Exhibit 10.8

 

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November 3, 2015

 

[Name]

[Address]

 

Re:          Employment Terms

 

Dear [Name]:

 

As you know, Exterran Holdings, Inc. (to be renamed Archrock, Inc.), a Delaware
corporation (the “Company”) is spinning off a new publicly-traded company,
Exterran Corporation (“SpinCo” and such spin-off, the “Spin-Off”), which will
own the assets and liabilities associated with the Company’s international
services and global fabrication businesses.  In connection with the Spin-Off,
and effective as of the effective time of the Spin-Off (the “Effective Time”), I
am pleased to offer you the position of [      ] of the Company, on the terms
and conditions set forth below.

 

1.   POSITIONS, DUTIES AND RESPONSIBILITIES.  As of the Effective Time, you will
serve as [      ] of the Company, and will have such duties and responsibilities
as are usual and customary for your position.  You will report directly to the
[         ]of the Company, and will work at the Company’s offices located in
Houston, Texas, except for travel to other locations as may be reasonably
necessary to fulfill your responsibilities.  At the Company’s request, you will
serve the Company and/or its subsidiaries and affiliates in other offices,
directorships and capacities in addition to the foregoing.  In the event that
you serve in any one or more of such additional capacities, your compensation
will not be increased beyond that specified in this letter.  You will be
expected to devote your full business time and attention to the business and
affairs of the Company and the performance of your duties hereunder.

 

2.   AT-WILL EMPLOYMENT.  You acknowledge and agree that your employment with
the Company is “at-will” and not for any specified time, and may be terminated,
with or without cause and with or without notice, at any time by you or the
Company; provided, however, that you will be entitled to certain benefits and
payments upon certain terminations of employment, as described in paragraphs 8
and 9 below.  The nature of your at-will employment relationship cannot be
changed except in a writing signed by you and an authorized representative of
the Company.

 

3.   BASE COMPENSATION.  During your employment with the Company, your base
salary will be as set forth on Exhibit A attached hereto (the “Base Salary”),
less payroll deductions and all required withholdings, payable in accordance
with the Company’s normal payroll practices but no less often than bi-weekly. 
Your Base Salary will be subject to annual

 

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review in the discretion of the board of directors of the Company (the “Board”)
or a designated committee of the Board.

 

4.   SHORT-TERM INCENTIVE.  For each fiscal year of the Company ending during
the term of your employment, you will be eligible to receive an annual
short-term incentive payment (the “Short-Term Incentive”) upon the achievement
of performance objectives to be determined by the Company’s Chief Executive
Officer and/or the Board or a designated committee of the Board, which will be
targeted at a percentage of your Base Salary as set forth on Exhibit A attached
hereto (the “Target Short-Term Incentive”), subject to annual review in the
discretion of the Board or a designated committee of the Board.  Any such
Short-Term Incentive will be paid on the date on which short-term incentives are
paid generally to the Company’s executive officers, but in no event later than
the fifteenth (15th) day of the third (3rd) month following the end of the
fiscal year in which the Short-Term Incentive is earned and, unless otherwise
agreed to by the Board or a designated committee of the Board, you must be
employed by the Company on the payment date in order to earn such bonus.

 

5.             [FOR ALL CASH RETENTION AWARD: RETENTION PAYMENT.  As a key
employee, you will be eligible to receive a cash payment in the aggregate amount
set forth on Exhibit A attached hereto (the “Retention Payment”), subject to the
terms and conditions herein.

 

(a)           Payments. The Retention Payment will be paid to you in
installments as follows: (i) thirty-three percent (33%) of the Retention Payment
will be paid to you on, or within thirty (30) days following, the date on which
the Effective Time occurs (the “Effective Date”); (ii) thirty-three percent
(33%) of the Retention Payment will be paid to you on, or within thirty (30)
days following, the first (1st) anniversary of the Effective Date (the “First
Anniversary”); and (iii) thirty-four percent (34%) of the Retention Payment will
be paid to you on, or within thirty (30) days following, the second (2nd)
anniversary of the Effective Date (the “Second Anniversary”), in each case,
subject to your continued employment with the Company through the Effective
Date, the First Anniversary or the Second Anniversary, as applicable (each such
date, a “Service Date”).

 

(b)           Accelerated Payments. Notwithstanding anything in Section 5(a) to
the contrary:

 

(i) Without Cause or for Good Reason.  If your employment is terminated by the
Company without Cause or you resign for Good Reason (each, as defined in your
Change of Control Agreement or Severance Agreement (each, as defined below), as
applicable), in either case, prior to the Second Anniversary, you will be
entitled to receive, in addition to any payments or benefits for which you are
eligible under your Severance Agreement and/or Change of Control Agreement, as
applicable, an amount (the “Excess Amount”) equal to the excess, if any, of
(i) the then-unpaid portion of your Retention Payment (excluding any unpaid
portion for which a Service Date has occurred prior to your termination of
employment) over (ii) either (x) the aggregate amount of the “Severance Payment”
(as defined in your Severance Agreement) that you are entitled to receive upon
such termination under your Severance Agreement or (y) the aggregate amount of
cash severance that you are entitled to receive upon such termination under your
Change of Control Agreement, as applicable.  The Excess

 

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Amount will be paid to you on or within thirty (30) days following the date of
your termination of employment.

 

(ii)           Death or Disability. If your employment with the Company
terminates due to your death or Disability (as defined below) prior to the
Second Anniversary, you (or your estate, as applicable) will be entitled to
receive a pro-rated portion of your Retention Payment (the “Pro-Rated Amount”)
determined by multiplying (i) the amount of the Retention Payment that you
otherwise would have been eligible to receive on the next Service Date to occur
following your termination of employment, had such termination not occurred,
multiplied by (ii) a fraction, the numerator of which is the number of days
elapsed between the most recent Service Date and the date on which your
termination of employment occurs and the denominator of which is 365.  The
Pro-Rated Amount will be paid to you (or your estate) on or within thirty (30)
days following the date of your termination of employment.  For purposes of this
Section 5, “Disability” means that you are “disabled” within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended.

 

(iii)          No Offset.  For the avoidance of doubt, notwithstanding anything
to the contrary in your Severance Agreement and/or Change of Control Agreement,
any amounts that may be or become payable to you under this Section 5 will not
offset any cash severance payments payable to you under your Severance Agreement
and/or Change of Control Agreement.

 

(c)           Termination of Employment. Except as otherwise set forth in
Section 5(b) above, upon your termination of employment, you will forfeit any
then-unpaid portion of your Retention Payment, excluding any unpaid portion for
which a Service Date has occurred prior to your termination of employment.  For
purposes of clarity, any transfer of your employment between SpinCo and the
Company (and/or their affiliates) prior to, on or following the Effective Time
will not constitute a termination of your employment with the Company for
purposes of this Section 5.]

 

[FOR ALL STOCK RETENTION AWARD: RETENTION AWARD.  As a key employee, on or
within thirty (30) days following the date on which the Effective Time occurs
(the “Effective Date”), the Company will grant you a long-term equity incentive
award valued at the amount set forth on Exhibit A attached hereto (the
“Retention Award”).  The Retention Award will be granted under and subject to
the terms and conditions of the Company’s equity incentive plan and the
applicable award notice for that grant (the “Retention Award Agreement”). The
Retention Award will be comprised of shares of the Company’s restricted stock,
which will be subject to the terms and conditions herein.

 

(a)           Vesting. The Retention Award will vest as follows:
(i) thirty-three percent (33%) of the Retention Award will be vested on the date
of grant; (ii) thirty-three percent (33%) of the Retention Award will vest on
the first (1st) anniversary of the Effective Date; and (iii) thirty-four percent
(34%) of the Retention Award will vest on the second (2nd) anniversary of the
Effective Date, in each case, subject to your continued employment with the
Company through each applicable vesting date.

 

(b)           Termination of Employment. Except as otherwise set forth in your
Retention Award Agreement or your Severance Agreement and/or Change of Control
Agreement

 

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(each, as defined below), as applicable, upon your termination of employment,
you will forfeit any then-unvested portion of your Retention Award.]

 

[FOR STOCK/CASH COMBINATION RETENTION AWARDS: RETENTION PAYMENT AND AWARD.  As a
key employee, you will be eligible to receive a cash payment in the amount set
forth on Exhibit A attached hereto (the “Retention Payment”) and a long-term
equity incentive award valued at the amount set forth on Exhibit A (the
“Retention Award”), in each case, subject to the terms and conditions herein.

 

(a)           Retention Payment. The Retention Payment will be paid to you on or
within thirty (30) days following the date on which the Effective Time occurs
(the “Effective Date”), subject to your continued employment with the Company
through the Effective Date.

 

(b)           Retention Award. The Retention Award will be granted to you on or
within thirty (30) days following the Effective Date, under and subject to the
terms and conditions of the Company’s equity incentive plan and the applicable
award notice for that grant (the “Retention Award Agreement”). The Retention
Award will be comprised of shares of the Company’s restricted stock.

 

(i)            Vesting. The Retention Award will vest as follows: (i) fifty
percent (50%) of the Retention Award will vest on the first (1st) anniversary of
the Effective Date, and (ii) fifty percent (50%) of the Retention Award will
vest on the second (2nd) anniversary of the Effective Date, in each case,
subject to your continued employment with the Company through each applicable
vesting date.

 

(ii)           Termination of Employment. Except as otherwise set forth in your
Retention Award Agreement or your Severance Agreement and/or Change of Control
Agreement (each, as defined below), as applicable, upon your termination of
employment, you will forfeit any then-unvested portion of your Retention Award.]

 

6.   ANNUAL EQUITY AWARDS.  For each fiscal year of the Company during the term
of your employment, beginning in 2016, the Company anticipates that you will be
eligible to receive an annual equity award valued at the amount set forth on
Exhibit A attached hereto (the “Annual Award”).  The amount of your Annual Award
will be subject to annual review in the discretion of the Board or a designated
committee of the Board.  It is anticipated that your Annual Award will be
granted in early March of each year, subject to your continued employment
through the applicable grant date, in accordance with the Company’s general
plans, policies and practices with respect to grants of annual equity awards to
its executive officers generally.  The Board or a designated committee of the
Board, in its sole discretion, will determine the type or types of equity that
comprise each Annual Award (which may include, without limitation, restricted
stock, stock options, performance shares and/or restricted stock units of the
Company) as well as the grant dates and exercise prices, in each case, in
accordance with the terms and conditions of the applicable equity plan(s) and
award notice(s).

 

7.   BENEFITS; PAID TIME OFF.  During your employment with the Company, you will
be eligible to participate in all savings, retirement, incentive, health,
welfare and perquisite plans (including, but not limited to, medical, dental,
disability insurance, life insurance, employee stock purchase, 401(k) and
deferred compensation plans and programs) maintained or sponsored

 

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by the Company for its executive officers, as in effect from time to time and
subject to the terms and conditions thereof.  In addition, you will be entitled
to paid time off in accordance with the plans, policies, programs and practices
of the Company generally applicable to its executive officers, as in effect from
time to time.  Notwithstanding the foregoing, nothing contained in this letter
will require or obligate the Company to establish, maintain or continue any
particular employee benefit plan, program, policy or benefit.

 

8.  NON-CHANGE OF CONTROL SEVERANCE.  Effective as of the Effective Time, you
and the Company will execute a new severance benefit agreement substantially in
the form attached hereto as Exhibit B (the “Severance Agreement”) that will
supersede the existing severance benefit agreement between you and the Company
(the “Prior Severance Agreement”).  Subject to and upon the terms and conditions
of the Severance Agreement, subject to your timely execution and non-revocation
of a release of claims in favor of the Company and its affiliates, you will be
entitled to receive certain severance benefits and payments upon certain
terminations of your employment with the Company and its affiliates, as
described on Exhibit A attached hereto.

 

9.   CHANGE OF CONTROL SEVERANCE.  In addition, effective as of the Effective
Time, you and the Company will execute a new change of control agreement
substantially in the form attached hereto as Exhibit C (the “Change of Control
Agreement”) that will supersede the existing change of control agreement between
you and the Company (the “Prior Change of Control Agreement”).  Subject to and
upon the terms and conditions of the Change of Control Agreement, subject to
your timely execution and non-revocation of a release of claims in favor of the
Company and its affiliates, you will be entitled to receive certain severance
payments and benefits upon certain terminations of your employment with the
Company and its affiliates in connection with a Change of Control, as described
on Exhibit A attached hereto.

 

10.  WAIVER OF GOOD REASON.  In consideration of the benefits provided
hereunder, and notwithstanding anything to the contrary in the Prior Severance
Agreement and/or the Prior Change of Control Agreement, you hereby waive any
right you may have to resign your employment with the Company for “Good Reason”
for the purposes of such agreements, in each case, due to any changes in your
title and/or in the scope of your duties and responsibilities that have occurred
previously or may occur in connection with the Spin-Off.  Further, for the
avoidance of doubt, the occurrence of “Good Reason” under your Severance
Agreement and/or Change of Control Agreement will be determined by reference to
your title, duties and responsibilities as of immediately following the
Effective Time.

 

11.  RESTRICTIVE COVENANTS.  You acknowledge and agree that, during your
employment with the Company, you will be subject to the Company’s standard
policies, if any, relating to non-disparagement, non-solicitation,
non-competition and confidentiality, as set forth in the Severance Agreement,
the Change of Control Agreement and any other Company policies or plans
generally applicable to its executive officers [ (the “Restrictions”).  In the
event that it is finally adjudicated by a court of competent jurisdiction that
you have breached any of the Restrictions on or following the date hereof, then,
in addition to any other remedies available to the Company, you shall be
obligated to repay to the Company any portion of the Retention Payment
previously paid to you and you shall forfeit any then-unpaid portion of the
Retention Payment.]

 

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12.  STOCK OWNERSHIP REQUIREMENTS.  You acknowledge and agree that, following
the Effective Time and continuing through the date on which your employment with
the Company terminates for any reason, you will be required to comply with the
Company’s stock ownership requirements as in effect from time to time.

 

13.  CLAWBACK AND RECOUPMENT.  All compensation and benefits payable to you by
the Company and/or its affiliates will be subject to any clawback or recoupment
requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act
and any clawback or recoupment policies that the Company and/or its affiliates
may adopt from time to time.

 

14.  WITHHOLDING.  The Company may withhold from any amounts payable under this
letter such federal, state, local or foreign taxes as are required to be
withheld pursuant to any applicable law or regulation.

 

15.  GOVERNING LAW.  This letter shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to principles of
conflict of laws thereof.

 

16.  ENTIRE AGREEMENT.  As of the Effective Time, this letter, together with the
Severance Agreement and the Change of Control Agreement, constitutes the final,
complete and exclusive agreement between you and the Company with respect to the
subject matter of this letter, and supersedes and replaces any and all other
agreements, offers or promises, whether oral or written, by the Company, its
affiliates or any predecessor employer (or any representative thereof),
including without limitation, the Prior Severance Agreement and the Prior Change
of Control Agreement.  You agree that any such prior agreement, offer or promise
between you and the Company, its affiliates or any predecessor employer (or any
representative thereof), is hereby terminated and will be of no further force or
effect, and you acknowledge and agree that upon your execution of this letter,
you will have no right or interest in or with respect to any such agreement,
offer or promise.

 

17.          SUCCESSORS; ASSIGNS.  This letter is personal to you and, without
the prior written consent of the Company, shall not be assignable by you
otherwise than by will or the laws of descent and distribution.

 

Please confirm your acceptance of, and agreement to, the foregoing terms and
conditions by signing and dating this letter in the space provided below and
returning it to the Company.  Please retain one fully-executed original for your
files.

 

Sincerely,

 

EXTERRAN HOLDINGS, INC.

 

 

By:

 

 

 

[Name]

 

 

[Title]

 

 

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Agreed and Accepted,

this       day of        , 2015:

 

 

By:

 

 

 

[Name]

 

 

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EXHIBIT A

 

COMPENSATION TERMS

 

Base Salary

 

$[                ] per year

Target Short-Term Incentive

 

[     ]% of Base Salary

Annual Equity Award Value

 

$[                ]

[INCLUDE IF APPLICABLE: Retention Payment]

 

$[                ]

[INCLUDE IF APPLICABLE: Retention Award Value]

 

$[                ]

Non-Change of Control Severance

 

Upon a Qualifying Termination of Employment (as defined in the Severance
Agreement), subject to your timely execution and non-revocation of a release of
claims in favor of the Company and its affiliates, you will be eligible to
receive:

·                  a lump-sum severance payment equal to (i) your Base Salary
plus (ii) your Target Short-Term Incentive plus (iii) your Target Short-Term
Incentive prorated through the date of termination plus (iv) any earned but
unpaid Short-Term Incentive for the fiscal year ending prior to the date of
termination;

·                  full accelerated vesting of your then-outstanding unvested
equity awards that would have otherwise vested during the one-year period
following your termination; and

·                  healthcare continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 for up to one year following your
termination, to the extent permitted by applicable law.

Change of Control Severance

 

Upon a Qualifying Termination of Employment (as defined in the Change of Control
Agreement), subject to your timely execution and non-revocation of a release of
claims in favor of the Company and its affiliates, you will be eligible to
receive:

·                  a lump-sum severance payment equal to (i) [    ] times your
Base Salary plus (ii) [    ] times your Target Short-Term Incentive plus
(iii) your Target Short-Term Incentive prorated through the date of termination
plus (iv) any earned but unpaid Short-Term Incentive for the fiscal year ending
prior to the date of termination;

·                  an amount equal to [    ] times the total employer matching
contributions that would have been credited to your account under the Company’s
401(k) plan and any deferred compensation plan had you made elective deferrals
or contributions during the

 

 

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twelve (12) months preceding your termination;

·                  any amounts previously deferred by you or earned but not
previously paid under the Company’s incentive and nonqualified deferred
compensation programs as of your termination date;

·                  full accelerated vesting of your then-outstanding unvested
equity awards; and

·                  healthcare continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 for up to two years following your
termination, to the extent permitted by applicable law.

 

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EXHIBIT B

 

SEVERANCE AGREEMENT

 

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EXHIBIT C

 

CHANGE OF CONTROL AGREEMENT

 

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