Document:

exv10w3

Exhibit
10.3

FORM
OF

OILTANKING
PARTNERS, L.P.

LONG-TERM INCENTIVE PLAN

          Section 1. 
Purpose of the Plan. The Oiltanking Partners, L.P. Long-Term Incentive Plan (the
“Plan”) has been adopted on [          ] (the “Effective Date”) by OTLP GP, LLC, a Delaware
limited liability company, the general partner (“General Partner”) of Oiltanking Partners, L.P., a
Delaware limited partnership (the “Partnership”). The Plan is intended to promote the interests of
the General Partner, the Partnership and their Affiliates by providing to Employees, Consultants
and Directors incentive compensation awards based on Units to encourage superior performance. The
Plan is also contemplated to enhance the ability of the General Partner, the Partnership and their
Affiliates to attract and retain the services of individuals who are essential for the growth and
profitability of the Partnership and to encourage them to devote their best efforts to advancing
the business of the Partnership.

          Section 2. Definitions. As used in the Plan, the following terms shall have the
meanings set forth below:

          (a) “409A Award” means an Award that constitutes a “deferral of compensation” within the
meaning of the 409A Regulations, whether by design, due to a subsequent modification in the terms
and conditions of such Award or as a result of a change in applicable law following the date of
grant of such Award, and that is not exempt from Section 409A of the Code pursuant to an applicable
exemption.

          (b) “409A Regulations” means the applicable Treasury regulations and other interpretive
guidance promulgated pursuant to Section 409A of the Code.

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

          (d) “Award” means an Option, Unit Appreciation Right, Restricted Unit, Phantom Unit, Unit
Award, Substitute Award, Other Unit Based Award granted under the Plan or Performance Awards and
includes, as appropriate, any tandem DERs granted with respect to an Award (other than a Restricted
Unit or Unit Award).

          (e) “Award Agreement” means the written or electronic agreement by which an Award shall be
evidenced.

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

          (g) “Change of Control” means, and shall be deemed to have occurred upon one or more of the
following events:

     (i) any “person” or “group” within the meaning of those terms as used in Sections 13(d)
and 14(d)(2) of the Exchange Act, other than members of the General Partner, the
Partnership, or an Affiliate of either the General Partner or the Partnership, shall become
the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or
otherwise,

 

 

of 50% or more of the voting power of the voting securities of the General Partner or
the Partnership;

     (ii) the limited partners of the General Partner or the Partnership approve, in one
transaction or a series of transactions, a plan of complete liquidation of the General
Partner or the Partnership;

     (iii) the sale or other disposition by either the General Partner or the Partnership of
all or substantially all of its assets in one or more transactions to any Person other than
an Affiliate;

     (iv) the General Partner or an Affiliate of the General Partner or the Partnership
ceases to be the general partner of the Partnership;

     (v) any other event specified as a “Change of Control” in an applicable Award
Agreement.

          (h) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          (i) “Committee” means the Board or such committee as may be appointed by the Board to
administer the Plan, which alternative committee may be the board of directors or managers of any
Affiliate or a committee therefore.

          (j) “Consultant” means an individual who renders consulting or advisory services to the
General Partner, the Partnership or an Affiliate of either.

          (k) “Director” means a member of the Board or the board of an Affiliate of the General Partner
who is not an Employee or a Consultant (other than in that individual’s capacity as a Director).

          (l) “Distribution Equivalent Right” or “DER” means a contingent right, granted alone or in
tandem with a specific Award (other than a Restricted Unit or Unit Award), to receive with respect
to each Unit subject to the Award an amount in cash, Units and/or Phantom Units, as determined by
the Committee in its sole discretion, equal in value to the distributions made by the Partnership
with respect to a Unit during the period such Award is outstanding.

          (m) “Effective Date” has the meaning set forth in Section 1.

          (n) “Employee” means an employee of the General Partner or an Affiliate of the General
Partner.

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

          (p) “Fair Market Value” means, on any relevant date, the closing sales price of a Unit on the
principal national securities exchange or other market in which trading in Units occurs on the last
market trading day prior to the applicable day (or, if there is no trading in the Units on such
date, on the next preceding day on which there was trading) as reported in The Wall Street Journal
(or other reporting service approved by the Committee). If Units are not traded on a national
securities exchange or other market at the time a determination of Fair Market Value is required to
be made hereunder, the determination of Fair Market Value shall be made by the Committee in good
faith using a “reasonable application of a reasonable valuation method” within the meaning of the
409A Regulations (specifically, Treasury Regulation Section 1.409A-l(b)(5)(iv)(B)).

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          (q) “General Partner” has the meaning set forth in Section 1.

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

          (s) “Other Unit Based Award” means an Award granted to an Employee, Director or Consultant
pursuant to Section 6(e).

          (t) “Participant” means an Employee, Consultant or Director granted an Award under the Plan.

          (u) “Partnership” has the meaning set forth in Section 1.

          (v) “Performance Award” means a right granted to an Employee, Director or Consultant pursuant
to Section 6(h), to receive an Award based upon performance criteria specified by the Committee.

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

          (x) “Phantom Unit” means a notional Unit granted under the Plan which upon vesting entitles
the Participant to receive, at the time of settlement, a Unit or an amount of cash equal to the
Fair Market Value of a Unit, as determined by the Committee in its sole discretion.

          (y) “Plan” has the meaning set forth in Section 1.

          (z) “Restricted Period” means the period established by the Committee with respect to an Award
during which the Award remains subject to forfeiture and is either not exercisable by or payable to
the Participant, as the case may be.

          (aa) “Restricted Unit” means a Unit granted under the Plan that is subject to a Restricted
Period.

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

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

          (dd) “Substitute Award” means an award granted pursuant to Section 6(g) of the Plan.

          (ee) “Unit Distribution Right” or “UDR” means a distribution made by the Partnership with
respect to a Restricted Unit.

          (ff) “Unit” means a common unit of the Partnership.

          (gg) “Unit Appreciation Right” means a contingent right granted under the Plan that entitles
the holder to receive, in cash or Units, as determined by the Committee in its sole discretion, an
amount equal to the excess of the Fair Market Value of a Unit on the exercise date of the Unit
Appreciation Right (or another specified date) over the exercise price of the Unit Appreciation
Right.

          (hh)
“Unit Award” means a grant of a Unit that is not subject to a Restricted Period.

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          Section 3. Administration.

          (a) Authority of the Committee. The Plan shall be administered by the Committee. A
majority of the Committee shall constitute a quorum, and the acts of the members of the Committee
who are present at any meeting thereof at which a quorum is present, or acts unanimously approved
by the members of the Committee in writing, shall be the acts of the Committee. Subject to the
following and any applicable law, the Committee, in its sole discretion, may delegate any or all of
its powers and duties under the Plan, including the power to grant Awards under the Plan, to the
Chief Executive Officer of the General Partner, subject to such limitations on such delegated
powers and duties as the Committee may impose, if any. Upon any such delegation all references in
the Plan to the “Committee,” other than in Section 7, shall be deemed to include the Chief
Executive Officer. Any such delegation shall not limit the Chief Executive Officer’s right to
receive Awards under the Plan; provided, however, the Chief Executive Officer may not grant Awards
to himself, a Director or any executive officer of the General Partner or an Affiliate, or take any
action with respect to any Award previously granted to himself, an individual who is an executive
officer or a Director. Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the Plan, the Committee shall
have full power and authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to a Participant; (iii) determine the number of Units to be covered by Awards;
(iv) determine the terms and conditions of any Award, consistent with the terms of the Plan, which
terms may include any provision regarding the acceleration of vesting or waiver of forfeiture
restrictions or any other condition or limitation regarding an Award, based on such factors as the
Committee shall determine, in its sole discretion; (v) determine whether, to what extent, and under
what circumstances Awards may be vested, settled, exercised, canceled, or forfeited; (vi) interpret
and administer the Plan and any instrument or agreement relating to an Award made under the Plan;
(vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and (viii) make any other
determination and take any other action that the Committee deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or an Award Agreement in such manner and to such extent as
the Committee deems necessary or appropriate. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all Persons, including, without limitation, the
General Partner, the Partnership, any Affiliate, any Participant, and any beneficiary of any
Participant.

          (b) Limitation of Liability. The Committee and each member thereof shall be entitled
to, in good faith, rely or act upon any report or other information furnished to him or her by any
officer or employee of the General Partner, the Partnership or their Affiliates, the General
Partner’s or the Partnership’s legal counsel, independent auditors, consultants or any other agents
assisting in the administration of the Plan. Members of the Committee and any officer or employee
of the General Partner, the Partnership or any of their Affiliates acting at the direction or on
behalf of the Committee shall not be personally liable for any action or determination taken or
made in good faith with respect to this Plan, and shall, to the fullest extent permitted by law, be
indemnified and held harmless by the General Partner with respect to any such action or
determination.

          (c) Exemptions from Section 16(b) Liability. It is the intent of the General Partner
that the grant of any Awards to, or other transaction by, a Participant who is subject to Section
16 of the Exchange Act shall be exempt from Section 16(b) of the Exchange Act pursuant to Rule
16b-3 or another applicable exemption (except for transactions acknowledged by the Participant in
writing to be non-exempt). Accordingly, if any provision of the Plan or any Award Agreement does
not comply with the requirements of Rule 16b-3 or such other exemption as then applicable to any
such transaction, such

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provision shall be construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section
16(b) of the Exchange Act.

          Section 4. Units.

          (a) Limits on Units Deliverable. Subject to adjustment as provided in Section 4(c),
the number of Units that may be delivered with respect to Awards under the Plan is [__________].
On January 1 of each calendar year occurring prior to the expiration of the Plan the total number
of Units reserved and available for issuance under this Plan shall increase by [______] Units.
Units withheld from an Award or surrendered by a Participant to satisfy the Partnership’s or an
Affiliate’s tax withholding obligations (including the withholding of Units with respect to
Restricted Units) or to satisfy the payment of any exercise price with respect to the Award shall
not be considered to be Units delivered under the Plan for this purpose. If any Award is
forfeited, cancelled, exercised, settled in cash, or otherwise terminates or expires without the
actual delivery of Units pursuant to such Award (the grant of Restricted Units is not a delivery of
Units for this purpose), the Units subject to such Award shall again be available for Awards under
the Plan (including Units not delivered in connection with the exercise of an Option or Unit
Appreciation Right). There shall not be any limitation on the number of Awards that may be granted
and paid in cash.

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

          (c) Anti-dilution Adjustments. With respect to any “equity restructuring” event that
could result in an additional compensation expense to the General Partner or the Partnership
pursuant to the provisions of FASB Accounting Standards Codification, Topic 718 if adjustments to
Awards with respect to such event were discretionary, the Committee shall equitably adjust the
number and type of Units covered by each outstanding Award and the terms and conditions, including
the exercise price and performance criteria (if any), of such Award to equitably reflect such
restructuring event and shall adjust the number and type of Units (or other securities or property)
with respect to which Awards may be granted after such event. With respect to any other similar
event that would not result in an accounting charge under FASB Accounting Standards Codification,
Topic 718 if the adjustment to Awards with respect to such event were subject to discretionary
action, the Committee shall have complete discretion to adjust Awards in such manner as it deems
appropriate with respect to such other event. In the event the Committee makes any adjustment
pursuant to the foregoing provisions of this Section 4(c), the Committee shall make a corresponding
and proportionate adjustment with respect to the maximum number of Units that may be delivered with
respect to Awards under the Plan as provided in Section 4(a) and the kind of Units or other
securities available for grant under the Plan.

          (d) Additional Issuances. Except as hereinbefore expressly provided, the issuance by
the General Partner or the Partnership of Units for cash, property, labor or services, upon direct
sale, or upon the conversion of Units or obligations of the General Partner or the Partnership
convertible into such Units, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of Units subject to
Awards theretofore granted pursuant to the Plan.

          Section 5. Eligibility. Any Employee, Consultant or Director shall be eligible to be
designated a Participant and receive an Award under the Plan. Notwithstanding the foregoing,

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Employees, Consultants and Directors that provide services to Affiliates that are not
considered a single employer with the Partnership under Section 414(b) of the Code or Section
414(c) of the Code shall not be eligible to receive Awards which are subject to Section 409A of the
Code until the Affiliate adopts this Plan as a participating employer in accordance with Section
10. Further, if the Units issuable pursuant to an Award are intended to be registered with the SEC
on Form S-8, then only Employees, Consultants, and Directors of the Partnership or a parent or
subsidiary of the Partnership (within the meaning of General Instruction A.1(a) to Form S-8) will
be eligible to receive such an Award.

          Section 6. Awards.

          (a) Options. The Committee may grant Options that are intended to comply with
Treasury Regulation Section 1.409A-l(b)(5)(i)(A) only to Employees, Consultants or Directors
performing services for the Partnership or a corporation or other type of entity in a chain of
corporations or other entities in which each corporation or other entity has a “controlling
interest” in another corporation or entity in the chain, starting with the Partnership and ending
with the corporation or other entity for which the Employee, Consultant or Director performs
services. For purposes of this Section 6(a), “controlling interest” means (i) in the case of a
corporation, ownership of stock possessing at least 50% of total combined voting power of all
classes of stock of such corporation entitled to vote or at least 50% of the total value of shares
of all classes of stock of such corporation; (ii) in the case of a partnership, ownership of at
least 50% of the profits interest or capital interest of such partnership; (iii) in the case of a
sole proprietorship, ownership of the sole proprietorship; or (iv) in the case of a trust or
estate, ownership of an actuarial interest (as defined in Treasury Regulation Section
1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or estate. The Committee may grant Options
that are otherwise exempt from or compliant with Section 409A of the Code to any eligible Employee,
Consultant or Director. The Committee shall have the authority to determine the number of Units to
be covered by each Option, the purchase price therefor and the Restricted Period and other
conditions and limitations applicable to the exercise of the Option, including the following terms
and conditions and such additional terms and conditions, as the Committee shall determine, that are
not inconsistent with the provisions of the Plan.

          (i) Exercise Price. The exercise price per Unit purchasable under an Option
that does not provide for the deferral of compensation under the 409A Regulations shall be
determined by the Committee at the time the Option is granted but, except with respect to
Substitute Awards, may not be less than the Fair Market Value of a Unit as of the date of
grant of the Option. The exercise price per Unit purchasable under an Option that does not
provide for the deferral of compensation by reason of satisfying the short-term deferral
rule set forth in the 409A Regulations or that is compliant with Section 409A of the Code
shall be determined by the Committee at the time the Option is granted.

          (ii) Time and Method of Exercise. The Committee shall determine the exercise
terms and the Restricted Period with respect to an Option grant, which may include, without
limitation, a provision for accelerated vesting upon the achievement of specified
performance goals or other events, and the method or methods by which payment of the
exercise price with respect thereto may be made or deemed to have been made, which may
include, without limitation, cash, check acceptable to the General Partner, withholding
Units from an Award, a “cashless-broker” exercise through procedures approved by the General
Partner, or any combination of the above methods, having a Fair Market Value on the exercise
date equal to the relevant exercise price.

          (iii) Forfeitures. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participant’s employment or service with the General
Partner

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and its Affiliates or membership on the Board, whichever is applicable, for any reason
during the applicable Restricted Period, all unvested Options shall be forfeited by the
Participant. The Committee may, in its discretion, waive in whole or in part such
forfeiture with respect to a Participant’s Options; provided that the waiver contemplated
under this Section 6(a)(iii) shall be effective only to the extent that such waiver will not
cause the Participant’s Options that are designed to satisfy Section 409A of the Code to
fail to satisfy such section.

          (b) Unit Appreciation Rights. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Unit Appreciation Rights shall be granted, the number
of Units to be covered by each grant, whether Units or cash shall be delivered upon exercise, the
exercise price therefor and the conditions and limitations applicable to the exercise of the Unit
Appreciation Rights, including the following terms and conditions and such additional terms and
conditions as the Committee shall determine, that are not inconsistent with the provisions of the
Plan.

          (i) Exercise Price. The exercise price per Unit Appreciation Right shall be
determined by the Committee at the time the Unit Appreciation Right is granted and may be
more or less than the Fair Market Value of a Unit as of the date of grant of the Award.
Notwithstanding the foregoing, the exercise price per Unit that may be acquired under a Unit
Appreciation Right that does not provide for the deferral of compensation under the 409A
Regulations shall not be less than the Fair Market Value of a Unit as of the date of grant
of the Unit Appreciation Right.

          (ii) Time of Exercise. The Committee shall determine the Restricted Period and
the time or times at which a Unit Appreciation Right may be exercised in whole or in part,
which may include, without limitation, accelerated vesting upon the achievement of specified
performance goals or other events.

          (iii) Forfeitures. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participant’s employment with or service to the General
Partner, the Partnership and their Affiliates or membership on the Board, whichever is
applicable, for any reason during the applicable Restricted Period, all outstanding Unit
Appreciation Rights awarded to the Participant shall be automatically forfeited on such
termination. The Committee may, in its discretion, waive in whole or in part such
forfeiture with respect to a Participant’s Unit Appreciation Rights.

          (c) Restricted Units and Phantom Units. The Committee shall have the authority to
determine the Employees, Consultants and Directors to whom Restricted Units or Phantom Units shall
be granted, the number of Restricted Units or Phantom Units to be granted to each such Participant,
the Restricted Period, the conditions under which the Restricted Units or Phantom Units may become
vested or forfeited and such other terms and conditions as the Committee may establish with respect
to such Awards.

          (i) UDRs. To the extent provided by the Committee, in its discretion, a grant
of Restricted Units may provide that the distributions made by the Partnership with respect
to the Restricted Units shall be subject to the same forfeiture and other restrictions as
the Restricted Unit and, if restricted, such distributions shall be held, without interest,
until the Restricted Unit vests or is forfeited with the UDR being paid or forfeited at the
same time, as the case may be. In addition, the Committee may provide that such
distributions be used to acquire additional Restricted Units for the Participant. Such
additional Restricted Units may be subject to such vesting and other terms as the Committee
may prescribe. Absent such a restriction on the UDRs in the Award Agreement, UDRs shall be
paid to the holder of the Restricted Unit without restriction

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at the same time as cash distributions are paid by the Partnership to its unitholders.
Notwithstanding the foregoing, UDRs shall only be paid in a manner that is either exempt
from or in compliance with Section 409A of the Code.

          (ii) Forfeitures. Except as otherwise provided in the terms of the applicable
Award Agreement, upon termination of a Participant’s employment with, or consultant services
to, the General Partner and its Affiliates or membership on the Board, whichever is
applicable, for any reason during the applicable Restricted Period, all outstanding,
unvested Restricted Units and Phantom Units awarded the Participant shall be automatically
forfeited on such termination. The Committee may, in its discretion, waive in whole or in
part such forfeiture with respect to a Participant’s Restricted Units and/or Phantom Units;
provided that the waiver contemplated under this Section 6(c)(ii) shall be effective only to
the extent that such waiver will not cause the Participant’s Restricted Units and/or Phantom
Units that are designed to satisfy Section 409A of the Code to fail to satisfy such section.

          (iii) Lapse of Restrictions.

               (A) Phantom Units. During the 15 calendar day period immediately following the
vesting of each Phantom Unit, subject to the provisions of Section 8(b), the Participant
shall be entitled to settlement of such Phantom Unit and shall receive one Unit or an amount
in cash equal to the Fair Market Value of a Unit, as determined by the Committee in its
discretion.

               (B) Restricted Units. Upon the vesting of each Restricted Unit, subject to
satisfying the tax withholding obligations of Section 8(b), the Participant shall be
entitled to have the restrictions removed from his or her Award so that the Participant then
holds an unrestricted Unit.

          (d) Unit Awards. A Unit Award of Units not subject to a Restricted Period may be
granted under the Plan to any Employee, Consultant or Director as a bonus or additional
compensation or in lieu of cash compensation the individual is otherwise entitled to receive, in
such amounts as the Committee determines to be appropriate.

          (e) Other Unit Based Awards. The Committee is authorized, subject to limitations
under applicable law, to grant to Participants such other Awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or related to, Units, as
deemed by the Committee to be consistent with the purposes of this Plan, including, without
limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable
into Units, purchase rights for Units, Awards with value and payment contingent upon performance of
the Partnership or any other factors designated by the Committee, and Awards valued by reference to
the book value of Units or the value of securities of or the performance of specified Affiliates of
the General Partner or the Partnership. The Committee shall determine the terms and conditions of
such Awards. Units delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(e) shall be purchased for such consideration, paid for at such times, by such
methods, and in such forms, including, without limitation, cash, Units, other Awards, or other
property, as the Committee shall determine. Cash awards, as an element of or supplement to any
other Award under this Plan, may also be granted pursuant to this Section 6(e).

          (f) DERs. To the extent provided by the Committee, in its discretion, an Award (other
than a Restricted Unit or Unit Award) may include a tandem DER grant, which may provide that such
DERs shall be paid directly to the Participant, be reinvested into additional Awards, be credited
to a

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bookkeeping account (with or without interest in the discretion of the Committee) subject to
the same vesting restrictions as the tandem Award, or be subject to such other provisions or
restrictions as determined by the Committee in its discretion. Absent a contrary provision in the
Award Agreement, DERs shall be paid to the Participant without restriction at the same time as
ordinary cash distributions are paid by the Partnership to its unitholders. Notwithstanding the
foregoing, DERs shall only be paid in a manner that is either exempt from or in compliance with
Section 409A of the Code.

          (g) Substitute Awards. Awards may be granted under the Plan in substitution for
similar awards held by individuals who become Employees, Consultants or Directors as a result of a
merger, consolidation or acquisition by the Partnership or an Affiliate of another entity or the
assets of another entity. Such Substitute Awards that are Options or Unit Appreciation Rights may
have exercise prices less than the Fair Market Value of a Unit on the date of the substitution if
such substitution complies with Section 409A of the Code and the 409A Regulations and other
applicable laws and exchange rules.

          (h) Performance Awards. The right of a Participant to receive a grant, and the right
of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the Committee. The Committee
may use such business criteria and other measures of performance as it may deem appropriate in
establishing any performance conditions, and may exercise its discretion to reduce or increase the
amounts payable under any Award subject to performance conditions.

          (i) Performance Goals Generally. The performance goals for such Performance
Awards shall consist of one or more business criteria or individual performance criteria and
a targeted level or levels of performance with respect to each of such criteria, as
specified by the Committee consistent with this Section 6(h). The Committee may determine
that such Performance Awards shall be granted, exercised, and/or settled upon achievement of
any one performance goal or that two or more of the performance goals must be achieved as a
condition to grant, exercise and/or settlement of such Performance Awards. The Committee
shall establish any such performance conditions and goals based on one or more business
criteria for the General Partner and/or the Partnership, on a consolidated basis, and/or for
specified Affiliates or business or geographical units of the Partnership, as determined by
the Committee in its discretion, which may include (but are not limited to) one or more of
the following: (A) earnings per Unit, (B) increase in revenues, (C) increase in cash flow,
(D) increase in cash flow from operations, (E) increase in cash flow return, (F) return on
net assets, (G) return on assets, (H) return on investment, (I) return on capital, (J)
return on equity, (K) economic value added, (L) operating margin, (M) contribution margin,
(N) net income, (O) net income per Unit, (P) pretax earnings, (Q) pretax earnings before
interest, depreciation and amortization, (R) pretax operating earnings after interest
expense and before incentives, service fees, and extraordinary or special items, (S) total
unitholder return, (T) debt reduction, (U) market share, (V) change in the Fair Market Value
of the Units, (W) operating income, and (X) any of the above goals determined on an absolute
or relative basis or as compared to the performance of a published or special index deemed
applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock
Index or a group of comparable companies. Performance goals may differ for Performance
Awards granted to any one Participant or to different Participants.

          (ii) Performance Periods. Achievement of performance goals in respect of such
Performance Awards shall be measured over a performance period of up to ten years, as
specified by the Committee. Performance goals shall be established by the Committtee not
later than 90 days after the beginning of any performance period applicable to such
Performance Awards.

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          (iii) Settlement. After the end of each performance period, the Committee
shall determine the amount, if any, of the amount of the potential Performance Award
otherwise payable to each Participant. Settlement of such Performance Awards shall be in
cash, Units, other Awards or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce or increase the amount of a settlement otherwise to
be made in connection with such Performance Awards. The Committee shall specify the
circumstances in which such Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a performance period or
settlement of Performance Awards.

          (i) General.

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

          (ii) Limits on Transfer of Awards.

               (A) Except as provided in Section 6(i)(ii)(C) below, each Option and Unit Appreciation
Right shall be exercisable only by the Participant during the Participant’s lifetime, or by
the Person to whom the Participant’s rights shall pass by will or the laws of descent and
distribution.

               (B) Except as provided in Section 6(i)(ii)(C) below, no Award and no right under any
such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable against the
General Partner, the Partnership or any Affiliate.

               (C) To the extent specifically provided by the Committee with respect to an Option or
Unit Appreciation Right, an Option or Unit Appreciation Right may be transferred by a
Participant without consideration to immediate family members or related family trusts,
limited partnerships or similar entities or on such terms and conditions as the Committee
may from time to time establish.

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

          (iv) Issuance of Units. The Units or other securities of the Partnership
delivered pursuant to an Award may be evidenced in any manner deemed appropriate by the
Committee in its sole discretion, including, but not limited to, in the form of a
certificate issued in the name of the Participant or by book entry, electronic or otherwise
and shall be subject to such stop transfer orders and other restrictions as the Committee
may deem advisable under the Plan or the rules, regulations, and other requirements of the
SEC, any stock exchange upon which such Units or other securities are then listed, and any
applicable federal or state laws, and the Committee may cause a legend or legends to be
inscribed on any such certificates to make appropriate reference to such restrictions.

10

 

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

          (vi) Delivery of Units or other Securities and Payment by Participant of
Consideration. Notwithstanding anything in the Plan or any Award Agreement to the
contrary, delivery of Units pursuant to the exercise, vesting and/or settlement of an Award
may be deferred for any period during which, in the good faith determination of the
Committee, the General Partner is not reasonably able to obtain Units to deliver pursuant to
such Award without violating applicable law or the applicable rules or regulations of any
governmental agency or authority or securities exchange. No Units or other securities shall
be delivered pursuant to any Award until payment in full of any amount required to be paid
pursuant to the Plan or the applicable Award Agreement (including, without limitation, any
exercise price or tax withholding) is received by the General Partner.

          (vii) Change of Control. No 409A Award shall become exercisable, or be settled
or otherwise paid or distributed, pursuant to the Plan or the applicable Award Agreement, as
a result of a Change of Control, unless the event constituting such Change of Control also
constitutes a “change in the ownership or effective control” or “in the ownership of a
substantial portion of the assets” of the General Partner or the Partnership, as
appropriate, within the meaning of Treasury Regulation Section 1.409A-3(i)(5); except that,
to the extent permitted under Section 409A of the Code and the 409A Regulations, the time of
exercise, payment or settlement of a 409A Award shall be accelerated, or payment shall be
made under the Plan in respect of such Award, upon the occurrence of a Change of Control, as
determined by the Committee in its discretion, to the extent necessary to pay income,
withholding, employment or other taxes imposed on such 409A Award. To the extent any 409A
Award does not become exercisable or is not settled or otherwise payable upon a Change of
Control as a result of the limitations described in the preceding sentence, it shall become
exercisable or be settled or otherwise payable upon the occurrence of an event that
qualifies as a permissible time of distribution in respect of such 409A Award under Section
409A and the Treasury Regulations promulgated thereunder, the Plan and the terms of the
governing Award Agreement.

          (viii) Additional Agreements. Each Employee, Consultant or Director to whom an
Award is granted under this Plan may be required to agree in writing, as a condition to the
grant of such Award or otherwise, to subject an Award that is exercised or settled following
such Person’s termination of services with the General Partner, the Partnership or their
Affiliates to a general release of claims and/or a noncompetition agreement in favor of the
General Partner, the Partnership, and their Affiliates, with the terms and conditions of
such agreement(s) to be determined in good faith by the Committee.

          Section 7. Amendment and Termination. Except to the extent prohibited by applicable
law:

          (a) Amendments to the Plan and Awards. Except as required by applicable law or the
rules of the principal securities exchange, if any, on which the Units are traded, the Board or the
Committee may amend, alter, suspend, discontinue, or terminate the Plan in any manner, including
increasing the number of Units available for Awards under the Plan, without the consent of any
partner, Participant, other holder or beneficiary of an Award, or any other Person.
Notwithstanding the foregoing, the Committee may waive any conditions or rights under, amend any
terms of, or alter any Award theretofore granted, provided that no change, other than pursuant to
Section 7(b), 7(c), or 7(d) below, in

11

 

any Award shall materially reduce the rights or benefits of a Participant with respect to an
Award without the consent of such Participant.

          (b) Recapitalizations. If the Partnership recapitalizes, reclassifies its equity
securities, or otherwise changes its capital structure (a “recapitalization”), the number and class
of Units covered by an Award theretofore granted shall be adjusted so that such Award shall
thereafter cover the number and class of Units and securities to which the holder would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the holder had been the holder of record of the number of Units then covered by
such Award and the Unit limitations provided in Section 4 shall be adjusted in a manner consistent
with the recapitalization.

          (c) Award Adjustment. Except as otherwise provided in Section 4(c), in the event of
changes in the outstanding Units by reason of recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in capitalization occurring after
the date of the grant of any Award and not otherwise provided for by this Section 7, any
outstanding Awards and any agreements evidencing such Awards shall be subject to adjustment by the
Committee at its discretion as to the number and price of Units or other consideration subject to
such Awards. In the event of any such change in the outstanding Units, the Unit limitations
provided in Section 4 may be appropriately adjusted by the Committee, whose determination shall be
conclusive.

          (d) Change of Control. Notwithstanding any other provisions of the Plan or any Award
Agreement to the contrary, upon a Change of Control the Committee, acting in its sole discretion
without the consent or approval of any holder, may affect one or more of the following
alternatives, which may vary among individual holders and which may vary among Awards: (i) remove
any applicable forfeiture restrictions on any Award; (ii) accelerate the time of exercisability or
the time at which the Restricted Period shall lapse to a specific date, before or after such Change
of Control, specified by the Committee; (iii) require the mandatory surrender to the General
Partner or the Partnership by selected holders of some or all of the outstanding Awards held by
such holders (irrespective of whether such Awards are then subject to a Restricted Period or other
restrictions pursuant to the Plan) as of a date, before or after such Change of Control, specified
by the Committee, in which event the Committee shall thereupon cancel such Awards and pay to each
holder an amount of cash per Unit equal to the amount calculated in Section 7(e) (the “Change of
Control Price”) less the exercise price, if any, applicable to such Awards; or (iv) make such
adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Change of
Control (including, but not limited to, the substitution of Awards for new awards); provided,
however, that the Committee may determine in its sole discretion that no adjustment is necessary to
Awards then outstanding.

          (e) Change of Control Price. The “Change of Control Price” shall equal the amount
determined in clause (i), (ii), (iii), (iv) or (v), whichever is applicable, as follows: (i) the
per Unit price offered to Unit holders in any merger or consolidation, (ii) the per Unit value of
the Units immediately before the Change of Control without regard to assets sold in the Change of
Control and assuming the General Partner or the Partnership, as applicable, has received the
consideration paid for the assets in the case of a sale of the assets, (iii) the amount distributed
per Unit in a dissolution transaction, (iv) the price per Unit offered to Unit holders in any
tender offer or exchange offer whereby a Change of Control takes place, or (v) if such Change of
Control occurs other than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv)
of this Section 7(e), the Fair Market Value per Unit of the Units that may otherwise be obtained
with respect to such Awards or to which such Awards track, as determined by the Committee as of the
date determined by the Committee to be the date of cancellation and surrender of such Awards. In
the event that the consideration offered to unitholders of the Partnership in any transaction
described in

12

 

this Section 7(e) or Section 7(d) consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the consideration offered which is other than
cash.

          Section 8. General Provisions.

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

          (b) Tax Withholding. Unless other arrangements have been made that are acceptable to
the General Partner or an Affiliate, the Partnership or Affiliate is authorized to deduct,
withhold, or cause to be deducted or withheld, from any Award, from any payment due or transfer
made under any Award or from any compensation or other amount owing to a Participant the amount (in
cash, Units, Units that would otherwise be issued pursuant to such Award or other property) of any
applicable taxes payable in respect of the grant or settlement of an Award, its exercise, the lapse
of restrictions thereon, or any other 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 General Partner or Affiliate to
satisfy its withholding obligations for the payment of such taxes. Notwithstanding the foregoing,
with respect to any Participant who is subject to Rule 16b-3, such tax withholding automatically
shall be effected by the General Partner “netting” or withholding Units otherwise deliverable to
the Participant on the vesting or payment of such Award.

          (c) No Right to Employment or Services. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the General Partner or any
Affiliate, to continue providing consulting services, or to remain on the Board, as applicable.
Furthermore, the General Partner or an Affiliate may at any time dismiss a Participant from
employment or his or her service relationship free from any liability or any claim under the Plan,
unless otherwise expressly provided in the Plan, any Award Agreement or other agreement.

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

          (e) 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 Committee, such
provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person
or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

          (f) Other Laws. The Committee may refuse to issue or transfer any Units or other
consideration under an Award if, in its sole discretion, it determines that the issuance or
transfer of such Units or such other consideration might violate any applicable law or regulation,
the rules of the principal securities exchange on which the Units are then traded, or entitle the
Partnership or an Affiliate to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the General Partner 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.

          (g) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between the
General Partner or any Affiliate and a Participant or any other Person. To the extent that any
Person acquires a

13

 

right to receive payments from the General Partner or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any general unsecured creditor of the General Partner
or such Affiliate.

          (h) No Fractional Units. No fractional Units shall be issued or delivered pursuant to
the Plan or any Award, and the Committee shall determine in its sole discretion 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 with or without consideration.

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

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

          (k) Participation by Affiliates. In making Awards to Employees employed by an entity
other than the General Partner, the Committee shall be acting on behalf of the Affiliate, and to
the extent the Partnership has an obligation to reimburse the Affiliate for compensation paid for
services rendered for the benefit of the Partnership, such payments or reimbursement payments may
be made by the Partnership directly to the Affiliate, and, if made to the General Partner, shall be
received by the General Partner as agent for the Affiliate.

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

          (m) Compliance with Section 409A. Nothing in the Plan or any Award Agreement shall
operate or be construed to cause the Plan or an Award to fail to comply with the requirements of
Section 409A of the Code. The applicable provisions of Section 409A the Code and the 409A
Regulations are hereby incorporated by reference and shall control over any Plan or Award Agreement
provision in conflict therewith. To the extent that any Award shall be subject to Section 409A of
the Code, it shall be designed to comply with Section 409A of the Code.

          (n) Specified Employee under Section 409A of the Code. Subject to any other
restrictions or limitations contained herein, in the event that a “specified employee” (as defined
under Section 409A of the Code and the Treasury Regulations thereunder) becomes entitled to a
payment under an Award which is a 409A Award on account of a “separation from service” (as defined
under Section 409A of the Code and the Treasury Regulations thereunder), such payment shall not
occur until the date that is six months plus one day from the date of such separation from service.
Any amount that is otherwise payable within the six month period described herein will be
aggregated and paid in a lump sum without interest.

          (o) No Guarantee of Tax Consequences. None of the Board, the Committee, the
Partnership nor the General Partner makes any commitment or guarantee that any federal, state or
local tax treatment will (or will not) apply or be available to any Participant.

          Section 9. Term of the Plan. The Plan shall be effective on the date on which it is
adopted by the Board and shall continue until the earliest of (i) the date terminated by the Board,
(ii) all

14

 

Units available under the Plan have been delivered to Participants, or (iii) the 10th
anniversary of the date the Plan is adopted by the Board. However, any Award granted prior to such
termination, and the authority of the Board or Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights under such Award,
shall extend beyond such termination date.

          Section 10. Adoption by Affiliates. With the consent of the Committee, any Affiliate
that is not considered a single employer with the Partnership under Section 414(b) of the Code or
Section 414(c) of the Code may adopt the Plan for the benefit of its Employees, Consultants or
Directors by written instrument delivered to the Committee before the grant to such Affiliate’s
Employees, Consultants or Directors under the Plan of any 409A Award.

15exv10w4

Exhibit 10.4

FORM
OF
SERVICES AGREEMENT

     This SERVICES AGREEMENT is entered into as of the __ day of __________ 2011 (the “Effective
Date”), by and between OILTANKING PARTNERS, L.P., a Delaware limited partnership (the
“Partnership”), OTLP GP, LLC, a Delaware limited liability company and the general partner of the
Partnership (the “General Partner”), and OILTANKING NORTH AMERICA, LLC, a Delaware limited
liability company (“OTNA”). The above-named entities are sometimes referred to in this Agreement
each as a “Party” and collectively as the “Parties.”

     WHEREAS, the Partnership Group (as hereinafter defined) desires to obtain certain services
from OTNA and OTNA desires to provide certain services to the Partnership Group;

     NOW, THEREFORE, in consideration of the premises and covenants, conditions and agreements
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

     For purposes of this Agreement, the following terms shall have the following meanings:

     “Administrative Representative(s)” has the meaning given such term in Section 6.15(a).

     “Affiliate” means, with respect to any Person, any other Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with, such Person, and
includes any Person in like relation to an Affiliate. A Person shall be deemed to “control”
another Person if such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise; and the term “controlled” shall have a similar
meaning. Without limiting the generality of the foregoing, it is agreed that any Person that owns
or controls, directly or indirectly, 50% or more of the voting securities of another Person shall
be deemed for purposes of this Agreement to control such other Person.

     “Arbitration Award” has the meaning given such term in Section 6.12.

     “Base CPI” has the meaning given such term in Section 2.1(d)(i).

     “Business” has the meaning given such term in Section 2.1(a).

     “Cause” has the meaning given such term in the Partnership Agreement.

 

 

     “Change of Control” means, with respect to any Person (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 dissolution or liquidation of the Applicable Person;

     (c) the consolidation or merger of the Applicable Person with or into another Person,
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

     (d) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the
Exchange Act) 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 that would not constitute a
Change of Control under clause (c) above.

     “Closing Date” means the date of the closing of the initial public offering of common units of
the Partnership.

     “Conflicts Committee” has the meaning given such term in the Partnership Agreement.

     “CPI” has the meaning given such term in Section 2.1(d)(i).

     “Damages” has the meaning given such term in Section 5.1.

     “Discussion Date” has the meaning given such term in Section 6.16.

     “Effective Date” has the meaning given such term in the preamble to this Agreement.

     “Estimate Invoice” has the meaning given to such term in Section 2.6.

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

2

 

     “Expiration Date” has the meaning given such term in Section 3.1

     “Extension Periods” has the meaning given such term in Section 3.1.

     “Final CPI” has the meaning given such term in Section 2.1(d)(i).

     “General Partner” has the meaning given such term in the preamble to this Agreement.

     “Governmental Authority” means:

     (a) any domestic or foreign government, whether national, federal, state provincial,
territorial, municipal or local (whether administrative, legislative, executive or
otherwise);

     (b) any agency, authority, ministry, department, regulatory body, court, central bank,
bureau, board or other instrumentality having legislative, judicial, taxing, regulatory,
prosecutorial or administrative powers or functions of, or pertaining to, government;

     (c) any court, tribunal, commission, individual, arbitrator, arbitration panel or
other body having adjudicative, regulatory, judicial, quasi-judicial, administrative or
similar functions; and

     (d) any other body or entity created under the authority of or otherwise subject to
the jurisdiction of any of the foregoing, including any stock or other securities exchange
or professional association.

	 	 	“Indemnified Party” has the meaning given such term in Section 5.2(b).

	 	 	“Indemnifying Party” has the meaning given such term in Section 5.2(b).

     “OTA” has the meaning given such term in Section 2.1(a).

     “OTNA” has the meaning given such term in the preamble to this Agreement.

     “OTNA Indemnitees” has the meaning given such term in Section 5.1.

     “Partnership” has the meaning given such term in the preamble to this Agreement.

     “Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership
of the Partnership, as it may be amended from time to time.

     “Partnership Entities” means the Partnership and each other member of the Partnership Group;
and “Partnership Entity” means any of the Partnership Entities.

3

 

     “Partnership Group” means the Partnership and its Subsidiaries.

     “Party” or “Parties” has the meaning given such term in the preamble to this Agreement.

     “Person” is to be construed broadly and includes an individual, partnership, corporation,
business trust, limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity or a Governmental Authority.

     “Representatives” has the meaning given such term in Section 5.1.

     “Sales Taxes” has the meaning given such term in Section 6.1(b).

     “Services” has the meaning given such term in Section 2.1(a).

     “SG&A Expenses Limit” has the meaning given such term in Section 2.1(d).

     “Shortfall Amount” has the meaning given such term in Section 2.6.

     “Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.

     “Terminated Service” has the meaning given such term in Section 3.2.

     “Third-Party Claim” has the meaning given such term in Section 5.2(a).

     “True Up Invoice” has the meaning given to such term in Section 2.6.

     “Voting Securities” of a Person means securities of any class of such Person entitling the
holders thereof to vote in the election of, or to appoint, members of the board of directors or
other similar governing body of the Person; provided, that if such Person is a limited partnership,
Voting Securities of such Person shall be the general partner interest in such Person.

4

 

ARTICLE 2

SERVICES

     2.1 Provision, Allocation and Reimbursement for Services

     (a) OTNA agrees to provide the Partnership Entities with certain selling, general,
administrative and operating services necessary to run the business of the Partnership
Group (the “Business”), which services may include, without limitation, those services set
forth in Schedule A and Schedule B (collectively, the “Services”). The Services shall be
substantially similar in nature and quality to the services of each such type previously
provided by Oiltanking Holding Americas, Inc., a Delaware corporation (“OTA”), in
connection with its management and operation of the Business prior to its acquisition by
the Partnership.

     (b) OTNA shall provide the Services to the Partnership Entities in a manner that is in
the good faith judgment of OTNA commercially reasonable; provided, that for so long as OTNA
exercises at least the same degree of care, skill and prudence in providing the Services as
customarily exercised by it in providing Services to OTA and its Affiliates (other than the
Partnership Group), then OTNA will be deemed to have provided such Services in a
commercially reasonable manner. EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE, OTNA MAKES
NO (AND HEREBY DISCLAIMS AND NEGATES ANY AND ALL) WARRANTIES OR REPRESENTATIONS WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES. IN NO EVENT SHALL OTNA OR ANY OF ITS
AFFILIATES BE LIABLE TO ANY MEMBER OF THE PARTNERSHIP GROUP OR TO ANY OTHER PERSON FOR ANY
EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES RESULTING FROM
ANY ERROR IN THE PERFORMANCE OF THE SERVICES, REGARDLESS OF WHETHER THE PERSON PROVIDING
SUCH SERVICES, ITS AFFILIATES, OR OTHERS MAY BE WHOLLY, CONCURRENTLY, PARTIALLY, OR SOLELY
NEGLIGENT OR OTHERWISE AT FAULT.

     (c) Subject to the provisions of Section 2.1(d) below, the Partnership Entities hereby
agree to reimburse OTNA for all cash expenses and expenditures that OTNA incurs or payments
OTNA makes on behalf of the Partnership Entities for the Services; provided that the
Partnership Entities shall reimburse OTNA for any direct costs actually incurred by OTNA in
providing the Services and further provided that the Partnership Entities shall not be
required to pay or reimburse OTNA for any services that OTNA otherwise provides to support
its own assets or the assets of Affiliates other than the Partnership Group.

     (d) Subject to the provisions of this Section 2.1(d), the amount for which OTNA shall
be entitled to reimbursement from the Partnership Group pursuant to Section 2.1(c) for the
Services listed in Schedule A (except as set

5

 

specifically set forth in Schedule A) shall not
exceed $17.0 million per year (the “SG&A Expenses Limit”). The SG&A Expenses Limit shall be
subject to adjustment as follows:

     (i) On each anniversary date of this Agreement, the SG&A Expenses Limit shall
be increased by the percentage increase, if any, in the Consumer Price Index — All
Urban Consumers, U.S. City Average, Not Seasonally Adjusted (the “CPI”). The base
index (“Base CPI ”) shall be the published CPI as of the month of Effective Date,
which shall be compared with the first or subsequent anniversary date indices
(each, a “Final CPI”). The percentage change will be calculated to the third
decimal place and applied to the SG&A Expenses Limit to determine the adjustment to
the SG&A Expenses Limit in accordance with the following formula:

	 	 	 	 	 

	 

	 	Final CPI — Base CPI
 

              Base CPI
	 	x      SG&A Expenses Limit = Adjustment Amount 

If the product of the foregoing formula is negative, there shall be no adjustment
to the SG&A Expenses Limit. In the event that the CPI is no longer kept or
published, OTNA shall establish an alternative method of adjusting the SG&A
Expenses Limit based on a then currently published inflation index.

     (ii) If after the Closing Date, the Partnership Group completes any
acquisition of assets or businesses or the business of the Partnership Group
otherwise expands, then the SG&A Expenses Limit shall be appropriately increased in
order to account for adjustments in the nature and extent of the Services provided
by OTNA to the Partnership Entities, with any such increase in the SG&A Expenses
Limit to be subject to the prior approval of the Conflicts Committee. Any issues
that the Parties are not able to resolve pursuant to the foregoing sentence shall
be resolved in accordance with Section 6.12.

     (iii) Beginning on the third anniversary of the term of this Agreement, the
Parties will meet at least annually on or about October 31 to review the scope of
the Services, the standards of performance, performance metrics and activity levels
and, if applicable, any adjustments to the SG&A Expenses Limit. The Parties will
use their good-faith efforts to resolve any issues concerning Service standards,
performance metrics or changes in the SG&A Expenses Limit, with any increase or
decrease (including as a result of termination of a specific service by the
Partnership Group as a result of Section 3.2 hereto) in the SG&A Expenses Limit to
be subject to the prior approval of the Conflicts
Committee. Any issues that the Parties are not able to resolve pursuant to
the foregoing sentence shall be resolved in accordance with Section 6.12.

6

 

The SG&A Expenses Limit shall not apply to reimbursement for expenses for the Services
listed in Schedule B, publicly traded partnership expenses of the Partnership Group as
provided in Section 2.2 or for insurance reimbursements as provided in Section 2.3.

     2.2 Reimbursement for Publicly Traded Partnership Expenses.
The Partnership Entities hereby agree to reimburse OTNA for all expenses and expenditures that
OTNA incurs or payments that it makes as a result of the Partnership becoming a publicly traded
partnership, including (but not limited to) expenses associated with annual and quarterly
reporting; tax return and Schedule K-1 preparation and distribution expenses; Sarbanes-Oxley
compliance expenses; expenses associated with listing on the New York Stock Exchange; independent
auditor fees; legal fees; investor relation expenses; and registrar and transfer agent fees. The
obligation of the Partnership Entities to reimburse OTNA pursuant to this Section 2.2 shall not be
subject to any monetary limitation, including the SG&A Expenses Limit set forth in Section 2.1.

     2.3 Reimbursement for Insurance.
The Partnership Entities hereby agree to reimburse OTNA for all expenses that OTNA incurs or
payments that it makes on behalf of the Partnership Entities for insurance coverage with respect to
the Business. The obligation of the Partnership Entities to reimburse OTNA pursuant to this Section
2.3 shall not be subject to any monetary limitation, including the SG&A Expenses Limit set forth in
Section 2.1.

     2.4 Access.
The Partnership Group shall (a) make available on a timely basis to OTNA all information and
materials reasonably requested by OTNA to enable OTNA to provide the Services to the Partnership
Entities; and (b) provide to OTNA reasonable access to the Business to the extent necessary for
OTNA to provide the Services to the Partnership Entities.

     2.5 Cooperation.
OTNA and the Partnership Group shall cooperate with each other in all reasonable respects in
matters relating to the provision and receipt of the Services. Such cooperation shall include (a)
obtaining all consents, licenses or approvals and (b) making timely decisions and granting timely
approvals and acceptances, in each necessary to permit each Party to perform its obligations
hereunder.

     2.6 Payments. On or before the first business day of each month, OTNA shall send an invoice to the General
Partner for that amount of money associated with all expenses or expenditures
estimated by OTNA to be incurred or payments estimated by OTNA to be made by OTNA during the given
month that are to be reimbursed by the Partnership Entities pursuant to Sections 2.1, 2.2 and 2.3
hereof (each, an “Estimate Invoice”). Subject to Section 2.7, the Partnership Entities shall pay
or cause to be paid each Estimate Invoice within thirty (30) days after the date of the Estimate
Invoice. Any Estimate Invoice that is not paid within such thirty (30) day period shall be subject
to late charges, calculated based on a rate per annum equal to the ‘prime rate’ as set forth from
time to time in The Wall Street Journal, Eastern Edition, ‘Money Rates’ column (or the maximum
legal rate, whichever is lower), for each month or portion thereof that the statement is overdue.
The Estimate Invoices shall be “trued up” within ten (10) days of

7

 

the end of each quarter based on
the actual amount of the expenses, expenditures or payments in respect of which estimates were made
in the immediately preceding quarter, and OTNA will deliver to the Partnership Entities a revised
invoice (the “True Up Invoice”) reflecting any adjustments to the Estimate Invoices. The
Partnership Entities shall pay or cause to be paid any amount set forth in a True Up Invoice that
is in OTNA’s favor (a “Shortfall Amount”) within ten (10) days after the date of the True Up
Invoice. Any Shortfall Amount that is not paid within such ten-(10)-day period shall be subject to
late charges, calculated based on a rate per annum equal to the ‘prime rate’ as set forth from time
to time in The Wall Street Journal, Eastern Edition, ‘Money Rates’ column (or the maximum legal
rate, whichever is lower), for each month or portion thereof that the statement is overdue. OTNA
shall credit against the next Estimate Invoice any amount set forth in a True Up Invoice that is in
the Partnership Entities’ favor.

     2.7 Disputed Invoices. The Partnership Entities may withhold payment on any portion of the invoiced amount that it
disputes in good faith if it provides OTNA with written notice of such dispute (together with
reasonable detail of the facts underlying such dispute) within ten (10) days following the date of
such invoice. The Administrative Representatives shall meet and attempt in good faith to resolve
the dispute. If within twenty (20) days the Administrative Representatives have been unable to
resolve the dispute, and if the dispute relates to whether amounts were properly charged or
Services actually performed, either Administrative Representative may submit the dispute to an
independent third party auditing firm that is mutually agreeable to OTNA, on the one hand, and the
Partnership Entities, on the other hand. The Parties shall cooperate with such auditing firm and
shall provide such auditing firm with access to such books and records as may be reasonably
necessary to permit a determination by such auditing firm. The resolution by such auditing firm
shall be final and binding on the Parties. Upon final determination that any amount in dispute
under this Section 2.7 is owed to OTNA, the Partnership Entities shall promptly pay to OTNA such
amount, together with interest equal to the ‘prime rate’ of interest on the original due date as
published by The Wall Street Journal, Eastern Edition, ‘Money Rates’ column (or the maximum legal
rate, whichever is lower), accruing from the original due date of such amount to the date of actual
payment. The auditing firm shall use commercially reasonable efforts to complete its work within
thirty (30) days following its engagement. The expenses of the auditing firm shall be apportioned
equally between OTNA and the Partnership Entities.

     2.8 Audit. OTNA shall keep books of accounts and other records, in reasonable detail and in accordance with
generally accepted accounting principles and industry standards, consistently applied, with respect
to the provision of the Services and the fees charges, including time logs (or similar time
allocation materials), receipts and other related back-up materials. Such books of account and
other records shall be open for the Partnership Entities’ inspection during normal business hours
upon at least ten (10) days’ prior written notice for twelve (12) months following the end of the
calendar year in which such Services were rendered. This inspection right will include the right
of the Partnership Entities to have their accountants or auditors review such books and records.
If an audit reveals that the Partnership Entities paid more than the applicable fees for any
applicable audited period or Service, OTNA shall reimburse the Partnership

8

 

Entities for any amounts
overpaid together with interest equal to the ‘prime rate’ of interest on the original due date as
published by The Wall Street Journal, Eastern Edition, ‘Money Rates’ column (or the maximum legal
rate, whichever is lower), accruing from the date paid by the Partnership Entities to the date
reimbursed by OTNA.

ARTICLE 3

TERM AND TERMINATION

     3.1 Term. The initial term of this Agreement will commence on the date hereof and, subject to the
provisions of Sections 3.3, 3.4 and 3.5 hereof, shall continue until the tenth anniversary thereof.
The term of this Agreement shall thereafter automatically renew for additional twelve-month
periods (“Extension Periods”) (such date and each anniversary thereof marking the expiration of an
Extension Period being hereinafter called the “Expiration Date”) unless and until either the
Partnership or OTNA provides to the other parties written notice not later than one hundred eighty
(180) days prior to the Expiration Date stating that the noticing Party does not agree to extend
the term of this Agreement for an additional Extension Period.

     3.2 Termination for Convenience. Any specific Service or subcategory of a Service may be terminated by the Partnership Group
(each such specific Service or subcategory of a Service that has been terminated by the Partnership
Group, a “Terminated Service”) at its convenience upon thirty (30) days’ prior written notice to
OTNA. At the request of the Partnership Group, OTNA shall continue to perform a Terminated Service and shall be
entitled to compensation for such Terminated Service in accordance with the terms of this Agreement
beyond such thirty (30) day period for the period of time not to
exceed ninety (90) days. At the request of OTNA, the Partnership
Group will afford OTNA the period of time that is reasonably required for OTNA to demobilize the personnel
and operations that have been utilized in respect of such Terminated
Service and will reimburse OTNA for the costs and losses
reasonably incurred by OTNA in connection with
the demobilization or termination of use of systems, personnel,
service contracts, machinery and equipment deployed by OTNA to
provide any Services; provided, however, that the amount of such
costs and losses shall be subject to the mutual agreement of the
Partnership Group and OTNA.

     3.3 Early Termination. In the event that any Party hereto (a) becomes insolvent, (b) commits an act of bankruptcy, (c)
takes advantage of any law for the benefit of debtors or such Party’s creditors, or (d) suffers a
receiver to be appointed for it or any of its property, the other party may, then or thereafter
during the continuation of such event, upon giving thirty (30) days’ prior written notice,
terminate this Agreement and exercise such other and further rights and remedies as it may have
pursuant to law.

     3.4 Breach. In the event of a material breach by OTNA or the Partnership Entities of any of their material
obligations under this Agreement, including any failure by the Partnership Entities to make
payments to OTNA when due, that is not cured in all material respects within thirty (30) days after
receiving written notice thereof from the non-breaching Party, the non-breaching Party may
terminate this Agreement immediately by providing written notice of such termination, provided that
the withholding of payment by the Partnership in accordance with Section 2.7 shall not constitute a
breach of this agreement.

9

 

     3.5 Change of Control. This Agreement shall terminate upon a Change of Control of the General Partner or the
Partnership, other than any Change of Control of the General Partner or the Partnership deemed to
have occurred pursuant to clause (iv) of the definition of Change of Control solely as a result of
a Change of Control of OTA. Notwithstanding any other provision of this Agreement, if the General
Partner is removed as general partner of the Partnership under circumstances where Cause does not
exist and common units held by the General Partner and its Affiliates are not voted in favor of
such removal, this Agreement may immediately thereupon be terminated by OTNA. The Partnership
shall provide OTNA with notice of any Change of Control of the General Partner or the Partnership
at least ninety (90) days prior to the effective date thereof.

     3.6 Amounts Due. In the event of a termination of this Agreement, OTNA shall be entitled to the immediate payment
of, and the Partnership Entities shall, within ten (10) days, pay to OTNA, all accrued amounts for
Services, taxes and other amounts due under this Agreement as of the date of termination. Payments
not made within ten (10) days of termination of this Agreement shall be subject to late charges as
provided in Section 2.6.

     3.7 Effect of Termination. Upon expiration or termination of this Agreement, all rights and obligations of the Parties
under this Agreement shall terminate; provided, however, that such termination shall not affect or
excuse the performance of any Party (i) for any breach of this Agreement occurring prior to such
termination or (ii) under any of the following provisions of this Agreement that survive the
termination of this Agreement indefinitely: Section 2.6, Section 3.6, this Section 3.7 and Article
5 and Article 6 hereof.

ARTICLE 4

FORCE MAJEURE

     OTNA shall not be liable for any expense, loss or damage whatsoever arising out of any
interruption of Services or delay or failure to perform under this Agreement that is due to acts of
God, acts of a public enemy, acts of terrorism, acts of a nation or any state, territory, province
or other political division thereof, fires, floods, epidemics, riots, theft, quarantine
restrictions, freight embargoes or other similar causes beyond the reasonable control of OTNA. In
any such event, OTNA’s obligations hereunder shall be postponed for such time as its performance is
suspended or delayed on account thereof. OTNA will promptly notify the Partnership Group, either
orally or in writing, upon learning of the occurrence of such event of force majeure. Upon the
cessation of the force majeure event, OTNA will use commercially reasonable efforts to resume its
performance with the least practicable delay.

ARTICLE 5

INDEMNIFICATION AND INSURANCE

     5.1 Release. Except as specifically set forth in this Agreement, the Partnership Group hereby releases OTNA
and each of its employees, agents, members, managers, officers and directors (collectively, the
“Representatives” and together with OTNA, the “OTNA Indemnitees”), from and against any and all
claims, demands,

10

 

complaints, liabilities, losses, damages, costs and expenses (collectively,
“Damages”) arising from, relating to or in connection with the provision of any Service to, or the
use of any Service by, the Partnership Entities or any of their Affiliates or any other Person
using such Service, except to the extent that such Damages were caused by acts or omissions of OTNA
or its Representatives, which acts or omissions are finally determined by a court or arbitral
tribunal of competent jurisdiction to be the result of the fraud, willful misconduct or gross
negligence of such Person, in which case such OTNA Indemnitee shall not be entitled to the benefits
of this Section 5.1 to the extent that such Damages were caused by such fraud, willful misconduct
or gross negligence.

     5.2 Indemnity.

     (a) Except as specifically set forth in this Agreement, the Partnership Group hereby
agrees to indemnify, defend and hold harmless the OTNA Indemnitees from and against any and
all Damages arising from, relating to or in connection with any demand, claim, proceeding
or complaint by a third party (each, a “Third-Party Claim”) in respect of the provision of
any to, or the use of any Services by, the Partnership Group, except to the extent that
such Damages were caused by acts or omissions of OTNA or the Representative, which acts or
omissions are finally determined by a court or arbitral tribunal of competent jurisdiction
to be the result of the fraud, willful misconduct or gross negligence of
such Person, in which case, such OTNA Indemnitee shall not be entitled to the benefits
of this Section 5.2(a) to the extent that such Damages were caused by such fraud, willful
misconduct or gross negligence.

     (b) If a Third-Party Claim is made against any Person entitled to indemnification
pursuant to Section 5.2(a) (an “Indemnified Party”), and if such Indemnified Party intends
to seek indemnity with respect thereto under Section 5.2(a), such Indemnified Party shall
promptly notify in writing the party obligated to indemnify such Indemnified Party (the
“Indemnifying Party”) of the nature of the claim. The failure by the Indemnified Party to
give notice as provided above shall not relieve the Indemnifying Party of its obligations
under this Article 5, except to the extent that the Indemnifying Party’s rights are
actually prejudiced as a result of such failure to give notice. Upon receipt of notice of
the assertion of a claim, the Indemnifying Party shall have the right to assume, reasonably
and promptly, the defense of the claim at its own expense. The Indemnified Party shall
have the right to employ separate counsel and to participate in (but not control) any such
action, but the fees and expenses of such counsel shall be at the expense of the
Indemnified Party. If the Indemnifying Party does not reasonably promptly assume the
defense, the Indemnified Party shall have the right to employ counsel and to control the
defense against the claim, and the reasonable fees and expenses of such counsel shall be at
the expense of the Indemnifying Party. The Indemnifying Party shall not enter into any
settlement of a claim that includes any term other than just a payment of money, nor any
settlement of a claim that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Party a full release from all liability with
respect to the claim, in each case, without the prior written consent of the

11

 

Indemnified
Party (which consent shall not be unreasonably withheld). The Indemnified Party, if it
shall control the defense of the claim, shall not enter into any settlement of a claim
without the prior written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld). The Indemnified Party shall provide all reasonable cooperation and
assistance, at the Indemnifying Party’s expense, in the defense of any claim for which
indemnification is available and shall furnish such records, information, testimony and
attend such conferences, discovery proceedings, hearings, trials and appeals as may
reasonably be requested.

ARTICLE 6

MISCELLANEOUS

     6.1 Taxes.

     (a) The Partnership Group shall bear all taxes, duties and other similar charges (and
any related interest and penalties), imposed as a result of the Partnership Entities’
receipt of Services under this Agreement, including any tax which any Partnership Entity is
required to withhold or deduct from payments to any OTNA, except any net income tax imposed
upon OTNA.

     (b) Notwithstanding Section 6.1(a), the Partnership Group is liable for and will
indemnify and hold harmless OTNA from all sales, use and similar taxes (plus any penalties,
fines or interest thereon) (collectively, “Sales Taxes”) assessed, levied or imposed by any
Governmental Authority on the provision of Services by OTNA to the Partnership Entities.
OTNA shall collect from the Partnership Entities any Sales Tax that is due on the Services
it provides to the Partnership Entities and shall pay such Sales Tax so collected to the
appropriate Governmental Authority.

     6.2 Assignment. This Agreement shall bind and inure to the benefit of and be enforceable by the Parties hereto
and their respective successors and permitted assigns. No Party may assign its rights or
obligations under this Agreement without the prior written consent of the other Parties hereto;
provided, however, that OTNA may assign its rights and obligations under this Agreement to any
Affiliate of OTNA. Any purported assignment or transfer in violation of this Section 6.2 shall be
null and void and of no effect.

     6.3 No Third Party Beneficiaries. Except as provided in Article 5, this Agreement is for the sole benefit of the Parties and their
successors and permitted assigns, and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the Parties and their successors and permitted assigns,
any legal or equitable rights hereunder, whether as third-party beneficiaries or otherwise.

     6.4 Amendments. Except as otherwise provided in this Agreement, including Section 6.15(b), no amendment to this
Agreement shall be effective unless it is in writing and signed by each Party hereto.

12

 

     6.5 Waivers. No failure or delay on the part of any Party in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power. The rights and remedies of
the Parties hereunder are cumulative and are not exclusive of any rights or remedies which they
would otherwise have hereunder. No provision of this Agreement may be waived except pursuant to a
writing executed by the waiving Party.

     6.6 Notices. All notices or other communications required or permitted to be given hereunder shall be in
writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and shall be
deemed given when so delivered by hand or facsimile, or if mailed, three days after mailing (one
business day in the case of express mail or overnight courier service), as follows (or at such
other address for a Party as shall be specified by notice given in accordance with this Section
6.6):

OTNA:

Oiltanking North America, LLC

15631 Jacintoport Boulevard

Houston, Texas 77015

Attention: ____________

Partnership:

Oiltanking Partners, L.P.

15631 Jacintoport Boulevard

Houston, Texas 77015

Attention: ____________

General Partner:

OTLP GP, LLC

15631 Jacintoport Boulevard

Houston, Texas 77015

Attention: ____________

     6.7 Further Assurances. The Parties agree to execute such additional instruments, agreements and documents and to take
such other actions, as may be necessary to effect the purposes of this Agreement.

     6.8 Exhibits and Schedules; Interpretation. The headings contained in this Agreement or in any Schedule are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. All Schedules
referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Any capitalized terms used in any Schedule but not otherwise defined therein, shall
have the meaning as defined in this Agreement. When a reference is made in this Agreement

13

 

to an
Article, Section or Schedule, such reference shall be to an Article or Section of, or a Schedule
to, this Agreement unless otherwise indicated. For all purposes hereof, the terms “include” and
“including” shall be deemed followed by the words “without limitation.” The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement. No provision of
this Agreement shall be interpreted or construed against any Party hereto solely because such Party
or its legal representative drafted such provision.

     6.9 Counterparts. This Agreement may be executed in two or more counterparts, and by facsimile, each of which
shall be deemed to be an original, but all of which shall constitute one and the same agreement.

     6.10 Entire Agreement. This Agreement, including the Schedules, constitute the entire agreement and understanding among
the Parties with respect to the subject matter hereof and supersedes all prior agreements and
understandings and negotiations, both written and oral, between the Parties with respect to the
subject matter of this Agreement. No representation, inducement, promise, understanding, condition
or warranty not set forth herein has been made or relied upon by any Party hereto.

     6.11 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any applicable rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent
possible.

     6.12 Arbitration. Any dispute, controversy or claim arising out of or in connection with this Agreement shall be
settled by final and binding arbitration conducted in Houston, Texas in accordance with the
Commercial Arbitration Rules of the American Arbitration Association by one or more arbitrators
designated in accordance with said Rules. All arbitrators must have not less than seven years
experience in the energy industry. The Parties agree that the award of the arbitral tribunal (the
“Arbitration Award”) shall be: (a) conclusive, final and binding upon the Parties; and (b) the sole
and exclusive remedy between the Parties regarding any and all claims and counterclaims presented
to the arbitral tribunal. All notices to be given in connection with the arbitration shall be as
provided in Section 6.6 of this Agreement. The Arbitration Award shall include interest, at a rate
determined as appropriate by the arbitrators, from the date of any breach or other violation of
this Agreement to the date when the Arbitration Award is paid in full. The Arbitration Award shall
also include the fixing of the expense of the arbitration and the assessment of the same, as is
appropriate in the opinion of the arbitrators, against either or both parties hereto. Each party
shall otherwise bear its cost for its respective legal fees, witnesses, depositions and other
out-of-pocket expenses incurred in the course of the arbitration.

14

 

     6.13 Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT,
BY THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE WHICH WOULD
RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER STATE.

     6.14 Confidentiality; Title to Data.

     (a) Each of the Parties agrees that any confidential information of the other Party
received in the course of performance under this Agreement shall be kept strictly
confidential by the Parties, except that OTNA may, for the purpose of providing Services
pursuant to this Agreement, disclose such information to any of its Subsidiaries or to
third-party contractors; provided that any such third party shall have agreed to be bound
by this Section 6.14; and any Party may disclose such information to the extent reasonably
necessary in connection with the enforcement of this Agreement or as required by law, any
Governmental Authority or legal process, including any tax audit or litigation or if
requested by any Governmental Authority. The obligations under this Section 6.14 shall not
apply to (i) information that becomes generally available to the public other than as a
result of a disclosure, directly or indirectly, by the receiving Party or its Affiliates;
(ii) information that becomes available to a party on a non-confidential basis from a
source other than the other Party (provided that such source is not known by such party to
be bound by a confidentiality agreement with or other obligation of secrecy to the other
Party); (iii) information to the extent required by a court of competent jurisdiction or
other Governmental Authority or otherwise as required by law, including disclosure
obligations imposed under the United States federal securities laws; or (iv) information on
a “need-to-know” basis under an obligation of confidentiality to its, its Affiliates, and
its and its Affiliates’ consultants, legal counsel, employees, directors, officers,
accountants, banks and other financing sources and their advisors.

     (b) The Partnership Group acknowledges that the Partnership Group will not acquire any
right, title or interest (including any license rights or rights of use) in any firmware or
software, and the licenses therefor that are owned by OTNA, by reason of the provision of
the Services provided hereunder.

     6.15 Administrative Representatives.

     (a) Each Party shall by notice to the other Party appoint one or more Representatives
(“Administrative Representative(s)”) to facilitate day-to-day
communications and performance under this Agreement. Each Party may treat an act of
an Administrative Representative of any other Party as being authorized by such other Party
to act for and bind such Party. Each Party may replace its Administrative Representative
by giving written notice of the replacement to the other Parties.

15

 

     (b) No additional schedules, modifications to the existing Schedule or modifications
or amendments to this Agreement shall be effective unless and until executed by the
Administrative Representatives of each of OTNA and the Partnership.

     6.16 Dispute Resolution. If the Parties are unable to resolve any service or performance issues or if there is a material
breach of this Agreement that has not been corrected within thirty (30) days of receipt of notice
of such breach, the Administrative Representatives of the Parties in dispute shall meet promptly to
review and resolve such issues and breaches in good faith (the date on which such Persons first so
meet, the “Discussion Date”). If such Persons are unable to fully resolve any such issues and
breaches in good faith promptly after the Discussion Date, any remaining disputes shall be resolved
in accordance with Section 6.12.

     6.17 Overriding Obligations. Notwithstanding anything to the contrary, no term of this Agreement or the Schedules hereto
shall have the effect of obliging either to breach any legal or regulatory obligation to which such
Person may be subject, by virtue of either requiring such Person to act in a particular manner or
refrain from doing so.

[Rest of the page intentionally left blank]

16

 

     IN WITNESS WHEREOF, the parties have executed this Services Agreement as of the date first
above written.

	 	 	 	 	 	 	 	 	 

	OILTANKING PARTNERS, L.P.	 	OILTANKING NORTH AMERICA, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	OTLP GP, LLC, its General Partner	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	

	 	 

	 	
	 	 

	 	 
	Name:

	 	 

	 	Name:
	 	 

	 	 
	

	 	 

	 	
	 	 

	 	 
	Title:

	 	 

	 	Title:
	 	 

	 	 
	 

	 	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	OTLP GP, LLC	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 
	 	 	 	 	 	 
	 
	Name:

	 	 
	 	 	 	 	 	 
	 
	Title:

	 	 

	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

17

 

SCHEDULE A

Services Subject to the SG&A Expenses Limit

	1)	 	executive,
	 
	2)	 	investor relations (provided that the SG&A Expenses Limit shall not apply to reimbursement of
expenses for investor relations services),
	 
	3)	 	sales and marketing,
	 
	4)	 	corporate legal for support of existing assets of the Partnership Group for support of
existing assets of the Partnership Group,
	 
	5)	 	accounting (provided that the SG&A Expenses Limit shall not apply to reimbursement of
expenses for accounting services that are to be to be reimbursed pursuant to Section 2.2),
	 
	6)	 	treasury and cash management,
	 
	7)	 	creditor management and collections,
	 
	8)	 	internal audit,
	 
	9)	 	tax reporting and administration for support of existing assets of the Partnership Group,
	 
	10)	 	insurance administration and claims processing,
	 
	11)	 	risk management,
	 
	12)	 	health, safety, security and environmental affairs for support of existing assets of the
Partnership Group,
	 
	13)	 	human resources management for support of existing assets of the Partnership Group,
	 
	14)	 	payroll administration,
	 
	15)	 	internal training,
	 
	16)	 	engineering services for support of existing assets of the Partnership Group,
	 
	17)	 	Enterprise Resource Planning for support of existing assets of the Partnership Group, and
	 
	18)	 	information technology for support of existing assets of the Partnership Group.

18

 

SCHEDULE B

Operations and Project Development Services

	1)	 	operations,
	 
	2)	 	maintenance and repair,
	 
	3)	 	inventory management,
	 
	4)	 	facilities management,
	 
	5)	 	services of third party consultants and advisers, and
	 
	6)	 	services and business development for support of new or expansion projects.

19

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