Document:

Exhibit 10.1

 

AMENDED AND RESTATED K-SEA TRANSPORTATION PARTNERS L.P.

 LONG-TERM INCENTIVE PLAN

 

1.             Purpose of the Plan.

 

The K-Sea Transportation Partners L.P. Long-Term Incentive Plan (the “Plan”) is intended to promote the interests of K-Sea Transportation Partners L.P., a Delaware limited partnership (the “Partnership”), by providing to employees and directors of K-Sea General Partner GP LLC, a Delaware limited liability company (the “Company”), and its Affiliates who perform services for the Partnership, incentive compensation awards for superior performance that are based on Units.  The Plan is also contemplated to enhance the ability of the Company and its Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Partnership and to encourage them to devote their best efforts to the business of the Partnership, thereby advancing the interests of the Partnership.

 

2.             Definitions.

 

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

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Award” means an Option or Phantom Unit granted under the Plan, and shall include any DER granted with respect to a Phantom Unit.

 

“Award Agreement” means the agreement entered into between the Partnership and the Participant evidencing the terms and conditions of the Award.

 

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

 

“Cash-Out Value” means the amount determined in Clause (i) or (ii), whichever is applicable, as follows: (i) the per Unit price offered to equityholders of the Partnership in any merger or consolidation or (iii) in the event of a reorganization, the Fair Market Value per Unit determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of an Award.  In the event that the consideration offered to equityholders of the Partnership in any transaction described in this definition consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash.

 

“Change in Control” shall be deemed to have occurred upon the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one or a series of related transactions) of all or substantially all of the assets of the Partnership or K-Sea Operating Partnership L.P. to any Person or its Affiliates, other than the Partnership, the

 

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Company or any of their Affiliates or (ii) any merger, reorganization, consolidation or other transaction pursuant to which more than 50% of the combined voting power of the equity interests in the Partnership or K-Sea Operating Partnership L.P. ceases to be owned by Persons who own such interests, respectively, as of the date of the initial public offering of Units.

 

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

 

“Deferral Commitment” means the agreement by which an Employee or Director, who has been issued a Phantom Unit, elects to defer receipt of the Unit or Cash-Out Value payment otherwise payable to the Employee or Director upon the vesting of the Phantom Unit.

 

“Deferred Award” means (i) an Elective Deferral Award (as defined in Section 6(b)(iv) of the Plan) with respect to which a recipient has made a Deferral Commitment (ii) an Automatic Deferral Award (as defined in Section 6(b)(v) of the Plan) or (iii) an Other Deferred Award (as defined in Section 6(b)(vi).

 

“Deferred Compensation Plan” means the K-Sea Transportation Partners L.P. Deferred Compensation Plan.

 

“DER” means a right, granted in tandem with a Phantom Unit, to receive an amount in cash equal to, and at the same time as, the cash distributions made by the Partnership with respect to a Unit during the period such Phantom Unit is outstanding, provided that any payments with respect to DERs that are granted in tandem with a Deferred Award may, pursuant to the terms of a Deferral Commitment or Award Agreement, be deferred under and in accordance with the Deferred Compensation Plan.

 

“Director” means a member of the Board or the board of directors or managers of an Affiliate who is not an Employee.

 

“Employee” means any employee of the Company or an Affiliate, including, without limitation, K-Sea Transportation Inc., a Delaware corporation, in each case as determined by the Committee. Notwithstanding the foregoing, the term “Employee” shall not include any individual covered by a collective bargaining or comparable agreement between representatives of such employees and the Partnership, the Company or any Affiliate of the Partnership or the Company.

 

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

 

“Fair Market Value” means the closing sales price of a Unit on the date of determination (or, if there is no trading in the Units on such date, the closing sales price on the last date the Units were traded) as reported in The Wall Street Journal (or other reporting service approved by the Committee). In the event Units are not publicly traded at the time a determination of Fair Market Value is required to be made hereunder, the determination of Fair Market Value shall be made in good faith by the Committee.

 

“Option” means an option to purchase Units granted under the Plan.

 

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

 

“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of the Partnership.

 

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

 

“Phantom Unit” means a phantom (notional) unit granted under the Plan which upon vesting, or at such other time as may be specified in a Deferral Commitment or Award Agreement, entitles the Participant to receive a Unit or an amount of cash equal to the Fair Market Value of a Unit, whichever is determined by the Committee.

 

“Plan” means this K-Sea Transportation Partners L.P. Long-Term Incentive Plan, as amended from time to time.

 

“Restricted Period” means the period established by the Committee with respect to an Award during which the Award remains subject to forfeiture (i.e., it is not vested) and is not exercisable by or payable to the Participant.

 

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

 

“SEC” means the Securities and Exchange Commission, or any successor thereto.

 

“Unit” means a Common Unit of the Partnership.

 

3.             Administration.

 

The Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum, and the acts of the members of the Committee who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee. Subject to the following and any applicable law, the Committee, in its sole discretion, may delegate any or all of its powers and duties under the Plan, including the power to grant Awards under the Plan, to the Chief Executive Officer of K-Sea Transportation GP, LLC (provided that the Chief Executive Officer is a member of the Board), subject to such limitations on such delegated powers and duties as the Committee may impose, if any. Upon any such delegation all references in the Plan to the “Committee,” other than in Section 7, shall be deemed to include the Chief Executive Officer; provided, however, that such delegation shall not limit the Chief Executive Officer’s right to receive Awards under the Plan. Notwithstanding the foregoing, the Chief Executive Officer may not grant Awards to, or take any action with respect to any Award previously granted to, himself, a person who is an officer subject to Rule 16b-3 or who is a member of the Board.  Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Units to be covered by Awards; (iv) determine the

 

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terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan and any instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, the Partnership, any Affiliate, any Participant, and any beneficiary of any Award.

 

4.             Units.

 

(a)           Units Available. Subject to adjustment as provided in Section 4(c), the number of Units with respect to which Options and Phantom Units may be granted under the Plan is 940,000.  If any Option or Phantom Unit is forfeited or otherwise terminates or is canceled without the delivery of Units, then the Units covered by such Award, to the extent of such forfeiture, termination or cancellation, shall again be Units with respect to which an Option or Phantom Unit, as the case may be, may be granted.

 

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

 

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

 

(d)           Cash-Out of Awards. In the event that the Partnership is reorganized, merged or consolidated with another entity, the Committee may, in its sole discretion, (i) require the mandatory surrender to the Partnership by selected holders of Options of some or all of the outstanding Options held by such holder (irrespective of whether such Options are then exercisable under the provisions of the Plan) as of a date (before or after the reorganization, merger or consolidation) specified by the Committee, in which event the Committee shall

 

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thereupon cancel such Options and pay to each holder thereof an amount of cash per Unit equal to the excess, if any, of the Cash-Out Value of the Units subject to such Option over the exercise price(s) under such Options for such Units or (ii) require the mandatory surrender to the Partnership by selected holders of Phantom Units of some or all of the outstanding Phantom Units held by such holder (irrespective of whether such Phantom Units are vested under the provisions of the Plan) as of a date (before or after the reorganization, merger or consolidation) specified by the Committee, in which event the Committee shall thereupon cancel such Phantom Units and pay to each holder an amount of cash per Phantom Unit equal to the Cash-Out Value of the Units. Notwithstanding the above, with respect to Phantom Unit Awards that constitute nonqualified deferred compensation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other applicable authority thereunder (“Section 409A”) and are subject to the requirements of Section 409A, an accelerated payment of such Phantom Unit Award may only be made if the reorganization, merger or consolidation event which triggers the application of this Section 4(d) would qualify as a permitted distribution event under the then-applicable authority issued with respect to Section 409A or would otherwise be permissible under Section 409A.

 

5.             Eligibility.

 

Any Employee who performs services for the benefit of the Partnership as determined by the Committee, or any Director shall be eligible to be designated a Participant and receive an Award under the Plan.

 

6.             Awards.

 

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

 

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

 

(ii)           Time and Method of Exercise.  The Committee shall determine the Restricted Period with respect to an Option, which may include, without limitation, accelerated vesting upon the achievement of specified performance goals, and the method or methods by which payment of the exercise price with respect thereto be made or deemed to have been made, which may include, without limitation: (a) cash, (b) check acceptable to the Company, (c) a “cashless-broker” exercise through procedures approved by the Company or (d) any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price.

 

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(iii)          Forfeiture.  Except as otherwise provided in the terms of the Option grant, upon termination of a Participant’s employment with the Company and its Affiliates or membership on the Board, whichever is applicable, for any reason during the applicable Restricted Period, all Options shall be forfeited by the Participant (or any transferee) unless otherwise provided in a written employment agreement between the Participant and the Company or its Affiliates. The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Options.

 

(b)           Phantom Units. The Committee shall have the authority to determine the Employees and Directors to whom Phantom Units shall be granted, the number of Phantom Units to be granted to each such Participant, the Restricted Period, the conditions under which the Phantom Units may become vested or forfeited, which may include, without limitation, the accelerated vesting upon the achievement of specified performance goals, and such other terms and conditions as the Committee may establish with respect to such Awards including whether DERs are granted with respect to such Phantom Units.

 

(i)            DERs.  Phantom Units granted under the Plan may include a tandem DER grant.

 

(ii)           Forfeiture.  Except as otherwise provided in the terms of the Phantom Units grant, upon termination of a Participant’s employment with the Company and its Affiliates or membership on the Board, whichever is applicable, for any reason during the applicable Restricted Period, all Phantom Units shall be forfeited by the Participant (or any transferee) unless otherwise provided in a written employment agreement between the Participant and the Company or its Affiliates. The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Phantom Units.

 

(iii)          Lapse of Restrictions.  Unless a different payment time is specified in the Award agreement, the Participant shall be entitled to receive from the Company one Unit or cash equal to the Fair Market Value of a Unit, as determined by the Committee, in its discretion, upon or as soon as reasonably practical following the vesting of each Phantom Unit.

 

(iv)          Elective Deferral Awards.  The Committee may, pursuant to the terms of an Award Agreement, permit the recipient of a Phantom Unit award, within 30 days from the date of receipt of such Phantom Unit award, in his or her sole discretion, to execute a written Deferral Commitment specifying that the Phantom Unit award shall not be paid to the recipient upon the vesting of the Phantom Unit award but shall instead be deferred pursuant to the terms of such Deferral Commitment and the terms of the Deferred Compensation Plan (any such award pursuant to which a recipient may execute a Deferral Commitment, an “Elective Deferral Award”).  Notwithstanding the terms of any Elective Deferral Award or any employment or other agreement to which a recipient may be a party to the contrary, except in connection with any applicable vesting acceleration in connection with a Change in Control that also constitutes a change in control

 

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event (within the meaning of Treasury Regulation Section 1.409A-3(i)(5) or any successor regulation) or a recipient’s disability (within the meaning of Treasury Regulation Section 1.409A-3(i)(4)) or a recipient’s death, in no event shall any Phantom Units that are subject to an Elective Deferral Award vest prior to the 31st day following the one-year anniversary of the date of grant of such Elective Deferral Award, regardless of whether the recipient makes a Deferral Commitment with respect to such Elective Deferral Award.  If a recipient makes a Deferral Commitment with respect to any Phantom Units that are subject to an Elective Deferral Award, and the recipient becomes entitled to accelerated vesting with respect to such Phantom Units as a result of a Qualified Acceleration Event that occurs prior to the one-year anniversary of the date the recipient makes the applicable Deferral Commitment, such Deferral Commitment shall not be given effect and such Phantom Units shall not constitute a Deferred Award.

 

(v)           Automatic Deferral Awards. The Committee may, pursuant to the terms of an Award Agreement, grant Phantom Units under the Plan that are automatically deferred under and in accordance with the terms of the Deferred Compensation Plan (an “Automatic Deferral Award”).  In the event the Committee grants an Automatic Deferral Award to a recipient, the Award Agreement with respect to such Automatic Deferral Award shall constitute the recipient’s Deferral Commitment for purposes of the Deferred Compensation Plan.

 

(vi)          Other Deferred Awards.  The Committee may permit a recipient to make a Deferral Commitment with respect to any grant or potential grant of Phantom Units in such other manner as the Committee may determine from time to time, provided that such Deferral Commitment complies with the terms of the Deferred Compensation Plan and Section 409A. Any Phantom Unit award with respect to which such a Deferral Commitment has been made is referred to herein as an “Other Deferred Award.”

 

(c)           General.

 

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

 

(ii)           Limits on Transfer of Awards.  Unless otherwise provided in the Award agreement, each Option shall be exercisable only by the Participant during the Participant’s lifetime, or by the person to whom the Participant’s right shall pass by will or the law of descent and distribution.  Unless otherwise provided in the Award agreement, no Award and no right under any such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or

 

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encumbered by a Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company and any Affiliate.

 

(iii)          Term of Awards. The term of each Award shall be for such period as may be determined by the Committee.

 

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

 

(v)           Consideration for Grants.  Awards may be granted for such consideration, including services, as the Committee determines.

 

(vi)          Delivery of Units or other Securities and Payment by Participant of Consideration.  Notwithstanding anything in the Plan or any grant agreement to the contrary, delivery of Units pursuant to the exercise or vesting of an Award may be deferred for any period during which, in the good faith determination of the Committee, the Company is not reasonably able to obtain Units to deliver pursuant to such Award without violating the rules or regulations of any applicable law or securities exchange. No Units or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including, without limitation, any exercise price or tax withholding) is received by the Company. Such payment may be made by such method or methods and in such form or forms as the Committee shall determine, including, without limitation, cash, other Awards, withholding of Units, cashless-broker exercises with simultaneous sale, or any combination thereof; provided that the combined value, as determined by the Committee, of all cash and cash equivalents and the Fair Market Value of any such Units or other property so tendered to the Company, as of the date of such tender, is at least equal to the full amount required to be paid to the Company pursuant to the Plan or the applicable Award agreement.

 

(vii)         Change in Control.  Subject to additional or contrary provisions in the Award agreement, upon a Change in Control or such period prior thereto as may be established by the Committee, all Awards shall automatically vest and become payable or exercisable, as the case may be, in full. In this regard, all Restricted Periods shall terminate and all performance criteria, if any, shall be deemed to have been achieved at the maximum level. To the extent an Option is not exercised upon a Change in Control, the Committee may, in its discretion, cancel such Award without payment or provide for a replacement grant with respect to such Award on such terms as it deems appropriate.

 

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7.             Amendment and Termination.

 

Except to the extent prohibited by applicable law:

 

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

 

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

 

(c)           Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(c) of the Plan) affecting the Partnership or the financial statements of the Partnership, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 

8.             General Provisions.

 

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

 

(b)           Withholding. The Company, its Affiliate or its designated third party administrator shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or Units under this Plan, an appropriate amount of cash or number of Units or a combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Company or its Affiliate to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company or its Affiliate of Units theretofore owned by the holder of the Award with respect to which withholding is required.  If Units are used to satisfy tax withholding, such Units shall be valued based on the Fair Market Value when the tax withholding is required to be made.

 

(c)           No Right to Employment.  The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate or to remain on the Board, as applicable. Further, the Company or an Affiliate may at any time dismiss a Participant from employment.

 

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(d)           Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware without regard to its conflict of laws principles.

 

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

 

(f)            Other Laws. Notwithstanding anything in the Plan or any Award agreement to the contrary, the Committee may refuse to issue or transfer any Units or other consideration under an Award if, in its sole discretion, it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation, the rules of the principal securities exchange on which the Units are then traded.

 

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

 

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

 

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

 

(j)            Facility of Payment. Any amounts payable hereunder to any individual under legal disability or who, in the judgment of the Committee, is unable to properly manage his financial affairs, may be paid to the legal representative of such person, or may be applied for the benefit of such person in any manner that the Committee may select, and the Company and its Affiliates shall be relieved of any further liability for payment of such amounts.

 

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

 

9.             Term of the Plan.

 

The Plan shall be effective on the date of its approval by the Board and shall continue until the date terminated by the Board or the date Units are no longer available for the payment of Awards under the Plan, whichever occurs first. However, unless otherwise expressly

 

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provided in the Plan or in an applicable Award Agreement, any Award granted prior to such termination, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award, shall extend beyond such termination date.

 

11Exhibit 10.2

 

K-SEA TRANSPORTATION PARTNERS L.P.

 

DEFERRED COMPENSATION PLAN

 

 

TABLE OF CONTENTS

 

	
 
  	
 
  	
Page
  
	
 
  	
 
  	
 
  
	
ARTICLE 1
  	
PURPOSE; EFFECTIVE DATE
  	
1
  
	
 
  	
 
  	
 
  
	
1.1
  	
Purpose
  	
1
  
	
 
  	
 
  	
 
  
	
ARTICLE 2
  	
DEFINITIONS
  	
1
  
	
 
  	
 
  	
 
  
	
2.1
  	
Account
  	
1
  
	
 
  	
 
  	
 
  
	
2.2
  	
Beneficiary
  	
1
  
	
 
  	
 
  	
 
  
	
2.3
  	
Board
  	
1
  
	
 
  	
 
  	
 
  
	
2.4
  	
Change in Control
  	
2
  
	
 
  	
 
  	
 
  
	
2.5
  	
Committee
  	
2
  
	
 
  	
 
  	
 
  
	
2.6
  	
Company
  	
2
  
	
 
  	
 
  	
 
  
	
2.7
  	
Deferral Commitment
  	
3
  
	
 
  	
 
  	
 
  
	
2.8
  	
Deferral Period
  	
3
  
	
 
  	
 
  	
 
  
	
2.9
  	
Determination Date
  	
3
  
	
 
  	
 
  	
 
  
	
2.10
  	
Director
  	
3
  
	
 
  	
 
  	
 
  
	
2.11
  	
Earnings
  	
3
  
	
 
  	
 
  	
 
  
	
2.12
  	
Form of Payment Designation
  	
4
  
	
 
  	
 
  	
 
  
	
2.13
  	
Participant
  	
4
  
	
 
  	
 
  	
 
  
	
2.14
  	
Partnership
  	
4
  
	
 
  	
 
  	
 
  
	
2.15
  	
Plan
  	
4
  
	
 
  	
 
  	
 
  
	
2.16
  	
Plan Benefit
  	
4
  
	
 
  	
 
  	
 
  
	
2.17
  	
Plan Year
  	
4
  
	
 
  	
 
  	
 
  
	
2.18
  	
Phantom Unit
  	
4
  
	
 
  	
 
  	
 
  
	
2.19
  	
Remuneration
  	
5
  
	
 
  	
 
  	
 
  
	
2.20
  	
Separation from Service
  	
5
  
	
 
  	
 
  	
 
  
	
2.21
  	
Share
  	
5
  
	
 
  	
 
  	
 
  
	
2.22
  	
Total Disability
  	
5
  
	
 
  	
 
  	
 
  
	
ARTICLE 3
  	
PARTICIPATION AND DEFERRAL COMMITMENTS
  	
5
  
	
 
  	
 
  	
 
  
	
3.1
  	
Eligibility and Participation
  	
5
  

 

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3.2
  	
Form of Deferral
  	
6
  
	
 
  	
 
  	
 
  
	
3.3
  	
Commitment Limited by Termination
  	
6
  
	
 
  	
 
  	
 
  
	
3.4
  	
Modification of Deferral Commitment
  	
6
  
	
 
  	
 
  	
 
  
	
ARTICLE 4
  	
DEFERRED COMPENSATION ACCOUNT
  	
6
  
	
 
  	
 
  	
 
  
	
4.1
  	
Account
  	
6
  
	
 
  	
 
  	
 
  
	
4.2
  	
Determination of Accounts
  	
7
  
	
 
  	
 
  	
 
  
	
4.3
  	
Vesting of Accounts
  	
7
  
	
 
  	
 
  	
 
  
	
4.4
  	
Statement of Accounts
  	
8
  
	
 
  	
 
  	
 
  
	
ARTICLE 5
  	
PLAN BENEFITS
  	
8
  
	
 
  	
 
  	
 
  
	
5.1
  	
Benefits Upon Separation from Service
  	
8
  
	
 
  	
 
  	
 
  
	
5.2
  	
Death Benefit
  	
8
  
	
 
  	
 
  	
 
  
	
5.3
  	
Form of Payment
  	
8
  
	
 
  	
 
  	
 
  
	
5.4
  	
Valuation and Settlement
  	
9
  
	
 
  	
 
  	
 
  
	
5.5
  	
Payment to Guardian
  	
9
  
	
 
  	
 
  	
 
  
	
ARTICLE 6
  	
BENEFICIARY DESIGNATION
  	
10
  
	
 
  	
 
  	
 
  
	
6.1
  	
Beneficiary Designation
  	
10
  
	
 
  	
 
  	
 
  
	
6.2
  	
Changing Beneficiary
  	
10
  
	
 
  	
 
  	
 
  
	
6.3
  	
No Beneficiary Designation
  	
10
  
	
 
  	
 
  	
 
  
	
6.4
  	
Effect of Payment
  	
10
  
	
 
  	
 
  	
 
  
	
ARTICLE 7
  	
ADMINISTRATION
  	
11
  
	
 
  	
 
  	
 
  
	
7.1
  	
Committee; Duties
  	
11
  
	
 
  	
 
  	
 
  
	
7.2
  	
Agents
  	
11
  
	
 
  	
 
  	
 
  
	
7.3
  	
Binding Effect of Decisions
  	
11
  
	
 
  	
 
  	
 
  
	
7.4
  	
Indemnity of Committee
  	
11
  
	
 
  	
 
  	
 
  
	
7.5
  	
Election of Committee After Change in Control
  	
11
  
	
 
  	
 
  	
 
  
	
ARTICLE 8
  	
CLAIMS PROCEDURE
  	
12
  
	
 
  	
 
  	
 
  
	
8.1
  	
Claim
  	
12
  
	
 
  	
 
  	
 
  
	
8.2
  	
Denial of Claim
  	
12
  
	
 
  	
 
  	
 
  
	
8.3
  	
Review of Claim
  	
12
  
	
 
  	
 
  	
 
  
	
8.4
  	
Final Decision
  	
12
  
	
 
  	
 
  	
 
  
	
ARTICLE 9
  	
AMENDMENT AND TERMINATION OF PLAN
  	
13
  

 

ii

 

	
9.1
  	
Amendment
  	
13
  
	
 
  	
 
  	
 
  
	
9.2
  	
Company’s Right to Terminate
  	
13
  
	
 
  	
 
  	
 
  
	
ARTICLE 10
  	
MISCELLANEOUS
  	
14
  
	
 
  	
 
  	
 
  
	
10.1
  	
Unfunded Plan
  	
14
  
	
 
  	
 
  	
 
  
	
10.2
  	
Company Obligation
  	
14
  
	
 
  	
 
  	
 
  
	
10.3
  	
Unsecured General Creditor
  	
14
  
	
 
  	
 
  	
 
  
	
10.4
  	
Trust Fund
  	
14
  
	
 
  	
 
  	
 
  
	
10.5
  	
Nonassignability
  	
15
  
	
 
  	
 
  	
 
  
	
10.6
  	
Not a Contract of Employment
  	
15
  
	
 
  	
 
  	
 
  
	
10.7
  	
Protective Provisions
  	
15
  
	
 
  	
 
  	
 
  
	
10.8
  	
Governing Law
  	
15
  
	
 
  	
 
  	
 
  
	
10.9
  	
Validity
  	
15
  
	
 
  	
 
  	
 
  
	
10.10
  	
Notice
  	
15
  
	
 
  	
 
  	
 
  
	
10.11
  	
Successors
  	
16
  
	
 
  	
 
  	
 
  
	
10.12
  	
Section 409A of the Code
  	
16
  

 

iii

 

 

K-SEA TRANSPORTATION PARTNERS L.P.

 

DEFERRED COMPENSATION PLAN

 

ARTICLE 1

 

PURPOSE; EFFECTIVE DATE

 

1.1          Purpose

 

The purpose of this Deferred Compensation Plan is to provide tax planning opportunities and supplemental deferred compensation benefits to Employees of the Company and certain affiliates and to Board Members of the Company.

 

1.2          Effective Date

 

The Plan is effective                         , 2010.

 

ARTICLE 2

 

DEFINITIONS

 

For the purposes of this Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise:

 

2.1          Account

 

“Account” means the account maintained by the Company, including the subaccounts described in Section 4.1, to measure and determine the amounts to be paid to a Participant under the Plan. The maintenance of these Accounts is for recordkeeping purposes only and shall not require any segregation of assets.

 

2.2          Beneficiary

 

“Beneficiary” means the person, persons or entity as designated by the Participant, entitled under Article VI to receive any Plan Benefits payable after the Participant’s death.

 

2.3          Board

 

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

 

 

2.4          Change in Control

 

“Change in Control” means an occasion upon which (i) any ‘person’ (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as now in effect or as hereafter amended (‘Exchange Act’)) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Partnership or a corporation controlled by the Partnership, acquires (either directly and/or through becoming the ‘beneficial owner’ (as defined in Rule 13d-3 under the Exchange Act)), directly or indirectly, securities of the Partnership representing 30% or more of the combined voting power of the Partnership’s then outstanding securities (or has acquired securities representing 30% or more of the combined voting power of the Partnership’s then outstanding securities during the 12-month period ending on the date of the most recent acquisition of Partnership securities by such person); or (ii) during any period of twelve (12) consecutive months (not including any period prior to the adoption of this Plan), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Partnership to effect a transaction described in clauses (i) or (iii) of this Paragraph) whose election by the Board or nomination for election by the Partnership’s unitholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (iii) any of (a) the Partnership consummates a merger, consolidation, reorganization, recapitalization or statutory share exchange (a ‘Business Combination’), other than a Business Combination which would result in the voting securities of the Partnership outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power and at least 50% of the combined total fair market value of the securities of the Partnership or such surviving entity outstanding immediately after such Business Combination, (b) the Partnership’s shareholders approve a plan of complete liquidation of the Partnership, or (c) the Partnership completes the sale or other disposition of all or substantially all of its assets in one or a series of transactions.

 

2.5          Committee

 

“Committee” means the committee appointed by the Board to administer the Plan pursuant to Article VII. The initial Committee so designated by the Board shall be the Administrative Committee.

 

2.6          Company

 

“Company” means K-Sea General Partner GP LLC, a Delaware limited liability company and directly or indirectly affiliated subsidiary corporations, any other affiliate designated by the Board, or any successor to the business thereof.

 

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2.7          Deferral Commitment

 

“Deferral Commitment” means a commitment made by a Participant to defer a percentage or flat dollar amount of any or each of the three types of Remuneration pursuant to Article III.  The Deferral Commitment may, but need not, specify a different percentage or flat dollar amount in respect of (i) the Annual Bonus, (ii) Director Fees, and (iii) Phantom Unit Awards.  A specified percentage or a flat dollar amount of the Annual Bonus, Director Fees or Phantom Unit Awards may be deferred into the appropriate subaccount of a Participant’s Account.  A Deferral Commitment with respect to any form of Remuneration shall remain in effect until amended or revoked as provided under Section 3.2.

 

2.8          Deferral Period

 

“Deferral Period” means each calendar year with respect to an Annual Bonus or Director Fees and means the 30-day period following the grant of a Phantom Unit Award in the case of Phantom Unit Awards.

 

2.9          Determination Date

 

“Determination Date” means the last day of each calendar month.

 

2.10        Director

 

“Director” means a member of the Board of K-Sea General Partner GP, LLC.

 

2.11        Earnings

 

“Earnings” means, with respect to the subaccounts of a Participant’s Account associated with deferrals of an Annual Bonus or deferrals of Directors Fees, the earnings or losses attributable to any investment vehicles which the Committee may from time to time identify for such purpose. In so identifying one or more investment vehicles, the Committee may, in its discretion, establish a mechanism to allow each Participant to select which of the specified investment vehicles shall serve as the basis for determining Earnings with respect to the Participant’s applicable subaccounts. Alternatively, the Committee may, in its discretion, direct that the Earnings attributable to the Participant’s applicable subaccounts shall be determined by reference to a pre-determined investment vehicle or specified blend of investment vehicles.

 

2.11A         It is contemplated that during the time period that each Phantom Unit is outstanding, whenever a cash distribution is made by the Partnership with respect to actual outstanding Units, a corresponding cash distribution will be made to the Participant on whose behalf such Phantom Unit has been established. It is also contemplated that such corresponding cash distribution shall be made to each applicable Participant within thirty (30) days of the date the cash distributions are made to the holders of actual outstanding Units. Nevertheless, the Committee may, in its sole discretion, establish through the provisions of a Deferral Commitment a mechanism wherein such periodic cash distributions with respect to Phantom Units will be deferred until the date that payments are made with respect to the underlying Phantom Units. If such a mechanism is established, then with respect to a Participant’s

 

3

 

subaccount associated with deferrals of such Phantom Unit Awards, the term “Earnings” means an amount of cash equal to the cash distributions made by the Partnership with respect to an actual outstanding Unit during the period each such Phantom Unit is outstanding. The amount of such cash will be allocated to the Participant’s subaccount associated with deferrals of the Annual Bonus or Directors Fees, as the case may be, as of the date the corresponding cash distribution is made with respect to actual outstanding Units and shall then be credited with future Earnings in the same manner as the remaining balance of such subaccount. Alternatively, the Committee may, in its discretion, establish a mechanism wherein the amount of cash distributions deemed applicable to a Phantom Unit shall instead be converted into an additional fractional Phantom Unit, based upon the trading price of actual outstanding Units as of the day the corresponding cash distribution is made with respect to actual outstanding Units. Any such additional fractional Unit shall be allocated to the Participant’s subaccount associated with deferred Phantom Units and be subject to all the rules and elections attributable to such subaccount.

 

2.12        Form of Payment Designation

 

“Form of Payment Designation” means the form prescribed by the Committee and completed by the Participant, indicating the chosen form of payment for benefits payable under this Plan, as elected by the Participant.

 

2.13        Participant

 

“Participant” means any Employee or Director who is eligible, pursuant to Section 3.1, to participate in this Plan, and who has elected to defer any form of Remuneration under this Plan.

 

2.14        Partnership

 

“Partnership” means K-Sea Transportation Partners L.P., a Delaware limited partnership.

 

2.15        Plan

 

“Plan means this Deferred Compensation Plan as amended from time to time.

 

2.16        Plan Benefit

 

“Plan Benefit” means the benefit payable to the Participant as calculated in Article V.

 

2.17        Plan Year

 

“Plan Year” means the consecutive twelve (12) month period ending on each December 31.

 

2.18        Phantom Unit

 

“Phantom Unit” means a phantom (notational) unit issued under the authority of the K-

 

4

 

Sea Transportation Partners L.P. Long-Term Incentive Plan, or any successor of such plan, which has a value equal to the value of one Share.

 

2.19        Remuneration

 

“Remuneration” means certain forms of compensation otherwise payable to the Participant by the Company.  The term Remuneration shall include (i) the Annual Bonus, (ii) Director Fees and (iii) Phantom Unit Awards.

 

2.20        Separation from Service

 

“Separation from Service” means the definition set forth in Treas. Reg. § 1.409A-1(h).

 

2.21        Share

 

“Share” means a common unit of the Partnership that is publicly traded on the New York Stock Exchange.

 

2.22        Total Disability

 

“Total Disability” means the incurrence of a physical or mental condition which prevents a Participant from engaging in the performance of his or her duties on an apparently permanent basis and which qualifies as a disability for purposes of IRC Section 409A.

 

ARTICLE 3

 

PARTICIPATION AND DEFERRAL COMMITMENTS

 

3.1      Eligibility and Participation.

 

(a)           Eligibility. Eligibility to participate in the Plan shall be limited to individuals who are Directors and to individuals who are selected by the Committee for eligibility to participate in this Plan from the management and highly compensated employee workforce of the Company (“Employees”).

 

(b)           Participation. A Director’s participation in the Plan shall be effective upon election to the Board of Directors of the Company and an Employee’s participation in the Plan shall be effective upon the identification of such Employee as an eligible Participant by the Committee, together, in the case of both a Director and an Employee with the completion and submission of a Deferral Commitment and a Form of Payment Designation to the Committee.  In the case of deferrals of the Annual Bonus or Directors Fees, the Deferral Commitment must be filed by the thirtieth (30th) day of the second (2nd) month immediately preceding the beginning of the Deferral Period. In the case of deferrals of a Phantom Unit Award, the Deferred Commitment must be filed before the end of the applicable Deferral Period.  Such Deferral Commitment and Form of Payment Designation shall remain in effect with respect to each

 

5

 

succeeding Deferral Period, until such time as another Deferral Commitment is filed with the Committee as described in Section 3.2(b) below.

 

(c)           Part-Year Participation. When an individual first becomes eligible to participate during a Deferral Period, a Deferral Commitment may be submitted to the Committee within thirty (30) days after the Committee notifies the individual of eligibility to participate. Such Deferral Commitment will be effective only with regard to Remuneration earned following submission of the Deferral Commitment to the Committee.

 

3.2          Form of Deferral

 

A Participant may elect a Deferral Commitment as follows:

 

(a)           Form of Deferral Commitment. A Deferral Commitment shall apply to each installment of the applicable form of Remuneration otherwise payable by the Company to a Participant during the Deferral Period. The Deferral Commitment shall, if applicable, provide for all necessary investment instructions with respect to deferred Remuneration.

 

(b)           Period of Commitment. Once a Participant has made a Deferral Commitment, that Commitment shall remain in effect for that Deferral Period and shall remain in effect for all future Deferral Periods unless revoked or amended in writing by the Participant and delivered to the Committee no later than November 30 of the year preceding the Deferral Period for which it is in intended to be effective.

 

3.3          Commitment Limited by Termination

 

If a Participant terminates from the Board of the Company or, in the case of an Employee, incurs a Separation from Service prior to the end of the Deferral Period, the Deferral Period shall end as of the date of termination or Separation from Service, as the case may be...

 

3.4          Modification of Deferral Commitment

 

A Deferral Commitment shall be irrevocable by the Participant during a Deferral Period.

 

ARTICLE 4

 

DEFERRED COMPENSATION ACCOUNT

 

4.1          Account

 

For recordkeeping purposes only, an Account shall be maintained for each Participant and shall be subject to periodic credits and adjustments as described herein.  A separate subaccount shall be maintained within the Account to reflect deferrals attributable to (i) the

 

6

 

Annual Bonus, (ii) Director Fees and (iii) Phantom Unit Awards, as the case may be.  In addition, the Committee may, in its sole discretion at any time and from time to time, implement a mechanism to provide for the allocation of employer-originated contributions to a Participant’s Account in the Plan. Such employer-originated contributions may include, by way of example and not limitation, amounts reflecting matching contributions which could not be allocated to the Participant’s account in an IRC Section 401(k) plan due to various legal limitations and discretionary employer contributions. Any such employer-originated contributions shall be allocated to separate subaccounts of the Participant then designed for such purpose. Such separate subaccounts shall, to the extent then vested, be distributed in the form of a lump sum upon the Participant’s Separation from Service except to the extent that a procedure is established to allow a Participant to file a Deferral Commitment and Form of Payment Designation with respect to such subaccount.  The Account shall be a book-keeping device utilized for the sole purpose of determining the benefits payable under the Plan and shall not constitute a separate fund of assets.

 

4.2          Determination of Accounts

 

Each Account as of each Determination Date shall consist of the balance of all subaccounts within the Account as of the immediately preceding Determination Date, adjusted as follows:

 

(a)           New Deferrals. The appropriate subaccount of each Account shall be increased by any deferred Remuneration credited since such Determination Date and any amount treated as a Phantom Unit cash distribution credit under Section 2.11.

 

(b)           Distributions. The Account shall be reduced by any benefits distributed to the Participant since such immediately preceding Determination Date.

 

(c)           Earnings. The Account shall be increased by the Earnings on the average daily balance in the Account since such immediately preceding Determination Date.

 

4.3          Vesting of Accounts

 

A Participant shall be one hundred percent (100%) vested at all times in the amount of any Annual Bonus or Director Fee elected to be deferred under this Plan and Earnings thereon credited to the Participant’s Account and shall have a vested interest in any Phantom Unit Awards which is based upon the vesting provisions associated with such Phantom Unit Award under the K-Sea Transportation Partners L.P. Long-Term Incentive Plan.  Finally, in the event that a separate subaccount is established to provide for the deferral of an employer-originated contribution as described in Section 4.1, the document announcing such contribution shall specify the vesting schedule, if any, applicable to such contribution.

 

7

 

4.4          Statement of Accounts

 

The Committee shall give to each Participant a statement showing the balances in the Participant’s Account (including all subaccounts maintained for such Account, to the extent applicable) both on an annual basis and at such times as may be determined by the Committee.

 

ARTICLE 5

 

PLAN BENEFITS

 

5.1          Benefits Upon Separation from Service

 

If a Deferral Commitment has specified that any portion of an Account shall be paid upon a specified date, payment shall be made on such date unless the Participant incurs a Separation from Service prior to such date due to death or the incurrence of Total Disability or incurs a Separation from Service for any reason after a Change in Control of the Company in which case payments shall commence within sixty (60) days of the date of such Separation from Service due to death, Total Disability or Separation from Service after a Change in Control of the Company.  If a Participant incurs a Separation from Service for any reason other than death, Total Disability or a Separation from Service after a Change in Control of the Company, the Company shall pay the Participant benefits equal to the full vested balance in the Participant’s Account.  If a Participant incurs a Separation from Service due to Death, Total Disability or incurs a Separation from Service for any reason after a Change in Control of the Company, the Participant’s benefits shall be based upon the full balance of the Participant’s Account, whether or not previously vested.

 

5.2          Death Benefit

 

Upon the death of the Participant, the Company shall pay to the Participant’s Beneficiary an amount determined as follows:

 

(a)           If the Participant dies prior to a Separation from Service, the amount payable under this paragraph shall be in lieu of any other benefit payment under this Plan and shall equal the full balance of the Participant’s Account, whether or not vested.

 

(b)           If the Participant dies after a Separation from Service, the amount payable shall be equal to the remaining unpaid vested balance of the Participant’s Account.

 

5.3          Form of Payment

 

Retirement, termination and death benefits, attributable to a Participant’s Account shall be paid in the form of benefit as provided below, specified by the Participant in the Form of

 

8

 

Payment Designation unless the benefit is based on a “small account” as defined in Subsection (c) below. Payments shall commence no later than sixty (60) days after all information necessary to calculate the benefit amount has been received by the Company following the date of Retirement, termination, or death.  The Form of Payment Designation selected in (a) or (b) below shall be for the entire Account.  If upon termination or Retirement, the Participant’s most recent election as to the form of payment was made within one (1) year of such termination or Retirement, then the prior election shall be used to determine the form of payment. The forms of benefit payment associated with the Account are:

 

(a)           A lump-sum amount which is equal to the balance of the Account; or

 

(b)           Equal annual installments which are equal to the Account amortized over a period of up to five (5), ten (10), fifteen (15) or twenty (20) years.

 

Earnings shall continue to be credited on the unpaid balance of the Account in connection with payments made on an installment basis.  In the event that a Participant dies prior to receipt of all installments payable in connection with an elected installment payment method, the Beneficiary of the remaining payments may request the Committee to accelerate the payment of some or all of the remaining installments. The Committee may consider any such request in its sole discretion but shall not be bound to grant any such request.

 

(c)           Small Account.  If the aggregate value of the Participant’s Account is under fifty thousand dollars ($50,000) on the Valuation Date as defined in Section 5.4, the benefit shall be paid in a lump sum.

 

With respect to distributions involving Phantom Units, Shares or cash, as determined in the discretion of the Committee, shall be distributed in an amount equal to the number and value of Phantom Units associated with such distributions.

 

5.4          Valuation and Settlement

 

If applicable, the specific date designated by the Participant in a Deferral Commitment, or if no such date is designated, the last day of the month in which the Participant incurs a Separation from Service, or, if a Participant dies prior to a Separation from Service, the last day of the month in which the Participant dies shall be the Valuation Date. The amount of any lump sum payment and the initial amount of installments shall be based on the value of the Participant’s Account balance on the Valuation Date. The date on which a lump sum is paid or the date on which installments commence shall be the settlement date. The settlement date shall be no more than sixty-five (65) days after the Valuation Date. All payments shall be made as of the first (1st) day of the month.

 

5.5          Payment to Guardian

 

If a Plan Benefit is otherwise payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of property, the Committee may direct payment to

 

9

 

the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Committee may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution. Such distribution shall completely discharge the Committee, the Partnership and the Company from all liability with respect to such benefit.

 

ARTICLE 6

 

BENEFICIARY DESIGNATION

 

6.1          Beneficiary Designation

 

Each Participant shall have the right, at any time, to designate one (1) or more persons or entities as Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of Participant’s death prior to complete distribution of the Participant’s Account balance. Each Beneficiary designation shall be in a written form prescribed by the Committee and shall be effective only when filed with the Committee during the Participant’s lifetime.

 

6.2          Changing Beneficiary

 

Any Beneficiary designation may be changed by an unmarried Participant without the consent of the previously named Beneficiary by the filing of a new Beneficiary designation with the Committee.  The filing of a new designation shall cancel all designations previously filed.

 

6.3          No Beneficiary Designation

 

If any Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary designated by a deceased Participant dies before the Participant or before complete distribution of the Participant’s benefits, the Participant’s Beneficiary shall be the person in the first of the following classes in which there is a survivor:

 

(a)           The Participant’s surviving spouse;

 

(b)           The Participant’s children in equal shares, except that if any of the children predeceases the Participant but leaves issue surviving, then such issue shall take, by right of representation, the share the deceased child would have taken if living;

 

(c)           The Participant’s estate.

 

6.4          Effect of Payment

 

Payment to the Beneficiary shall completely discharge the Company’s obligations under this

 

10

 

Plan.

 

ARTICLE 7

 

ADMINISTRATION

 

7.1          Committee; Duties

 

This Plan shall be administered by the Committee, which shall consist of not less than three (3) persons appointed by the Board, except after a Change in Control as provided in Section 7.5 below. The Committee shall have the authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of the Plan, as may arise in such administration. A majority vote of the Committee members shall control any decision. Members of the Committee may be Participants under this Plan.

 

7.2          Agents

 

The Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company.

 

7.3          Binding Effect of Decisions

 

The decision or action of the Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

 

7.4          Indemnity of Committee

 

The Company shall indemnify and hold harmless the members of the Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan on account of such member’s service on the Committee, except in the case of gross negligence or willful misconduct.

 

7.5          Election of Committee After Change in Control

 

After a Change in Control, vacancies on the Committee shall be filled by majority vote of the remaining Committee members and Committee members may be removed only by such a vote. If no Committee members remain, a new Committee shall be elected by majority vote of the Participants in the Plan immediately preceding such Change in Control. No amendment shall be made to Article VII or other Plan provisions regarding Committee authority with respect to

 

11

 

the Plan without prior approval by the Committee.

 

ARTICLE 8

 

CLAIMS PROCEDURE

 

8.1          Claim

 

Any person or entity claiming a benefit, requesting an interpretation or ruling under the Plan (hereinafter referred to as “Claimant”), or requesting information under the Plan shall present the request in writing to the Committee, which shall respond in writing as soon as practicable.

 

8.2          Denial of Claim

 

If the claim or request is denied, the written notice of denial shall state:

 

(a)           The reasons for denial, with specific reference to the Plan provisions on which the denial is based;

 

(b)           A description of any additional material or information required and an explanation of why it is necessary; and

 

(c)           An explanation of the Plan’s claim review procedure.

 

8.3          Review of Claim

 

Any Claimant whose claim or request is denied or who has not received a response within sixty (60) days may request a review by notice given in writing to the Committee. Such request must be made within sixty (60) days after receipt by the Claimant of the written notice of denial, or in the event Claimant has not received a response sixty (60) days after receipt by the Committee of Claimant’s claim or request. The claim or request shall be reviewed by the Committee which may, but shall not be required to, grant the Claimant a hearing. On review, the Claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

 

8.4          Final Decision

 

The decision on review shall normally be made within sixty (60) days after the Committee’s receipt of the Claimant’s claim or request. If an extension of time is required for a hearing or other special circumstances, the Claimant shall be notified and the time limit shall be one hundred twenty (120) days. The decision shall be in writing and shall state the reasons and the relevant Plan provisions. All decisions on review shall be final and bind all parties concerned.

 

12

 

ARTICLE 9

 

AMENDMENT AND TERMINATION OF PLAN

 

9.1          Amendment

 

The Board may at any time amend the Plan by written instrument, notice of which is given to all Participants and to Beneficiaries receiving installment payments, subject to the following:

 

(a)           Preservation of Account Balance. No amendment shall reduce the amount accrued in any Account to the date such notice of the amendment is given.

 

(b)           Changes in Earnings Rate. No amendment shall reduce, either prospectively or retroactively, the rate of Earnings to be credited to the amount already accrued in a Participant’s Account and any Remuneration to be credited to the Account under Deferral Commitments already in effect on that date.

 

The Board may also effectuate an amendment to the Plan through a written Board resolution which shall be viewed as part of this Plan.  If such resolution applies to fewer then all Participants and Beneficiaries, then only those Participants and Beneficiaries who are directly affected by such resolution need be given notice of such resolution.

 

9.2          Company’s Right to Terminate

 

The Board may at any time partially or completely terminate the Plan if, in its judgment, the tax, accounting or other effects of the continuance of the Plan, or potential payments thereunder would not be in the best interests of Company.

 

(a)           Partial Termination. The Board may partially terminate the Plan by instructing the Committee not to accept any additional Deferral Commitments. If such a partial termination occurs, the Plan shall continue to operate and be effective with regard to Deferral Commitments entered into prior to the effective date of such partial termination.

 

(b)           Complete Termination. The Board may completely terminate the Plan by instructing the Committee not to accept any additional Deferral Commitments, and by terminating all ongoing Deferral Commitments. In the event of complete termination, the Plan shall cease to operate and Company shall pay out each Account.  Payment of an Account shall be made as a lump sum or in equal monthly installments, based on the Account balance, provided, however, that in the event of a complete termination of the Plan subsequent to a Change in Control, payment of the entire Account in a lump sum will be made no more than thirty (30) days subsequent to the effective date of such complete termination. Notwithstanding the above, the payment of any portion of an Account which is subject to Section 409A and the conversion of Phantom Stock Units into Shares may not be accelerated except in compliance with the provisions of Treas. Reg. Section 1.409A-3(j)(4)(ix) or such other events and conditions which may be permitted in generally applicable guidelines published in the Internal Revenue Bulletin.

 

13

 

The Board reserves any discretion to distribute benefits in accordance with the requirements of such regulations and/or such guidelines

 

Earnings shall continue to be credited on the unpaid balance in each Account.

 

ARTICLE 10

 

MISCELLANEOUS

 

10.1        Unfunded Plan

 

This Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly-compensated employees” within the meaning. of Sections 201, 301 and 401 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, the Board may terminate the Plan and make no further benefit payments or remove certain employees as Participants if it is determined by the United States Department of Labor, a court of competent jurisdiction, or an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA (as currently in effect or hereafter amended) which is not so exempt.

 

10.2        Company Obligation

 

The obligation to make benefit payments to any Participant under the Plan shall be an obligation solely of the Company.

 

10.3        Unsecured General Creditor

 

Except as provided in Section 10.4, Participants and Beneficiaries shall be unsecured general creditors, with no secured or preferential right to any assets of Company or any other party for payment of benefits under this Plan. Any property held by Company for the purpose of generating the cash flow for benefit payments shall remain its general, unpledged and unrestricted assets. Company’s obligation under the Plan shall be an unfunded and unsecured promise to pay money in the future.

 

10.4        Trust Fund

 

Company shall be responsible for the payment of all benefits provided under the Plan. At its discretion, Company may establish one (1) or more Trusts, with such Trustees as the Board may approve, for the purpose of providing for the payment of such benefits. Although such a Trust shall be irrevocable, its assets shall be held for payment of all of Company’s general creditors in the event of insolvency. To the extent any benefits provided under the Plan are paid from any such Trust, Company shall have no further obligation to pay them. If not paid from the Trust, such benefits shall remain the obligation of Company.

 

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10.5        Nonassignability

 

Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

 

10.6        Not a Contract of Employment

 

This Plan shall not constitute a contract of employment between Company and the Participant. Nothing in this Plan shall give a Participant the right to be retained in the service of Company or to interfere with the right of Company to discipline or discharge a Participant at any time.

 

10.7        Protective Provisions

 

A Participant will cooperate with Company by furnishing any and all information requested by Company, in order to facilitate the payment of benefits hereunder, and by taking such other action as may be requested by Company.

 

10.8        Governing Law

 

The provisions of this Plan shall be construed and interpreted according to the laws of the State of New York, except as preempted by federal law.

 

10.9        Validity

 

If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

 

10.10      Notice

 

Any notice required or permitted under the Plan shall be sufficient if in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Committee shall be directed to the Company’s address. Mailed notice to a Participant or Beneficiary shall be directed to the individual’s last known address in Company’s records.

 

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10.11      Successors

 

The provisions of this Plan shall bind and inure to the benefit of Company and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of Company, and successors of any such corporation or other business entity.

 

10.12      Section 409A of the Code

 

To the extent that such requirements are applicable, the Plan is intended to comply with the requirements of Section 409A and shall be interpreted and administered in accordance with that intent.  If any provision of the Plan would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the conflict. The nature of any such amendment shall be determined by the Board.  Notwithstanding the above, if the Participant qualifies as a “specified employee,” as defined in Treas. Reg. Section 1.409A-1(i), incurs a Separation from Service for any reason other than death and becomes entitled to a distribution under the Plan, then to the extent required by Section 409A, no distribution otherwise payable to the Participant during the first six (6) months after the date of such Separation from Service, shall be paid to the Participant until the date which is one day after the date which is six (6) months after the date of such separation from service (or, if earlier, the date of the Participant’s death).

 

	
 
  	
K-SEA GENERAL PARTNER G.P. LLC
  
	
 
  	
 
  
	
 
  	
By:
  	
 
  
	
 
  	
 
  	
Its
  
	
 
  	
 
  
	
 
  	
Dated:
  	
 
  
				

 

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