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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-12
UNIVERSAL COMPRESSION HOLDINGS, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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or the Form or Schedule and the date of its filing.
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(UNIVERSAL COMPRESSNION LOGO)
UNIVERSAL COMPRESSION HOLDINGS, INC.
4440 BRITTMOORE ROAD
HOUSTON, TEXAS 77041
July 13, 2001
Dear Shareholder:
We cordially invite you to our Annual Meeting of Shareholders. The meeting
will be held on Thursday, August 16, 2001, at 10:00 a.m., local time, at the
Omni Houston Hotel Westside, 13210 Katy Freeway, Houston, Texas 77079.
At this year's meeting, you will be asked to vote on the election of three
directors, the approval of a new Employee Stock Purchase Plan, a new Restricted
Stock Plan for Executive Officers and a new Directors' Stock Plan and the
ratification of Deloitte & Touche LLP's appointment as our independent auditors.
Our board of directors unanimously recommends that you vote "FOR" the
election of the three directors, the approval of the three new plans and the
ratification of the appointment of the independent auditors.
We have attached a notice of meeting and a Proxy Statement that contains
more information about these proposals and the meeting, including:
- how to obtain an admission card, if you plan to attend the meeting and
- the different methods you may use to vote, including telephone and the
Internet.
If you plan to attend, please mark the appropriate box on your proxy card
to help us plan for the meeting.
Your vote is important. We encourage you to sign and return your proxy
card, or use the telephone or Internet voting procedures, before the meeting, so
that your shares will be represented and voted at the meeting even if you cannot
attend in person.
/s/ STEPHEN A. SNIDER
STEPHEN A. SNIDER
President and Chief Executive
Officer
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UNIVERSAL COMPRESSION HOLDINGS, INC.
4440 BRITTMOORE ROAD
HOUSTON, TEXAS 77041
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
TO BE HELD ON AUGUST 16, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Universal
Compression Holdings, Inc. will be held at the Omni Houston Hotel Westside,
13210 Katy Freeway, Houston, Texas 77079 on Thursday, August 16, 2001, at 10:00
a.m., local time. The purposes of the meeting are:
1. To elect three directors to serve until the 2004 Annual Meeting of
Shareholders,
2. To consider and approve the adoption of our new Employee Stock
Purchase Plan,
3. To consider and approve the adoption of our new Restricted Stock
Plan for Executive Officers,
4. To consider and approve the adoption of our new Directors' Stock
Plan,
5. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the company to serve for the 2002 fiscal year and
6. To transact such other business as may properly come before the
meeting and at any adjournments or postponements of the meeting.
Our Board of Directors has set June 22, 2001 as the record date for the
meeting. This means that owners of our common stock at the close of business on
that date are entitled to:
- receive this notice of the meeting and
- vote at the meeting and any adjournments or postponements of the meeting.
We will make a list of our shareholders as of the close of business on June
22, 2001 available for inspection during normal business hours from August 6th
through August 15, 2001, at our principal place of business, 4440 Brittmoore
Road, Houston, Texas 77041. This list also will be available at the meeting.
By Order of the Board of Directors,
/s/ MARK L. CARLTON
MARK L. CARLTON
Senior Vice President, General
Counsel and Secretary
Houston, Texas, July 13, 2001
We urge each shareholder to promptly sign and return the enclosed proxy card or
to use the telephone or Internet voting procedures described in the accompanying
Proxy Statement. See our Question and Answer section for information about
voting by telephone or Internet, how to revoke a proxy, and how to vote your
shares in person.
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TABLE OF CONTENTS
PAGE
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Questions and Answers about our Annual Meeting and Voting... 1
Election of Directors (Proposal 1).......................... 5
Information about Committees, Meetings and Compensation of
Directors.............................................. 8
Compensation Committee Interlocks and Insider
Participation.......................................... 9
Section 16(a) Beneficial Ownership Reporting Compliance... 9
Transactions and Relationships with our Directors and
Executive Officers..................................... 9
Executive Officers.......................................... 10
Executive Compensation...................................... 11
Performance Graph........................................... 14
Report of the Compensation Committee........................ 15
Report of the Audit Committee............................... 18
Principal Shareholders...................................... 19
Certain Relationships and Related Transactions.............. 21
Arrangements with Weatherford............................. 21
Registration Rights Agreements............................ 22
Voting Agreements......................................... 22
Termination of Management Agreement and Consulting
Agreement.............................................. 22
Transactions with an Officer and Director................. 23
Proposal to Approve Adoption of the New Employee Stock
Purchase Plan (Proposal 2)................................ 23
Proposal to Approve Adoption of the New Restricted Stock
Plan for Executive Officers (Proposal 3).................. 26
Proposal to Approve Adoption of the New Directors' Stock
Plan (Proposal 4)......................................... 28
Ratification of Appointment of Independent Auditors
(Proposal 5).............................................. 29
Expenses of Solicitation.................................... 29
Proposals of Shareholders for 2002 Annual Meeting........... 30
Other Information........................................... 30
ANNEXES:
Audit Committee Charter..................................... I-1
Employee Stock Purchase Plan................................ II-1
Restricted Stock Plan for Executive Officers................ III-1
Directors' Stock Plan....................................... IV-1
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UNIVERSAL COMPRESSION HOLDINGS, INC.
4440 BRITTMOORE ROAD
HOUSTON, TEXAS 77041-8004
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 16, 2001
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These proxy materials are furnished to you in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Universal
Compression Holdings, Inc. (sometimes referred to as the "Company"), for use at
the 2001 Annual Meeting of Shareholders of the Company. The meeting will be held
at the Omni Houston Hotel Westside, 13210 Katy Freeway, Houston, Texas 77079, on
August 16, 2001, at 10:00 a.m., local time. The proxies also may be voted at any
adjournments or postponements of the meeting.
We are first sending these proxy materials to our shareholders on or about
July 13, 2001.
All properly executed written proxies, and all properly completed proxies
submitted by telephone or by the Internet, that are delivered pursuant to this
solicitation will be voted at the meeting in accordance with the directions
given in the proxy, unless the proxy is revoked prior to the meeting.
Only owners of record of shares of our common stock at the close of
business on June 22, 2001 are entitled to vote at the meeting, or at
adjournments or postponements of the meeting. Each owner of record on the record
date is entitled to one vote for each share of common stock held. On June 22,
2001, there were 28,488,450 shares of our common stock issued and outstanding.
QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this Proxy Statement relates to the proposals
to be voted on at our annual meeting, the voting process, the compensation
of our directors and most highly paid officers, and certain other required
information. Our 2001 Annual Report to Shareholders for the fiscal year
ended March 31, 2001 is also enclosed.
Q: WHAT IS A PROXY?
A: A proxy is your legal designation of another person to vote the shares that
you own. That other person is called a proxy. If you designate someone as
your proxy in a written document, that document also is called a proxy or a
proxy card. Stephen A. Snider, Ernie L. Danner, Richard W. FitzGerald and
Mark L. Carlton have been designated as proxies for our 2001 Annual Meeting
of Shareholders.
Q: WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?
A: The record date for the 2001 Annual Meeting of Shareholders is June 22,
2001. The record date is established by our Board of Directors as required
by Delaware law. Owners of common stock at the close of business on the
record date are entitled:
- to receive notice of the meeting and
- to vote at the meeting and any adjournments or postponements of the
meeting.
Q: WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?
A: There are five proposals scheduled to be voted on at the meeting:
- the election of directors,
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- the approval of the adoption of a new Employee Stock Purchase Plan,
- the approval of the adoption of a new Restricted Stock Plan for Executive
Officers,
- the approval of the adoption of a new Directors' Stock Plan and
- the ratification of the appointment of Deloitte & Touche as our
independent auditors.
Q: WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE MEETING?
A: Other than the five proposals described in this Proxy Statement, we do not
expect any matters to be presented for a vote at the annual meeting. If you
grant a proxy, the persons named as proxy holders, Stephen A. Snider, Ernie
L. Danner, Richard W. FitzGerald and Mark L. Carlton, will have the
discretion to vote your shares on any additional matters properly presented
for a vote at the meeting. If for any unforeseen reason any of our nominees
is not available as a candidate for director, the persons named as proxy
holders will vote your proxy for such other candidate or candidates as may
be nominated by the Board of Directors.
Q: WHAT IS THE DIFFERENCE BETWEEN A SHAREHOLDER OF RECORD AND A SHAREHOLDER
WHO HOLDS STOCK IN STREET NAME?
A: If your shares are registered in your name, you are a shareholder of
record. If your shares are in the name of your broker or bank, your shares
are held in street name.
Q: HOW DO I VOTE MY SHARES IN PERSON AT THE MEETING?
A: Shares held directly in your name as the shareholder of record may be voted
in person at the annual meeting. If you choose to do so, please bring the
enclosed proxy card or proof of identification.
Even if you currently plan to attend the annual meeting in person, we
recommend that you also submit your proxy as described below so that your
vote will be counted if you later decide not to attend the meeting. Shares
held in street name may be voted in person by you only if you obtain a
signed proxy from the record holder giving you the right to vote the
shares.
Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE MEETING?
A: Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may vote without attending the meeting.
You may vote by granting a proxy or, for shares held in street name, by
submitting voting instructions to your broker or nominee. In most
instances, you will be able to do this over the Internet, by telephone or
by mail. Please refer to the summary instructions below and those included
on your proxy card or, for shares held in street name, the voting
instruction card included by your broker or nominee.
BY INTERNET -- If you have Internet access, you may submit your proxy from
any location in the world by following the Internet voting instructions on
the proxy card.
BY TELEPHONE -- If you live in the United States or Canada, you may submit
your proxy by following the telephone voting instructions on the proxy
card.
BY MAIL -- You may vote by mail by signing your proxy card or, for shares
held in street name, the voting instruction card included by your broker or
nominee and mailing it in the enclosed, postage prepaid and addressed
envelope. If you provide specific voting instructions, your shares will be
voted as you instruct. If you sign but do not provide instructions, your
shares will be voted as described below in "What if I do not specify my
choice for a matter when returning my proxy?"
Q: WHAT ARE MY VOTING CHOICES WHEN VOTING FOR DIRECTOR NOMINEES, AND WHAT VOTE
IS NEEDED TO ELECT DIRECTORS?
A: In voting on the election of the three director nominees to serve until our
2004 Annual Meeting of Shareholders, you may vote in one of the following
ways:
- in favor of all nominees,
- withhold votes as to all nominees, or
- withhold votes as to specific nominees.
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Directors will be elected by a plurality.
Our Board of Directors recommends a vote "FOR" each of the nominees.
Q: IS CUMULATIVE VOTING PERMITTED FOR THE ELECTION OF DIRECTORS?
A: No, you are not entitled to cumulate your votes in the election of
directors.
Q: WHAT ARE MY VOTING CHOICES WHEN VOTING ON THE ADOPTION OF THE EMPLOYEE
STOCK PURCHASE PLAN?
A: In voting on approval of the adoption of the new Employee Stock Purchase
Plan, you may vote in one of the following ways:
- in favor of the approval,
- against the approval or
- abstain from voting on the approval.
Our Board of Directors recommends a vote "FOR" the new Employee Stock
Purchase Plan.
Q: WHAT ARE MY VOTING CHOICES WHEN VOTING ON THE ADOPTION OF THE RESTRICTED
STOCK PLAN FOR EXECUTIVE OFFICERS?
A: In voting on approval of the adoption of the new Restricted Stock Plan for
Executive Officers, you may vote in one of the following ways:
- in favor of the approval,
- against the approval or
- abstain from voting on the approval.
Our Board of Directors recommends a vote "FOR" the new Restricted Stock
Plan for Executive Officers.
Q: WHAT ARE MY VOTING CHOICES WHEN VOTING ON THE ADOPTION OF THE DIRECTORS'
STOCK PLAN?
A: In voting on approval of the adoption of the new Directors' Stock Plan, you
may vote in one of the following ways:
- in favor of the approval,
- against the approval or
- abstain from voting on the approval.
Our Board of Directors recommends a vote "FOR" the new Directors' Stock
Plan.
Q: WHAT ARE MY VOTING CHOICES WHEN VOTING ON THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AND WHAT VOTE IS NEEDED TO RATIFY
THEIR APPOINTMENT?
A: In voting on the ratification of the appointment of Deloitte & Touche LLP
as our independent auditors, you may vote in one of the following ways:
- in favor of the ratification,
- against the ratification or
- abstain from voting on the ratification.
Our Board of directors recommends a vote "FOR" the ratification of the
appointment of Deloitte & Touche LLP as our independent auditors.
Q: HOW CAN I REVOKE MY PROXY?
A: You can revoke your proxy by any one of the following four actions:
- by giving written notice to our corporate secretary,
- by delivering a later-dated proxy,
- by using the telephone or Internet voting procedures described in the
enclosed proxy card or
- voting in person at the meeting.
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Q: IS MY VOTE CONFIDENTIAL?
A: The votes of all shareholders are held in confidence from directors,
officers and employees except:
- as necessary to meet applicable legal requirements and to assert or
defend claims for or against the company,
- in case of a contested proxy solicitation,
- if a shareholder makes a written comment on the proxy card or otherwise
communicates his or her vote to our management or
- as necessary to allow the independent inspectors of election to certify
the results of the vote.
Q: WHAT IF I DO NOT SPECIFY MY CHOICE FOR A MATTER WHEN RETURNING MY PROXY?
A: You should specify your choice for each matter on the enclosed form of
proxy. If no instructions are given, proxies that are signed and returned
will be voted "FOR" the election of all director nominees, "FOR" the
proposal to adopt our new Employee Stock Purchase Plan, "FOR" the proposal
to adopt our new Restricted Stock Plan for Executive Officers, "FOR" the
proposal to adopt our new Directors' Stock Plan and "FOR" the proposal to
ratify the appointment of Deloitte & Touche LLP as our independent
auditors.
Q: HOW WILL ABSTENTIONS AND BROKER NON-VOTES BE COUNTED?
A: The approval of the new Employee Stock Purchase Plan, the new Restricted
Stock Plan for Executive Officers and the new Directors' Stock Plan
requires the affirmative vote of the majority of the votes cast so long as
the total votes cast on each proposal represent at least a majority of the
shares entitled to vote at the Annual Meeting. Abstentions will have no
effect on the result of the vote so long as the holders of at least a
majority of the shares entitled to vote at the Annual Meeting actually cast
votes. Broker non-votes will have no effect on the result of the vote. The
proposal to ratify the appointment of Deloitte & Touche as our independent
auditors and any other matter that may come before the meeting will be
adopted if the votes cast for that matter exceed the votes cast against the
matter.
Q: WHO COUNTS THE VOTES?
A: A representative of EquiServe, our transfer agent, will tabulate the votes
and act as the inspector of the election.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
A: We will announce preliminary voting results at the meeting and publish
final results in our quarterly report on Form 10-Q for the second quarter
of fiscal year 2002 ending on September 30, 2001.
Q: WHAT IS THE QUORUM REQUIREMENT FOR THE MEETING?
A: The quorum requirement for holding the meeting and transacting business is
a majority of the outstanding shares entitled to be voted and present in
person or represented by proxy. Both abstentions and broker non-votes are
counted as present for the purpose of determining the presence of a quorum.
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING OF
SHAREHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?
A: Yes, you may submit proposals for consideration at future shareholder
meetings, including director nominations. In order for a shareholder
proposal, including a director nomination, to be considered for inclusion
in our Proxy Statement for next year's annual meeting, the written proposal
must be received by us no later than March 15, 2002. The proposal will need
to comply with regulations of the Securities and Exchange Commission
regarding the inclusion of shareholder proposals in company-sponsored proxy
materials and must contain the information required by our By-laws.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: If you have any questions about this Proxy Statement or the meeting, please
contact Mark L. Carlton, our Senior Vice President and General Counsel, at
(713) 335-7000.
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ELECTION OF DIRECTORS
(PROPOSAL 1)
The shareholders elect approximately one-third of the members of our Board
of Directors annually. The directors are divided into three classes, with each
class serving for a period of three years.
The terms of Thomas C. Case, Uriel E. Dutton and C. Kent May will expire at
the 2001 Annual Meeting. Messrs. Case, Dutton and May have been nominated to
stand for reelection at the meeting to hold office until our 2004 Annual Meeting
and until their successors are elected and qualified.
We have no reason to believe that any of these nominees will be unable or
unwilling to serve if elected. However, if any nominee should become unable or
unwilling to serve for any reason, proxies may be voted for another person
nominated as a substitute by our Board of Directors, or the Board may reduce the
number of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THOMAS C.
CASE, URIEL E. DUTTON AND C. KENT MAY AS DIRECTORS.
NOMINEES FOR ELECTION TO TERM EXPIRING 2004
THOMAS C. CASE
Age 52
Houston, Texas
Mr. Case has served on our Board of Directors since 1999. Mr. Case served
as the President of Mobil Global Gas & Power, Inc. and was responsible for gas
marketing and power development in North and South America from 1998 until
December 1999. Mr. Case retired from Mobil on April 1, 2000. From 1996 to 1997,
Mr. Case was the Executive Vice President of Duke Energy (formerly Pan Energy)
Trading and Market Services, a joint venture between Duke Energy and Mobil. From
1991 to 1996, he held various positions with Mobil serving at various times as
President and Executive Vice President/Chief Operating Officer of Mobil Natural
Gas Inc., Manager of Strategic Planning for Exploration and Production of Mobil
and President of Mobil Russia.
Mr. Case is a member of the Audit Committee of our Board of Directors.
URIEL E. DUTTON
Age 70
Houston, Texas
Mr. Dutton joined our Board of Directors in February 2001 as a designee of
WEUS Holding, Inc., a subsidiary of Weatherford International, Inc., following
our acquisition of Weatherford Global Compression Services, L.P. Mr. Dutton has
been counsel to and a partner with the law firm of Fulbright & Jaworski L.L.P.
for more than the past five years, where his practice focuses on real estate and
oil and gas matters.
Mr. Dutton is a member of the Audit Committee of our Board of Directors.
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C. KENT MAY
Age 61
Pittsburgh, Pennsylvania
Mr. May has served on our Board of Directors since 1998. Mr. May is a
Senior Vice President, General Counsel, Secretary and a director of Anchor Glass
Container Corporation. He also serves as General Counsel, Secretary and a
director of Consumers Packaging Inc., Canada's largest glass container
manufacturer, and is a director of Fabrica de Envases de Vidrio, S.A. de C.V., a
Mexican glass container manufacturer. He serves as General Counsel to Glenshaw
Glass Company and G&G Investments, Inc., a privately-held investment company. He
is also a manager and secretary of Main Street Capital Holdings, L.L.C., a
merchant banking firm. He has been an associate, partner or member of the law
firm of Eckert Seamans Cherin & Mellott, L.L.C. since 1964, and served as
Managing Partner of the firm from 1991 to 1996.
Mr. May is a member of the Audit Committee of our Board of Directors.
INCUMBENT DIRECTORS -- TERM EXPIRING 2002
ERNIE L. DANNER
Age 47
Houston, Texas
Mr. Danner became our Chief Financial Officer and Executive Vice President
and a director upon consummation of our acquisition of Tidewater Compression
Service in 1998. In April 1999, Mr. Danner's duties as Chief Financial Officer
were assumed by Richard FitzGerald. Prior to joining us, Mr. Danner served as
Chief Financial Officer and Senior Vice President of MidCon Corp., an interstate
pipeline company and a wholly-owned subsidiary of Occidental Petroleum
Corporation. From 1988 until May 1997, Mr. Danner served as Vice President,
Chief Financial Officer and Treasurer of INDSPEC Chemical Company and he also
served as a director of INDSPEC.
CURTIS W. HUFF
Age 43
Houston, Texas
Mr. Huff joined our Board of Directors in February 2001 as a designee of
WEUS Holding following our acquisition of Weatherford Global. Mr. Huff became
President, Chief Executive Officer and a director of Grant Prideco, Inc. on
February 5, 2001. Previously, he served as Executive Vice President and Chief
Financial Officer of Weatherford International, Inc. since January 2000, and
served as its General Counsel and Secretary since May 1998. Prior to that time,
Mr. Huff was a partner with the law firm of Fulbright & Jaworski L.L.P.,
Weatherford's counsel, and held that position for more than five years. Mr. Huff
is a director of UTI Energy Corp., an oil and gas drilling company.
Mr. Huff is a member of the Compensation Committee of our Board of
Directors.
EDMUND P. SEGNER, III
Age 47
Houston, Texas
Mr. Segner joined our Board of Directors in 2000. Mr. Segner has served as
President and Chief of Staff of EOG Resources since August of 1999. He joined
Enron Corporation in 1988 as Vice President of Public and Investor Relations. He
later served as Executive Vice President and Chief of Staff until 1997 when he
moved to Enron Oil & Gas Company as Vice Chairman and Chief of Staff. Mr. Segner
is a Certified Public Account and a member of the Houston Society of Financial
Analysts. He is also a director of the Domestic Petroleum Council.
Mr. Segner serves as Chairman of the Audit Committee of our Board of
Directors.
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STEPHEN A. SNIDER
Age 53
Houston, Texas
Mr. Snider has been our President and Chief Executive Officer and a
director since consummation of our Tidewater Compression acquisition in 1998.
Mr. Snider joined Tidewater in 1975 as General Manager of air compressor
operations. In 1979, Mr. Snider established Tidewater Compression's operations
in the Northeastern United States. In 1981, he assumed responsibility for the
Western United States operations of Tidewater Compression. Mr. Snider left
Tidewater in 1983 to own and operate businesses unrelated to the energy
industry. He returned to Tidewater in 1991 as Senior Vice President of
Compression. Mr. Snider has over 25 years of experience in senior management of
operating companies, and also serves as a director of Energen Corporation.
Mr. Snider is a member of the Executive Committee of our Board of
Directors.
INCUMBENT DIRECTORS -- TERM EXPIRING 2003
JOHN K. CASTLE
Age 60
New York, New York
Mr. Castle joined our Board of Directors in 1998. Mr. Castle has been
Chairman of Castle Harlan, Inc. since 1987. Mr. Castle is also Chairman of
Castle Harlan Partners III G.P., Inc., which is the general partner of the
general partner of Castle Harlan Partners, III, L.P., one of our shareholders,
and of Castle Connolly Medical Ltd. and Castle Connolly Graduate Medical
Publishing, LLC. He serves as Chairman and Chief Executive Officer of Branford
Castle, Inc., an investment holding company. Immediately prior to forming
Branford Castle, Inc. in 1986, Mr. Castle was President and Chief Executive
Officer and a director of Donaldson, Lufkin and Jenrette, Inc., one of the
nation's leading investment banking firms. Mr. Castle is a director of Sealed
Air Corporation, Morton's Restaurant Group, Inc., Statia Terminals Group, N.V.,
Commemorative Brands, Inc., AdobeAir Holdings, Inc., Wilshire Restaurant Group,
Inc. and Equipment Support Services. Mr. Castle is a member of the Corporation
of the Massachusetts Institute of Technology and a trustee of the New York
Presbyterian Hospital, Inc. and the Whitehead Institute of Biomedical Research.
Formerly, Mr. Castle was a director of The Equitable Life Assurance Society of
the United States and Trustee of the New York Medical College, where he served
as Chairman of the Board for 11 years.
Mr. Castle is a member of the Executive and Compensation Committees of our
Board of Directors.
BERNARD J. DUROC-DANNER
Age 47
Houston, Texas
Mr. Duroc-Danner became a member of our Board of Directors in February 2001
as a designee of WEUS Holding following our acquisition of Weatherford Global.
Mr. Duroc-Danner joined Weatherford International, Inc. in May 1987 to initiate
the start-up of Weatherford's oilfield service and equipment business through
EVI, Inc. He was elected EVI's President in January 1990 and Chief Executive
Officer in May 1990. In connection with the merger of EVI, Inc. with Weatherford
Enterra, Inc. in May 1998, Mr. Duroc-Danner was elected as Weatherford
International, Inc.'s Chairman of the Board, President and Chief Executive
Officer. Mr. Duroc-Danner holds a Ph.D. in economics from Wharton (University of
Pennsylvania). In prior years, Mr. Duroc-Danner held positions at Arthur D.
Little and Mobil Oil Inc. Mr. Duroc-Danner is a director of Parker Drilling
Company (an oil and gas drilling company) and Cal-Dive International, Inc. (a
company engaged in subsea services in the Gulf of Mexico). Mr. Duroc-Danner is
also a director of Grant Prideco, Inc. (a provider of drill pipe and other drill
stem products). Grant Prideco was a wholly owned subsidiary of Weatherford until
April 14, 2000, when Weatherford distributed all of the outstanding shares of
Grant Prideco to its shareholders.
Mr. Duroc-Danner is a member of the Executive Committee of our Board of
Directors.
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WILLIAM M. PRUELLAGE
Age 27
New York, New York
Mr. Pruellage became a director in April 2000. Mr. Pruellage is a Vice
President with Castle Harlan, Inc. Prior to joining Castle Harlan in July 1997,
Mr. Pruellage worked as an investment banking analyst at Merrill Lynch since
July 1995. Mr. Pruellage is also a director of Wilshire Restaurant Group, Inc.
and Commemorative Brands, Inc.
Mr. Pruellage is a member of the Compensation Committee of our Board of
Directors.
SAMUEL URCIS
Age 66
Beverly Hills, California
Mr. Urcis has served on our Board of Directors since 1998. Mr. Urcis is a
General Partner of Alpha Partners, a venture capital firm which he co-founded in
1982. From 1979 to 1982, and since 1997, Mr. Urcis has been an investor and
advisor in the energy field, primarily in the oilfield services and equipment
sector. From 1972 to 1979, Mr. Urcis was with Geosource Inc., a diversified
services and equipment company, which he conceptualized and co-founded. Mr.
Urcis served in the capacity of Chief Operating Officer and Vice President of
Corporate Development. From 1955 to 1972, Mr. Urcis served in various technical
and management capacities at Rockwell International, Hughes Aircraft, Aerolab
Development Company and Sandberg-Serrell Corporation. Mr. Urcis has served as a
director of the Glaucoma Research Foundation, and as a Trustee of the Monterey
Institute of International Studies. Mr. Urcis serves as our director pursuant to
an agreement entered into in connection with our Tidewater Compression
acquisition in 1998.
Mr. Urcis is a member of the Executive and Compensation Committees of our
Board of Directors.
INFORMATION ABOUT COMMITTEES, MEETINGS AND COMPENSATION OF DIRECTORS
The Board of Directors has established an Executive Committee, an Audit
Committee and a Compensation Committee. We do not have a standing nominating
committee. The Audit Committee and the Compensation Committee are comprised
entirely of outside directors. The committee service of our directors is
indicated on pages 5 through 8 of this Proxy Statement.
The Executive Committee, between meetings of the Board of Directors, may
exercise the powers of the Board of Directors except to the extent prohibited by
law, or adopting or recommending to the shareholders any matter required by the
Delaware General Corporation Law to be submitted to shareholders for approval.
The Executive Committee met five times in fiscal year 2001, in addition to
action taken by unanimous written consent.
The Audit Committee recommends to the Board of Directors the engagement of
the independent auditors and reviews with the independent auditors the scope and
results of the audits, the internal accounting controls and the professional
services furnished by the independent auditors. The Board of Directors has
adopted the Audit Committee Charter, which is attached to this Proxy Statement
as Annex I. All four members of our Audit Committee are "independent," as that
term is defined in the New York Stock Exchange listing standards. The Audit
Committee met twice in fiscal year 2001.
The Compensation Committee reviews and approves all salary arrangements and
other compensation for officers. The Compensation Committee is also responsible
for the administration of the Company's benefit plans, including our stock
option plan and, if approved by our shareholders, the new Employee Stock
Purchase Plan and Restricted Stock Plan. In fiscal year 2001, the Compensation
Committee met five times, in addition to action taken by unanimous written
consent.
In fiscal year 2001, the Board of Directors held seven meetings and took
action by unanimous written consent ten times. Committees of the Board of
Directors held a total of twelve meetings and took action by unanimous written
consent six times. Average overall attendance at such meetings was 92%. Each
director
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attended at least 75% of the aggregate of all meetings of the Board of Directors
and the Committees on which he served during fiscal year 2001.
Directors who are not our officers (other than directors designated by
Castle Harlan Partners and Mr. Duroc-Danner and Mr. Huff) receive an annual
director fee of $20,000, $750 per board of directors or committee meeting
attended and reimbursement of reasonable out-of-pocket expenses. Currently, five
of our directors are entitled to this compensation. Our directors are not
otherwise compensated for their services. The Board of Directors has approved
the adoption of the new Directors' Stock Plan, subject to shareholder approval.
Under the plan, which is described in Proposal 4 of this Proxy Statement, the
directors may elect to receive all or a portion of their future director fees in
our common stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company is comprised of four outside
directors, Mr. Castle, Mr. Huff, Mr. Pruellage and Mr. Urcis. Mr. Castle is a
controlling shareholder of Castle Harlan Partners III, G.P., the general partner
of Castle Harlan Partners III, L.P., which beneficially owns approximately 6% of
our outstanding common stock. Mr. Pruellage is a Vice President of Castle Harlan
Partners III, L.P. Mr. Huff is the former Executive Vice President and Chief
Financial Officer of Weatherford International, Inc., the parent company of WEUS
Holding, Inc., which owns approximately 46% of our outstanding common stock. See
"Certain Relationships and Related Transactions" for a description of certain of
our arrangements with Castle Harlan and Weatherford.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive officers, directors and certain persons who own more than ten
percent of our common stock are required by Section 16(a) of the Securities
Exchange Act of 1934 and related regulations:
- to file reports of their ownership of common stock with the SEC and the
New York Stock Exchange, and to furnish us with copies of the reports.
We received written representations from each such person who did not file
an annual report with the SEC on Form 5 that no Form 5 was due. Based solely on
our review of the reports and representations, we believe that all required
Section 16(a) reports were timely filed in fiscal 2001.
TRANSACTIONS AND RELATIONSHIPS WITH OUR DIRECTORS AND EXECUTIVE OFFICERS
See "Information about Committees, Meetings and Compensation of Directors,"
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions."
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EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive
officers as of June 30, 2001:
NAME AGE POSITION
---- --- --------
Stephen A. Snider..................... 53 President, Chief Executive Officer and
Director
Ernie L. Danner....................... 47 Executive Vice President and Director
Richard W. FitzGerald................. 47 Senior Vice President and Chief
Financial Officer
Mark L. Carlton....................... 46 Senior Vice President and General
Counsel
Jack B. Hilburn, Jr. ................. 56 Senior Vice President of Operations
Kirk E. Townsend...................... 43 Senior Vice President of Sales
Hanford P. Jones...................... 49 Senior Vice President of Engineered
Products
Stephen A. Snider. Mr. Snider's biographical information may be found on
page 7 of this Proxy Statement.
Ernie L. Danner. Mr. Danner's biographical information may be found on
page 6 of this Proxy Statement.
Richard W. FitzGerald. Mr. FitzGerald has served as our Senior Vice
President and Chief Financial Officer since April 1999. Mr. FitzGerald held the
position of Vice President -- Financial Planning and Services of KN Energy from
February 1998 to April 1999. Prior to that time, Mr. FitzGerald served as Vice
President and Controller of MidCon Corp., a wholly-owned subsidiary of
Occidental Petroleum Corporation, for a period in excess of five years.
Mark L. Carlton. Mr. Carlton joined us as Senior Vice President and
Co-General Counsel in October 2000 and, effective December 8, 2000, became our
Senior Vice President and General Counsel. From 1982 until April 2000, Mr.
Carlton held various legal positions with Mobil Corporation and its affiliates,
serving most recently as Senior Counsel for Mobil Business Resources
Corporation.
Jack B. Hilburn, Jr. Mr. Hilburn is our Senior Vice President of
Operations and has served as Senior Vice President of Operations of Universal
Compression, Inc., our operating subsidiary ("UCI"), since April 1999. Mr.
Hilburn is responsible for all field operations, overhaul shops and warehouses.
Mr. Hilburn joined us in 1994 to oversee domestic operations. In September 1996,
Mr. Hilburn was promoted to Vice President of Operations and in April 1999, he
was promoted to Senior Vice President of Operations. Prior to 1994, Mr. Hilburn
was employed by Marathon Oil Corporation in various capacities, including Region
Manager of southeast onshore and lower 48 offshore production operations, and
later as Manager of Operations and Construction Services. Mr. Hilburn has over
26 years of management experience in the oil and gas industry.
Kirk E. Townsend. Mr. Townsend served as Vice President of Sales of UCI
from October 1999 to February 2001, when he was promoted to Senior Vice
President of Sales. Mr. Townsend is responsible for all sales activities, both
domestic and international. Mr. Townsend joined us in 1979 as a domestic sales
representative. In 1986, he became an international sales representative for
UCI. Mr. Townsend was promoted to Vice President of Business Development in
April 1999, and Vice President of Sales in October 1999. Mr. Townsend has over
21 years of sales and management experience in the natural gas compression
industry.
Hanford P. Jones. Mr. Jones served as Vice President of Engineered
Products for UCI from April 1999 to February 2001, when he became a Senior Vice
President. Mr. Jones is responsible for all engineering and fabrication
production of UCI's packaging division. Mr. Jones joined us in January 1999 as
General Manager of Engineered Products. From May 1998 to January 1999, Mr. Jones
performed engineering and pipeline operation consulting services for various
companies. Prior to May 1998, Mr. Jones was employed by NorAm Energy Corporation
for a period in excess of 18 years in various capacities, including Region
Manager
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of NorAm's Western Region, and later as Chief Engineer and Engineering Manager.
Mr. Jones has over 25 years of engineering and management experience in the oil
and gas industry.
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
fiscal year 2001, 2000 and 1999 to our Chief Executive Officer, our four other
most highly compensated executive officers and a former officer who would have
been one of our highest paid officers had she been employed by us at the end of
our most recent fiscal year:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------- SECURITIES ALL OTHER
FISCAL SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) ($)
--------------------------- ------ ------- ------- ------------ ------------
Stephen A. Snider...................... 2001 222,917 350,437 161,007 17,159(1)
President & Chief Executive Officer 2000 170,000 35,000 -- 15,000(1)
1999 170,000 43,890 49,145 41,965(1)
Ernie L. Danner........................ 2001 69,250 232,365 104,057 310,019(2)
Executive Vice President 2000 37,875 -- -- 6,226(2)
1999 135,000 43,080 35,491 23,055(2)
Richard W. FitzGerald(3)............... 2001 178,333 232,365 90,333 12,506(4)
Senior Vice President & 2000 146,049 20,000 16,379 34,132(4)
Chief Financial Officer 1999 -- -- -- --
Kirk E. Townsend....................... 2001 163,750(5) 170,023 64,286 14,959(6)
Senior Vice President of Sales 2000 229,521(5) 15,000 11,508 21,878(6)
1999 154,436(5) -- 2,970 9,331(6)
Jack B. Hilburn, Jr. .................. 2001 148,333 160,577 65,333 9,464(7)
Senior Vice President of Operations 2000 110,000 15,000 16,379 4,843(7)
1999 91,250 17,310 6,682 7,774(7)
Valerie L. Banner...................... 2001 92,443 87,690 30,333 157,159(9)
Former Senior Vice President & 2000 100,000 15,000 -- 4,435(9)
General Counsel(8) 1999 83,350 17,708 16,379 2,375(9)
---------------
(1) Includes (a) matching contributions to Mr. Snider's 401(k) account of $6,688
during fiscal 2001 and $5,100 during each of fiscal 2000 and fiscal 1999,
(b) $3,876 in health premiums paid on behalf of Mr. Snider under its
executive medical plans during each of fiscal 1999, 2000 and 2001, (c)
payments made on behalf of Mr. Snider pursuant to our Supplemental Savings
Plan of $4,063 during fiscal 2001 and $3,187 during fiscal 2000 and fiscal
1999 and (d) $29,800 paid to Mr. Snider for moving expenses during fiscal
1999.
(2) Includes (a) matching contributions to Mr. Danner's 401(k) account of $2,078
during fiscal 2001, $1,136 during fiscal 2000 and $4,050 during fiscal 1999,
(b) $3,876 in health premiums paid on behalf of Mr. Danner under our
executive medical plan during each of fiscal 2001, 2000 and 1999, (c)
payments made on behalf of Mr. Danner pursuant to our Supplemental Savings
Plan of $169 during fiscal 1999 and (d) a payment of $300,000 in shares of
our common stock during fiscal 2001.
(3) Mr. FitzGerald joined us in April 1999.
(4) Includes (a) matching contributions made to Mr. FitzGerald's 401(k) account
of $5,350 during fiscal 2001 and $3,750 during fiscal 2000, (b) health care
premiums paid on behalf of Mr. FitzGerald under our Executive Medical Plan
of $3,876 in fiscal 2001 and $3,553 in fiscal 2000, (c) payment made on
behalf of
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Mr. FitzGerald pursuant to our Supplemental Savings Plan of $2,844 in fiscal
2001 and $750 during fiscal 2000 and (d) $25,886 paid to Mr. FitzGerald for
moving expenses in fiscal 2000.
(5) Includes sales commissions.
(6) Includes (a) matching contributions made to Mr. Townsend's 401(k) account of
$4,913 during fiscal 2001, $6,886 during fiscal 2000 and $7,051 during
fiscal 1999, (b) $3,876 in health care premiums paid on behalf of Mr.
Townsend under our Executive Medical Plan during fiscal 2001 and fiscal
2000, (c) payment made on behalf of Mr. Townsend to our Supplemental Savings
Plan of $413 during fiscal 2001 and $2,543 during fiscal 2000, (d) an
automobile allowance paid to Mr. Townsend of $5,646 during fiscal 2001,
$4,281 during fiscal 2000 and $4,068 during fiscal 1999 and (e) $4,200 paid
to Mr. Townsend for club dues during fiscal 2000.
(7) Includes (a) matching contributions made to Mr. Hilburn's 401(k) account of
$2,963 during fiscal 2001 and $2,225 during fiscal 1999, (b) health care
premiums paid on behalf of Mr. Hilburn of $3,876 in each of fiscal 2001,
fiscal 2000 and fiscal 1999 and (c) an automobile allowance paid to Mr.
Hilburn of $2,118 in fiscal 2001, $720 in fiscal 2000 and $1,341 in fiscal
1999.
(8) Ms. Banner served as Senior Vice President and General Counsel until
December 2000.
(9) Includes (a) matching contributions to Ms. Banner's 401(k) account of $2,525
during fiscal 2001, $3,000 during fiscal 2000 and $2,250 during fiscal 1999,
(b) $2,584 in health premiums paid on behalf of Ms. Banner during fiscal
2001 and $323 during fiscal 2000, (c) payments made on behalf of Ms. Banner
pursuant to our Supplemental Savings Plan of $1,430 during fiscal 2001 and
$1,000 during fiscal 2000 and (d) $150,313 in severance paid to Ms. Banner
as a result of our termination of her employment agreement without cause
during fiscal 2001.
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OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES PERCENT OF ASSUMED ANNUAL RATES OF
UNDERLYING TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM (TEN YEARS)(1)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- ------------- ----------- ---------- ------------- -------------
Stephen A. Snider....... 61,007 5.35% $21.50 04/20/10 $ 824,890 $2,090,433
100,000 8.77 31.65 12/11/10 1,990,451 5,044,195
Ernie L. Danner......... 44,057 3.87 21.50 04/20/10 595,705 1,509,633
60,000 5.26 31.65 12/11/10 1,194,271 3,026,517
Richard W. FitzGerald... 20,333 1.78 21.50 04/20/10 274,927 696,720
10,000 0.88 22.00 05/23/10 138,357 350,623
60,000 5.26 31.65 12/11/10 1,194,271 3,026,517
Kirk E. Townsend........ 14,286 1.25 21.50 04/20/10 193,164 489,516
15,000 1.32 22.00 05/23/10 207,535 525,935
35,000 3.07 31.65 12/11/10 696,658 1,765,468
Jack B. Hilburn, Jr. ... 20,333 1.78 21.50 04/20/10 274,927 696,720
10,000 0.88 22.00 05/23/10 138,357 350,623
35,000 3.07 31.65 12/11/10 696,658 1,765,468
Valerie L. Banner....... 20,333 1.78 21.50 04/20/10 -- --
10,000 0.88 22.00 05/23/10 -- --
---------------
(1) The calculations at five percent and ten percent appreciation rates are
established by the SEC and are not intended to forecast future appreciation
rates for our common stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END (#) FISCAL YEAR-END ($)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Stephen A. Snider...... -- $ -- 110,152 100,000 $1,642,397 $3,165,000
Ernie L. Danner........ -- -- 79,548 60,000 1,186,080 1,899,000
Richard W.
FitzGerald........... -- -- 36,712 70,000 547,391 2,119,000
Kirk E. Townsend....... -- -- 25,794 50,000 384,598 1,437,750
Jack B. Hilburn,
Jr. ................. -- -- 36,712 45,000 547,391 1,327,750
Valerie L. Banner...... 36,712 888,967 -- -- -- --
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PERFORMANCE GRAPH
The following graph compares the performance of our common stock to the
Standard & Poor's 500 Stock Index and Standard & Poor's Oil and Gas Drilling and
Equipment Index from May 25, 2000, the first day of trading for our common
stock, to March 31, 2001. The graph assumes that the value of the investment in
our common stock, the S&P 500 Index and the S&P Oil and Gas Drilling and
Equipment Index was $100 at May 25, 2000 and that all dividends were reinvested
quarterly.
COMPARISON OF CUMULATIVE TOTAL RETURN
BASED ON INITIAL INVESTMENT OF $100 ON MAY 25, 2000
PERFORMANCE GRAPH
-----------------------------------------------------------------------------------------------------------------
5/24/00 6/00 9/00 12/00 3/01
-----------------------------------------------------------------------------------------------------------------
Universal Compression Holdings, Inc. $100.00 $152.27 $140.63 $171.31 $159.09
S&P 500 $100.00 $100.36 $ 99.39 $ 91.61 $ 80.75
S&P Oil and Gas Drilling and
Equipment $100.00 $102.49 $111.81 $103.79 $ 89.00
The performance graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that we specifically incorporate
this information by reference, and shall not otherwise be deemed filed under
those Acts.
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REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of Universal
Compression Holdings, Inc., together with the full Board of Directors of the
Company, offers this report regarding compensation policies for executive
officers, including the President and Chief Executive Officer of the Company.
The overall goal of the Compensation Committee is to develop executive
compensation policies and practices that are consistent with the Company's
strategic business and financial objectives and that serve to attract, motivate
and retain key employees. While these principles apply to compensation policies
for all executive officers, the Committee considers individual factors in
determining the appropriate mix of compensation for each officer.
Historically, the Company has entered into employment agreements with its
executive officers, including its President and Chief Executive Officer. All but
one of these agreements expired in February 2001, and the Committee elected as a
policy matter not to renew them. Instead, executive officers will be offered
change of control agreements with the Company pursuant to which such executives
will receive certain payments in the event of termination upon a change of
control in exchange for non-competition agreements. To date, Messrs. Hilburn,
Townsend and Carlton have entered into change of control agreements with the
Company.
COMPONENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation currently consists of three primary
components:
- an annual base salary,
- an annual incentive cash bonus and
- periodic grants of stock options.
For fiscal year 2001, stock options were the only form of long-term
incentive compensation offered by the Company. In the future, the Committee
hopes to use other types of long-term incentive compensation, including
restricted stock grants. In April 2001, the Company's Board of Directors, on the
recommendation of the Committee, approved the adoption of a new restricted stock
plan for executive officers, subject to approval of the Company's shareholders.
This plan is described in the Proxy Statement as Proposal 3.
Base Salary. The purpose of base salary is to create a secure base of cash
compensation for executive officers that is competitive in the industry. The
Compensation Committee exercises its discretion in making salary decisions,
taking into consideration the compensation packages paid to executive officers
by companies of similar size in the energy industry. Salary increases for
executive officers are considered annually, but do not follow a preset schedule
or formula. In December 2000, the annual base salary of Stephen A. Snider, our
President and Chief Executive Officer, was raised from $220,000 to $265,000. Our
other executive officers also received raises at that time.
Annual Incentive Bonus. Each year, the Committee adopts an Officers'
Incentive Plan which specifies the target bonus or incentive award for each of
the Company's executive officers. The purpose of the annual bonus is to provide
cash compensation that is at-risk on an annual basis and is contingent on the
achievement of certain business, operating and individual objectives, efforts
expended on behalf of the Company and overall contributions to the Company's
success. For fiscal year 2001, these objectives were divided into three
categories: (1) year-end EBITDA levels compared to budgeted EBITDA (worth 60% of
the bonus), (2) safety performance (worth 10% of the bonus) and (3) individual
performance, which included, among other things, personal effort, contribution
to the Company's success and involvement in strategic planning (worth 30% of the
bonus). EBITDA is defined in the Officers' Incentive Plan as net earnings plus
management fees, payments under the Officers' Incentive Plan, bonuses, interest,
taxes, depreciation and amortization, adjusted for unusual and non-recurring
items.
Generally, incentive bonus awards are calculated as a percentage of base
salary as specified in the Officers' Incentive Plan, ranging from 0% up to 50%
of base salary for senior vice presidents, 0% up to 60% of base salary for
executive vice presidents and 0% to up to 70% of base salary for the Company's
President and
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Chief Executive Officer. In the event of exceptional results or circumstances,
the incentive ranges may be exceeded, as they were for fiscal 2001 incentives.
Bonuses for fiscal 2001, which were paid in May 2001, exceeded the targeted
amounts. The Committee felt that the increased bonuses were appropriate given
the Company's success and strong overall performance during fiscal 2001 and the
significant efforts expended by the Company's executive officers during that
period. In addition, the Company's EBITDA for fiscal 2001 far exceeded budgeted
EBITDA, and the Company's safety performance was very strong. Mr. Snider's bonus
for fiscal year 2001 was $350,437, or 132% of his base salary. See the Summary
Compensation Table for bonuses paid to the Company's other named executive
officers.
Long-Term Incentive Compensation. Long-term incentives generally comprise
a significant portion of the total compensation package for executive officers,
as the Committee believes it is a critical tool in the retention of officers.
For fiscal 2001, incentive stock options were the only form of long-term
incentive compensation used by the Company. The purpose of stock options is to
provide equity compensation whose value is entirely at-risk based on the
increase in the Company's stock price and the creation of shareholder value,
thereby aligning the financial interests of our executive officers with our
shareholders. Stock options also allow executive officers to have equity
ownership in the Company and to share in the appreciation of the value of the
Company's stock over time. The options only have value if the Company's stock
price appreciates from the date the options are granted.
During fiscal 2001, stock options were awarded throughout the Company to
professional, managerial and technical employees and in connection with its
initial public offering and acquisitions. These options vest in one-third
increments over a term of three years, with the exercise price equal to the fair
market value of the Company's stock on the date of grant. Under the terms of the
Company's incentive stock option plan, all options outstanding at the time of
the Company's initial public offering in May 2000 became fully vested.
Approximately 215 employees, or 15% of the Company's workforce, received option
awards in fiscal 2001. The named executive officers received option awards
covering 485,016 shares in fiscal 2001, of which options covering 161,007 shares
were granted to Mr. Snider.
Other Compensation Programs. Another aspect of the Company's compensation
package is designed to encourage employees to save for the future. Currently,
this consists of the Company's 401(k) Retirement and Savings Plan and
Supplemental Savings Plan. These other compensation programs generally are not
linked to the Company's performance.
The Company's 401(k) savings plan provides the Company's regular, full-time
employees with the opportunity to contribute on a pre-tax basis up to 15% of
eligible earnings to an account investing in various investment options. The
Company matches employee contributions at a rate of 50% for the first 6% of
salary contributed, with the Company's contributions vesting over a period of
five years. The Company contributed a total of $26,846 to the 401(k) plan on
behalf of its executive officers in fiscal 2001, including $6,688 contributed on
behalf of Mr. Snider. Under the Company's Supplemental Savings Plan, the
Company's executives are given the opportunity to defer 2-15% of their salary
and up to 100% of their bonus, with the Company matching the first 3% of
compensation deferred. The Company's matching contributions under the
Supplemental Savings Plan are not subject to any vesting requirements. During
fiscal year 2001, the Company contributed a total of $9,873 to the Supplemental
Savings Plan on behalf of its executive officers, including $4,063 on behalf of
Mr. Snider. See the Summary Compensation Table for contribution information with
respect to the Company's other named executive officers under these plans.
Benefits. Benefits offered to executive officers serve a different purpose
than the other elements of total compensation. In general, the Company's
benefits are designed to provide a safety net of protection against potential
financial catastrophes that can result from illness, disability or death.
Benefits offered to executive officers generally are the same as those that are
offered to the Company's employees as a whole, with the exception of the
executive medical plan. This plan supplements the Company's general medical plan
by covering deductibles and co-payments for executive officers, up to a maximum
of $5,000 per year per executive.
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New Incentive Plans. The Committee believes that new forms of incentive
compensation are appropriate to attract, retain and motivate the highest level
of talent. For this reason, the Committee has recommended, and the Company's
Board of Directors has approved the adoption of, a new restricted stock plan to
allow for grants of stock that vest over time to executive officers. This plan,
which is subject to approval by the Company's shareholders, is described in
Proposal 3 of the Proxy Statement. Subject to shareholder approval, the Board
approved grants of a total of 110,000 restricted shares to the Company's
executive officers, including 30,000 restricted shares to Mr. Snider. In
addition, the Committee has recommended that the Company implement an employee
stock purchase plan, which would permit eligible employees to purchase shares of
the Company's stock at a discount and without brokerage commissions, subject to
certain limitations. This plan also is subject to approval by the Company's
shareholders, and is described in Proposal 2 of the Proxy Statement.
Other Considerations. The Committee considers the expected tax treatment
to the Company and its executive officers as one of the factors in determining
compensation matters. Section 162(m) of the Internal Revenue Code generally
limits the deductibility of certain compensation expenses in excess of
$1,000,000 to any one individual in any fiscal year. However, certain qualifying
performance-based compensation is not subject to the limitations on
deductibility. The Committee currently intends to structure the Company's
compensation of its executives in accordance with the requirements for
deductibility under Section 162(m) to the extent reasonably practicable and
consistent with the Company's other compensation objectives.
Summary. The Committee believes that the executive compensation policies
and programs described in this report serve the interests of the Company and its
shareholders, but that new forms of long-term incentive compensation should be
implemented, including the restricted stock plan. The Company's executive
compensation is intended to be linked to, and commensurate with, the Company's
performance and with shareholder expectations.
Prepared by the Compensation
Committee and submitted by the full
Board of Directors,
John K. Castle
Curtis W. Huff
William M. Pruellage
Samuel Urcis
Thomas C. Case
Ernie L. Danner
Bernard J. Duroc-Danner
Uriel E. Dutton
C. Kent May
Edmund P. Segner, III
Stephen A. Snider
The foregoing report shall not be deemed incorporated by reference by any
general statement or reference to this Proxy Statement into any filing under the
Securities Act or under the Securities Exchange Act, except to the extent that
we specifically incorporate this information by reference, and shall not
otherwise be deemed filed under such Acts.
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REPORT OF THE AUDIT COMMITTEE
The Company's Audit Committee is responsible for, among other things,
reviewing with our independent auditors the scope and results of their audit
engagement. In connection with the fiscal 2001 audit, the Audit Committee has:
- reviewed and discussed with management the Company's audited financial
statements included in our Annual Report on Form 10-K for the year ended
March 31, 2001;
- discussed with Deloitte & Touche, LLP, our independent auditors
("Deloitte & Touche"), the matters required to be discussed by Statement
of Accounting Standards No. 61, as modified or supplemented; and
- received from and discussed with Deloitte & Touche the written
disclosures and letter from Deloitte & Touche required by Independence
Standards Board Standard No. 1, as modified or supplemented, regarding
their independence.
Based on the review and the discussions described in the preceding bullet
points, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in our Annual Report on Form 10-K for
the year ended March 31, 2001 for filing with the Securities and Exchange
Commission.
Our Board of Directors has adopted a new charter for the Audit Committee, a
copy of which is attached to this Proxy Statement as Annex I. The members of the
Audit Committee have been determined to be independent in accordance with the
requirements of Section 303.01(B)(2)(a) and (3) of the New York Stock Exchange
listing standards.
Submitted by the Audit Committee,
Edmund P. Segner, III
Thomas C. Case
Uriel E. Dutton
C. Kent May
The foregoing report shall not be deemed incorporated by reference by any
general statement or reference to this Proxy Statement into any filing under the
Securities Act or under the Securities Exchange Act, except to the extent that
we specifically incorporate this information by reference, and shall not
otherwise be deemed filed under such Acts.
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PRINCIPAL SHAREHOLDERS
In February 2001, we acquired Weatherford Global and certain related
entities through a merger of the parent company of Weatherford Global into our
operating subsidiary, UCI. As consideration for the merger, we issued 13,750,000
shares of our common stock, or approximately 48% of our total outstanding shares
immediately following the merger, to WEUS Holding, a wholly owned subsidiary of
Weatherford International, Inc. We entered into a voting agreement and a
registration rights agreement with WEUS concurrently with the merger. In
addition, we agreed that subject to certain stock ownership requirements, WEUS
would be entitled to designate up to three persons to serve on our board of
directors. See "Certain Relationships and Related Transactions -- Arrangements
with Weatherford." The merger resulted in a change of control of us for purposes
of the Securities Exchange Act.
On July 3, 2001, after the record date for the meeting, we completed a
public offering of 4,000,000 shares of our common stock, consisting of 1,333,333
shares offered by us and 2,666,667 shares offered by some of our shareholders,
including Castle Harlan. The following table sets forth, as of July 3, 2001, the
beneficial ownership of our common stock by:
- persons we know to be the beneficial owners of more than five percent of
our issued and outstanding common stock,
- each director,
- our executive officers and former executive officer identified in the
Summary Compensation Table and
- all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC.
Except as indicated in the footnotes to this table, each shareholder named in
the table has sole voting and investment power with respect to the shares set
forth opposite the shareholder's name. Except as otherwise set forth below,
shares of common stock not outstanding but deemed beneficially owned by virtue
of a person or group having the right to acquire them within 60 days, including
outstanding stock options, are treated as outstanding only for purposes of
determining the percentage owned by such person or group, but are not treated as
outstanding for the purpose of computing the percentage ownership by any other
person. The address for each executive officer and director listed below is c/o
Universal Compression Holdings, Inc., 4440 Brittmoore Road, Houston, Texas
77041.
AGGREGATE NUMBER
OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED SHARES(1)
------------------------------------ ---------------- -------------
WEUS Holding, Inc. ................................... 13,750,000 46.1%(2)
515 Post Oak Boulevard, Suite 600
Houston, Texas 77027-3415
Castle Harlan Partners III, L.P.(3)................... 1,895,301(4) 6.4%(4)
150 East 58th Street
New York, New York 10155
Thomas C. Case........................................ 334 *
John K. Castle(3)..................................... 1,895,301(5) 6.4%(5)
Samuel Urcis(6)....................................... 219,699 *
C. Kent May........................................... 334 *
William M. Pruellage.................................. 167 *
Edmund P. Segner, III................................. -- *
Bernard J. Duroc-Danner............................... -- *
Curtis W. Huff........................................ -- *
Uriel E. Dutton....................................... -- *
Stephen A. Snider(7).................................. 143,605 *
Ernie L. Danner(8).................................... 160,192 *
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AGGREGATE NUMBER
OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED SHARES(1)
------------------------------------ ---------------- -------------
Richard W. FitzGerald(9).............................. 41,382 *
Jack B. Hilburn, Jr.(10).............................. 40,111 *
Kirk E. Townsend(11).................................. 39,011 *
Valerie L. Banner(12)................................. 668 *
All directors and executive officers as a group (16
persons)(13)........................................ 2,307,593(5) 7.7%(5)
---------------
* Less than 1% of our issued and outstanding shares of common stock.
(1) Based upon 29,816,956 shares of common stock outstanding and 13,242
treasury shares issued that are not counted as outstanding in calculating
the beneficial ownership percentage. This number does not include up to an
additional 200,000 shares that may be issued subject to the underwriters'
30-day over-allotment option in our recently completed equity offering, or
up to an additional 727,273 shares that we may issue in our pending
acquisition of KCI, Inc.
(2) WEUS is a direct, wholly owned subsidiary of Weatherford International,
Inc., a publicly traded company. Pursuant to a voting agreement entered
into in connection with our Weatherford Global acquisition, WEUS has agreed
to limit its voting power to 33 1/3% of our total outstanding common stock
until the earlier of February 9, 2003 or the date that Castle Harlan and
its affiliates own less than 5% of our outstanding common stock. This
voting agreement may terminate if the underwriters' overallotment option is
exercised in connection with our recent equity offering.
(3) John K. Castle and Leonard M. Harlan are the controlling shareholders of
Castle Harlan Partners III, G.P., Inc., the general partner of the general
partner of Castle Harlan Partners III, L.P., and as such, each of them may
be deemed to be a beneficial owner of the shares owned by Castle Harlan
Partners III, L.P. Both Mr. Castle and Mr. Harlan disclaim beneficial
ownership of the shares in excess of their respective pro rata partnership
interests in Castle Harlan Partners III, L.P. and its affiliates.
(4) Includes 90,909 shares of common stock directly held by Mr. Castle, and
204,306 shares of common stock held by certain entities and individuals
(which includes 99,153 shares subject to options held by Samuel Urcis which
are fully vested) for which Mr. Castle may direct the voting pursuant to
voting trust agreements under which Mr. Castle acts as voting trustee. Also
includes 231,880 shares held by Castle Harlan and its affiliates that are
subject to the underwriters' 30-day over-allotment option from our recently
completed equity offering. All such shares may be deemed to be beneficially
owned by Mr. Castle. Mr. Castle disclaims beneficial ownership of the
shares subject to the voting trust agreements, other than 9,817 shares of
common stock owned by Branford Castle Holdings, Inc. that are subject to
the voting trust. Prior to the equity offering and as of the record date
for the meeting, Castle Harlan and its affiliates owned or had voting
control over approximately 20% of our common stock.
(5) Includes 1,468,153 shares of common stock directly held by Castle Harlan
Partners III, L.P., 90,909 shares of common stock directly held by John K.
Castle, and 204,306 shares of common stock held by certain other entities
and individuals (which includes 99,153 shares subject to options held by
Samuel Urcis which are fully vested) for which Mr. Castle may direct the
voting pursuant to voting trust agreements under which Mr. Castle acts as
voting trustee. Also includes 231,880 shares held by Castle Harlan and its
affiliates that are subject to the underwriters' 30-day over-allotment
option from our recently completed equity offering. All such shares may be
deemed to be beneficially owned by Castle Harlan Partners III. Castle
Harlan Partners III disclaims beneficial ownership of the shares not
directly held by it. Prior to the equity offering and as of the record date
for the meeting, Castle Harlan and its affiliates owned or had voting
control over approximately 20% of our common stock.
(6) Includes 99,135 shares subject to options that are fully vested. Also
includes 40,145 shares of common stock owned by Castle Harlan Partners that
Mr. Urcis has the option to purchase. All of Mr. Urcis's shares are subject
to a voting trust agreement with Castle Harlan.
(7) Includes 110,152 shares of common stock subject to options, all of which
are fully vested.
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(8) Includes 79,548 shares of common stock subject to options, all of which are
fully vested. Also includes 33,455 shares of common stock owned by Castle
Harlan Partners that Mr. Danner has an option to purchase.
(9) Includes 40,045 shares of common stock subject to options, all of which are
fully vested.
(10) Includes 40,045 shares of common stock subject to options, all of which are
fully vested.
(11) Includes 30,794 shares of common stock subject to options, all of which are
fully vested.
(12) Ms. Banner served as our Senior Vice President and General Counsel until
December 2000.
(13) Includes an aggregate of 493,297 shares of common stock subject to options,
all of which are fully vested.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ARRANGEMENTS WITH WEATHERFORD
Registration Rights Agreement. Concurrently with our acquisition of
Weatherford Global Compression Services, L.P. in February 2001, we entered into
a registration rights agreement with WEUS Holding, Inc., an affiliate of
Weatherford International, Inc. Under this agreement, WEUS has the right, on up
to three occasions, to cause us to register at our expense WEUS's shares of our
common stock under the Securities Act at any time by providing a written demand
to us, subject to certain minimum dollar values. The registration rights
agreement also provides WEUS with certain "piggyback" registration rights, or
rights to require us, subject to certain limitations, to include its shares of
our common stock in other registration statements that we may file.
Voting Agreement. We also entered into a voting agreement with WEUS
concurrently with the Weatherford Global acquisition that provides that until
the earlier of (1) February 9, 2003 or (2) the date that Castle Harlan and its
affiliates own less than 5% of our outstanding common stock, WEUS and its
affiliates will vote any shares of our common stock that they own in excess of
33 1/3% of our total outstanding shares in the same proportion that shares of
our stock owned by the public are voted. Shares owned by the public include all
shares of our common stock other than shares owned by WEUS, Castle Harlan and
their respective affiliates. Castle Harlan and its affiliates currently own in
excess of 5% of our common stock. If the underwriters' overallotment option in
connection with our recent equity offering is exercised, Castle Harlan's
ownership could fall below 5%, which would result in a termination of the voting
agreement.
Transitional Services Agreement. Concurrently with the closing of the
Weatherford Global acquisition, Weatherford and Weatherford Global, as our
subsidiary, entered into a transitional services agreement under which
Weatherford would continue to provide certain administrative and support
services, such as shared corporate office space and general communication and
information services, to Weatherford Global until June 9, 2001. Weatherford
Global, as our subsidiary, paid Weatherford $125,000 for the first thirty days
of services. For the period subsequent to the initial thirty days, Weatherford
Global paid Weatherford a fee based on a proportional amount of Weatherford's
costs and expenses in providing the services plus a 10% management fee.
Board Representation. Weatherford, through WEUS, has the right to
designate three members to our board of directors for so long as it owns at
least 20% of our outstanding common stock. One WEUS nominee is a Class A
director with a term of office expiring in 2001, the second WEUS nominee is a
Class B director with a term of office expiring in 2002, and the third WEUS
nominee is a Class C director with a term of office expiring in 2003. If WEUS's
ownership of our common stock falls below 20%, WEUS may designate only two
directors, and if its ownership falls below 10%, it may no longer designate
directors to our board. WEUS's current designees to our board are Mr. Dutton
(Class A), Mr. Huff (Class B) and Mr. Duroc-Danner (Class C).
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REGISTRATION RIGHTS AGREEMENTS
In connection with our acquisition of Tidewater Compression Service, Inc.
in 1998, we entered into a registration rights agreement with Castle Harlan
Partners and some of our other shareholders (including certain of our directors
and officers). Under this registration rights agreement, these shareholders
generally have the right to require us to register any or all of their shares of
our common stock under the Securities Act, at our expense, subject to certain
minimum dollar values. In addition, these shareholders are generally entitled to
include, at our expense, their shares of our common stock covered by the
registration rights agreement in any registration statement under the Securities
Act, that we propose to file with respect to our common stock. In addition, we
entered into a registration agreement with the two former shareholders of GCSI
concurrently with our GCSI acquisition. This agreement provides the former GCSI
shareholders with two demands for shelf registrations, both of which have been
filed. We also agreed in these agreements to indemnify the shareholders against
specified liabilities, including liabilities under the Securities Act.
VOTING AGREEMENTS
In connection with the Tidewater Compression acquisition in 1998, we
entered into a voting agreement and two voting trust agreements. The voting
agreement requires that some of our significant shareholders vote their shares
of our common stock in the same manner as Castle Harlan. This agreement
terminated automatically upon completion of our recent equity offering. The
voting trust agreements provide that certain of our other shareholders,
including some of our directors, assign their shares of our common stock to a
voting trust which has John K. Castle as its trustee in exchange for interests
in the trust. These agreements remain in effect except as to shares sold in our
recent equity offering or otherwise. Prior to our initial public offering in May
2000, these voting agreements and trusts also covered Energy Spectrum Partners,
L.P. and our employees, officers and some of our directors. Currently, only two
of our directors, Samuel Urcis and William Pruellage, and none of our employees
or officers, are subject to a voting trust agreement. Castle Harlan currently
has voting control over approximately 6% of our common stock.
TERMINATION OF MANAGEMENT AGREEMENT AND CONSULTING AGREEMENT
In connection with our 1998 acquisition of Tidewater Compression, we also
entered into a management agreement with Castle Harlan, Inc. pursuant to which
Castle Harlan agreed to provide us with business and organizational strategy,
financial and investment management and merchant and investment banking
services. We agreed to pay Castle Harlan a fee for these services of $3.0
million per year. This fee was paid in advance for the first year and quarterly
in advance thereafter. The agreement was for a term of five years, renewable
automatically from year to year unless Castle Harlan or its affiliates then
beneficially owns less than 20% of our outstanding capital stock. We agreed to
indemnify Castle Harlan against liabilities, costs, charges and expenses
relating to the performance of its duties, other than those resulting from its
gross negligence or willful misconduct. We paid Castle Harlan Inc. $3.0 million,
$750,000 and $3.0 million during the period from December 12, 1997 (inception)
through March 31, 1998 and the years ended March 31, 1999 and 2000,
respectively. As of March 31, 2000, 33,560 shares of common stock and 18,080
shares of preferred stock (which shares of preferred stock were subsequently
split and converted to 42,046 shares of common stock on May 30, 2000 in
connection with our initial public offering) held by our officers were subject
to repurchase requirements in the event of our termination of the officer
without "cause," disability or death as specified in the stock repurchase
agreement. We maintained an insurance policy to fund substantially all of our
obligations in the event of disability or death of these officers. This option
repurchase requirement was terminated upon completion of our initial public
offering. In addition, in consideration for certain finder services in
connection with our Tidewater Compression acquisition, we entered into a
finder's and consulting agreement with Samuel Urcis, one of our directors. Under
that agreement, Mr. Urcis was entitled to a consulting fee of $150,000 per year
in exchange for various consulting services, as well as a seat on our board and
options to purchase shares of our common stock. We paid Mr. Urcis $12,500,
$165,523 and $140,264 during the period from December 12, 1997 (inception)
through March 31, 1998 and the years ended March 31, 1999 and 2000,
respectively.
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This management agreement (other than the indemnification provisions) and
consulting agreement were terminated upon the completion of our initial public
offering in May 2000 in exchange for (1) our payment to Castle Harlan of $3.0
million in cash (one year's management fee) and our issuance to Castle Harlan of
136,364 shares of our common stock, which shares are subject to registration
rights and (2) our payment to Mr. Urcis of $150,000 in cash (one year's
consulting fee) and our issuance to Mr. Urcis of 6,818 shares of our common
stock, which shares are also subject to registration rights. Also, Castle Harlan
granted Mr. Urcis a ten-year option in 1998 to purchase from it 17,820 shares
and 22,326 shares of our common stock at exercise prices of $6.73 and $21.50,
respectively.
We also agreed with Castle Harlan to nominate a total of three Castle
Harlan designees for election to our board for so long as those designees are
reasonably qualified and Castle Harlan and its affiliates beneficially own at
least 15% of our outstanding stock (including shares over which it has voting
control pursuant to voting agreements and trusts). Although Castle Harlan's
right terminated upon completion of our recent equity offering, its current
designees to our board, Mr. Castle and Mr. Pruellage, serve terms expiring at
our 2003 annual meeting of shareholders.
TRANSACTIONS WITH AN OFFICER AND DIRECTOR
In consideration for consulting services rendered by Ernie Danner, one of
our executive officers and directors, in connection with our Tidewater
Compression acquisition, Castle Harlan granted Mr. Danner a ten-year option to
purchase from it 14,850 shares of our common stock at a price of $6.73 per
share, and 18,605 shares of our common stock at a price of $21.50 per share.
Also, Castle Harlan agreed that upon its sale of more than 75% of the shares
that Castle Harlan owns of our outstanding common stock, Castle Harlan will pay
Mr. Danner $500,000 if it realizes a return in excess of 100%, or $750,000 if it
realizes a return in excess of 300%, of its initial investment in us. Castle
Harlan sold approximately one-half of its shares of our common stock in our
recent equity offering. Upon completion of our Tidewater Compression
acquisition, we paid Mr. Danner for his services $100,000 in cash and granted to
him shares that were converted into 16,727 shares of our common stock, which
shares are subject to registration rights. Upon completion of our initial public
offering in May 2000, we paid Mr. Danner for his services 13,636 shares of our
common stock, which shares are subject to registration rights. As an officer,
Mr. Danner also holds stock options awarded by us.
PROPOSAL TO APPROVE ADOPTION OF THE NEW
EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 2)
We are proposing to adopt a new Employee Stock Purchase Plan. The plan is
intended to be qualified under Internal Revenue Code Section 423. If the plan is
qualified under Section 423, which requires the approval of our shareholders,
our employees who participate in the plan will enjoy certain tax advantages, as
described below. The approval of the plan requires the affirmative vote of the
majority of the votes cast so long as the total votes cast on this proposal
represent at least a majority of the shares entitled to vote at the Annual
Meeting.
The Employee Stock Purchase Plan will allow our employees to purchase
shares of our common stock at a discount, without being subject to tax until
they sell the stock, and without having to pay any brokerage commissions with
respect to the purchases. The purposes of the Employee Stock Purchase Plan are
to encourage the purchase of our common stock by our employees, to provide our
employees with a personal stake in the Company, and to help retain employees and
maintain our competitiveness in the marketplace. The first offering period under
the Employee Stock Purchase Plan will commence on or after September 1, 2001, as
determined by the administrator of the plan.
The Employee Stock Purchase Plan provides our employees with the right to
purchase shares of our common stock through payroll deductions. A total of
250,000 shares of our common stock initially will be available for purchase
under the plan, subject to adjustment in the number and price of shares
available for
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purchase in the event the outstanding shares of our common stock are increased
or decreased through stock dividends, recapitalizations, stock splits,
reorganizations or similar changes.
The Employee Stock Purchase Plan will be administered by our Board of
Directors or a committee of at least two directors appointed by our Board, and
either the Board or the committee, as applicable, may delegate responsibility
for administration to others as appropriate. Subject to the terms of the
Employee Stock Purchase Plan, the Board or the committee has authority to
interpret the plan, to adopt rules and regulations for administering the plan
and to make all other determinations that it deems necessary or advisable for
administering the plan.
Any employee (who is customarily employed more than 20 hours per week) is
eligible to participate in the Employee Stock Purchase Plan if he or she is
employed by us at all times for a ninety-day period and continues to be employed
on the effective date of his or her participation in the plan. As of March 31,
2001, approximately 1,150 of our employees, including our President and Chief
Executive Officer and our other executive officers, would have been eligible to
participate in the Employee Stock Purchase Plan if it had been in effect. As
participation in the plan is voluntary, we cannot determine at this time the
amount of shares that will be acquired by participants or the dollar value of
any such participation.
Any employee who would own stock and/or hold outstanding options to
purchase stock (including rights to purchase common stock under the Employee
Stock Purchase Plan) collectively representing five percent or more of the total
voting power or value of our stock is not eligible to participate in the plan.
Ownership of stock is determined in accordance with the provisions of Section
424(d) of the Internal Revenue Code. In addition, an employee is not permitted
to purchase stock under this plan exceeding $25,000 in fair market value for
each calendar year.
An eligible employee who wishes to participate in the Employee Stock
Purchase Plan must file an election form with the Company's finance department
on or before the date set by the Board or administering committee, which will be
before the beginning of an offering period. Each participant will have payroll
deductions made in accordance with the participant's election form from the
participant's compensation on each payday during the time he or she is a
participant in the Employee Stock Purchase Plan. All payroll deductions will be
credited to the participant's account under the plan.
Stock will be available to be purchased during an offering period, which
will be a period of three months up to one year (except for the initial offering
period, which will be a period of up to four months, as determined by the Board
or the administering committee). Shares of our common stock will be deemed to
have been purchased on the last day of each offering period or such other date
as required by administrative operational requirements. The purchase price per
share, which will be determined by the Board or the administering committee
prior to each offering period, will be between 85% and 100% of the lesser of:
- the fair market value per share of common stock on the first day of the
offering period; or
- the fair market value per share of common stock on the last day of the
offering period.
If any of these dates is not a trading day, then the fair market value will
be determined on the most recent trading day preceding that date. The fair
market value per share is the closing share price reported on the national
exchange on which our stock is traded.
If the total number of shares of common stock for which purchase rights are
exercised at the end of an offering period exceeds the maximum number of shares
of common stock available, our Board or the administering committee will make an
allocation of shares available for delivery and distribution on any basis
consistent with the terms of the plan. The unapplied account balances will be
credited to the participants' accounts for the next succeeding offering period
or, at each participant's election, returned to the participant, without
interest, as soon as practicable following the end of the offering period.
A participant may discontinue participation in the Employee Stock Purchase
Plan at any time, but no other change, including the amount of his or her
payroll deductions, may be made during an offering period. A participant may
change the amount of payroll deductions for subsequent offerings by giving
written notice of
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such change to the Company's finance department on or before the date set by the
Board or administering committee, which will be before the beginning of an
offering period.
A participant may elect to withdraw all, but not less than all, of the
balance credited to the participant's account at any time before the end of the
offering period by providing at least fifteen days' prior written notice to the
Company's finance department. No further payroll deductions will be made with
respect to the participant during that offering period. Withdrawals during an
offering period by any officer who is subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as amended, will not be
permitted under the plan.
If a participant's employment terminates for any reason other than death,
his or her participation in the Employee Stock Purchase Plan will immediately
end, and all amounts credited to such participant's account will be returned to
the participant. If a participant's employment terminates due to death or if the
participant dies after termination of employment but before the participant's
account has been returned, all amounts credited to such participant's account
will be returned to the participant's successor-in-interest.
An employee's rights under the Employee Stock Purchase Plan belong to the
employee alone and may not be transferred or assigned to any other person during
the employee's lifetime. After the shares of common stock have been issued under
the Employee Stock Purchase Plan, such shares may be assigned or transferred the
same as any other shares, subject to any restrictions that may be imposed by the
Board or the administering committee pursuant to the plan.
Shares of our common stock purchased under the Employee Stock Purchase Plan
may be from our authorized but unissued shares, treasury shares or outstanding
shares. We will pay all fees and expenses incurred, other than individual
federal, state, local or other taxes, in connection with the Employee Stock
Purchase Plan.
The Employee Stock Purchase Plan will not be qualified under Section 401(a)
of the Internal Revenue Code. We generally will not be entitled to a deduction
with respect to stock purchased under the Employee Stock Purchase Plan, unless
the stock is disposed of within one year after it is purchased by the employee,
or within two years after the start of the offering period pursuant to which the
stock was purchased.
Generally, no tax consequences arise at the time an employee purchases
shares of common stock under the Employee Stock Purchase Plan. In general, upon
a disposition of shares, the participant will receive compensation taxable as
ordinary income for the taxable year in which the disposition occurs in an
amount equal to the lesser of:
- the excess of the fair market value of the shares at the beginning of the
offering period over the purchase price of the shares, or
- the excess over the purchase price of (a) the amount actually received
for the shares if sold or exchanged or (b) the fair market value of the
shares on the date of any other termination of his or her ownership (such
as by gift).
The amount of such ordinary income is then added to the participant's basis
in his or her shares for purposes of determining capital gain or loss. This tax
treatment only applies if the following holding period requirements are
satisfied:
- the participant does not dispose of the shares for at least one year and
one day after the date of purchase, and
- the participant does not dispose of the shares for at least two years and
one day after the beginning of the offering period pursuant to which the
shares were purchased.
If a participant disposes of shares of our common stock purchased under the
Employee Stock Purchase Plan before the holding period is satisfied, he or she
will be considered to receive compensation taxable as ordinary income in the
amount of the difference between the amount received for the shares and the
amount
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paid for the shares. If the shares are sold or exchanged, the amount of such
ordinary income is added to the participant's basis in his or her shares for
purposes of determining capital gain or loss.
If a participant dies before disposing of the shares purchased under the
Employee Stock Purchase Plan, he or she will be deemed to have realized
compensation taxable as ordinary income in the taxable year in which his or her
death occurred in an amount equal to the lesser of:
- the excess of the fair market value of the shares at the beginning of the
offering period over the purchase price of the shares, or
- the excess of the fair market value of the shares on the date of death
over the purchase price of the shares.
The participant is deemed not to have realized any capital gain or loss
because of death.
Our Board will have the right to amend, modify, suspend or terminate the
Employee Stock Purchase Plan at any time without notice, but no amendment may
cause the rights to purchase shares under the plan to not qualify under Section
423 of the Internal Revenue Code or be adverse to the interests of the
participants. Upon any amendment of the Employee Stock Purchase Plan, including
the increase in the number of shares available under the plan or any change to
the eligibility requirements of participants, we will obtain shareholder
approval if required by law. Upon any termination, all shares or unapplied
payroll deductions will be distributed to the participants.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF OUR
PROPOSED EMPLOYEE STOCK PURCHASE PLAN AS DESCRIBED IN THIS PROPOSAL 2.
PROPOSAL TO APPROVE ADOPTION OF THE NEW
RESTRICTED STOCK PLAN FOR EXECUTIVE OFFICERS
(PROPOSAL 3)
We are also asking our shareholders to approve the Universal Compression
Holdings, Inc. Restricted Stock Plan for Executive Officers. This is a new plan
that will provide participants with grants of our common stock that will vest
over time.
Our Board of Directors approved development of the Restricted Stock Plan on
April 20, 2001, subject to approval by our shareholders. Approval of the
Restricted Stock Plan requires the affirmative vote of the majority of the votes
cast at the Annual Meeting so long as the total votes cast on this proposal
represent at least a majority of the shares entitled to vote at the Annual
Meeting.
The Board believes the Restricted Stock Plan will provide long-term
incentives to, and a means of rewarding outstanding performance by, selected key
employees who contribute, and are expected to contribute, materially to our
success. The Board also believes the Restricted Stock Plan will enhance the
interest of these key employees in our success and progress as well as our
ability to maintain a competitive position in attracting and retaining qualified
key personnel necessary for our continued success and progress.
The following paragraphs summarize the principal features of the Restricted
Stock Plan. This summary is subject, in all respects, to the terms of the
Restricted Stock Plan, which is attached as Annex III to this Proxy Statement.
Key employees selected to participate in the plan by the Board or
administering committee are those officers whose performance and
responsibilities are determined to be influential to our success. It is
anticipated that approximately seven key employees will participate in the
Restricted Stock Plan initially. The Company may not grant more than 350,000
shares of restricted stock under the Restricted Stock Plan, but that number may
be adjusted upward or downward by the Board or the administering committee in
the event the outstanding shares of our common stock are increased or decreased
through stock dividends, recapitalizations, stock splits, reorganizations or
similar changes.
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The Restricted Stock Plan is administered by the Board or a committee
appointed by the Board, consisting of at least two members of the Board. The
Board or administering committee will have full authority to interpret the plan,
to establish rules and regulations concerning the plan, and to make all
determinations necessary or advisable for the administration of the plan. The
Board may amend, alter, or discontinue the Restricted Stock Plan at any time,
but any amendment, alteration or discontinuation cannot adversely affect any
awards of restricted stock previously granted. In addition, no amendment which
increases the aggregate number of shares of common stock that may be issued
pursuant to the Restricted Stock Plan will be effective unless the amendment is
approved by our shareholders. Subject to the specific terms of the Restricted
Stock Plan, the Board or the administering committee may accelerate any award of
restricted stock or waive any conditions or restrictions to such award.
The Restricted Stock Plan contemplates that certain terms of the awards of
restricted stock under the plan, including the number of shares granted, vesting
schedules and forfeiture restrictions, will be specified in a Restricted Stock
Agreement between the Company and the individual key employee. Each individual
Restricted Stock Agreement will be subject to the Restricted Stock Plan, but the
terms and conditions of the separate Restricted Stock Agreements are not
required to be identical and may be changed from time to time as determined by
the Board or administering committee.
The Board or the administering committee will determine the vesting
schedule and forfeiture restrictions for any awards under the Restricted Stock
Plan, which will be specified in the Restricted Stock Agreement with each
participant. We currently anticipate that the restricted shares will vest 0%
upon the first anniversary of the grant and 25% on each anniversary thereafter
through the fifth anniversary as long as the participant continues employment
with the Company, except that the initial grants for 2001 referenced below shall
vest 0% upon January 1, 2002 and 25% on each January 1 thereafter through
January 1, 2006.
Subject to the provisions of a particular Restricted Stock Agreement,
termination of employment for any reason during the vesting period will result
in forfeiture of the unvested stock. Under the plan, participants will have the
right to vote the shares and receive any cash dividends payable on the shares
during the vesting period. Unless provided otherwise in the applicable
Restricted Stock Agreement or a written employment agreement with the
participant, the restricted shares will immediately vest on the occurrence of a
change of control as defined in the plan, which includes certain tender offers,
mergers, share exchanges, transfers of voting power or a sale of substantially
all of the assets.
The following table illustrates the number of restricted shares approved by
the Board to be granted under the Restricted Stock Plan, subject to the plan
being approved by our shareholders, and the value of such shares based on the
closing price of our common stock on the New York Stock Exchange on July 3,
2001:
RESTRICTED STOCK PLAN BENEFITS
NUMBER OF
RESTRICTED
NAME AND POSITION DOLLAR VALUE SHARES GRANTED
----------------- ------------ --------------
Stephen A. Snider.......................................... $ 849,000 30,000
President & Chief Executive Officer
Ernie L. Danner............................................ 566,000 20,000
Executive Vice President
Richard W. FitzGerald...................................... 566,000 20,000
Senior Vice President & Chief Financial Officer
Kirk E. Townsend........................................... 283,000 10,000
Senior Vice President of Sales
Jack B. Hilburn, Jr. ...................................... 283,000 10,000
Senior Vice President of Operations
All executive officers as a group (7 persons).............. $3,113,000 110,000
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The following is only a brief summary of the effect of federal income
taxation on the recipient and the Company under the Restricted Stock Plan, based
on the Internal Revenue Code. This summary does not purport to be complete and
does not discuss the income tax laws of any municipality, state or country
outside the United States in which a restricted stock recipient may reside.
A recipient will not recognize any taxable income at the time he or she is
granted shares of restricted stock, until such time as the shares are vested. At
that time, the recipient will recognize ordinary income measured by the then
fair market value of the vested shares. When the recipient sells the shares, any
difference between the sales price and the fair market value at the time of
vesting may be treated as capital gain (or loss). At the time of vesting, the
Company will be entitled to a tax deduction in the amount of the ordinary income
recognized by the recipient. A recipient may elect (within 30 days of the
transfer of the shares) an alternative tax treatment under the Internal Revenue
Code to cause the acceleration of income recognition to occur at the time of
grant, which will also accelerate the timing of the Company's deduction and
modify the recipient's resale treatment.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF OUR
PROPOSED RESTRICTED STOCK PLAN FOR EXECUTIVE OFFICERS AS DESCRIBED IN THIS
PROPOSAL 3.
PROPOSAL TO APPROVE ADOPTION OF THE NEW
DIRECTORS' STOCK PLAN
(PROPOSAL 4)
We are asking our shareholders to also approve the new Directors' Stock
Plan, which provides our non-employee directors the opportunity to receive our
common stock as payment for all or part of their director retainer fees. The
Board believes that the plan will align the interests of directors in the
Company's welfare with that of the Company's shareholders and promote the
attraction and retention of able persons to serve as directors. The approval of
the plan requires the affirmative vote of the majority of the votes cast so long
as the total votes cast on this proposal represent at least a majority of the
shares entitled to vote at the Annual Meeting.
The plan applies only to directors who are not employees of Universal
Compression Holdings, Inc. or of any of its subsidiaries and who receive
director fees. Five of our directors currently are eligible to participate in
the plan. An aggregate of 15,000 shares of our common stock are available for
issuance under the plan, subject to adjustment for stock dividends, stock
splits, share combinations, recapitalizations, reorganizations, mergers, share
exchanges or other similar transactions.
Under the plan, each eligible director may, prior to the beginning of each
fiscal year, elect to receive a percentage (either 0%, 25%, 50%, 75% or 100%) of
his or her next fiscal year's director fees in common stock. Directors who do
not submit an election will continue to receive their fees in cash. Elections
are made annually but are irrevocable for that fiscal year. For newly elected or
appointed directors, the election must be made within 30 days of commencing
service. Current eligible directors will have 30 days after the date of adoption
of the plan, if approved by our shareholders, to make an election with respect
to their director fees for the remainder of the fiscal year ended March 31,
2002.
A director electing to receive all or part of his or her fees in the form
of stock will receive, as of the end of each quarter, the number of shares
determined by dividing the dollar amount of fees for such quarter that the
director has elected to receive in stock by the last reported sales price per
share on the last day of such quarter.
Eligible directors may also elect to defer, for any period of time of not
less than six months, the receipt of all or a portion (either 25%, 50%, 75% or
100%) of the director fees that the director has elected to receive in stock.
The election, which is irrevocable, must be made at the time the director makes
the election to receive all or a portion of his or her director fees in the form
of stock.
The deferral period will automatically terminate upon the director's
retirement, termination of service, death or disability. The Board may also
accelerate the termination of the deferral period in the event of a change of
control of the Company.
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Upon termination of the deferral period, the Company will issue shares
unless the director elects at that time, subject to approval by the Board or the
administering committee, to receive the shares in equal annual installments over
not more than five years. Upon issuance of the shares, the director will
recognize income, and the Company will be allowed to take a deduction in an
amount equal to the fair market value of the stock at the time of issuance.
The summary of the plan set forth above is subject to the terms of the
Directors' Stock Plan attached to this Proxy Statement as Annex IV.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF OUR
PROPOSED DIRECTORS' STOCK PLAN AS DESCRIBED IN THIS PROPOSAL 4.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 5)
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Deloitte & Touche LLP to serve as the Company's independent auditors
for the fiscal year ending March 31, 2002, subject to ratification of the
appointment by the shareholders. Deloitte & Touche has served as the Company's
independent auditors since 1998 when the Company was formed and is considered by
management to be well qualified.
We have been advised by Deloitte & Touche LLP that neither the firm, nor
any member of the firm, has any financial interest, direct or indirect, in any
capacity in the Company or its subsidiaries.
One or more representatives of Deloitte & Touche LLP will be present at
this year's Annual Meeting of Shareholders. The representatives will have an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the votes cast by the holders of the shares of
our common stock voting in person or by proxy at the meeting. If our
shareholders do not ratify the appointment of Deloitte & Touche LLP, our Board
of Directors will reconsider the appointment.
AUDIT FEES
The aggregate fees billed by Deloitte & Touche for professional services
rendered for the audit of our annual financial statements for the fiscal year
ended March 31, 2001 and for the reviews of the financial statements included in
our Quarterly Reports on Form 10-Q for the same fiscal year were approximately
$235,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No professional services were rendered or fees billed by Deloitte & Touche
for information technology services relating to financial information systems
design and implementation for the fiscal year ended March 31, 2001.
ALL OTHER FEES
The aggregate fees billed by Deloitte & Touche for services rendered to the
Company, other than the services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees" for the fiscal
year ended March 31, 2001 were approximately $410,000.
The Audit Committee has considered whether the provision of non-audit
services by Deloitte & Touche is compatible with maintaining the independent
auditor's independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT AUDITORS.
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EXPENSES OF SOLICITATION
We will bear all expenses incurred in connection with the solicitation of
proxies. We have not engaged anyone to assist with the solicitation of proxies.
However, our directors, officers and employees may solicit proxies by mail,
telephone and personal contact. They will not receive any additional
compensation for these activities. In addition, we will reimburse brokers,
fiduciaries and custodians for their costs in forwarding proxy materials to
beneficial owners of common stock held in their names.
PROPOSALS OF SHAREHOLDERS FOR 2002 ANNUAL MEETING
We must receive proposals of shareholders intended to be presented at the
2002 Annual Meeting of Shareholders no later than March 15, 2002 in order for
the proposals to be eligible for inclusion in our Proxy Statement and proxy
relating to that meeting. These proposals should be sent to our Corporate
Secretary via facsimile to (713) 466-6720 or by mail to our Corporate Secretary,
4440 Brittmoore Road, Houston, Texas 77041-1734.
According to our By-laws, a proposal for action to be presented by any
shareholder at an annual or special meeting of shareholders shall be out of
order and shall not be acted upon unless
- specifically described in our notice to all shareholders of the meeting
and the matters to be acted upon thereat, or
- the proposal shall have been submitted in writing to the Corporate
Secretary at the above facsimile number or mailing address and received
at our principal executive offices no earlier than April 29 or later than
May 29, 2002 and such proposal is, under law, an appropriate subject for
shareholder action.
Our By-laws are filed as Exhibit 3.5 to Amendment Number Two to the
Registration Statement on Form S-1 filed with the SEC on May 22, 2000 (File No.
333-34090), or you may contact Mark L. Carlton, our Senior Vice President,
General Counsel and Secretary, at our principal corporate office for a copy of
the relevant By-law provisions regarding the requirements for making shareholder
proposals and nominating director candidates.
OTHER INFORMATION
We do not know of any proposals or other items, other than those referred
to in the accompanying Notice of Annual Meeting of Shareholders, that may
properly come before the meeting or other matters incident to the conduct of the
meeting.
As to any other proposal or item that may properly come before the meeting,
including voting on a proposal omitted from this Proxy Statement pursuant to the
rules of the SEC, it is intended that proxies will be voted in accordance with
the discretion of the proxy holders.
The form of proxy and this Proxy Statement have been approved by the Board
of Directors and are being mailed and delivered to shareholders by its
authority.
THE 2001 ANNUAL REPORT TO SHAREHOLDERS INCLUDES OUR FINANCIAL STATEMENTS FOR THE
FISCAL YEAR ENDED MARCH 31, 2001. WE HAVE MAILED THE 2001 ANNUAL REPORT TO ALL
OF OUR SHAREHOLDERS. THE 2001 ANNUAL REPORT DOES NOT FORM ANY PART OF THE
MATERIAL FOR THE SOLICITATION OF PROXIES.
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ANNEX I
UNIVERSAL COMPRESSION HOLDINGS, INC.
AUDIT COMMITTEE CHARTER
ROLE AND INDEPENDENCE
The Audit Committee of the Board of Directors assists the board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and reporting practices of the Corporation and such other
duties as directed by the Board. The membership of the Committee shall consist
of at least three directors who are generally knowledgeable in financial and
auditing matters, including at least one member with accounting or related
financial management expertise. Each member shall be free of any relationship
that, in the opinion of the Board, would interfere with his or her individual
exercise of independent judgment. The Committee is expected to maintain free and
open communication (including private executive sessions) with the independent
accountants, the internal auditors and the management of the Corporation. In
discharging this oversight role, the Committee is empowered to investigate any
matter brought to its attention (with full power to retain outside counsel or
other experts for this purpose). This charter shall be reviewed and updated
periodically as appropriate.
RESPONSIBILITIES
The Audit Committee's primary responsibilities include:
- Primary input into the recommendation to the Board for the selection and
retention of the independent accountant that audits the financial
statements of the Corporation. In the process, the Committee will discuss
and consider the auditor's written affirmation that the auditor is in
fact independent, will review the fees and other significant compensation
paid to the auditor, will discuss the nature and rigor of the audit
process, receive and review all reports and will provide to the
independent accountant full access to the Committee (and the Board) to
report on any and all appropriate matters.
- Provision of guidance and oversight to the internal audit function of the
Corporation, including review of the organization, plans and results of
such activity.
- Review of financial statements (including Forms 10-Q and 10-K) with
management and the independent auditor. It is anticipated that these
discussions will include quality of earnings, review of reserves and
accruals, consideration of the suitability of accounting principles,
review of highly judgmental areas, audit adjustments and such other
inquiries as may be appropriate.
- Discussion with management and the auditors of the quality and adequacy
of the Corporation's internal controls.
- Discussion with management of the status of pending litigation, taxation
matters and other areas of oversight to the legal and compliance area as
may be appropriate.
- Reporting on audit committee activities to the full Board (and issuance
annually of a summary report suitable for submission to stockholders).
- Meet with representatives of the Corporation and independent auditors
prior to the release of financial information.
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ANNEX II
UNIVERSAL COMPRESSION HOLDINGS, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
1.01 Purpose. The Universal Compression Holdings, Inc. Employee Stock
Purchase Plan, which has been adopted by the Board of Directors, is intended to
encourage employees of Universal Compression Holdings, Inc. ("Universal") to
remain in its employ and participate in its growth by providing a method whereby
employees of Universal and its eligible Subsidiary Corporations (collectively,
with Universal, the "Company") will have an opportunity to acquire a proprietary
interest in the Company's long-term performance and success through the purchase
of shares of the Common Stock at a price that may be less than the fair market
value of the stock on the date of purchase from funds accumulated through
payroll deductions. It is the intention of the Company to have the Plan qualify
as an "employee stock purchase plan" under section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"). The provisions of the Plan shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
ARTICLE II
DEFINITIONS
2.01 "Base Pay" means regular straight-time earnings excluding payments
for overtime, shift premium, bonuses and other special payments, commissions and
other incentive payments.
2.02 "Board" means the Board of Directors of Universal.
2.03 "Common Stock" means the Common Stock, $0.01 par value, of Universal.
2.04 "Committee" means the committee appointed by the Board pursuant to
Article X to administer the Plan. If the Board does not appoint a Committee, or
if a Committee otherwise fails to exist at any time during the term hereof, the
Board shall perform the functions of the Committee.
2.05 "Employee" means any person who is customarily employed, within the
meaning of Code section 3401, by the Company (i) more than 20 hours per week or
(ii) at least five months in any calendar year. The Committee shall determine
when an Employee's period of employment terminates and when such period of
employment is deemed to be continued during an approved leave of absence.
2.06 "Offering" means any offering as described in Section 4.02 hereof
permitting Participants to purchase Common Stock under the Plan.
2.07 "Offering Commencement Date" means the date on which an Offering will
commence, as described in Section 4.02.
2.08 "Offering Period" means the period between the Offering Commencement
Date and the Offering Termination Date, as described in Section 4.02.
2.09 "Offering Termination Date" means the last day of an Offering Period,
as described in Section 4.02.
2.10 "Participant" means an Employee who exercises an option to purchase
Common Stock under the Plan by authorizing payroll deductions under Section
5.02.
2.11 "Plan" means the Universal Compression Holdings, Inc. Employee Stock
Purchase Plan, as set forth herein and as it may be amended from time to time.
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2.12 "Subsidiary Corporation" means (i) any "subsidiary corporation" of
Universal as that term is defined in section 424(f) of the Code, (ii) any other
entity that is taxed as a corporation under Code Section 7701(a)(3) and is a
member of the "affiliated group" as defined in Code Section 1504(a) of which
Universal is the common parent, and (iii) any other entity as may be permitted
from time to time by the Code or the Internal Revenue Service to be an employer
of employees participating in the Plan; provided, however, that any such
Subsidiary Corporation must be designated as a participating employer in the
Plan by the Board.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Initial Eligibility. Except as provided in Section 3.02, any
Employee who shall have completed ninety (90) days' employment and shall be
employed by the Company on the date his participation in the Plan is to become
effective shall be eligible to participate in Offerings under the Plan which
commence on or after such ninety-day period has concluded.
3.02 Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an option to purchase Common
Stock under the Plan:
(a) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company (for purposes of this subparagraph, the rules of section 424(d) of
the Code shall apply in determining stock ownership of any Employee) and
any option granted to an Employee which results in his stock ownership (as
determined under section 423(b)(3) of the Code) equaling or exceeding such
5% limitation shall be entirely void as if it had never been granted; or
(b) which permits his rights to purchase stock under all employee
stock purchase plans of the Company to accrue at a rate which exceeds
$25,000 in fair market value of the stock (determined at the time such
option is granted) for each calendar year in which such option is
outstanding. For purposes of this subparagraph (b), (i) an option accrues
when the option first becomes exercisable during any calendar year; (ii) an
option accrues at a rate provided in the applicable Offering, but in no
case may such rate for any Employee exceed $25,000 of the fair market value
of stock determined at the time the option is granted for any one calendar
year; (iii) an option that has accrued under any one Offering may not be
carried over by a Participant to any other Offering; and (iv) only rights
to purchase stock that have been granted under an employee stock purchase
plan that complies with section 423 of the Code shall be taken into
account.
3.03 Commencement of Participation. An eligible Employee may become a
Participant by completing an authorization for a payroll deduction in accordance
with Section 5.02 on the form provided by the Company and filing it with the
Company's finance department on or before the date set therefor by the
Committee, which date shall be prior to the Offering.
ARTICLE IV
OFFERINGS
4.01 Shares Offered. The total number of shares of Common Stock available
under the Plan is Two Hundred and Fifty Thousand (250,000) shares. If any
Offering shall expire without the rights under such Offering having been
exercised in full, such unpurchased shares covered thereby shall be added to the
shares otherwise available for future Offerings.
4.02 Offerings. The Company may make periodic Offerings to eligible
employees to purchase Common Stock under the Plan, the duration of which may be
for a period of three months up to one year; provided, however, that the initial
Offering Commencement Date may be for a period of less than three months, as
determined by the Committee. Offering Periods commencing after the initial
Offering Period will commence on January 1, April 1, July 1 or October 1. With
respect to each Offering, the Committee, at its
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discretion, may specify the maximum number of shares of Common Stock that may be
purchased under the Offering or such other limitations that it may deem
appropriate. The number of shares of Common Stock that may be purchased under
each successive Offering shall be all or a portion of the balance of the Two
Hundred and Fifty Thousand (250,000) shares authorized but not purchased
previously under the terms of this Plan.
As used in the Plan, "Offering Commencement Date" means the January 1,
April 1, July 1 or October 1, as the case may be, on which the particular
Offering begins (except with respect to the initial Offering Commencement Date,
which shall be September 1, 2001). "Offering Termination Date" means the March
31, June 30, September 30 or December 31, as the case may be, on which the
particular Offering terminates, and "Offering Period" means the period from the
Offering Commencement Date to the Offering Termination Date.
ARTICLE V
PAYROLL DEDUCTIONS
5.01 Offering Rights. With respect to each Offering, each Employee shall
be offered the opportunity to elect to have deducted from each paycheck issued
during the Offering Period an amount as determined by the Participant which
shall be withheld by the Company for the purchase on behalf of such electing
Employee of the number of whole shares of Common Stock that can be purchased
with the amount deducted for such purpose, but in no event may the number of
whole shares which may be purchased by any Participant exceed the number of
whole shares available during the Offering Period or exceed the individual
Participant allotment, if any, for the Offering Period described in Section 6.03
hereof. Fractional shares may not be purchased; any funds that are insufficient
to purchase whole shares shall remain in each affected Participant's Plan
account until the following Offering Period, at which time such funds shall be
(i) combined with the Participant's payroll deduction for the following Offering
Period and used to purchase whole shares for each affected Participant who
remains eligible to participate in such Offering Period, or (ii) returned to
each affected Participant who is not eligible to participate in the following
Offering Period.
5.02 Payroll Deductions. Each Employee shall become a Participant
pursuant to the terms of an Offering by filing a written election to participate
in that Offering in the form of a payroll deduction authorization prior to the
Offering Commencement Date on the form provided by the Company for that purpose.
A Participant may elect to have his authorization continue for future Offerings
until revoked or modified in writing. A Participant may elect to have deductions
made from his pay in one of two ways. At the time a Participant files his
authorization for payroll deduction, he shall elect to have deductions made from
his pay on each payday during the time he is a Participant in an Offering at the
rate of any specified whole percentage from 1% up to and including 10% of his
Base Pay in effect at the Offering Commencement Date or the Participant shall
elect to have a specific dollar amount deducted from his pay on each payday
during the time he is a Participant pursuant to rules that may be proscribed
from time to time by the Committee; provided, however, that each payroll
deduction shall be in an amount not less than $30 per payroll period and shall
be subject to the restrictions contained in Section 3.02. In the case of a
part-time hourly Employee, such Employee's Base Pay during an Offering shall be
determined by multiplying such Employee's hourly rate of pay in effect on the
Offering Commencement Date by the number of regularly scheduled hours of work
for such Employee during such Offering. Payroll deductions shall commence with
the first regular payroll period coinciding with or ending on the Offering
Commencement Date, or at such other time as may be specified in such Offering
and shall end on the earlier of the last regular payroll period coinciding with
or ending before the Offering Termination Date or, if earlier, upon the
termination of the Participant's employment with the Company.
5.03 Method of Payment; Participant's Account. The Company will maintain
or cause to have maintained a Plan account on its books in the names of each
Participant. All payroll deductions made for a Participant shall be credited to
his account under the Plan. Purchases of shares of Common Stock by any
Participant pursuant to an Offering shall be made with funds accumulated in the
Participant's account through payroll deductions from the Participant's Base Pay
during the Offering Period. A Participant may not make any separate cash payment
into such account except when on leave of absence and then only as provided in
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Section 5.05. The Company shall not credit a Participant's Plan account with
interest on any payroll deduction.
5.04 Changes in Payroll Deductions. A Participant may discontinue his
participation in the Plan as provided in Article VII, but no other change can be
made during an Offering and, specifically, a Participant may not alter the
amount of his payroll deductions for that Offering.
5.05 Leave of Absence. If a Participant goes on a leave of absence, such
Participant shall have the right to elect (i) to withdraw the balance in his
Plan account pursuant to Article VII, (ii) to discontinue contributions to the
Plan but remain a Participant in the Plan, or (iii) to remain a Participant in
the Plan during such leave of absence, authorizing deductions to be made from
payments by the Company to the Participant during such leave of absence and
undertaking to make cash payments to the Plan at the end of each payroll period
to the extent that amounts payable by the Company to such Participant are
insufficient to meet such Participant's authorized Plan deductions.
ARTICLE VI
TERMS AND CONDITIONS OF OFFERINGS AND OPTIONS
6.01 Terms and Conditions. Except as provided in Section 3.02(b), all
Participants shall have the same rights and privileges, as specified below in
this Article VI.
6.02 Number of Option Shares. On each Offering Commencement Date, a
Participant shall be deemed to have been granted an option to purchase shares of
Common Stock of the Company equal to the percentage of the Employee's Base Pay
that he has elected to have withheld through payroll deductions multiplied by
the Employee's Base Pay during the Offering Period, or the specified portion
elected, divided by the purchase price per share determined under Section 6.04,
subject to the allotments, if any, for the Offering Period described in Section
6.03.
6.03 Allotment of Shares. If the total number of shares of Common Stock
to be purchased by Participants through payroll deduction under any Offering
exceeds the shares available for purchase under the Offering, the Committee may
make allotments of shares among the Participants on any basis consistent with
the terms of the Plan, and Offerings for shares, if any, in excess of the shares
so allotted shall be deemed to have lapsed. Any funds remaining in a
Participant's account after an Offering as a result of this Section 6.03 shall
be carried over into the next Offering, or shall be returned to the Participant
as soon as practicable if another Offering will not occur or if the Employee
does not elect to participate in the next Offering.
6.04 Purchase Price. The purchase price per share at which Common Stock
may be purchased under each Offering shall be a percentage established by the
Committee prior to the Offering Commencement Date which is from 85% to 100% of
the lesser of the fair market value of a share of Common Stock as determined as
of (i) the Offering Commencement Date or (ii) the Offering Termination Date. In
determining the purchase price, the fair market value per share of Common Stock
shall be the closing price reported, if any, on the New York Stock Exchange or
successor exchange or market system for the date on which such value is being
determined; provided, however, that if the closing sales price is not reported
on such date, then the closing price on the most recently preceding date on
which such price was reported shall be used. If no trading market on the New
York Stock Exchange exists, the Board of Directors or the Committee shall
determine the fair market value for this purpose.
6.05 Nontransferability of Options. An option shall not be transferable
by the Employee or Participant to whom it has been granted otherwise than by
will or the laws of descent and distribution and shall be exercisable, during
the Participant's lifetime, only by the Participant. Further, in the discretion
of the Board, the terms of any Offering may prohibit transfer under any
circumstances and provide for cancellation of the unexercised portion of any
option upon the death of a Participant.
6.06 Purchases. As of the Offering Termination Date, or such other date
as required by administrative operational requirements, purchases of shares of
Common Stock by any Participant pursuant to an Offering shall be made with funds
accumulated in the Participant's account through payroll deductions from the
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Participant's pay or as otherwise permitted by the Board, under rules of uniform
application over the time period specified in such Offering.
6.07 Other Provisions. Each Offering shall contain such other provisions
as the Committee shall deem advisable, including restrictions on resale of
Common Stock purchased through an Offering, provided that no such provisions may
in any way conflict, or be inconsistent with the terms of the Plan as amended
from time to time.
6.08 Requirements of Law. The issuance of any Common Stock hereunder is
conditioned upon registration or exemption of the Common Stock to be issued
under applicable federal and state securities laws and its listing on any
applicable stock exchange. In no event shall any Common Stock be issued
hereunder prior to the effective date of any such registration, exemption or
listing application. In addition, unless and until the Plan is approved by a
proper vote of the stockholders of Universal, the purchase price per share under
Section 6.04 shall be at least 100% of the fair market value determined
thereunder.
6.09 Issuance of Common Stock. The shares of Common Stock purchased by
each Participant with respect to each Offering shall be considered to be issued
and outstanding to his credit as of the close of business on the Offering
Termination Date or other purchase date for the Offering as described in Section
6.06. Certificates for shares of Common Stock shall be issued in accordance with
Section 7.02 only in the name of the Participant unless the Participant, or in
the event of death, the Participant's designee, elects otherwise by written
notice to the Company and the Company gives prior written consent to such
election.
6.10 Account Balances. No interest shall accrue at any time for any
amount credited to the account of a Participant. After the close of each
Offering, a report shall be sent to each Participant stating the entries made to
his account, the number of shares of Common Stock purchased, and the applicable
purchase price of such shares.
ARTICLE VII
WITHDRAWALS FROM PARTICIPANT ACCOUNTS
7.01 Withdrawal From Offering. Except for any officer of the Company who
is subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended (an "Insider"), any Participant may cease
participation in an Offering at any time prior to the Offering Termination Date
and withdraw all cash amounts in his account by providing at least fifteen (15)
days' prior written notice to the Company's finance department revoking his
payroll deduction authorization. Such withdrawals shall serve to cancel the
Participant's option, and the Participant shall thereupon cease his
participation in such Offering. Partial cash withdrawals shall not be permitted.
Any cash withdrawal request shall be made in such form and under such conditions
as may be specified from time to time by the Committee. Insiders may not make
cash withdrawals for so long as they remain Insiders.
7.02 Issuance of Certificates. As soon as practicable after each Offering
Period, each Participant will receive a stock certificate representing all of
the shares of Common Stock (in a whole number of shares) held in his account.
Subject to Section 6.07, a Participant shall not be permitted to pledge,
transfer, or sell shares of Common Stock held in his account until they are
issued in certificate form.
7.03 Termination of Employment. Upon termination of a Participant's
employment with the Company for any reason, whether voluntary or involuntary,
his participation in the Plan shall immediately terminate. As soon thereafter as
is practicable, the Participant, or the Participant's beneficiary in the event
of the Participant's death, shall receive (i) cash in an amount equal to the
balance in his account as of the date of his termination of employment, without
interest; (ii) a stock certificate for all whole shares of Common Stock not yet
delivered out of the account; and (iii) cash equivalent to any fractional shares
of Common Stock in the account.
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ARTICLE VIII
RECAPITALIZATION OR REORGANIZATION
AND COMMON STOCK DIVIDENDS
8.01 Merger, Consolidation, or Reorganization. In the event of a
dissolution or liquidation of the Company, or any merger, consolidation, or
share exchange pursuant to which the holders of Common Stock would receive cash,
securities or property from another person or entity, the Board, at its
election, may cause each outstanding option to terminate; provided, however,
that each Participant shall in such event, subject to such rules and limitations
of uniform application as the Board may prescribe, be entitled to the rights of
terminating Participants provided in Article VII.
8.02 Capital Adjustments. The aggregate number of shares of Common Stock
that may be purchased by the exercise of outstanding options and the purchase
price per share covered by each such outstanding option and the number of shares
of Common Stock held in a Participant's account shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of Common Stock or other capital adjustment
or the payment of a Common Stock dividend or other increase or decrease in such
shares of Common Stock effected without the receipt of consideration by the
Company.
8.03 Company's Discretion. The grant of an option under the Plan shall
not affect in any way the Company's right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business or to
merge, consolidate, dissolve, liquidate, sell, or transfer all or any part of
its business or assets.
ARTICLE IX
AMENDMENT OR TERMINATION OF THE PLAN
9.01 Amendment or Termination. The Board in its sole and absolute
discretion may suspend or terminate the Plan, reconstitute the Plan in whole or
in part, or amend or revise the Plan in any respect whatsoever except that (i)
no amendment shall cause any option to fail to qualify as an option under
section 423 of the Code; (ii) without approval of the stockholders, no amendment
shall increase the number shares of Common Stock that may be sold under the Plan
or make any change in the Employees or class of Employees eligible to
participate in the Plan; and (iii) without the approval of a Participant, no
change shall be made in the terms of any outstanding option adverse to the
interest of the Participant. The Plan shall terminate on the date that all
shares of Common Stock authorized for sale under the Plan have been purchased,
except as otherwise extended by authorizing additional shares under the Plan.
ARTICLE X
ADMINISTRATION
10.01 Appointment of Committee. If the Board appoints a Committee to
administer the Plan, the Committee shall consist of at least two directors of
Universal. The Board may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies, however caused, in the Committee.
10.02 Authority of Committee. Subject to the express provisions of the
Plan, the Committee shall have full power and authority in its discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be final, conclusive and binding on
all persons. The Committee may delegate some or all of its administrative powers
and responsibilities to such other persons from time to time as it deems
appropriate.
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ARTICLE XI
MISCELLANEOUS
11.01 Nontransferability. Except by the laws of descent and distribution,
no benefit provided hereunder shall be subject to alienation, assignment, or
transfer by a Participant (or by any person entitled to such benefit pursuant to
the terms of this Plan), nor shall it be subject to attachment or other legal
process of whatever nature, and any attempted alienation, assignment,
attachment, or transfer shall be void and of no effect whatsoever and, upon any
such attempt, the benefit shall terminate and be of no force or effect. During a
Participant's lifetime, options granted to the Participant shall be exercisable
only by the Participant. Shares of Common Stock shall be delivered only to the
Participant or death beneficiary entitled to receive the same or to the
Participant's authorized legal representative.
11.02 No Employment Right. Neither this Plan nor any action taken
hereunder shall be construed as giving any right to any individual to be
retained as an officer or Employee of the Company.
11.03 Tax Withholding. The Company shall have the right to deduct from
all payments hereunder any federal, state, local, or employment taxes that it
deems are required by law to be withheld with respect to such payments.
11.04 Government and Other Regulations. The obligation of the Company to
deliver shares of Common Stock or make cash payments hereunder shall be subject
to all applicable laws, rules, and regulations and to such approvals by any
government agencies or regulatory authority as may be deemed necessary or
appropriate by the Committee. If shares of Common Stock deliverable hereunder
may in certain circumstances be exempt from registration under the Securities
Act of 1933, as amended, the Company may restrict its transfer in such manner as
it deems advisable to ensure such exempt status. The Plan is intended to comply
with Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Any
provision inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan. The Plan shall be subject to any provision necessary
to assure compliance with federal and state securities laws.
11.05 Indemnification. Each person who is or at any time serves as a
member of the Board and/or the Committee shall be indemnified and held harmless
by Universal against and from (i) any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person may
be a party or in which such person may be involved by reason of any action or
failure to act under this Plan; and (ii) any and all amounts paid by such person
in satisfaction of judgment in any such action, suit, or proceeding relating to
this Plan except to the extent that any such loss, cost, liability or expense
arises from the gross negligence or willful misconduct of such person. Each
person covered by this indemnification shall give Universal an opportunity, at
its own expense, to handle and defend the same before such person undertakes to
handle and defend the same on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the charter or bylaws of Universal, as
a matter of law, or otherwise, or any power that Universal may have to indemnify
such person or hold such person harmless.
11.06 Reliance on Reports. Each member of the Board and the Committee
shall be fully justified in relying or acting in good faith upon any report made
by the independent public accountants of the Company and upon any other
information furnished in connection with this Plan. In no event shall any person
who is or shall have been a member of the Board and/or the Committee be liable
for any determination made or other action taken or any omission to act in
reliance upon any such report or information, or for any action taken, including
the furnishing of information, or failure to act, if in good faith.
11.07 Governing Law. All matters relating to this Plan shall be governed
by the laws of the State of Texas, without regard to the principles of conflict
of laws thereof, except to the extent preempted by the laws of the United
States.
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11.08 Relationship to Other Benefits. No payment under this Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, or group insurance plan of the Company.
11.09 Expenses. The expenses of implementing and administering this Plan
shall be borne by the Company.
11.10 Titles and Headings. The titles and headings of the Articles and
Sections in this Plan are for convenience of reference only, and in the event of
any conflict, the text of this Plan, rather than such titles or headings, shall
control.
11.11 Application of Funds. All funds received by the Company under the
Plan shall constitute general funds of the Company.
11.12 Nonexclusivity of Plan. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of Universal for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
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ANNEX III
UNIVERSAL COMPRESSION HOLDINGS, INC.
RESTRICTED STOCK PLAN
FOR EXECUTIVE OFFICERS
The Board of Directors (the "Board") has adopted the Universal Compression
Holdings, Inc. Restricted Stock Plan for Executive Officers (the "Plan"),
covering an aggregate of Three Hundred and Fifty Thousand (350,000) shares of
Common Stock, as set forth herein.
1. PURPOSE. The purposes of the Plan are to attract and retain for the
Company and its Affiliates the best available Executive Officers, to provide
additional incentive to the Executive Officers, to increase their interest in
the Company's welfare and to promote the success of the business of the Company
and its Affiliates.
2. DEFINITIONS. As used herein, unless the context requires otherwise, the
following terms shall have the meanings indicated below:
a. "Affiliate" means (i) any corporation, partnership or other entity
which owns, directly or indirectly, a majority of the voting equity
securities of the Company, or (ii) any corporation, partnership or other
entity of which a majority of the voting equity securities or equity
interest is owned, directly or indirectly, by the Company.
b. "Award" means any Restricted Stock Award granted under the Plan to
a Grantee pursuant to the terms, conditions and limitations that the
Committee may establish in order to fulfill the objectives of the Plan.
c. "Board" means the Board of Directors of the Company.
d. "Change in Control" of the Company means the occurrence of any of
the following events: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 50 percent or more of the
combined voting power of the Company's then outstanding securities; (ii) as
a result of, or in connection with, any tender offer or exchange offer,
merger, or other business combination (a "Transaction"), the persons who
were directors of the Company immediately before the Transaction shall
cease to constitute a majority of the Board of the Company or any successor
to the Company; (iii) the Company is merged or consolidated with another
corporation and as a result of the merger or consolidation less than 75
percent of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former stockholders
of the Company; (iv) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Company representing 50
percent or more of the combined voting power of the Company's then
outstanding voting securities; or (v) the Company transfers substantially
all of its assets to another corporation which is not controlled by the
Company.
e. "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute. Reference in the Plan to any section of the Code shall
be deemed to include any amendments or successor provisions to such section
and any Treasury regulations promulgated under such section.
f. "Committee" means the committee, as constituted from time to time,
of the Board that is appointed by the Board to administer the Plan;
provided, however, that while the Common Stock is publicly traded, the
Committee shall be a committee of the Board consisting solely of two or
more Outside Directors, in accordance with Section 162(m) of the Code, and
solely of two or more Non-Employee Directors, in accordance with Rule
16b-3, as necessary in each case to satisfy such requirements with respect
to Awards granted under the Plan. Notwithstanding any other provision of
this Plan to the contrary, in the absence of a committee being appointed by
the Board, the Committee shall mean the entire Board.
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g. "Common Stock" means the Common Stock, $0.01 par value per share,
of the Company or the common stock that the Company may in the future be
authorized to issue (as long as the common stock varies from that currently
authorized, if at all, only in amount of par value).
h. "Company" means Universal Compression Holdings, Inc., a Delaware
corporation.
i. "Continuous Service" means that the provision of services to the
Company in any capacity of Executive Officer is not interrupted or
terminated. Service shall not be considered interrupted or terminated for
this purpose in the case of (i) any approved leave of absence, (ii)
transfers of employment involving the Company, or any successor, in any
capacity of Executive Officer, or (iii) any change in status as long as the
individual remains in the service of the Company in any capacity of
Executive Officer. An approved leave of absence shall include sick leave,
military leave, or any other authorized personal leave.
j. "Covered Employee" means the chief executive officer and the four
other most highly compensated officers of the Company for whom total
compensation is required to be reported to shareholders under Regulation
S-K, as determined for purposes of Section 162(m) of the Code.
k. "Disability" means the "disability" of a person as defined in a
then effective long-term disability plan maintained by the Company that
covers such person, or if such a plan does not exist at any relevant time,
"Disability" means the permanent and total disability of a person within
the meaning of Section 22(e)(3) of the Code. Section 22(e)(3) of the Code
provides that an individual is totally and permanently disabled if he is
unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
l. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute. Reference in the Plan to any section of
the Exchange Act shall be deemed to include any amendments or successor
provisions to such section and any rules and regulations relating to such
section.
m. "Executive Officer" means a person who is an "Officer" of the
Company within the meaning of Section 16 of the Exchange Act (whether or
not the Company is subject to the requirements of the Exchange Act).
n. "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
i. If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing
sales price for such a share of Common Stock (or the closing bid, if no
sales were reported) as quoted on such exchange or market (or the
exchange or market with the greatest volume of trading in the Common
Stock) on the day of determination (or if no such price or bid is
reported on that day, on last market trading day prior to the day of
determination), as reported in The Wall Street Journal or such other
source as the Committee deems reliable.
ii. In the absence of any such established markets for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Committee.
o. "Grantee" means an Executive Officer to whom an Award has been
granted under the Plan.
p. "Non-Employee Director" means a director of the Company who either
(i) is not an employee or officer, does not receive compensation (directly
or indirectly) from the Company or Affiliate in any capacity other than as
a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K), does not possess an interest
in any other transaction as to which disclosure would be required under
Item 404(a) of Regulation S-K and is not engaged in a business relationship
as to which disclosure would be required under Item 404(b) of Regulation
S-K or (ii) is otherwise considered a "non-employee director" for purposes
of Rule 16b-3.
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q. "Outside Director" means a director of the Company who either (i)
is not a current employee of the Company or an "affiliated corporation"
(within the meaning of the Treasury regulations promulgated under Section
162(m) of the Code), is not a former Employee of the Company or an
"affiliated corporation" receiving compensation for prior services (other
than benefits under a tax qualified pension plan), has not been an officer
of the Company or an "affiliated corporation" at any time and is not
currently receiving (within the meaning of the Treasury regulations
promulgated under Section 162(m) of the Code) direct or indirect
remuneration from the Company or an "affiliated corporation" for services
in any capacity other than as a Director, or (ii) is otherwise considered
an "outside director" for purposes of Section 162(m) of the Code.
r. "Plan" means this Universal Compression Holdings, Inc. Restricted
Stock Plan for Executive Officers, as set forth herein and as it may be
amended from time to time.
s. "Regulation S-K" means Regulation S-K promulgated under the
Securities Act, as it may be amended from time to time, and successor to
Regulation S-K. Reference in the Plan to any item of Regulation S-K shall
be deemed to include any amendments or successor provisions to such item.
t. "Restriction Period" means the period during which the Common Stock
under a Restricted Stock Award is nontransferable and subject to
"Forfeiture Restrictions" as defined in Section 3(a) of this Plan and set
forth in the related Restricted Stock Agreement.
u. "Restricted Stock Agreement" means the written agreement evidencing
the grant of a Restricted Stock Award executed by the Company and the
Grantee, including any amendments thereto. Each Restricted Stock Agreement
shall be subject to the terms and conditions of the Plan.
v. "Restricted Stock Award" means an Award granted under Section 3 of
the Plan of shares of Common Stock issued to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights
of first refusal, repurchase provisions, forfeiture provisions and other
terms and conditions as are established by the Committee.
w. "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as it may be amended from time to time, and any successor to Rule 16b-3.
x. "Section" means a section of the Plan unless otherwise stated or
the context otherwise requires.
y. "Securities Act" means the Securities Act of 1933, as amended, and
any successor statute. Reference in the Plan to any section of the
Securities Act shall be deemed to include any amendments or successor
provisions to such section and any rules and regulations relating to such
section.
z. "Stock" means the Common Stock.
3. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS. Each Restricted Stock
Agreement shall be in such form and shall contain such terms and conditions as
the Committee shall deem appropriate. The terms and conditions of such
Restricted Stock Agreements may change from time to time, and the terms and
conditions of separate Restricted Stock Agreements need not be identical, but
each such Restricted Stock Agreement shall be subject to the terms and
conditions of this Section 3.
a. Forfeiture Restrictions. Shares of Common Stock that are the
subject of a Restricted Stock Award shall be subject to restrictions on
disposition by the Grantee and to an obligation of the Grantee to forfeit
and surrender the shares to the Company under certain circumstances (the
"Forfeiture Restrictions"). The Forfeiture Restrictions shall be determined
by the Committee in its sole discretion, and the Committee may provide that
the Forfeiture Restrictions shall lapse on the passage of time, the
attainment of one or more performance targets established by the Committee,
or the occurrence of such other event or events determined to be
appropriate by the Committee. The Forfeiture Restrictions applicable to a
particular Restricted Stock Award (which may differ from any other such
Restricted Stock Award) shall be stated in the Restricted Stock Agreement.
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b. Restricted Stock Awards. At the time any Restricted Stock Award is
granted under the Plan, the Company and the Grantee shall enter into a
Restricted Stock Agreement setting forth each of the matters addressed in
this Section 3 and such other matters as the Committee may determine to be
appropriate. Shares of Common Stock awarded pursuant to a Restricted Stock
Award shall be represented by a stock certificate registered in the name of
the Grantee of such Restricted Stock Award. The Grantee shall have the
right to receive dividends with respect to the shares of Common Stock
subject to a Restricted Stock Award, to vote the shares of Common Stock
subject thereto and to enjoy all other stockholder rights with respect to
the shares of Common Stock subject thereto, except that, unless provided
otherwise in the Restricted Stock Agreement, (i) the Grantee shall not be
entitled to delivery of the shares of Common Stock certificate until the
Forfeiture Restrictions have expired, (ii) the Company or an escrow agent
shall retain custody of the shares of Common Stock until the Forfeiture
Restrictions have expired, (iii) the Grantee may not sell, transfer,
pledge, exchange, hypothecate or otherwise dispose of the shares of Common
Stock until the Forfeiture Restrictions have expired, and (iv) a breach of
the terms and conditions established by the Committee pursuant to the
Restricted Stock Agreement shall cause a forfeiture of the Restricted Stock
Award. At the time of such Award, the Committee may, in its sole
discretion, prescribe additional terms, conditions or restrictions relating
to the Restricted Stock Award, including rules pertaining to the
termination of the Grantee's Continuous Service (by retirement, Disability,
death or otherwise) prior to expiration of the Forfeiture Restrictions.
Such additional terms, conditions or restrictions shall also be set forth
in a Restricted Stock Agreement made in connection with the Restricted
Stock Award.
c. Rights and Obligations of Grantee. One or more stock certificates
representing shares of Common Stock, free of Forfeiture Restrictions, shall
be delivered to the Grantee promptly after, and only after, the Forfeiture
Restrictions have expired. Each Restricted Stock Agreement shall require
that (i) the Grantee, by his or her acceptance of the Restricted Stock
Award, shall irrevocably grant to the Company a power of attorney to
transfer any shares so forfeited to the Company and agrees to execute any
documents requested by the Company in connection with such forfeiture and
transfer, and (ii) such provisions regarding transfers of forfeited shares
of Common Stock shall be specifically performable by the Company in a court
of equity or law.
d. Restriction Period. The Restriction Period for a Restricted Stock
Award shall commence on the date of grant of the Restricted Stock Award
and, unless otherwise established by the Committee and stated in the
Restricted Stock Award Agreement, shall expire upon satisfaction of the
conditions set forth in the Restricted Stock Agreement pursuant to which
the Forfeiture Restrictions will lapse.
e. Securities Restrictions. The Committee may impose other conditions
on any shares of Common Stock subject to a Restricted Stock Award as it may
deem advisable, including (i) restrictions under applicable state or
federal securities laws, and (ii) the requirements of any stock exchange or
national market system upon which shares of Common Stock are then listed or
quoted.
f. Payment for Restricted Stock. The Committee shall determine the
amount and form of any payment for shares of Common Stock received pursuant
to a Restricted Stock Award; provided, that in the absence of such a
determination, the Grantee shall not be required to make any payment for
shares of Common Stock received pursuant to a Restricted Stock Award,
except to the extent otherwise required by law.
g. Forfeiture of Restricted Stock. Subject to the provisions of the
particular Restricted Stock Agreement, on termination of the Grantee's
Continuous Service during the Restriction Period, the shares of Common
Stock subject to the Restricted Stock Award shall be forfeited by the
Grantee. Upon any forfeiture, all rights of the Grantee with respect to the
forfeited shares of the Common Stock subject to the Restricted Stock Award
shall cease and terminate, without any further obligation on the part of
the Company, except that if so provided in the Restricted Stock Agreement
applicable to the Restricted Stock Award, the Company shall repurchase each
of the shares of Common Stock forfeited for the purchase price per share
paid by the Grantee ("Forfeiture Repurchase Option"). The Committee will
have discretion to determine whether the Continuous Service of a Grantee
has terminated and the date
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on which such Continuous Service terminates and whether the Grantee's
Continuous Service terminated as a result of the Disability of the Grantee.
h. Lapse of Forfeiture Restrictions in Certain Events; Committee's
Discretion. Notwithstanding the provisions of Section 3(g) or any other
provision in the Plan to the contrary, the Committee may, in its discretion
and as of a date determined by the Committee, fully vest any or all Common
Stock awarded to the Grantee pursuant to a Restricted Stock Award, and upon
such vesting, all Forfeiture Restrictions applicable to such Restricted
Stock Award shall lapse or terminate. Any action by the Committee pursuant
to this Section 3(h) may vary among individual Grantees and may vary among
the Restricted Stock Awards held by any individual Grantee. Notwithstanding
the preceding provisions of this Section 3(h), the Committee may not take
any action described in this Section 3(h) with respect to a Restricted
Stock Award that has been granted to a Covered Employee if such Award has
been designed to meet the exception for performance-based compensation
under Section 162(m) of the Code.
4. ADJUSTMENT UPON CHANGES IN CAPITALIZATION AND CORPORATE EVENTS.
a. Capital Adjustments. The number of shares of Common Stock (i)
covered by each outstanding Award granted under the Plan, any exercise or
purchase price of such outstanding Award, and any other terms of the Award
that the Committee determines requires adjustment and (ii) available for
issuance shall be adjusted to reflect, as deemed appropriate by the
Committee, any increase or decrease in the number of shares of Common Stock
resulting from a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of
the Company without receipt of consideration, subject to any required
action by the Board or the shareholders of the Company and compliance with
applicable securities laws; provided, however, that a fractional share will
not be issued upon exercise of any Award, and either (i) any fraction of a
share of Common Stock that would have resulted will be cashed out at Fair
Market Value or (ii) the number of shares of Common Stock issuable under
the Award will be rounded up to the nearest whole number, as determined by
the Committee. Except as the Committee determines, no issuance by the
Company of shares of capital stock of any class, or securities convertible
into shares of capital stock of any class, shall affect, and no adjustment
by reason hereof shall be made with respect to, the number or price of
shares of Common Stock subject to an Award.
b. Dissolution or Liquidation. The Committee shall notify the Grantee
at least twenty (20) days prior to any proposed dissolution or liquidation
of the Company. Unless provided otherwise in an individual Restricted Stock
Agreement or in a then-effective written employment agreement between the
Grantee and the Company, to the extent that an Award has not been
previously exercised, the Company's repurchase rights relating to an Award
have not expired or the Forfeiture Restrictions have not lapsed, any such
Award that is a Restricted Stock Award shall be forfeited and the shares of
Common Stock subject to such Award shall be returned to the Company, in
each case, immediately prior to consummation of such dissolution or
liquidation, such Award shall terminate immediately prior to consummation
of such dissolution or liquidation.
c. Change in Control. Unless specifically provided otherwise with
respect to Change in Control events in a Restricted Stock Agreement or in a
then-effective written employment agreement between the Grantee and the
Company, if, during the effectiveness of the Plan, a Change in Control
occurs, the Forfeiture Restrictions applicable to all outstanding
Restricted Stock Awards shall lapse and shares of Common Stock subject to
such Restricted Stock Awards shall be released from escrow, if applicable,
and delivered to the Grantees of the Awards free of any Forfeiture
Restriction.
5. STOCKHOLDER APPROVAL. The Company shall obtain the approval of the Plan
by the Company's stockholders to the extent required to satisfy Section 162(m)
of the Code or to satisfy or comply with any applicable laws or the rules of any
stock exchange or national market system on which the Common Stock may be listed
or quoted. No Award that is issued prior to initial stockholder approval or as a
result of any increase in the number of shares of Common Stock authorized to be
issued under the Plan may be exercised or forfeiture restrictions lapse prior to
the time the Plan or such increase, respectively, has been
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approved by the stockholders of the Company, and all such Awards will similarly
terminate if such stockholder approval is not obtained.
6. ADMINISTRATION. This Plan shall be administered by the Committee. The
Committee shall interpret the Plan and any Awards granted pursuant to the Plan
and shall prescribe such rules and regulations in connection with the operation
of the Plan as it determines to be advisable for the administration of the Plan.
The Committee may rescind and amend its rules and regulations from time to time.
The interpretation by the Committee of any of the provisions of this Plan or any
Award granted under this Plan shall be final and binding upon the Company and
all persons having an interest in any shares of Common Stock acquired pursuant
to an Award.
7. EFFECT OF PLAN. Neither the adoption of the Plan nor any action of the
Board or the Committee shall be deemed to give any Executive Officer any right
to be granted an Award or any other rights except as may be evidenced by the
Restricted Stock Agreement, or any amendment thereto, duly authorized by the
Committee, and executed on behalf of the Company, and then only to the extent
and on the terms and conditions expressly set forth therein. The existence of
the Plan and the Awards granted hereunder shall not affect in any way the right
of the Board, the Committee or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or consolidation or
other transaction involving the Company, any issue of bonds, debentures, or
shares of preferred stock ahead of or affecting the Common Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale or transfer
of all or any part of the Company's assets or business, or any other corporate
act or proceeding by or for the Company. Nothing contained in the Plan,
Restricted Stock Agreement, or in other related documents shall confer upon any
Executive Officer any right with respect to such person's Continuous Service or
interfere or affect in any way with the right of the Company to terminate such
person's Continuous Service at any time, with or without cause.
8. NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS. Except as specifically
provided in a retirement or other benefit plan of the Company, Awards shall not
be deemed compensation for purposes of computing benefits or contributions under
any retirement plan of the Company, and shall not affect any benefits under any
other benefit plan of any kind or any benefit plan subsequently instituted under
which the availability or amount of benefits is related to level of
compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the
Employee Retirement Income Security Act of 1974, as amended.
9. AMENDMENT OR TERMINATION OF PLAN. The Board in its discretion may, at
any time or from time to time after the date of adoption of the Plan, terminate
or amend the Plan in any respect, including amendment of any form of Restricted
Stock Agreement, exercise agreement or instrument to be executed pursuant to the
Plan; provided, however, to the extent necessary to comply with the Code,
including Sections 162(m) and 422 of the Code, other applicable laws, or the
applicable requirements of any stock exchange or national market system, the
Company shall obtain stockholder approval of any Plan amendment in such manner
and to such a degree as required. No Award may be granted after termination of
the Plan. Any amendment or termination of the Plan shall not affect Awards
previously granted, and such Awards shall remain in full force and effect as if
the Plan had not been amended or terminated, unless mutually agreed otherwise in
a writing signed by the Grantee and the Company.
11. SEVERABILITY AND REFORMATION. The Company intends all provisions of
the Plan to be enforced to the fullest extent permitted by law. Accordingly,
should a court of competent jurisdiction determine that the scope of any
provision of the Plan is too broad to be enforced as written, the court should
reform the provision to such narrower scope as it determines to be enforceable.
If, however, any provision of the Plan is held to be wholly illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable and severed, and the Plan shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions of the Plan shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance.
12. GOVERNING LAW. The Plan shall be construed and interpreted in
accordance with the laws of the State of Texas.
III-6
50
13. INTERPRETIVE MATTERS. Whenever required by the context, pronouns and
any variation thereof shall be deemed to refer to the masculine, feminine, or
neuter, and the singular shall include the plural, and visa versa. The term
"include" or "including" does not denote or imply any limitation. The captions
and headings used in the Plan are inserted for convenience and shall not be
deemed a part of the Plan for construction or interpretation.
III-7
51
ANNEX IV
UNIVERSAL COMPRESSION HOLDINGS, INC.
DIRECTORS' STOCK PLAN
INTRODUCTION
The Board of Directors (the "Board") of Universal Compression Holdings,
Inc., a Delaware corporation (the "Company"), has adopted the Universal
Compression Holdings, Inc. Directors' Stock Plan (the "Plan") covering an
aggregate of fifteen thousand (15,000) shares of common stock, $0.01 par value,
of the Company ("Common Stock").
1. PURPOSE. The purpose of the Plan is to provide non-employee directors
(the "Directors") of the Company with an opportunity to receive Common Stock
from the Company as payment for their retainer fees (the "Retainer Fees") which
will:
(a) enhance their interest in the Company's welfare;
(b) furnish them an additional incentive to continue their services
for the Company; and
(c) provide an additional means through which the Company may attract
qualified persons to serve on the Board.
2. ADMINISTRATION. The Plan will be administered by a Committee appointed
by the Board from time to time; provided, however, that in the absence of a
Committee being appointed by the Board, the Committee shall mean the entire
Board. The Committee may delegate some or all of its administrative powers and
responsibilities to such other persons from time to time as it deems
appropriate.
3. PARTICIPANTS. Members of the Board of the Company who are not employees
of the Company or any subsidiary of the Company ("Participants") are eligible to
participate in the Plan.
4. GRANT OF STOCK. The eligible individual Directors, on or before March
31 of each year, may elect by written notice to the Committee to receive a
portion (which may be a percentage equal to either 0%, 25%, 50%, 75% or 100%) of
their Retainer Fees for the following fiscal year in the form of Common Stock.
Any portion that is not paid in the form of Common Stock will be paid in cash.
With respect to the portion of the Retainer Fees to be paid in Common Stock for
each quarter, the number of shares shall be determined by dividing the dollar
amount of such portion of the Retainer Fees that would otherwise be paid in cash
to the Participant for such quarter by the reported closing sales price per
share of the Common Stock of the Company on the last day of such quarter on the
New York Stock Exchange or successor exchange or market system for the date on
which such value is being determined. If a closing sales price is not reported
on the last day of an applicable quarter, then the closing sales price on the
most recently preceding date on which such price was reported shall be used.
Payment for any fractional shares shall be made in cash. The Company will issue
the shares of Common Stock as soon as practicable after the end of the
applicable quarter, unless the Participant has elected to defer the receipt of
the Common Stock pursuant to paragraph 5 of this Plan.
For eligible Directors who are first elected or appointed to the Board
during a particular fiscal year, their written election for that year must be
made within thirty (30) days after the commencement of their service as a
Director, and the election will apply to Retainer Fees to be received for
quarters commencing after the date of election. Notwithstanding any other
provision of the Plan to the contrary, all eligible Directors will be entitled
to make a written election hereunder within thirty (30) days after the date the
Plan is approved by the stockholders of the Company with respect to Retainer
Fees to be received for quarters commencing after the date of election.
Elections shall only apply to a single fiscal year but shall be irrevocable
for that year. Participants shall be fully vested in their stock at all times
upon grant.
5. ELECTION TO DEFER. Notwithstanding any other provision of the Plan to
the contrary, eligible individual Directors who elect under the Plan to receive
all or a portion of their Retainer Fees in the form of Common Stock also may
elect to defer until a later date the receipt of all or a portion (which may be
a
IV-1
52
percentage equal to either 25%, 50%, 75% or 100%) of the Retainer Fees that the
Participant has elected to receive in the form of Common Stock.
Any election by an eligible individual Director to defer Retainer Fees for
a fiscal year under this paragraph 5 of the Plan shall be made at the same time
as the election under paragraph 4 hereunder, shall be irrevocable, and may be
made for any period of time of not less than six months; provided, that any
deferral period shall automatically terminate upon the occurrence of the
retirement, termination of service, death or disability of the electing
individual Director. The Board, in its discretion, may accelerate the
termination of deferral periods in the event of a change in control of the
Company. For purposes of the Plan, a "change in control" of the Company means
the occurrence of any of the following events: (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 50 percent or more of the combined voting power of the
Company's then outstanding securities; (ii) as a result of, or in connection
with, any tender offer or exchange offer, merger, or other business combination
(a "Transaction"), the persons who were directors of the Company immediately
before the Transaction shall cease to constitute a majority of the Board of the
Company or any successor to the Company; (iii) the Company is merged or
consolidated with another corporation and as a result of the merger or
consolidation less than 75 percent of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the aggregate by the
former stockholders of the Company; (iv) a tender offer or exchange offer is
made and consummated for the ownership of securities of the Company representing
50 percent or more of the combined voting power of the Company's then
outstanding voting securities; or (v) the Company transfers substantially all of
its assets to another corporation which is not controlled by the Company.
Any eligible individual Director who makes an election to defer hereunder
shall be credited with phantom units of Common Stock at the same time and in the
same number (plus an amount for fractional shares) as if such Director had
elected not to defer any portion of the Retainer Fees. The phantom units of
Common Stock shall be subject to adjustment as set forth in paragraph 6 of this
Plan, as if such shares represented by such phantom units had been issued. Any
dividends that are payable with respect to outstanding Common Stock shall not be
eligible for deferral hereunder and shall be paid to eligible individual
Directors at the same time and in the same amount as if the shares of Common
Stock represented by an electing Director's phantom units hereunder were
outstanding.
The Company shall issue shares of Common Stock represented by a
Participant's phantom units as soon as practicable after the termination of the
deferral period applicable to such units; provided that a Participant may elect
at the end of the deferral period, subject to approval by the Committee, to have
the shares of Common Stock represented by the phantom units distributed to the
Participant in annual installments over not more than five (5) years.
In the event of a Participant's death, the Company shall issue the shares
of Common Stock represented by the Participant's phantom units to the
Participant's estate.
6. CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The number of shares of Common
Stock covered by this Plan may be adjusted to reflect, as deemed appropriate by
the Committee in its sole discretion, any stock dividend, stock split, share
combination, exchange of shares, recapitalization, merger, consolidation,
separation, reorganization, liquidation or the like, of or by the Company.
7. INTERPRETATION. The Committee shall interpret the Plan and shall
prescribe such rules and regulations in connection with the operation of the
Plan as it determines to be advisable for the administration of the Plan. The
Committee may rescind and amend its rules and regulations.
8. AMENDMENT OR DISCONTINUANCE. The Plan may be amended (subject to
approval, if required, of the stockholders of the Company) or discontinued by
the Board.
9. EFFECT OF PLAN. Nothing in this Plan shall be construed as conferring
upon any Participant the right to continue as a director.
10. APPLICABLE LAW. This Plan shall be construed in accordance with and
governed by the laws of the State of Texas.
IV-2
53
Universal Compression Holdings, Inc. encourages all shareholders to vote their
proxies. We now provide three convenient methods of voting:
1. PROXY CARD: Complete, sign, date and return the proxy card attached below in
the enclosed envelope (no postage required);
2. TELEPHONE: Call toll-free on a touch-tone phone 1-877-779-8683, 7 days a
week, 24 hours a day; or
3. INTERNET: Log on the website http://www.eproxyvote.com/uco.
If you choose to vote via Telephone or the Internet, you will be given
instructions and asked to enter your control number, located on this
proxy card. Telephone and Internet voting access will close at midnight
on the day prior to the date of the Annual Meeting. IF YOU VOTE VIA
TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
ZUCH1B DETACH HERE
PROXY
UNIVERSAL COMPRESSION HOLDINGS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 16, 2001
I have received the Notice of Annual Meeting of Shareholders and
Proxy Statement dated July 13, 2001 of Universal Compression Holdings,
Inc. and hereby appoint Stephen A. Snider, Ernie L. Danner, Richard
W. FitzGerald and Mark L. Carlton, and each of them, as my proxies, with
full power of substitution, to represent me at the Annual Meeting of
Shareholders of the Company to be held on August 16, 2001 (and at any
adjournments or postponements of the annual meeting), and to vote all
shares of common stock that I would be entitled to vote if personally
present at the annual meeting in the manner specified on the back of
this card (or, if I do not specify how to vote, to vote all my shares
FOR all proposals described on the back of this card and to vote in the
discretion of the proxies as to any other matters coming before the
annual meeting.)
--------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED SEE REVERSE
SIDE ON REVERSE SIDE SIDE
--------------- ---------------
54
----------------- ----------------
VOTE BY TELEPHONE VOTE BY INTERNET
----------------- ----------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote is
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
-------------------------------------- ----------------------------------------
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/uco
3. Enter your 14-digit Voter Control 3. Enter your 14-digit Voter Control
Number located on your Proxy Card Number located on your Proxy Card
above your name. above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
-------------------------------------- ---------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/uco
anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
ZUCH1A DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
IF YOU CHOOSE NOT TO VOTE VIA TELEPHONE OR THE INTERNET, PLEASE PROMPTLY MARK
THIS PROXY CARD TO SPECIFY HOW YOU WOULD LIKE YOUR SHARES VOTED AND DATE, SIGN
AND MAIL IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED. OUR BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSALS REFERRED TO BELOW.
1. Election of the following persons to serve as directors until the
2004 Annual Meeting of Shareholders:
NOMINEES: (01) Thomas C. Case, (02) Uriel E. Dutton, and (03) C. Kent May.
FOR WITHHELD MARK HERE
ALL FROM ALL IF YOU PLAN
NOMINEES [ ] [ ] NOMINEES TO ATTEND [ ]
THE MEETING
MARK HERE
FOR ADDRESS
[ ] CHANGE AND [ ]
---------------------------------------------------- NOTE BELOW
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Approval of the adoption of the new Employee [ ] [ ] [ ]
Stock Purchase Plan.
3. Approval of the adoption of the new Restricted
Stock Plan for Executive Officers. [ ] [ ] [ ]
4. Approval of the adoption of the new Directors'
Stock Plan. [ ] [ ] [ ]
5. Ratification of the appointment of Deloitte &
Touche LLP as Independent Auditors. [ ] [ ] [ ]
In addition, I hereby authorize such proxies to vote my shares in their
discretion as to any other matters that may come before the Annual Meeting.
IF YOU EXECUTE AND RETURN THIS PROXY CARD BUT DO NOT SPECIFY THE MANNER IN WHICH
THE PROXIES SHOULD VOTE YOUR SHARES, THE PROXIES WILL VOTE YOUR SHARES FOR ALL
THE FOREGOING PROPOSALS AND IN THEIR DISCRETION AS TO ANY OTHER MATTERS COMING
BEFORE THE MEETING.
Please date this Proxy Card and sign your name exactly as it appears hereon.
Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian or trustee, please add your title
as such. If executed by a corporation, this Proxy Card should be signed by a
duly authorized officer. If signed by a partnership, please sign in the
partnership name by authorized person.
Signature: Date:
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Signature: Date:
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