Exhibit 10.2


 


CHANGE
OF CONTROL AGREEMENT


 


This Change of
Control Agreement (this “Agreement”) is entered into and effective as of                      ,          by
and between Universal Compression Holdings, Inc., a Delaware corporation,
(the “Company”), and                                   (the
“Employee”).


 


W I T N E S S E T H:


 


WHEREAS, the
Company and Employee wish to enter an agreement regarding their respective
rights and obligations in connection with a Change of Control (as defined
below) within three (3) years from the date of this Agreement;


 


NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree as follows:


 


1.             Certain Definitions.


 


(a)           “Cause”
shall mean:


 


(i)            the
willful and continued failure of the Employee to perform substantially the
Employee’s duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Employee by the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Employee has not substantially performed the Employee’s duties, or


 


(ii)           the
willful engaging by the Employee in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.


 


No act, or failure to act, on
the part of the Employee shall be considered “willful” unless it is done, or
omitted to be done, by the Employee in bad faith or without reasonable belief
that the Employee’s action or omission was in the best interests of the
Company.  Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer or of a senior officer
of the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Employee in
good faith and in the best interests of the Company.  The cessation of employment of the Employee
shall not be deemed to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Employee, and the Employee is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the 


 


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Employee is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying
the particulars thereof in detail.


 


(b)           “Change
of Control” shall mean:


 


(i)            The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35 percent or more of either (A) the
then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control:


 


(A)          any
acquisition directly from the Company,


 


(B)           any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or


 


(C)           any
acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) of this Section 1(b);
or


 


(ii)           Individuals,
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual was a member of
the Incumbent Board; or


 


(iii)          Consummation
of a reorganization, merger or consolidation or sale or other disposition,
directly or indirectly, of all or substantially all of the assets of the
Company (a “Corporate Transaction”) in each case, unless, following such
Corporate Transaction, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Corporate Transaction beneficially own, directly or indirectly,
more than 50 percent of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of



 


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the corporation resulting from
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries), (B) no
individual or entity (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, 35 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (C) at least a majority of
the members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Corporate Transaction; or


 


(c)           “Good
Reason” shall mean the occurrence of any of the following:


 


(i)            the
assignment to the Employee of any duties inconsistent in any material respect
with the Employee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities during the ninety (90) day
period prior to a Change of Control, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Employee;


 


(ii)           the
Company’s requiring the Employee to be based at any other office or location
than required during the ninety (90) day period prior to a Change of Control,
or the Company’s requiring the Employee to travel on Company business to a
substantially greater extent than required during the ninety (90) day period
prior to a Change of Control;


 


(iii)          any
purported termination by the Company of the Employee’s employment otherwise
than as expressly permitted by this Agreement; or


 


(iv)          in
the event of a Change of Control or merger, consolidation or other business
combination of the Company in which the Company’s securities cease to be
publicly traded, the assignment to the Employee of any position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities that are not (A) at or with the ultimate parent company
of the entity surviving or resulting from such merger, consolidation or other
business combination and 


 


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(B) substantially similar
to the Employee’s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities during the ninety (90)
day period prior to the Change of Control.


 


For purposes of this Agreement,
any good faith determination of “Good Reason” made by the Employee shall be
conclusive.


 


(d)           “Board”
shall mean the Board of Directors of the Company.


 


2.             Termination for Good
Reason or Other than Cause, Death or Disability following a Change of Control.  If during the one (1) year
period following a Change of Control, the Company terminates the Employee’s
employment other than for Cause, death or disability, or the Employee
terminates employment for Good Reason:


 


(a)           The
Company shall pay to the Employee in a lump sum in cash within thirty (30) days
after the date of termination the aggregate of the following amounts:


 


(i)            the
sum of (1) the Employee’s annual base salary through the date of
termination to the extent not theretofore paid, (2) the product of
(x) the higher of (I) the highest annual bonus received by the
Employee over the preceding three-year period and (II) the annual bonus
that would be payable in respect of the current fiscal year (and annualized for
any fiscal year consisting of less than 12 months) (such higher amount being
referred to as the “Highest Annual Bonus”) and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
date of termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Employee under a plan sponsored by the
Company or any of its affiliated companies (together with any accrued interest
or earnings thereon), and any accrued vacation pay, in each case to the extent
not theretofore paid;


 


(ii)           an
amount equal to two times the sum of (i) the then current annual base
salary of the Employee and (ii) the Highest Annual Bonus; and


 


(iii)          an
amount equal to the total of the employer basic and matching contributions
credited to the Employee under the Company’s (or any of its affiliated
companies’) 401(k) Retirement and Savings Plan (the “401(k) Plan”) and any
other deferred compensation plan during the 12-month period immediately
preceding the month of the Employee’s date of termination multiplied by two,
such amount to be grossed up so that the amount the Employee actually receives
after payment of any federal or state taxes payable thereon equals the amount
first described above.


 


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(b)           For
a period of two years from the Employee’s date of termination, or such longer
period as may be provided by the terms of the appropriate medical and/or
welfare benefit plan, program, practice or policy, the Company shall provide
benefits to the Employee and/or the Employee’s family equal to those which
would have been provided to them in accordance with the plans, programs, practices
and policies if the Employee’s employment had not been terminated; provided,
however, that with respect to any of such plans, programs, practices or
policies requiring an employee contribution, the Employee shall continue to pay
the monthly employee contribution for same, and provided further, that if the
Employee becomes employed by another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility.


 


(c)           The
Company shall pay to the Employee an amount equal to the forfeiture of the
Employee, if any, under the Company’s (or any of its affiliated companies’)
deferred compensation plan and/or the 401(k) Plan and any other similar
plans.  Such payment shall be made in
each case within 15 days after the forfeiture occurs under the applicable plan.  If a forfeiture under a plan has not occurred
by March 1st of the calendar year after the year of termination
(the “Determination Date”), but the Employee is less than 100 percent vested in
his account in such plan as of the date of the Employee’s termination of
employment for which benefits are payable pursuant to this Agreement, then the
benefit payable pursuant to this Section 2(c) shall be calculated as
if such forfeiture occurred as of the Determination Date and the benefit due
under this section shall be paid on or before 15 days after the
Determination Date.  The payment provided
in the preceding sentence shall be in full satisfaction of the Company’s
obligation to make a payment pursuant to this Section 2(c).


 


(d)           All
stock options, restricted stock, restricted stock units, or other stock-based
awards held by the Employee, not already vested shall be 100% vested.  Notwithstanding the terms of any Company (or
affiliate) plan or agreement between the Company (or affiliate) and Employee to
the contrary, the accelerated vesting of all stock options, restricted stock,
restricted stock units, or other awards required pursuant to the terms of this Section 2(c) shall
supercede and govern.


 


(e)           To
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Employee any other amounts or benefits required to be paid or
provided or which the Employee is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies.


 


(f)            The
Company and the Employee agree that to the extent that the Company determines
in good faith (which determination shall include, at a minimum, an opinion of
outside legal counsel supporting the same) that the provisions of Section 409A
of the Code require a delay in payment of any benefits 


 


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(which as of the date of this
Agreement, would not exceed 6 months) to which the Employee is entitled
pursuant to this Agreement in order to avoid the penalties and additional taxes
provided under such section, such payment or provision of benefit shall be
delayed until the earliest date on which payment can be made without penalty
pursuant to Section 409A of the Code. 
If the Employee disagrees with the Company’s determination that Section 409A
requires a delay in payment, the payment can be made prior to the payment date
determined by the Company if the Employee agrees that should the Internal
Revenue Service subsequently assert that some or all of the payments made
pursuant to this Agreement do not comply with the requirements of Section 409A
of the Code, (A) the Employee agrees that he is solely responsible for
excise taxes, penalties and interest resulting from such determination, and
that he will not seek contribution, reimbursement or any other recovery from
the Company or any of its affiliates, officers, employees or directors for any
excise tax, interest or penalty paid or due or any costs he incurs in
challenging such position of the Internal Revenue Service, and (B) the
Employee will reimburse, and hold the Company harmless for, any costs,
including attorneys fees and costs of court, penalties or fees, that it may
incur in connection with a later determination that the payments made pursuant
to this Agreement are covered by Section 409A of the Code and were not
properly reported as such.


 


3.             Other Rights.  Except as provided herein,
nothing in this Agreement shall prevent or limit the Employee’s continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Employee may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Employee may have under any contract or agreement with the Company or any of
its affiliated companies.  Except as
provided hereinafter, amounts which are vested benefits or which the Employee
is otherwise entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the date of termination shall be payable in
accordance with such plan, policy, practice or program or contract or
agreement.  It is expressly agreed by the
Employee that the Employee shall have no right to receive, and hereby waives
any entitlement to, any severance pay or similar benefit under any other plan,
policy, practice or program of the Company; provided, however, that this Section 3
shall not affect the Company’s obligations, if any, relating to post-retirement
health coverage for the Employee and/or the Employee’s spouse.  The Employee also agrees that to the extent
he may be eligible for any severance pay or similar benefit under any laws
providing for severance or termination benefits, such other severance pay or
similar benefit shall be coordinated with the benefits owed hereunder, such
that the Employee shall not receive duplicate benefits.


 


4.             Full Settlement.


 


(a)           No Rights of Offset.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense 


 


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or other claim, right or action
which the Company may have against the Employee or others.


 


(b)           No Mitigation Required.  In no event shall the Employee be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Employee obtains other
employment.


 


(c)           Legal Fees.  The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses which the Employee
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company or the Employee of the validity or enforceability of,
or liability under, any provision of Sections 1, 2, 3, 4, 5, 7 or 8 of this
Agreement or any guarantee of performance thereto (including as a result of any
contest by the Employee about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment (including any
payment delayed as provided in Section 2(f)), at the applicable Federal
rate provided for in Section 7872(f)(2)(A) of the Internal Revenue
Code of 1986, as amended (the “Code”).


 


5.             Certain Additional Payments by the Company.


 


(a)           Anything
in this Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any payment or distribution by
the Company to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Employee shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by the Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  Notwithstanding the foregoing provisions of
this Section 5(a), if it shall be determined that the Employee is entitled
to a Gross-Up Payment, but that the Employee, after taking into account the
Payments and the Gross-Up Payment, would not receive a net after-tax benefit of
at least $1,000 (taking into account both income taxes and any Excise Tax) as
compared to the net after-tax proceeds to the Employee resulting from an
elimination of the Gross-Up Payment and a reduction of the Payments, in the
aggregate, to an amount (the “Reduced Amount”) such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Employee and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.


 


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(b)           Subject
to the provisions of Section 5(c), all determinations required to be made
under this Section 5, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination shall be made by Deloitte &
Touche LLP or, as provided below, such other certified public accounting firm
as may be designated by the Employee (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and the Employee
within 15 business days after the receipt of notice from the Employee that
there has been a Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Employee shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Section 5,
shall be paid by the Company to the Employee within five days after the receipt
of the Accounting Firm’s determination. 
Any determination by the Accounting Firm shall be binding upon the
Company and the Employee.  As a result of
the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have
been made (“Underpayment”), consistent with the calculations required to be
made hereunder.  In the event that the
Company exhausts its remedies pursuant to Section 5(c) and the
Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Employee.


 


(c)           The
Employee shall notify the Company in writing of any claim by the Internal
Revenue Service (the “IRS”) that, if successful, would require the payment by
the Company of the Gross-Up Payment (or an additional Gross-Up Payment) in the
event the IRS seeks higher payment.  Such
notification shall be given as soon as practicable, but no later than ten
business days after the Employee is informed in writing of such claim, and
shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid.  The
Employee shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due).  If the Company
notifies the Employee in writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:


 


(i)            give
the Company any information reasonably requested by the Company relating to
such claim,


 


(ii)           take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, 


 


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including without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,


 


(iii)          cooperate
with the Company in good faith in order to effectively contest such claim, and


 


(iv)          permit
the Company to participate in any proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such costs and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.  Without
limitation on the foregoing provisions of this Section 5(c), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Employee to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Employee agrees to prosecute such contest to determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if
the Company directs the Employee to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Employee, on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issues raised by the IRS or any other
taxing authority.


 


(d)           If,
after the receipt by the Employee of an amount advanced by the Company pursuant
to Section 5(c), the Employee becomes entitled to receive any refund with
respect to such claim, the Employee shall (subject to the Company’s complying
with the requirements of Section 5(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).  If,
after the receipt by the Employee of an amount advanced by the Company pursuant
to Section 5(c), a determination is made that the Employee shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Employee in writing of its intent to contest such 


 


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denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.


 


6.             Restrictions and Obligations of the Employee.


 


(a)           Consideration for Restrictions and Covenants.  The Company and Employee agree that the
principal consideration for the agreement to make the payments provided in this
Agreement by the Company to Employee is the Employee’s compliance with the
undertakings set forth in this Section 6. 
Notwithstanding any other provision of this Agreement to the contrary,
the Employee agrees to comply with the provisions of this Section 6 only
if the Employee actually receives any such payments from the Company pursuant
to this Agreement.


 


(b)           Confidentiality.  The confidential and proprietary information
and, in any material respect, trade secrets of the Company are among its most
valuable assets, including but not limited to, its customer and vendor lists,
database, engineering, computer programs, frameworks, models, its marketing
programs, its sales, financial, marketing, training and technical information,
and any other information, whether communicated orally, electronically, in
writing or in other tangible forms concerning how the Company creates, develops,
acquires or maintains its products and marketing plans, targets its potential
customers and operates its retail and other businesses.  The Company invested, and continues to
invest, considerable amounts of time and money in its process, technology,
know-how, obtaining and developing the goodwill of its customers, its other
external relationships, its data systems and data bases, and all the
information described above (hereinafter collectively referred to as “Confidential
Information”), and any misappropriation or unauthorized disclosure of
Confidential Information in any form would irreparably harm the Company.  The Employee shall hold in a fiduciary
capacity for the benefit of the Company all Confidential Information relating
to the Company and its business, which shall have been obtained by the Employee
during the Employee’s employment by the Company and which shall not be or
become public knowledge (other than by acts by the Employee or representatives
of the Employee in violation of this Agreement).  After termination of the Employee’s
employment with the Company, the Employee shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate, divulge or use any such information, knowledge or data to anyone
other than the Company and those designated by it.


 


(c)           Non-Solicitation or Hire.  During the term of Employee’s employment with
the Company, or any affiliate thereof and for a two-year period following the
termination of the Employee’s employment for any reason, the Employee shall
not, directly or indirectly (i) employ or seek to employ any person who is
at the date of termination, or was at any time within the six-month period 


 


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preceding the date of
termination, an officer, general manager or director or equivalent or more
senior level employee of the Company or any of its subsidiaries or otherwise
solicit, encourage, cause or induce any such employee of the Company or any of
its subsidiaries to terminate such employee’s employment with the Company or
such subsidiary for the employment of another company (including for this
purpose the contracting with any person who was an independent contractor
(excluding consultant) of the Company during such period) or (ii) take any
action that would interfere with the relationship of the Company or its
subsidiaries with their suppliers or customers without, in either case, the
prior written consent of the Company’s Board of Directors, or engage in any
other action or business that would have a material adverse effect on the
Company.


 


(d)           Non-Competition.  (i) During the term of Employee’s
employment with the Company, or any affiliate thereof and for a one-year period
following the termination of the Employee’s employment for any reason, the
Employee shall not, directly or indirectly:


 


(i)            engage
in any managerial, administrative, advisory, consulting, operational or sales
activities in Restricted Business anywhere in the Restricted Area, including,
without limitation, as a director or partner of such Restricted Business,
and/or


 


(ii)           organize,
establish, operate, own, manage, control or have a direct or indirect
investment: or ownership interest in a Restricted Business or in any
corporation, partnership (limited or general), limited liability company
enterprise or other business entity that engages in a Restricted Business
anywhere in the Restricted Area; and


 


Nothing
contained in this Section 6 shall prohibit or otherwise restrict the
Employee from acquiring or owning, directly or indirectly, for passive
investment purposes not intended to circumvent this Agreement, securities of
any entity engaged, directly or indirectly, in a Restricted Business if either (i) such
entity is a public entity and the Employee (A) is not a controlling Person
of, or a member of a group that controls, such entity and (B) owns,
directly or indirectly, no more than 3% of any class of equity securities of
such entity or (ii) such entity is not a public entity and the Employee (A) is
not a controlling Person of, or a member of a group that controls, such entity
and (B) does not own, directly or indirectly, more than 1% of any class of
equity securities of such entity.


 


(e)           Definitions.  For purposes of this Section 6:


 


(i)            “Restricted
Business” means the business of designing, manufacturing, servicing, operating,
marketing, assembling, renting or leasing of air or gas compressors or devices
using comparable technologies or other business in which the Company or its
subsidiaries may be engaged during the term of Employee’s employment with the 


 


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Company.  To the extent that any entity is primarily
engaged in a business other than a Restricted Business, the term “Restricted
Business” shall mean the operations, division, segment or subsidiary of such
entity that is engaged in any Restricted Business.


 


(ii)           “Restricted
Area” means any state in the United States, or any country in which the Company
or its subsidiaries engages in any Restricted Business at any time during the
term of Employee’s employment with the Company.


 


(f)            The
Employee acknowledges that monetary damages for any breach of Paragraphs 6(b),
(c), and (d) above will not be an adequate remedy and that irreparable
injury will result to the Company, its business and property, in the event of
such a breach.  For that reason, the
Employee agrees that in the event of a breach in addition to recovering legal
damages, the Company is entitled to proceed in equity for specific performance
or to enjoin the Employee from violating such provisions.


 


7.             Successors.


 


(a)           This
Agreement is personal to the Employee and shall not be assignable by the
Employee otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of
and be enforceable by the Employee’s legal representatives.


 


(b)           This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.


 


(c)           The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.


 


8.             Miscellaneous.


 


(a)           THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives that specifically refers to
this Agreement.


 


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(b)           All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows: 


 




	
  If to the

  Employee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to the

  Company:

  	
   

  	
  Universal Compression

  Holdings, Inc.

  4444 Brittmoore Road

  Houston, Texas 77041

  Attention: General Counsel

  






 


or to such other address as either party
shall have furnished to the other in writing in accordance herewith.  Notices and communications shall be effective
when actually received by the addressee.


 


(c)           The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.


 


(d)           The
Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.


 


(e)           The
Employee’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, including without limitation, the right of the
Employee to terminate employment for Good Reason shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.


 


(f)            This
Agreement constitutes the entire agreement and understanding between the parties
relating to the subject matter hereof and supersedes all prior agreements
between the parties relating to the subject matter hereof.


 


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IN WITNESS
WHEREOF, the Employee has hereunto set the Employee’s hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these
presents to be executed in its name and on its behalf, all as of the day and
year first above written. 


 


 


	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  UNIVERSAL COMPRESSION

  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Stephen A. Snider

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
				



 


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