Document:

exv10w39

 

EXHIBIT 10.39

Summary of Certain Executive Officer and Director Compensation Arrangements

Named Executive Officer Salary and Bonus Information

     The following table presents the base salaries as of February 28, 2008 of our named executive
officers serving as executive officers as of December 31, 2007.

	 	 	 	 	 
	Name	 	Salary
	Louis Raspino
	 	$	900,000	 
	Rodney W. Eads
	 	$	535,000	 
	Brian C. Voegele
	 	$	405,000	 
	W. Gregory Looser
	 	$	382,000	 
	Lonnie D. Bane
	 	$	335,000	 

     Under our annual incentive compensation plan for 2008, bonuses for executive officers will be
paid based on objectives established by our Compensation Committee. The specific objectives and
related targets under the plan for 2008 are expected to be approved by the Compensation Committee
by the end of the second quarter of 2008. Bonuses for executive officers under the 2008 plan will
be determined with reference to the level of achievement of the plan objectives. Target bonuses
payable for 2008 as a percentage of base salary for the persons named above are as follows: Mr.
Raspino—90%; Mr. Eads—75%; Mr. Voegele—60%; Mr. Looser—55%; and Mr. Bane—55%. The maximum
bonus equals two times the target bonus.

Director Fees

     The annual retainer for the chairman of the board is $180,000. Each other director who is not
an employee of our company receives an annual retainer of $75,000 and a fee of $2,000 for each
board and committee meeting attended. In addition, the chairman of the Audit Committee receives an
annual fee of $15,000; the chairman of the Compensation Committee receives an annual fee of
$12,000; and the chairman of the Nominating and Corporate Governance Committee receives an annual
fee of $10,000.exv10w29

 

Exhibit
10.29

EXTERRAN DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2008)

 

 

EXTERRAN DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2008)

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS	 	 	2	 
	 1.1
	 	Account	 	 	2	 
	1.2
	 	Affiliate	 	 	2	 
	1.3
	 	Base Salary	 	 	2	 
	1.4
	 	Beneficiary	 	 	2	 
	1.5
	 	Board	 	 	2	 
	1.6
	 	Bonus	 	 	2	 
	1.7
	 	Business Day	 	 	2	 
	1.8
	 	Code	 	 	2	 
	1.9
	 	Committee	 	 	2	 
	1.10
	 	Company	 	 	3	 
	1.11
	 	Company Discretionary Contributions	 	 	3	 
	1.12
	 	Company Restorative Contributions	 	 	3	 
	1.13
	 	Company Stock	 	 	3	 
	1.14
	 	Compensation	 	 	3	 
	1.15
	 	Deferral Contributions	 	 	3	 
	1.16
	 	Deferral Election	 	 	3	 
	1.17
	 	Disability or Disabled	 	 	3	 
	1.18
	 	Effective Date	 	 	3	 
	1.19
	 	Elective Deferrals	 	 	3	 
	1.20
	 	Eligible Employee	 	 	3	 
	1.21
	 	ERISA	 	 	3	 
	1.22
	 	ESSP	 	 	3	 
	1.23
	 	Installment Payments	 	 	3	 
	1.24
	 	Investment Election	 	 	4	 
	1.25
	 	Investment Funds	 	 	4	 
	1.26
	 	Participant	 	 	4	 
	1.27
	 	Participating Company	 	 	4	 
	1.28
	 	Plan	 	 	4	 
	1.29
	 	Plan Year	 	 	4	 
	1.30
	 	Recordkeeper	 	 	4	 
	1.31
	 	Savings Plan	 	 	4	 
	1.32
	 	Section 409A	 	 	4	 
	1.33
	 	Separation from Service	 	 	4	 
	1.34
	 	Unforeseeable Emergency	 	 	4	 
	1.35
	 	Valuation Date	 	 	5	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE II ELIGIBILITY AND PARTICIPATION	 	 	6	 
	2.1
	 	Eligibility	 	 	6	 
	2.2
	 	Procedure for Participation	 	 	6	 
	2.3
	 	Cessation of Active Participation	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE III PARTICIPANT ACCOUNTS; DEFERRALS AND CREDITING	 	 	7	 
	3.1
	 	Participant Accounts	 	 	7	 
	3.2
	 	Deferrals of Base Salary	 	 	8	 
	3.3
	 	Deferrals of Bonus	 	 	8	 
	3.4
	 	Procedure for Elections	 	 	8	 
	3.5
	 	Company Restorative Contributions	 	 	9	 
	3.6
	 	Company Discretionary Contributions	 	 	9	 
	3.7
	 	Debiting of Distributions	 	 	9	 
	3.8
	 	Crediting of Earnings, Gains and Losses	 	 	10	 
	3.9
	 	Value of Account	 	 	10	 
	3.10
	 	Notice to Participants of Account Balances	 	 	10	 
	3.11
	 	Good Faith Valuation Binding	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE IV INVESTMENT FUNDS	 	 	11	 
	4.1
	 	Selection by Committee	 	 	11	 
	4.2
	 	Participant Direction of Deemed Investments	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE V VESTING AND DISTRIBUTION OF ACCOUNT BALANCES	 	 	13	 
	5.1
	 	Vesting	 	 	13	 
	5.2
	 	Election of Time and Form of Distributions	 	 	13	 
	5.3
	 	Time of Distribution Upon Distribution Events	 	 	14	 
	5.4
	 	Time and Form of Distribution of Company Discretionary Contributions	 	 	15	 
	5.5
	 	Subsequent Election as to Time and Form of Distribution	 	 	15	 
	5.6
	 	Distributions on Account of Unforeseeable Emergency	 	 	15	 
	5.7
	 	Beneficiary Designation and Death Benefits	 	 	16	 
	5.8
	 	Taxes	 	 	16	 
	5.9
	 	Errors and Omissions in Accounts	 	 	16	 
	5.10
	 	Acceleration of Benefits	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE VI CLAIMS	 	 	18	 
	6.1
	 	Claims	 	 	18	 
	6.2
	 	Arbitration	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE VII SOURCE OF FUNDS; TRUST	 	 	20	 
	7.1
	 	Source of Funds	 	 	20	 
	7.2
	 	Trust	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE VIII ADMINISTRATIVE COMMITTEE	 	 	21	 
	8.1
	 	Action	 	 	21	 
	8.2
	 	Rights and Duties	 	 	21	 
	8.3
	 	Compensation, Indemnity and Liability	 	 	21	 
	8.4
	 	Designation of Participating Companies	 	 	22	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE IX AMENDMENT AND TERMINATION	 	 	23	 
	9.1
	 	Amendments	 	 	23	 
	9.2
	 	Termination of the Plan	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE X MISCELLANEOUS	 	 	24	 
	10.1
	 	Taxation	 	 	24	 
	10.2
	 	No Employment Contract	 	 	24	 
	10.3
	 	Headings	 	 	24	 
	10.4
	 	Gender and Number	 	 	24	 
	10.5
	 	Successors	 	 	24	 
	10.6
	 	Assignment of Benefits	 	 	24	 
	10.7
	 	Entire Plan	 	 	24	 
	10.8
	 	Legally Incompetent	 	 	25	 
	10.9
	 	Notice	 	 	25	 
	10.10
	 	Governing Law	 	 	25	 
	 
	 	 	 	 	 	 
	APPENDIX A	 	 	 	 

iii

 

EXTERRAN DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2008)

          Effective as of the 1st day of January, 2008, Exterran Holdings, Inc., a Delaware corporation
(the “Company”), hereby adopts the Exterran Deferred Compensation Plan (the “Plan”).

BACKGROUND AND PURPOSE

          A. Background. The Company maintains the Exterran 401(k) Retirement Plan, a plan
qualified under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the
“Code”), with limits on contributions and benefits as prescribed by the Code, including, without
limitation, the maximum limits on Compensation (as defined herein), employee deferrals and benefit
allocations (under Code Sections 401(a)(17), 402(g), and 415, respectively).

          B. Purpose. The Company desires to provide its designated key management employees
and those of its affiliated companies that participate in the Plan with an opportunity to maximize
savings benefits by (i) allowing such employees to defer Compensation and (ii) providing an
employer matching contribution, thereby providing greater incentives to such employees to remain in
service with the Company and maintain the highest standards of performance. In addition, effective
as of January 1, 2008, deferred Compensation and employer matching contributions to the Exterran
Inc. Employees’ Supplemental Savings Plan (the “ESSP”) that were earned or vested after December
31, 2004, along with all earnings, gains and losses attributable thereto, are separated and
transferred from the ESSP and into the Plan, with such deferred Compensation and employer matching
contributions to be maintained and distributed from, and in accordance with the terms of, the Plan
applicable to deferred Compensation and employer matching contributions, respectively.

          C. Type of Plan. The Plan constitutes an unfunded, nonqualified deferred compensation
plan that benefits certain designated employees who are within a select group of key management or
highly compensated employees. The Plan is intended to qualify for the exemptions provided under
Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for plans
that are not tax-qualified and that are maintained primarily to provide deferred compensation for a
select group of management or highly compensated employees.

 

 

ARTICLE I

DEFINITIONS

          For purposes of the Plan, the following terms, when capitalized, shall have the meanings set
forth below unless a different meaning plainly is required by the context.

          1.1 Account shall mean, with respect to a Participant or Beneficiary, the total dollar
amount or value evidenced by the last balance posted in accordance with the terms of the Plan to
the account record established for such Participant or Beneficiary. Separate sub-accounts may be
maintained within each Account as deemed necessary by the Committee, including, but not limited to,
Base Salary Deferral Accounts, Bonus Deferral Accounts, Company Restorative Contribution Accounts
and Company Discretionary Contribution Accounts.

          1.2 Affiliate shall mean (i) any corporation or other entity that is required to be
aggregated with the Company under Code Section 414(b), (c), (m) or (o), and (ii) any other entity
in which the Company has an ownership interest and which the Company designates as an Affiliate for
purposes of the Plan.

          1.3 Base Salary shall mean the Participant’s base salary or wages paid to him by a
Participating Company for a Plan Year (before any Deferral Contributions or Elective Deferrals).
The Base Salary of a Participant as reflected on the books and records of the Participating Company
shall be conclusive.

          1.4 Beneficiary shall mean such natural person or persons or the trustee of an inter vivos
trust for the benefit of natural persons entitled to benefits hereunder following a Participant’s
death.

          1.5 Board shall mean the Board of Directors of the Company.

          1.6 Bonus shall mean the annual cash bonus (if any) paid to a Participant under a
Participating Company’s annual short-term bonus or incentive plan or program for a Plan Year and,
if designated by the Committee in its sole discretion prior to a Plan Year, regular commissions
paid to a Participant by a Participating Company for such Plan Year (before any Deferral
Contributions or Elective Deferrals); provided, however, the term “Bonus” shall not include any
other bonuses paid to the Participant, including, but not limited to, sign-on, retention, other
special or discretionary bonuses, or non-regular types of commissions paid to the Participant.

          1.7 Business Day shall mean any day other than a Saturday, Sunday or any day other than
days on which the New York Stock Exchange is closed for business.

          1.8 Code shall mean the Internal Revenue Code of 1986, as amended.

          1.9 Committee shall mean the Compensation Committee of the Board or such other committee
appointed by the Company to act as administrator of the Plan and to perform the duties described in
Article VIII.

2

 

          1.10 Company shall mean Exterran Holdings, Inc., a Delaware corporation, and its
successors.

          1.11 Company Discretionary Contributions shall mean the contribution made by the applicable
Participating Company to a Participant in such amount and as subject to such vesting requirements
as described in Section 3.6.

          1.12 Company Restorative Contributions shall mean the contribution made by the applicable
Participating Company to a Participant as described in Section 3.5.

          1.13 Company Stock shall mean the common stock, par value $0.01 per share, of the Company.

          1.14 Compensation shall mean a Participant’s Base Salary and Bonus for a Plan Year.

          1.15 Deferral Contributions shall mean, for each Plan Year, that portion of a Participant’s
Base Salary and/or Bonus deferred under the Plan pursuant to Sections 3.2 and 3.3.

          1.16 Deferral Election shall mean a written, electronic or other form of election permitted
by the Committee pursuant to which a Participant may elect to defer a portion of his Base Salary
and/or Bonus under the Plan.

          1.17 Disability or Disabled
shall mean a physical or mental impairment that (i) entitles a Participant to benefits under
the Company’s long-term disability plan and (ii) qualifies as a “Disability” under Code Section
409A(a)(2)(C), as determined by the Committee, in its sole discretion, but consistent with Treasury
Regulation § 1.409A-3(i)(4) (or any successor regulations or guidance thereto).

          1.18 Effective Date shall mean January 1, 2008.

          1.19 Elective Deferrals shall mean, for each Plan Year, a Participant’s pre-tax, elective
deferrals to the Savings Plan.

          1.20 Eligible Employee shall mean, for a Plan Year, an employee of a Participating Company
who (i) is a U.S. citizen (including an expatriate) or U.S. resident, (ii) is within a select group
of key management or highly compensated employees and (iii) is selected for participation in the
Plan by the Committee.

          1.21 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended.

          1.22 ESSP shall mean the Exterran Inc. Employees’ Supplemental Savings Plan, as in effect
on December 31, 2007.

          1.23 Installment Payments shall mean a series of individual payments made annually over a
period of years elected by a Participant pursuant to Section 5.3, with each such payment equal to
the amount resulting from the multiplication of the Participant’s Account

3

 

balance by a fraction,
the numerator of which is “1” and the denominator of which is the number of years remaining in the
period (for example, if the period is 10 years, then the Installment Payment in year one is equal
to the Account balance multiplied by 1/10; in year two, the Account balance multiplied by 1/9; and
so forth such that in year 10, the entire remaining Account balance is paid to the Participant
(i.e., Account balance multiplied by 1/1)).

          1.24 Investment Election shall mean an election, made in such form as the Committee may
direct, pursuant to which a Participant may elect the Investment Funds in which the amounts
credited to his Account shall be deemed to be invested.

          1.25 Investment Funds
shall mean the investment funds selected from time to time by the Committee for purposes of
determining the rate of return on amounts deemed invested pursuant to the terms of the Plan. In
the absence of such Committee selection, the investment funds shall be the same as those held under
the Savings Plan.

          1.26 Participant shall mean any person who participates in the Plan pursuant to the
provisions of Article II, or who otherwise has an Account under the Plan.

          1.27 Participating Company shall mean the Company and its Affiliates that are designated
by the Committee as Participating Companies as described in Section 8.4 and set forth on Appendix A
of the Plan.

          1.28 Plan shall mean the Exterran Deferred Compensation Plan, as contained herein, and all
amendments hereto.

          1.29 Plan Year shall mean the 12-month period ending on December 31 of each year.

          1.30 Recordkeeper shall mean Prudential Retirement Insurance and Annuity Company, or such
other party or parties so designated from time to time by the Committee.

          1.31 Savings Plan shall mean the Exterran 401(k) Retirement Plan, as amended from time to
time.

          1.32 Section 409A shall mean Section 409A of the Code.

          1.33 Separation from Service shall mean a “separation from service” within the meaning of
Section 409A(a)(2)(A)(i) and Treasury Regulation § 1.409A-1(h) (or any successor regulations or
guidance thereto), including separation due to death.

          1.34 Unforeseeable Emergency shall mean a severe financial hardship to the Participant
resulting from (i) an illness or accident of the Participant, the Participant’s spouse, the
Participant’s Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without
regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); (ii) loss of the Participant’s property
due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or (iii) other
similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant; provided, however, that the event meets the definition of
“unforeseeable emergency” under Section

4

 

409A(a)(2)(B)(ii) and Treasury Regulation §
1.409A-3(i)(3)(i) (or any successor regulations or guidance thereto).

     1.35 Valuation Date shall mean each Business Day; provided, however, that the value of an
Account on a day other than a Business Day shall be the value determined for the immediately
preceding Business Day.

5

 

ARTICLE II

ELIGIBILITY AND PARTICIPATION

          2.1 Eligibility.

          (a) Annual Participation. An Eligible Employee’s participation shall become effective
as of the first day of the Plan Year, provided he satisfies the procedures for participation in the
Plan described in Section 2.2, or is otherwise eligible for a Company Restoration Contribution
under Section 3.5. Employees whose benefits under the ESSP were transferred to the Plan shall be
Participants with respect to such benefits.

          (b) Interim Plan Year Participation. Each individual who becomes employed with a
Participating Company during the Plan Year and who is designated as an Eligible Employee shall be
eligible to participate in the Plan for a portion of such Plan Year by electing to make Deferral
Contributions, provided, however, that such individual is not otherwise eligible for, or a
participant in, a “plan” which is aggregated with this Plan for purposes of Section 409A. Such
individual’s participation shall become effective as soon as administratively practicable after the
date he satisfies the procedures for participation in the Plan described in Section 2.2. Such
procedures must be satisfied within 30 days following the date he becomes an Eligible Employee.

          2.2 Procedure for Participation. Each Participant shall complete such forms and provide
such data in a timely manner as required by the Committee. Such forms and data may include,
without limitation, a Deferral Election, the Eligible Employee’s acceptance of the terms and
conditions of the Plan, and the designation in accordance with the terms of the Plan of a
Beneficiary to receive any death benefits payable hereunder. A Participant must timely submit a
new Deferral Election for each Plan Year for which the Participant elects to make Deferral
Contributions. The Deferral Election of a Participant who is an Eligible Employee for a portion of
a Plan Year (pursuant to Section 2.1(b)) shall be effective only with respect to Compensation paid
for services to be performed after the Deferral Election is made.

          2.3 Cessation of Active Participation. Unless otherwise designated by the Committee, in
its sole discretion, each Participant who ceases to be an active employee of a Participating
Company shall cease to be eligible to receive or make any contributions under the Plan as of such
cessation of employment date. The Committee may remove an employee from active Participant status
for any subsequent Plan Year at any time prior to the first day of such Plan Year. If a
Participant’s active participation in the Plan ends, such Participant shall remain an inactive
Participant in the Plan until the earlier of (i) the date the full amount of his vested Account is
distributed from the Plan, or (ii) the date he again becomes an Eligible Employee and recommences
participation in the Plan. During the period of time that a person is an inactive Participant in
the Plan, his Account shall continue to be credited with earnings, gains and losses as provided in
Section 3.8.

6

 

ARTICLE III

PARTICIPANT ACCOUNTS; DEFERRALS AND CREDITING

          3.1 Participant Accounts.

          (a) Establishment of Accounts. The Committee shall establish and maintain an Account
on behalf of each Participant. To the extent provided herein, each Participant’s Account shall be
credited with Deferral Contributions, Company Restorative Contributions, and Company Discretionary
Contributions, along with the earnings, gains and losses attributable to such amounts, based upon
the Participant’s Investment Elections, and shall be debited by the amount of all distributions.
Each Participant’s Account shall be maintained until the vested value thereof has been distributed
to or on behalf of such Participant or his Beneficiary. Deferral Contributions that were earned or
vested after December 31, 2004 (along with all earnings, gains and losses attributable thereto)
under the ESSP and transferred to the Plan as of the Effective Date shall be evidenced and posted
under a Participant’s Account. Employer matching contributions that were earned or vested after
December 31, 2004 (along with all earnings, gains and losses attributable thereto) under the ESSP
and transferred to the Plan as of the Effective Date shall be evidenced and posted under a
Participant’s Company Restorative Contribution Account.

          (b) Nature of Contributions and Accounts. The amounts credited to a Participant’s
Account shall be represented solely by bookkeeping entries. No monies or other assets shall
actually be set aside for such Participant, and all payments to a Participant under the Plan shall
be made from the general assets of the Participating Companies (except as may be provided under
Section 7.2). Amounts credited with respect to Participants paid in currencies other than U.S.
dollars will be accumulated in local currency and converted to U.S. dollars as of the crediting
date.

          (c) Several Liabilities. Each Participating Company shall be severally (and not
jointly) liable for the payment of benefits under the Plan in an amount equal to the total of all
undistributed Deferral Contributions withheld from Participants’ Compensation paid or payable by
each such Participating Company, Company Restorative Contributions and Company Discretionary
Contributions made on behalf of the Participants employed by the Participating Company, and all
investment earnings, gains and losses attributable to such amounts. The Committee shall allocate
the total liability to pay benefits under the Plan among the Participating Companies in accordance
with the immediately preceding sentence, and the Committee’s determination shall be final and
binding.

          (d) General Creditors. Any assets which may be acquired by a Participating Company in
anticipation of its obligations under the Plan shall be part of the general assets of such
Participating Company. A Participating Company’s obligation to pay benefits under the Plan
constitutes a mere promise of such Participating Company to pay such benefits, and a Participant or
Beneficiary shall be and remain no more than an unsecured, general creditor of such Participating
Company.

7

 

          3.2 Deferrals of Base Salary. Each Participant who is eligible to participate in the Plan
as of the first day of a Plan Year, and each Participant who becomes eligible to participate in the
Plan for a portion of a Plan Year pursuant to Section 2.1(b), may elect to have Deferral
Contributions of his Base Salary made on his behalf for such Plan Year (or portion thereof) by
completing and delivering to the Committee a Deferral Election setting forth the terms of his
election. Subject to the terms and conditions set forth in Section 3.4, a Deferral Election shall
provide for the reduction of a Participant’s Base Salary payable in certain regular paychecks paid
during the Plan Year for which the Deferral Election is in effect. A Participant may elect to
defer up to a maximum of 100% of his Base Salary for the pay period (less any required tax or other
withholdings). The Committee, in its sole discretion, may change the maximum percentage set forth
in this Section 3.2 from time to time prior to the beginning of any Plan Year.

          3.3 Deferrals of Bonus. Each Participant who is eligible to participate in the Plan as of
the first day of a Plan Year, and each Participant who becomes eligible to participate in the Plan
for a portion of a Plan Year pursuant to Section 2.1(b), may elect to have a Deferral Contribution
from his Bonus made on his behalf for such Plan Year (or portion thereof) by completing and
delivering to the Committee a Deferral Election setting forth the terms of his election. Subject
to the terms and conditions set forth in Section 3.4, a Deferral Election shall provide for the
reduction of a Participant’s Bonus attributable to the Plan Year for which the Deferral Election is
in effect. A Participant may elect to defer up to a maximum of 100% of his Bonus (less any
required tax or other withholdings). The Committee, in its sole discretion, may change from time
to time the maximum percentage set forth in this Section 3.3 from time to time prior to any Plan
Year.

          3.4 Procedure for Elections. Subject to any modifications, additions or exceptions that
the Committee, in its sole discretion, deems necessary, appropriate or helpful, the following terms
shall apply to such elections:

          (a) Timing of Election. To be effective, a Participant’s Deferral Election must be
made within the time period prescribed by the Committee (the “Election Period”). The Election
Period shall end, and the Participant’s Deferral Election shall be irrevocable, on or, if
designated by the Committee, a date before, the last day of the Plan Year immediately preceding the
Plan Year for which Deferral Contributions will be made; except that, with respect to those
employees who become eligible to participate in the Plan for a portion of a Plan Year pursuant to
Section 2.1(b) with respect to Deferral Contributions, such Election Period shall begin on the date
such individual’s participation becomes effective and extend for 30 days thereafter. If a
Participant fails to submit a Deferral Election in a timely manner, he shall be deemed to have
elected not to participate in the Plan for that Plan Year with respect to his deferred
Compensation.

          (b) Term. Each Participant’s Deferral Election shall become effective (i) on the
first day of the Plan Year next following the date on which the Participant makes the Deferral
Election or (ii) with respect to those employees who become eligible to participate in the Plan for
a portion of a Plan Year pursuant to Section 2.1(b), as soon as practicable after receipt by
the Committee of his Deferral Election. Each Participant’s Deferral Election shall remain in
effect for Base Salary and/or Bonus paid solely during the Plan Year for which it applies. If a

8

 

Participant is transferred from the employment of one Participating Company to the employment of
another Participating Company, his Deferral Election with the first Participating Company will
remain in effect and will apply to his Base Salary and/or Bonus from the second Participating
Company as if he had made his Deferral Election while employed by his new employer for the duration
of the applicable Plan Year.

          (c) Revocation. A Participant may not change or revoke his Deferral Election, once it
becomes irrevocable as provided in Section 3.4(a). Notwithstanding the foregoing, any Participant
who receives a distribution on account of an Unforeseeable Emergency as provided for under Section
5.6 shall have his Deferral Election revoked as of the date such distribution is made. A
Participant whose Deferral Election has been revoked may enter into a new Deferral Election with
respect to his Base Salary and/or Bonus for any subsequent Plan Year by making such Deferral
Election on or before the last day of the Plan Year immediately preceding the Plan Year for which
he desires to participate and in which the Base Salary and/or Bonus to be deferred is to be paid,
provided he is otherwise eligible to make Deferral Contributions for such Plan Year.

          (d) Crediting of Deferral Contributions. For each Plan Year that a Participant has a
Deferral Election in effect, the Committee shall credit the amount of such Participant’s Deferral
Contributions to his Account as of the Valuation Date which coincides with or immediately follows
the date on which such amount would have been paid to him but for his Deferral Election, or as soon
as administratively practicable thereafter.

          3.5 Company Restorative Contributions. For each Plan Year, the Participating Company shall
credit to a Participant’s Company Restorative Contribution Account an amount, if any, equal to (i)
the total of the Participant’s Deferral Contributions and Elective Deferrals (excluding any
“catch-up” contributions made by the Participant to the Savings Plan) for such Plan Year,
multiplied by (ii) the employer matching contribution formula under the Savings Plan for such Plan
Year, with such resulting amount reduced by (iii) the employer matching contributions made to the
Participant’s account under the Savings Plan for such Plan Year (excluding employer matching
contributions made on any “catch-up” contributions to the Participant’s account under the Savings
Plan); provided, however, that such Participant is an employee of a Participating Company or an
Affiliate (x) as of the last day of such Plan Year and (y) as of the date the contribution is
credited for such Plan Year. The Company Restorative Contribution will be credited to the
Participant’s Company Restorative Contribution Account as soon as practicable after the close of
the Plan Year to which the Company Restorative Contribution relates.

          3.6 Company Discretionary Contributions. The Company may credit a Participant’s
Discretionary Contribution Account at any time with an amount determined by a Participating Company
and subject to such vesting restrictions as the Committee, in its sole discretion, shall determine.

          3.7 Debiting of Distributions. As of each Valuation Date, the Committee shall debit each
Participant’s Account for any amount distributed from such Account since the immediately preceding
Valuation Date.

9

 

          3.8 Crediting of Earnings, Gains and Losses. The Recordkeeper shall credit each
Participant’s Account with earnings, gains and/or losses based upon Investment Elections made by
the Participant in accordance with Article IV and any investment procedures adopted by the
Committee.

          3.9 Value of Account. The value of a Participant’s Account as of any date shall be equal
to the aggregate value of all contributions and all investment earnings, gains and losses deemed
credited to his Account as of the Valuation Date coinciding with or immediately preceding such
date, less any amounts distributed (or forfeited) since the preceding Valuation Date, determined in
accordance with this Article III.

          3.10 Notice to Participants of Account Balances. At least once each Plan Year, the
Committee shall cause a written statement of a Participant’s Account balance to be distributed to
the Participant.

          3.11 Good Faith Valuation Binding. In determining the value of the Accounts, the Committee
shall exercise its best judgment, and all such determinations of value (in the absence of bad
faith) shall be binding upon all Participants and their Beneficiaries.

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ARTICLE IV

INVESTMENT FUNDS

          4.1 Selection by Committee. From time to time, the Committee shall select two or more
Investment Funds for purposes of determining the rate of return on amounts in the Participants’
Accounts deemed invested in accordance with the terms of the Plan. Unless the Committee determines
otherwise, the Investment Funds available under the Plan shall generally be selected from the
investment options available under the Savings Plan. The Committee, in its sole discretion, may
change, add or remove Investment Funds on a prospective basis at any time and in any manner it
deems appropriate (and without notice). With respect to Company Restorative Contributions made
prior to December 31, 2007, to the extent such amounts are deemed invested in Company Stock
immediately prior to the transfer date of the amount, such amounts shall continue to be deemed
invested in Company Stock until the earlier of (i) the date the Participant elects to reinvest such
amounts in another Investment Fund(s) or (ii) December 31, 2010. Any amounts that are invested in
Company Stock as of December 31, 2010 shall be deemed invested in the default Investment Fund(s)
specified by the Committee as of January 1, 2011. Except as described above, no portion of a
Participant’s Account may be deemed invested in Company Stock. Moreover, once any such amounts
deemed invested in Company Stock are reinvested into another Investment Fund, such amounts may not
subsequently be deemed reinvested in Company Stock.

          4.2 Participant Direction of Deemed Investments. Each Participant generally may direct the
manner in which his Account shall be deemed invested in and among the Investment Funds (other than
Company Stock). Any Participant investment directions permitted hereunder shall be made in
accordance with the following terms:

          (a) Nature of Participant Direction. The selection of Investment Funds by a
Participant shall be for the sole purpose of determining the rate of return to be credited to his
Account, and shall not be treated or interpreted in any manner whatsoever as a requirement or
direction to actually invest assets in any Investment Fund or any other investment media. The
Plan, as an unfunded, nonqualified deferred compensation plan, at no time shall have any actual
investment of assets relative to the benefits or Accounts hereunder.

          (b) Investment of Contributions. Each Participant may make an Investment Election
prescribing the percentage of his existing Account and the future contributions thereto that will
be deemed invested in each Investment Fund. An initial Investment Election of a Participant shall
be made as of the date the Participant commences participation in the Plan and shall apply to all
contributions credited to such Participant’s Account after such date. A Participant may make
subsequent Investment Elections as of any Valuation Date, and each such election shall apply to the
Participant’s existing Account and all future contributions credited to the Participant’s Account
after the Committee has a reasonable opportunity to process the election pursuant to such
procedures as the Committee may determine from time to time. Subject to the provisions of Section
4.1, an Investment Election made pursuant to this subsection
shall remain effective until changed by the Participant. If a Participant fails to make an
Investment Election (or fails to make a valid or complete Investment Election), then the amounts

11

 

contributed to the Participant’s Account will be deemed invested in the default Investment Fund(s).

     (c) Committee’s Administrative Discretion. The Committee shall have complete
discretion to adopt and revise procedures to be followed in making Investment Elections. Such
procedures may include, but are not limited to, the process of making elections, the permitted
frequency of making elections, the incremental size of elections, the contribution types to which
such elections apply, the deadline for making elections and the effective date of such elections.
Any procedures adopted by the Committee that are inconsistent with the deadlines or procedures
specified in this Section 4.2 shall supersede such provisions of this Section without the necessity
of a Plan amendment.

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ARTICLE V

VESTING AND DISTRIBUTION OF ACCOUNT BALANCES

          5.1 Vesting. A Participant shall at all times be fully vested in his Deferral
Contributions, and the earnings, gains and losses attributable thereto credited to his Account with
respect to such deferrals. A Participant shall vest at the same time and in the same amount in his
Company Restorative Contributions as prescribed by the vesting schedule in the Savings Plan for
employer matching contributions to such plan. A Participant shall vest at such times and in such
amounts in his Company Discretionary Contributions as determined by the Committee. Notwithstanding
any provision of the Plan to the contrary, a Participant shall be fully vested at all times in his
benefit transferred to the Plan from the ESSP.

          5.2 Election of Time and Form of Distributions.

          (a) Distribution Elections. At the time a Participant elects to defer his
Compensation for a Plan Year, and in accordance with procedures established by the Committee, the
Participant shall make the following distribution elections:

          (i) Termination or Disability. The Participant may timely elect to
receive the benefits attributable to his Deferral Contributions and his vested
Company Restorative Contributions, if any, for such Plan Year (including the
earnings, gains and losses attributable thereto) in the form of either a lump-sum
payment or Installment Payments, as described in Section 5.3, in the event of his
termination of employment that is a Separation from Service or, if applicable,
Disability. Such election shall remain in effect unless and until a subsequent
election is made in accordance with Section 5.5.

          (ii) In-Service Distribution. The Participant may timely elect to
receive the benefits attributable to his Deferral Contributions and vested Company
Restorative Contributions, if any, for such Plan Year (including the earnings, gains
and losses attributable thereto) in the form of either a lump-sum payment or
Installment Payments, as described in Section 5.3, while employed by a Participating
Company. The foregoing notwithstanding, in the event a Participant’s termination of
employment or Disability occurs prior to such in-service payment date or the
commencement of such in-service payments, his benefits shall be distributed as
provided in Section 5.2(a)(i) or, if applicable, Section 5.2(b). Such election
shall remain in effect unless and until a subsequent election is made in accordance
with Section 5.5.

          (b) Failure to Elect Form of Distribution. If a Participant fails to make an election
as to the form of distribution of his Deferral Contributions and his vested Company Restorative
Contributions, if any, for a particular Plan Year as provided in Section 5.2(a), the benefits
attributable to such contributions (including the earnings, gains and losses attributable
thereto), shall be distributed in the form of a lump-sum payment (i) as soon as
administratively practicable, but in no event later than 90 days following, the date the
Participant’s employment

13

 

terminates for any reason, provided such termination is a Separation from
Service or (ii) if earlier, his Disability.

          5.3 Time of Distribution Upon Distribution Events.

          (a) Pursuant to Section 5.2, a Participant may elect to have his benefit attributable to his
Deferred Contributions and vested Company Restorative Contributions for each Plan Year paid as
follows:

          (i) Lump-Sum Payment. The Participant may elect to receive a lump-sum
payment equal to his Account balance that is attributable to his vested
contributions for the Plan Year to which such election applies. Any such lump-sum
payment shall be paid on the earlier of:

	 	(A)	 	the date of the Participant’s
termination of employment for any reason if such termination is
a Separation from Service or, if earlier, Disability, pursuant
to Section 5.2(a)(i); or
	 
	 	(B)	 	January 1 of the calendar year
elected by the Participant pursuant to Section 5.2(a)(ii).

          (ii) Installment Payments. The Participant may elect to receive annual
Installment Payments over a period of two to 10 years with respect to his Account
balance that is attributable to his vested contributions for the Plan Year to which
such election applies. Amounts remaining unpaid shall be subject to adjustment for
costs and deemed investment performance pursuant to Article III of the Plan. Annual
Installment Payments shall commence on the earlier of:

	 	(A)	 	January 1 of the calendar year
immediately following the date of the Participant’s termination
of employment for any reason if such termination is a Separation
from Service or if earlier, Disability, pursuant to Section
5.2(a)(i); or
	 
	 	(B)	 	January 1 of the calendar year
elected by the Participant pursuant to Section 5.2(a)(ii) (but
not prior to the end of the Participation Year in which the
attributable Compensation was deferred).

     (b) Delay of Distribution to Specified Employees. Notwithstanding any Plan provision
to the contrary, in the case of a Participant who has been identified by the Committee, in its sole
discretion, as a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) as of the date
of his Separation from Service, a distribution paid under the Plan by reason of the Participant’s
Separation from Service (other than termination by reason of death) that would be paid during the
six-month period commencing after such Participant’s date of Separation from
Service shall be delayed until the date that is the earlier of (i) the date six months and one
day after the date the Participant has incurred a Separation from Service or (ii) the date of the
Participant’s death. Payments delayed pursuant to this Section 5.3(b) shall be paid without
interest for such delay in payment.

14

 

          (c) Delay of Payments Subject to Code Section 162(m). A payment may be delayed to the
extent that the Company reasonably anticipates that, if the payment were made as scheduled, the
Company’s deduction would not be permitted under Code Section 162(m), provided that the payment is
made during the Participant’s first taxable year in which the Company reasonably anticipates the
deduction will not be barred by Code Section 162(m).

          (d) ESSP Prior Elections. Unless a Participant has elected otherwise in accordance
with the transition election provisions under IRS Notices 2006-79 and 2007-86, such Participant’s
benefit under the Plan attributable to his ESSP benefit transferred to the Plan effective as of the
Effective Date shall be distributed in accordance with the time and form previously elected under
the ESSP by the Participant for the applicable plan years.

          (e) Form of Distribution. All lump-sum payments shall be made in cash; provided,
however, that to the extent a portion of a Participant’s Account is deemed invested in Company
Stock as of such distribution date, the Participant may elect, in the form and manner prescribed by
the Committee, to have that portion of his Account distributed in whole shares of Company Stock
(with any fractional shares distributed in cash). All annual installment payments shall be made in
cash.

          5.4 Time and Form of Distribution of Company Discretionary Contributions. As applicable,
the provisions of this Article V shall apply with respect to a Participant’s Company Discretionary
Contributions, unless the Committee provides otherwise in the agreement or other document providing
for such contribution.

          5.5 Subsequent Election as to Time and Form of Distribution. A Participant may revise his
election for his benefit for any Plan Year (or make an initial election) after the December 31st of
the Plan Year immediately preceding such Plan Year (a “Subsequent Election”), in the form and
manner prescribed by the Committee, as to the timing and/or form (from among the distribution
options in Section 5.3). A Subsequent Election shall not be valid or effective unless (i) it is
made no later than 12 months prior to the date upon which his benefit for such Plan Year would have
been paid had no Subsequent Election been made, (ii) other than with respect to the payment of the
benefit on account of death or Unforeseeable Emergency under Section 5.6, the distribution of the
benefit is deferred to a specific future year that is no less than five years after the date the
deferred amount would have been paid had no Subsequent Election been made, and (iii) otherwise
satisfies the requirements of Treasury Regulation § 1.409A-2(b)(2) (or any successor regulations or
guidance thereto). A Subsequent Election under this Section shall take effect only after the
election has been in effect for 12 months.

          5.6 Distributions on Account of Unforeseeable Emergency.
If a Participant has suffered an Unforeseeable Emergency, as determined by the Committee in its
sole discretion, the Committee shall cause the Participating Company to pay an in-service
distribution to such Participant. Such distribution shall be paid in a single-sum payment, as soon
as administratively practicable after the Participant requests the distribution and the Committee
determines that the Participant has incurred an Unforeseeable Emergency, and shall be limited to
the amount reasonably necessary to meet the Participant’s needs resulting from the Unforeseeable
Emergency, plus amounts necessary to pay income taxes or penalties reasonably anticipated to result
from the distribution, after taking into account the extent to which such hardship is or may

15

 

be
relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship) or by cessation of deferrals under the Plan. In addition, the Participant’s
Deferral Contributions shall cease for the remainder of the Plan Year. The amount of such
distribution shall reduce the Participant’s Account balance as provided in Section 3.7.

          5.7 Beneficiary Designation and Death Benefits. In the event of the death of any
Participant, notwithstanding a Participant’s election under this Article V, all amounts in his
Account shall be distributed in a cash lump-sum payment, as soon as administratively practicable,
but in no event later than 90 days after his death, as follows:

          (a) General. A Participant shall designate to the Committee, in the form and manner
prescribed by the Committee, the Beneficiary or Beneficiaries to receive his Account balance
following his death, and the Participant may at any time change or cancel any such designation by
filing a request in the form and manner prescribed by the Committee.

          (b) No Designation. In the event of the death of any Participant, the entire amount
in the Account of such Participant shall be distributed to the Participant’s Beneficiary, or if
there is no Beneficiary, payment will be made to the executor or legal representative of the
Participant’s estate. If the Beneficiary does not predecease the Participant, but dies prior to
distribution of the Participant’s entire benefit, the remaining benefit will be paid to the
executor or legal representative of the Beneficiary’s estate.

          5.8 Taxes. If the whole or any part of any Participant’s or Beneficiary’s benefit
hereunder shall become subject to any estate, inheritance, income, employment or other tax which
the Participating Company shall be required to pay or withhold, the Participating Company shall
have the full power and authority to withhold and pay such tax out of any monies or other property
held for the account of the Participant or Beneficiary whose interests hereunder are so affected
(including, without limitation, by reducing and offsetting the Participant’s or Beneficiary’s
Account balance). Prior to making any payment, the Participating Company may require such releases
or other documents from any lawful taxing authority as it shall deem necessary.

          5.9 Errors and Omissions in Accounts. If an error or omission is discovered in the Account
of a Participant or Beneficiary or in the amount of a Participant’s deferrals, the Committee, in
its sole discretion, shall cause appropriate,
equitable adjustments to be made as soon as administratively practicable following the discovery of
such error or omission.

          5.10 Acceleration of Benefits. Notwithstanding any other provision of this Plan to the
contrary, in no event shall the Plan permit the acceleration of the time or schedule of any payment
or distribution under the Plan, except that the Committee may accelerate a payment or distribution
under the Plan as follows:

          (i) to fulfill a domestic relations order, as provided in Treasury Regulation §
1.409A-3(j)(4)(ii) (or any successor regulations or guidance thereto);

16

 

          (ii) to comply with a certificate of divestiture, as provided in Treasury
Regulation § 1.409A-3(j)(4)(iii) (or any successor regulations or guidance thereto);
or

          (iii) to pay employment taxes on such deferred compensation, as provided in
Treasury Regulation § 1.409A-3(j)(4)(vi) (or any successor regulations or guidance
thereto).

17

 

ARTICLE VI

CLAIMS

          6.1 Claims.

          (a) Rights. If a Participant or Beneficiary has any grievance, complaint or claim
concerning any aspect of the operation or administration of the Plan, including, but not limited
to, claims for benefits, the Participant or Beneficiary shall submit the claim in accordance with
the procedures set forth in this Section.

          (b) Procedure. Claims for benefits under the Plan may be filed in writing with the
Committee on a form or in such other written documents as the Committee may prescribe. The
Committee shall furnish to the claimant written notice of the disposition of a claim within 90 days
after the claim therefor is filed; provided, however, that if special circumstances require an
extension of time for processing the claim, the Committee shall furnish written notice of the
extension to the claimant prior to the end of the initial 90-day period, and such extension shall
not exceed one additional, consecutive 90-day period. In the event the claim is denied, the notice
of the disposition of the claim shall provide the specific reasons for the denial, citations of the
pertinent provisions of the Plan, an explanation as to how the claimant can perfect the claim
and/or submit the claim for review (where appropriate), and a statement of the claimant’s right to
bring a civil action under ERISA pursuant to mandatory arbitration following an adverse
determination on review.

          (c) Appeal. Any Participant or Beneficiary who has been denied a benefit shall be
entitled, upon request to the Committee, to appeal the denial of his claim. The claimant (or his
duly authorized representative) may review pertinent documents related to the Plan and in the
Committee’s possession in order to prepare the appeal. The request for review, together with a
written statement of the claimant’s position, must be filed with the Committee no later than 60
days after receipt of the written notification of denial of a claim provided for in subsection (b)
above. The Committee’s decision shall be made within 60 days following the filing of the request
for review and shall be communicated in writing to the claimant; provided, if special circumstances
require an extension of time for processing the appeal, the Committee shall furnish written notice
of the extension to the claimant prior to the end of the initial 60-day period, and such extension
shall not exceed one additional 60-day period. If unfavorable, the notice of the decision shall
explain the reasons for denial, indicate the provisions of the Plan or other documents used to
arrive at the decision and state the claimant’s right to bring a civil action under ERISA pursuant
to mandatory arbitration (as provided in Section 6.2).

          (d) Satisfaction of Claims. Any payment to a Participant or Beneficiary, all in
accordance with the provisions of the Plan, shall to the extent thereof be in full satisfaction of
all claims hereunder against the Committee and all Participating Companies, any of which may
require such Participant or Beneficiary as a condition to such payment to execute a receipt and
release therefor in such form as shall be determined by the Committee or the Participating
Companies. If a receipt and release is required and the Participant or Beneficiary (as applicable)
does not provide such receipt and release in a timely enough manner to permit a timely
distribution in accordance with the general timing of distribution provisions in the Plan, the

18

 

payment of any affected distribution(s) may be delayed until the Committee or the Participating
Companies receives a proper receipt and release.

          (e) Limitations. Benefits under the Plan will be paid only if the Committee decides
in its discretion that a Participant or Beneficiary is entitled to benefits. Notwithstanding the
foregoing or any provision of the Plan to the contrary, a Participant must exhaust all
administrative remedies set forth in this Section 6.1 or otherwise established by the Committee
before bringing any action at law or equity under Section 6.2. Any claim based on a denial of a
claim under this Plan must be brought no later than the date which is six months after the date of
the final denial of a claim under Section 6.1(c) hereof. Any claim not brought within such time
shall be waived and forever barred.

          6.2 Arbitration. Subject to first exhausting all administrative remedies under Section 6.1
of the Plan, any dispute, controversy or claim arising out of or in connection with or relating to
the denial of benefits under this Plan must be timely submitted to and settled by binding
arbitration in Houston, Texas, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (or at any other place or under any other form of arbitration mutually
acceptable to the parties so involved). Any dispute, controversy or claim submitted for resolution
shall be submitted to one neutral arbitrator agreed to by the parties, who shall have the authority
to render a decision in terms of findings of fact and conclusions of law. No arbitration shall be
commenced after the date when institution of legal or equitable proceedings based upon such subject
matter would be barred by the applicable statute of limitations. Either party may bring an action
in any court of competent jurisdiction to compel arbitration under this Plan, to enforce an
arbitration award, and to vacate an arbitration award. However, in actions seeking to vacate an
award, the standard of review to be applied to the arbitrator’s findings of fact and conclusions of
law will be the same as that applied by an appellate court reviewing a decision of a trial court
sitting without a jury. The parties agree that in any arbitration commenced pursuant to this Plan,
the parties shall be entitled to such discovery (including depositions, requests for the production
of documents, and interrogatories) as is allowed by the arbitrator after the arbitrator hears
arguments for and against limits which shall be imposed on discovery by each party in arbitration.
The arbitrator shall have full power and authority to limit discovery. In the event that either
party fails to comply with its discovery obligations hereunder, the arbitrator shall have full
power and authority to compel disclosure or impose sanctions to the full extent of Rule 37, Federal
Rules of Civil Procedure. Unless the parties agree otherwise, the parties, the arbitrator, and the
American Arbitration Association shall treat the arbitration proceedings, any related discovery,
and the decision of the arbitrator, as confidential, except in connection with judicial proceedings
ancillary to the arbitration, such as a judicial challenge to, or enforcement of, an award, and
unless otherwise required by law to protect a legal right of a party. To the extent possible, any
specific issues of confidentiality should be raised with and resolved by the neutral arbitrator.
The arbitrator shall, in his award, allocate between the parties the costs of arbitration, which
shall include reasonable attorneys’ fees of the parties, as well as the arbitrator’s fees and
expenses, in such proportions as the arbitrator deems just.

19

 

ARTICLE VII

SOURCE OF FUNDS; TRUST

          7.1 Source of Funds. Except as provided in Section 7.2 (relating to the Trust if so
established), each Participating Company shall provide the benefits described in the Plan from its
general assets. However, to the extent that funds in such Trust allocable to the benefits payable
under the Plan are sufficient, the Trust assets may be used to pay benefits under the Plan. If
such Trust assets are not sufficient to pay all benefits due under the Plan, then the appropriate
Participating Company shall have the obligation, and the Participant or Beneficiary who is due such
benefits shall look to such Participating Company to provide such benefits. Notwithstanding the
foregoing, the Company in its sole discretion shall have the authority to allocate the total
liability to pay benefits under the Plan among the Participating Companies in such manner and
amounts as it deems appropriate.

          7.2 Trust. In accordance with the Trust Agreement entered into between the Company and the
Trustee, if so entered into, the following provisions shall apply:

          (a) Establishment. To the extent determined by the Company, the Participating
Companies shall transfer the funds necessary to fund benefits accrued hereunder to the Trustee to
be held and administered by the Trustee pursuant to the terms of the Trust Agreement. Except as
otherwise provided in the Trust Agreement, each transfer into the Trust Fund shall be irrevocable
as long as a Participating Company has any liability or obligations under the Plan to pay benefits,
such that the Trust property is in no way otherwise subject to use by the Participating Company;
provided, it is the intent of the Company that the assets held by the Trust are and shall remain at
all times subject to the claims of the general creditors of the Participating Companies.

          (b) Distributions. Pursuant to the Trust Agreement, the Trustee shall make payments
to Participants and Beneficiaries in accordance with a payment schedule provided by the
Participating Company. The Participating Company shall make provisions for the reporting and
withholding of any federal, state or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the
appropriate taxing authorities.

          (c) Status of the Trust. No Participant or Beneficiary shall have any interest in the
assets held by the Trust or in the general assets of the Participating Companies other than as a
general, unsecured creditor. Accordingly, a Participating Company shall not grant a security
interest in the assets held by the Trust in favor of the Participants, Beneficiaries or any
creditor.

20

 

ARTICLE VIII

ADMINISTRATIVE COMMITTEE

          8.1 Action. The Committee shall be organized and shall take action in a manner provided
under the Committee’s By-Laws or such other rules as may from time to time be adopted by or for the
Committee.

          8.2 Rights and Duties. The Committee shall administer the Plan and shall have all the
powers necessary to accomplish that purpose, including (but not limited to) the following:

          (a) To construe, interpret and administer the Plan;

          (b) To make determinations required by the Plan, and to maintain records regarding
Participants’ and Beneficiaries’ benefits hereunder;

          (c) To compute and certify to each Participating Company the amount and kinds of benefits
payable to Participants and Beneficiaries, and to determine the time and manner in which such
benefits are to be paid;

          (d) To authorize all disbursements by each Participating Company pursuant to the Plan;

          (e) To maintain all the necessary records of the administration of the Plan;

          (f) To make and publish such rules for the regulation of the Plan as are not inconsistent with
the terms hereof;

          (g) To have all powers elsewhere conferred upon it;

          (h) To appoint a Trustee hereunder;

          (i) To delegate to the Company’s Benefit Committee or other committee, individuals, or
entities from time to time the performance of any of its duties or responsibilities hereunder; and

          (j) To hire agents, accountants, actuaries, consultants and legal counsel to assist in
operating and administering the Plan.

The Committee shall have the exclusive right to construe and interpret the Plan, to decide all
questions of eligibility for benefits and to determine the amount of such benefits, and its
decisions on such matters shall be final and conclusive on all Participants, Beneficiaries and
other parties.

     8.3 Compensation, Indemnity and Liability. The Committee and its members shall serve as such without bond and without compensation for
services hereunder. All expenses of the Committee

21

 

shall be paid by the Participating Companies.
No member of the Committee shall be liable for any act or omission of any other member of the
Committee, or for any act or omission on his own part, excepting his own willful misconduct.
Without limiting the generality of the foregoing, any such decision or action taken by the
Committee in reliance upon any information supplied to it by an officer of the Company, the
Company’s legal counsel, or the Company’s independent accountants in connection with the
administration of this Plan shall be deemed to have been taken in good faith. The Participating
Companies shall indemnify and hold harmless the Committee and each member thereof against any and
all expenses and liabilities, including reasonable legal fees and expenses, arising out of his
membership on the Committee, excepting only expenses and liabilities arising out of his own willful
misconduct.

          8.4 Designation of Participating Companies. The Committee may designate any Affiliate as a
Participating Company by written instrument delivered to the Company, the Trustee (if any), and the
designated Affiliate, with such Participating Companies set forth on Appendix A of the Plan. Such
written instrument shall specify the effective date of such designated participation and shall
become, as to such designated Affiliate and its employees, a part of the Plan. Each designated
Affiliate shall be conclusively presumed to have consented to its designation and to have agreed to
be bound by the terms of the Plan and any and all amendments thereto with respect to its Eligible
Employees and Participants upon its submission of information to the Committee required by the
terms of or with respect to the Plan or upon making a contribution pursuant to the terms of the
Plan. Each designated Affiliate shall authorize and designate the Company as its agent to act for
it in all transactions affecting the administration of the Plan and shall authorize and designate
the Committee to act for such Affiliate and its Eligible Employees and Participants in the same
manner in which the Committee may act for the Company and its Eligible Employees and Participants
hereunder. The Committee may revoke the designation of any Affiliate as a Participating Company by
written instrument delivered to the Company, the Trustee (if any), and the designated Affiliate
(and Appendix A shall be amended to reflect the same), with such revocation effective as provided
in such written instrument (and consistent with Section 409A). On and after the effective date of
such revocation, the Affiliate’s employees shall no longer be Eligible Employees and thus not be
permitted to be active Participants under the Plan. Unless the Committee expressly provides
otherwise, if a Participant Company ceases to be an Affiliate, such Affiliate shall automatically
cease to be a Participating Company without any action required by the Committee.

22

 

ARTICLE IX

AMENDMENT AND TERMINATION

          9.1 Amendments. The Board shall have the right to amend the Plan in whole or in part at
any time. Any amendment shall be in writing and executed by a duly authorized officer of the
Company. An amendment to the Plan may modify its terms in any respect whatsoever, and may include,
without limitation, a permanent or temporary freezing of the Plan such that the Plan shall remain
in effect with respect to existing Account balances without permitting any new contributions;
provided, however, that no such action may reduce the amount already credited to a Participant’s or
Beneficiary’s Account without the affected Participant’s or Beneficiary’s written consent.

          9.2 Termination of the Plan. The Company reserves the right to discontinue and terminate
the Plan at any time and for any reason. Any action to terminate the Plan shall be taken by the
Board in the form of a written Plan amendment executed by a duly authorized officer of the Company.
In the event of a termination of the Plan, unpaid benefits shall continue to be an obligation of
the Company and, unless otherwise expressly provided by resolution of the Board, shall be paid as
scheduled and in all events in a manner consistent with the requirements of Section 409A. If the
Plan is terminated and the Board expressly provides for each Participant’s Account to be
distributed, such amounts shall be paid in a single sum as soon as practicable after the date the
Plan is terminated. The amount of any such distribution shall be determined as of the Valuation
Date immediately preceding the date any such termination distribution is to be processed.
Termination of the Plan shall be binding on all Participants and Beneficiaries.

23

 

ARTICLE X

MISCELLANEOUS

          10.1 Taxation. It is the intention of the Company that the benefits payable hereunder
shall not be deductible by the Participating Companies or taxable for federal income tax purposes
to Participants or Beneficiaries until such benefits are paid by the Participating Companies, or
the Trust, as the case may be, to such Participants or Beneficiaries. When benefits are paid
hereunder, it is the intention of the Company that they shall be deductible by the Participating
Companies under Code Section 162. The provisions of the Plan shall be construed and the Plan shall
be operated in a manner consistent with the requirements of Section 409A. Specifically, no
provision of the Plan that would provide for a distribution that is subject to the additional tax
under Section 409A shall be permitted and any provision of the Plan which would result in a failure
to meet the requirements of Section 409A shall be deemed null and void.

          10.2 No Employment Contract. Nothing herein contained is intended to be, nor shall be
construed as constituting, a contract or other arrangement between the Company or any Participating
Company and any Participant to the effect that the Participant will be employed by a Participating
Company for any specific period of time.

          10.3 Headings. The headings of the various Articles and Sections in the Plan are solely
for convenience and shall not be relied upon in construing any provisions hereof. Any reference to
a Section shall refer to a Section of the Plan unless specified otherwise.

          10.4 Gender and Number. Use of any gender in the Plan will be deemed to include both
genders when appropriate, and use of the singular number will be deemed to include the plural when
appropriate, and vice versa in each instance.

          10.5 Successors. The Company shall 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 and/or the Participating Companies to expressly assume the obligations
hereunder in the same manner and to the same extent that the Company and the Participating
Companies would be required to perform if no such succession had taken place.

          10.6 Assignment of Benefits. The right of a Participant or Beneficiary to receive payments
under the Plan shall not be anticipated, alienated, sold, assigned, transferred, pledged,
encumbered, attached or garnished by
creditors of such Participant or Beneficiary, except by will or by the laws of descent and
distribution and then only to the extent permitted under the terms of the Plan.

          10.7 Entire Plan. This Plan supersedes all prior agreements, if any, understandings and
arrangements, oral or written, with respect to the subject matter hereof.

24

 

          10.8 Legally Incompetent. The Committee, in its sole discretion, may direct that a payment
to be made to an incompetent or disabled person, whether because of minority or mental or physical
disability, instead be made to the guardian of such person or to the person having custody of such
person, without further liability either on the part of the Company or the Participating Companies
for the amount of such payment to the person on whose account such payment is made.

          10.9 Notice. Any notice or filing required or permitted to be given to the Committee or
the Company under this Plan shall be sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the principal office of the Company. Such notice shall be deemed
given as of the date of delivery or, if delivery is made by registered or certified mail, as of the
date shown on the postmark on the receipt for registration or certification.

          10.10 Governing Law. The Plan shall be construed, administered and governed in all
respects in accordance with ERISA and other applicable federal law and, to the extent not preempted
by federal law, in accordance with the laws of the State of Texas. If any provisions of the Plan
shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall continue to be fully effective.

[Execution Page Follows]

25

 

          IN WITNESS WHEREOF, the Company has executed these presents to be executed by its duly
authorized officer in a number of copies, all of which shall constitute but one and the same
instrument which may be sufficiently evidenced by any executed copy hereof, this ___day of
January, 2008, but effective as of January 1, 2008.

	 	 	 	 	 	 	 
	 	 	EXTERRAN HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

26

 

EXTERRAN DEFERRED COMPENSATION PLAN

APPENDIX A

          The Plan’s Participating Companies as of January 1, 2008 are as follows:

	(1)	 	Exterran Energy Solutions, L.P.; and
	 
	(2)	 	Exterran Holdings Co. NL B.V.

A-1

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