be granted and the terms and conditions thereof.

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### (ii)  Value of Performance Units.  Each Performance Unit shall have an initialvalue that is established by the Board at the time of grant.  The Board shall set Performance Goals in itsdiscretion which, depending on the extent to which they are met

 

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### during a Performance Period, willdetermine the number and value of Performance Units that will be paid out tothe Participant.

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### (iii)  Earningof Performance Units.  Subject to theprovisions of the Plan, after the applicable Performance Period has ended, theholder of Performance Units shall be entitled to receive a payout of the numberand value of Performance Units earned by the Participant over the PerformancePeriod, to be determined by the Board, in its sole and plenary discretion, as afunction of the extent to which the corresponding Performance Goals have beenachieved.

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### (iv)  Form and Timing of Payment ofPerformance Units.  Subject tothe provisions of the Plan, the Board, in its sole and plenary discretion, maypay earned Performance Units in the form of cash, Units, other securities,other Awards or other property (or in any combination thereof) that has anaggregate Fair Market Value equal to the value of the earned Performance Unitsat the close of the applicable Performance Period.  Such Units may be granted subject to anyrestrictions in the applicable Award Agreement deemed appropriate by the Board.  The determination of the Board with respectto the form and timing of payout of such Awards shall be set forth in theapplicable Award Agreement.

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## (f)  CashIncentive Awards.  Subject to theprovisions of the Plan, the Board, in its sole and plenary discretion, shallhave the authority to grant Cash Incentive Awards.  The Board shall establish Cash IncentiveAward levels to determine the amount of a Cash Incentive Award payable upon theattainment of Performance Goals.

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## (g)  OtherUnit-Based Awards.  Subject to theprovisions of the Plan, the Board shall have the sole and plenary authority togrant to Participants other equity-based or equity-related Awards (including,but not limited to, fully-vested Units) in such amounts and subject to suchterms and conditions as the Board shall determine.

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## (h)  DistributionEquivalents.  In the sole and plenarydiscretion of the Board, an Award, other than an Option, UAR or Cash IncentiveAward, may provide the Participant with distributions or distribution equivalents,payable in cash, Units, other securities, other Awards or other property, on acurrent or deferred basis, on such terms and conditions as may be determined bythe Board in its sole and plenary discretion, including, without limitation,payment directly to the Participant, withholding of such amounts by the Partnershipsubject to vesting of the Award or reinvestment in additional Units, RestrictedUnits or other Awards.

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# SECTION 7.  Amendment and Termination.  (a)  Amendments to the Plan.  Subject to any applicable law or government regulationand to the rules of the NYSE or any successor exchange or quotation systemon which the Units may be listed or quoted, the Plan may be amended, modifiedor terminated by the Board at any time and in any manner without the approvalof the unitholders of the Partnership except that unitholder approval shall berequired for any amendment that would (i) increase the maximum number ofUnits for which Awards may be granted under the Plan; provided, however,that any adjustment under Section 4(b) shall not constitute anincrease for

 

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# purposes of this Section 7(a)(i);  (ii) decrease the Exercise Price of anyOption or UAR that, at the time of such decrease, has an Exercise Price that isgreater than the then current Fair Market Value of a Unit or cancel, inexchange for cash or any other Award, any Such Award; provided, however,that any amendment, modification or termination or other action taken pursuantto Section 3(a)(xi), Section 4(b), Section 7(c) or Section 8shall not constitute a decrease or cancelation for purposes of this Section 7(a)(ii);or (iii) change the class of employees or other individuals eligible toparticipate in the Plan.  Nomodification, amendment or termination of the Plan may, without the consent of anyParticipant to whom any Award shall previously have been granted, materiallyand adversely affect the rights of such Participant (or his or her transferee)under such Award, unless otherwise provided by the Board in the applicable AwardAgreement.

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## (b)  Amendmentsto Awards.  The Board may waive anyconditions or rights under, amend any terms of, or alter, suspend, discontinue,cancel or terminate any Award theretofor granted, prospectively orretroactively; provided, however, that, except as set forth in thePlan, unless otherwise provided by the Board in the applicable Award Agreement,any such waiver, amendment, alteration, suspension, discontinuance, cancelationor termination that would materially and adversely impair the rights of anyParticipant or any holder or beneficiary of any Award theretofor granted shallnot to that extent be effective without the consent of the impairedParticipant, holder or beneficiary.

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## (c)  Adjustmentof Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Board is hereby authorized to makeadjustments in the terms and conditions of, and the criteria included in, Awardsin recognition of unusual or nonrecurring events (including, withoutlimitation, the events described in Section 4(b) or the occurrence ofa Change of Control) affecting the Partnership, any Affiliate, or the financialstatements of the Partnership or any Affiliate, or of changes in applicable rules,rulings, regulations or other requirements of any governmental body orsecurities exchange, accounting principles or law (i) whenever the Board,in its sole and plenary discretion, determines that such adjustments are appropriateor desirable, including, without limitation, providing for a substitution orassumption of Awards, accelerating the exercisability of, lapse of restrictionson, or termination of, Awards or providing for a period of time for exerciseprior to the occurrence of such event, (ii) if deemed appropriate ordesirable by the Board, in its sole and plenary discretion, by providing for acash payment to the holder of an Award in consideration for the cancelation ofsuch Award, including, in the case of an outstanding Option or UAR, a cashpayment to the holder of such Option or UAR in consideration for thecancelation of such Option or UAR in an amount equal to the excess, if any, ofthe Fair Market Value (as of a date specified by the Board) of the Unitssubject to such Option or UAR over the aggregate Exercise Price of such Optionor UAR and (iii) if deemed appropriate or desirable by the Board, in itssole and plenary discretion, by canceling and terminating any Option or UARhaving a per Unit Exercise Price equal to, or in excess of, the Fair MarketValue of a Unit subject to such Option or UAR without any payment orconsideration therefor.

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# SECTION 8.  Change of Control.  Unless otherwise provided in the applicableAward Agreement, in the event of a Change of Control after the date of theadoption of the Plan, unless provision is made in connection with the Change ofControl

 

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# for (a) assumption ofAwards previously granted or (b) substitution for such Awards of newawards or similar entitlements covering equity interests in the successorcorporation or other entity in the Change of Control with appropriateadjustments as to the number and kinds of equity interests, Performance Goals andthe Exercise Prices, if applicable, (i) any outstanding Options or UARs thenheld by Participants that are unexercisable or otherwise unvested shallautomatically be deemed exercisable or otherwise vested, as the case may be, asof immediately prior to such Change of Control, (ii) all Performance Unitsand Cash Incentive Awards shall be paid out as if the date of the Change ofControl were the last day of the applicable Performance Period and “target”performance levels had been attained and (iii) all other outstandingAwards (i.e., other than Options, UARs, Performance Units and Cash IncentiveAwards) then held by Participants that are unexercisable, unvested or stillsubject to restrictions or forfeiture, shall automatically be deemedexercisable and vested and all restrictions and forfeiture provisions relatedthereto shall lapse as of immediately prior to such Change of Control.

#  

# SECTION 9.  General Provisions.  (a)  Nontransferability.  Except as otherwise specified in theapplicable Award Agreement, during the Participant’s lifetime each Award (andany rights and obligations thereunder) shall be exercisable only by theParticipant, or, if permissible under applicable law, by the Participant’slegal guardian or representative, and no Award (or any rights and obligationsthereunder) may be assigned, alienated, pledged, attached, sold or otherwisetransferred or encumbered by a Participant otherwise than by will or by thelaws of descent and distribution, and any such purported assignment,alienation, pledge, attachment, sale, transfer or encumbrance shall be void andunenforceable against the Partnership or any Affiliate; provided that (i) thedesignation of a beneficiary shall not constitute an assignment, alienation,pledge, attachment, sale, transfer or encumbrance and (ii) the Board maypermit further transferability, on a general or specific basis, and may imposeconditions and limitations on any permitted transferability.  All terms and conditions of the Plan and allAward Agreements shall be binding upon any permitted successors and assigns.

#  

## (b)  NoRights to Awards.  No Participant orother Person shall have any claim to be granted any Award, and there is noobligation for uniformity of treatment of Participants or holders orbeneficiaries of Awards.  The terms andconditions of Awards and the Board’s determinations and interpretations withrespect thereto need not be the same with respect to each Participant and maybe made selectively among Participants, whether or not such Participants aresimilarly situated.

##  

## (c)  UnitCertificates.  All certificates for Unitsor other securities of the Partnership or any Affiliate delivered under thePlan pursuant to any Award or the exercise thereof shall be subject to suchstop transfer orders and other restrictions as the Board may deem advisableunder the Plan, the applicable Award Agreement or the rules, regulations andother requirements of the SEC, the NYSE or any other stock exchange orquotation system upon which such Units or other securities are then listed or reportedand any applicable Federal or state laws, and the Board may cause a legend orlegends to be put on any such certificates to make appropriate reference tosuch restrictions.

 

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##  

## (d)  Withholding.  A Participant may be required to pay to the Partnershipor any Affiliate, and the Partnership or any Affiliate shall have the right andis hereby authorized to withhold from any Award, from any payment due ortransfer made under any Award or under the Plan or from any compensation orother amount owing to a Participant, the amount (in cash, Units, othersecurities, other Awards or other property) of any applicable withholding taxesin respect of an Award, its exercise or any payment or transfer under an Awardor under the Plan and to take such other action as may be necessary in theopinion of the Board or the Partnership to satisfy all obligations for thepayment of such taxes.

##  

## (e)  Section 409Aof the Code.  Participants are solelyresponsible and liable for the satisfaction of all taxes and penalties that mayarise in connection with Awards (including any taxes arising under Section 409Aof the Code), and the Partnership shall not have any obligation to indemnify orotherwise hold any Participant harmless from any or all of such taxes.  The Board shall have the discretion toorganize any deferral program, to require deferral election forms, and to grantor to unilaterally modify any Award in a manner that (i) conforms with therequirements of Section 409A of the Code, (ii) voids any Participantelection to the extent it would violate Section 409A of the Code and (iii) forany distribution event or election that could be expected to violate Section 409Aof the Code, make the distribution only upon the earliest of the first to occurof a “permissible distribution event” within the meaning of Section 409Aof the Code, or a distribution event that the participant elects in accordancewith Section 409A of the Code.  The Boardshall have the sole discretion to interpret the requirements of the Code,including Section 409A, for purposes of the Plan and all Awards.

##  

## (f)  AwardAgreements.  Each Award hereundershall be evidenced by an Award Agreement, which shall be delivered to theParticipant and shall specify the terms and conditions of the Award and any rules applicablethereto, including, but not limited to, the effect on such Award of the death,disability or termination of employment or service of a Participant and theeffect, if any, of such other events as may be determined by the Board.

##  

## (g)  NoLimit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Partnership or anyAffiliate from adopting or continuing in effect other compensationarrangements, which may, but need not, provide for the grant of options,restricted units, units and other types of equity-based awards, and sucharrangements may be either generally applicable or applicable only in specificcases.

##  

## (h)  NoRight to Employment.  The grant of anAward shall not be construed as giving a Participant the right to be retained asa director, officer, employee or consultant of or to the Partnership or anyAffiliate, nor shall it be construed as giving a Participant any rights tocontinued service on the Board.  Further,the Partnership or an Affiliate may at any time dismiss a Participant fromemployment or discontinue any consulting relationship, free from any liabilityor any claim under the Plan, unless otherwise expressly provided in the Plan orin any Award Agreement.

 

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## (i)  NoRights as Unitholder.  No Participantor holder or beneficiary of any Award shall have any rights as a unitholderwith respect to any Units to be distributed under the Plan until he or she hasbecome the holder of such Units.  Inconnection with each grant of Restricted Units, except as provided in theapplicable Award Agreement, the Participant shall not be entitled to the rightsof a unitholder in respect of such Restricted Units.  Except as otherwise provided in Section 4(b),Section 7(c) or the applicable Award Agreement, no adjustments shallbe made for dividends or distributions on (whether ordinary or extraordinary,and whether in cash, Units, other securities or other property), or otherevents relating to, Units subject to an Award for which the record date isprior to the date such Units are delivered.

##  

## (j)  GoverningLaw.  The validity, construction andeffect of the Plan and any rules and regulations relating to the Plan andany Award Agreement shall be determined in accordance with the laws of theState of Delaware, without giving effect to the conflict of laws provisionsthereof.

##  

## (k)  Severability.  If any provision of the Plan or any Award isor becomes or is deemed to be invalid, illegal or unenforceable in anyjurisdiction or as to any Person or Award, or would disqualify the Plan or any Awardunder any law deemed applicable by the Board, such provision shall be construedor deemed amended to conform to the applicable laws, or if it cannot beconstrued or deemed amended without, in the determination of the Board,materially altering the intent of the Plan or the Award, such provision shallbe construed or deemed stricken as to such jurisdiction, Person or Award andthe remainder of the Plan and any such Award shall remain in full force andeffect.

##  

## (l)  OtherLaws.  The Board may refuse to issueor transfer any Units or other consideration under an Award if, acting in itssole and plenary discretion, it determines that the issuance or transfer ofsuch Units or such other consideration might violate any applicable law orregulation or entitle the Partnership to recover the same under Section 16(b) ofthe Exchange Act, and any payment tendered to the Partnership by a Participant,other holder or beneficiary in connection with the exercise of such Award shallbe promptly refunded to the relevant Participant, holder or beneficiary.  Without limiting the generality of theforegoing, no Award granted hereunder shall be construed as an offer to sellsecurities of the Partnership, and no such offer shall be outstanding, unlessand until the Board in its sole and plenary discretion has determined that anysuch offer, if made, would be in compliance with all applicable requirements ofthe U.S. Federal and any other applicable securities laws.

##  

## (m)  NoTrust or Fund Created.  Neither thePlan nor any Award shall create or be construed to create a trust or separatefund of any kind or a fiduciary relationship between the Partnership or any Affiliate,on one hand, and a Participant or any other Person, on the other hand.  To the extent that any Person acquires aright to receive payments from the Partnership or any Affiliate pursuant to an Award,such right shall be no greater than the right of any unsecured general creditorof the Partnership or such Affiliate.

 

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## (n)  NoFractional Units.  No fractional Unitsshall be issued or delivered pursuant to the Plan or any Award, and the Boardshall determine whether cash, other securities or other property shall be paidor transferred in lieu of any fractional Units or whether such fractional Unitsor any rights thereto shall be canceled, terminated or otherwise eliminated.

##  

## (o)  Requirementof Consent and Notification of Election Under Section 83(b) of theCode or Similar Provision.  Noelection under Section 83(b) of the Code (to include in gross incomein the year of transfer the amounts specified in Section 83(b) of theCode) or under a similar provision of law may be made unless expresslypermitted by the terms of the applicable Award Agreement or by action of the Boardin writing prior to the making of such election.  If an Award recipient, in connection with theacquisition of Units under the Plan or otherwise, is expressly permitted underthe terms of the applicable Award Agreement or by such Board action to makesuch an election and the Participant makes the election, the Participant shallnotify the Board of such election within ten days of filing notice of theelection with the IRS or other governmental authority, in addition to anyfiling and notification required pursuant to regulations issued under Section 83(b) ofthe Code or other applicable provision.

##  

## (p)  Interpretation.  (i) Headings are given to the Sectionsand subsections of the Plan solely as a convenience to facilitate reference.Such headings shall not be deemed in any way material or relevant to theconstruction or interpretation of the Plan or any provision thereof.

##  

## (ii) Thewords “include”, “includes” and “including” shall be deemed to be followed bythe phrase “without limitation”.

##  

# SECTION 10.  Term of the Plan.  (a)  Effective Date.  The Plan shall be effective as of the date ofits adoption by the Board.

#  

## (b)  ExpirationDate.  No Award shall be grantedunder the Plan after the tenth anniversary of the date the Plan is approvedunder Section 10(a).  Unlessotherwise expressly provided in the Plan or in an applicable Award Agreement,any Award granted hereunder may, and the authority of the Board to amend, alter,adjust, suspend, discontinue or terminate any such Award or to waive anyconditions or rights under any such Award shall, nevertheless continuethereafter.

 

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