UNIVERSAL COMPRESSION HOLDINGS,
INC.
RETENTION BONUS PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
Universal
Compression Holdings, Inc. has established this retention bonus
plan for select employees, known as the Universal Compression
Holdings, Inc. Retention Bonus Plan (the “Plan”). The
primary purpose of the Plan is to provide an incentive for
employees to remain employed with the Company or an Affiliate in
light of a potential merger with Hanover Compressor
Company.
Whenever used in
this Plan, the following terms shall have the meanings set forth
below and when the meaning is intended, the initial letter of the
word is capitalized:
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(a)
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“Administrator” means
the Compensation Committee of the Board of Directors of the
Company.
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(b)
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“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
management and policies of the controlled entity or organization,
whether through the ownership voting securities or by contract or
otherwise.
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(c)
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“Company” means
Universal Compression Holdings, Inc., a Delaware
corporation.
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(d)
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“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 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, Company management, or the Board
of Directors, in the case of executive officers of the Company,
when such directions are consistent with the Participant’s
customary duties and responsibilities and where such refusal has
continued for more than 10 days following written-notice;
(iv) willful misconduct as an employee of the Company or an
Affiliate which includes the Participant’s failure to adhere
to the Company’s
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Code of Business Conduct and Ethics;
(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 Administrator, 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, as determined in the sole discretion of the
Administrator. With respect to any Participant residing outside of
the United States, the Company may revise the definition of
“Cause” as appropriate to conform to the laws of the
applicable non-U.S. jurisdiction.
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(e)
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“Code” means the
Internal Revenue Code of 1986, as amended.
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(f)
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“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 Company may
revise the definition of “Disability” as appropriate to
conform to the laws of the applicable non-U.S.
jurisdiction.
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(g)
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“Key Date” means the
date through which a Participant must remain in continuous
employment with the Company or an Affiliate in order to be entitled
to all or a portion of a Retention Bonus, as determined under
Section 5.2 and set forth on the Participant’s Retention
Bonus Award Letter. A Participant may have a single Key Date or
multiple Key Dates, as determined under
Section 5.2.
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(h)
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“Participant” means an
employee of the Company or an Affiliate selected by the
Administrator who has been provided a Retention Bonus Award Letter
that specifies the details of the employee’s participation in
the Plan.
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(i)
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“Retention Bonus” means
the amount described in Section 5.1 and specifically set forth
on the Participant’s Retention Bonus Award Letter.
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(j)
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“Retention Bonus Award
Letter” means the letter provided by the Administrator to
each Participant that sets forth the Retention Bonus and Key
Date(s) applicable to the Retention Bonus, as described in
Section 5.1.
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(k)
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“Successor” shall mean
any person, firm, corporation, or business entity which at any
time, whether by merger, purchase, or otherwise, acquires all or
substantially all of the assets, stock or business of the
Company.
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(l)
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“Waiver and Release”
shall mean the legal document, in the form attached hereto as
Exhibit A or such other form as may be prescribed by
the Company, in which a Participant, in exchange for a Retention
Bonus under the Plan, among other things, releases the Company, the
Affiliates, and the Successor and all of its affiliates, their
directors, officers, employees and agents, their employee benefit
plans, and the fiduciaries and agents of said plans from liability
and damages in any way related to the Participant’s
employment with or separation from employment with the Company or
an Affiliate.
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3.1
Administration of the Plan . The Plan shall be administered
by the Administrator.
3.2
Authority of the Administrator . Subject to the provisions
herein, the Administrator shall have full power and authority to
select and approve Participants; to determine the amount of the
Retention Bonus opportunity (which need not be the same for each
Participant); to determine the terms and conditions of each
individual’s participation in a manner consistent with the
provisions of the Plan; to establish Key Dates and, if multiple Key
Dates are established for a Participant, then the portion of the
Retention Bonus payable upon each such Key Date; to determine
whether any strategic, financial, and/or operational goals have
been met; to interpret, in its sole discretion, the Plan and any
agreement or instrument entered into under the Plan; to establish,
amend, rescind, or waive rules and regulations for the Plan’s
administration; and in general to have the full power to make all
other determinations which may be necessary or advisable for the
administration of the Plan, to the extent consistent with the
provisions of the Plan. Notwithstanding the foregoing or any
provision of the Plan to the contrary, a Participant must exhaust
all administrative remedies established by the Administrator before
bringing any action at law or equity. The Administrator may
delegate its power, authority and duties under the Plan to the
Chief Executive Officer or other executive officers of the Company
pursuant to such conditions or limitations as the Administrator may
establish; provided, however, that the Administrator’s duty
to select and approve executive officer Participants, the amounts
of such selected executive officers’ Retention Bonuses and
their Key Dates, and the applicable terms and conditions for such
Participants may not be delegated by the Administrator.
3.3
Decision of Administrator Final . Subject to applicable law,
any interpretation of the provisions of the Plan and any decision
on any matter within the discretion of the Administrator made by
the Administrator in good faith shall be final and conclusive and
binding on all persons.
3.4
Interested Administrator . If an Administrator is also a
Participant in the Plan, he may not decide or determine any matter
or question concerning his benefits unless such decision or
determination could be made by him under the Plan if he were not
the Administrator.
The Administrator
shall identify which employees of the Company or an Affiliate shall
participate in the Plan. As soon as practicable following selection
by the Administrator, each selected employee shall be provided with
a Retention Bonus Award Letter which shall describe the terms and
conditions of each individual’s participation in the Plan. A
selected employee shall become a Participant in the Plan as of such
time as the selected employee is provided with his or her Retention
Bonus Award Letter.
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ARTICLE 5
RETENTION BONUS OPPORTUNITY
5.1
Establishment of Retention Bonus Amount . The Administrator
shall establish a Retention Bonus amount for each Participant,
which need not be the same for each Participant. Each Retention
Bonus amount may be stated as a dollar amount or as a percentage of
the Participant’s annual rate of base salary then in effect,
and shall represent the amount of cash that can be earned by the
Participant under the Plan. Each Participant’s Retention
Bonus amount shall be communicated to such Participant in the form
of a Retention Bonus Award Letter provided to such Participant by
the Company.
5.2
Establishment of Key Date or Key Dates . Subject to
Section 6.1, each Participant must remain in continuous
employment with the Company or an Affiliate (and any Successor)
through and including such Participant’s Key Date or Key
Dates in order to be entitled to receive a Retention Bonus under
this Plan. The Administrator, in its sole discretion, shall
determine whether a Participant has one or multiple Key Dates,
establish the Key Date or Key Dates for each Participant, and in
the event a Participant has multiple Key Dates, determine the
portion of the Retention Bonus, which are not required to be in
equal amounts for each Key Date, payable upon each such Key Date,
which need not be the same for each Participant. A Key Date may be
based on (i) a fixed date, (ii) a number of days
occurring after a strategic, financial, and/or operational goal as
determined in the sole discretion of the Administrator, or
(iii) such other criteria as determined in the sole discretion
of the Administrator, with such date or dates set forth in the
Participant’s Retention Bonus Award Letter.
5.3
Payment of Retention Bonus . Subject to Section 6.1,
any Retention Bonus payable under this Plan shall be paid to the
Participant (or the Participant’s beneficiary, as the case
may be), as follows:
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(a)
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if
a Participant has a single Key Date, the entire Retention Bonus
shall be paid in a single lump sum within ten (10) days after
such Participant’s Key Date; or
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(b)
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if
a Participant has multiple Key Dates, the portion of the Retention
Bonus assigned to a Key Date shall be paid in a single lump sum
within ten (10) days after such Key Date.
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Except as
provided in Section 6.1, a Participant who has multiple Key
Dates must be employed on all of his or her Key Dates to be
eligible to receive the entire Retention Bonus.
5.4
Withholding for Taxes . Notwithstanding any other provisions
of the Plan, the Company shall withhold from any payment to be made
under the Plan such amount or amounts as may be required for
purposes of complying with the tax withholding provisions of the
Code or any applicable federal, state, local or foreign laws, and
in the case of expatriate employees, the withholding required under
the Company’s expatriate program, or such other amount or
amounts as are agreed to by the Participant.
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ARTICLE 6
TERMINATION OF EMPLOYMENT
6.1
Termination Due to Death Disability, or Termination Without
Cause . Notwithstanding anything in this Plan to the contrary,
in the event a Participant’s employment with the Company or
an Affiliate is terminated prior to or as of a Participant’s
Key Date by reason of death, Disability, or termination by the
Company or an Affiliate without Cause, subject to execution without
revocation of a Waiver and Release as described below (other than
in the event of termination due to death), such Participant shall
receive the following:
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(a)
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in
the event the Participant has a single Key Date, the entire
Retention Bonus; or
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(b)
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in
the event the Participant has multiple Key Dates, (i) the
entire Retention Bonus, if such term
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