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EXHIBIT
10.16

EXTERRAN HOLDINGS, INC.

DIRECTORS’ STOCK AND DEFERRAL PLAN

INTRODUCTION

     The Board of Directors (the “Board”) of Exterran Holdings, Inc., a Delaware corporation (the
“Company”), has adopted the Exterran Holdings, Inc. Directors’ Stock and Deferral Plan (the “Plan”)
covering an aggregate of 100,000 shares of common stock, $0.01 par value, of the Company (“Common
Stock”). The Plan is effective as of August 20, 2007 (“Effective Date”).

1. PURPOSE

     The purpose of the Plan is to provide non-employee directors of the Company’s Board of
Directors (the “Directors”) with an opportunity to receive Common Stock from the Company as payment
for their Director retainer fees and meeting fees (together, the “Retainer Fees”) which will:

     (a)
enhance their interest in the Company’s welfare;

     (b)
furnish them an additional incentive to continue their services for the Company;
and

     (c)
provide an additional means through which the Company may attract qualified persons to
serve on the Board.

2. ADMINISTRATION

     The Plan will be administered by a committee appointed by the Board from time to time (the
“Committee”); provided, however, that in the absence of a Committee being appointed by the Board,
the Committee shall mean the entire Board. The Committee may delegate some or all of its
administrative powers and responsibilities to such other persons from time to time as it deems
appropriate.

3. PARTICIPANTS

     Members of the Board who are not employees of the Company or any subsidiary of the Company
(“Participants”) are eligible to participate in the Plan.

4. GRANT OF STOCK

     The eligible individual Directors, on or before December 31 of each year, may elect, by filing
a written notice to the Committee, in the form and manner prescribed by the Committee (“Election
Form”), to receive a percentage equal to 25%, 50%, 75% or 100% of their Retainer Fees for the
following calendar year in the form of shares of Common Stock. Any portion of the Retainer Fees
that is not paid in the form of Common Stock will be paid to the Director in cash.

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With respect to
the portion of the Retainer Fees to be paid in Common Stock for each quarter,
the number of shares for each quarter shall be determined by dividing the dollar amount of
such portion of the Retainer Fees that would otherwise be paid in cash to the Participant for such
quarter by the closing sales price per share of the Common Stock on the last day of such quarter,
as reported on the New York Stock Exchange or successor exchange (“NYSE”) or, if the Common Stock
is not listed on the NYSE, then as quoted on the National Association of Securities Dealers, Inc.
Automated Quotation System (“NASDAQ”), or if no closing sales price is reported or quoted on such
date, then the closing sales price on the last preceding day on which the Common Stock was traded,
as reported by the NYSE or NASDAQ, as the case may be. Any fractional shares shall be paid to the
Director in cash.

     The Company will issue the shares of Common Stock (in book entry form) to the Participants, as
soon as practicable after the end of the applicable quarter, but in no event later than thirty (30)
days after the end of the applicable quarter, unless the Participant has elected to defer the
receipt of the Common Stock pursuant to paragraph 5 of this Plan.

     Eligible Directors who are first elected or appointed to the Board during a particular
calendar year, provided their service as a Director commences prior to the last quarter for such
year, may participate in the Plan for that initial year of service, by filing with the Committee an
Election Form within the first thirty (30) days after the commencement date of their service as a
Director (an “Initial Year Election”). A Director’s Initial Year Election will apply solely to the
Retainer Fees to be received for the remaining full quarters of that year commencing after the date
the Election Form is filed with the Committee. A Director who initially commences service during
the last quarter of a year shall not be eligible to participate in the Plan for such commencement
year. Notwithstanding the foregoing or any other provision of the Plan to the contrary, if the
Effective Date occurs prior to the final quarter of 2007, all eligible Directors as of the
Effective Date will be entitled to make an election hereunder within thirty (30) days of the
Effective Date with respect to Retainer Fees to be received for the remaining full quarters of 2007
commencing after the Effective Date. In the event of a Participant’s death prior to the end of the
quarter, the Company shall issue the whole shares of Common Stock, with any fractional units paid
in cash, to the Participant’s estate as soon as practicable following the Participant’s death.

     Elections shall apply only to a single calendar year and shall be irrevocable for that year.
Participants shall be fully vested in their right to receive Common Stock at all times.

5. ELECTION TO DEFER

     Notwithstanding any other provision of the Plan to the contrary, at the time an eligible
Director makes an election to receive all or a portion of the Director’s Retainer Fees in the form
of shares of Common Stock, the Director also may elect, on the Election Form, to defer until a
later date the receipt of a percentage equal to 25%, 50%, 75% or 100% of the Retainer Fees that the
Participant has elected to receive in the form of Common Stock.

     Any election by an eligible Director to defer Retainer Fees for a period pursuant to this
paragraph 5 of the Plan must be made and filed with the Committee at the same time the Director

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makes the election under paragraph 4 hereunder and such election shall be irrevocable. The
deferral period may be any period of time of not less than six (6) months from the end of the
quarter the Common Stock would have otherwise been paid to the Director; provided, however,
that any deferral period shall automatically terminate upon the occurrence of a separation from
service as a Director for any reason. Notwithstanding the foregoing or any other provision of the
Plan to the contrary, no deferral under this paragraph 5 shall be permitted for Common Stock
received for 2007.

     The Board, in its discretion, may accelerate the termination of deferral periods in the event
of a change in control of the Company. For purposes of the Plan, a “Change in Control” of the
Company means the occurrence of any of the following events:

     (i) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 40% or more of either (A) the then outstanding shares of common
stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this subparagraph (i), any acquisition by any Person pursuant to a
transaction which complies with clause (A) of subsection (iii) of this definition shall not
constitute a Change in Control; or

     (ii) Individuals, who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board shall be
considered for purposes of this definition as though such individual was a member of the
Incumbent Board, but excluding, for these purposes, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or

     (iii) the consummation of a reorganization, merger or consolidation involving the
Company or any of its subsidiaries, or the sale, lease or other disposition of all or
substantially all of the assets of the Company and its subsidiaries, taken as a whole (other
than to an entity wholly owned, directly or indirectly, by the Company) (each, a “Corporate
Transaction”), in each case, unless, following such Corporate Transaction, (A) all or
substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Corporate Transaction beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the Resulting Corporation in

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substantially the same
proportions as their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, and (B) at least a majority of the
members of the board of directors of the Resulting Corporation were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Corporate Transaction. The term “Resulting Corporation” means
(1) the Company or its successor, or (2) if as a result of a Corporate Transaction the
Company or its successor becomes a subsidiary of another entity, then such entity or the
parent of such entity, as applicable, or (3) in the event of a Corporate Transaction
involving the sale, lease or other disposition of all or substantially all of the assets of
the Company and its subsidiaries, taken as a whole, then the transferee of such assets in
such Corporate Transaction. Notwithstanding the foregoing, neither the sale, lease or other
disposition of assets by the Company or its subsidiaries to Universal Compression Partners,
L.P. or its successor nor the sale, lease or other disposition of any interest in Universal
Compression Partners, L.P., its general partner or its successor shall, in and of itself,
constitute a Change in Control for purposes of this Plan.

In addition to meeting the requirements of an event under subparagraphs (i), (ii) or (iii) above,
the Change in Control shall meet the requirements of corporate change under Section
409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended (the “Code”), and the
accompanying Treasury regulations and guidelines issued by the Internal Revenue Service.

     Any eligible Director who makes an election to defer hereunder shall be credited with phantom
units of Common Stock at the same time and in the same number (plus an amount for fractional
shares) as if such Director had elected not to defer any portion of the Retainer Fees. The phantom
units of Common Stock shall be subject to adjustment as set forth in paragraph 6 of this Plan, as
if such shares represented by such phantom units had been issued. Any dividends that are payable
with respect to outstanding Common Stock shall not be eligible for deferral hereunder and shall be
paid to eligible Directors at the same time and in the same amount as if the shares of Common Stock
represented by an electing Director’s phantom units hereunder were outstanding.

     The Company shall issue the whole shares of Common Stock (in book entry form) represented by a
Participant’s phantom units as soon as practicable after the end of the deferral period applicable
to such units, with any fractional units paid in cash, but in no event later than December 31st of
the year during which the deferral period ended or, if later, ninety (90) day after the end of the
deferral period. The foregoing notwithstanding to the contrary, in no event shall the whole shares
of Common Stock, and cash for any fractional units, represented by a Participant’s phantom units
for 2007 be issued (or paid as the case of cash for fractional shares) later than March 15, 2008.

     In the event of a Participant’s death, the Company shall issue the whole shares of Common
Stock represented by the Participant’s phantom units, with any fractional units paid in cash, to
the Participant’s estate as soon as practicable following the Participant’s death.

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6. CAPITAL ADJUSTMENTS AND REORGANIZATIONS

     The existence of the Plan shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization
or other change in the Company’s or any Company affiliate’s capital structure or its business, any
merger or consolidation of the Company or any affiliate of the Company, any issue of debt or equity
securities ahead of or affecting Common Stock or the rights thereof, the dissolution or liquidation
of the Company or any affiliate or any sale, lease, exchange or other disposition of all or any
part of its assets or business or any other corporate act or proceeding.

     The shares of Common Stock available under the Plan are as presently constituted, but if, and
whenever, prior to payment of such shares, the Company shall effect a subdivision or consolidation
of shares of Common Stock or the payment of a stock dividend on Common Stock without receipt of
consideration by the Company, the number of shares of Common Stock with respect to which a
Participant may be entitled (i) in the event of an increase in the number of outstanding shares,
shall be proportionately increased, and the purchase price per share shall be proportionately
reduced, and (ii) in the event of a reduction in the number of outstanding shares shall be
proportionately reduced, and the purchase price per share shall be proportionately increased, other
than through a Company-directed share repurchase program. Any fractional share resulting from such
adjustment shall be rounded up to the next whole share.

     In the event of changes in the outstanding Common Stock by reason of recapitalization,
reorganization, merger, consolidation, combination, stock split, stock dividend, spin-off, exchange
or other relevant changes in capitalization or distributions to the holders of Common Stock
occurring prior to payment of the shares under the Plan and not otherwise provided for under the
Plan, which would have the effect of diluting or enlarging the rights of Participants, such shares
and any notice evidencing such shares shall be subject to adjustment by the Committee, in its sole
discretion, as to the number and price of such shares of Common Stock. In the event of any such
change in the outstanding Common Stock or distribution to the holders of Common Stock, or upon the
occurrence of any other event described in this paragraph 6, the aggregate number of shares
available under the Plan and the maximum number of shares that may be elected to be received by
Participants under the Plan may be appropriately adjusted to the extent, if any, determined by the
Committee, whose determination shall be conclusive.

     Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of
any class or securities convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of shares of Common Stock due a
Participant pursuant to an election under the Plan.

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7. INTERPRETATION

     The Committee shall interpret the Plan and shall prescribe such rules and regulations in
connection with the operation of the Plan as it determines to be advisable for the administration
of the Plan. The Committee may rescind and amend its rules and regulations.

8. AMENDMENT OR DISCONTINUANCE

     The Plan may be amended or discontinued by the Board at any time.

9. EFFECT OF PLAN

     Nothing in this Plan shall be construed as conferring upon any Participant the right to
continue as a Director.

10. APPLICABLE LAW

     The Plan shall be governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to its conflicts of laws principles.

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Exhibit 10.17

CONSULTING AGREEMENT

     This Consulting Agreement (this “Agreement”) is entered into and effective as of August 20,
2007, by and between Exterran Holdings, Inc., a Delaware corporation (“Company”), and Ernie L.
Danner (“Consultant”).

W I T N E S S E T H:

     A. As an executive officer of Universal Compression Holdings, Inc. (“Universal”) and a member
of its board of directors, Consultant has become familiar with and aware of Confidential
Information (as hereinafter defined), and future plans with respect thereto, all of which has been
and will be established and maintained at great expense to Company; this information is a trade
secret and constitutes the valuable goodwill of Company.

     B. In connection with closing of the business combination of Universal and Hanover Compressor
Company (“Hanover”) pursuant to that certain Agreement and Plan of Merger among Hanover, Universal,
Iliad Holdings, Inc., Hector Sub, Inc. and Ulysses Sub, Inc., dated as of February 5, 2007, as
amended, Consultant’s service as an executive officer and director of Universal will terminate, and
Consultant will become a director of Exterran Holdings, Inc., the parent company of Universal and
Hanover following the business combination.

     C. Consultant desires to provide consulting services to Company under the terms and conditions
described herein, and Company desires such services.

A G R E E M E N T S

     In consideration of the mutual promises, terms, covenants and conditions set forth herein and
the performance of each, the parties hereto hereby agree as follows:

     1. Consulting Services. During the Term (as defined herein), Consultant will provide
(a) such services of a consulting, advisory or similar nature as an executive officer of the
Company may reasonably request with respect to the business and affairs of Company related to
Company’s current business and internal and external growth opportunities and (b) such other
services to which the President of Company and Consultant mutually agree from time to time. In
each case, Consultant will be available to Company for consultation at such times and locations as
Company reasonably may request and that are agreeable to consultant; provided, however, that under
no circumstances shall Consultant be required to provide more than 20% of the level of services
that Consultant performed in the course of his employment with Universal prior to the date hereof.
Without the prior written consent of Company, Consultant will not have authority to act or make
decisions for, give instructions or orders on behalf of or make commitments on behalf of Company.
The parties agree that Consultant is and shall be treated for all purposes as an independent
contractor to Company and no employment, partnership, agency, joint venture or other relationship
shall be created or construed herefrom.

     2. Compensation.

     (a) For the services rendered by Consultant, Company shall compensate Consultant with
payment of Twenty–nine thousand five hundred eighty three
dollars and thirty–three cents DOLLARS ($29,583.33) per month of the Term, to be

 

 

paid in monthly payments beginning on the first date of the Term, contingent upon
Consultant’s satisfaction of all the terms of this Agreement. In addition, Company shall
reimburse Consultant for all reasonable out-of-pocket expenses actually paid by Consultant
in providing the consulting services requested by Company in Section 1. Company
shall reimburse such expenses within 60 days of receipt of reasonable documentation of such
expenses.

     (b) In addition, during the Term (and for such period following the Term as is provided
in Section 3(b) hereof), Company shall provide medical and welfare benefits to
Consultant and/or Consultant’s family equal to those that would have been provided to them
in accordance with Universal’s plans, programs, practices and policies if Consultant’s
employment with Universal had not been terminated; provided, however, that with respect to
any of such plans, programs, practices or policies requiring an employee contribution,
Consultant shall continue to pay the monthly employee contribution for same, and provided
further, that if Consultant becomes employed by another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility.

     3. Term; Termination; Rights on Termination. The term of this Agreement shall begin
on the date hereof and continue on a month-to-month basis until terminated by either party upon one
month’s advance written notice (the “Term”). Upon termination of this Agreement for any reason
provided above, all rights and obligations of Company and Consultant under this Agreement shall
cease as of the effective date of termination, except that (a) Consultant’s obligations under
Sections 4, 5, 6 and 7 hereof shall survive such termination in
accordance with their terms and (b) notwithstanding anything to the contrary contained in any other
agreement or arrangement between Consultant and Company or Universal, Company shall continue, for a
period of two years immediately following the date of termination of this Agreement, to provide
Consultant and/or Consultant’s family with the medical and welfare benefits described in
Section 2(b) hereof, subject to the limitations set forth therein.

     4. Return of Company Property. All records, designs, patents, business plans,
financial statements, manuals, memoranda, lists and other property delivered to or compiled by
Consultant by or on behalf of Company or any entity controlling, controlled by or under common
control with Company (an “Affiliate”) or the representatives, vendors or customers thereof that
pertain to the business of Company or any Affiliate shall be and remain the property of Company or
such Affiliate, as the case may be, and be subject at all times to the discretion and control
thereof. Likewise, all correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of Company or its Affiliates
that are collected or held by Consultant shall be delivered promptly to Company or its Affiliates,
as the case may be, without request by such party, upon termination of the Term, without regard to
the cause or reasons for such termination. Because of the difficulty of measuring economic losses
to Company and its Affiliates as a result of a breach of this Section 4, and because of the
immediate and irreparable damage that could be caused to Company and its Affiliates for which it
would have no other remedy, since monetary damages alone may not be an adequate remedy,
Consultant agrees that this Section 4 may be enforced by Company in the event of
breach by him, by, without limitation, injunctions, restraining orders and other equitable actions.

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     5. Independent Contractor. Consultant expressly acknowledges that he will be acting
as an independent contractor and not as an employee, for all purposes. Accordingly, Consultant
agrees not to hold himself out to the public as an employee of Company. As an independent
contractor, Consultant shall be responsible for the payment of social security withholding tax and
all other federal, state and local taxes. Consultant shall further be obligated to secure, at his
sole cost, insurance as may be required by law. Subject to Company’s obligation to pay reasonable
out-of-pocket expenses actually paid by Consultant as provided in Section 2(a), Consultant
shall also be solely responsible for any and all costs associated in performing the services to be
rendered under this Agreement.

     6. Successors.

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

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

     (c) Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of Company to assume expressly and agree to perform this Agreement in the same manner
and to the same extent that Company would be required to perform it if no such succession
had taken place.

     7. Miscellaneous.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. CONSULTANT HEREBY
AGREES THAT VENUE FOR ANY DISPUTE RELATED TO THIS AGREEMENT SHALL BE FILED AND HEARD BY THE
COURTS IN AND FOR HARRIS COUNTY, TEXAS, OR THE U.S. DISTRICT COURTS FOR THE SOUTHERN
DISTRICT OF TEXAS, HOUSTON DIVISION.

     (b) The captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors and legal
representatives that specifically refers to this Agreement.

     (c) All notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows: if to Consultant,
Ernie L. Danner, 60
Autumn Crescent, The Woodlands, Texas 77381; and if to Company,
Exterran Holdings, Inc. 4444 Brittmoore Road, Houston, Texas 77041, Attention:

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

     (d) If any portion of this Agreement is held invalid or inoperative, the other portions
of this Agreement shall be deemed valid and operative and, so far as is reasonable and
possible, effect shall be given to the intent manifested by the portion held invalid or
inoperative.

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

     IN WITNESS WHEREOF, Consultant and Company have executed this Agreement:

	 	 	 	 	 
	 	CONSULTANT:

 	 
	 	  	/s/ Ernie L. Danner 	 
	 	 	Name: Ernie L. Danner 	 	 
	 	 	 	 
	 
	 	EXTERRAN HOLDINGS, INC.

 	 
	 	By:  	/s/ Steven A. Snider 	 
	 	 	Name: Steven A. Snider 	 	 
	 	 	Title: President and Chief Executive Officer 	 	 
	 

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