Document:

EXHIBIT 10.58

 

 

February 18, 2010

 

Grantee Name

Grantee Address

City, State  Zip

 

Re:                               Grant of Phantom Units

 

Dear Grantee:

 

I am pleased to inform you that you have been granted            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) one-third shall vest upon the later to occur of the May 2013 Distribution Date and the date on which the Partnership pays a quarterly distribution of at least $0.975, (ii) one-third shall vest upon the later to occur of the May 2014 distribution date and the date the Partnership pays a quarterly distribution of at least $1.0125, and (iii) one-third shall vest upon the later to occur of the May 2015 distribution date and the date the Partnership pays a quarterly distribution of at least $1.05.  Any remaining Phantom Units that are not vested by the May 2016 Distribution Date, and any tandem DERs (regardless of vesting) associated with such Phantom Units, shall expire on such date.

 

2.               Subject to the further provisions of this Agreement, your DERs shall vest (become payable in cash) as follows: (i) one-third shall vest upon and effective with the date on which the Partnership pays a quarterly distribution of at least $0.975 per unit, (ii) one-third shall vest upon and effective with the date on which the Partnership pays a quarterly distribution of at least $1.0125 per unit, and (iii) one-third shall vest upon and effective with the date on which the Partnership pays a quarterly distribution of at least $1.05 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.

 

333 Clay Street, Suite 1600  ·  Houston, Texas  77002  ·  713/646-4100 or 800-564-3036

 

 

5.               Subject to the further provisions of this Agreement, your DERs shall vest (become payable in cash) as follows: (i) one-third shall vest upon and effective with the date on which the Partnership pays a quarterly distribution of at least $0.975 per unit, (ii) one-third shall vest upon and effective with the date on which the Partnership pays a quarterly distribution of at least $1.0125 per unit, and (iii) one-third shall vest upon and effective with the date on which the Partnership pays a quarterly distribution of at least $1.05 per unit.

 

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

 

7.               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.

 

8.               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: (i) 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; (ii) any DERs associated with the unvested, nonforfeitable Phantom Units described in clause (i) shall not be forfeited on the date of termination, but shall be payable and shall expire in accordance with paragraph 5 above; and (iii) any unvested Phantom Units that have satisfied none of the vesting criteria as of the date of termination, and any tandem DERs (regardless of vesting) associated with such Phantom Units, shall automatically be forfeited as of the date of termination.

 

9.               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”), your then outstanding Phantom Units and tandem DERs shall not be forfeited on such date, and (i) such DERs shall vest in accordance with paragraph 2 above and expire in accordance with paragraph 1 or paragraph 5 above, as applicable, and  (ii) such Phantom Units shall vest or expire in accordance with paragraph 1 above; provided, however, that such vesting of Phantom Units shall occur either (x) on the date the Partnership pays the quarterly distribution specified in clause (i), (ii) or (iii) of paragraph 1 (and in the proportion indicated therein) without regard to any requirement for further passage of time or (y) if the relevant quarterly distribution has been paid prior to the date of termination, on the next following Distribution Date.

 

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As soon as administratively practicable after the vesting of any Phantom Units pursuant to this paragraph 7, payment will be made in cash in an amount equal to the Market Value of the number of Phantom Units vesting.

 

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

 

11.         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 day in February, May, August or November in any year (as context dictates) that is 45 days after the end of the most recently completed calendar quarter (or, if not a business day, the closest previous business day). “Market Value” means the average of the closing sales prices for a Common Unit on the New York Stock Exchange for the five trading days preceding the then most recent “ex dividend” date for payment of a distribution by the Partnership.

 

The phrase “Change in Status” means (A) the termination of your employment by the Company other than a Termination for Cause, within two and a half months prior to or one year following a Change of Control (the “Protected Period”), or (B) the termination of your employment by you due to the occurrence during the Protected Period, without your written consent, of (i) any material diminution in your authority, duties or responsibilities, (ii) any material reduction in your base salary or (iii) any other action or inaction that constitutes a material breach of this agreement by the Company.  A termination by you shall not be a Change in Status unless (1) you provide written notice to the Company of the condition in (B)(i),(ii) or (iii) that would constitute a Change in Status within 90 days of the initial existence of the condition and (2) the Company fails to remedy the condition within the 30-day period following such notice. As used herein, a termination of the Employee’s employment means a “separation from service,” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

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 retain direct or indirect control 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

 

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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 after the date hereof the beneficial owner, directly or indirectly, of more than 49.9% of the membership interest in the Company.  Notwithstanding the foregoing, no Change of Control shall be deemed to have occurred in connection with a restructuring or reorganization related to a securitization and sale to the public of direct or indirect equity interests in the general partner if (x) the Company retains direct or indirect control over the general partner and (y) the Persons who own membership interests in the Company on the date hereof continue to beneficially own, directly or indirectly, more than 50% of the membership interest 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.

 

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In order for this grant to be effective you must designate a beneficiary that will be entitled to receive any benefits payable under this grant in the event of your death.  Unless you indicate otherwise by checking the appropriate box the named beneficiaries on this form will serve as your beneficiaries for all previous LTIP grants.  Please execute and return a copy of this grant letter to me and retain a copy for your records.

 

	
 
    	
PLAINS ALL AMERICAN PIPELINE, L.P.
    
	
 
    	
 
    
	
 
    	
By: PAA GP LLC
    
	
 
    	
By: PLAINS AAP, L.P.
    
	
 
    	
 
    
	
 
    	
By: PLAINS ALL AMERICAN GP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    	
Tim   Moore
    
	
 
    	
Title:   
    	
Vice   President & General Counsel
    

 

Beneficiary Designation

 

	
Primary Beneficiary Name
    	
 
    	
Relationship
    	
 
    	
Percent   (Must total 100%)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
Secondary Beneficiary Name
    	
 
    	
Relationship
    	
 
    	
Percent   (Must total 100%)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

o Check this box only if designation does not apply to prior grants

 

	
 
    	
 
    
	
Grantee   Name
    	
 
    
	
 
    	
 
    
	
No. of   Units:
    	
 
    	
 
    
	
 
    	
 
    
	
Dated:
    	
 
    	
 
    
				

 

5Exhibit 10.59

 

September 27, 2010

 

John R. Rutherford

5568 Candlewood Lane

Houston, TX 77056

 

Dear John:

 

Pursuant to our discussions, the following shall set forth the employment agreement (this “Agreement”) between Plains All American GP LLC (the “Company”) and John R. Rutherford (“Executive”).

 

1.             Title and Position.  Executive’s position will be Executive Vice President of the Company with primary responsibility for acquisitions and strategic planning.  Executive will report to the Chairman and Chief Executive Officer (“CEO”) and/or President and Chief Operating Officer (“COO”) as appropriate for the circumstances.

 

2.             Compensation.  Executive’s compensation will include:

 

a.                                       Base Salary.  A monthly salary of $20,833.33, payable semi-monthly in cash for so long as Executive is employed by the Company.  This amount may be increased by the Company from time to time, but may not be decreased from this base level, or any future increased level, without Executive’s express written approval.

 

b.                                      Bonus.  Executive will participate in the Company’s annual discretionary bonus program.  The amount of bonus recommended to the Board annually with respect to Executive will be dependent upon the CEO and COO’s assessments of both Executive’s individual contributions throughout the year and the overall partnership performance.  Subject to the continued service requirements described below, for calendar years 2010, 2011 and 2012, Executive’s annual bonuses will not be less than $1 million (the “Minimum Annual Bonuses”); provided that, for calendar year 2010, Executive’s Minimum Annual Bonus shall be prorated based on his official start date with the Company. The Minimum Annual Bonuses shall be paid in cash on the earlier of the date that the annual bonus payments are made to the other participants in the annual discretionary bonus program or February 28th of the year following the applicable calendar year. The Company’s obligation to pay a Minimum Annual Bonus is contingent upon (i) Executive’s remaining employed by the Company as of the date on which the applicable Minimum Annual Bonus payment is due (unless Executive’s failure to remain employed

 

 

results from a “Change in Status,” as defined below) and (ii) continued compliance with the terms of the Confidentiality Agreement, as defined in Section 5 below. The phrase “Change in Status” means (A) the termination of Executive’s employment by the Company other than a Termination for Cause, or (B) the termination of Executive’s employment by Executive due to the occurrence, without Executive’s written consent, of (i) any material diminution in authority, duties or responsibilities, (ii) any material reduction in base salary or (iii) any other action or inaction that constitutes a material breach of this agreement by the Company.  A termination by Executive shall not constitute a Change in Status unless (1) Executive provides written notice to the Company of the condition in (B)(i),(ii) or (iii) that would constitute a Change in Status within 90 days of the initial existence of the condition, (2) the Company fails to remedy the condition within the 30-day period following such notice and (3) you terminate your employment within 10 days of the end of the 30-day period. As used herein, a termination of the Employee’s employment means a “separation from service,” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). “Termination for Cause” shall have the meaning ascribed in the LTIP Grant letter referenced in sub-paragraph c. below.

 

c.                                       LTIP Grant.  Executive will receive an initial grant of 100,000 Phantom Units under the Company’s Long-Term Incentive Plan (LTIP) that vest upon the achievement of both performance and minimum service as follows:

 

	
Vest
    	
 
    	
Performance
   Qtrly distribution (Annual Rate)
    	
 
    	
Minimum
   Service
    
	
25%
    	
 
    	
$0.975/unit ($3.90/unit)
    	
 
    	
2 yr. Anniv. 2012*
    
	
25%
    	
 
    	
$0.975/unit ($3.90/unit)
    	
 
    	
May 2013
    
	
25%
    	
 
    	
$1.0125/unit ($4.05/unit)
    	
 
    	
May 2014
    
	
25%
    	
 
    	
$1.05/unit ($4.20/unit)
    	
 
    	
May 2015
    

*earliest vesting will occur on the first distribution date following the anniversary

 

Grants include distribution equivalent rights (DERs) that vest upon achievement of performance benchmarks.

 

The terms of Executive’s grant of Phantom Units are generally set forth in the form exemplar LTIP Grant letter that has been provided to Executive contemporaneously herewith; provided, however, that in the event of a “change of control” (as defined in the LTIP Grant letter) within the first year of Executive’s employment, 25% of Executive’s Phantom Units will automatically vest if a Change of Status occurs within one year of such change of control.

 

d.                                      Class B Units.  Executive will receive an initial grant of 10,000 Class B units in Plains AAP, L.P. that earn and vest as follows:

 

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Earn
    	
 
    	
Performance
   Qtrly distribution (Annual Rate)
    	
 
    	
Minimum
   Vest Service
    
	
25%
    	
 
    	
$0.975/unit ($3.90/unit)
    	
 
    	
(1)
    
	
25%
    	
 
    	
$1.0125/unit ($4.05/unit)
    	
 
    	
(1)
    
	
25%
    	
 
    	
$1.05/unit ($4.20/unit)
    	
 
    	
(1)
    
	
25%
    	
 
    	
$1.125/unit ($4.50/unit)
    	
 
    	
(1)
    

 

(1)    Executive will “earn” each tranche of units as described above 180 days after achievement of the respective performance benchmarks.  Prior to January 2017, the Company retains a call right on “earned” units such that, if Executive terminates his employment prior to:

 

a.               January 2015, the call right is 50% of the fair market value of Earned Units on date of departure;

 

b.              January 2017, but after January 2015, the call right is 75% of the fair market value of Earned Units on date of departure.

 

The Company’s call right must be exercised within sixty (60) days of Executive’s termination, otherwise such units shall vest and not be subject to being called.

 

The remaining terms of Executive’s grant of Class B units are generally set forth in the form exemplar Class B Restricted Units Agreement that has been provided to Executive contemporaneous herewith; provided, however, that: (a) in the event of a “change of control” (as defined in the Class B Restricted Units Agreement) within the first year of Executive’s employment, 25% of Executive’s Class B units will automatically vest if he is terminated other than for “Cause” (as defined in the Class B Restricted Units Agreement) within one year of such change of control; and (b) in the event of a change of control after the first year of Executive’s employment, Executive will vest in any “earned” tranches of Class B units (without regard to the 180 day lag period) as well as the next succeeding incremental tranche of Class B units upon the change of control (without regard to Executive’s employment status) and any unvested units will be canceled.

 

3.             Expense Reimbursement.  Company shall reimburse Executive for all reasonable business expenses, including travel and entertainment, and membership dues at one country club or athletic club.

 

4.             Benefits.  Executive shall receive and be entitled to other employment benefits, including: (a) four weeks paid vacation, (b) up to 10 days sick leave with pay, (c) participation in the Company’s 401(K) Plan, and (d) all health and welfare benefits, including insurance, provided to other senior executives of the Company, on the same basis and terms as other senior executives of the Company.

 

5.             Confidentiality and Non-Solicitation.  Executive and the Company shall execute a Confidential Information and Non-Solicitation Agreement (the “Confidentiality Agreement”) substantially in the form of Exhibit “A” attached hereto.  The rights and obligations set forth in the Confidentiality Agreement shall survive the termination of this Agreement.

 

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6.             Commencement of Employment; Term and Termination.  Employment of Executive shall commence on October 1, 2010.  Either party may terminate Executive’s employment at any time; however, such termination shall not affect the provisions of this Agreement, including those in sections 2 and 5, that create post-employment duties and rights.

 

7.             Company acknowledges receipt of Executive’s agreements with Lazard, as provided to the Company by Executive.  Executive represents that: (a) his execution of this Agreement will not violate the terms of any Agreement to which he is currently bound; and (b) he is not subject to an existing confidentiality, non-compete or similar type Agreement that would prevent, limit or otherwise encumber Executive’s ability to perform his job with the Company.  Executive undertakes to bring to the Company’s attention any change of job description or other circumstance that would potentially breach the confidentiality and non-compete aspects of the Lazard agreements, and the Company undertakes to cooperate in commercially reasonable, good faith efforts to reduce or remove the potential for breach.

 

8.             Upon termination of his employment for any reason, Executive shall promptly return to Company all copies of any Company data, records, or materials of whatever nature or kind, including all materials incorporating the proprietary information of Company.

 

9.             If the parties determine, or the Internal Revenue Service asserts, that any payments or benefits to be made or provided to Executive hereunder do not comply with Section 409A of the Internal Revenue Code, then the parties agree to mutually take such actions as are reasonably necessary or appropriate to ensure compliance with Section 409A.

 

10.           Notwithstanding the foregoing, this Agreement is subject to and contingent upon a satisfactory background check in which information that Executive has provided regarding items such as education, work experience, criminal record and professional credentials will be verified.  Executive may be asked to provide additional information or assist in the process if Company encounters any difficulties in the verification of this information.  If any of the information is found to be untrue or misrepresented, this offer will be withdrawn, or, if employed, Executive’s employment will be terminated.

 

11.           By accepting this offer, Executive agrees that he shall at all times:

 

a.                     adhere to the Company’s Trading and Risk Management Policies and Procedures,

 

b.                    adhere to the Company’s Code of Business Conduct, and

 

c.                     not misrepresent nor conceal information regarding transactions from senior management or any person responsible for the accurate recording and reporting of each transaction.

 

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If the foregoing meets with your understanding of our agreement, please execute, date and return one original Agreement for our files.

 

	
 
    	
 
    	
Very truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
PLAINS ALL AMERICAN GP LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: 
    	
Greg L. Armstrong
    
	
 
    	
 
    	
Title: 
    	
Chairman and CEO
    
	
 
    	
 
    	
 
    
	
AGREED   TO AND ACCEPTED
    	
 
    	
 
    
	
this                day   of September, 2010
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
John   R. Rutherford

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