Exhibit 10.10

 

USA COMPRESSION PARTNERS, LP

2013 LONG-TERM INCENTIVE PLAN

 

FORM OF

EMPLOYEE PHANTOM UNIT AGREEMENT

 

Pursuant to this Phantom Unit Agreement, dated as of Grant Date identified in
the Grant Notice below (this “Agreement”), USA Compression GP, LLC (the
“Company”), as the general partner of USA Compression 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 USA Compression 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 distribution equivalent right (“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:  [                  ]

 

Vesting of Phantom Units:  Phantom Units shall vest in three equal annual
installments, with the first installment vesting on [                ] and the
other two installments on the next two succeeding anniversaries thereof, subject
in each case to the Participant continuing in Service through the applicable
vesting date; provided that the Phantom Units shall be subject to accelerated
vesting in certain circumstances as set forth in Section 4(b).

 

Forfeiture of Phantom Units:  In the event of a cessation (not including any
approved leave of absence) 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.

 

Payment of Phantom Units:  Vested Phantom Units shall be paid to the Participant
as set forth in Section 5 below.

 

DERs: Each Phantom Unit granted under this Agreement shall be issued in tandem
with a corresponding DER, which shall entitle the Participant to receive
payments in an amount equal to the Partnership distributions in accordance with
Section 3 below.

 

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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 in the amount set
forth in the Grant Notice above, 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 following the Grant
Date and while the DER is outstanding in respect of the Unit underlying the
Phantom Unit to which such DER relates.  The Company shall make each such
payment to the Participant in cash as soon as reasonably practicable, but not
later than forty-five days after each such distribution is paid by the
Partnership.

 

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, if a Change in Control occurs after the Grant Date and
following such occurrence, the Participant incurs a termination of Service due
to the Participant’s termination by the Company or one of its Affiliates without
Cause or the Participant’s resignation for Good Reason, then 100% of the
then-unvested Phantom Units shall vest in full as of immediately prior to such
termination (1).  For purposes of this Agreement, the following definitions
shall apply:

 

(i)                                     “Cause” shall have the meaning set forth
in a written employment or other similar agreement between the Participant on
one hand and the Partnership, the Company or any of their Affiliates on the
other hand.  In the event the Participant is not a party to a written agreement
containing a definition of “Cause” or similar term, “Cause” (solely for purposes
of this Agreement and not for the purpose of establishing any standard of
termination for employment) shall mean a finding by the Committee, before or
after the Participant’s termination of Service, of: (i) any material failure by
the Participant to perform the Participant’s duties and responsibilities as an
Employee; (ii) any significant act of fraud, embezzlement, theft or
misappropriation by the Participant relating to the Company, the Partnership or
any of their Affiliates that is demonstrably and significantly injurious to the
Partnership or any of its Affiliates; (iii) the Participant’s conviction of a
felony or a crime involving moral turpitude; (iv) any gross negligence or

 

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(1)  Acceleration for the President and Chief Executive Officer will occur
immediately upon a Change in Control.

 

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intentional misconduct on the part of the Participant in the conduct of the
Participant’s duties and responsibilities with the Company, the Partnership or
any of their Affiliates that is demonstrably and significantly injurious to the
Partnership or any of its Affiliates; or (v) any material breach by the
Participant of any agreement between the Company, the Partnership or any of
their Affiliates, on the one hand, and the Participant on the other; provided,
that with respect to items (i), (iv) and (v), the Participant shall have not
been able to remedy such deficiencies within 15 days of receiving written notice
thereof from the Company (as long as any such types of deficiencies have not
previously been noticed in writing to Participant in the immediately preceding
six months).  The findings and decision of the Committee with respect to such
matter, including those regarding the acts of the Participant and the impact
thereof, will be final for all purposes.

 

(ii)                                  “Good Reason” shall have the meaning set
forth in a written employment or other similar agreement between the Participant
on one hand and the Partnership, the Company or any of their Affiliates on the
other hand, provided that in no event shall any event or occurrence constitute
Good Reason for purposes of this Agreement unless such event or occurrence
constitutes a “material negative change” (within the meaning of Treasury
Regulation 1.409A-1(n)(2)) to the Participant in his or her service relationship
with the Company, the Partnership and its Affiliates.  In the event the
Participant is not a party to a written agreement containing a definition of
“Good Reason” or similar term, “Good Reason” (solely for purposes of this
Agreement and not for the purpose of establishing any standard of termination
for employment) shall mean the occurrence of one or more of the following
actions without the Participant’s consent: (1) a material reduction in the
duties and responsibilities held by the Participant, except in connection with a
termination of the Participant’s Service for Cause; (2) a material reduction in
the Participant’s base salary, other than a reduction that is generally
applicable to all similarly situated employees of the Company; or (3) a material
change (i.e., more than 50 miles) in the geographic location at which the
Participant must perform services for the Company, the Partnership or its
Affiliates; provided, however, that no termination of Service by the Participant
shall constitute a termination for Good Reason unless (a) the Participant has
first provided the Company, the Partnership or its applicable Affiliate with
written notice specifically identifying the acts or omissions constituting the
grounds for Good Reason within thirty (30) days after the Participant has or
should reasonably be expected to have had knowledge of the occurrence thereof,
(b) the Company, the Partnership or its Affiliate, as applicable, has not cured
such acts or omissions within thirty (30) days of its actual receipt of such
notice, and (c) the effective date of the Participant’s termination for Good
Reason occurs no later than ninety (90) days after the initial existence of the
facts or circumstances constituting Good Reason.

 

(c)                                  Forfeiture.  Notwithstanding the foregoing,
in the event of a cessation (not including any approved leave of absence) 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 (not including any
approved leave of absence) of Service shall thereafter become vested.

 

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(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 forty-five (45) 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 in 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.    DERs shall be paid to the
Participant as provided above in Section 3.

 

(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 the Company and/or
its Affiliates shall withhold, solely at the election of the Participant,
(a) Units otherwise issuable in respect of such Phantom Units having a Fair
Market Value equal to the sums required to be withheld, (b) cash, or (c) a
combination of cash and Units otherwise issuable in respect of such Phantom
Units.  In the event that Units that would otherwise be issued in payment of the
Phantom Units are used to satisfy all or part of 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 (if a broker assisted transaction is permitted by the Participant),
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, less any cash withheld.

 

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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.  Except as set
forth in the next sentence, 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.  Notwithstanding the foregoing, (i) the
Phantom Units or any right of the Participant under the Phantom Units may be
transferred by a Participant without consideration to any “family member” of the
Participant, as defined in the instructions to use of the Form S-8 Registration
Statement under the Securities Act, as applicable, or any other transferee
specifically approved by the Committee after taking into account any state,
federal, local or foreign tax and securities laws applicable to transferable
Awards; and (ii) vested Units may be transferred to the extent permitted by the
Partnership Agreement and not otherwise prohibited by this Agreement or any
other agreement restricting the transfer of such Units.

 

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 the amount of cash, other
securities, or other property that shall be paid or transferred in lieu of
fractional Units.

 

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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
or establish standards regarding the termination from employment of the
Participant.  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.                               Non-Solicitation of Customers and Employees.

 

(a)                                 During the period beginning on the Grant
Date and for a period of 12 months following the termination of the
Participant’s Service (the “Restricted Period”) for any reason, the Participant
agrees to not, directly or indirectly, recruit or otherwise solicit or induce
any employee, customer, subscriber or supplier of the Company to terminate its
employment or arrangement with the Company, to engage in business with the
Participant (or any future employer, affiliate or service recipient of the
Participant) or to otherwise change its relationship with the Company, the
Partnership or any of their Affiliates.  Further, during the Restricted Period,
the Participant agrees not to, directly or indirectly, hire or attempt to hire,
or assist another person, firm, corporation, partnership or business in hiring
or attempting to hire any employee (or former employee for six months after
termination of employment) of the Company.

 

(b)                                 It is recognized and acknowledged by the
Participant that a breach of the covenants contained in this Section 12 will
cause irreparable damage to the Company, the Partnership and their Affiliates
and their goodwill, the exact amount of which will be difficult or impossible to
ascertain, and that the remedies at law for any such breach will be inadequate. 
Accordingly, the Participant agrees that in the event of a breach of any of the
covenants contained in this Section 12, in addition to any other remedy which
may be available at law or in equity, the Company, the Partnership and their
Affiliates will be entitled to specific performance and injunctive relief
without having to prove damages.  In the event any term of this Section 12 shall
be determined by any court of competent jurisdiction to be unenforceable by
reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it will be interpreted to extend only over the maximum period of time for which
it may be enforceable, over the maximum geographical area as to which it may be
enforceable, or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.

 

13.                               Non-Disparagement.  The Participant agrees to
refrain from making any oral or written statements to a third party about the
Company, the Partnership, or any of their Affiliates that are slanderous,
libelous or defamatory with the effect of damaging the business or reputation of
the Company, the Partnership, or any of their Affiliates. If the Participant
violates

 

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the terms of this Section 13, the violation shall be deemed an Act of Misconduct
under the Plan and the Phantom Units, DERs, and Units issuable hereunder,
whether vested or unvested and whether or not previously issued, shall be
subject to the clawback described in Section 8(o) of the Plan only to the extent
that the violation resulted in actual demonstrable harm to the Company, the
Partnership, or any of their Affiliates.

 

14.                               Severability.  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.

 

15.                               Tax Consultation.  None of the Board, the
Committee, the Company or 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.

 

16.                               Amendments, Suspension and Termination. 
Solely 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.

 

17.                               Lock-Up Agreement.  The Participant shall
agree, if so requested of all executive management personnel 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 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 rule.

 

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18.                               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.

 

19.                               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.

 

20.                               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.

 

21.                               Successors and Assigns.  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.

 

22.                               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.

 

23.                               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.

 

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24.                               Forfeiture.  The Award granted under this
Agreement shall automatically be deemed forfeited by the Participant on
[                    ] unless prior to such date the Participant shall have
(i) executed and delivered to the Partnership this Agreement and (except for
Participants who already have entered into (a) a written employment agreement
with the Partnership, one of its subsidiaries or USA Compression Management
Services, LLC or (b) a Nondisclosure and Assignment of Inventions Agreement in
form satisfactory to the Partnership (a “Form NDA and Assignment”)) (ii) of an
NDA and Assignment in favor of the Partnership.

 

[Signature page follows]

 

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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 this Agreement 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.

 

 

 

USA Compression Partners, LP

 

a Delaware limited partnership

 

 

 

By:

USA Compression GP, LLC

 

Its:

General Partner

 

 

 

 

 

By:

 

 

 

Name: Eric D. Long

 

 

Title: President and CEO

 

 

 

 

 

 

 

“PARTICIPANT”

 

 

 

 

 

[                                  ]

 

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