Form 8-K Archrock Partners, L.P. For: Feb 18

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): February 18, 2016

 

 

ARCHROCK PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

 

 

 

16666 Northchase Drive

Houston, Texas 77060

(Address of Principal Executive Offices) (Zip Code)

 

(281) 836-8000
Registrant’s telephone number, including area code

 

Not Applicable
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 5.02.                                        Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Adoption of Incentive Program for 2016

 

On February 18, 2016, the compensation committee of the board of directors of Archrock, Inc. (the “Archrock compensation committee”) adopted a short-term incentive program (the “2016 Incentive Program”) to provide the short-term cash incentive compensation element of Archrock’s and our total direct compensation program for this year.  The Archrock compensation committee set the cash incentive target under the 2016 Incentive Program for each of the following individuals, our named executive officers (the “Named Executive Officers”), as a specified percentage of his respective base salary:

 

Executive Officer		Title		2016 Cash Incentive Target (% of base salary)
D. Bradley Childers		President and Chief Executive Officer		110
David S. Miller		Senior Vice President and Chief Financial Officer		70
Robert E. Rice		Senior Vice President		70
Donald C. Wayne		Senior Vice President and General Counsel		65

 

Each Named Executive Officer’s potential cash incentive payout ranges from 0% to 200% of his respective target, as may be adjusted by the Archrock compensation committee in its discretion.  In addition, the Archrock compensation committee has the discretion to increase each individual’s actual bonus payment above 200% of his respective target.

 

Actual payouts under the 2016 Incentive Program will be based on the Archrock compensation committee’s assessment of Archrock’s performance for 2016 relative to one or more of the following performance indicators, as well as such other factors or criteria that the Archrock compensation committee in its discretion deems appropriate:

 

·      Financial and operational performance, including operating cash flow, operating horsepower and a consolidated debt ratio;

 

·      Safety, to be assessed by specific corporate and group metrics, including the incident rate for recordable injuries;

 

·      Service quality, to be assessed by various group metrics, including equipment service availability; and

 

·      People, to be assessed by successful implementation of various group initiatives intended to optimize and enhance company culture.

 

The Archrock compensation committee intends to award performance-based short-term incentive compensation under the 2016 Incentive Program based on its assessment of: (i) for all Named Executive Officers, overall Archrock company financial and operating performance, including operating cash flow, operating horsepower and a consolidated debt ratio, (ii) for each Named Executive Officer other than Messrs. Childers and Miller, each officer’s operating unit performance relative to the performance indicators, (iii) each Named Executive Officer’s individual contribution toward Archrock’s company and/or operating unit performance, including his demonstrated leadership and implementation of Archrock’s business strategy, (iv)  the recommendations of our Chief Executive Officer (other than with respect to himself), and (v) any other factors or criteria that the Archrock compensation committee may choose to consider, in its discretion. No specific weight will be given to any of these factors. The Archrock compensation committee has reserved the right to modify the list of performance indicators, as well as target levels of one or more of these indicators, in its discretion based on internal and external developments during the course of 2016.

 

Pursuant to the terms of an omnibus agreement between us, our general partner, Archrock and others (the “Omnibus Agreement”), we will reimburse Archrock for that portion of our Named Executive Officers’ compensation, including any 2016 short-term incentive compensation awarded under the 2016 Incentive Program, allocated to us.

 

Adoption of Phantom Unit Award Notice

 

On February 18, 2016, the compensation committee (the “Committee”) of the board of directors of Archrock GP LLC, the general partner of Archrock General Partner, L.P., the general partner of Archrock Partners, L.P., adopted a form of Award Notice and Agreement for Phantom Units with DERs (the “Phantom Unit Award Notice”), which sets forth the terms for grants to officers and employees of our phantom units with tandem distribution equivalent rights (“DERs”) under the Archrock Partners, L.P. Long-Term Incentive Plan (the “Plan”).  Among other things, the Phantom Unit Award Notice provides for (i) notice of the amount and vesting schedule of the award, (ii) immediate vesting of the unvested portion of the award in the event of the grantee’s termination of employment as a result of death or disability, (iii) forfeiture of the unvested portion of the award in the event of the grantee’s termination of employment other than as a result of death or disability, (iv) immediate vesting of the unvested portion of the award in the event of the grantee’s termination of employment by the company without cause, by the grantee for good reason or due to the grantee’s death or disability, in each case, within 18 months following a change of control, (v) payment of the phantom units, in the Committee’s discretion, in our common units, a lump sum in cash equal to the fair market value of our common units on the vesting date, or a combination of the two and (vi) non-transferability of the award prior to vesting.  Awards granted under the Phantom Unit Award Notice vest one-third per year over a three-year period, subject to continued service through each vesting date.

 

The foregoing summary is qualified in its entirety by reference to the Phantom Unit Award Notice, a copy of which is filed as Exhibit 10.1 to this Form 8-K and is incorporated in this Item 5.02 by reference.

 

Adoption of Director Unit Award Notice

 

On February 18, 2016, the Committee adopted a form of Award Notice and Agreement for Unit Award for Non-Employee Directors (the “Director Unit Award Notice”), which sets forth the terms for grants to non-employee directors of our common units under the Plan. In connection with the receipt of an award under a Director Unit Award Notice, the grantee must agree to abide by specified confidentiality, non-solicitation and non-competition covenants.

 

The foregoing summary is qualified in its entirety by reference to the Director Unit Award Notice, a copy of which is filed as Exhibit 10.2 to this Form 8-K and is incorporated in this Item 5.02 by reference.

 

Item 9.01                                           Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit No.		Description
10.1		Form of Archrock Partners, L.P. Award Notice and Agreement for Phantom Units with DERs
10.2		Form of Archrock Partners, L.P. Award Notice and Agreement for Unit Award for Non-Employee Directors

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	ARCHROCK PARTNERS, L.P.
	By:	Archrock General Partner, L.P., its general partner
	By:	Archrock GP LLC, its general partner
	/s/ David S. Miller
	David S. Miller
	Senior Vice President and Chief Financial Officer
Date: February 24, 2016

 

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Exhibit Index

 

Exhibit No.		Description
10.1		Form of Archrock Partners, L.P. Award Notice and Agreement for Phantom Units with DERs
10.2		Form of Archrock Partners, L.P. Award Notice and Agreement for Unit Award for Non-Employee Directors

 

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Exhibit 10.1

 

ARCHROCK PARTNERS, L.P.
FORM OF AWARD NOTICE AND AGREEMENT
PHANTOM UNITS WITH DERS

 

Archrock GP LLC (the “Company”), as general partner of Archrock General Partner, L.P. (the general partner of Archrock Partners, L.P. (the “Partnership”)), has granted to you (the “Participant”) Phantom Units under the Archrock Partners, L.P. Long-Term Incentive Plan, as amended (the “Plan”), subject to the terms and conditions set forth in this Award Notice and Agreement (this “Notice”) and the Plan.  Each Phantom Unit shall be issued in tandem with a corresponding DER, which shall entitle you to payments in an amount equal to Partnership distributions in accordance with Section 2 below.  Unless otherwise defined herein, capitalized terms in this Notice have the same meaning ascribed to them in the Plan.

 

The material terms of your Award are as follows:

 

1.                                      Award.  You have been granted Phantom Units, each with a tandem grant of a DER (together, your “Award”), as provided above.

 

2.                                      DERs.  Each Phantom Unit granted hereunder is hereby granted in tandem with a corresponding DER, which DER shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the Phantom Unit to which it corresponds (the “DER Period”).  Each DER shall entitle you to receive payments, subject to and in accordance with this Notice, in an amount equal to each distribution (including any extraordinary or other non-recurring distribution), in each case, that (a) is made by the Partnership in respect of the Common Unit (“Unit”) underlying the Phantom Unit to which such DER relates, and (b) has an applicable Distribution Date (as defined below) occurring during the DER Period.  Such amounts (if any) shall be payable as and when such distributions are paid generally to the Partnership’s Unit holders (and without regard to the vested or unvested status of the Phantom Unit underlying such DER on the applicable Distribution Date).  Notwithstanding the foregoing, upon the payment or forfeiture of a Phantom Unit, the DER granted in tandem with such paid or forfeited Phantom Unit and the DER Period shall terminate with respect to such Phantom Unit. For the avoidance of doubt, a DER will only entitle you to payments relating to distributions with an applicable Distribution Date occurring between the Grant Date and the date on which you receive payment in respect of the Phantom Unit to which it corresponds in accordance with Paragraph 7 below (or, if earlier, the date on which you forfeit the Phantom Unit to which it corresponds).  The DERs and any amounts that may become distributable in respect thereof shall be treated separately from the Phantom Units and the rights arising in connection therewith for purposes of Section 409A of the Code (including for purposes of the designation of the time and form of payments required by Section 409A of the Code).  For purposes of this Notice, “Distribution Date” shall mean, with respect to any distribution made in respect of the Units of the Partnership, the date preceding the ex-dividend date applicable to such distribution.

 

3.                                      Grant Date.  The Grant Date of your Award is the date of approval by the Compensation Committee of the Board of Directors of the Company.

 

4.                                      Vesting.  Your Award is subject to a vesting schedule. Over a three-year period, one-third of your Award will automatically vest on or about each Grant Date anniversary (each a “Vest Date”); however, except as otherwise provided in Paragraphs 5 and 6 below, you must be in the employment of the Company at all times from the Grant Date up to and including the applicable Vest Date to vest in your Phantom Units under this Award.  Contact Archrock’s Stock Plan Administrator at (281) 836-7000 with any questions concerning the vesting of your Award.

 

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5.                                      Termination of Employment.  If your employment with the Company terminates for any reason other than due to your a) death or b) a disability that would meet the criteria for being considered “disabled” under the Company’s or an Affiliate’s long-term disability plan as if you were eligible to participate in the plan (“Disability”), then all of your unvested Phantom Units will be forfeited without payment as of the date of such termination. If your employment with the Company terminates as a result of your death or Disability, then your unvested Phantom Units will vest on the date of such termination.  For purposes of this Notice, (a) your “employment with the Company” includes your employment as an Employee with the Company or an Affiliate and (b) your “employment with the Company” will be terminated only if it is a “separation from service” within the meaning of Section 409A of the Internal Revenue Code and accompanying regulations issued under Section 409A.

 

6.                                      Termination Following a Change of Control.  In the event a Change of Control occurs, notwithstanding anything to the contrary in this Award Notice, this section will govern the vesting of your Award on and after the date a Change of Control is consummated.

 

If your status as an Employee of the Company or an Affiliate is terminated on or within 18 months following the date a Change of Control is consummated (i) by the Company or such Affiliate without cause, (ii) by you for Good Reason (as defined below) or (iii) as a result of your death or Disability, then the unvested portion of your Award as of the date of your termination as an Employee will immediately vest in full and all restrictions applicable to your Award will cease as of the date of your termination.  If your status as an Employee is terminated by the Company or an Affiliate with cause or by you without Good Reason on or after the date a Change of Control is consummated, then the unvested portion of your Award will be automatically forfeited on the date of your termination.

 

For purposes of this Award Notice, unless otherwise provided in a written agreement between the Company or an Affiliate and you, “Good Reason” means the occurrence of any of the following without your express written consent:

 

(i)                                     A reduction of 10% or more of your base salary;

 

(ii)                                  Your being required to be based at any other office or location of employment more than 50 miles from your primary office or location of employment immediately prior to the Change of Control; or

 

(iii)                               The willful failure by the Company or an Affiliate to pay you your compensation when due;

 

provided, however, unless otherwise provided in a written agreement between the Company or an Affiliate and you, that Good Reason does not exist with respect to a matter unless you give the Company or an Affiliate, as applicable, a notice of termination due to such matter within 20 days of the date such matter first exists.  If you fail to give a notice of termination timely, you shall be deemed to have waived all rights you may have under this Award Notice with respect to such matter.  The Company or an Affiliate will have 30 days from the date of your notice of termination to cure the matter.  If the Company or an Affiliate cures the matter, your notice of termination shall be deemed rescinded.  If the Company or an Affiliate (as applicable) fails to cure the matter timely, your status as an Employee shall be deemed to have been terminated by the Company for Good Reason at the end of the 30-day cure period.

 

7.                                      Payment.  As soon as administratively practicable, but in no event later than the 60th day after the date your Phantom Units vest in accordance with Paragraphs 4, 5 or 6 above (the “Payment Date”), the Company will pay you one Unit of the Partnership with respect to each vested Phantom Unit; provided, however, that the Committee, in its discretion, may elect to pay to you on the Payment Date all of the Units related to your vested Phantom Units either (a) in the form of a lump sum cash payment or (b) in a combination of Units and a lump sum cash payment in lieu of Units.  Any lump sum cash payment will be equal to the Fair Market Value as of the Vest Date of the Units.  Awards made under this Notice are not intended to be subject to Section 409A

 

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of the Code under the short-term deferral exclusion and this Notice will be interpreted and operated consistent with such intent.

 

8.                                      Non-Transferability.  Prior to vesting, you cannot sell, transfer, pledge, exchange or otherwise dispose of the Phantom Units.

 

9.                                      Withholding.  If your Award is subject to applicable income, employment and/or social insurance or social security withholding obligations, unless you make other arrangements with the Company prior to the Payment Date, the Company or its Affiliate shall withhold cash and/or a sufficient number of Units that are otherwise issuable to you pursuant to your Award to satisfy any such withholding obligations. If necessary, the Company also reserves the right to withhold from your regular earnings an amount sufficient to meet the withholding obligations.

 

10.                               Rights as Unitholder.  You, or your executor, administrator, heirs, or legatees shall have the right to receive distributions on Units and all the other privileges of a unitholder of the Partnership only from the date of issuance of a Unit in your name representing payment of a vested Phantom Unit.

 

11.                               No Right to Continued Employment.  Nothing contained in this Notice confers upon you any right to continued employment with the Company or interferes in any way with the right of the Company or any its Affiliates to terminate your employment at any time.

 

12.                               Plan Governs.  This Notice is subject to the terms of the Plan, a copy of which is available on UBS One Source or which will be provided to you upon written request addressed to Archrock Partners, L.P., Stock Plan Administration, 16666 Northchase Drive, Houston, TX 77060.  All the terms and conditions of the Plan, as may be amended from time to time, and any rules, guidelines and procedures which may from time to time be established pursuant to the Plan, are hereby incorporated into this Notice. In the event of a discrepancy between this Notice and the Plan, the Plan shall govern.

 

13.                               Modifications.  The Company may make any change to this Notice that is not adverse to your rights under this Notice or the Plan.

 

14.                               Data Privacy.  You consent to the collection, use, processing and transfer of your personal data as described in this paragraph.  You understand that the Company and/or its Affiliates hold certain personal information about you (including your name, address and telephone number, date of birth, social security number, social insurance number, etc.) for the purpose of administering the Plan (“Data”).  You also understand that the Company and/or its Affiliates will transfer this Data amongst themselves as necessary for the purpose of implementing, administering and managing your participation in the Plan, and that the Company and/or its Affiliates may also transfer this Data to any third parties assisting the Company in the implementation, administration and management of the Plan.  You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for these purposes.  You also understand that you may, at any time, review the Data, require any necessary changes to the Data or withdraw your consent in writing by contacting the Company.  You further understand that withdrawing your consent may affect your ability to participate in the Plan.

 

15.                               Additional Information.  If you require additional information concerning your Award, contact the Company’s Stock Plan Administrator at 281.836.8055 or at [email protected].  You may also contact UBS at 713.654.4713.

 

16.                               Participant Acceptance.  If you agree with the terms and conditions of this Award, please indicate your acceptance in UBS One Source by selecting “Accept.”  To decline the Award, select “Decline.”  Please note that if you decline the Award or do not accept the terms of the award within 90 days of the Grant Date, the Award will be forfeited.

 

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Exhibit 10.2

 

ARCHROCK PARTNERS, L.P.
FORM OF AWARD NOTICE AND AGREEMENT
UNIT AWARD FOR NON-EMPLOYEE DIRECTORS

 

Archrock GP LLC (the “Company”), as general partner of Archrock General Partner, L.P., which is the general partner of Archrock Partners, L.P. (the “Partnership”), has granted to you (the “Participant”) Common Units under the Archrock Partners, L.P. Long-Term Incentive Plan (as amended, the “Plan”), subject to the terms and conditions set forth in this Award Notice and Agreement (the “Award Notice”) and the Plan.  Unless otherwise defined herein, capitalized terms used in this Award Notice shall have the respective meanings ascribed to them in the Plan.

 

The material terms of your Award are as follows:

 

1.                                                              Award.  You have been granted Common Units of the Partnership (the “Award” or “Units”) subject to these terms and conditions.

 

2.                                                              Grant Date.  The Grant Date of your Award is the date on which this Award is approved by the Compensation Committee of the Board of Directors of the Company.

 

3.                                                              Rights as Unitholder.  You, or your executor, administrator, heirs, or legatees shall have the right to receive distributions on Units and all the other privileges of a unitholder of the Partnership.

 

4.                                                              No Right to Continued Service.  Nothing contained in this Award Notice shall confer upon you any right to continued service as a Director or limit in any way the right of the Company or any its Affiliates to terminate or modify the terms of your service at any time.

 

5.                                                              Withholding. The Company and its Affiliates may elect, with your consent, to withhold a sufficient number of Units that are otherwise issuable to you pursuant to your Award to satisfy any such withholding obligations.

 

6.                                                              Plan Governs.  Your Award and this Award Notice are subject to the terms of the Plan, a copy of which is available at no charge through your UBS account or which will be provided to you upon request as indicated in Section 11.  All the terms and conditions of the Plan, as may be amended from time to time, and any rules, guidelines and procedures which may from time to time be established pursuant to the Plan, are hereby incorporated into this Award Notice, including, but not limited to, Section 8(m) (“Compliance with Section 409A”) thereof. In the event of a discrepancy between this Award Notice and the Plan, the Plan shall govern.

 

7.                                                              Adjustments. This Award is subject to adjustment as provided in Section 7(c) of the Plan.

 

8.                                                              Modifications.  The Company may make any change to this Award Notice that is not adverse to your rights under this Award Notice or the Plan.

 

9.                                                              Non-Solicitation/Confidentiality Agreement. The greatest assets of the Partnership and its Affiliates (“Archrock” in this Section 9) are its employees, directors, customers, and confidential information.  In recognition of the increased risk of unfairly losing any of these assets to its competitors, Archrock has adopted this Non-Solicitation/Confidentiality Agreement as set forth in this Section 9, the terms of which you accept and agree to by accepting the Award.

 

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In connection with your acceptance of the Award under the Plan, and in exchange for the consideration provided hereunder, you agree that you will not, during your service to Archrock, and for one year thereafter, directly or indirectly, for any reason, for your own account or on behalf of or together with any other person, entity or organization (a) call on or otherwise solicit any natural person who is employed by Archrock in any capacity with the purpose or intent of attracting that person from the employ of Archrock, or (b) divert or attempt to divert from Archrock any business relating to the provision of natural gas compression services without the prior written consent of Archrock. As further consideration for the grant of the Award, you agree that you will not, while in service to Archrock, or at any time thereafter, (i) make any independent use of, or disclose to any other person (except as authorized by Archrock) any confidential, nonpublic and/or proprietary information of Archrock, including, without limitation, information derived from reports, work in progress, codes, marketing and sales programs, customer lists, records of customer service requirements, cost summaries, pricing formulae, methods of doing business, ideas, materials or information prepared or performed for, by or on behalf of Archrock nor (ii) by any manner or means, in public or in private, disparage, demean, insult or defame Archrock, its officers or directors.

 

If any court determines that any provision of this agreement, or any part thereof, is invalid or unenforceable, the remainder of this agreement shall not be affected and shall be given full effect, without regard to the invalid portions and the court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable.

 

You understand that this agreement is independent of and does not affect the enforceability of any other restrictive covenants by which you have agreed to be bound in any other agreement with Archrock.

 

Notwithstanding any other provision of this Award, the provisions of this Section 9 shall be governed, construed and enforced in accordance with the laws of the State of Texas, without giving effect to the conflict of law principles thereof.  Any action or proceeding seeking to enforce any provision of this Section 9 shall be brought only in the courts of the State of Texas or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of Texas, and the parties consent to the jurisdiction of such courts in any such action or proceeding and waive any objection to venue laid therein.

 

10.                                                       Data Privacy.  You consent to the collection, use, processing and transfer of your personal data as described in this paragraph.  You understand that the Company and/or its Affiliates hold certain personal information about you (including your name, address and telephone number, date of birth, social security number, social insurance number, etc.) for the purpose of administering the Plan (“Data”).  You also understand that the Company and/or its Affiliates will transfer this Data amongst themselves as necessary for the purpose of implementing, administering and managing your participation in the Plan, and that the Company and/or its Affiliates may also transfer this Data to any third parties assisting the Company in the implementation, administration and management of the Plan.  You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for these purposes.  You also understand that you may, at any time, review the Data, require any necessary changes to the Data or withdraw your consent in writing by contacting the Company.  You further understand that withdrawing your consent may affect your ability to participate in the Plan.

 

11.                                                       Additional Information.  If you require additional information concerning your Award, contact the Company’s Stock Plan Administrator at 281.836.8055 or at [email protected].  You may also contact UBS at 713.654.4713.

 

12.                                                       Participant Acceptance.  If you agree with the terms and conditions of this Award, please indicate your acceptance in UBS One Source by selecting “Accept.”  To reject the Award, select “Reject.”  Please note that if you reject the Award or do not accept the Award within 90 days of the Grant Date, the Award will be forfeited.

 

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