Document:

Exhibit 10.6

 

DIRECTOR AND OFFICER INDEMNITY
AGREEMENT

 

This agreement
(the “Agreement”) is made and entered into as of the        
day of                  ,
2007, by and between OSG America L.P., a Delaware limited partnership (the “Partnership”),
and [Name], (the “Indemnitee”).

 

RECITALS

 

A.            The Indemnitee is an [Office] of OSG
America LLC, a Delaware limited liability company and the general partner of
the Partnership (the “General Partner”).

 

B.            Both the Partnership and the Indemnitee
recognize the increased risk of litigation and other claims being asserted
against directors and officers of public entities in today’s environment.

 

C.            Section 17-108 of the Delaware
Revised Uniform Limited Partnership Act, 6 Del. C. Section 17-101, et seq., (the “Act”) expressly recognizes that,
subject to such standards and restrictions as may be set forth in its
partnership agreement, a limited partnership may, and shall have the power to,
indemnify and hold harmless any person from and against any and all claims and
demands whatsoever.

 

D.            Subject to the limitations set forth
therein, Section 7.07 of the Amended and Restated Agreement of Limited
Partnership of the Partnership (the “Partnership Agreement”) requires
the Partnership to indemnify and advance expenses to the directors and officers
of the General Partner to the fullest extent permitted by law and the Indemnitee
has been serving and continues to serve as an [Office] of the General Partner
in part in reliance on such provision.

 

E.             In recognition of the Indemnitee’s
need for substantial protection against any potential personal liability in
order to assure the Indemnitee’s continued service to the Partnership and
General Partner in an effective manner and the Indemnitee’s reliance on the
provisions of the Partnership Agreement and in part to provide the Indemnitee
with specific contractual assurance that the protection promised by the Partnership
Agreement will be available to the Indemnitee, the Partnership wishes to
provide in this Agreement for the indemnification of and the advancing of
expenses to the Indemnitee to the fullest extent (whether partial or complete)
permitted by the Partnership Agreement and as set forth in this Agreement, and,
to the extent insurance is maintained, for the continued coverage of the Indemnitee
under the Partnership’s directors’ and officers’ liability insurance policies.

 

In
consideration of the foregoing and the mutual covenants contained herein, and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.             Certain
Definitions.

 

(a)           “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, such Person. 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.

 

(b)           “Board of Directors” means the Board of
Directors of the General Partner.

 

(c)           “Change in Control” means, and shall be
deemed to have occurred upon one or more of the following events: (i) any
transaction resulting in the Partnership (or its successor or survivor by way
of merger, consolidation, or some other transaction, or a parent or subsidiary
thereof) ceasing to be an Affiliate of OSG (or its successor or survivor by way
of merger, consolidation, or some other transaction, or a parent or subsidiary
thereof); (ii) the limited partners of the Partnership approve, in one
transaction or a series of transactions, a plan of complete liquidation of the
Partnership; (iii) the sale or other disposition by either the General Partner
or the Partnership of all or substantially all of its assets, or the sale or
other disposition of all or substantially all of the assets of the Partnership’s
subsidiaries, in one or more transactions to any Person other than the General
Partner or an Affiliate of the General Partner; or (iv) a transaction
resulting in a Person other than OSG (or its successor or survivor by way of
merger, consolidation, or some other transaction, or a parent or subsidiary
thereof) or an Affiliate thereof being the general partner of the Partnership
(or its successor or survivor by way of merger, consolidation, or some other
transaction, or a parent or subsidiary thereof).

 

(d)           “Expenses” means all direct and indirect
costs of any type or nature whatsoever (including, without limitation, all
attorneys’ fees and related disbursements and other out-of- pocket costs)
actually and reasonably incurred by the Indemnitee in connection with the
investigation, defense or appeal of or being a witness in, participating in or
preparing to defend a Proceeding or establishing or enforcing a right to (i)
indemnification or advancement of expenses under this Agreement, the Partnership
Agreement, the Act or otherwise or (ii) directors’ and officers’ liability
insurance coverage; provided, however, that Expenses shall not
include any judgments, fines or penalties or amounts paid in settlement of a
Proceeding. Should any payments by the Partnership under this Agreement be
determined to be subject to any federal, state or local income or excise tax, “Expenses”
shall also include such amounts as are necessary to place the Indemnitee in the
same after-tax position (after giving effect to all applicable taxes) as the
Indemnitee would have been in had no such tax been determined to apply to such
payments.

 

(e)           “Indemnifiable Event” is any event or
occurrence related to the fact that the Indemnitee is or was a director or
officer of the General Partner, or is or was serving at the request of the General
Partner as a director, officer, employee, trustee or agent of another
corporation, partnership, joint venture, trust, nonprofit entity or other
entity (including service with respect to employee benefit plans), or by reason
of anything done or not done by the Indemnitee in any such capacity.

 

(f)            “Indemnification Period” shall be such
period as the Indemnitee shall continue to serve as a director or officer of
the General Partner, or shall continue at the request of the General Partner to
serve as a director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust, nonprofit entity or other entity, and
thereafter so 

 

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long as the Indemnitee shall be subject to
any possible Proceeding arising out of the Indemnitee’s tenure in the foregoing
positions.

 

(g)           “Losses” are any judgments, fines,
penalties and amounts paid in settlement (including all interest assessments
and other charges paid or payable in connection with or in respect of such
judgments, fines, penalties or amounts paid in settlement) of any Proceeding.

 

(h)           “OSG” means Overseas Shipholding Group,
Inc., a Delaware corporation.

 

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

 

(j)            “Proceeding” shall mean any completed,
actual, pending or threatened action, suit, claim, inquiry or proceeding,
whether civil, criminal, administrative or investigative (including an action
by or in the right of the Partnership) and whether formal or informal.

 

(k)           “Reviewing Party” shall mean (i) the Board
of Directors (provided that a majority of directors are not parties to the
Proceeding), (ii) a person or body selected by the Board of Directors or (iii)
if there has been a Change in Control, the special independent counsel referred
to in Section 5.

 

2.             Indemnification
and Advancement of Expenses. Subject to the limitations set forth in
Section 4:

 

(a)           Indemnification.
The Partnership shall indemnify and hold harmless the Indemnitee, to the
fullest extent permitted by the Partnership Agreement, as soon as practicable
after written demand is presented to the Partnership, in the event the Indemnitee
was or is made or is threatened to be made a party to or witness in or is
otherwise involved in a Proceeding by reason, in whole or in part, of an
Indemnifiable Event against all Expenses and Losses incurred by the Indemnitee
in connection with such Proceeding. In the event of any change, after the date
of this Agreement, in any applicable law, statute or rule regarding the right
of a Delaware limited partnership to indemnify any director or officer of its
general partner, such change, to the extent it would expand the Indemnitee’s
rights under this Agreement, shall be included within the Indemnitee’s rights
and the Partnership’s obligations under this Agreement, and, to the extent it
would narrow the Indemnitee’s rights or the Partnership’s obligations under
this Agreement, shall be excluded from this Agreement; provided, however,
that any change required by applicable laws, statutes or rules to be applied to
this Agreement shall be so applied regardless of whether the effect of such
change is to narrow the Indemnitee’s rights or the Partnership’s obligations
under this Agreement.

 

(b)           Advancement
of Expenses. The Partnership shall, to the fullest extent permitted by the
Partnership Agreement, pay the Expenses incurred by the Indemnitee as soon as
practicable after written demand is presented to the Partnership in the event
the Indemnitee was or is made or is threatened to be made a party to or witness
in or is otherwise involved in a Proceeding by reason, in whole or in part, of
an Indemnifiable Event in advance of its final disposition; provided, however,
that, to the extent required by law, such payment of expenses in 

 

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advance of the final disposition of the
Proceeding shall be made only upon receipt of an undertaking by the Indemnitee
to repay all amounts advanced if it should be ultimately determined that the Indemnitee
is not entitled to be indemnified under this Agreement, the Act or otherwise.

 

(c)           Partial
Indemnity. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Partnership for some or a portion of the
Losses or Expenses, but not, however, for all of the total amount thereof, the Partnership
shall indemnify the Indemnitee for the portion thereof to which the Indemnitee
is entitled. Notwithstanding any other provision of this Agreement, to the
extent that the Indemnitee has been successful on the merits or otherwise in
defense of any issue or matter therein, including dismissal without prejudice, the
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.

 

(d)           Contribution.
If the indemnification provided in Section 2(a) for any reason is held by a
court of competent jurisdiction to be unavailable to the Indemnitee, then in
respect of any Indemnifiable Event, the Partnership shall contribute to the
amount of Expenses and Losses paid in settlement actually incurred and paid or
payable by the Indemnitee in such proportion as is appropriate to reflect (i)
the relative benefits received by the Partnership on the one hand and the Indemnitee
on the other hand from the transaction from which such Proceeding arose and
(ii) the relative fault of the Partnership on the one hand and of the Indemnitee
on the other hand in connection with the events which resulted in such Expenses
and Losses, as well as any other relevant equitable considerations. The
relative fault of the Partnership on the one hand and of the Indemnitee on the
other hand shall be determined by reference to, among other things, the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. The Partnership and the Indemnitee agree that it would not
be just and equitable if contribution pursuant to this Section 2(d) were
determined by pro rata allocation or any other method of allocation which does
not take account of the foregoing equitable considerations.

 

(e)           Enforcement.
If a claim for indemnification (following the final disposition of such
Proceeding) under Section 2(a) or advancement of Expenses under Section 2(b) is
not paid in full within thirty days after a written claim therefor by the Indemnitee
has been presented to the Partnership, the Indemnitee may file suit against the
Partnership to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In addition, the Indemnitee may file suit against the Partnership to
establish a right to indemnification or advancement of Expenses arising under
this Agreement, the Partnership Agreement, the Act or otherwise. In any such
action the Partnership shall have the burden of proving by clear and convincing
evidence that the Indemnitee is not entitled to the requested indemnification
or advancement of Expenses under applicable law.

 

3.             Notification
and Defense of Proceeding. Promptly after receipt by the Indemnitee of
notice of the commencement of or threat of the commencement of any Proceeding, the
Indemnitee shall, if a request for indemnification in respect thereof is to be
made against the Partnership under this Agreement, notify the Partnership of
the commencement thereof; but the failure to notify the Partnership will not
relieve the Partnership from any liability which it may have to the Indemnitee
under this Agreement or otherwise unless and only to the extent that such 

 

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omission
can be shown to have prejudiced the Partnership’s ability to defend the
Proceeding. Except as otherwise provided below, the Partnership shall be
entitled to assume the defense of such Proceeding, with counsel approved by the
Indemnitee (which approval shall not be unreasonably withheld). After notice
from the Partnership to the Indemnitee of its election to assume the defense
thereof, the Partnership will not be liable to the Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The Indemnitee shall have the
right to employ its counsel in such Proceeding, but the fees and expenses of
such counsel incurred after notice from the Partnership of its assumption of
the defense thereof shall be at the expense of the Indemnitee unless (i) the
employment of counsel by the Indemnitee has been authorized by the Partnership,
(ii) the Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Partnership and the Indemnitee in the conduct
of the defense of such Proceeding or (iii) the Partnership shall not in fact
have employed counsel to assume the defense of such Proceeding, in each of
which cases the fees and expenses of counsel shall be at the expense of the Partnership.
The Partnership shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Partnership or as to which the Indemnitee shall
have made the conclusion provided for in clause (ii) of this Section 3. The Partnership
shall not settle any Proceeding in any manner, which would impose any penalty,
limitation, admission, Loss or Expense on the Indemnitee without the Indemnitee’s
prior written consent. Neither the Partnership nor the Indemnitee will
unreasonably withhold its consent to any proposed settlement, provided that the
Indemnitee may, in the Indemnitee’s sole discretion, withhold consent to any
proposed settlement that would impose any penalty, limitation, admission, Loss
or Expense on the Indemnitee.

 

4.             Limitation
on Indemnification. Notwithstanding the terms of Section 2:

 

(a)           the
obligations of the Partnership set forth in Section 2 shall be subject to the
condition that the Reviewing Party shall not have determined (based on a
written opinion of outside counsel in all cases) that the Indemnitee would not
be permitted to be so indemnified under the Partnership Agreement; provided,
however, that if the Indemnitee has commenced or thereafter commences
legal proceedings in a court of competent jurisdiction to secure a
determination that the Indemnitee should be indemnified under the Partnership
Agreement, any determination made by the Reviewing Party that the Indemnitee
would not be permitted to be indemnified under applicable law shall not be
binding and the Indemnitee shall not be required to reimburse the Partnership
for any advancement of Expenses until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed) and the Partnership shall not be obligated to indemnify or
advance to the Indemnitee any additional amounts covered by such Reviewing
Party determination (unless there has been a determination by a court of
competent jurisdiction that the Indemnitee would be permitted to be so
indemnified under applicable law);

 

(b)           the
Partnership shall not be required to indemnify or advance Expenses to the
Indemnitee with respect to a Proceeding (or part thereof) by the Indemnitee
(and not by way of defense), except if the commencement of such Proceeding (i)
was authorized in the specific case by the Board of Directors or (ii) brought
to establish or enforce a right to indemnification and/or advancement of
Expenses arising under this Agreement, the Partnership Agreement, the Act or
otherwise;

 

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(c)           the
Partnership shall not be obligated pursuant to the terms of this Agreement to
indemnify the Indemnitee for any amounts paid in settlement of a Proceeding
unless the Partnership consents in advance in writing to such settlement, which
consent shall not be unreasonably withheld;

 

(d)           the
Partnership shall not be obligated pursuant to the terms of this Agreement to
indemnify the Indemnitee on account of any suit in which judgment is rendered
against the Indemnitee for an accounting of profits made from the purchase or
sale by the Indemnitee of securities of the Partnership pursuant to the
provisions of Section l6(b) of the Securities Exchange Act of 1934, as amended
or similar provisions of any federal, state or local statutory law;

 

(e)           the
Partnership shall not be obligated pursuant to the terms of this Agreement to
indemnify the Indemnitee if a final decision by a court having jurisdiction in
the matter shall determine that such indemnification is not lawful; and

 

(f)            the
Partnership shall not be obligated pursuant to the terms of this Agreement to
make any payment in connection with any Proceeding to the extent the Indemnitee
has otherwise actually received payment (under any insurance policy or
otherwise) of the amounts otherwise indemnifiable under this Agreement.

 

5.             Change
in Control. The Partnership agrees that if there is a Change in Control,
then with respect to all matters thereafter arising concerning the rights of the
Indemnitee to indemnity payments and Expense advances under this Agreement, the
Partnership Agreement and any other agreements now or hereafter in effect
relating to Proceedings for Indemnifiable Events, the Partnership shall seek
legal advice only from special independent counsel selected by the Indemnitee
and approved by the Board of Directors (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for the Partnership
(other than in connection with such matters) or the Indemnitee. Without
limiting the Board of Director’s obligation not to unreasonably withhold its approval,
in the event that the Indemnitee and the Partnership are unable to agree on the
selection of the special independent counsel, such special independent counsel
shall be selected by lot from among at least five nationally recognized law
firms each in New York City, New York, each having no less than 250 lawyers. Such
selection shall be made in the presence of the Indemnitee (and the Indemnitee’s
legal counsel or either of them, as the Indemnitee may elect). Such special
independent counsel, among other things, shall determine whether and to what
extent the Indemnitee would be permitted to be indemnified under applicable law
and shall render its written opinion to the Partnership and the Indemnitee to
such effect. The Partnership agrees to pay the reasonable fees of the special
independent counsel referred to above and to fully indemnify such counsel
against any and all expenses (including attorneys’ fees), Proceedings,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant to this Agreement.

 

6.             Subrogation.
In the event of payment to the Indemnitee under this Agreement, the Partnership
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Partnership effectively to bring suit
to enforce such rights.

 

6

 

7.             No
Presumptions. For purposes of this Agreement, the termination of any
Proceeding against the Indemnitee by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that the Indemnitee did not meet
any particular standard of conduct or have any particular belief or that a
court has determined that indemnification is not permitted by applicable law. In
addition, neither the failure of the Reviewing Party to have made a
determination as to whether the Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by the
Reviewing Party that the Indemnitee has not met such standard of conduct or did
not have such belief shall be a defense to the Indemnitee’s Proceeding for
indemnification or create a presumption that the Indemnitee has not met any
particular standard of conduct or did not have any particular belief.

 

8.             Non-Exclusivity.
The rights conferred on the Indemnitee by this Agreement shall be in addition
to, and shall not be deemed exclusive of, any other rights which the Indemnitee
may have or hereafter acquire under any statute, the certificate of limited
partnership of the Partnership and the Partnership Agreement, any other agreement,
vote of unitholders or a resolution of directors, or otherwise, and to the
extent that during the Indemnification Period such rights are more favorable
than the rights currently provided under this Agreement to the Indemnitee, the Indemnitee
shall be entitled to the full benefits of such more favorable rights to the
extent permitted by law. Other than as set forth in this Section 8, in the case
of any inconsistency between the indemnification provisions of this Agreement
and any other agreement relating to the indemnification of the Indemnitee, the
indemnification provisions of this Agreement shall control.

 

9.             Liability
Insurance. The Partnership may, to the extent that the Board of Directors
in good faith determines it to be economically reasonable, maintain a policy of
directors’ and officers’ liability insurance, on such terms conditions as may
be approved by the Board of Directors. To the extent the Partnership maintains
directors’ and officers’ liability insurance, the Indemnitee shall be covered
by such policy in such a manner as to provide the Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the General
Partner’s directors, if the Indemnitee is a director, or of the General Partner’s
officers, if the Indemnitee is not a director but is an officer. Notice of any
termination or failure to renew such policy shall be provided to the Indemnitee
promptly upon the Partnership’s becoming aware of such termination or failure
to renew. The Partnership shall provide to the Indemnitee copies of all such
insurance policies and any endorsements thereto whenever such documents have
been provided to the Partnership.

 

10.           Amendment/Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions of this
Agreement (whether or not similar) nor shall such waiver constitute a
continuing waiver. Any waiver to this Agreement shall be in writing.

 

11.           Binding Effect. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of 

 

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the
business and/or assets of the Partnership, assigns, spouses, heirs, and
personal and legal representatives.

 

12.           Survival. This Agreement shall continue in effect
during the Indemnification Period, regardless of whether the Indemnitee
continues to serve as an officer or director of the General Partner or of any
other enterprise at the General Partner’s request.

 

13.           Severability. The provisions of this Agreement
shall be severable in the event that any provision of this Agreement (including
any provision within a single section, paragraph or sentence) is held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable,
and the remaining provisions shall remain enforceable to the fullest extent
permitted by law.

 

14.           Period of Limitations. No legal action shall be
brought and no cause of action shall be asserted by or in the right of the Partnership
against the Indemnitee or the Indemnitee’s estate, spouse, heirs, executors or
personal or legal representatives after the expiration of three years from the
date of accrual of such cause of action, and any claim or cause of action of
the Partnership shall be extinguished and deemed released unless asserted by
the timely filing of a legal action within such three year period; provided,
however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.

 

15.           Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument, notwithstanding
that both parties are not signatories to the original or same counterpart.

 

16.           Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.

 

 

	
   

  	
  OSG AMERICA L.P.,

  
	
   

  	
   

  
	
   

  	
  By: OSG America LLC, its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Myles R.
  Itkin

  
	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Indemnitee]

  

 

8Exhibit 10.7

 

OSG AMERICA L.P.

2007 OMNIBUS INCENTIVE COMPENSATION PLAN

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

“Exercise
Price” means (a) in the case of Options, the price specified in the
applicable Award Agreement as the price-per-Unit at which Units may be
purchased pursuant to such Option or (b) in the case of UARs, the price
specified in the applicable Award Agreement as the reference price-per-Unit
used to calculate the amount payable to the Participant.

 

“Fair Market
Value” means (a) with respect to any property other than Units, the fair
market value of such property determined by such methods or procedures as shall
be established from time to time by the Board and (b) with respect to the Units,
as of any date, (i) the closing price of Units (A) as reported by the NYSE
for such date or (B) if the Units are listed on any other national stock
exchange, as reported on the stock exchange composite tape for securities traded
on such stock exchange for such date or, with respect to each of clauses (A)
and (B), if there were no sales on such date, on the closest preceding date on
which there were sales of Units or (ii) in the event there shall be no
public market for the Units on such date, the fair market value of the Units as
determined in good faith by the Board.

 

“IRS” means
the Internal Revenue Service or any successor thereto and includes the staff
thereof.

 

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

 

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

 

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

 

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

 

“Performance
Criteria” means the criterion or criteria that the Board shall select for
purposes of establishing a Performance Goal for a Performance Period with
respect to any Performance Unit or Cash Incentive Award under the Plan.

 

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

 

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

 

“Performance
Period” means the one or more periods of time as the Board may select over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant’s right to and the payment of a Performance
Unit or Cash Incentive Award.

 

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

 

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

 

“Plan” means
this OSG America L.P. 2007 Omnibus Incentive Compensation Plan, as in effect
from time to time.

 

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

 

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

 

“SEC” means
the Securities and Exchange Commission or any successor thereto and shall
include the staff thereof.

 

3

 

“Subsidiary”
means any entity in which the Partnership, directly or indirectly, possesses 50%
or more of the total combined voting power of all classes of its stock.

 

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

 

“UAR” means a
unit appreciation right Award that represents an unfunded and unsecured promise
to deliver Units, cash, other securities, other Awards or other property equal
in value to the excess, if any, of the Fair Market Value per Unit over the
Exercise Price per Unit of the UAR, subject to the terms of the applicable
Award Agreement.

 

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

 

“Voting
Securities” means securities of any class of any Person entitling the holders
thereof to vote in the election of members of the board of directors or other
similar governing body of the Person.

 

SECTION 3. Administration.
(a)  Authority of Board. The Plan shall
be administered by the Board or such committee of the Board as may be
designated by the Board from time to time. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Board by the Plan, the Board shall have sole and plenary authority
to administer the Plan, including the 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, or
with respect to which payments, rights or other matters are to be calculated in
connection with, Awards, (iv) determine the terms and conditions of any Awards,
(v) determine the vesting schedules of Awards and, if certain performance
conditions must be attained in order for an Award to vest or be settled or paid,
establish such performance conditions and certify whether, and to what extent, such
performance conditions have been attained, (vi) determine whether, to what
extent and under what circumstances Awards may be settled or exercised in cash,
Units, other securities, other Awards or other property, or canceled, forfeited
or suspended and the method or methods by which Awards may be settled,
exercised, canceled, forfeited or suspended, (vii) determine whether, to
what extent and under what circumstances cash, Units, other securities, other Awards,
other property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the holder thereof or of
the Board, (viii) interpret, administer, reconcile any inconsistency in,
correct any default in and supply any omission in, the Plan and any instrument
or agreement relating to, or Award made under, the Plan, (ix) 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, (x)
accelerate the vesting or exercisability of, payment for or lapse of restrictions
on, Awards, (xi) amend an outstanding Award or grant a replacement Award for an
Award previously granted under the Plan if, in its sole discretion, the Board
determines that (A) 

 

4

 

the tax consequences of such Award to the Partnership or the
Participant differ from those consequences that were expected to occur on the
date the Award was granted or (B) clarifications or interpretations of, or
changes to, tax law or regulations permit Awards to be granted that have more
favorable tax consequences than initially anticipated and (xii) make any other
determination and take any other action that the Board deems necessary or
desirable for the administration of the Plan.

 

(b)  Board Decisions. Unless otherwise
expressly provided in the Plan, and not withstanding any delegation of its
powers, authority or function under the Plan to a duly designated committee of
the Board, all designations, determinations, interpretations and other
decisions under or with respect to the Plan or any Award shall be within the sole
and plenary discretion of the Board, may be made at any time and shall be
final, conclusive and binding upon all Persons, including the Partnership, any
Affiliate, any Participant, any holder or beneficiary of any Award and any unitholder.

 

(c)  Indemnification. No member of the Board
or any employee of the Partnership or any of its Affiliates (each such Person,
a “Covered Person”) shall be liable for any action taken or omitted to be taken
or any determination made in good faith with respect to the Plan or any Award
hereunder. Each Covered Person shall be indemnified and held harmless by the Partnership
against and from (i) any loss, cost, liability or expense (including
attorneys’ fees) that may be imposed upon or incurred by such Covered Person in
connection with or resulting from any action, suit or proceeding to which such
Covered Person may be a party or in which such Covered Person may be involved
by reason of any action taken or omitted to be taken under the Plan or any
Award Agreement and (ii) any and all amounts paid by such Covered Person,
with the Partnership’s approval, in settlement thereof, or paid by such Covered
Person in satisfaction of any judgment in any such action, suit or proceeding
against such Covered Person; provided that the Partnership shall have
the right, at its own expense, to assume and defend any such action, suit or
proceeding, and, once the Partnership gives notice of its intent to assume the
defense, the Partnership shall have sole control over such defense with counsel
of the Partnership’s choice. The foregoing right of indemnification shall not
be available to a Covered Person to the extent that a court of competent
jurisdiction in a final judgment or other final adjudication, in either case
not subject to further appeal, determines that the acts or omissions of such
Covered Person giving rise to the indemnification claim resulted from such
Covered Person’s bad faith, fraud or wilful criminal act or omission or that
such right of indemnification is otherwise prohibited by law or by the Partnership
Agreement. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which Covered Persons may be entitled under
the Partnership Agreement, as a matter of law, or otherwise, or any other power
that the Partnership may have to indemnify such Persons or hold them harmless.

 

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

 

5

 

available to be delivered pursuant to Awards under the Plan. If Units
issued upon exercise, vesting or settlement of an Award, or Units owned by a
Participant (which are not subject to any pledge or other security interest),
are surrendered or tendered to the Partnership in payment of the Exercise Price
of an Award or any taxes required to be withheld in respect of an Award, in
each case, in accordance with the terms and conditions of the Plan and any
applicable Award Agreement, such surrendered or tendered Units shall again
become available to be delivered pursuant to Awards under the Plan.

 

(b)  Adjustments for Changes in Capitalization
and Similar Events. In the event that the Board determines that any
dividend or other distribution (whether in the form of cash, Units, other
securities or other property), recapitalization, unit split, reverse unit
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 corporate transaction or event that affects
the value of the Units, then the Board shall (i) in such manner as it may
determine equitable or desirable, adjust (A) the number of Units or other
securities of the Partnership (or number and kind of other securities or
property) with respect to which Awards may be granted, including (1) the
aggregate number of Units that may be delivered pursuant to Awards granted
under the Plan and (2) the maximum number of Units or other securities of
the Partnership (or number and kind of other securities or property) with
respect to which Awards may be granted to any Participant in any fiscal year of
the Partnership, and (B) the terms of any outstanding Award, including
(1) the number of Units or other securities of the Partnership (or number
and kind of other securities or property) subject to outstanding Awards or to
which outstanding Awards relate and (2) the Exercise Price with respect to
any Award, (ii) if deemed appropriate or desirable by the Board, make provision
for a cash payment to the holder of an outstanding Award in consideration for
the cancelation of such Award, including, in the case of an outstanding Option
or UAR, a cash payment to the holder of such Option or UAR in consideration for
the cancelation of such Option or UAR in an amount equal to the excess, if any,
of the Fair Market Value (as of a date specified by the Board) of the Units
subject to such Option or UAR over the aggregate Exercise Price of such Option
or UAR and (iii) if deemed appropriate or desirable by the Board, cancel and
terminate any Option or UAR having a per Unit Exercise Price equal to, or in
excess of, the Fair Market Value of a Unit subject to such Option or UAR
without any payment or consideration therefor.

 

(c)  Substitute Awards. Awards may, in the
discretion of the Board, be granted under the Plan in assumption of, or in
substitution for, outstanding awards previously granted by the Partnership or any
of its Affiliates or a company acquired by the Partnership or any of its
Affiliates or with which the Partnership or any of its Affiliates combines (“Substitute
Awards”). The number of Units underlying any Substitute Awards shall be counted
against the aggregate number of Units available for Awards under the Plan; provided,
however, that Substitute Awards issued in connection with the assumption
of, or in substitution for, outstanding awards previously granted by an entity
that is acquired by the Partnership or any of its Affiliates or with which the 

 

6

 

Partnership or any of its Affiliates combines shall not be counted
against the aggregate number of Units available for Awards under the Plan.

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

(B)  Wherever in the Plan or any Award Agreement a
Participant is permitted to pay the Exercise Price of an Option or taxes
relating to the exercise of an Option by delivering Units, the Participant may,
if permitted by the Board, and subject to procedures satisfactory to it, in its
discretion, satisfy such delivery requirement by presenting proof of beneficial
ownership of such Units, in which case the Partnership shall treat the Option
as exercised without further payment and shall withhold such number of Units
from the Units acquired by the exercise of the Option.

 

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

 

(c)  UARs. (i)  Grant. Subject to the provisions of
the Plan, the Board shall have sole and plenary authority to determine the
Participants to whom UARs shall be granted, the number of Units to be covered
by each UAR, the Exercise Price thereof and the conditions and limitations
applicable to the exercise thereof. UARs may be granted in tandem with another
Award, in addition to another Award or freestanding and unrelated to another
Award. UARs granted in tandem with, or in addition to, an Award may be granted
either at the same time as the Award or at a later time.

 

(ii)  Exercise Price. Except as otherwise
established by the Board at the time a UAR is granted and set forth in the
applicable Award Agreement, the Exercise Price of each Unit covered by a UAR
shall be not less than 100% of the Fair Market Value of such Unit (determined
as of the date the UAR is granted).

 

8

 

(iii)  Exercise. A UAR shall entitle the
Participant to receive an amount equal to the excess, if any, of the Fair
Market Value of a Unit on the date of exercise of the UAR over the Exercise
Price thereof. The Board shall determine, in its sole and plenary discretion,
whether a UAR shall be settled in cash, Units, other securities, other Awards,
other property or a combination of any of the foregoing.

 

(iv)  Other Terms and Conditions. Subject to
the terms of the Plan and any applicable Award Agreement, the Board shall
determine, at or after the grant of a UAR, the vesting criteria, term, methods
of exercise, methods and form of settlement and any other terms and conditions
of any UAR. Any such determination by the Board may be changed by the Board
from time to time and may govern the exercise of UARs granted or exercised
thereafter. The Board may impose such conditions or restrictions on the
exercise of any UAR as it shall deem appropriate or desirable.

 

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

 

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

 

(iii)  Payment/Lapse of Restrictions. Each RUA
shall be granted with respect to one Unit or shall have a value equal to the
Fair Market Value of one Unit. RUAs shall be paid in cash, Units, other
securities, other Awards or other property, as determined in the sole and
plenary discretion of the Board, upon the lapse of restrictions applicable
thereto, or otherwise in accordance with the applicable Award Agreement.

 

(e)  Performance Units. (i)  Grant. Subject to the provisions of
the Plan, the Board shall have sole and plenary authority to determine the
Participants to whom Performance Units shall be granted and the terms and
conditions thereof.

 

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

 

9

 

during a Performance Period, will determine the number and value of
Performance Units that will be paid out to the Participant.

 

(iii)  Earning of Performance Units. Subject
to the provisions of the Plan, after the applicable Performance Period has
ended, the holder of Performance Units shall be entitled to receive a payout of
the number and value of Performance Units earned by the Participant over the
Performance Period, to be determined by the Board, in its sole and plenary discretion,
as a function of the extent to which the corresponding Performance Goals have
been achieved.

 

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

 

(f)  Cash Incentive Awards. Subject to the
provisions of the Plan, the Board, in its sole and plenary discretion, shall
have the authority to grant Cash Incentive Awards. The Board shall establish
Cash Incentive Award levels to determine the amount of a Cash Incentive Award
payable upon the attainment of Performance Goals.

 

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

 

(h)  Distribution Equivalents. In the sole
and plenary discretion of the Board, an Award, other than an Option, UAR or
Cash Incentive Award, may provide the Participant with distributions or distribution
equivalents, payable in cash, Units, other securities, other Awards or other
property, on a current or deferred basis, on such terms and conditions as may
be determined by the Board in its sole and plenary discretion, including,
without limitation, payment directly to the Participant, withholding of such
amounts by the Partnership subject to vesting of the Award or reinvestment in
additional Units, Restricted Units or other Awards.

 

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

 

10

 

purposes of this Section 7(a)(i); 
(ii) decrease the Exercise Price of any Option or UAR that, at the time
of such decrease, has an Exercise Price that is greater than the then current
Fair Market Value of a Unit or cancel, in exchange for cash or any other Award,
any Such Award; provided, however, that any amendment,
modification or termination or other action taken pursuant to Section 3(a)(xi),
Section 4(b), Section 7(c) or Section 8 shall not constitute a decrease or
cancelation for purposes of this Section 7(a)(ii); or (iii) change the
class of employees or other individuals eligible to participate in the Plan. No
modification, amendment or termination of the Plan may, without the consent of any
Participant to whom any Award shall previously have been granted, materially
and adversely affect the rights of such Participant (or his or her transferee)
under such Award, unless otherwise provided by the Board in the applicable Award
Agreement.

 

(b)  Amendments to Awards. The Board may
waive any conditions or rights under, amend any terms of, or alter, suspend,
discontinue, cancel or terminate any Award theretofor granted, prospectively or
retroactively; provided, however, that, except as set forth in the
Plan, unless otherwise provided by the Board in the applicable Award Agreement,
any such waiver, amendment, alteration, suspension, discontinuance, cancelation
or termination that would materially and adversely impair the rights of any
Participant or any holder or beneficiary of any Award theretofor granted shall
not to that extent be effective without the consent of the impaired
Participant, holder or beneficiary.

 

(c)  Adjustment of Awards Upon the Occurrence
of Certain Unusual or Nonrecurring Events. The Board 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(b) or the occurrence of a
Change of Control) affecting the Partnership, any Affiliate, or the financial
statements of the Partnership or any Affiliate, or of changes in applicable rules,
rulings, regulations or other requirements of any governmental body or
securities exchange, accounting principles or law (i) whenever the Board,
in its sole and plenary discretion, determines that such adjustments are appropriate
or desirable, including, without limitation, providing for a substitution or
assumption of Awards, accelerating the exercisability of, lapse of restrictions
on, or termination of, Awards or providing for a period of time for exercise
prior to the occurrence of such event, (ii) if deemed appropriate or
desirable by the Board, in its sole and plenary discretion, by providing for a
cash payment to the holder of an Award in consideration for the cancelation of
such Award, including, in the case of an outstanding Option or UAR, a cash
payment to the holder of such Option or UAR in consideration for the
cancelation of such Option or UAR in an amount equal to the excess, if any, of
the Fair Market Value (as of a date specified by the Board) of the Units
subject to such Option or UAR over the aggregate Exercise Price of such Option
or UAR and (iii) if deemed appropriate or desirable by the Board, in its sole
and plenary discretion, by canceling and terminating any Option or UAR having a
per Unit Exercise Price equal to, or in excess of, the Fair Market Value of a Unit
subject to such Option or UAR without any payment or consideration therefor.

 

SECTION 8. Change
of Control. Unless otherwise provided in the applicable Award Agreement, in
the event of a Change of Control after the date of the adoption of the Plan, unless
provision is made in connection with the Change of Control

 

11

 

for (a) assumption of Awards previously granted or (b) substitution for
such Awards of new awards or similar entitlements covering equity interests in
the successor corporation or other entity in the Change of Control with
appropriate adjustments as to the number and kinds of equity interests,
Performance Goals and the Exercise Prices, if applicable, (i) any outstanding
Options or UARs then held by Participants that are unexercisable or otherwise
unvested shall automatically be deemed exercisable or otherwise vested, as the
case may be, as of immediately prior to such Change of Control, (ii) all
Performance Units and Cash Incentive Awards shall be paid out as if the date of
the Change of Control were the last day of the applicable Performance Period
and “target” performance levels had been attained and (iii) all other
outstanding Awards (i.e., other than Options, UARs, Performance Units and Cash
Incentive Awards) then held by Participants that are unexercisable, unvested or
still subject to restrictions or forfeiture, shall automatically be deemed
exercisable and vested and all restrictions and forfeiture provisions related
thereto shall lapse as of immediately prior to such Change of Control.

 

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

 

(b)  No Rights to Awards. No Participant or
other Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Participants or holders or
beneficiaries of Awards. The terms and conditions of Awards and the Board’s
determinations and interpretations with respect thereto need not be the same
with respect to each Participant and may be made selectively among
Participants, whether or not such Participants are similarly situated.

 

(c)  Unit Certificates. All certificates
for Units or other securities of the Partnership or any Affiliate 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 Board may deem
advisable under the Plan, the applicable Award Agreement or the rules,
regulations and other requirements of the SEC, the NYSE or any other stock
exchange or quotation system upon which such Units or other securities are then
listed or reported and any applicable Federal or state laws, and the Board may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

 

12

 

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

 

(e)  Section 409A of the Code. Participants
are solely responsible and liable for the satisfaction of all taxes and
penalties that may arise in connection with Awards (including any taxes arising
under Section 409A of the Code), and the Partnership shall not have any
obligation to indemnify or otherwise hold any Participant harmless from any or
all of such taxes. The Board shall have the discretion to organize any deferral
program, to require deferral election forms, and to grant or to unilaterally
modify any Award in a manner that (i) conforms with the requirements of Section
409A of the Code, (ii) voids any Participant election to the extent it would violate
Section 409A of the Code and (iii) for any distribution event or election that
could be expected to violate Section 409A of the Code, make the distribution
only upon the earliest of the first to occur of a “permissible distribution
event” within the meaning of Section 409A of the Code, or a distribution event
that the participant elects in accordance with Section 409A of the Code. The Board
shall have the sole discretion to interpret the requirements of the Code,
including Section 409A, for purposes of the Plan and all Awards.

 

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

 

(g)  No Limit on Other Compensation Arrangements.
Nothing contained in the Plan shall prevent the Partnership or any Affiliate
from adopting or continuing in effect other compensation arrangements, which
may, but need not, provide for the grant of options, restricted units, units
and other types of equity-based awards, and such arrangements may be either
generally applicable or applicable only in specific cases.

 

(h)  No Right to Employment. The grant of
an Award shall not be construed as giving a Participant the right to be
retained as a director, officer, employee or consultant of or to the Partnership
or any Affiliate, nor shall it be construed as giving a Participant any rights
to continued service on the Board. Further, the Partnership or an Affiliate may
at any time dismiss a Participant from employment or discontinue any consulting
relationship, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.

 

13

 

(i)  No Rights as Unitholder. No
Participant or holder or beneficiary of any Award shall have any rights as a unitholder
with respect to any Units to be distributed under the Plan until he or she has
become the holder of such Units. In connection with each grant of Restricted Units,
except as provided in the applicable Award Agreement, the Participant shall not
be entitled to the rights of a unitholder in respect of such Restricted Units. Except
as otherwise provided in Section 4(b), Section 7(c) or the applicable Award
Agreement, no adjustments shall be made for dividends or distributions on
(whether ordinary or extraordinary, and whether in cash, Units, other
securities or other property), or other events relating to, Units subject to an
Award for which the record date is prior to the date such Units are delivered.

 

(j)  Governing Law. The validity,
construction and effect of the Plan and any rules and regulations relating to
the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of Delaware, without giving effect to the conflict of laws
provisions thereof.

 

(k)  Severability. If any provision of the
Plan or any Award is or becomes or is deemed to be 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 Board,
such provision shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Board, materially altering the intent of the Plan or the Award,
such provision shall be construed or deemed 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.

 

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

 

(m)  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 Partnership or any
Affiliate, on one hand, and a Participant or any other Person, on the other
hand. To the extent that any Person acquires a right to receive payments from
the Partnership or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Partnership or such
Affiliate.

 

14

 

(n)  No Fractional Units. No fractional Units
shall be issued or delivered pursuant to the Plan or any Award, and the Board
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.

 

(o)  Requirement of Consent and Notification of
Election Under Section 83(b) of the Code or Similar Provision. No
election under Section 83(b) of the Code (to include in gross income in the
year of transfer the amounts specified in Section 83(b) of the Code) or
under a similar provision of law may be made unless expressly permitted by the
terms of the applicable Award Agreement or by action of the Board in writing
prior to the making of such election. If an Award recipient, in connection with
the acquisition of Units under the Plan or otherwise, is expressly permitted
under the terms of the applicable Award Agreement or by such Board action to
make such an election and the Participant makes the election, the Participant
shall notify the Board of such election within ten days of filing notice of the
election with the IRS or other governmental authority, in addition to any filing
and notification required pursuant to regulations issued under
Section 83(b) of the Code or other applicable provision.

 

(p)  Interpretation. (i) 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.

 

(ii) The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”.

 

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

 

(b)  Expiration Date. No Award shall be
granted under the Plan after the tenth anniversary of the date the Plan is approved
under Section 10(a). Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board to amend, alter, adjust, suspend, discontinue or terminate any
such Award or to waive any conditions or rights under any such Award shall,
nevertheless continue thereafter.

 

15

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