Document:

EXHIBIT
10.1

 

PERFORMANCE
OPTION GRANT AGREEMENT

 

March      ,
2005

 

To:                              [Name]

[Address]

 

Re:                               Grant of Performance Options

 

Dear [first name]:

 

I
am pleased to inform you that Plains All American GP LLC and Plains AAP, L.P.
(together, the “Company”) hereby jointly grant to you [number] options (the “Options”)
with respect to common units of Plains All American Pipeline, L.P. (the “MLP
Units”) on the following terms:

 

1.                                       Each Option represents the right
to purchase a single MLP Unit at a purchase price of $22.00 per MLP Unit;
provided, however, that the purchase price with respect to an MLP Unit shall be
reduced by an amount equal to 80% of the value of any distributions made with
respect to an MLP Unit during the period beginning on June 7, 2001 and
ending on the date record title to such MLP Unit is transferred in connection
with the exercise of the Option.  For
purposes of the foregoing, a distribution will be deemed made on the record
date for such distribution.

 

2.                                       Subject to the further
provisions below, the Options shall become vested (exercisable) on the later to
occur of (i) January 1, 2008 and (ii) the date on which the
quarterly distribution declared on the common units of Plains All American
Pipeline, L.P. equals or exceeds $0.675. Notwithstanding the foregoing, all of
the Options shall vest immediately upon occurrence of a Change in Control of
the Company.  A “Change in Control of the
Company” shall conclusively be deemed to have occurred on the date when (i) any
person (other than Plains Resources Inc. or its wholly owned subsidiaries),
including any partnership, limited partnership, syndicate or other group deemed
a “person” for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner, directly
or indirectly, of 50% or more of the membership or partnership interest in the
Company, (ii) the persons who own membership or partnership interests in
the Company as of June 8, 2001 cease to beneficially own, directly or
indirectly, more than 50% of the membership or partnership interest in the
Company or (iii) (A) Plains Resources Inc. or its subsidiaries
becomes the beneficial owner, directly or indirectly, of more than 50% of the
membership or partnership

 

 

interest in the Company and (B) within
one year thereafter, the Company terminates your employment.

 

3.                                       All Options must be exercised by
December 31 of the year in which they vest.  Any Options not so exercised will be
forfeited.

 

4.                                       In the event of your termination
of employment with the Company and its Affiliates for any reason other than (i) your
death, (ii) your “Disability” (a physical or mental infirmity that impairs
your ability to perform substantially your duties for a period of 180
consecutive days or that the Company otherwise determines constitutes a
Disability) or (iii) in connection with a Change in Control of the
Company, all of your Options not then vested shall automatically be forfeited
unexercised as of your date of termination.

 

5.                                       In the event of your termination
of employment with the Company and its Affiliates due to your death or
Disability or in connection with a Change in Control, all of your Options shall
immediately vest.

 

6.                                       Vested Options may be exercised
by written notice to the Company at its principal executive office addressed to
the attention of its Secretary.  The
purchase price with respect to a vested Option shall be paid in full at the
time of exercise in cash or other property acceptable to the Company, which may
include, in your discretion, withholding a number of MLP Units otherwise
payable to you.

 

7.                                       Upon exercise of an Option, you
shall pay all required withholding taxes.

 

8.                                       For purposes hereof, you shall
be considered to be in the employment of the Company as long as you remain an
employee of the Company and its Affiliates. 
Any question as to whether and when there has been a termination of your
employment, and the cause of such termination, shall be determined by the
Company and its determination shall be final.

 

9.                                       This Agreement shall be binding
upon and inure to the benefit of any successors to the Company and all persons
lawfully claiming under you.

 

10.                                 These Options shall not be
transferable otherwise than (a) by will or the laws of descent and
distribution, (b) pursuant to a qualified domestic relations order as
defined in Title I of the Employee Retirement Income Security Act of 1974,
as amended, and the rules thereunder, or (c) with the consent of the
Company.

 

11.                                 This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without regard to conflicts of laws principles thereof.

 

By signing
below, you agree that the Options are governed by the terms of the Plains All
American 2001 Performance Option Plan, as amended (the “Plan”).  Terms used herein that are defined in the
Plan shall have the meanings set forth in the Plan. Terms used herein that are
not defined either herein or in the Plan shall have the meaning set forth in
the Third Amended and Restated Agreement of Limited Partnership of Plains All
American Pipeline, L.P., as amended (the “Partnership Agreement”).  Copies of the Plan and the Partnership
Agreement are available upon request. 
Please execute and return this Agreement to me.  The attached copy of this Agreement is for
your records.

 

2

 

IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of March      , 2005.

 

	
   

  	
  PLAINS ALL AMERICAN GP LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Tim Moore, Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PLAINS AAP, L.P.

  
	
   

  	
  By Plains All American GP LLC,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Tim Moore, Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [name]

  

 

3EXHIBIT
10.2

 

«GrantDate»

 

«FirstName»«LastName»

«Address1»

«City»,
«State» «PostalCode»

 

Re:                               Grant of Restricted
Units

 

Dear «FirstName»:

 

I am pleased to inform you that you have been granted «Units» Phantom Units as of the above date
pursuant to the Company’s 2005 Long-Term Incentive Plan (the “Plan”).  In addition, in tandem with each Phantom Unit
you have been granted a distribution equivalent right (a “DER”). The terms and
conditions of this grant are as set forth below.

 

1.                       Subject to the further provisions
of this Agreement, your Phantom Units shall vest (become payable in the form of
one Common Unit of Plains All American Pipeline, L.P. for each Phantom Unit) as
follows: (i) 30% shall vest upon the later to occur of the May 2007
Distribution Date and the date on which the Partnership pays a quarterly
dividend of $0.65 per unit, (ii) 30% shall vest upon the later to occur of
the May 2009 Distribution Date and the date on which the Partnership pays
a quarterly distribution of $0.70 per unit, and (iii) 40% shall vest upon
the later to occur of the May 2010 Distribution Date and the date on which
the Partnership pays a quarterly distribution of $0.75 per unit.  Any Phantom Units that remain unvested, and
all associated DERs (whether or not vested), as of the May 2011
Distribution Date (after giving effect to the distribution on such date) shall
be forfeited.

 

2.                       Subject to the further
provisions of this Agreement, your DERs shall vest (become payable in cash) as
follows: (i) 30% shall vest upon and effective with the earlier to occur
of the May 2007 Distribution Date and the date on which the Partnership
pays a quarterly dividend of $0.65 per unit, (ii) 15% shall vest upon and
effective with the earlier to occur of the May 2008 Distribution Date and
the date on which the Partnership pays a quarterly distribution of $0.675 per
unit, (iii) 15% shall vest upon and effective with the earlier to occur of
the May 2009 Distribution Date and the date on which the Partnership pays
a quarterly distribution of $0.70 per unit, (iv) 20% shall vest upon and
effective with the earlier to occur of the May 2010 Distribution Date and
the date on which the Partnership pays a quarterly distribution of $.725 per
unit, and (v) 20% shall vest upon and effective with the earlier to occur
of the May 2010 Distribution Date and the date on which the Partnership
pays a quarterly distribution of $0.75 per unit.

 

3.                       Your DERs shall not accrue
payments prior to vesting.

 

 

4.                       Any distribution level required
for vesting under paragraphs 1 or 2 above shall be proportionately reduced or
increased for any split or reverse split, respectively, of the Units, or any
event or transaction having similar effect.

 

5.                       Upon vesting of any Phantom
Units, an equivalent number of DERs will expire.  Any such DERs that are vested prior to, or
that would vest as of, the Distribution Date on which the Phantom Units vest,
shall be payable on such Distribution Date prior to their expiration.

 

6.                       In the event of the termination
of your employment with the Company and its Affiliates (other than in
connection with a Change in Status or by reason of your death or “disability,”
as defined in paragraph 7 below), all of your then outstanding DERs (regardless
of vesting) and Phantom Units shall automatically be forfeited as of the date
of termination; provided, however, that if the Company or its Affiliates
terminate your employment other than a Termination for Cause, any unvested
Phantom Units that have satisfied all vesting criteria as of the date of
termination but for the passage of time shall be deemed nonforfeitable on the
date of termination, and shall vest on the next following Distribution Date; provided,
further, that any DERs associated with the unvested, nonforfeitable Phantom
Units described in the preceding proviso shall not be forfeited on the date of
termination, but shall be payable and shall expire in accordance with paragraph
5 above.

 

7.                       In the event of termination of
your employment with the Company and its Affiliates by reason of your death or
your “disability” (a physical or mental infirmity that impairs your ability
substantially to perform your duties for a period of eighteen months or that
the Company otherwise determines constitutes a “disability”), all of your then
outstanding Phantom Units and tandem DERs shall be deemed 100% nonforfeitable
on such date, and such Phantom Units shall vest in accordance with paragraph 1
and paragraph 2 above.

 

8.                       In the event of a Change in
Status, all of your then outstanding Phantom Units and tandem DERs shall be deemed
100% nonforfeitable on such date, and such Phantom Units shall vest in full
upon the next Distribution Date.

 

9.                       Upon payment pursuant to a DER,
you agree that the Company may withhold any taxes due from your compensation as
required by law.  Upon vesting of a
Phantom Unit, you agree that the Company may withhold any taxes due from your
compensation as required by law, which (in the sole discretion of the Company)
may include withholding a number of Common Units otherwise payable to you.

 

As used herein, the phrase “Distribution Date” means the date, in any
given month and year, on which the Partnership pays a quarterly distribution.

 

 

The phrase “Change in Status” means the occurrence, within three months
prior to or one year following a Change of Control, of any of the following
circumstances:  (A) any termination
by the Company of your employment other than a Termination for Cause, (B) without
your consent, any removal of you from, or any failure to re-elect you to, the
positions held by you  (or substantially
equivalent positions) immediately prior to the change that may constitute a
Change in Status, or (C) any reduction in your base salary or (D) any
material reduction in your fringe benefits.

 

The phrase “Change of Control” means, and shall be deemed to have
occurred upon the occurrence of, one or more of the following events:  (i) the Company ceasing to be the
general partner of the general partner of the Partnership, (ii) 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 Partnership or
the Company to any Person and/or its Affiliates, other than to the Partnership
or the Company, including any employee benefit plan thereof; (iii) a
consolidation, reorganization, merger or any other similar transaction
involving (a) a Person other than the Partnership or the Company and (b) the
Partnership, the Company or both, (iv) the Persons who own membership
interests in the Company on the date hereof cease to beneficially own, directly
or indirectly, more than 50% of the membership interest in the Company, or (v) any
Person, including any partnership, limited partnership, syndicate or other
group deemed a “person” for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended, becoming the beneficial owner,
directly or indirectly, of more than 49.9% of the membership interest in the
Company (a “Majority Holder”); provided, however, that if any
Person including any partnership, limited partnership, syndicate or other group
deemed a “person” for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended, who is a member of the Company as
of March 1, 2005, or any Affiliate of any such Person, becomes a Majority
Holder, a Change of Control shall not be deemed to have occurred pursuant to
this clause (v) if at or prior to the time such Person becomes a Majority
Holder, such Person executes and delivers to the Company an agreement
substantially in the form of Exhibit A hereto (the “Specified Voting
Agreement”); provided, further, however, that if, following the execution
and delivery to the Company of the Specified Voting Agreement by such Majority
Holder, (x) such Majority Holder shall give written notice to the Company of
termination of such Specified Voting Agreement pursuant to Section 3
thereof (and such written notice is not withdrawn prior to the effectiveness of
such termination), then a Change of Control shall be deemed to have occurred
upon the effectiveness of such termination if, at the time of the effectiveness
of such termination, such Majority Holder beneficially owns, directly or
indirectly, more than 49.9% of the membership interests in the Company or (y)
such Majority Holder shall breach or anticipatorily breach the Specified Voting
Agreement,  then a Change of Control
shall be deemed to have occurred at the time of such breach (or anticipatory
breach) of the Specified Voting Agreement if, at the time of such breach, such
Majority Holder beneficially owns, directly or indirectly, more than 49.9% of
the membership interests in the Company.

 

 

The phrase “Termination for Cause” shall mean severance of your
employment with the Company or its Affiliates based on your (i) failure to
perform your job function in accordance with standards described to you in
writing, or (ii) violation of the Company’s Code of Business Conduct
(unless waived in accordance with the terms thereof), in each case, with the
specific failure or violation described to you in writing.

 

The “Company” refers to Plains All American GP LLC.  The “Partnership” refers to Plains All
American Pipeline, L.P.

 

  Terms used herein that are not defined herein
shall have the meanings set forth in the Plan or, if not defined in the Plan,
in the Third Amended and Restated Agreement of Limited Partnership of Plains
All American Pipeline, L.P., as amended (the “Partnership Agreement”). By
signing below, you agree that the Phantom Units and DERs granted hereunder are
governed by the terms of the Plan.  Copies
of the Plan and the Partnership Agreement are available upon request.  Please execute and return this Agreement to
me.  The attached copy of this Agreement
is for your records.

 

 

	
   

  	
  PLAINS ALL
  AMERICAN PIPELINE, L.P.

  
	
   

  	
   

  
	
   

  	
  By: PLAINS
  AAP, L.P.

  
	
   

  	
   

  
	
   

  	
  By: PLAINS
  ALL AMERICAN GP LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Tim Moore

  
	
   

  	
  Title:

  	
  Vice
  President & General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  «FirstName» «LastName»

  	
   

  
	
   

  	
   

  
	
  SSN:

  	
  «SSN»

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 

  	
   

  	
   

  	
   

  
								

 

 

 

 

EXHIBIT A

 

Form of Letter Agreement

 

                                                                                                [DATE]

 

 

Plains All American GP LLC

333 Clay Street, Suite 1600

Houston, Texas 77002

 

 

Gentlemen:

 

                                                Reference is made to the Amended and Restated
Limited Liability Company Agreement of Plains All American GP LLC, dated as of
June 8, 2001, as amended (the “LLC Agreement”). 
The undersigned has become the beneficial owner of more than 49.9% (a
“Majority Holder”) of the Membership Interests (as defined in the LLC
Agreement) of Plains All American GP LLC, a Delaware limited liability company
(the “Company”).  Capitalized terms that
are not otherwise defined herein shall have the meanings set forth in the LLC
Agreement.

 

                The undersigned hereby acknowledges its
understanding that, pursuant to the terms of certain of the Company’s equity
incentive awards, absent the execution and delivery of this letter agreement by
the undersigned, the fact that the undersigned has become a Majority Holder
would constitute a “change of control” for purposes of those equity incentive
awards.

 

1.             Subject to the terms and conditions
of this letter agreement, during the term of this letter agreement, at each
annual meeting of the Members, at each special meeting of the Members called
for the purpose of electing Independent Directors, and in respect of any action
by written consent to elect Independent Directors, the undersigned shall vote
or cause to be voted the Excess Interests held by it and its affiliates in
favor of the election of each nominee for Independent Director in the same
proportion as all Membership Interests (other than those beneficially owned by
the undersigned and its affiliates, including the Excess Interests) are voted
with respect to such election.  For the
avoidance of doubt, for purposes of this letter agreement the term “Independent
Director” shall not include any replacement Director who is to be elected by a
Majority in Interest pursuant to the second sentence of Section 7.1(a)(iv) of
the LLC Agreement.  “Excess Interests”
means, with respect to a particular election or removal of Independent
Directors, an amount of Membership Interests equal to the amount, if any, by
which the total Membership Interests beneficially owned by the undersigned and
its affiliates and entitled to vote with respect to such election or removal of
Independent Directors exceeds 49.9% of the outstanding Membership Interests that
are entitled to vote with respect to such election or removal of Independent
Directors.

 

 

 

2.             Subject to the terms and conditions
of this letter agreement, during the term of this letter agreement, at each
special meeting of the Members called for the purpose of removing any
Independent Director without Good Cause, and in connection with any action by
the Members to remove any Independent Director without Good Cause, including
without limitation pursuant to Section 7.1(a)(iii) of the LLC Agreement, the
undersigned shall vote or cause to be voted the Excess Interests held by it and
its affiliates in favor of or against the removal of such Independent Director
in the same proportion as all Membership Interests (other than those
beneficially owned by the undersigned and its affiliates, including the Excess
Interests) are voted with respect to such removal.  For the purposes of this letter agreement,
the Members shall have “Good Cause” to remove or fail to reelect any Independent
Director only upon such Independent Director’s (i) engaging in gross
misconduct, including without limitation any breach of his fiduciary duties,
(ii) violation of the Company’s Code of Business Conduct (unless waived in
accordance with the terms thereof), (iii) engaging in conduct which is
demonstrably and materially injurious to the Company or to Rodeo, L.P. and its
subsidiaries, taken as a whole, (iv) indictment for, or conviction of, a felony
involving moral turpitude.

3.             The term of this letter agreement
shall commence on the date of this letter agreement and shall continue
thereafter unless terminated by the undersigned pursuant to this Section
3.  The undersigned shall be entitled to
terminate this letter agreement at any time upon giving at least one year’s
prior written notice of such termination to the Company.  Notwithstanding the foregoing, the
undersigned shall be entitled to terminate this letter agreement at any time by
giving written notice to the Company (which notice shall be effective
immediately) upon and after the occurrence of any of the following
circumstances:  (a) the undersigned is no
longer a Majority Holder, (b) with respect to the Plains All American 2005
Long-Term Incentive Plan (the “2005 Plan”), all of the Awards (as defined in
the 2005 Plan) granted to Greg L. Armstrong shall have vested in accordance
with their terms, (c) with respect to the 2005 Plan, all of the Awards granted
to Harry N. Pefanis shall have vested in accordance with their terms, (d) if
the undersigned is any of Plains Holdings Inc., KAFU Holdings, L.P., E-Holdings
III, L.P. or Sable Investments, L.P., or any affiliate of any of the foregoing
(collectively, the “Private Equity Members”), at least two of the other Members
shall cease to be Private Equity Members, (e) any other Member shall be in
breach of the LLC Agreement in any manner adverse to the undersigned, (f) the
Persons who own the equity interests in the undersigned, or if the undersigned
is controlled directly or indirectly by any other entity, the ultimate parent
of the undersigned, as the case may be, on the date hereof cease to
beneficially own, directly or indirectly, more than 50% of the equity interest
in the undersigned or the ultimate parent entity, as the case may be, (g) Greg
L. Armstrong shall cease to be the Chief Executive Officer of the Company, or
(h) Harry N. Pefanis shall cease to be the President and Chief Operating
Officer of the Company; provided, that in the case of either clause (g) or (h)
above, to be effective such written notice must be given within 90 days of such
officer ceasing to hold such position.

4.             Except to the extent specifically
set forth above, nothing contained herein shall be deemed to modify, supersede
or in any manner limit any rights of the undersigned under the LLC Agreement,
including without limitation, any rights of the 

 

 

undersigned to designate a
Director pursuant to Section 7.1(a)(ii) of the LLC Agreement, or to remove any
such designated Director pursuant to Section 7.1(a)(iii) of the LLC
Agreement.  Nothing contained herein
shall be deemed to modify, supersede or in any manner limit any rights of the
undersigned under the Partnership Agreement or the Rodeo, L.P. Partnership
Agreement.

5.             This letter agreement is to be
governed by the laws of the State of Delaware, without giving effect to the
principles of conflicts of laws thereof. 
If any provision hereof is deemed unenforceable, the enforceability of
the other provisions hereof shall not be affected.

6.             The undersigned signs solely in
his, her or its individual capacity with respect to his, her or its beneficial
ownership of Membership Interests and makes no agreement or understanding
herein in any other capacity, including his, her or its capacity as a director
of the Company.

7.             This letter agreement may be
executed in two or more counterparts, each of which shall be considered an
original but all of which together shall constitute the same instrument.

8.             This letter agreement (including
the documents and instruments referred to herein) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the undersigned and the Company, or any of them, with
respect to the subject matter hereof.

9.             This letter agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by each of the undersigned and the
Company.

10.           This letter agreement shall not be
assigned by the Company by operation of law or otherwise without the prior
written consent of the undersigned.

11.           This letter agreement shall be
binding upon and inure solely to the benefit of each party to this letter
agreement and their permitted assignees, and nothing in this letter agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of
this letter agreement.  Without limiting
the foregoing, no direct or indirect holder of any equity interests or
securities of any party to this letter agreement (whether such holder is a
limited or general partner, member, stockholder or otherwise), nor any
Affiliate of any party to this letter agreement, nor any director, officer,
employee, representative, agent or other controlling Person of each of the
parties to this letter agreement and their respective Affiliates shall have any
liability or obligation arising under this letter agreement.

12.           The undersigned acknowledges and
agrees that the Company could not be made whole by monetary damages in the
event of any default by the undersigned of the terms and conditions set forth
in this letter agreement.  It is
accordingly agreed and understood that the Company, in addition to any other
remedy that it may have at law or in equity, shall be entitled to an injunction
or injunctions to prevent breaches of this letter 

 

 

 

agreement and specifically
to enforce the terms and provisions hereof in any action instituted in any
court of the United States or in any state having appropriate jurisdiction.

	
   

  	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [UNDERSIGNED]

  
	
   

  	
   

  	
   

  
	
  Agreed and
  accepted as of

  	
   

  
	
  this ___ day
  of _____, ___:

  	
   

  
	
   

  	
   

  	
   

  
	
  PLAINS ALL
  AMERICAN GP LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

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