Execution Version

 

 
DRESSER RAND GROUP INC.
 

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PARENT GUARANTY
 

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Dated as of December 28, 2007
 
 
 
 
 

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PARENT GUARANTY

PARENT GUARANTY
 
PARENT GUARANTY, dated as of December 28, 2007 (this "Guaranty"), by DRESSER
RAND GROUP INC, a Delaware corporation (the "Guarantor"), to CITIBANK
INTERNATIONAL PLC (PARIS BRANCH), a finance institution established under the
laws of England and qualified in France as a credit establishment of the
European Economic Area (the "Lessor"). Capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Participation
Agreement dated as of the date hereof among the Lessor, Dresser-Rand S.A.
(France) (the "Lessee" or the "Company"), the Persons named therein as Note
Holders and Citicorp North America, Inc., as Agent (the "Agent") (as the same
may be amended from time to time, the "Participation Agreement").
 
Preliminary Statement
 
A. The Guarantor intends this Guaranty to be an inducement for (i) the Lessor
and the Agent to enter into the transactions contemplated by the Operative
Documents, and (ii) the Note Holders to make Advances under the Notes, and
(iii) the Lessor to make the Investments, all of which the Agent, the Lessor and
the Note Holders would be unwilling to do if the Guarantor did not execute and
deliver this Guaranty.
 
B. The Guarantor will derive substantial direct and indirect hereafter from the
transaction contemplated by the Participation Agreement and the Other Operative
Documents. It is a condition precedent to the making of Investments by the
Lessor and Advances by the Note Holders under the Participation Agreement from
time to time that the Guarantor shall have executed and deliver this Guaranty.
 
NOW, THEREFORE, in consideration of the premises and intending to be legally
bound by this Guaranty, the Guarantor hereby agrees to be bound as follows:
 
1. Guaranty. The Guarantor unconditionally guarantees and agrees with the Lessor
that (i) all Rent, the Residual Value Amount, the Termination Value, all
indemnification payments required to be made pursuant to Section 9.14 of the
Participation Agreement and all other sums stated in the Operative Documents to
the extent payable by the Company thereunder will be promptly paid in full when
due, whether at stated maturity, by acceleration or otherwise, in accordance
with the provisions of the Operative Documents and (ii) the Company will
perform, comply with and observe all other obligations, covenants, terms,
conditions and undertakings of the Company (as Lessee and in its capacity as
Construction Agent) contained in the Operative Documents.
 
 
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2. Nature of the Guaranty. a) This Guaranty shall be irrevocable, and in all
events shall be continuing, unconditional and absolute, and if for any reason
any sums stated in the other Operative Documents to be payable by the Company,
or any part thereof, shall not be paid promptly when due, or any other
obligation, covenant, term, condition or undertaking of the Company contained in
any Operative Document shall not be performed, complied with or observed in
accordance with said Operative Document, subject in each case, in respect of
such obligation to pay or perform, to the terms of the Operative Documents, then
in each such instance upon demand of payment, performance, compliance or
observance, made by the Lessor to the Guarantor, the Guarantor shall pay,
perform, comply with or observe the same to or for the benefit of the Lessor
pursuant to and in accordance with the provisions of the Operative Documents,
regardless of any defenses or rights of set-off or counterclaim, regardless of
whether the Lessor shall have taken any steps to enforce its rights against the
Guarantor, the Company or any other Person, to collect such sums, or any part
thereof, and regardless of any other condition or contingency. The Guarantor
also agrees to pay on demand to the Lessor such further amounts as shall be
sufficient to cover the reasonable costs and expenses of collecting such sums,
or part thereof, or of otherwise enforcing this Guaranty, including, in any
case, reasonable compensation to their respective attorneys for all services
rendered in that connection.
 
(b) Any and all payments by the Guarantor hereunder shall be made free and clear
of and without deduction for any and all present or future Charges and all
liabilities with respect thereto. If the Guarantor shall be required by Law to
deduct any Charges from or in respect of any amounts payable hereunder, (i) the
amounts payable by the Guarantor shall be increased by the amount necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2(b)) the Lessor receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) the Guarantor shall make such deductions and (iii) the Guarantor shall pay
the full amount deducted to the relevant taxation authority or other
Governmental Authority in accordance with applicable Laws. Within fifteen
(15) days after the date of any deduction of any Charges, the Guarantor shall
furnish to the Lessor, and the Agent the original or a certified copy of a
receipt or other documentation evidencing payment thereof as is reasonably
acceptable to the Lessor.
 
3. Certain Waivers. b) The Guarantor hereby unconditionally (i) waives any
requirement that the Agent, the Lessor and the Note Holders first make demand
upon, or seek to enforce remedies against, any other Person or any of the
collateral or property of such other Person before demanding payment from, or
seeking to enforce this Guaranty against, the Guarantor; (ii) covenants that
this Guaranty will not be discharged except by complete satisfaction of all
obligations of the Company contained in the Operative Documents; (iii) agrees
that this Guaranty shall remain in full effect without regard to, and shall not
be affected or impaired by, any invalidity, illegality, irregularity or
unenforceability in whole or in part of any other Operative Document (and the
Guarantor hereby waives any defense relating to the enforceability of the
Operative Documents or any provision contained therein) or except as expressly
set forth herein or in the Operative Documents, or any limitation of the
liability of the Company thereunder or any limitation on the method or terms of
payment thereunder which may now or hereafter be caused or imposed in any manner
whatsoever; (iv) waives diligence, presentment and protest with respect to, and,
except as expressly provided herein or in the Operative Documents, any notice of
default in, the payment of any amount at any time payable under or in connection
with the Notes, the Investments or any of the Operative Documents; and
(v) agrees that each and every right, power and remedy given under this Guaranty
or any other Operative Document shall be cumulative and not exclusive, and be in
addition to all other rights, powers and remedies now or hereafter granted or
otherwise existing.
 
 
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PARENT GUARANTY
 
(b) Until all obligations of the Company under the Operative Documents have been
indefeasibly paid in full, the Guarantor hereby irrevocably waives any claim,
remedy or right that it may now have or hereafter acquire against the Company
that arise from the existence, payment, performance or enforcement of the
obligations of the Company under any other Operative Document, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or
remedy of the Agent, the Lessor or any Note Holder against the Company whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Company directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim, remedy or
right. If any amount shall be paid to the Guarantor in violation of the
preceding sentence at any time prior to the indefeasible cash payment in full of
all amounts payable under this Guaranty, such amount shall be held in trust for
the benefit of the Lessor, and shall forthwith be paid to the Lessor and be
credited and applied to the amounts payable under this Guaranty. The Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangement contemplated by the Operative Documents and that the
waiver set forth in this Section 3 is knowingly made in contemplation of such
benefits. Notwithstanding the foregoing, the obligation to hold amounts in trust
shall not have effect to the extent that it would otherwise create or take
effect as a charge or security interest over such amounts.
 
4. Absolute Obligations. The obligations, undertakings and conditions to be
performed or observed by the Guarantor under this Guaranty shall not be affected
or impaired by reason of the happening from time to time of any of the following
with respect to the Operative Documents, all without notice to, or the further
consent of, the Guarantor:
 
 
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(a) the waiver by the Agent, the Lessor, any Note Holder or any other Person of
the observance or performance by the Company or the Guarantor of any of the
obligations, undertakings or conditions contained in any of the Operative
Documents, except to the extent of such waiver;
 
(b) the extension, in whole or in part, of the time for payment of any amount
owing or payable under or with respect to any of the Notes, the Investments, the
Loan Agreement, or any other Operative Document or of any other sums or
obligations under or arising out of or on account of the Notes, the Investments,
the Loan Agreement or any other Operative Document except to the extent of such
extension;
 
(c) the modification or amendment (whether material or otherwise) of any of the
obligations of the Company, the Lessor, the Guarantor or any other guarantor
under any Operative Document, except to the extent of such modification or
amendment;
 
(d) the taking or the omission of any of the actions referred to in any other
Operative Document (including, without limitation, the giving of any consent
referred to therein);
 
(e) any failure, omission, delay or lack on the part of the Agent, the Lessor,
any Note Holder, or any other Person to enforce, assert or exercise any right,
power or remedy conferred on the Agent, the Lessor, any Note Holder or any other
Person in any of the Operative Documents or any action on the part of the Agent,
the Lessor, any Note Holder or any other Person granting indulgence or extension
in any form;
 
(f) the release or discharge of the Agent, the Lessor, the Company or any other
Person from the performance or observance of any obligation, undertaking or
condition to be performed by the Agent, the Company or any other Person under or
with respect to any Notes, the Investments or any other Operative Document by
operation of Law;
 
(g) any action, inaction or election of remedies by the Agent, the Lessor, a
Note Holder or any other Person which results in any impairment or destruction
of any subrogation rights of the Guarantor, or any rights of the Guarantor to
proceed against any other Person for reimbursement;
 
(h) the surrender by the Agent, the Lessor, any Note Holder or any other Person
of any security at any time held for the performance or observance of any of the
agreements, covenants, terms or conditions contained in the Notes or any of the
other Operative Documents;
 
 
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PARENT GUARANTY
 
(i) any event or circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor, indemnitor or surety under the
laws of the State of New York or any other applicable jurisdiction;
 
(j) any other circumstances whatsoever (with or without notice to or knowledge
of the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Guarantor with respect to its obligations
hereunder or under the other Operative Documents, in bankruptcy or in any other
instance, except based on payment or performance;
 
(k) any change in circumstances, whether or not foreseen or foreseeable, whether
or not imputable to the Guarantor, any Note Holder, the Agent or the Lessor and
whether or not such change in circumstances shall or might in any manner and to
any extent vary the risk of the Guarantor hereunder;
 
(l) any sublease or other use of any of the Property, or any sale, transfer,
disposition, grant of security interest, mortgaging or assignment by the Company
of any of its interests, rights or obligations, in, to and under the Lease, or
with respect to the Property or any part thereof, whether or not permitted by
the terms of any of the Operative Documents;
 
(m) any assignment or grant of security interest by any Note Holder or the
Lessor of all or any part of such Note Holder's or the Lessor's right, title and
interest in or in respect of its Notes, Investments or in the Property;
 
(n) any sale by the Lessor, or its successors or assigns, of the Property or any
part thereof pursuant to the terms of the Operative Documents, subject to the
application of the proceeds thereof in accordance with the Operative Documents;
 
(o) any consolidation or merger of the Company, whether permitted under the
terms of the Participation Agreement or otherwise, or the sale, transfer or
other disposition by the Company of all or substantially all of the assets
and/or liabilities of the Company or any change in the ownership of the equity
interests of the Company;
 
(p) the voluntary or involuntary liquidation, dissolution, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
the arrangement, composition or readjustment of the Company, or any other
similar proceeding affecting the status, existence, assets or obligations of the
Company, or the limitation on damages for the breach of, or the disaffirmation
of, any of the Operative Documents in any such proceeding;
 
 
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(q) any invalidity or unenforceability, for any reason, of the Lease or any
other Operative Document, or of any provision thereof, or of any of the
obligations, or any defect in the Lessor's title to, or any security interest
granted in, the Property or any part thereof; or
 
(r) any other cause, whether similar or dissimilar to the foregoing;
 
it being the intention of the Guarantor that this Guaranty be absolute and
unconditional in any and all circumstances and that this Guaranty shall be
discharged only by the indefeasible payment in full of all sums and the
performance of all obligations with respect to which this Guaranty relates.
 
5. Events of Default. An Event of Default under the Participation Agreement
shall constitute an Event of Default hereunder.
 
6. Representation and Warranties. The Guarantor represents and warrants to the
Lessor, the Agent and the Note Holders that the following shall be true and
correct on and as of the date hereof and true and correct in all material
respects on and as of each Funding Date on which a Funding shall occur (except
to the extent such representations and warranties relate expressly to an earlier
date):
 
(a) The execution, delivery and performance by the Guarantor of this Guaranty
are within the Guarantor’s corporate powers, have been duly authorized by all
necessary corporate action and do not contravene (i) the Guarantor’s charter or
by-laws or (ii) any law or any contractual restriction binding on or affecting
the Guarantor, except where such contravention would not reasonably be expected
to cause a Material Adverse Effect.
 
(b) The Guaranty is a legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor in accordance with its terms, except as
enforceability thereof may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of equity.
 
(c) the representations and warranties applicable to the Guarantor set forth in
Sections 3.01(a), (b) and (c), 3.04 through 3.10, 3.12 through 3.15 and 3.18
through 3.20 (each as amended, supplemented or otherwise modified from time to
time) of the Revolving Credit Agreement, incorporated herein by reference (the
“Incorporated Representations”), mutatis mutandis, are true and correct in all
material respects as if made on the date hereof. For purposes of this
representation, the terms defined in the Revolving Credit Agreement and used in
any of the Incorporated Representations are incorporated herein by reference.
 
 
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PARENT GUARANTY
 
7. Affirmative Covenants. The affirmative covenants applicable to the Guarantor
set forth in Sections 5.01 through 5.07, 5.09 and 5.11 (each as amended,
supplemented or otherwise modified from time to time) of the Revolving Credit
Agreement, are incorporated herein by reference (the “Incorporated Affirmative
Covenants”), mutatis mutandis. For purposes of this Section 7, the terms defined
in the Revolving Credit Agreement and used in any of the Incorporated
Affirmative Covenants are incorporated herein by reference.
 
8. Negative Covenants. The negative covenants applicable to the Guarantor set
forth in Sections 6.01 through 6.14 (each as amended, supplemented or otherwise
modified from time to time) of the Revolving Credit Agreement, are incorporated
herein by reference (the “Incorporated Negative Covenants”), mutatis mutandis.
For purposes of this Section 8, the terms defined in the Revolving Credit
Agreement and used in any of the Incorporated Negative Covenants are
incorporated herein by reference..
 
9. Waiver of Notice of Acceptance. Notice of acceptance of this Guaranty and
notice of the execution and delivery of any other instrument referred to in this
Guaranty are hereby waived by the Guarantor.
 
10. Reinstatement. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the obligations to be paid hereunder is rescinded or must otherwise be
restored or returned by any Person, upon the insolvency, bankruptcy or
reorganization of the Guarantor, or otherwise, all as though such payment had
not been made. The provisions of this Section shall survive the termination of
this Guaranty.
 
11. Term. This Guaranty shall remain in full force and effect until payment in
full of all sums payable by the Company under the Operative Documents, the
termination of all Commitments and the performance in full of all obligations of
the Guarantor in accordance with the provisions of this Guaranty, subject to
reinstatement as provided in Section 10. Subject as aforesaid, the Guarantor's
payment obligations hereunder shall be deemed satisfied upon the actual and
timely receipt by the Agent of all amounts payable hereunder in full in cash.
This Guaranty is a guaranty of payment and performance when due and not a
guaranty of collection.
 
 
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12. Severability. In case any provision of this Guaranty or any application
thereof shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions and any other application thereof
shall not in any way be affected or impaired thereby.
 
13. Time of the Essence; Successor; No Oral Modification; Enforcement. TIME IS
OF THE ESSENCE IN THIS GUARANTY AND THE TERMS HEREIN SHALL BE SO CONSTRUED. This
Guaranty shall be binding upon the Guarantor and its successors and shall inure
to the benefit of, and be enforceable by, the Lessor and its respective
successors and assigns. This Guaranty may not be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the Guarantor
and the parties required pursuant to Section 9.04 of the Participation
Agreement. This Guaranty may be enforced as to any one or more defaults either
separately or cumulatively.
 
14. GOVERNING LAW. c) THIS GUARANTY SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING SECTION 5­1401 OF THE GENERAL OBLIGATIONS LAW (OR ANY SIMILAR
SUCCESSOR PROVISION THERETO) BUT EXCLUDING ALL OTHER CONFLICT-OF-LAW RULES.
 
15. Submission to Jurisdiction. d) The Guarantor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Guaranty or any
other Operative Document, or for recognition or enforcement of any judgment, and
the Guarantor hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the extent permitted by law, in such federal court.
The Guarantor agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Guaranty shall
affect any right that the Note Holders, the Agent or the Lessor may otherwise
have to bring any action or proceeding relating to this Guaranty in the courts
of any jurisdiction.
 
(b) The Guarantor irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Guaranty or any other Operative Document in any New York State
or federal court. The Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
 
 
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16. Notices. All notices, demands, requests, consents, approvals and other
instruments hereunder shall be given in the manner and at the appropriate
address set forth in the Participation Agreement or at such other address as
such party shall designate by notice to each of the other parties hereto.
 
17. Waiver; Reliance. The Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the amounts which the Guarantor is
obligated to pay hereunder and notice of or proof of reliance by the Agent, the
Lessor or the Note Holders upon this Guaranty or acceptance of this Guaranty.
The indebtedness evidenced by the Operative Documents shall conclusively be
deemed to have been created, contracted, incurred, renewed, extended, amended or
waived in reliance upon this Guaranty, and all dealings between the Guarantor,
the Agent, the Lessor and the Note Holders shall likewise be conclusively
presumed to have been had or consummated in reliance upon this Guaranty.
 
18. Construction. The rules of construction set forth in Appendix A to the
Participation Agreement apply to this Guaranty.
 
19. Revolving Credit Agreement. If the Revolving Credit is terminated or is
otherwise no longer in effect, the Incorporated Representations, the
Incorporated Affirmative Covenants and the Incorporated Negative Covenants shall
be deemed to be the representations and warranties, affirmative covenants and
negative covenants, as applicable, in effect immediately prior to the
termination thereof.
 
 
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed
as of the day and year first above written.
 

       
DRESSER RAND GROUP INC.
 
   
   
    By:      

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Name:
  Title 

 
 
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