Exhibit 10.6
QEP MIDSTREAM PARTNERS, LP
2013 LONG-TERM INCENTIVE PLAN
PHANTOM UNIT AGREEMENT
Pursuant to this Phantom Unit Agreement, dated as of [            ], 2013 (this
“Agreement”), QEP Midstream Partners GP, LLC (the “Company”), as the general
partner of QEP Midstream Partners, LP (the “Partnership”), hereby grants to
[            ] (the “Participant”) the following award of Phantom Units
(“Phantom Units”), pursuant and subject to the terms and conditions of this
Agreement and the QEP Midstream Partners, LP 2013 Long-Term Incentive Plan (the
“Plan”), the terms and conditions of which are hereby incorporated into this
Agreement by reference. Each Phantom Unit shall constitute a Phantom Unit under
the terms of the Plan and is hereby granted in tandem with a corresponding DER,
as further detailed in Section 3 below. Except as otherwise expressly provided
herein, all capitalized terms used in this Agreement, but not defined, shall
have the meanings provided in the Plan.
GRANT NOTICE
Subject to the terms and conditions of this Agreement, the principal features of
this Award are as follows:
Number of Phantom Units: [            ] Phantom Units
Grant Date: [            ], 2013
Vesting of Phantom Units: [Insert time-based vesting schedule].
Forfeiture of Phantom Units: In the event of a cessation of the Participant’s
Service for any reason, all Phantom Units that have not vested prior to or in
connection with such cessation of Service shall, subject to Section 4(b) below,
thereupon automatically be forfeited by the Participant without further action
and for no consideration.
Payment of Phantom Units: Vested Phantom Units shall be paid to the Participant
in the form of Units as set forth in Section 5 below.
DERs: Each Phantom Unit granted under this Agreement shall be issued in tandem
with a corresponding dividend equivalent right, or DER, which shall entitle the
Participant to receive payments in an amount equal to Partnership distributions
in accordance with Section 3 below.
TERMS AND CONDITIONS OF PHANTOM UNITS
1. Grant. The Company hereby grants to the Participant, as of the Grant Date, an
award of [            ] Phantom Units, subject to all of the terms and
conditions contained in this Agreement and the Plan.
2. Phantom Units. Subject to Section 4 below, each Phantom Unit that vests shall
represent the right to receive payment, in accordance with Section 5 below, in
the form of one (1) Unit. Unless and until a Phantom Unit vests, the Participant
will have no right to payment in respect of such Phantom Unit. Prior to actual
payment in respect of any vested Phantom Unit, such Phantom Unit will represent
an unsecured obligation of the Partnership, payable (if at all) only from the
general assets of the Partnership.
3. Grant of Tandem DER. Each Phantom Unit granted hereunder is hereby granted in
tandem with a corresponding DER, which shall remain outstanding from the Grant
Date until the earlier of the payment or forfeiture of the related Phantom Unit.
Each DER shall entitle the Participant to receive payments, subject to and in
accordance with this Agreement, in an amount equal to any distributions made by
the Partnership in respect of the Unit underlying the Phantom Unit to which such
DER relates, regardless of whether or not such Phantom Unit is vested.
4. Vesting and Forfeiture.
(a) Vesting. Subject to Section 4(c) below, the Phantom Units shall vest in such
amounts and at such times as are set forth in the Grant Notice above.
(b) Accelerated Vesting. Subject to Section 4(c) below, the Phantom Units shall
vest in full upon the occurrence of any of the following events: [Insert
circumstances resulting in accelerated vesting, if any].
(c) Forfeiture. Notwithstanding the foregoing, in the event of a cessation of
the Participant’s Service for any reason, all Phantom Units that have not vested
prior to or in connection with such cessation of Service shall thereupon
automatically be forfeited by the Participant without further action and without
payment of consideration therefor. No portion

--------------------------------------------------------------------------------

of the Phantom Units which has not become vested at the date of the
Participant’s cessation of Service shall thereafter become vested.
(d) Payment. Vested Phantom Units shall be subject to the payment provisions set
forth in Section 5 below.
5. Payment of Phantom Units and DERs.
(a) Phantom Units. Unpaid, vested Phantom Units shall be paid to the Participant
in the form of Units in a lump-sum as soon as reasonably practical, but not
later than sixty (60) days, following the date on which such Phantom Units vest.
Payments of any Phantom Units that vest in accordance herewith shall be made to
the Participant (or in the event of the Participant’s death, to the
Participant’s estate) in whole Units in accordance with this Section 5. In lieu
of the foregoing, the Committee may elect at its discretion to pay the Phantom
Units in cash equal to the Fair Market Value of the Units that would otherwise
be distributed as of the date of vesting.
(b) DERs. Payments in respect of DERs shall be made to the Participant promptly
upon the making of the corresponding distributions by the Partnership to its
common unitholders.
(c) Potential Delay. Notwithstanding anything to the contrary in this Agreement,
no amounts payable under this Agreement shall be paid to the Participant prior
to the expiration of the six (6)-month period following his “separation from
service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) (a
“Separation from Service”) to the extent that the Company determines that paying
such amounts prior to the expiration of such six (6)-month period would result
in a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code. If the
payment of any such amounts is delayed as a result of the previous sentence,
then on the first business day following the end of the applicable six (6)-month
period (or such earlier date upon which such amounts can be paid under
Section 409A of the Code without resulting in a prohibited distribution,
including as a result of the Participant’s death), such amounts shall be paid to
the Participant.
6. Tax Withholding. The Company and/or its Affiliates shall have the authority
and the right to deduct or withhold, or to require the Participant to remit to
the Company and/or its Affiliates, an amount sufficient to satisfy all
applicable federal, state and local taxes (including the Participant’s
employment tax obligations) required by law to be withheld with respect to any
taxable event arising in connection with the Phantom Units and the DERs. In
satisfaction of the foregoing requirement, unless otherwise determined by the
Committee, the Company and/or its Affiliates shall withhold Units otherwise
issuable in respect of such Phantom Units having a Fair Market Value equal to
the sums required to be withheld. In the event that Units that would otherwise
be issued in payment of the Phantom Units are used to satisfy such withholding
obligations, the number of Units which shall be so withheld shall be limited to
the number of Units which have a Fair Market Value (which, in the case of a
broker-assisted transaction, shall be determined by the Committee, consistent
with applicable provisions of the Code) on the date of withholding equal to the
aggregate amount of such liabilities based on the minimum statutory withholding
rates for federal, state, local and foreign income tax and payroll tax purposes
that are applicable to such supplemental taxable income.
7. Rights as Unit Holder. Neither the Participant nor any person claiming under
or through the Participant shall have any of the rights or privileges of a
holder of Units in respect of any Units that may become deliverable hereunder
unless and until certificates representing such Units shall have been issued or
recorded in book entry form on the records of the Partnership or its transfer
agents or registrars, and delivered in certificate or book entry form to the
Participant or any person claiming under or through the Participant.
8. Non-Transferability. Neither the Phantom Units nor any right of the
Participant under the Phantom Units may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Participant (or any
permitted transferee) other than by will or the laws of descent and distribution
and any such purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against the Company, the
Partnership and any of their Affiliates.
9. Distribution of Units. Unless otherwise determined by the Committee or
required by any applicable law, rule or regulation, neither the Company nor the
Partnership shall deliver to the Participant certificates evidencing Units
issued pursuant to this Agreement and instead such Units shall be recorded in
the books of the Partnership (or, as applicable, its transfer agent or equity
plan administrator). All certificates for Units issued pursuant to this
Agreement and all Units issued pursuant to book entry procedures hereunder shall
be subject to such stop transfer orders and other restrictions as the Company
may deem advisable under the Plan or the rules, regulations, and other
requirements of the Securities Exchange Commission, any stock exchange upon
which such Units are then listed, and any applicable federal or state laws, and
the Company may cause a legend or legends to be inscribed on any such
certificates or book entry to make appropriate reference to such restrictions.
In addition to the terms and conditions provided herein, the Company may require
that the Participant make such covenants, agreements, and representations as the
Company, in its sole discretion, deems advisable in order to comply with any
such laws, regulations, or requirements. No fractional Units shall be issued or
delivered pursuant to the Phantom Units and the Committee shall determine
whether cash, other securities, or other property shall be paid

--------------------------------------------------------------------------------

or transferred in lieu of fractional Units or whether such fractional Units or
any rights thereto shall be canceled, terminated, or otherwise eliminated.
10. Partnership Agreement. Units issued upon payment of the Phantom Units shall
be subject to the terms of the Plan and the Partnership Agreement. Upon the
issuance of Units to the Participant, the Participant shall, automatically and
without further action on his or her part, (i) be admitted to the Partnership as
a Limited Partner (as defined in the Partnership Agreement) with respect to the
Units, and (ii) become bound, and be deemed to have agreed to be bound, by the
terms of the Partnership Agreement.
11. No Effect on Service. Nothing in this Agreement or in the Plan shall be
construed as giving the Participant the right to be retained in the employ or
service of the Company or any Affiliate thereof. Furthermore, the Company and
its Affiliates may at any time dismiss the Participant from employment or
consulting free from any liability or any claim under the Plan or this
Agreement, unless otherwise expressly provided in the Plan, this Agreement or
any other written agreement between the Participant and the Company or an
Affiliate thereof.
12. Severablility. If any provision of this Agreement is or becomes or is deemed
to be invalid, illegal, or unenforceable in any jurisdiction, 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 this Agreement, such provision
shall be stricken as to such jurisdiction, and the remainder of this Agreement
shall remain in full force and effect.
13. Tax Consultation. None of the Board, the Committee, the Company nor the
Partnership has made any warranty or representation to Participant with respect
to the income tax consequences of the issuance of the Phantom Units, the DERs,
the Units or the transactions contemplated by this Agreement, and the
Participant represents that he or she is in no manner relying on such entities
or their representatives for tax advice or an assessment of such tax
consequences. The Participant understands that the Participant may suffer
adverse tax consequences in connection with the Phantom Units and DERs granted
pursuant to this Agreement. The Participant represents that the Participant has
consulted with any tax consultants that the Participant deems advisable in
connection with the Phantom Units and DERs.
14. Amendments, Suspension and Termination. To the extent permitted by the Plan,
this Agreement may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board or the
Committee. Except as provided in the preceding sentence, this Agreement cannot
be modified, altered or amended, except by an agreement, in writing, signed by
both the Partnership and the Participant.
15. Lock-Up Agreement. The Participant shall agree, if so requested by the
Company or the Partnership and any underwriter in connection with any public
offering of securities of the Partnership or any Affiliate thereof, not to
directly or indirectly offer, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of or otherwise dispose of or transfer any Units
held by him or her for such period, not to exceed one hundred eighty (180) days
following the effective date of the relevant registration statement filed under
the Securities Act in connection with such public offering, as such underwriter
shall specify reasonably and in good faith. The Company or the Partnership may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period. Notwithstanding the
foregoing, the 180-day period may be extended in the discretion of the Company
for up to such number of additional days as is deemed necessary by such
underwriter or the Company or Partnership to continue coverage by research
analysts in accordance with FINRA Rule 2711 or any successor or other applicable
rule.
16. Conformity to Securities Laws. The Participant acknowledges that the Plan
and this Agreement are intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act, any and all regulations
and rules promulgated by the Securities and Exchange Commission thereunder, and
all applicable state securities laws and regulations. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and the Phantom Units
and DERs are granted, only in such a manner as to conform to such laws, rules
and regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
17. Code Section 409A. None of the Phantom Units, the DERs or any amounts paid
pursuant to this Agreement are intended to constitute or provide for a deferral
of compensation that is subject to Section 409A of the Code. Nevertheless, to
the extent that the Committee determines that the Phantom Units or DERs may not
be exempt from (or compliant with) Section 409A of the Code, the Committee may
(but shall not be required to) amend this Agreement in a manner intended to
comply with the requirements of Section 409A of the Code or an exemption
therefrom (including amendments with retroactive effect), or take any other
actions as it deems necessary or appropriate to (a) exempt the Phantom Units or
DERs from Section 409A of the Code and/or preserve the intended tax treatment of
the benefits provided with respect to the Phantom Units or DERs, or (b) comply
with the requirements of Section 409A of the Code. To the extent applicable,
this Agreement shall be

--------------------------------------------------------------------------------

interpreted in accordance with the provisions of Section 409A of the Code.
Notwithstanding anything in this Agreement to the contrary, to the extent that
any payment or benefit hereunder constitutes non-exempt “nonqualified deferred
compensation” for purposes of Section 409A of the Code, and such payment or
benefit would otherwise be payable or distributable hereunder by reason of the
Participant’s cessation of Service, all references to the Participant’s
cessation of Service shall be construed to mean a Separation from Service, and
the Participant shall not be considered to have a cessation of Service unless
such cessation constitutes a Separation from Service with respect to the
Participant.
18. Adjustments; Clawback. The Participant acknowledges that the Phantom Units
are subject to modification and forfeiture in certain events as provided in this
Agreement and Section 7 of the Plan. The Participant further acknowledges that
the Phantom Units, DERs and Units issuable hereunder, whether vested or unvested
and whether or not previously issued, are subject to clawback as provided in
Section 8(o) of the Plan.
19. Successors and Assigns. The Company or the Partnership may assign any of its
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company and the
Partnership. Subject to the restrictions on transfer contained herein, this
Agreement shall be binding upon the Participant and his or her heirs, executors,
administrators, successors and assigns.
20. Governing Law. The validity, construction, and effect of this Agreement and
any rules and regulations relating to this Agreement shall be determined in
accordance with the laws of the State of Delaware without regard to its
conflicts of laws principles.
21. Headings. Headings are given to the sections and subsections of this
Agreement 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 this Agreement or any provision hereof.
[Signature page follows]
The Participant’s signature below indicates the Participant’s agreement with and
understanding that this award is subject to all of the terms and conditions
contained in the Plan and in this Agreement, and that, in the event that there
are any inconsistencies between the terms of the Plan and the terms of this
Agreement, the terms of the Plan shall control. The Participant further
acknowledges that the Participant has read and understands the Plan and this
Agreement, which contains the specific terms and conditions of this grant of
Phantom Units. The Participant hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Committee upon any questions
arising under the Plan or this Agreement.
 
 
 
 
QEP Midstream Partners GP, LLC
a Delaware limited liability company
 
 
By:
 
 
Name:
Title:

 
 
 
 
QEP Midstream Partners, LP
a Delaware limited partnership
 
 
By:
 
QEP Midstream Partners GP, LLC
Its:
 
General Partner

 
 
 
 
By:
 
 
 
 
Name:
 
 
Title:

 

--------------------------------------------------------------------------------

 
 
 
“PARTICIPANT”
 
 
[Name]