Exhibit 10.3





EXHIBIT 10.3




EXECUTION COPY









Wachovia Capital Markets, LLC,

Solely as agent of Wachovia Bank, National Association

375 Park Avenue

New York, NY 10152




June 4, 2009




	 	 	 
	To:

	 	Exterran Holdings, Inc.
	 

	 	16666 Northchase Drive
	 

	 	Houston, Texas 77060
	 

	 	Attention: Treasurer
	 

	 	Telephone No.: (281) 836-7000
	 

	 	Facsimile No.: (281) 836-8106






Re: Call Option Transaction




The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and
conditions of the call option transaction entered into between Wachovia Bank, National Association
(“Dealer”), represented by Wachovia Capital Markets, LLC (“Agent”) as its agent, and Exterran
Holdings, Inc. (“Counterparty”) as of the Trade Date specified below (the “Transaction”). This
letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified
below. This Confirmation shall replace any previous agreements and serve as the final
documentation for this Transaction.



The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.
(“ISDA”) are incorporated into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation shall govern. Certain defined terms
used herein have the meanings assigned to them in the Prospectus dated June 3, 2009, as
supplemented by the Prospectus Supplement dated June 4, 2009 (as so supplemented, the “Prospectus”)
relating to the USD 325,000,000 principal amount of 4.25% Convertible Senior Notes due 2014 (the
“Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”)
issued by Counterparty pursuant to the Indenture to be dated as of June 10, 2009 (the “Base
Indenture”), as supplemented by a Supplemental Indenture thereto (the “Supplemental Indenture”) to
be dated June 10, 2009, between Counterparty and Wells Fargo Bank, National Association, as trustee
(the Base Indenture as so supplemented, the “Indenture”). In the event of any inconsistency
between the terms defined in the Prospectus, the Indenture and this Confirmation, this Confirmation
shall govern. The parties acknowledge that this Confirmation is entered into on the date hereof
with the understanding that (i) definitions set forth in the Indenture which are also defined
herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein
will conform to the descriptions thereof in the Prospectus. If any such definitions in the
Indenture or any such sections of the Indenture differ from the descriptions thereof in the
Prospectus, the descriptions thereof in the Prospectus will govern for purposes of this
Confirmation. The parties further acknowledge that the Indenture section numbers used herein are
based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation,
and if any such section numbers are changed in the Indenture as executed, the parties will amend
this Confirmation in good faith to preserve the intent of the parties. For the avoidance of doubt,
references to the Base Indenture or Supplemental Indenture, as the case may be, herein are
references to the Base Indenture or the Supplemental Indenture, as the case may be, as in effect on
the date of its execution and if the Base Indenture or the Supplemental Indenture is amended
following such date, any such amendment will be disregarded for purposes of this Confirmation
unless the parties agree otherwise in writing.


 


 









 





Each party is hereby advised, and each such party acknowledges, that the other party has
engaged in, or refrained from engaging in, substantial financial transactions and has taken other
material actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below.



1. This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as
to the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if Dealer and Counterparty had executed an agreement in such form
(but without any Schedule except for the election of the laws of the State of New York as the
governing law (without reference to the choice of law doctrine)) on the Trade Date. In the event
of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation
will prevail for the purpose of the Transaction to which this Confirmation relates. The parties
hereby agree that no Transaction other than the Transaction to which this Confirmation relates
shall be governed by the Agreement.



2. The terms of the particular Transaction to which this Confirmation relates are as follows:



General Terms:



	 	 	 	 	 
	 

	 	Trade Date:
	 	June 4, 2009
	 
	 	 	 	 
	 

	 	Effective Date:
	 	The third Exchange Business Day immediately prior to the Premium Payment Date
	 
	 	 	 	 
	 

	 	Option Style:
	 	“Modified American”, as described under “Procedures for Exercise” below
	 
	 	 	 	 
	 

	 	Option Type:
	 	Call
	 
	 	 	 	 
	 

	 	Buyer:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Seller:
	 	Dealer
	 
	 	 	 	 
	 

	 	Shares:
	 	The common stock of Counterparty, par value USD 0.01 per Share (Exchange symbol
“EXH”)
	 
	 	 	 	 
	 

	 	Number of Options:
	 	325,000. For the avoidance of doubt, the Number of Options shall be
reduced by any Options exercised by Counterparty. In no event will the Number of Options
be less than zero.
	 
	 	 	 	 
	 

	 	Applicable Percentage:
	 	40% 
	 
	 	 	 	 
	 

	 	Option Entitlement:
	 	As of any date, a number equal to the product of the Applicable Percentage
and the Conversion Rate as of such date (as defined in the Supplemental Indenture, but
without regard to any adjustments to the Conversion Rate pursuant to Section 4.04(f) or
(g) or Section 4.06 of the Supplemental Indenture and subject to “Method of Adjustment”
below), for each Convertible Note.
	 
	 

	 	Strike Price:
	 	USD 23.1508 
	 
	 	 	 	 
	 

	 	Premium:
	 	USD 35,763,000 
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	June 10, 2009
	 
	 	 	 	 
	 

	 	Exchange:
	 	The New York Stock Exchange
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges






 


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Procedures for Exercise:




	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Exercise Period(s):
	 	Notwithstanding anything to the contrary in the Equity Definitions, an
Exercise Period shall occur with respect to an Option hereunder only if such Option is an
Exercisable Option (as defined below) and the Exercise Period shall be, in respect of any
Exercisable Option, the period commencing on, and including, the relevant Conversion Date
and ending on, and including, the Scheduled Valid Day immediately preceding the first day
of the relevant Settlement Averaging Period in respect of such Conversion Date; provided
that in respect of Exercisable Options relating to Convertible Notes for which the
relevant Conversion Date occurs on or after March 15, 2014, the final day of the Exercise
Period shall be the Scheduled Valid Day immediately preceding the Expiration Date.
	 
	 	 	 	 
	 

	 	Conversion Date:
	 	With respect to any conversion of Convertible Notes, the date on which the
Holder (as such term is defined in the Supplemental Indenture) of such Convertible Notes
satisfies all of the requirements for conversion thereof as set forth in Section 4.02(b)
of the Supplemental Indenture.
	 
	 	 	 	 
	 

	 	Exercisable Options:
	 	In respect of any Exercise Period (the “Relevant Exercise Period”), the
lesser of (i) the number of Convertible Notes surrendered to Counterparty for conversion
on the first day of the Relevant Exercise Period, and (ii) the Number of Options as of
the first day of the Relevant Exercise Period; provided that if there are any other
Exercisable Options as to which a prior Exercise Period has commenced but no Exercise
Date has yet occurred which would thereby reduce the Number of Options as of the related
Exercise Date (such other Exercisable Options, the “Other Exercisable Options”), then
solely for the purposes of determining the number of Exercisable Options for the Relevant
Exercise Period, the Number of Options on the first day of the Relevant Exercise Period
shall be reduced by such Other Exercisable Options.
	 
	 

	 	 	 	Notwithstanding the foregoing, in no event shall the
number of Exercisable Options exceed the Number of
Options.
	 
	 

	 	Expiration Time:
	 	The Valuation Time
	 
	 	 	 	 
	 

	 	Expiration Date:
	 	June 15, 2014, subject to earlier exercise.
	 
	 	 	 	 
	 

	 	Multiple Exercise:
	 	Applicable, as described under Exercisable Options above.
	 
	 	 	 	 
	 

	 	Automatic Exercise:
	 	Applicable; and means that in respect of an Exercise Period, a number of
Options not previously exercised hereunder equal to the number of Exercisable Options
shall be deemed to be exercised on the final day of such Exercise Period for such
Exercisable Options; provided that such Options shall be deemed exercised only if
Counterparty has provided a Notice of Exercise to Dealer.






 


3









 





	 	 	 	 	 
	 

	 	Notice of Exercise:
	 	Notwithstanding anything to the contrary in the Equity Definitions, in
order to exercise any Exercisable Options, Counterparty must notify Dealer in writing
before 5:00 p.m. (New York City time) on the Scheduled Valid Day prior to the scheduled
first day of the Settlement Averaging Period for the Exercisable Options being exercised
of (i) the number of such Options, (ii) the scheduled first day of the Settlement
Averaging Period and the scheduled Settlement Date and (iii) if Counterparty elects a
Settlement Method other than Net Share Settlement Method in accordance with “Settlement
Method” below, such notice must include the information, representations,
acknowledgements and agreements required pursuant to “Settlement Method Election
Conditions” below; provided that in respect of Exercisable Options relating to
Convertible Notes with a Conversion Date occurring on or after March 15, 2014, such
notice may be given on or prior to the second Scheduled Valid Day immediately preceding
the Expiration Date and need only specify the information required in clause (i) above,
and the information in clause (iii) above, if applicable, will be provided in a Notice of
Final Settlement Method.
	 
	 	 	 	 
	 

	 	Notice of Final Settlement Method:
	 	In order to elect a Settlement Method other than Net Share
Settlement for any Exercisable Options relating to Convertible Notes with a Conversion
Date occurring on or after March 15, 2014, Counterparty must notify Dealer in writing
before 5:00 p.m. (New York City time) on or prior to March 15, 2014 of such election, and
any such notice must include the information, representations, acknowledgements and
agreements required pursuant to “Settlement Method Election Conditions” below.
	 
	 	 	 	 
	 

	 	Valuation Time:
	 	At the close of trading of the regular trading session on the Exchange;
provided that if the principal trading session is extended, the Calculation Agent shall
determine the Valuation Time in its reasonable discretion.
	 
	 	 	 	 
	 

	 	Market Disruption Event:
	 	Section 6.3(a) of the Equity Definitions is hereby replaced in its
entirety by the following:
	 
	 	 	 	 
	 

	 	 	 	“‘Market Disruption Event’ means, in respect of a Share,
(i) a failure by the primary United States national or
regional securities exchange or market on which the
Shares are listed or admitted to trading to open for
trading during its regular trading session or (ii) the
occurrence or existence prior to 1:00 p.m. (New York
City time) on any Scheduled Valid Day for the Shares for
more than one half-hour period in the aggregate during
regular trading hours of any suspension or limitation
imposed on trading (by reason of movements in price
exceeding limits permitted by the relevant stock
exchange or otherwise) in the Shares or in any options,
contracts or future contracts relating to the Shares.”






 


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Settlement Terms:




	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Settlement Method:
	 	For any Exercisable Option, Net Share Settlement; provided that
Counterparty may elect Cash Settlement or Combination Settlement for such Exercisable
Option in accordance with the “Settlement Method Election Conditions” below.
	 
	 	 	 	 
	 

	 	Settlement Method Election

Conditions:
	 	In order to elect a Settlement Method other than Net
Share Settlement for any Exercisable Option, the Notice of Exercise or Notice of Final
Settlement Method for such Exercisable Option, as applicable, shall:
	 
	 	 	 	 
	 

	 	 	 	(i) include Counterparty’s election of such other
Settlement Method for such Exercisable Options;
	 
	 	 	 	 
	 

	 	 	 	(ii) if such other Settlement Method is Combination
Settlement, specify the fixed amount of cash per
Exercisable Option that is to be delivered to
Counterparty (the “Specified Option Cash Amount”);
	 
	 	 	 	 
	 

	 	 	 	(iii) contain a representation that, on the date of such
Notice of Exercise or Notice of Final Settlement Method,
as applicable, Counterparty is not in possession of any
material non-public information with respect to
Counterparty or the Shares;
	 
	 	 	 	 
	 

	 	 	 	(iv) contain a representation that Counterparty is
electing such other Settlement Method in good faith and
not as part of a plan or scheme to evade the
prohibitions of Rule 10b-5 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”);
	 
	 	 	 	 
	 

	 	 	 	(v) contain a representation that Counterparty has not
entered into or altered any hedging transaction relating
to the Shares corresponding to or offsetting the
Transaction;
	 
	 	 	 	 
	 

	 	 	 	(vi) contain a representation that Counterparty is not
electing such other Settlement Method to create actual
or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the
Shares) or to raise or depress or otherwise manipulate
the price of the Shares (or any security convertible
into or exchangeable for the Shares); and
	 
	 	 	 	 
	 

	 	 	 	(vii) contain an acknowledgment by Counterparty that (A)
any transaction by Dealer following Counterparty’s
election of such other Settlement Method shall be made
at Dealer’s sole discretion and for Dealer’s own account
and (B) Counterparty does not have, and shall not
attempt to exercise, any influence over how, when,
whether or at what price to effect such transactions,
including, without limitation, the price paid or
received per Share pursuant to such transactions, or
whether such transactions are made on any securities
exchange or privately.






 


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	 	Net Share Settlement:
	 	If Net Share Settlement is applicable to any Exercisable Option
exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on the
relevant Settlement Date for each such Exercisable Option, a number of Shares (the “Net
Share
Settlement Amount”) equal to the sum, for each Valid Day
during the Settlement Averaging Period for each such
Exercisable Option, of (i) the Daily Option Value for
such Valid Day, divided by (ii) the Relevant Price on
such Valid Day, divided by (iii) the number of Valid
Days in the Settlement Averaging Period; provided that
in no event shall the Net Share Settlement Amount for
any Exercisable Option exceed a number of Shares equal
to the Applicable Limit for such Exercisable Option
divided by the Relevant Price on the last Valid Day of
the Settlement Averaging Period.
	 
	 	 	 	 
	 

	 	 	 	Dealer will deliver cash in lieu of any fractional
Shares to be delivered with respect to any Net Share
Settlement Share Amount valued at the Relevant Price for
the last Valid Day of the Settlement Averaging Period.
	 
	 	 	 	 
	 

	 	Combination Settlement:
	 	If Combination Settlement is applicable to any Exercisable Option
exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on the
relevant Settlement Date for each such Exercisable Option:
	 
	 	 	 	 
	 

	 	 	 	(i) an amount of cash (the “Combination Settlement Cash
Amount”) equal to the sum, for each Valid Day during the
Settlement Averaging Period for such Exercisable Option,
of (A) an amount (the “Daily Combination Settlement Cash
Amount”) equal to the lesser of (1) the product of the
Applicable Percentage and the Specified Option Cash
Amount and (2) the Daily Option Value, divided by (B)
the number of Valid Days in the Settlement Averaging
Period; and
	 
	 	 	 	 
	 

	 	 	 	(ii) a number of Shares (the “Combination Settlement
Share Amount”) equal to the sum, for each Valid Day
during the Settlement Averaging Period for such
Exercisable Option, of (A) the Daily Option Value on
such Valid Day minus Daily Combination Settlement Cash
Amount for such Valid Day, divided by (B) the Relevant
Price on such Valid Day, divided by (C) the number of
Valid Days in the Settlement Averaging Period; provided
that if the calculation in clause (A) above results in
zero or a negative number for any Valid Day, the
Combination Settlement Share Amount for such Valid Day
shall be deemed to be zero;
	 
	 	 	 	 
	 

	 	 	 	provided that in no event shall the sum of (x) the
Combination Settlement Cash Amount for any Exercisable
Option and (y) the Combination Settlement Share Amount
for such Exercisable Option multiplied by the Relevant
Price on the last Valid Day of the Settlement Averaging
Period, exceed the Applicable Limit for such Exercisable
Option.
	 
	 	 	 	 
	 

	 	 	 	Dealer will deliver cash in lieu of any fractional
Shares to be delivered with respect to any Combination
Settlement Share Amount valued at the Relevant Price for
the last Valid Day of the Settlement Averaging Period.






 


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	 	Cash Settlement:
	 	If Cash Settlement is applicable to any Exercisable Option exercised or
deemed exercised hereunder, in lieu of Section 8.1 of
the Equity Definitions, Dealer will pay to Counterparty,
on the relevant Settlement Date for each such
Exercisable Option, an amount of cash (the “Cash
Settlement Amount”) equal to the sum, for each Valid Day
during the Settlement Averaging Period for such
Exercisable Option, of (i) the Daily Option Value for
such Valid Day, divided by (ii) the number of Valid Days
in the Settlement Averaging Period; provided that in no
event shall the Cash Settlement Amount for any
Exercisable Option exceed the Applicable Limit for such
Exercisable Option.
	 
	 	 	 	 
	 

	 	Daily Option Value:
	 	For any Valid Day, an amount equal to (i) the Option Entitlement on
such Valid Day, multiplied by (ii) the Relevant Price on such Valid Day less the Strike
Price on such Valid Day; provided that if the calculation contained in clause (ii) above
results in a negative number, the Daily Option Value for such Valid Day shall be deemed
to be zero. In no event will the Daily Option Value be less than zero.
	 
	 	 	 	 
	 

	 	Applicable Limit:
	 	For any Exercisable Option, an amount of cash equal to the Applicable
Percentage multiplied by the excess of (i) the aggregate of (A) the amount of cash, if
any, delivered to the Holder of the related Convertible Note upon conversion of such
Convertible Note and (B) the number of Shares, if any, delivered to the Holder of the
related Convertible Note upon conversion of such Convertible Note multiplied by the
Relevant Price on the last Valid Day of the Settlement Averaging Period for such
Exercisable Option, over (ii) USD 1,000.
	 
	 	 	 	 
	 

	 	Valid Day:
	 	A day on which (i) there is no Market Disruption Event and (ii) trading in
the Shares generally occurs on the Exchange or, if the Shares are not then listed on the
Exchange, on the principal other United States national or regional securities exchange
on which the Shares are then listed or, if the Shares are not then listed on a United
States national or regional securities exchange, on the principal other market on which
the Shares are then traded. If the Shares are not so listed or traded, “Valid Day” means
a Business Day.
	 
	 	 	 	 
	 

	 	Scheduled Valid Day:
	 	A day that is scheduled to be a Valid Day on the principal United States
national or regional securities exchange or market on which the Shares are listed or
admitted for trading. If the Shares are not so listed or admitted for trading,
“Scheduled Valid Day” means a Business Day.
	 
	 	 	 	 
	 

	 	Business Day:
	 	Any day other than a Saturday, a Sunday or a day on which the Federal Reserve
Bank of New York is authorized or required by law or executive order to close or be
closed.
	 
	 	 	 	 
	 

	 	Relevant Price:
	 	On any Valid Day, the per Share volume-weighted average price as displayed
under the heading “Bloomberg VWAP” on Bloomberg page EXH.N <equity> AQR (or any
successor thereto) in respect of the period from the scheduled opening time of the
Exchange to the Scheduled Closing Time of the Exchange on such Valid Day (or if such
volume-weighted average price is unavailable, the market value of one Share on such Valid
Day, as
determined by the Calculation Agent using a
volume-weighted method).






 


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	 	Settlement Averaging Period:
	 	For any Exercisable Option and regardless of the Settlement
Method applicable to such Exercisable Option:
	 
	 	 	 	 
	 

	 	 	 	(i) if Counterparty has, on or prior to March 15, 2014,
delivered a Notice of Exercise to Dealer with respect to
such Exercisable Option with a Conversion Date occurring
prior to March 15, 2014, the forty (40) consecutive
Valid Days commencing on and including the second
Scheduled Valid Day following such Conversion Date; or
	 
	 	 	 	 
	 

	 	 	 	(ii) if Counterparty has, on or following March 15,
2014, delivered a Notice of Exercise to Dealer with
respect to such Exercisable Option with a Conversion
Date occurring on or following March 15, 2014, the forty
(40) consecutive Valid Days commencing on, and
including, the forty-second (42nd) Scheduled
Valid Day immediately prior to the Expiration Date.
	 
	 	 	 	 
	 

	 	Settlement Date:
	 	For any Exercisable Option, the third Business Day immediately following the
final Valid Day of the Settlement Averaging Period for such Exercisable Option.
	 
	 	 	 	 
	 

	 	Settlement Currency:
	 	USD
	 
	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and
10.5 of the Equity Definitions will be applicable, except that all references in such
provisions to “Physically-settled” shall be read as references to “Share Settled”.
“Share Settled” in relation to any Option means that Net Share Settlement or Combination
Settlement is applicable to that Option.
	 
	 	 	 	 
	 

	 	Representation and Agreement:
	 	Notwithstanding Section 9.11 of the Equity Definitions, the
parties acknowledge that any Shares delivered to Counterparty shall be, upon delivery,
subject to restrictions and limitations arising from Counterparty’s status as issuer of
the Shares under applicable securities laws.






3. Additional Terms applicable to the Transaction:




               Adjustments applicable to the Transaction:




	 	 	 	 	 
	 

	 	Potential Adjustment Events:
	 	Notwithstanding Section 11.2(e) of the Equity Definitions, a
“Potential Adjustment Event” means an occurrence of any event or condition, as set forth in
Section 4.04(a), (b), (c), (d) or (e) of the Supplemental Indenture that would result in an
adjustment to the Conversion Rate of the Convertible Notes; provided that in no event shall
there be any adjustment hereunder as a result of an adjustment to the Conversion Rate
pursuant to Section 4.04(f) or (g) or Section 4.06 of the Supplemental Indenture.






 


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	 	Method of Adjustment:
	 	Calculation Agent Adjustment, and means that, notwithstanding Section
11.2(c) of the Equity Definitions, upon any adjustment to the Conversion Rate of the
Convertible Notes pursuant to the Supplemental Indenture (other than Section 4.04(f) or (g)
or
Section 4.06 of the Supplemental Indenture) or any
adjustment pursuant to Section 4.05 of the Supplemental
Indenture, the Calculation Agent will make a
corresponding adjustment to any one or more of the
Strike Price, Number of Options, Option Entitlement and
any other variable relevant to the exercise, settlement
or payment for the Transaction; provided that if the
Calculation Agent in good faith disagrees with any
adjustment to the Conversion Rate pursuant to Section
4.04(n) or Section 4.05 of the Supplemental Indenture,
the Calculation Agent will determine the corresponding
adjustment to be made to any one or more of the Strike
Price, Number of Options, Option Entitlement and any
other variable relevant to the exercise, settlement or
payment for the Transaction in a commercially reasonable
manner.






Extraordinary Events applicable to the Transaction:




	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Merger Events:
	 	Applicable; provided that notwithstanding Section 12.1(b) of the Equity
Definitions, a “Merger Event” means the occurrence of any event or condition set forth
in the definition of “Merger Event” in Section 4.07(a) of the Supplemental Indenture.
	 
	 	 	 	 
	 

	 	Tender Offers:
	 	Applicable; provided that notwithstanding Section 12.1(d) of the Equity
Definitions, a “Tender Offer” means the occurrence of any event or condition set forth
in Section 4.04(e) of the Indenture.
	 
	 	 	 	 
	 

	 	Consequence of Merger Events/Tender
Offers:
	 	Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon the
occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall make a
corresponding adjustment in respect of any adjustment under the Supplemental Indenture to
any one or more of the nature of the Shares, Strike Price, Number of Options, Option
Entitlement and any other variable relevant to the exercise, settlement or payment for
the Transaction; provided, however, that such adjustment shall be made without regard to
any adjustment to the Conversion Rate for the issuance of additional shares as set forth
in Section 4.06 of the Supplemental Indenture; provided further that if, with respect to
a Merger Event or Tender Offer, (i) the consideration for the Shares includes (or, at the
option of a holder of Shares, may include) shares of an entity or person not organized
under the laws of the United States, any State thereof or the District of Columbia or
(ii) the Counterparty to the Transaction following such Merger Event or Tender Offer,
will not be the Issuer following such Merger Event or Tender Offer, then Cancellation and
Payment (Calculation Agent Determination) shall apply.
	 
	 	 	 	 
	 

	 	Nationalization, Insolvency or Delisting:
	 	 Cancellation and Payment (Calculation Agent
Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of
the Equity Definitions, it will also constitute a Delisting if the Exchange is located in
the United States and the Shares are not immediately re-listed, re-traded or re-quoted on
any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or their respective successors); if the Shares are immediately re-listed,
re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global Market (or their
respective successors), such exchange or quotation
system shall thereafter be deemed to be the Exchange.






 


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	 	Additional Disruption Events:	 	 
	 
	 	 	 	 
	 

	 	Change in Law:

	 	Applicable; provided that Section 12.9(a)(ii)(X) of the Equity Definitions is
hereby amended by replacing the word “Shares” with the phrase “Hedge Positions.”
	 
	 	 	 	 
	 

	 	Failure to Deliver:

	 	Applicable
	 
	 	 	 	 
	 

	 	Hedging Disruption:

	 	Applicable; provided that Section 12.9(a)(v) of the Equity Definitions
is hereby modified by inserting the following two phrases at the end of such Section:
	 
	 	 	 	 
	 

	 	 	 	“For the avoidance of doubt, the term “equity price
risk” shall be deemed to include, but shall not be
limited to, stock price and volatility risk. And, for
the further avoidance of doubt, any such transactions or
assets referred to in phrases (A) or (B) above must be
available on commercially reasonable pricing terms.”
	 
	 	 	 	 
	 

	 	Hedging Party:

	 	For all applicable Additional Disruption Events, Dealer.
	 
	 	 	 	 
	 

	 	Determining Party:

	 	For all applicable Extraordinary Events, Dealer.
	 
	 	 	 	 






	 	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgements
Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable
	 
	 	 
	4. Calculation Agent:

	 	Dealer; provided that all determinations made by Dealer as Calculation
Agent shall be made in good faith and in a commercially reasonable manner. Following any
calculation or determination by Calculation Agent hereunder and a prior written request by
Counterparty, the Calculation Agent shall provide Counterparty a written explanation of such
calculation or determination including, where applicable, a description of the methodology and
the basis for such calculation or determination in reasonable detail, it being understood that
the Calculation Agent shall not be obligated to disclose any proprietary models used by it for
such calculation or determination. No transferee of Dealer shall act as Calculation Agent
without the prior written consent of Counterparty, such consent not to be unreasonably
withheld or delayed.






5. Account Details:




	 	(a)	 	Account for payments to Counterparty:





Bank: JPMorgan Chase Bank, N.A., New York

ABA: 021000021

Acct: Exterran Holdings, Inc.

Acct No.: 737308817





Account for delivery of Shares to Counterparty:


 


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To be provided by Counterparty.




	 	(b)	 	Account for payments to Dealer:





Wachovia Bank, National Association

Charlotte, NC

ABA: 053-000-219

Account No.: 04659360009768

Attn: Equity Derivatives





Account for delivery of Shares from Dealer:


To be provided by Dealer.




6. Offices:



The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch
Party.



The Office of Dealer for the Transaction is: New York



Wachovia Bank, National Association

375 Park Avenue

New York, NY 10152




7. Notices: For purposes of this Confirmation:




	 	(a)	 	Address for notices or communications to Counterparty:





Exterran Holdings, Inc.

16666 Northchase Drive

Houston, Texas 77060

Attention: Treasurer

Telephone No.: (281) 836-7000

Facsimile No.: (281) 836-8106





	 	(b)	 	Address for notices or communications to Dealer:





Wachovia Bank, National Association

c/o Mark Kohn or Head Trader

375 Park Avenue, NY4073

New York, NY 10152

Telephone No.: (212) 214-6089

Facsimile No.: (212) 214-8917




8. Representations and Warranties of Counterparty



Each of the representations and warranties of Counterparty set forth in Section 3 of the
Underwriting Agreement (the “Underwriting Agreement”) dated as of June 4, 2009 between Counterparty
and J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wachovia
Capital Markets, LLC and Credit Suisse Securities (USA) LLC as representative of the Underwriters
party thereto (the “Underwriters”), are true and correct and are hereby deemed to be repeated to
Dealer on the date hereof and on and as of the Premium Payment Date as if set forth herein.
Counterparty hereby further represents and warrants to Dealer that:




	 	(a)	 	Counterparty has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction; such execution,
delivery and performance have been duly authorized by all necessary corporate action on
Counterparty’s part; and this Confirmation
has been duly and validly executed and delivered by Counterparty and constitutes its
valid and binding obligation, enforceable against Counterparty in accordance with
its





 


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	 	 	 	terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity)
and except that rights to indemnification and contribution hereunder may be limited
by federal or state securities laws or public policy relating thereto.

	 
	 	(b)	 	Neither the execution and delivery of this Confirmation nor the incurrence or
performance of obligations of Counterparty hereunder will conflict with or result in a
breach of the certificate of incorporation or by-laws (or any equivalent documents) of
Counterparty, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or instrument
to which Counterparty or any of its subsidiaries is a party or by which Counterparty or
any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is
subject, or constitute a default under, or result in the creation of any lien under,
any such agreement or instrument.

	 
	 	(c)	 	No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection with the execution,
delivery or performance by Counterparty of this Confirmation, except such as have been
obtained or made and such as may be required under the Securities Act of 1933, as
amended (the “Securities Act”) or state securities laws.

	 
	 	(d)	 	Counterparty is not and will not be required to register as an “investment
company” as such term is defined in the Investment Company Act of 1940, as amended.

	 
	 	(e)	 	It is an “eligible contract participant” (as such term is defined in Section
1a(12) of the Commodity Exchange Act, as amended (the “CEA”)) because one or more of
the following is true:

	 
	 	 	 	Counterparty is a corporation, partnership, proprietorship, organization, trust or
other entity and:







	 	(A)	 	Counterparty has total assets in excess of USD 10,000,000;

	 
	 	(B)	 	the obligations of Counterparty hereunder are guaranteed, or
otherwise supported by a letter of credit or keepwell, support or other
agreement, by an entity of the type described in Section 1a(12)(A)(i) through
(iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or 1a(12)(C) of the CEA; or

	 
	 	(C)	 	Counterparty has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of Counterparty’s
business or to manage the risk associated with an asset or liability owned or
incurred or reasonably likely to be owned or incurred by Counterparty in the
conduct of Counterparty’s business.







	 	(f)	 	Each of it and its affiliates is not, on the date hereof, in possession of any
material non-public information with respect to Counterparty.

	 
	 	(g)	 	Counterparty is entering into the Transaction for bona fide business purposes
and not for speculative purposes.






9. Other Provisions:




	 	(a)	 	Opinions. Counterparty shall deliver to Dealer an opinion of counsel,
dated as of the Trade Date and reasonably acceptable to Dealer in form and substance,
with respect to (i) due incorporation, existence and good standing of Counterparty in
Delaware, (ii) Counterparty’s qualifications as a foreign corporation and good standing
in Texas, (iii) the due authorization, execution and delivery of the Confirmation, and
(iv) the absence of conflict of the execution and delivery of the
Confirmation with any material agreement required to be filed as any exhibit to
Counterparty’s Annual Report on Form 10-K, Counterparty’s charter documents and any
applicable law or regulation. Delivery of such opinion to Dealer shall be a
condition precedent for the purpose of Section 2(a)(iii) of the Agreement with
respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.





 


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	 	(b)	 	Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of
such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the
number of outstanding Shares as determined on such day is (i) less than 59.2 million
(in the case of the first such notice) or (ii) thereafter more than 3.0 million less
than the number of Shares included in the immediately preceding Repurchase Notice.
Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their
respective officers, directors, employees, affiliates, advisors, agents and controlling
persons (each, an “Indemnified Person”) from and against any and all losses (including
losses relating to Dealer’s hedging activities as a consequence of becoming, or of the
risk of becoming, a Section 16 “insider”, including without limitation, any forbearance
from hedging activities or cessation of hedging activities and any losses in connection
therewith with respect to this Transaction), claims, damages, judgments, liabilities
and expenses (including reasonable attorney’s fees), joint or several, which an
Indemnified Person may become subject to, as a result of Counterparty’s failure to
provide Dealer with a Repurchase Notice on the day and in the manner specified in this
paragraph, and to reimburse, within 30 days, upon written request, each of such
Indemnified Persons for any reasonable legal or other expenses incurred in connection
with investigating, preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or asserted
against the Indemnified Person as a result of Counterparty’s failure to provide Dealer
with a Repurchase Notice in accordance with this paragraph, such Indemnified Person
shall promptly notify Counterparty in writing, and Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others Counterparty may designate in
such proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. Counterparty shall not be liable for any settlement of any proceeding
contemplated by this paragraph that is effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
Counterparty agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Counterparty shall not, without
the prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding contemplated by this paragraph that is in respect of
which any Indemnified Person is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims that are
the subject matter of such proceeding on terms reasonably satisfactory to such
Indemnified Person. If the indemnification provided for in this paragraph is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then Counterparty hereunder, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph (b) are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity. The indemnity and contribution agreements
contained in this paragraph shall remain operative and in full force and effect
regardless of the termination of this Transaction.

	 
	 	(c)	 	Regulation M. Counterparty is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the Exchange Act, of any
securities of Counterparty, other than the distribution of the Convertible Notes.
Counterparty shall not, until the second Scheduled Trading Day immediately following
the Effective Date, engage in any such distribution.





 


13









 





	 	(d)	 	No Manipulation. Counterparty is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for the Shares)
or otherwise in violation of the Exchange Act.

	 
	 	(e)	 	Transfer or Assignment. (i) Counterparty shall have the right to
transfer or assign its rights and obligations hereunder with respect to all, but not
less than all, of the Options hereunder (such Options, the “Transfer Options”);
provided that such transfer or assignment shall be subject to reasonable conditions
that Dealer may impose, including but not limited, to the following conditions:







(A) With respect to any Transfer Options, Counterparty shall not be released
from its notice and indemnification obligations pursuant to Section 9(b) or any
obligations under Section 9(m) or 9(r) of this Confirmation;




(B) Any Transfer Options shall only be transferred or assigned to a third party
that is a United States person (as defined in the Internal Revenue Code of 1986,
as amended);




(C) Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to, an
undertaking with respect to compliance with applicable securities laws in a
manner that, in the reasonable judgment of Dealer, will not expose Dealer to
material risks under applicable securities laws) and execution of any
documentation and delivery of legal opinions with respect to securities laws and
other matters by such third party and Counterparty, as are requested and
reasonably satisfactory to Dealer;




(D) Dealer will not, as a result of such transfer and assignment, be required to
pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the
Agreement greater than an amount that Dealer would have been required to pay to
Counterparty in the absence of such transfer and assignment;




(E) An Event of Default, Potential Event of Default or Termination Event will
not occur as a result of such transfer and assignment;




(F) Without limiting the generality of clause (B), Counterparty shall cause the
transferee to make such Payee Tax Representations and to provide such tax
documentation as may be reasonably requested by Dealer to permit Dealer to
determine that results described in clauses (D) and (E) will not occur upon or
after such transfer and assignment; and




(G) Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Dealer in connection with such
transfer or assignment.




	 	 	 	(ii) Dealer may, without Counterparty’s consent, transfer or assign all or any part
of its rights or obligations under the Transaction to any third party with a rating
for its long term, unsecured and unsubordinated indebtedness equal to or better than
the lesser of (x) the credit rating of Dealer at the time of the transfer and (y) A-
by Standard and Poor’s Rating Group, Inc. or its successor (“S&P”), or A3 by Moody’s
Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases to rate such
debt, at least an equivalent rating or better by a substitute rating agency mutually
agreed by Counterparty and Dealer. If at any time at which (1) the Section 16
Percentage exceeds 7.5%, (2) the Option Equity Percentage exceeds 14.5%, or (3) the
Share Amount exceeds the Post-Effective Limit (if any applies), Dealer is unable
after using its commercially reasonable efforts to effect a transfer or assignment
of Options to a third party on pricing terms reasonably acceptable to Dealer and
within a time period reasonably acceptable to Dealer such that (1) the Section 16
Percentage will be equal to or less than 7.5%, (2) the Option Equity Percentage will
be equal to or less than 14.5%, and (3) the Share Amount will be equal to or less
than any such Post-Effective Limit, then Dealer may designate any Exchange Business
Day as an Early Termination Date with respect to a portion of the Transaction (the
“Terminated Portion”), such that following such partial termination (1) the Section
16 Percentage will be equal to or less than 7.5%, (2) the Option Equity Percentage
will be equal to or less than 14.5%, and (3) the Share Amount





 


14









 







	 	 	 	will be equal to or
less than such Post-Effective Limit. In the event that Dealer so designates an
Early
Termination Date with respect to a Terminated Portion, a payment shall be made
pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been
designated in respect of a Transaction having terms identical to this Transaction
and a Number of Options equal to the number of Options underlying the Terminated
Portion, (2) Counterparty shall be the sole Affected Party with respect to such
partial termination and (3) the Terminated Portion shall be the sole Affected
Transaction (and, for the avoidance of doubt, the provisions of Section 9(k) shall
apply to any amount that is payable by Dealer to Counterparty pursuant to this
sentence as if Counterparty was not the Affected Party). The “Section 16
Percentage” as of any day is the fraction, expressed as a percentage, (A) the
numerator of which is the number of Shares that Dealer and each person subject to
aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act
and rules promulgated thereunder directly or indirectly beneficially own (as defined
under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder)
and (B) the denominator of which is the number of Shares outstanding. The “Option
Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the
numerator of which is the sum of (x) the product of the Number of Options and the
Option Entitlement and (y) the aggregate number of Shares underlying any other call
option transaction sold by Dealer to Counterparty, and (B) the denominator of which
is the number of Shares outstanding. The “Share Amount” as of any day is the number
of Shares that Dealer and any person whose ownership position would be aggregated
with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law,
rule, regulation or regulatory order that for any reason becomes applicable to
ownership of Shares after the Trade Date (“Applicable Laws”), owns, beneficially
owns, constructively owns, controls, holds the power to vote or otherwise meets a
relevant definition of ownership of under the Applicable Laws, as determined by
Dealer in its reasonable discretion. The “Post-Effective Limit” means (x) the
minimum number of Shares that would give rise to reporting or registration
obligations or other requirements (including obtaining prior approval from any
person or entity) of a Dealer Person, or would result in an adverse effect on a
Dealer Person, under the Applicable Laws, as determined by Dealer in its reasonable
discretion, minus (y) 1% of the number of Shares outstanding.







	 	 	 	(iii) Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or
other securities to or from Counterparty, Dealer may designate any of its affiliates
to purchase, sell, receive or deliver such Shares or other securities and otherwise
to perform Dealer’s obligations in respect of this Transaction and any such designee
may assume such obligations. Dealer shall be discharged of its obligations to
Counterparty to the extent of any such performance.







	 	(f)	 	Staggered Settlement. If upon advice of counsel with respect to
applicable legal and regulatory requirements, including any requirements relating to
Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not
be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of
the Shares to be delivered by Dealer on the Settlement Date for the Transaction, Dealer
may, by notice to Counterparty on or prior to any Settlement Date (a “Nominal
Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered
Settlement Date”) as follows:

	 
	 	 	 	(i) in such notice, Dealer will specify to Counterparty the related Staggered
Settlement Dates (the first of which will be such Nominal Settlement Date and the
last of which will be no later than the twentieth (20th) Exchange Business Day
following such Nominal Settlement Date) and the number of Shares that it will
deliver on each Staggered Settlement Date;

	 
	 	 	 	(ii) the aggregate number of Shares that Dealer will deliver to Counterparty
hereunder on all such Staggered Settlement Dates will equal the number of Shares
that Dealer would otherwise be required to deliver on such Nominal Settlement Date;
and

	 
	 	 	 	(iii) if the Net Share Settlement terms or the Combination Settlement terms set
forth above were to apply on the Nominal Settlement Date, then the Net Share
Settlement terms or the Combination Settlement terms, as applicable, will apply on
each Staggered Settlement Date, except that the
Shares deliverable pursuant to such terms on the Nominal Settlement Date will be
allocated among such Staggered Settlement Dates as specified by Dealer in the notice
referred to in clause (i) above.





 


15









 







	 	(g)	 	Role of Agent.

	 
	 	 	 	(i) The Agent is registered as a broker-dealer with the U.S. Securities and Exchange
Commission and the National Association of Securities Dealers, is acting hereunder
for and on behalf of Dealer solely in its capacity as agent for Dealer pursuant to
instructions from Dealer, and is not and will not be acting as Counterparty’s agent,
broker, advisor or fiduciary in any respect under or in connection with this
Transaction.

	 
	 	 	 	(ii) In addition to acting as Dealer’s agent in executing this Transaction, the
Agent is authorized from time to time to give written payment and/or delivery
instructions to Counterparty directing it to make its payments and/or deliveries
under this Transaction to an account of the Agent for remittance to Dealer (or its
designee), and for that purpose any such payment or delivery by Counterparty to the
Agent shall be treated as a payment or delivery to Dealer.

	 
	 	 	 	(iii) Except as otherwise provided herein, any and all notices, demands, or
communications of any kind transmitted in writing by either Dealer or Counterparty
under or in connection with this Transaction will be transmitted exclusively by such
Party to the other Party through the Agent at the following address:

	 
	 	 	 	Wachovia Capital Markets, LLC

201 South College Street, 6th Floor

Charlotte, NC 28288-0601

Facsimile No.: (704) 383-8425

Telephone No.: (704) 715-8086

Attention: Equity Derivatives

	 
	 	 	 	(iv) The Agent shall have no responsibility or liability to Dealer or Counterparty
for or arising from (A) any failure by either Dealer or Counterparty to perform any
of their respective obligations under or in connection with this Transaction, (B)
the collection or enforcement of any such obligations, or (C) the exercise of any of
the rights and remedies of either Dealer or Counterparty under or in connection with
this Transaction. Each of Dealer and Counterparty agrees to proceed solely against
the other to collect or enforce any such obligations, and the Agent shall have no
liability in respect of this Transaction except for its gross negligence or willful
misconduct in performing its duties as the agent of Dealer.

	 
	 	 	 	(v) Upon written request, the Agent will furnish to Dealer and Counterparty the date
and time of the execution of this Transaction and a statement as to the source and
amount of any remuneration received or to be received by the Agent in connection
with this Transaction.

	 
	 	(h)	 	Additional Termination Events. Notwithstanding anything to the
contrary in this Confirmation if an event of default with respect to Counterparty shall
occur under the terms of the Convertible Notes as set forth in Section 5.01 of the
Supplemental Indenture or under Section 6.01 of the Base Indenture, as modified by
Section 5.01 of the Supplemental Indenture, which event of default results in the
Convertible Notes becoming due and payable before their stated maturity, then such
event of default shall constitute an Additional Termination Event applicable to the
Transaction and, with respect to such event of default (A) Counterparty shall be deemed
to be the sole Affected Party and the Transaction shall be the sole Affected
Transaction and (B) Dealer shall be the party entitled to designate an Early
Termination Date pursuant to Section 6(b) of the Agreement.

	 
	 	(i)	 	Amendments to Equity Definitions.

	 
	 	 	 	(i) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting
from the fourth line thereof the word “or” after the word “official” and inserting a
comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof
and inserting the following words
therefor “or (C) at Dealer’s option, the occurrence of any of the events specified
in Section 5(a)(vii)(1) through (9) of the ISDA Master Agreement with respect to
that Issuer.”





 


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	 	 	 	(ii) Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing
“either party may elect” with “Dealer may elect” and (2) replacing “notice to the
other party” with “notice to Counterparty” in the first sentence of such section.

	 
	 	(j)	 	No Set-Off. Neither party shall have the right to set off any
obligation that it may have to the other party under this Transaction against any
obligation such other party may have to it, whether arising under the Agreement, this
Confirmation or any other agreement between the parties hereto, by operation of law or
otherwise.

	 
	 	(k)	 	Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If in respect of this Transaction, an amount is payable by
Dealer to Counterparty (i) pursuant to Section 12.7 or Section 12.9 of the Equity
Definitions or (ii) pursuant to Section 6(d)(ii) of the Agreement (a “Payment
Obligation”), Counterparty may request Dealer to satisfy any such Payment Obligation by
the Share Termination Alternative (as defined below) (except that Counterparty shall
not make such an election in the event of a Nationalization, Insolvency, Merger Event
or Tender Offer, in each case, in which the consideration to be paid to holders of
Shares consists solely of cash, or an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected Party,
other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi),
(vii) or (viii) of the Agreement or a Termination Event of the type described in
Section 5(b) of the Agreement in each case that resulted from an event or events
outside Counterparty’s control) and shall give irrevocable telephonic notice to Dealer,
confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New
York City time) on the Merger Date, the Tender Offer Date, the Announcement Date (in
the case of Nationalization, Insolvency or Delisting), the Early Termination Date or
date of cancellation, as applicable; provided that if Counterparty does not validly
request Dealer to satisfy its Payment Obligation by the Share Termination Alternative,
Dealer shall have the right, in its reasonable discretion, to satisfy its Payment
Obligation by the Share Termination Alternative, notwithstanding Counterparty’s
election to the contrary. In calculating any amounts under Section 6(e) of the
Agreement, notwithstanding anything to the contrary in the Agreement, (1) separate
amounts shall be calculated as set forth in Section 6(e) with respect to (i) this
Transaction and (ii) all other Transactions, and (2) such separate amounts shall be
payable pursuant to Section 6(d)(ii) of the Agreement.






	 	 	 
	Share Termination Alternative:

	 	Applicable and means that Dealer
shall deliver to Counterparty the Share Termination Delivery Property on, or
within a commercially reasonable period of time after, the date when the
Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of
the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as
applicable (the “Share Termination Payment Date”), in satisfaction of the
Payment Obligation in the manner reasonably requested by Counterparty free of
payment.
	 
	 	 
	Share Termination Delivery Property:

	 	A number of Share Termination
Delivery Units, as calculated by the Calculation Agent, equal to the Payment
Obligation divided by the Share Termination Unit Price. The Calculation Agent
shall adjust the Share Termination Delivery Property by replacing any
fractional portion of a security therein with an amount of cash equal to the
value of such
fractional security based on the values used
to calculate the Share Termination Unit Price.






 


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	Share Termination Unit Price:

	 	The value to Dealer of property
contained in one Share Termination Delivery Unit, as determined by the
Calculation Agent in its discretion by commercially reasonable means and
notified by the Calculation Agent to Dealer at the time of notification of the
Payment Obligation. For the avoidance of doubt, the parties agree that in
determining the Share Termination Delivery Unit Price the Calculation Agent may
consider the purchase price paid in connection with the purchase of Share
Termination Delivery Property.
	 
	 	 
	Share Termination Delivery Unit:

	 	One Share or, if a Merger Event has
occurred and a corresponding adjustment to this Transaction has been made, a
unit consisting of the number or amount of each type of property received by a
holder of one Share (without consideration of any requirement to pay cash or
other consideration in lieu of fractional amounts of any securities) in such
Merger Event, as determined by the Calculation Agent.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other applicable provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections 9.8, 9.9, 9.11, 9.12 and 10.5 (as
modified above) of the Equity Definitions will be applicable, except that all
references in such provisions to “Physically-settled” shall be read as
references to “Share Termination Settled” and all references to “Shares” shall
be read as references to “Share Termination Delivery Units”. “Share
Termination Settled” in relation to this Transaction means that Share
Termination Alternative is applicable to this Transaction.







	 	(l)	 	Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of either party has represented, expressly or
otherwise, that such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided herein.

	 
	 	(m)	 	Registration. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Dealer (A) the Shares acquired by Dealer for the purpose of
hedging its obligations pursuant to this Transaction (the “Hedge Shares”) or (B) any
Early Unwind Shares delivered to Dealer pursuant to Section 9(s) (any such Hedge Shares
or Early Unwind Shares, “Restricted Shares”) cannot be sold in the public market by
Dealer without registration under the Securities Act, Counterparty shall, at its
election, either (i) in order to allow Dealer to sell the Restricted Shares in a
registered offering, make available to Dealer an effective registration statement under
the Securities Act and enter into an agreement, in form and substance satisfactory to
Dealer, substantially in the form of an underwriting agreement for a registered
secondary offering; provided, however, that if Dealer, in its sole reasonable
discretion, is not satisfied with





 


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	 	 	 	access to due diligence materials, the results
of its due diligence investigation, or the procedures and documentation for the
registered offering referred to above, then clause (ii) or clause (iii) of this
paragraph shall apply at the election of Counterparty, (ii) in order to allow Dealer
to sell the Restricted Shares in a private placement, enter into a private placement
agreement substantially similar to private placement purchase agreements customary
for private placements of equity securities, in form and substance satisfactory to
Dealer (in which case, the Calculation Agent shall make any adjustments to the terms
of this Transaction that are necessary, in its reasonable judgment, to compensate
Dealer for any discount from the public market price of the Shares incurred on the
sale of Restricted Shares in a private placement), or (iii) purchase the Restricted
Shares from Dealer at the Reference Price on such Exchange Business Days, and in the
amounts, requested by Dealer.







	 	(n)	 	Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Counterparty and each of its employees, representatives, or
other agents may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the Transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to Counterparty relating
to such tax treatment and tax structure.

	 
	 	(o)	 	Right to Extend. Dealer may postpone, in whole or in part, any
Settlement Date or any other date of valuation or delivery by Dealer or add additional
Settlement Dates or any other date of valuation or delivery, with respect to some or
all of the Options hereunder, if Dealer reasonably determines, in its discretion, that
such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or
hedge unwind activity hereunder in light of existing liquidity conditions or to enable
Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or
settlement activity hereunder in a manner that would, if Dealer were Counterparty or an
affiliated purchaser of Counterparty, be in compliance with applicable legal,
regulatory or self-regulatory requirements, or with related policies and procedures
applicable to Dealer.

	 
	 	(p)	 	Status of Claims in Bankruptcy. Dealer acknowledges and agrees that
this Confirmation is not intended to convey to Dealer rights against Counterparty with
respect to the Transaction that are senior to the claims of common stockholders of
Counterparty in any United States bankruptcy proceedings of Counterparty; provided that
nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue
remedies in the event of a breach by Counterparty of its obligations and agreements
with respect to the Transaction; provided, further, that nothing herein shall limit or
shall be deemed to limit Dealer’s rights in respect of any transactions other than the
Transaction.

	 
	 	(q)	 	Securities Contract; Swap Agreement. The parties hereto intend for:
(a) the Transaction to be a “securities contract” and a “swap agreement” as defined in
the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and
the parties hereto to be entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code; (b)
a party’s right to liquidate the Transaction and to exercise any other remedies upon
the occurrence of any Event of Default under the Agreement with respect to the other
party to constitute a “contractual right” as described in the Bankruptcy Code; and (c)
each payment and delivery of cash, securities or other property hereunder to constitute
a “margin payment” or “settlement payment” and a “transfer” as defined in the
Bankruptcy Code.

	 
	 	(r)	 	Notice of Merger Consideration. Counterparty covenants and agrees that,
as promptly as practicable following the public announcement of any consolidation,
merger and binding share exchange to which Counterparty is a party, or any sale of all
or substantially all of Counterparty’s assets, in each case pursuant to which the
Shares will be converted into cash, securities or other property, Counterparty shall
notify Dealer in writing of the types and amounts of consideration that holders of
Shares have elected to receive upon consummation of such transaction or event (the date
of such notification, the “Consideration Notification Date”); provided that in no event
shall the Consideration Notification Date be later than the date on which such
transaction or event is consummated.





 


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	 	(s)	 	Early Unwind. (i) In the event the sale of the “Underwritten
Securities” (as defined in the Underwriting Agreement) is not consummated with the
Underwriters for any reason, or if Counterparty fails to deliver to Dealer opinions of
counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City
time) on the Premium Payment Date, or such later date as agreed upon by the parties
(the Premium Payment Date or such later date, the “Early Unwind Date”), the Transaction
shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i)
the Transaction and all of the respective rights and obligations of Dealer and
Counterparty under the Transaction shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and agrees not to make
any claim against the other party with respect to any obligations or liabilities of the
other party arising out of and to be performed in connection with the Transaction
either prior to or after the Early Unwind Date; provided that Counterparty shall
reimburse Dealer for any costs or expenses (including market losses) relating to the
unwinding of its hedging activities in connection with the Transaction (including any
loss or cost incurred as a result of terminating, liquidating, obtaining or
reestablishing any hedge or related trading position of Dealer or one or more of its
affiliates in connection with the Transaction). The amount of any such reimbursement
shall be determined by Dealer in its sole good faith discretion. Dealer shall notify
Counterparty of such amount and Counterparty shall pay such amount in immediately
available funds on the Early Unwind Date. Each of Dealer and Counterparty represent
and acknowledge to the other that, subject to the proviso included in this Section,
upon an Early Unwind, all obligations with respect to the Transaction shall be deemed
fully and finally discharged.

	 
	 	 	 	(ii) If an amount is payable by Counterparty to Dealer pursuant to Section 9(s)(i)
(a “Reimbursement Obligation”), Counterparty shall have the right, in its sole
discretion, to satisfy any such Reimbursement Obligation by delivering to Dealer, on
the Exchange Business Day immediately following the Early Unwind Date, the Early
Unwind Shares (as defined below) in satisfaction of such Reimbursement Obligation in
the manner reasonably requested by Dealer free of payment. The “Early Unwind
Shares” shall be a number of Shares equal to the Reimbursement Obligation otherwise
payable under Section 9(s)(i) divided by the value to Dealer per Share on the date
such Shares are to be delivered as Early Unwind Shares (the “Early Unwind Share
Price”), as determined by the Calculation Agent in its discretion using commercially
reasonable means, together with cash in lieu of any fractional Shares based on the
Early Unwind Share Price. The Calculation Agent shall notify Counterparty of the
Early Unwind Share Price at the time of notification of the Reimbursement
Obligation. If such Early Unwind Shares are Restricted Shares as set forth in
Section 9(m), the Early Unwind Share Price may reflect, in the Calculation Agent’s
judgment, a discount applicable to such Early Unwind Shares. If such Early Unwind
Shares are not Restricted Shares as set forth in Section 9(m), the Early Unwind
Price shall be Relevant Price on the Early Unwind Date. Counterparty shall give
irrevocable telephonic notice, confirmed in writing within one Scheduled Trading
Day, to Dealer of its election to satisfy any Reimbursement Obligation by delivery
of Early Unwind Shares pursuant to this Section 9(s)(ii) no later than 6:00 p.m.
(New York City time) on the Early Unwind Date.





 


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	 	 	 	(iii) Notwithstanding any other provision of this Confirmation or the Agreement, in
no event will Counterparty be required to deliver more than the Number of Shares in
the aggregate to Dealer pursuant to this Section 9(s). In the event Counterparty
shall not have delivered the full number of Shares otherwise applicable as a result
of the foregoing sentence (such deficit, the “Deficit Shares”), Counterparty shall
be continually obligated to deliver, from time to time until the full number of
Deficit Shares have been delivered pursuant to this Section 9(s), Shares when, and
to the extent, that (A) Shares are repurchased, acquired or otherwise received by
Counterparty or any of its subsidiaries after the Trade Date (whether or not in
exchange for cash, fair value or any other consideration), (B) authorized and
unissued Shares reserved for issuance in respect of other transactions prior to such
date which prior to the relevant date become no longer so reserved and (C)
Counterparty additionally authorizes any unissued Shares that are not reserved for
other transactions. Counterparty shall immediately notify Dealer of the occurrence
of any of the foregoing events (including the number of Shares subject to clause
(A), (B) or (C) and the
corresponding number of Shares to be delivered) and promptly deliver the Applicable
Percentage of the aggregate number of such Shares thereafter.







	 	(t)	 	Payment by Counterparty. In the event that (i) an Early Termination
Date occurs or is designated with respect to the Transaction as a result of a
Termination Event or an Event of Default (other than an Event of Default arising under
Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Counterparty owes to
Dealer an amount calculated under Section 6(e) of the Agreement, or (ii) Counterparty
owes to Dealer, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an
amount calculated under Section 12.8 of the Equity Definitions, such amount shall be
deemed to be zero.





 


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Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon
receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm
that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the
agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this
Confirmation or this page hereof as evidence of agreement to such terms and providing the other
information requested herein and immediately returning an executed copy by facsimile to
212-214-5913 (Attention: Equity Division Documentation Unit, by telephone contact 212-214-6100).




	 	 	 	 	 
	Very truly yours,


 
	 
	 	
Wachovia Capital Markets, LLC, acting solely
in its capacity as Agent of Wachovia Bank,
National Association

 	 
	 	By:  	 /s/
Mary Louise Guttmann	 
	 	 	Authorized Signatory 	 
	 	 	Name: Mary Louise
Guttmann
            Senior Vice President	 
	 
	 	Wachovia Bank, National Association, by
Wachovia Capital Markets, LLC, acting solely
in its capacity as Agent
 	 
	 
	 	By:  	 /s/
Mary Louise Guttmann	 
	 	 	Authorized Signatory 	 
	 	 	Name: Mary Louise
Guttmann
            Senior
Vice President	 



	 	 	 	 	 	 	 
	Accepted and confirmed
as of the Trade Date:	 	 
	 
	 	 	 	 	 	 
	Exterran Holdings, Inc.	 	 
	 
	 	 	 	 	 	 
	By:	 

	 /s/ J. Michael Anderson	 	 	 	 
	 

	 	 

	 	 
	 	 	Authorized Signatory	 	 
	 	 	Name: J. Michael Anderson	 	 







 


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