Document:

exv10w18

 

Exhibit 10.18

EXTERRAN HOLDINGS, INC.

2007 STOCK INCENTIVE PLAN

I. PURPOSE

     The purpose of the EXTERRAN HOLDINGS, INC. 2007 STOCK INCENTIVE PLAN is to provide a means
through which Exterran Holdings, Inc., a Delaware corporation, and its Affiliates may attract
highly-qualified persons to serve as Directors or to enter the employ of the Company and its
Affiliates and to provide a means whereby those individuals, whose present and potential
contributions to the Company and its Affiliates are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company and its Affiliates. A
further purpose of the Plan is to provide such individuals with additional incentive and reward
opportunities designed to enhance the profitable growth of the Company and its Affiliates.
Accordingly, the Plan provides for the grant of Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights and Performance Awards, or any combination of the foregoing, as is best
suited to the circumstances of the particular Employee or Director as determined by the Committee
in its sole discretion.

II. DEFINITIONS

     The following definitions shall be applicable throughout the Plan unless specifically modified
by any paragraph:

     (a) “Affiliate” means any corporation, partnership, limited liability company or partnership,
association, trust or other organization which, directly or indirectly, controls, is controlled by,
or is under common control with, the Company. For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any entity or organization, shall mean the possession, directly or
indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power
for the election of directors of the controlled entity or organization, or (ii) to direct or cause
the direction of the management and policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or otherwise.

     (b) “Award” means, individually or collectively, any Options, Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights, or Performance Awards granted under the terms of the Plan.

     (c) “Award Notice” means a written notice setting forth the terms of an Award.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Cause” means (i) the commission by a Participant of an act of fraud, embezzlement or
willful breach of a fiduciary duty to the Company or an Affiliate (including the unauthorized
disclosure of confidential or proprietary material information of the Company or an Affiliate),
(ii) a conviction of a Participant (or a plea of nolo contendere in lieu thereof) for a felony or a
crime involving fraud, dishonesty or moral turpitude, (iii) willful failure of a Participant to
follow the written directions of the chief executive officer of the Company or the Board, in the
case of executive officers of the Company; (iv) willful misconduct as an Employee of the Company or
an Affiliate; (v) willful failure of a Participant to render services to the Company or an
Affiliate in accordance with his employment arrangement, which failure amounts to a material
neglect of his duties to the Company or an Affiliate or (vi) substantial dependence, as determined
by the Committee, in its sole discretion, on any drug, immediate precursor or other substance
listed on Schedule IV of the Federal Comprehensive Drug Abuse Prevention and Control Act of 1970,
as amended. With respect to any Participant residing outside of the United States, the

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Committee may revise the definition of “Cause” as appropriate to conform to the laws of the
applicable non-U.S. jurisdiction.

     (f) “Code” means the U.S. Internal Revenue Code of 1986, as amended. References in the Plan to
any section of the Code shall be deemed to include any amendments or successor provisions to such
section and any regulations under such section.

     (g) “Committee” means the Committee defined in Paragraph IV(a) of the Plan.

     (h) “Common Stock” means the common stock, par value $.01 per share, of the Company, or any
security into which such common stock may be changed by reason of any transaction or event of the
type described in Paragraph XII.

     (i) “Company” means Exterran Holdings, Inc., a Delaware corporation, or any successors
thereto.

     (j) “Corporate Change” means:

     (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 subsection (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 Corporate Change; 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 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

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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
Corporate Change for purposes of this Plan.

     (k) “Director” means an individual elected to the Board by the stockholders of the Company or
by the Board under applicable corporate law and who is serving on the Board on the date the Plan is
adopted by the Board, or is subsequently elected to the Board, and is not an Employee.

     (l) “Disability” means any physical or mental condition for which the Participant would be
eligible to receive long-term disability benefits under the Company’s long-term disability plan.
With respect to any Participant residing outside of the United States, the Committee may revise the
definition of “Disability” as appropriate to conform to the laws of the applicable non-U.S.
jurisdiction.

     (m) “Employee” means any person who is an employee of the Company or any Affiliate. If an
entity ceases to be an Affiliate of the Company, a Participant employed by such entity shall be
deemed to have terminated his employment with the Company and its Affiliates and shall cease to be
an Employee under the Plan. For any and all purposes under the Plan, the term “Employee” shall
exclude an individual hired as an independent contractor, leased employee, consultant, or a person
otherwise designated by the Committee, the Company or an Affiliate at the time of hire as not
eligible to participate in or receive benefits under the Plan, even if such ineligible individual
is subsequently determined to be an employee by any governmental or judicial authority. For
purposes of any Award granted to a person residing outside of the United States, the Committee may
revise the definition of “Employee” as appropriate to conform to the laws of the applicable
non-U.S. jurisdiction.

     (n) “Fair Market Value” of a share of Common Stock means, as of any specified date: (i) if the
Common Stock is listed on a national securities exchange or quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System (“NASDAQ”), the closing sales price of a share
of Common Stock on that date, or if no prices are reported on that date, on the last preceding day
on which the Common Stock was traded, as reported by such exchange or NASDAQ, as the case may be;
and (ii) if the Common Stock is not listed on a national securities exchange or quoted on the
NASDAQ, but is traded in the over-the-counter market, the average of the bid and asked prices for a
share of Common Stock on the most recent date on which the Common Stock was publicly traded. In the
event the Common Stock is not publicly traded at the time a determination of its value is required
to be made hereunder, the determination of its Fair Market Value shall be made by the Committee in
such manner as it deems appropriate.

     (o) “Incentive Stock Option” means an Option granted under Paragraph VII of the Plan that is
an incentive stock option within the meaning of Section 422 of the Code.

     (p) “1934 Act” means the U.S. Securities Exchange Act of 1934, as amended.

     (q) “Non-Qualified Option” means an Option granted under Paragraph VII of the Plan that is not
an Incentive Stock Option.

     (r) “Option” means an option to purchase shares of Common Stock granted under Paragraph VII of
the Plan that may be either an Incentive Stock Option or a Non-Qualified Option.

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     (s) “Participant” means an Employee or Director who has been granted an Award under the Plan.

     (t) “Performance Award” means an opportunity for a Participant to earn additional compensation
if certain Performance Measures or other criteria are met, as described in Paragraph XI of the
Plan.

     (u) “Performance Measure” means any performance objective established by the Committee in its
sole discretion, including, but not limited to, one or more of the following:

     (1) the price of a share of Common Stock;

     (2) the Company’s earnings per share;

     (3) the Company’s market share;

     (4) the market share of a business unit of the Company designated by the Committee;

     (5) the Company’s sales;

     (6) the sales of a business unit of the Company designated by the Committee;

     (7) the net income (before or after taxes) of the Company or any business unit of the Company
designated by the Committee;

     (8) the cash flow return on investment, cash value added, and/or working cash flow of the
Company or any business unit of the Company designated by the Committee;

     (9) the earnings before or after interest, leasing expense, taxes, depreciation, distributions
on mandatorily redeemable preferred stock, and/or amortization of the Company or any business unit
of the Company designated by the Committee;

     (10) the economic value added;

     (11) the return on stockholders’ equity achieved by the Company;

     (12) the return on capital employed of the Company or any business unit of the Company
designated by the Committee; or

     (13) the total stockholders’ return achieved by the Company.

A Performance Measure may be subject to adjustment for changes in accounting standards required by
the Financial Accounting Standards Board after the goal is established, for specified significant
items or events, and may be absolute, relative to one or more other companies, or relative to one
or more indexes, and may be contingent upon future performance of the Company or any Affiliate,
division, or department thereof.

     (v) “Plan” means the Exterran Holdings, Inc. 2007 Stock Incentive Plan, as amended from time
to time.

     (w) “Restricted Stock” means Common Stock subject to certain restrictions, as
described in Paragraph VIII of the Plan.

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     (x) “Restricted Stock Unit” means a promise to deliver a share of Common Stock, or the Fair
Market Value of such share in cash, in the future if certain criteria are met, as described in
Paragraph IX of the Plan.

     (y) “Retirement” means a Termination of Service, other than due to Cause or death, on or after
the Participant attains (i) age 65 or (ii) age 55 and with the written consent of the Committee.
Notwithstanding the foregoing, with respect to a Participant residing outside of the United States,
the Committee may revise the definition of “Retirement” as appropriate to conform to the laws of
the applicable non-U.S. jurisdiction.

     (z) “Stock Appreciation Right” means a right entitling the Participant to the difference
between the Fair Market Value of a share of Common Stock on the date of exercise and the Fair
Market Value of a share of Common Stock on the date of grant, as described in Paragraph X of the
Plan.

     (aa) “Termination of Service” means a Participant’s termination of employment, if an Employee,
or a termination of service, if a Director, as the case may be. A Participant who is both an
Employee and a Director shall not incur a Termination of Service until the Participant terminates
both positions.

III. EFFECTIVE DATE AND DURATION OF THE PLAN

After its
adoption by the Board, the Plan shall become effective upon the effective date of
the consummation of the mergers pursuant to that certain Agreement and Plan of Merger dated
February 5, 2007, among Hanover Compressor Company, Universal Compression Holdings, Inc., Exterran
Holdings, Inc., Hector Sub, Inc., and Ulysses Sub, Inc. (the “Merger”), provided that the Plan has
been approved by the stockholders of each of Hanover Compressor Company and Universal Compression
Holdings, Inc. Notwithstanding any provision in the Plan, no Award shall be granted
hereunder prior to such stockholder approval. No further Awards may be granted under the Plan after
7 years from the effective date of the Plan. The Plan shall remain in effect until all Awards
granted under the Plan have been vested or forfeited and exercised or expired.

IV. ADMINISTRATION

     (a) Composition of Committee. The Plan shall be administered by the Compensation Committee of
the Board or such other committee, if any, that may be designated by the Board to administer the
Plan (the “Committee”); provided, however, that any and all members of the Committee shall satisfy
any independence requirements prescribed by any stock exchange on which the Company lists its
Common Stock; provided, further, that Awards may be granted to individuals who are subject to
Section 16(b) of the 1934 Act only if the Committee is comprised solely of two or more
“Non-Employee Directors” as defined in Securities and Exchange Commission Rule 16b-3 (as amended
from time to time, and any successor rule, regulation or statute fulfilling the same or similar
function); provided, further, that any Award intended to qualify for the “performance-based
compensation” exception under Section 162(m) of the Code shall be granted only if the Committee is
comprised solely of two or more “outside directors” within the meaning of Section l62(m) of the
Code and regulations pursuant thereto.

     (b) Powers. Subject to Paragraph IV(d), and the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine which Employees or Directors shall receive an
Award, the time or times when such Award shall be made, the terms and conditions of an Award, the
type of Award that shall be made, the number of shares subject to an Award and the value of an
Award. In making such determinations, the Committee shall take into account the nature of the
services rendered by the respective Employees or Directors, their present and potential
contribution to the Company’s success and such other factors as the Committee, in its sole
discretion, shall deem relevant.

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     (c) Additional Powers. The Committee shall have such additional powers as are delegated to it
by the other provisions of the Plan. Subject to the express provisions of the Plan, this shall
include the power to construe the Plan and the respective notices provided hereunder, to prescribe
rules and regulations relating to the Plan, and to determine the terms, restrictions and provisions
of the notice relating to each Award, including such terms, restrictions and provisions as shall be
required in the judgment of the Committee to cause designated Options to qualify as Incentive Stock
Options, and to make all other determinations necessary or advisable for administering the Plan.
The Committee may correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any notice relating to an Award in the manner and to the extent it shall deem expedient
to carry it into effect. Any determination or decision made by the Committee or its delegate
(pursuant to Paragraph IV(d)) under the terms of the Plan shall be made in the sole discretion of
the Committee or such delegate and shall be final and binding on all persons, including the Company
and Participants, but subject to ratification by the Board if the Board so provides.

     (d) Delegation of Powers. Subject to Paragraph IV(a) above, the Committee may delegate to the
Board or to the Chief Executive Officer or one or more other senior officers of the Company the
authority to grant Awards to Employees who are not subject to Section 16(b) of the 1934 Act.
Further, the Committee may delegate to the Governance Committee of the Board the authority to make
Awards to Directors, including to determine which Director shall receive an Award, the time or
times when such an Award shall be made, the terms and conditions of such an Award, the type of
Award that shall be made to a Director, the number of shares subject to such an Award, and the
value of such an Award. The Committee may delegate to the Chief Executive Officer or one or more
other senior officers of the Company its administrative functions under this Plan with respect to
the Awards. Any delegation described in this paragraph shall contain such limitations and
restrictions as the Committee may provide and shall comply in all respects with the requirements of
applicable law, including the Delaware General Corporation Law. The Committee may engage or
authorize the engagement of a third party administrator or administrators to carry out
administrative functions under the Plan.

     No member of the Committee or officer of the Company or an Affiliate to whom the Committee has
delegated authority in accordance with the provisions of Paragraph IV of this Plan shall be liable
for anything done or omitted to be done by him or her, by any member of the Committee or by any
officer of the Company or Affiliate in connection with the performance of any duties under this
Plan, except for his or her own willful misconduct or as expressly provided by statute.

     (e) Awards Outside of the United States. With respect to any Participant or eligible Employee
who is resident outside of the United States, the Committee may, in its sole discretion, amend or
vary the terms of the Plan in order to conform such terms with the requirements of local law, to
meet the goals and objectives of the Plan, and may, in its sole discretion, establish
administrative rules and procedures to facilitate the operation of the Plan in such non-U.S.
jurisdictions. The Committee may, where it deems appropriate in its sole discretion, establish one
or more sub-plans of the Plan for these purposes.

V. SHARES SUBJECT TO THE PLAN; AWARD LIMITATIONS

     (a) Shares Subject to the Plan. Subject to adjustment as provided in Paragraph XII, the
aggregate number of shares of Common Stock that may be issued under the Plan shall not exceed
4,750,000. The issuance of Common Stock under the Plan shall be counted against the overall number
of shares available for delivery under a fungible reserve approach. Any Shares of Common Stock
issued or reserved for issuance pursuant to Options or Stock Appreciation Rights shall be counted
against the aggregate share limitation of the Plan as one share for every share subject thereto.
Each Share of Common Stock issued pursuant to Restricted Stock or Restricted Stock Units shall be
counted against the aggregate share limitation of the Plan as two shares for every share subject
thereto. However, (a) if any Options or other

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stock-settled Awards are cancelled, expired, forfeited, settled in cash, or otherwise
terminated without issuing the underlying shares of Common Stock to the Participant, such shares
shall remain available for future grant under the Plan, and (b) if issued but unvested shares of
Restricted Stock are forfeited, such shares shall become available for future grant under the Plan.
Shares of Common Stock that are otherwise issuable to the Participant pursuant to an Award that are
withheld to satisfy tax withholding obligations or to pay the exercise price of an Option shall be
counted against the aggregate limitation of the Plan as provided herein and shall not become
available for future grant under the Plan.

     (b) Share and Value Limitation on Individual Awards. The maximum number of shares of Common
Stock that may be issuable under Awards granted to any one individual during any twelve month
period shall not exceed 500,000 shares of Common Stock (subject to adjustment in the
manner as provided in Paragraph XII). In addition, the maximum amount of cash compensation that may
be paid under Awards intended to qualify for the “performance-based compensation” exception under
Section 162(m) of the Code granted to any one individual during any twelve month period may not
exceed $5,000,000. The limitations set forth in this paragraph are intended to permit certain
awards under the Plan to constitute “performance-based” compensation for purposes of Section 162(m)
of the Code.

     (c) Stock Offered. Subject to the limitations set forth in Paragraph V(a), the stock to be
offered pursuant to the grant of an Award may be authorized but unissued Common Stock or Common
Stock previously issued and outstanding and reacquired by the Company. Any of such shares which
remain unissued and which are not subject to outstanding Awards at the termination of the Plan
shall cease to be subject to the Plan but, until termination of the Plan, the Company shall at all
times make available a sufficient number of shares to meet the requirements of the Plan.

VI. ELIGIBILITY AND GRANT OF AWARDS

     Subject to the delegation of power in Paragraph IV(d), the Committee, in its sole discretion,
may from time to time grant Awards under the Plan as provided herein to any individual who, at the
time of grant, is an Employee or a Director. An Award may be granted on more than one occasion to
the same person, and, subject to the limitations set forth in the Plan. Awards may include
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Awards or
any combination thereof. The Plan is discretionary in nature, and the grant of Awards by the
Committee is voluntary and occasional. The Committee’s selection of an eligible Employee or
Director to receive an Award in any year or at any time shall not require the Committee to select
such Employee or Director to receive an Award in any other year or at any other time. The selection
of an Employee or Director to receive one type of Award under the Plan does not require the
Committee to select such Employee or Director to receive any other type of Award under the Plan.
The Committee shall consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards.

VII. STOCK OPTIONS

     (a) Option Types and Option Period. Options may be in the form of Incentive Stock Options
and/or Non-Qualified Options for eligible Employees (as described below), as determined by the
Committee, in its sole discretion. Any Options granted to Directors shall be Non-Qualified
Options. Except as otherwise provided in Subparagraph (c) below or such shorter term as may be
provided in an Award Notice, each Option shall expire 7 years from its date of grant and, unless
provided otherwise in the Award Notice, shall be subject to earlier termination as follows:
Options, to the extent vested as of the date a Participant incurs a Termination of Service, may be
exercised only within three months of such date, unless such Termination of Service results from
(i) death, Retirement or Disability of the Participant, in which case all vested Options held by
such Participant may be exercised by the Participant, the Participant’s legal representative, heir
or devisee, as the case may be, within two years from the date of the Participant’s Termination of
Service, or (ii) Cause, in which event all outstanding vested Options held

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by such Participant shall be automatically forfeited unexercised on such termination;
provided, however, that notwithstanding the foregoing, no termination event described in (i) above
shall extend the expiration date of an Option beyond the 7th anniversary of its date of grant or,
such shorter period, if any, as may be provided in the Award Notice.

     (b) Vesting. Subject to the further provisions of the Plan, Options shall vest and become
exercisable in accordance with such vesting schedule as the Committee may establish in its sole
discretion, including vesting upon the satisfaction of one or more Performance Measures. A
Participant may not exercise an Option except to the extent it has become vested. Unless otherwise
provided in the Award Notice, all unvested Options shall automatically become fully vested upon a
Participant’s Termination of Service due to his or her death, Disability or Retirement. Options
that are not vested on a Participant’s Termination of Service shall automatically terminate and be
cancelled unexercised on such date.

     (c) Special Limitations on Incentive Stock Options. An Incentive Stock Option may be granted
only to an Employee of the Company or any parent or subsidiary corporation (as defined in Section
424 of the Code) at the time the Option is granted. To the extent that the aggregate Fair Market
Value (determined at the time the respective Incentive Stock Option is granted) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time by an individual
during any calendar year under all incentive stock option plans of the Company and its parent and
subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be treated as
Non-Qualified Options. The Committee shall determine, in accordance with applicable provisions of
the Code, any applicable treasury regulations and other administrative pronouncements, which of a
Participant’s Incentive Stock Options will not constitute Incentive Stock Options because of such
limitation and shall notify the Participant of such determination as soon as practicable after such
determination is made. No Incentive Stock Option shall be granted to an individual if, at the time
the Option is granted, such individual owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or subsidiary corporation,
within the meaning of Section 422(b)(6) of the Code, unless (i) at the time such Option is granted
the Option price is at least 110% of the Fair Market Value of the Common Stock subject to the
Option and (ii) such Option by its terms is not exercisable after the expiration of five years from
the date of grant. An Incentive Stock Option shall not be transferable otherwise than by will or
the laws of descent and distribution, and shall be exercisable during the Participant’s lifetime
only by such Participant or the Participant’s guardian or legal representative.

     (d) Award Notice. Each Option shall be evidenced by an Award Notice in such form and
containing such provisions not inconsistent with the provisions of the Plan and under such terms as
the Committee from time to time shall establish, including, without limitation, provisions to
qualify an Incentive Stock Option under Section 422 of the Code. An Award Notice may provide for
the payment of the Option price, in whole or in part, by cash, a check acceptable to the Company,
the delivery of a number of already-owned shares of Common Stock (plus cash if necessary) having a
Fair Market Value equal to such Option price (provided such shares have been owned for more than
six months by the Participant), a “cashless broker exercise” of the Option through any other
procedures established or approved by the Committee with respect thereto, or any combination of the
foregoing. Further, an Award Notice may provide, in the sole discretion of the Committee, for the
surrender of the right to purchase shares under the Option in return for a payment in cash or
shares of Common Stock or a combination of cash and shares of Common Stock equal in value to the
excess of the Fair Market Value of the shares with respect to which the right to purchase is
surrendered over the Option price therefor, on such terms and conditions as the Committee in its
sole discretion may prescribe. In the case of any such right that is granted in connection with an
Incentive Stock Option, such right shall be exercisable only when the Fair Market Value of the
Common Stock exceeds the price specified therefor in the Option or the portion thereof to be
surrendered. The terms and conditions of the respective Award Notices need not be identical.
Subject to the consent of the Participant, the Committee may, in its sole discretion, amend an

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outstanding Award Notice from time to time in any manner that is not inconsistent with the
provisions of the Plan (including, without limitation, an amendment that accelerates the time at
which the Option, or a portion thereof, may be exercisable).

     (e) Option Price and Payment. The price at which a share of Common Stock may be purchased
upon exercise of an Option shall be determined by the Committee but, subject to adjustment as
provided in Paragraph XII, such purchase price shall not be less than the Fair Market Value of a
share of Common Stock on the date such Option is granted. The Option or portion thereof shall be
exercised, and any applicable taxes shall be withheld, in accordance with such procedures as are
established or approved by the Committee.

     (f) Restrictions on Repricing of Options. Except as provided in Paragraph XII, the Committee
may not amend any outstanding Award Notice to lower the exercise price (or cancel and replace any
outstanding Option with Options having a lower exercise price).

     (g) Stockholder Rights and Privileges. The Participant shall be entitled to all the
privileges and rights of a stockholder only with respect to such shares of Common Stock as have
been purchased upon exercise of the Option and registered in the Participant’s name.

     (h) Options in Substitution for Options Granted by Other Employers. Options may be granted
under the Plan from time to time or approved by the Committee or the Board in substitution of
options held by individuals providing services to corporations or other entities who become
Employees or Directors as result of a merger or consolidation or other business transaction with
the Company or any Affiliate.

VIII. RESTRICTED STOCK

     (a) Restrictions to be Established by the Committee. Restricted Stock shall be subject to
restrictions on disposition by the Participant and an obligation of the Participant to forfeit and
surrender the shares to the Company under certain circumstances, and any other restrictions
determined by the Committee in its sole discretion on the date of grant; provided, however, that
such restrictions shall lapse upon:

     (i) the attainment of one or more Performance Measures;

     (ii) the Participant’s continued employment with the Company and its Affiliates or continued
service as a Director for a specified period of time;

     (iii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or

     (iv) a combination of any of the foregoing.

Each grant of Restricted Stock may have different restrictions as established in the sole
discretion of the Committee.

     (b) Other Terms and Conditions. Restricted Stock shall be registered in the name of the
Participant. Unless provided otherwise in an Award Notice, the Participant shall have the right to
receive dividends with respect to Restricted Stock, to vote Restricted Stock, and to enjoy all
other stockholder rights, except that: (i) the Company shall retain custody of the Restricted Stock
until the Restrictions have expired; (ii) the Participant may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the Restricted Stock until the restrictions have expired; and
(iii) a breach of the terms and conditions

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established by the Committee pursuant to the Restricted Stock Notice shall cause a forfeiture
of the Restricted Stock. If a Participant’s Termination of Service is due to his or her death or
Disability, all Awards of Restricted Stock of such Participant then outstanding shall immediately
vest in full and all restrictions applicable to such Awards shall terminate as of such date with
all performance criteria, if any, applicable to such Awards deemed met at 100% of target. At the
time of grant, the Committee may, in its sole discretion, establish additional terms, conditions or
restrictions relating to the Restricted Stock. Such additional terms, conditions or restrictions
shall be set forth in an Award Notice delivered in conjunction with the Award.

     (c) Payment for Restricted Stock. The Committee shall determine the amount and form of
payment required from the Participant in exchange for a grant of Restricted Stock, if any, provided
that in the absence of such a determination, a Participant shall not be required to make any
payment for Restricted Stock, except to the extent otherwise required by law.

     (d) Committee’s Discretion to Accelerate Vesting of Restricted Stock. The Committee may, in
its discretion and as of a date determined by the Committee, fully vest any or all of a
Participant’s Restricted Stock and, upon such vesting, all restrictions applicable to such
Restricted Stock shall terminate as of such date. Any action by the Committee pursuant to this
Subparagraph may vary among individual Participants and may vary among the Restricted Stock held by
any individual Participant. Notwithstanding the preceding provisions of this paragraph, the
Committee may not take any action described in this Subparagraph with respect to Restricted Stock
that has been granted to a “covered employee” (within the meaning of Treasury Regulation Section
1.162-27(c)(2)) if such Award has been designed to meet the exception for performance-based
compensation under Section 162(m) of the Code; provided, however, this prohibition shall not apply
to an acceleration pursuant to Paragraph XII or due to death or Disability of the Participant.

     (e) Award Notice. Each grant of Restricted Stock shall be evidenced by an Award Notice in
such form and containing such provisions not inconsistent with the provisions of the Plan and under
such terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award Notices need not be identical. Subject to the consent of the Participant and the
restriction set forth in the last sentence of Subparagraph (d) above, the Committee may, in its
sole discretion, amend an outstanding Award Notice from time to time in any manner that is not
inconsistent with the provisions of the Plan.

IX. RESTRICTED STOCK UNITS

     (a) Restrictions to be Established by the Committee. Restricted Stock Units shall be subject
to a restriction on disposition by the Participant and an obligation of the Participant to forfeit
the Restricted Stock Units under certain circumstances, and any other restrictions determined by
the Committee in its sole discretion on the date of grant; provided, however, that such
restrictions shall lapse upon:

     (i) the attainment of one or more Performance Measures;

     (ii) the Participant’s continued employment with the Company and its Affiliates or continued
service as a Director for a specified period of time;

     (iii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or

     (iv) a combination of any of the foregoing.

Each Award of Restricted Stock Units may have different restrictions as established in the sole
discretion of the Committee.

Page 10

 

     (b) Other Terms and Conditions. The Participant shall not be entitled to vote the shares of
Common Stock underlying the Restricted Stock Units or enjoy any other stockholder rights unless and
until the restrictions have lapsed and such shares have been registered in the Participant’s name.
If a Participant’s Termination of Service is due to his or her death or Disability, all Restricted
Stock Units of such Participant then outstanding shall immediately vest in full and all
restrictions applicable to such Restricted Stock Units shall terminate as of such date with all
performance criteria, if any, applicable to such Restricted Stock Units deemed met at 100% of
target. At the time of grant, the Committee may, in its sole discretion, establish additional
terms, conditions or restrictions relating to the Restricted Stock Units. Such additional terms,
conditions or restrictions shall be set forth in an Award Notice delivered in conjunction with the
Award.

     (c) Payment. Upon the lapse of the restrictions described in the Award Notice, the
Participant shall receive as soon as practicable payment equal to the Fair Market Value of the
shares of Common Stock underlying the Restricted Stock Units on the vesting date, less applicable
withholding. Payment shall be in the form of shares of Common Stock, cash, other equity
compensation, or a combination thereof, as determined by the Committee. Any cash payment shall be
made in a lump sum or in installments, as prescribed in the Award Notice. Payment shall be made no
later than 2-1/2 months following the end of the year in which the Restricted Stock Units vest,
unless payment is to be made in installments, in which case such installments shall comply with the
rules under Section 409A of the Code.

     (d) Committee’s Discretion to Accelerate Vesting of Restricted Stock Units. The Committee
may, in its discretion and as of a date determined by the Committee, fully vest any portion or all
of a Participant’s Restricted Stock Units and, upon such vesting, all restrictions applicable to
such Restricted Stock Units shall terminate as of such date. Any action by the Committee pursuant
to this Subparagraph may vary among Participants and may vary among the Restricted Stock Units held
by any Participant. Notwithstanding the preceding provisions of this paragraph, the Committee may
not take any action described in this Subparagraph with respect to Restricted Stock Units that have
been granted to a “covered employee” (within the meaning of Treasury Regulation Section
1.162-27(c)(2)) if such Award has been designed to meet the exception for performance-based
compensation under Section 162(m) of the Code; provided, however, this prohibition shall not apply
to an acceleration pursuant to Paragraph XII or due to death or Disability of the Participant.

     (e) Award Notice. Restricted Stock Units shall be evidenced by an Award Notice in such form
and containing such provisions not inconsistent with the provisions of the Plan and under such
terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award Notices need not be identical. Subject to the consent of the Participant and the
restriction set forth in the last sentence of Subparagraph (d) above, the Committee may, in its
sole discretion, amend an outstanding Award Notice from time to time in any manner that is not
inconsistent with the provisions of the Plan.

X. STOCK APPRECIATION RIGHTS

     (a) Restrictions to be Established by the Committee. Stock Appreciation Rights shall be
subject to a restriction on disposition by the Participant and an obligation of the Participant to
forfeit the Stock Appreciation Rights under certain circumstances, and any other restrictions
determined by the Committee in its sole discretion on the date of grant; provided, however, that
such restrictions shall lapse upon:

     (i) the attainment of one or more Performance Measures;

     (ii) the Participant’s continued employment with the Company and its Affiliates or continued
service as a Director for a specified period of time;

Page 11

 

     (iii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or

     (iv) a combination of any of the foregoing.

Each Award of Stock Appreciation Rights may have different restrictions as established in the sole
discretion of the Committee.

     (b) Other Terms and Conditions. If a Participant’s Termination of Service is due to his or
her death or Disability, all Stock Appreciation Rights of such Participant then outstanding shall
immediately vest in full and all restrictions applicable to such Stock Appreciation Rights shall
terminate as of such date with all performance criteria, if any, applicable to such Stock
Appreciation Rights deemed met at 100% of target. At the time of grant, the Committee may, in its
sole discretion, establish additional terms, conditions or restrictions relating to the Stock
Appreciation Rights. Such additional terms, conditions or restrictions shall be set forth in the
Award Notice delivered in conjunction with the Award.

     (c) Exercise Price and Payment. Subject to adjustment as provided in Paragraph XII, the
exercise price of the Stock Appreciation Rights shall not be less than the Fair Market Value of the
shares of Common Stock underlying the Stock Appreciation Rights on the date of grant. Upon the
lapse of the restrictions described in the Award Notice, the Participant shall be entitled to
exercise his or her Stock Appreciation Rights at any time up until the end of the period specified
in the Award Notice. The Stock Appreciation Rights, or portion thereof, shall be exercised and any
applicable taxes withheld, in accordance with such procedures as are established or approved by the
Committee. Upon exercise of the Stock Appreciation Rights, the Participant shall be entitled to
receive payment in an amount equal to: (i) the difference between the Fair Market Value of the
underlying shares of Common Stock subject to the Stock Appreciation Rights on the date of exercise
and the exercise price; times (ii) the number of shares of Common Stock with respect to which the
Stock Appreciation Rights are exercised; less (iii) any applicable withholding taxes. Payment shall
be made in the form of shares of Common Stock or cash, or a combination thereof, as determined by
the Committee. Cash shall be paid in a lump sum payment and shall be based on the Fair Market Value
of the underlying Common Stock on the exercise date.

     (d) Committee’s Discretion to Accelerate Vesting of Stock Appreciation Rights. The Committee
may, in its discretion and as of a date determined by the Committee, fully vest any portion or all
of a Participant’s Stock Appreciation Rights and, upon such vesting, all restrictions applicable to
such Stock Appreciation Rights shall terminate as of such date. Any action by the Committee
pursuant to this Subparagraph may vary among Participants and may vary among the Stock Appreciation
Rights held by any Participant. Notwithstanding the preceding provisions of this paragraph, the
Committee may not take any action described in this Subparagraph with respect to any Stock
Appreciation Rights that have been granted to a “covered employee” (within the meaning of Treasury
Regulation Section 1.162-27(c)(2)) if such Award has been designed to meet the exception for
performance-based compensation under Section 162(m) of the Code; provided, however, this
prohibition shall not apply to an acceleration pursuant to Paragraph XII or due to death or
Disability of the Participant.

     (e) Award Notice. Stock Appreciation Rights shall be evidenced by an Award Notice in such
form and containing such provisions not inconsistent with the provisions of the Plan and under such
terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award Notices need not be identical. Subject to the consent of the Participant and the
restriction set forth in the last sentence of Subparagraph (d) above, the Committee may, in its
sole discretion, amend an outstanding Award Notice from time to time in any manner that is not
inconsistent with the provisions of the Plan.

Page 12

 

XI. PERFORMANCE AWARDS

     (a) Performance Period. The Committee shall establish, with respect to and at the time of
each Performance Award, the maximum value of the Performance Award and the performance period over
which the performance applicable to the Performance Award shall be measured.

     (b) Performance Measures and Other Criteria. A Performance Award shall be awarded to a
Participant contingent upon future performance of the Company or any Affiliate, or a division or
department of the Company or any Affiliate, during the performance period. With respect to
Performance Awards intended to qualify as performance-based compensation under Section 162(m) of
the Code, the Committee shall establish the Performance Measures applicable to such performance
either (i) prior to the beginning of the performance period or (ii) within 90 days after the
beginning of the performance period if the outcome of the performance targets is substantially
uncertain at the time such targets are established, but not later than the date that 25% of the
performance period has elapsed. The Committee shall provide that the vesting of the Performance
Award will be based upon the Participant’s continued employment with the Company or its Affiliates
or continued service as a Director for a specified period of time and

     (i) the attainment of one or more Performance Measures, or a combination thereof:

     (ii) the occurrence of any event or the satisfaction of any other condition specified by the
Committee in its sole discretion; or

     (iii) a combination of any of the foregoing.

The Committee, in its sole discretion, may also provide for an adjustable Performance Award
value-based upon the level of achievement of Performance Measures.

     (c) Vesting. If a Participant’s Termination of Service is due to his or her death or
Disability, all Performance Awards of such Participant then outstanding shall immediately vest in
full and all restrictions applicable to such Awards shall terminate as of such date with all
performance criteria, if any, applicable to such Awards deemed met at 100% of target.

     (d) Award Criteria. In determining the value of a Performance Award, the Committee shall take
into account a Participant’s responsibility level, performance, potential, other Awards, total
annual compensation and such other considerations as it deems appropriate. The Committee, in its
sole discretion, may provide for a reduction in the value of a Participant’s Performance Award
during the performance period.

     (e) Payment. Following the end of the performance period, the holder of a Performance Award
shall be entitled to receive payment as soon as practicable of an amount not exceeding the maximum
value of the Performance Award, based on the achievement of the Performance Measures for such
performance period, as determined and certified in writing by the Committee. Payment of a
Performance Award may be made in cash, Common Stock, Options or other equity compensation, or a
combination thereof, as determined by the Committee. Payment shall be made in a lump sum or in
installments as prescribed in the Award Notice. If a Performance Award covering shares of Common
Stock is to be paid in cash, such payment shall be based on the Fair Market Value of a share of
Common Stock on the payment date. Payment shall be made no later than 2-1/2 months following the
end of the year in which the Performance Award vests, unless payment is to be made in installments,
in which case such installments shall comply with the rules under Section 409A of the Code.

     (f) Award Notice. Each Performance Award shall be evidenced by a Award Notice in such form
and containing such provisions not inconsistent with the provisions of the Plan and under such
terms as the Committee from time to time shall establish. The terms and provisions of the
respective Award

Page 13

 

Notices need not be identical. Subject to the consent of the Participant, the Committee may,
in its sole discretion, amend an outstanding Award Notice from time to time in any manner that is
not inconsistent with the provisions of the Plan.

XII. RECAPITALIZATION OR REORGANIZATION

     (a) No Effect on Right or Power. The existence of the Plan and the Awards granted hereunder
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 Affiliate’s capital structure or its business, any merger or consolidation of the Company or
any Affiliate, 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.

     (b) Subdivision or Consolidation of Shares; Stock Dividends. If, and whenever, prior to the
expiration of an Award previously granted, the Company shall effect a subdivision or consolidation
of shares of Common Stock or the payment of a dividend on Common Stock which is paid in the form of
Company stock without receipt of consideration by the Company, the number of shares of Common Stock
with respect to which such Award may thereafter be exercised or satisfied, shall be adjusted as
follows: (i) in the event of an increase in the number of outstanding shares, the number shares of
Common Stock subject to the Award 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, the number shares of Common Stock subject to the Award shall be proportionately
reduced, and the purchase price per share shall be proportionately increased, other than in the
event of a Company-directed share repurchase program. Any fractional share resulting from such
adjustment shall be rounded up to the next whole share. Such proportionate adjustments will be made
for purposes of making sure that to the extent possible, the fair value of the Awards after the
subdivision, consolidation or dividend is equal to the fair value before the change.

     (c) Corporate Changes. Except as otherwise specifically provided in an Award Notice,
effective upon a Corporate Change (or at such earlier time as the Committee may provide), all
Options then outstanding shall immediately become exercisable in full, all Restricted Stock shall
vest in full and cease to be subject to any restrictions, all Restricted Stock Units shall vest in
full and cease to be subject to any restrictions, any Stock Appreciation Rights shall immediately
be exercisable in full, and all Awards, the payout of which is subject to Performance Measures,
shall vest in full and become immediately payable at such levels as the Committee in its sole
discretion shall determine. In addition, the Committee, acting in its sole discretion without the
consent or approval of any Participant, may effect one or more of the following alternatives, which
alternatives may vary among individual Participants and which may vary among Awards held by any
individual Participant: (i) require the mandatory surrender to the Company by selected Participants
of some or all of the outstanding Options, stock-settled Restricted Stock Units and stock-settled
Stock Appreciation Rights held by such Participants as of a date, before or after such Corporate
Change, specified by the Committee, in which event the Committee shall thereupon cancel such Awards
and the Company shall pay (or cause to be paid) to each such Participant an amount of cash per
share equal to the excess, if any, of the amount calculated in Subparagraph (d) below (the “Change
of Control Value”) of the shares subject to such Awards over the exercise price(s), if any, under
such Awards for such shares, or (ii) provide that the number and class of shares of Common Stock
covered by such Awards shall be adjusted so that such Awards shall thereafter cover securities of
the surviving or acquiring corporation or other property (including, without limitation, cash) as
determined by the Committee in its sole discretion.

     (d) Change of Control Value. For the purposes of clause (i) in Subparagraph (c) above, the
“Change of Control Value” shall equal the amount determined in clause (i), (ii) or (iii), whichever
is

Page 14

 

applicable, as follows: (i) the per share price offered to stockholders of the Company in any
such merger, consolidation, sale of assets or dissolution transaction, (ii) the price per share
offered to stockholders of the Company in any tender offer or exchange offer whereby a Corporate
Change takes place, or (iii) if such Corporate Change occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares into which such Awards being
surrendered are exercisable or payable, as determined by the Committee as of the date determined by
the Committee to be the date of cancellation and surrender of such Awards. In the event that the
consideration offered to stockholders of the Company in any transaction described in this
Subparagraph (d) or Subparagraph (c) above consists of anything other than cash, the Committee
shall determine the fair cash equivalent of the portion of the consideration offered which is other
than cash.

     (e) Other Changes in the Common Stock. 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 after the date of the grant of any Award and
not otherwise provided for by this Paragraph XII, which would have the effect of diluting or
enlarging the rights of Participants, such Award and any notice evidencing such Award shall be
subject to equitable or proportionate adjustment by the Committee at its sole discretion as to the
number and price of shares of Common Stock or other consideration subject to such Award. 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 XII, the aggregate
number of shares available under the Plan and the maximum number of shares that may be subject to
Awards granted to any one individual may be appropriately adjusted to the extent, if any,
determined by the Committee, whose determination shall be conclusive. Such proportionate
adjustments will be made for purposes of making sure that to the extent possible, the fair value of
the Awards after the subdivision, consolidation or dividend is equal to the fair value before the
change.

     (f) No Adjustments Unless Otherwise Provided. 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 subject to Awards theretofore granted or the purchase price per
share, if applicable.

XIII. AMENDMENT AND TERMINATION OF THE PLAN

     The Board in its discretion may terminate the Plan at any time with respect to any shares of
Common Stock for which Awards have not theretofore been granted. The Board shall have the right to
alter or amend the Plan or any part thereof from time to time; provided that no change in the Plan
may be made that would impair the rights of a Participant with respect to any outstanding Award
without the consent of the Participant, and provided, further, that the Board may not, without
approval of the stockholders of the Company (a) amend the Plan to increase the maximum aggregate
number of shares that may be issued under the Plan or change the class of individuals eligible to
receive Awards under the Plan, (b) amend or delete Paragraph VII(f), or (c) amend Paragraph XII to
delete items (a) or (b).

XIV. MISCELLANEOUS

     (a) No Right To An Award. Neither the adoption of the Plan nor any action of the Board or of
the Committee shall be deemed to give any individual any right to be granted an Option, Restricted
Stock, Restricted Stock Units, Stock Appreciation Rights, or a Performance Award, or any other
rights hereunder except as may be evidenced by an Award Notice, and then only to the extent and on
the terms and conditions expressly set forth therein.

Page 15

 

     (b) Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan for
incentive and deferred compensation purposes, including Section 409A of the Code. The Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan to deliver shares of Common Stock or make payments; provided the Committee first determines in
its sole discretion that the structure of such trusts or other arrangements shall not cause any
change in the “unfunded” status of the Plan.

     (c) No Employment/Membership Rights Conferred. Nothing contained in the Plan or any Award
shall (i) confer upon any Employee any right to continued employment with the Company or any
Affiliate or (ii) interfere in any way with the right of the Company or any Affiliate to terminate
his or her employment at any time. Nothing contained in the Plan shall confer upon any Director any
right to service, or interfere in any way with the right of the Company to terminate his or her
service at any time.

     (d) Compliance with Securities Laws. The Company shall not be obligated to issue any shares
of Common Stock pursuant to an Award granted under the Plan at any time when the shares covered by
such Award have not been registered pursuant to applicable U.S. federal, state or non-U.S.
securities laws, or, in the opinion of legal counsel for the Company, the issuance and sale of such
shares is not covered under an applicable exemption from such registration requirements.

     (e) No Fractional Shares. No fractional shares of Common Stock nor cash in lieu of fractional
shares of Common Stock shall be distributed or paid pursuant to an Award. For purposes of the
foregoing, any fractional shares of Common Stock shall be rounded up to the nearest whole share.

     (f) Tax Obligations; Withholding of Shares. Except with respect to non-Employee Directors and
as otherwise provided under the Plan, no later than the date as of which an amount first becomes
includible in a Participant’s taxable income for U.S. federal, state, local or non-U.S. income or
social insurance tax purposes with respect to an Award granted under the Plan, the Participant
shall pay to the Company or the Affiliate employing the Participant, or make arrangements
satisfactory to the Company or the Affiliate employing the Participant for the payment of any such
income or social insurance taxes of any kind required by law to be withheld with respect to such
taxable amount. Notwithstanding the foregoing, the Company and its Affiliates may, in its sole
discretion, withhold a sufficient number of shares of Common Stock that are otherwise issuable to
the Participant pursuant to an Award to satisfy any such income or social insurance taxes of any
kind required by law to be withheld, as may be necessary in the opinion of the Company or the
Affiliate to satisfy all obligations for the payment of such taxes. For purposes of the foregoing,
the Committee may establish such rules, regulations and procedures as it deems necessary or
appropriate.

     (g) No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to
prevent the Company or an Affiliate from taking any action that is deemed by the Company or such
Affiliate to be appropriate or in its best interest, regardless of whether such action would have
an adverse effect on the Plan or any Award made under the Plan. No Employee, Participant,
representative of an Employee or Participant, or other person shall have any claim against the
Company or any Affiliate as a result of any such action.

     (h) Restrictions on Transfer. An Award (other than an Incentive Stock Option, which shall be
subject to the transfer restrictions set as forth in Paragraph VII(c)) shall not be transferable
otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder, or (iii) if vested, with the consent of
the Committee, in its sole discretion provided that any such transfer is permitted under the
applicable securities laws.

Page 16

 

     (i) Limitations Period. Any Participant who believes he or she is being denied any benefit or
right under the Plan may file a written claim with the Committee. Any claim must be delivered to
the Committee within forty-five (45) days of the specific event giving rise to the claim. Untimely
claims will not be processed and shall be deemed denied. The Committee, or its designee, will
notify the Participant of its decision in writing as soon as administratively practicable. Claims
not responded to by the Committee in writing within one hundred and twenty (120) days of the date
the written claim is delivered to the Committee shall be deemed denied. The Committee’s decision is
final and conclusive and binding on all persons. No lawsuit relating to the Plan may be filed
before a written claim is filed with the Committee and is denied or deemed denied and any lawsuit
must be filed within one year of such denial or deemed denial or be forever barred.

     (j) Section 409A of the Code. It is intended that any Awards under the Plan satisfy the
requirements of Section 409A of the Code to avoid imposition of applicable taxes thereunder. Thus,
notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under the
Plan would result in the imposition of an applicable tax under Section 409A of the Code and related
regulations and Treasury pronouncements, that Plan provision or Award may be reformed by the
Committee solely to the extent the Committee, in its sole discretion, determines is necessary to
avoid imposition of the applicable tax and no action taken to comply with Section 409A shall be
deemed to adversely affect the Participant’s rights to an Award.

     (k) Governing 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.

Page 17exv10w19

 

EXHIBIT 10.19

CHANGE OF CONTROL AGREEMENT

          THIS CHANGE OF CONTROL AGREEMENT (the “Agreement”), made and entered into effective as of
August 20, 2007 (the “Effective Date”), by and between Exterran Holdings, Inc., a Delaware
corporation (the “Company”), and                      (“Executive”).

          WHEREAS, the Company and Executive desire to enter into an agreement regarding their
respective rights and obligations in connection with a Change of Control during the Term of this
Agreement;

          THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Executive agree as follows:

     1. Term. This Agreement shall begin on the Effective Date and shall continue until August 20,
2009; provided, however, that commencing on August 20, 2008 and on each August 20 thereafter, the
term of this Agreement shall automatically be extended for one additional year (such initial
period, plus any extensions, plus, in the event of Executive’s Qualifying Termination of Employment
for Good Reason, any additional time period necessitated by the Company’s right to cure as set
forth in the definition of “Good Reason,” the “Term”), unless at least 90 days prior to such August
20 date the Board shall give written notice to Executive that the Term of this Agreement shall
cease to be so extended. However, if a Change of Control shall occur during the Term, the Term
shall automatically continue in effect for a period of 18 months plus, in the event of Executive’s
Qualifying Termination of Employment for Good Reason, any additional time period necessitated by
the Company’s right to cure as set forth in the definition of “Good Reason,” commencing on the date
of such Change of Control. This Agreement shall automatically terminate on Executive’s termination
of employment, except as provided in the definition of “Protected Period.” Termination of this
Agreement shall not alter or impair any rights of Executive arising under this Agreement on or
prior to such termination.

     2. Qualifying Termination of Employment. If Executive incurs a Qualifying Termination of
Employment, Executive shall be entitled to the benefits provided in Sections 3 and 4 hereof. If
Executive’s employment terminates for any reason other than for a Qualifying Termination of
Employment, then Executive shall not be entitled to any benefits under this Agreement.

     3. Benefits Upon a Qualifying Termination of Employment.

     (a) Lump Sum. Following a Qualifying Termination of Employment, the Company shall pay
to Executive, within five business days after the Date of Termination (or, if Code Section
409A is applicable to the payment, as soon as such payment can be made without being subject
to the additional taxes and interest under Code Section 409A), an amount, in a lump sum
payment, equal to the sum of:

     (i) The total of (A) Executive’s earned but unpaid Base Salary through the Date
of Termination plus (B) Executive’s Target Bonus for the current year (prorated to
Date of Termination) plus (C) any earned but unpaid

1

 

Actual Bonus for the prior year (if the prior year’s Actual Bonus has not yet
been calculated as of the Date of Termination such amount shall be payable when
calculated, but in no event later than March 15th of the year following the
Termination Year); plus

     (ii) Any portion of Executive’s vacation pay accrued, but not used, for the
Termination Year as of the Date of Termination; plus

     (iii) The product of [two/three] multiplied by the sum of Executive’s Base
Salary and Target Bonus amount for the Termination Year (not prorated); plus

     (iv) An amount equal to the total of the employer matching contributions that
would have been credited to Executive’s account under the 401(k) Plan and any other
deferred compensation plan of the Company (or any of its affiliated companies) had
Executive made the required amount of elective deferrals or contributions to receive
such maximum employer matching contributions under the 401(k) Plan and any other
deferred compensation plan (and regardless of whether Executive actually made any
such elective deferrals or contributions) during the 12-month period immediately
preceding the month of Executive’s Date of Termination, multiplied by [two/three],
such amount to be grossed up so that the amount Executive actually receives after
payment of any federal or state taxes payable thereon equals the amount first
described above; plus

     (iv) Amounts previously deferred by Executive, if any, or earned but not paid,
if any, under any Company incentive and nonqualified deferred compensation plans or
programs as of the Date of Termination.

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

     (c) Awards. All stock options, restricted stock, restricted stock units, or other
awards based in common stock of the Company, and all common units, unit appreciation rights,
unit options and other awards based in common units representing limited partner interests
of the Partnership, and all cash-based incentive awards held by Executive and

2

 

not previously vested shall be 100% vested (except with respect to (i) an award that is
subject to Code Section 409A if such acceleration would result in the imposition of
applicable taxes and interest under Code Section 409A and (ii) awards denominated in or
relating to common units of the Partnership that, by their terms, continue to vest following
a termination of employment without cause or for good reason). Notwithstanding the terms of
any Company (or affiliate) plan or agreement between the Company (or affiliate) and
Executive to the contrary, the accelerated vesting of all stock options, restricted stock,
restricted stock units, or other awards required pursuant to the terms of this Section 3(c)
shall govern.

     (d) Interest. If any payment due under the terms of this Agreement is not timely made
by the Company, its successors or assigns, interest shall accrue on such payment at the
highest maximum legal rate permissible under applicable law from the date such payment first
became due through the date it is paid.

     (e) Release. Notwithstanding anything in this Agreement to the contrary, no payment
shall be made or benefits provided pursuant to this Agreement unless Executive signs and
returns to the Company within 50 days following the date of a Qualifying Termination of
Employment, and does not revoke within seven days thereafter, a complete release and waiver,
in exchange for the severance payments described in Section 3(a) above, among other items,
of all claims for liability and damages in any way related to Executive’s employment against
the Company, its affiliates, their directors, officers, employees and agents, and their
employee benefit plans and fiduciaries and agents of such plans in a form provided by the
Company.

     (f) Severance Offset. Any cash severance payments provided under Section 3(a) shall be
offset or reduced by the amount of any cash severance amounts payable to Executive under any
other individual agreement the Company or an affiliate may have with Executive or any
severance plan or program maintained by the Company or any affiliate for employees in
general.

     (g) Code Section 409A Matters.

     (i) This Agreement is intended to comply with Code Section 409A and any
ambiguous provisions will be construed in a manner that is compliant with or exempt
from the application of Code Section 409A. If a provision of the Agreement would
result in the imposition of applicable taxes and interest under Code Section 409A,
such provision may be reformed to avoid imposition of such taxes and interest and no
action taken to comply with Code Section 409A shall be deemed to adversely affect
any rights or benefits of Executive hereunder.

     (ii) All reimbursements and in-kind benefits provided pursuant to this
Agreement shall be made in accordance with Treasury Regulations Section
1.409A-3(i)(1)(iv) such that any reimbursements or in-kind benefits will be deemed
payable at a specified time or on a fixed schedule relative to a permissible payment
event. Specifically, (A) the amounts reimbursed and in-kind benefits under this
Agreement, other than with respect to medical benefits provided under

3

 

Section 3(b), during Executive’s taxable year may not affect the amounts
reimbursed or in-kind benefits provided in any other taxable year, (B) the
reimbursement of an eligible expense shall be made on or before the last day of
Executive’s taxable year following the taxable year in which the expense was
incurred, and (C) the right to reimbursement or an in-kind benefit is not subject to
liquidation or exchange for another benefit.

     (iii) If the Company determines, pursuant to policies adopted by the Board,
that Executive is a “specified employee” within the meaning of Code Section 409A as
of the date of his Date of Termination, no distributions or benefits that are
subject to Code Section 409A shall be made under this Agreement before the date that
is six months and two days after Executive’s Date of Termination (or, if earlier,
the date of Executive’s death). In addition, in the event of a payment delayed
under this Section 3(g)(iii), the Company agrees to pay to Executive, as of the date
it makes the delayed payment, simple interest on such delayed amount at the
applicable Federal rate provided for in Code Section 7872(f)(2)(A), based on the
number of days the payment was delayed. If Executive disagrees with the Company’s
determination that Code Section 409A requires such six-month delay with respect to a
payment or benefit, such payment or benefit can be made prior to such delayed
payment date if Executive agrees in writing (in the form approved by the Company)
that should the IRS subsequently assert that some or all of the payments or benefits
made pursuant to this Agreement do not comply with the requirements of Code Section
409A, then (i) Executive agrees that he is solely responsible for all taxes, excise
taxes, penalties and interest resulting from such determination, and that he will
not seek contribution, reimbursement or any other recovery from the Company or any
of its affiliates, officers, employees or directors for any taxes, excise taxes,
interest or penalties paid or due or any costs he incurs in challenging such
position of the IRS, and (ii) Executive will reimburse, and hold the Company, its
affiliates, officers, employees or directors harmless for, any costs, including
attorneys fees and costs of court, penalties or fees, that it may incur in
connection with a later determination that the payments made pursuant to this
Agreement are covered by Code Section 409A and were not properly reported as such.

     4. Certain Additional Payments by the Company.

     (a) Anything in this Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any payment or distribution in the nature of
compensation (within the meaning of Code Section 280G(b)(2)) by the Company to or for the
benefit of Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 4) (a “Payment”) would be subject to the excise tax
imposed by Code Section 4999 or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the “Excise Tax”), then Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Executive of all taxes

4

 

(including any interest or penalties imposed with respect to such taxes), including
without limitation, any income taxes (and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this Section 4(a), if it shall be determined that Executive is
entitled to a Gross-Up Payment, but that Executive, after taking into account the Payments
and the Gross-Up Payment, would not receive a net after-tax benefit of at least $1,000
(taking into account both income taxes and any Excise Tax) as compared to the net after-tax
proceeds to Executive resulting from an elimination of the Gross-Up Payment and a reduction
of the Payments, in the aggregate, to an amount (the “Reduced Amount”) such that the receipt
of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

     (b) Subject to the provisions of Section 4(c), all determinations required to be made
under this Section 4, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination shall be made by Deloitte & Touche LLP or, as provided below, such other
certified public accounting firm as may be designated by Executive (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and Executive
within 15 business days after the receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 4, shall be paid by the Company to Executive within five days after
the receipt of the Accounting Firm’s determination. Any determination by the Accounting
Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the
application of Code Section 4999 at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the
Company should have been made (“Underpayment”), consistent with the calculations required to
be made hereunder. In the event that the Company exhausts its remedies pursuant to Section
4(c) and Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

     (c) Executive shall notify the Company in writing of any claim by the IRS that, if
successful, would require the payment by the Company of the Gross-Up Payment (or an
additional Gross-Up Payment) in the event the IRS seeks higher payment. Such notification
shall be given as soon as practicable, but no later than ten business days after Executive
is informed in writing of such claim, and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on

5

 

which he gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to contest such
claim, Executive shall:

     (i) Give the Company any information reasonably requested by the Company
relating to such claim;

     (ii) Take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including without limitation,
accepting legal representation with respect to such claim by an attorney reasonably
selected by the Company;

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

     (iv) Permit the Company to participate in any proceedings relating to such
claim;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such costs and
shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation of the foregoing
provisions of this Section 4(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such claim and
sue for a refund, the Company shall provide the amount of such payment to Executive as an
additional payment (“Supplemental Payment”) (subject to Section 4(d)), and shall indemnify
and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to such payment
or with respect to any imputed income with respect to such payment; and further provided
that any extension of the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment or Supplemental
Payment would be payable hereunder and Executive shall be entitled to settle or contest, as
the case may be, any other issues raised by the IRS or any other taxing authority.

6

 

     (d) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 4(c), Executive becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company’s complying with the requirements of Section 4(c))
promptly pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).

     (e) If the amount of medical benefits provided under Section 3(b) or the value of such
benefit coverage (including, without limitation, any insurance premiums paid by the Company
to provide such benefits) is subject to any income, employment or similar tax imposed by
federal, state or local law, or any interest or penalties with respect to such tax (such tax
or taxes, together with any such interest and penalties, being hereafter collectively
referred to as the “Income Tax”) because such benefits cannot be provided under a
nondiscriminatory health plan described in Section 105 of the Code or for any other reason,
the Company will pay to Executive an additional payment or payments (collectively, an
“Income Tax Payment”). The Income Tax Payment will be in an amount such that, after payment
by Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), Executive retains an amount of the Income Tax Payment equal to the Income Tax
imposed with respect to such welfare benefits or such welfare benefit coverage.

     5. Restrictions and Obligations of Executive.

     (a) Consideration for Restrictions and Covenants. The Company and Executive agree that
the principal consideration for the agreement to make the payments provided in this
Agreement by the Company to Executive is Executive’s compliance with the undertakings set
forth in this Section 5. Notwithstanding any other provision of this Agreement to the
contrary, Executive agrees to comply with the provisions of this Section 5 only if Executive
actually receives any such payments from the Company pursuant to this Agreement.

     (b) Confidentiality. Executive acknowledges that the Company will provide Executive
with Confidential Information and has previously provided Executive with Confidential
Information. In return for consideration provided under this Agreement, Executive agrees
that Executive will not, while employed by the Company or any affiliate and thereafter for a
period of two years, disclose or make available to any other person or entity, or use for
Executive’s own personal gain, any Confidential Information, except for such disclosures as
required in the performance of Executive’s duties with the Company or as may otherwise be
required by law or legal process (in which case Executive shall notify the Company of such
legal or judicial proceeding as soon as practicable following his receipt of notice of such
a proceeding, and permit the Company to seek to protect its interests and information).

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

7

 

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

     (d) Non-Competition. During the term of Executive’s employment with the Company, or
any affiliate thereof and for a [two/three]-year period following the termination of
Executive’s employment for any reason, Executive shall not, directly or indirectly:

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

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

Nothing contained in this Section 5 shall prohibit or otherwise restrict Executive from
acquiring or owning, directly or indirectly, for passive investment purposes not intended to
circumvent this Agreement, securities of any entity engaged, directly or indirectly, in a
Restricted Business if either (i) such entity is a public entity and Executive (A) is not a
controlling Person of, or a member of a group that controls, such entity and (B) owns,
directly or indirectly, no more than 3% of any class of equity securities of such entity or
(ii) such entity is not a public entity and Executive (A) is not a controlling Person of, or
a member of a group that controls, such entity and (B) does not own, directly or indirectly,
more than 1% of any class of equity securities of such entity.

     (e) Injunctive Relief. Executive acknowledges that monetary damages for any breach of
Section 5(b), (c), and (d) above will not be an adequate remedy and that irreparable injury
will result to the Company, its business and property, in the event of such a breach. For
that reason, Executive agrees that in the event of a breach, in addition to recovering legal
damages, the Company is entitled to proceed in equity for specific performance or to enjoin
Executive from violating such provisions.

8

 

     6. Miscellaneous Provisions.

     (a) Definitions Incorporated by Reference. Reference is made to Annex I hereto for
definitions of certain capitalized terms used in this Agreement, and such definitions are
incorporated herein by such reference with the same effect as if set forth herein.

     (b) No Other Mitigation or Offset; Legal Fees. The provisions of this Agreement are
not intended to, nor shall they be construed to, require that Executive mitigate the amount
of any payment or benefit provided for in this Agreement by seeking or accepting other
employment. Except as provided in Section 3(b), the amount of any payment or benefit
provided for in this Agreement shall not be reduced by any compensation earned or health
benefits received by Executive as the result of employment outside of the Company. Without
limitation of the foregoing, except as provided in Section 3(f), the Company’s obligations
to Executive under this Agreement shall not be affected by any set off, counterclaim,
recoupment, defense or other claim, right or action that the Company may have against
Executive. The Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company or Executive of the validity or
enforceability of, or liability under, any provision of this Agreement other than Section 5
or any guarantee of performance thereto (including as a result of any contest by Executive
about the amount of any payment pursuant to this Agreement), plus in each case interest on
any delayed payment at the applicable Federal rate provided for in Code Section
7872(f)(2)(A).

     (c) Cooperation. If Executive becomes entitled to severance benefits under Section 3
of this Agreement, Executive agrees, for a one-year period following the Date of
Termination, to provide reasonable cooperation to the Company in response to reasonable
requests made by the Company for information or assistance, including but not limited to,
participating upon reasonable notice in conferences and meetings, providing documents or
information, aiding in the analysis of documents, or complying with any other reasonable
requests by the Company including execution of any agreements that are reasonably necessary,
provided such cooperation relates to matters concerning Executive’s duties with the Company
and the requests do not, in the good faith opinion of Executive, materially interfere with
Executive’s other activities.

     (d) Successors; Binding Agreement.

     (i) Except in the case of a merger involving the Company with respect to which
under applicable law the surviving corporation of such merger will be obligated
under this Agreement in the same manner and to the same extent as the Company would
have been required if no such merger had taken place, the Company will require any
successor, by purchase or otherwise, to all or substantially all of the business
and/or assets of the Company, to execute an agreement whereby such successor
expressly assumes and agrees to perform this Agreement in the same manner and to the
same extent as the Company would have been required if no such succession had taken
place and expressly agrees

9

 

that Executive may enforce this Agreement against such successor. Failure of
the Company to obtain any such required agreement and to deliver such agreement to
Executive prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Executive to payment from the Company in the same
amount and on the same terms as Executive would be entitled hereunder if Executive
had terminated Executive’s employment for Good Reason in connection with a Change of
Control, except that for purposes of implementing the foregoing, the date on which
any such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid that executes and delivers
the agreement provided for in this Section 6(d)(i) or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.

     (ii) This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amounts would still be payable to Executive hereunder if Executive had
continued to live, all such amounts shall be paid in accordance with the terms of
this Agreement to Executive’s beneficiary as filed with the Company pursuant to this
Agreement or, if there be no such designated beneficiary, to Executive’s estate.

     (e) Notice. All notices, consents, waivers, and other communications required under
this Agreement must be in writing and will be deemed to have been duly given when (i)
delivered by hand (with written confirmation of receipt), (ii) sent by facsimile (with
confirmation of receipt), provided that a copy is mailed by certified mail, return receipt
requested, or (iii) when received by the addressee, if sent by a nationally recognized
overnight delivery service, in each case to the appropriate addresses and facsimile numbers
set forth below (or to such other addresses and facsimile numbers as a party may designate
by notice to the other parties):

If to the Company:

	 	 	 	 	 
	 

	 	Exterran Holdings, Inc.
	 	 
	 

	 	4444 Brittmoore Road	 	 
	 

	 	Houston, Texas 77041	 	 
	 

	 	Attn: Chairman of the Board of Directors	 	 
	 

	 	Facsimile No.: 713-                    	 	 
	 
	 	 	 	 
	 

	 	If to Executive:	 	 
	 
	 	 	 	 
	 

	 	[                    ]	 	 
	 

	 	[                    ]	 	 
	 

	 	[                    ]	 	 

10

 

     (f) Miscellaneous. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by
Executive and by the Chairman of the Board or an authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.

     (g) Validity. The interpretation, construction and performance of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the State of Texas
without regard to conflicts of laws principles. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and effect.

     (h) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and
the same instrument.

     (i) Descriptive Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this Agreement.

     (j) Corporate Approval. This Agreement has been approved by the Board, and has been
duly executed and delivered by Executive and on behalf of the Company by its duly authorized
representative.

     (k) Disputes. The parties agree to resolve any claim or controversy arising out of or
relating to this Agreement by binding arbitration under the Federal Arbitration Act before
one arbitrator in the City of Houston, State of Texas, administered by the American
Arbitration Association under its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction thereof. The
Company shall reimburse Executive, on a current basis, for all legal fees and expenses
incurred by Executive in connection with any dispute arising under this Agreement,
including, without limitation, the fees and expenses of the arbitrator, unless the
arbitrator finds Executive brought such claim in bad faith, in which event each party shall
pay its own costs and expenses and Executive shall repay to the Company any fees and
expenses previously paid on Executive’s behalf by the Company.

     The parties stipulate that the provisions hereof shall be a complete defense to any
suit, action, or proceeding instituted in any federal, state, or local court or before any
administrative tribunal with respect to any controversy or dispute arising during the period
of this Agreement and which is arbitrable as herein set forth. The arbitration provisions
hereof shall, with respect to such controversy or dispute, survive the termination of this
Agreement.

11

 

     (l) Withholding of Taxes. The Company may withhold from any amounts payable under this
Agreement all taxes it is required to withhold pursuant to any applicable law or regulation.

     (m) No Employment Agreement. Nothing in this Agreement shall give Executive any rights
to (or impose any obligations for) continued employment by the Company or any of its
affiliates or any successors, nor shall it give the Company any rights (or impose any
obligations) with respect to continued performance of duties by Executive for the Company or
any of its affiliates or any successors.

     (n) Entire Agreement. This instrument contains the entire agreement of Executive and
the Company with respect to the subject matter hereof, and hereby expressly terminates,
rescinds and replaces in full any prior and contemporaneous promises, representations,
understandings, arrangements and agreements between the parties relating to the subject
matter hereof, whether written or oral, except that any existing change of control or
similar agreement between Executive and Hanover Compressor Company, Universal Compression
Holdings, Inc. or any of their respective affiliates shall continue in full force and effect
according to its terms with respect to the Merger. However, nothing in this Agreement shall
affect Executive’s rights under such compensation and benefit plans and programs of the
Company in which Executive may participate, except as may be explicitly provided in this
Agreement.

          IN WITNESS WHEREOF, the Company and Executive have executed this Agreement in multiple
counterparts effective for all purposes as of the Effective Date.

	 	 	 	 	 	 	 
	 	 	EXTERRAN HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 
	 

	 	EXECUTIVE
	 	 
	 
	 	 	 	 
	 

	 	 	 	 

12

 

ANNEX I

TO

CHANGE OF CONTROL AGREEMENT

Definitions:

	1.	 	401(k) Plan. “401(k) Plan” shall mean the Company’s 401(k) Retirement and Savings Plan or
any successor plan and any other Code Section 401(a) qualified plan that includes a cash or
deferral arrangement under Code Section 401(k).
	 
	2.	 	Actual Bonus. “Actual Bonus” shall mean the specific annual incentive award approved for
Executive by the Board in the case of the Section 16 officers of the Company or approved by
the Chief Executive Officer for non-Section 16 officers of the Company.
	 
	3.	 	Base Salary. “Base Salary” shall mean an Executive’s annual rate of base salary (without
regard to bonus compensation) as in effect immediately prior to the Change of Control or as
the same may be increased from time to time thereafter.
	 
	4.	 	Board. “Board” shall mean the Board of Directors of the Company.
	 
	5.	 	Cause. The Company shall have “Cause” to terminate Executive’s employment only upon (a) the
commission by Executive of an act of fraud, embezzlement or willful breach of a fiduciary duty
to the Company or an affiliate (including the unauthorized disclosure of confidential or
proprietary material information of the Company or an affiliate), (b) a conviction of
Executive (or a plea of nolo contendere in lieu thereof) for a felony or a crime involving
fraud, dishonesty or moral turpitude, (c) willful failure of Executive to follow the written
directions of the Board; (d) willful misconduct by Executive as an employee of the Company or
an affiliate; (e) the willful failure of Executive to render services to the Company or an
affiliate in accordance with Executive’s employment arrangement, which failure amounts to a
material neglect of Executive’s duties to the Company or an affiliate; or (f) Executive’s
substantial dependence, as determined in the sole discretion of the Board, on any drug,
immediate precursor or other substance listed on Schedule IV of the Federal Comprehensive Drug
Abuse Prevention and Control Act of 1970, as amended.
	 
	6.	 	Change of Control. A “Change of Control” of the Company shall mean:

	 	(a)	 	The acquisition by any 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 subsection
(i), any acquisition by any Person pursuant to a transaction which complies with clause
(A) of subsection (c) of this definition shall not constitute a Change of Control; or

A-1

 

	 	(b)	 	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
	 
	 	(c)	 	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 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 or the parent of such transferee, as
applicable, in such Corporate Transaction. Notwithstanding the foregoing, neither the
sale, lease or other disposition of assets by the Company or its subsidiaries to the
Partnership or its subsidiaries or their successors nor the sale, lease or other
disposition of any interest in the Partnership, its general partner or its subsidiaries
or their successors shall, in and of itself, constitute a Change of Control for
purposes of this Agreement.

	 	 	Notwithstanding anything to the contrary contained in this Agreement, the Merger shall not
constitute a Change of Control for purposes of this Agreement.

	7.	 	Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.

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	8.	 	Confidential Information. “Confidential Information” shall mean any and all information,
data and knowledge that has been created, discovered, developed or otherwise become known to
the Company or any of its affiliates or ventures or in which property rights have been
assigned or otherwise conveyed to the Company or any of its affiliates or ventures, which
information, data or knowledge has commercial value in the business in which the Company is
engaged, except such information, data or knowledge as is or becomes known to the public
without violation of the terms of this Agreement.
	 
	9.	 	Date of Termination. “Date of Termination” shall mean (a) if Executive terminates his
employment for Good Reason, that date provided in the definition of Good Reason, (b) with
respect to a termination prior to a Change of Control that is deemed to be during the
Protected Period (as provided in said definition), the date of such termination, or (c) if
Executive’s employment is terminated for any other reason on or after a Change of Control, the
date of such termination, and, in the case of each of clauses (a), (b) and (c) above, such
termination is also a “separation from service” within the meaning of Code Section 409A.
	 
	10.	 	Disability. A “Disability” means Executive is entitled to long-term disability benefits
under the Company’s long-term disability plan.
	 
	11.	 	Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
	 
	12.	 	Good Reason. “Good Reason” shall mean the occurrence of any of the following without
Executive’s express written consent:

	 	(a)	 	A permanent change in Executive’s duties or responsibilities which are
materially inconsistent with either the type of duties and responsibilities of
Executive then in effect or with Executive’s title, but excluding any such change that
is in conjunction with and consistent with a promotion of Executive;
	 
	 	(b)	 	A reduction in Executive’s Base Salary.
	 
	 	(c)	 	A reduction in Executive’s annual Target Bonus percentage of Base Salary as in
effect immediately prior to the Change of Control;
	 
	 	(d)	 	A material reduction in Executive’s employee benefits (without regard to bonus
compensation, if any) if such reduction results in Executive receiving benefits which
are, in the aggregate, materially less than the benefits received by other comparable
employees of the Company generally;
	 
	 	(e)	 	Executive’s being required to be based at any other office or location of
employment more than 50 miles from Executive’s primary office or location of employment
immediately prior to the Change of Control; or
	 
	 	(f)	 	The willful failure by the Company to pay any compensation to Executive when
due.

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	 	 	However, Good Reason shall not exist with respect to a matter unless Executive gives the
Company a Notice of Termination due to such matter within 18 months of the date of
occurrence of the Change of Control. If Executive fails to give such Notice of Termination
timely, Executive shall be deemed to have waived all rights Executive may have under this
Agreement with respect to such matter. The Company shall have 30 business days from the
date of such Notice of Termination to cure the matter. If the Company cures the matter,
such Notice of Termination shall be deemed rescinded. If the Company fails to cure the
matter timely, Executive shall be deemed to have terminated at the end of such 30-day
period.

	13.	 	IRS. “IRS” shall mean the Internal Revenue Service.
	 
	14.	 	Merger. “Merger” shall mean the consummation of the transactions contemplated by that
certain Agreement and Plan of Merger, dated as of February 5, 2007, as amended, by and among
Universal Compression Holdings, Inc., Hanover Compressor Company, Exterran Holdings, Inc.,
Ulysses Sub, Inc. and Hector Sub, Inc.
	 
	15.	 	Notice of Termination. For purposes of this Agreement, a “Notice of Termination” shall mean
a written notice that sets forth in reasonable detail the facts and circumstances for
termination of Executive’s employment.
	 
	16.	 	Partnership. “Partnership” shall mean Exterran Partners, L.P. (formerly named Universal
Compression Partners, L.P.).
	 
	17.	 	Person. “Person” shall mean any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act.
	 
	18.	 	Protected Period. The “Protected Period” shall mean the period of time beginning with the
Change of Control and ending on the 18-month anniversary of such Change of Control or
Executive’s death, if earlier; provided, however, if Executive’s employment with the Company
is terminated during the Term and within six months prior to the date on which a Change of
Control occurs (e.g., not during the Protected Period), and it is reasonably demonstrated by
Executive that such termination was at the request of a third party who has taken steps
reasonably calculated to effect the Change of Control, or otherwise arose in connection with
or anticipation of the Change of Control, then for all purposes of this Agreement the Change
of Control shall be deemed to have occurred on the date immediately prior to the date of
Executive’s termination and Executive shall be deemed terminated by the Company during the
Protected Period other than for Cause
	 
	19.	 	Qualifying Termination of Employment. A “Qualifying Termination of Employment” shall mean a
termination of Executive’s employment during the Protected Period either (a) by the Company
other than for Cause or (b) by Executive for a Good Reason. The Executive’s death or
Disability during the Protected Period shall not constitute a Qualifying Termination of
Employment.

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	20.	 	Restricted Area. “Restricted Area” shall mean any state in the United States, or any country
in which the Company or its subsidiaries engages in any Restricted Business at any time during
the term of Executive’s employment with the Company.
	 
	21.	 	Restricted Business. “Restricted Business” shall mean the business of designing,
manufacturing, servicing, operating, marketing, assembling, renting or leasing of air or gas
compressors or devices using comparable technologies or other business in which the Company or
its subsidiaries may be engaged during the term of Executive’s employment with the Company.
To the extent that any entity is primarily engaged in a business other than a Restricted
Business, the term “Restricted Business” shall mean the operations, division, segment or
subsidiary of such entity that is engaged in any Restricted Business.
	 
	22.	 	Target Bonus. “Target Bonus” shall mean the target annual incentive award opportunity for an
Executive expressed as a percentage of salary as set forth in the annual management incentive
plan covering such Executive.
	 
	23.	 	Term. “Term” shall have the meaning set forth in Section 1 of this Agreement.
	 
	24.	 	Termination Year. “Termination Year” shall mean the calendar year during which Executive’s
Date of Termination occurs.

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