MANAGEMENT STOCK BUYBACK AGREEMENT
STOCK BUYBACK AGREEMENT, dated as of February 20, 1998 (the
"Agreement"), by and among Universal Compression Holdings, Inc., a Delaware
corporation ("Holdings") and the persons listed on the signature page hereto
under the heading "Purchasers" (such persons collectively referred to as the
"Purchasers").
WHEREAS, Holdings and the Purchasers are parties to the
Management Stock Purchase Agreement, dated the date hereof (the "Purchase
Agreement"), whereby each Purchaser is acquiring the number of shares of the
Common Stock of Holdings, par value $.01 per share (the "Common Stock"), and the
number of shares of the Series A Preferred Stock of Holdings, par value $.01 per
share (the "Preferred Stock") as is set forth opposite such person's name on
Annex I;
WHEREAS, in connection with such purchase, Holdings and the
Purchasers wish to set forth their understanding with respect to their
respective rights to force the sale, in the case of Holdings, or force the
purchase, in the case of the Purchasers, of the Common Stock and/or Preferred
Stock acquired pursuant to the Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. General. Except as provided in Sections 3, 4, 5 and 7 of
the Stockholders Agreement, dated as of the date hereof, by and among Holdings
and the stockholders party thereto (the "Stockholders Agreement"), each share of
Common Stock and Preferred Stock acquired by the Purchasers at any time may not
be sold, disposed of or otherwise transferred except to Holdings in accordance
with this Agreement. Each certificate representing shares of Common Stock and
Preferred Stock acquired by each Purchaser shall bear a legend to such effect.
In the event that any Purchaser, in accordance with the Stockholders Agreement,
transfers all or any shares of Common Stock or Preferred Stock to a person other
than Holdings, such transferee shall be obligated to comply with the provisions
of this Agreement. The Common Stock and Preferred Stock are sometimes
collectively referred to herein as the "Holdings Securities."
2. Call by Holdings. Within six months following such
Purchaser's termination of employment with Holdings and Universal Compression,
Inc., Holdings shall have the right to purchase from each Purchaser, all of the
Holdings Securities owned by such Purchaser for an amount equal to:
(a) in the case of Common Stock (i) where such Purchaser
resigns prior to the expiration (the "Expiration") of the Purchaser's term of
employment under such Purchaser's employment agreement, if any, or is terminated
for Cause at any time, the lesser of (x) the product of (A) the Common Share
Value (valued as of the end of the month preceding such Purchaser's resignation
from or termination of employment) multiplied by (B) the number of shares of
Common Stock held by such Purchaser, and (y) the product of
(A) the price per share of Common Stock paid by the Purchaser to acquire
such shares multiplied by (B) the number of shares of Common Stock held
by such Purchaser, or (ii) where such Purchaser resigns after the
Expiration, the Fair Market Value of such shares of Common Stock, and
(b) in the case of Preferred Stock (i) where such Purchaser
resigns prior to the Expiration or is terminated for Cause at any time, the
product of (A) the Preferred Share Value multiplied by (B) the number of shares
of Preferred Stock held by such Purchaser, or (ii) where such Purchaser resigns
after the Expiration, the Fair Market Value of such shares of Preferred Stock.
If such purchase of Holdings Securities by Holdings is
prohibited pursuant to the terms of any agreement to which Holdings is a party,
the period during which Holdings may make such purchase shall be extended by an
additional six months from the expiration of the initial six-month period.
3. Put by Purchaser. Each Purchaser shall have the right to
sell to Holdings, within three months following such Purchaser's death or
disability or termination of employment by Holdings for any reason other than
Cause, all of the Holdings Securities owned by such Purchaser for an amount
equal to:
(a) in the case of Common Stock, the Fair Market Value of such
shares of Common Stock, and
(b) in the case of Preferred Stock, the Fair Market Value of
such shares of Preferred Stock.
4. Definitions. For purposes of this Agreement:
(i) "Cause" shall mean termination (a) upon the willful and
continued failure by a Purchaser to substantially perform his duties with
Holdings or its subsidiaries (other than any such failure resulting from his
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to such Purchaser by the Board of Directors
of Holdings or such subsidiary, which demand specifically identifies the manner
in which such Purchaser is believed not to have substantially performed his
duties, or (b) a Purchaser's willful engagement in conduct which is or is likely
to become demonstrably and materially injurious to Holdings or such subsidiary,
monetarily or otherwise;
(ii) "Common Share Value" shall mean the quotient of (i) the
amount equal to the excess, if any, of the Holdings Equity Value over the
Holdings Preferred Value divided by (ii) the number of shares of Common Stock
outstanding on a fully diluted basis.
(iii) "EBITDA" shall mean, for any period, the amount equal
to: (a) the net income (or net loss) of Holdings and its subsidiaries during
such period after deduction of all expenses, taxes and other charges, determined
in accordance with generally accepted
accounting principles, after eliminating therefrom all extraordinary
items of income and expense (including the elimination of any expense
reported on the financial statements of Holdings or any subsidiary for
such period in respect of the management fee owed to Xxxxxx Xxxxxx, Inc.
("CHI") pursuant to the Management Agreement between CHI, Holdings and
Universal Compression, Inc., dated as of the date hereof); plus (b) to
the extent deducted from net income, dividends on Holdings' Preferred
Stock; plus (c) any provision for (or less any benefit from) income
taxes included in the determination of (a) above; plus (d) depreciation,
depletion and amortization; plus (e) the expenses of Holdings and its
subsidiaries charged to income for interest on indebtedness (including
the current portion thereof), determined in accordance with generally
accepted accounting principles.
(iv) "Fair Market Value" shall mean the fair market value of
the shares of Common Stock or Preferred Stock, as the case may be, that are
being purchased from or sold by a Purchaser pursuant to this Agreement, such
value to be determined by a nationally recognized investment banking firm
selected by the Board of Directors of Holdings, which selection shall be subject
to such Purchaser's approval (such approval or disapproval not to be
unreasonably withheld) within thirty (30) days of notice to him of such
selection.
(v) "Holdings Equity Value" shall mean, as of any date, an
amount equal to EBITDA for the four immediately preceding fiscal quarters,
multiplied by seven, minus the sum of (a) the amount of Holdings' indebtedness
for borrowed money (including any obligation owed in respect of capitalized
leases) (determined in accordance with generally accepted accounting principles
as set forth on Holdings' most recent quarterly balance sheet, including current
and long term portions) and accrued interest thereon, and (b) the amount of the
liquidation preference of any preferred stock (other than Preferred Stock)
outstanding and accrued dividends thereon.
(vi) "Holdings Preferred Value" shall mean the Preferred Share
Value multiplied by the number of shares of Preferred Stock outstanding on a
fully diluted basis.
(vii) "Preferred Share Value" shall mean the lesser of (a) the
Holdings Equity Value divided by the number of shares of Preferred Stock
outstanding on a fully diluted basis and (b) the liquidation value per share of
Preferred Stock assigned to the Preferred Stock, plus all accrued and unpaid
dividends thereon, if any.
5. Payment. The purchase of Holdings Securities by Holdings
pursuant to the foregoing provisions shall be paid for in cash, to the extent
permitted under the loan agreements and debt instruments relating to Holdings or
any of its subsidiaries, or, to the extent cash payments are not permitted
thereunder, by means of a subordinated payment-in-kind promissory note issued by
Holdings bearing interest, payable annually, at the lowest interest rate
required to avoid imputed interest, which note shall be repaid as soon as
permitted.
6. Further Action. Each party hereto agrees to execute and
deliver any instrument and take any action that may reasonably be requested by
any other party for the purpose of effectuating the provisions of this
Agreement.
7. Miscellaneous Provisions.
(a) Assignability; Binding Effect. Except as
otherwise provided in this Section, no right under this Agreement shall be
assignable and any attempted assignment in violation of this provision shall be
void. Holdings shall have the right to assign its rights and obligations
hereunder to any successor entity (including any entity acquiring substantially
all of the assets of Holdings), whereupon references herein to Holdings shall be
deemed to be to such successor. This Agreement, and the rights and obligations
of the parties hereunder, shall be binding upon and inure to the benefit of any
and all successors, permitted assigns, personal representatives and all other
legal representatives, in whatsoever capacity, by operation of law or otherwise,
of the parties hereto, in each case with the same force and effect as if the
foregoing persons were named herein as parties hereto.
(b) Notices. Any notice or other communication
required or which may be given hereunder shall be in writing and shall be
delivered personally, telecopied with confirmed receipt, sent by certified,
registered, or express mail, postage prepaid, or sent by a national next-day
delivery service to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice, and shall be
deemed given when so delivered personally or telecopied, or if mailed, 2 days
after the date of mailing, or, if by national next-day delivery service, on the
day after delivery to such service as follows:
(i) if to Holdings, to it at:
c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: 000-000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
(ii) if to a Purchaser, to it at:
Universal Compression, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, XX
(c) Applicable Law; Consent to Jurisdiction. This Agreement
and the validity and performance of the terms hereof shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of law or choice of law. The parties hereto hereby agree
that all actions or proceedings arising directly or indirectly from or in
connection with this Agreement shall be litigated only in the Supreme Court of
the State of New York or the United States District Court for the Southern
District of New York located in New York County, New York. To the extent
permitted by applicable law, the parties hereto consent to the jurisdiction and
venue of the foregoing courts and consent that any process or notice of motion
or other application to either of said courts or a judge thereof may be served
inside or outside the State of New York or the Southern District of New York by
registered mail, return receipt requested, directed to such party at its address
set forth in this Agreement (and service so made shall be deemed complete five
days after the same has been posted as aforesaid) or by personal service or in
such other manner as may be permissible under the rules of said courts.
(d) Entire Agreement; Amendments and Waivers.
This Agreement sets forth the entire understanding of the parties with respect
to the subject matter hereof. The failure of any party to seek redress for the
violation of or to insist upon the strict performance of any term of this
Agreement shall not constitute a waiver of such term and such party shall be
entitled to enforce such term without regard to such forbearance. This Agreement
may be amended only by the written consent of each party hereto, and each party
hereto may take any action herein prohibited or omit to take action herein
required to be performed by it, and any breach of or compliance with any
covenant, agreement, warranty or representation may be waived only by the
written waiver of the party against whom such action or inaction may negatively
affect, but, in any case, such consent or waiver shall only be effective in the
specific instance and for the specific purpose for which given.
(d) Headings. The headings in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretations of the Agreement.
(e) Severability. If any term, provision,
covenant or restriction of this Agreement, or any part thereof, is held by a
court of competent jurisdiction or any foreign federal, state, county or local
government or any other governmental, regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public policy for any
reason, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(f) Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
(g) Specific Performance. Each of the parties
hereto acknowledges and agrees that in the event of any breach of this
Agreement, the non-breaching party would be irreparably harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
shall and do hereby waive the defense in any action for specific performance
that a remedy at law would be adequate and that the parties hereto, in addition
to any other remedy to which they may be entitled at law or in equity, shall be
entitled to compel specific performance of this Agreement in any action
instituted in the Supreme Court of the State of New York or the United States
District Court for the Southern District of New York, or, in the event such
courts shall not have jurisdiction of such action, in any court of the United
States or any state thereof having subject matter jurisdiction of such action.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.
UNIVERSAL COMPRESSION HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
PURCHASERS:
/s/ Xxxxxxx Xxxxxx
------------------------------
XXXXXXX XXXXXX
/s/ Xxxxxx Xxxxxxxx
------------------------------
XXXXXX XXXXXXXX
/s/ Xxxxxx Xxxxxxx
------------------------------
XXXXXX XXXXXXX
/s/ Xxxxxx Xxxx
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XXXXXX XXXX
ANNEX I
Purchaser Number of Shares Purchase Price
--------- ---------------- --------------
Common Preferred Common Preferred
Stock Stock Stock Stock
------- --------- ------ ---------
Xxxxxxx Xxxxxx 2,000 8,000 $100,000 $400,000
Xxxxxx Xxxxxxxx 960 3,840 $48,000 $192,000
Xxxxxx Xxxxxxx -- -- -- --
Xxxxxx Xxxx -- -- -- --
