Exhibit
10.20


EXECUTION
VERSION


 


PLEDGE AND SECURITY AGREEMENT

(Assignment of Pledged Securities)


 


made by


UNIVERSAL COMPRESSION INTERNATIONAL INC.,


ENTERRA COMPRESSION INVESTMENT
COMPANY,


UNIVERSAL COMPRESSION SERVICES, LLC,


UNIVERSAL COMPRESSION CANADIAN
HOLDINGS, INC.,


UCI GP LP LLC, and


UCO GP, LLC, 

as Pledgors


 


to


 


WACHOVIA BANK, NATIONAL ASSOCIATION, 

as US Administrative Agent


 


Effective as of October 20, 2006















TABLE OF
CONTENTS


	
   

  	
   

  	
  ARTICLE 1

  	
   

  	
   

  
	
   

  	
   

  	
  Security
  Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Pledge

  	
   

  	
  2

  
	
  Section 1.02

  	
   

  	
  Collateral

  	
   

  	
  2

  
	
  Section 1.03

  	
   

  	
  No Subrogation

  	
   

  	
  3

  
	
  Section 1.04

  	
   

  	
  Amendments, Etc. with respect to the Obligations

  	
   

  	
  3

  
	
  Section 1.05

  	
   

  	
  Waivers

  	
   

  	
  4

  
	
  Section 1.06

  	
   

  	
  Pledge Absolute and Unconditional

  	
   

  	
  4

  
	
  Section 1.07

  	
   

  	
  Reinstatement

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  2

  	
   

  	
   

  
	
   

  	
   

  	
  Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Terms Defined Above

  	
   

  	
  6

  
	
  Section 2.02

  	
   

  	
  Certain Definitions

  	
   

  	
  6

  
	
  Section 2.03

  	
   

  	
  Credit Agreement Terms

  	
   

  	
  8

  
	
  Section 2.04

  	
   

  	
  Section References

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  3

  	
   

  	
   

  
	
   

  	
   

  	
  Representations
  and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Ownership of Collateral; Encumbrances

  	
   

  	
  8

  
	
  Section 3.02

  	
   

  	
  No Required Consent

  	
   

  	
  8

  
	
  Section 3.03

  	
   

  	
  Pledged Securities

  	
   

  	
  8

  
	
  Section 3.04

  	
   

  	
  First Priority Security Interest

  	
   

  	
  8

  
	
  Section 3.05

  	
   

  	
  Collateral

  	
   

  	
  9

  
	
  Section 3.06

  	
   

  	
  Pledgor’s Location

  	
   

  	
  9

  
	
  Section 3.07

  	
   

  	
  Benefit to the Pledgor

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  4

  	
   

  	
   

  
	
   

  	
   

  	
  Covenants
  and Agreements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Covenants in Credit Agreement

  	
   

  	
  9

  
	
  Section 4.02

  	
   

  	
  Maintenance of Perfected Security Interest; Further
  Documentation

  	
   

  	
  9

  
	
  Section 4.03

  	
   

  	
  Changes in Locations, Name, Etc

  	
   

  	
  10

  
	
  Section 4.04

  	
   

  	
  Pledged Securities

  	
   

  	
  10

  
	
  Section 4.05

  	
   

  	
  Certain Liabilities

  	
   

  	
  11

  
	
  Section 4.06

  	
   

  	
  Article 8 of the UCC

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  5

  	
   

  	
   

  
	
   

  	
   

  	
  Remedial
  Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  UCC and Other Remedies

  	
   

  	
  12

  
	
  Section 5.02

  	
   

  	
  Pledged Securities

  	
   

  	
  13

  



 



 i
 








 


	
  Section 5.03

  	
   

  	
  Private Sales of Pledged Securities

  	
   

  	
  15

  
	
  Section 5.04

  	
   

  	
  Non-Judicial Enforcement

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  6

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Administrative Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Administrative Agent’s Appointment as
  Attorney-in-Fact, Etc

  	
   

  	
  15

  
	
  Section 6.02

  	
   

  	
  Duty of Administrative Agent

  	
   

  	
  17

  
	
  Section 6.03

  	
   

  	
  Filing of Financing Statements

  	
   

  	
  18

  
	
  Section 6.04

  	
   

  	
  Authority of Administrative Agent

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE
  7

  	
   

  	
   

  
	
   

  	
   

  	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Waiver

  	
   

  	
  18

  
	
  Section 7.02

  	
   

  	
  Notices

  	
   

  	
  18

  
	
  Section 7.03

  	
   

  	
  Amendments in Writing

  	
   

  	
  18

  
	
  Section 7.04

  	
   

  	
  Successors and Assigns

  	
   

  	
  18

  
	
  Section 7.05

  	
   

  	
  Survival; Revival; Reinstatement

  	
   

  	
  19

  
	
  Section 7.06

  	
   

  	
  Counterparts; Effectiveness; Conflicts

  	
   

  	
  19

  
	
  Section 7.07

  	
   

  	
  Severability

  	
   

  	
  20

  
	
  Section 7.08

  	
   

  	
  Governing Law; Submission to Jurisdiction

  	
   

  	
  20

  
	
  Section 7.09

  	
   

  	
  Headings

  	
   

  	
  21

  
	
  Section 7.10

  	
   

  	
  Acknowledgments

  	
   

  	
  21

  
	
  Section 7.11

  	
   

  	
  Additional Pledgors and Pledgors

  	
   

  	
  22

  
	
  Section 7.12

  	
   

  	
  Releases

  	
   

  	
  22

  
	
  Section 7.13

  	
   

  	
  Acceptance

  	
   

  	
  23

  



 


 


ANNEXES:


I                                            Form
of Assumption Agreement


II                                        Form
of Supplement


 


SCHEDULES:


1                                          Notice
Addresses of Pledgors


2                                          Description
of Pledged Securities


3                                          Filings
and Other Actions Required to Perfect Security Interests


4                                          Location
of Jurisdiction of Organization and Chief Executive Office



 ii














PLEDGE AND SECURITY AGREEMENT


(Assignment of Pledged Securities)


This PLEDGE AND SECURITY AGREEMENT, dated as of October
20, 2006, is made by UNIVERSAL COMPRESSION INTERNATIONAL, INC., a Delaware
corporation, ENTERRA COMPRESSION INVESTMENT COMPANY, a Delaware corporation,
UNIVERSAL COMPRESSION SERVICES, LLC, a Delaware limited liability company,
UNIVERSAL COMPRESSION CANADIAN HOLDINGS, INC., a Delaware corporation, UCI GP
LP LLC, a Delaware limited liability company and UCO GP, LLC, a Delaware
limited liability company with principal offices at 4444 Brittmoore Road,
Houston, Texas 77041 (the “Pledgors”), in favor of WACHOVIA BANK,
NATIONAL ASSOCIATION, with offices at 301 South College Street, Charlotte,
North Carolina 28288, as Administrative Agent (in such capacity, the “US Administrative
Agent”) for itself and the lenders and other financial institutions (the “Lenders”)
from time to time party to the Senior Secured Credit Agreement dated of even
date herewith (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Universal Compression, Inc., a
Texas corporation (“UCI”), and Universal Compression Holdings, Inc., a
Delaware corporation (“Holdings” and together with UCI, the “US
Borrowers”), UC Canadian Partnership Holdings Company, a Nova Scotia
unlimited liability company (“UC Canadian Holdings”), and Universal
Compression Canada, Limited Partnership, a Nova Scotia limited partnership (“Universal
Canada” and together with UC Canadian Partnership, the “Canadian Borrowers”
and together with the US Borrowers, the “Borrowers”), the US
Administrative Agent, Wachovia Capital Finance Corporation (Canada), as
Canadian Administrative Agent, Deutsche Bank Trust Company Americas, as Syndication
Agent, Wachovia Capital Markets, LLC and Deutsche Bank Securities Inc., as the
Joint Lead Arrangers and Joint Lead Book Runners, and each of the other Agents
and Lenders party thereto.


R E C I T A L S


A.                                   The
Borrowers have requested that the Lenders provide certain loans to and
extensions of credit on behalf of the Borrowers.


B.                                     The
Lenders have agreed to make such loans and extensions of credit subject to the
terms and conditions of the Credit Agreement.


C.                                     It
is a condition precedent and a continuing covenant to the obligation of the
Lenders to make their loans and extensions of credit to the Borrowers under the
Credit Agreement that the Pledgors shall have executed and delivered this
Agreement to the US Administrative Agent for the ratable benefit of the
Lenders.


D.                                    NOW,
THEREFORE, in consideration of the premises and to induce the US Administrative
Agent and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective extensions of credit to the Borrowers
thereunder, the parties hereto agree as follows:



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ARTICLE 1

Security Interest


Section 1.01                                Pledge.  Each Pledgor hereby pledges, assigns
transfers and grants to the US Administrative Agent for the ratable benefit of
the Secured Creditors a security interest in and right of set-off against all
of the Pledgor’s rights, whether now owned or hereafter acquired, in and to the
assets referred to in Section 1.02 (the “Collateral”) to
secure the prompt payment and performance of the “Obligations” (as
defined in Section 2.02) and the performance by such Pledgor of
this Agreement.


Section 1.02                                Collateral.


(a)                                  The
Collateral consists of the “Pledged Securities” which means: (a) the certificated
Capital Stock and the limited partnership interests and general partnership
interests in UCO General Partner, LP all as described or referred to in
Schedule 2 (as the same may be supplemented from time to time pursuant to a
Supplement in substantially the form of Annex II); and (b) (i) the
certificates or instruments, if any, representing such certificated Capital
Stock and interests, (ii) all dividends (cash, certificated Capital Stock or
otherwise), cash, instruments, rights to subscribe, purchase or sell and all
other rights and Property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such securities and
interests, (iii) all replacements, additions to and substitutions for any of
the Property referred to in this definition, including, without limitation,
claims against third parties, (iv) the proceeds, interest, profits and other
income of or on any of the Property referred to in this definition, (v) all
security entitlements in respect of any of the foregoing, if any and (vi) all
books and records relating to any of the Property referred to in this
definition.


(b)                                       It
is expressly contemplated that additional Property may from time to time be
pledged, assigned or granted to the US Administrative Agent as additional
security for the Obligations, and the term “Collateral” as used herein
shall be deemed for all purposes hereof to include all such additional
Property, together with all other Property of the types described above related
thereto; provided, however, that in no event shall the term “Collateral”
include more than 65% of the issued and outstanding shares of Capital Stock of
any Foreign Subsidiary.  All certificates
or instruments representing or evidencing the Pledged Securities shall be
delivered to and held pursuant hereto by the US Administrative Agent or a
Person designated by the US Administrative Agent and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, and accompanied by any required transfer
tax stamps to effect the pledge of the Pledged Securities to the US Administrative
Agent.  Notwithstanding the preceding
sentence, at the US Administrative Agent’s discretion, all Pledged Securities
must be delivered or transferred in such manner as to permit the US Administrative
Agent to be a “protected purchaser” to the extent of its security interest as
provided in Section 8.303 of the UCC (if the US Administrative Agent otherwise
qualifies as a protected purchaser). During the continuance of an Event of
Default, the US Administrative Agent shall have the 



 2
 








right, at any time
in its discretion and without notice, to transfer to or to register in the name
of the US Administrative Agent or any of its nominees any or all of the Pledged
Securities, subject only to the revocable rights specified in Section 5.03.  In addition, during the continuance of an
Event of Default, the US Administrative Agent shall have the right at any time
to exchange certificates or instruments representing or evidencing Pledged
Securities for certificates or instruments of smaller or larger denominations.


Section 1.03                                No
Subrogation.  Notwithstanding any
payment made by any Pledgor hereunder or any set-off or application of funds of
any Pledgor by any Secured Creditor, no Pledgor shall be entitled to be
subrogated to any of the rights of any Secured Creditor against any Borrower or
any other Pledgor or any collateral security or pledge or guarantee or right of
offset held by any Secured Creditor for the payment of the Obligations, nor
shall any Pledgor seek or be entitled to seek any indemnity, exoneration,
participation, contribution or reimbursement from any Borrower or any other
Pledgor in respect of payments made by such Pledgor hereunder, until all
amounts owing to the Secured Creditors on account of the Obligations are
irrevocably and indefeasibly paid in full in cash, no Letter of Credit is
outstanding (except for Letters of Credit secured by cash collateral as
permitted in Section 2.01(b)(iii) of the Credit Agreement) and all of the
Aggregate Commitments are terminated.  If
any amount shall be paid to any Pledgor on account of such subrogation rights
at any time when all of the Obligations shall not have been irrevocably and
indefeasibly paid in full in cash, any Letter of Credit is outstanding (except
for Letters of Credit secured by cash collateral as permitted in Section
2.01(b)(iii) of the Credit Agreement) or any of the Aggregate Commitments are
in effect, such amount shall be held by such Pledgor in trust for the Secured Creditors,
and shall, forthwith upon receipt by such Pledgor, be turned over to the US
Administrative Agent in the exact form received by such Pledgor (duly indorsed
by such Pledgor to the US Administrative Agent, if required), to be applied
against the Obligations, whether matured or unmatured, in accordance with
Section 11.02(c) of the Credit Agreement.


Section 1.04                                Amendments,
Etc. with respect to the Obligations. 
Each Pledgor shall remain obligated hereunder, and such Pledgor’s
obligations hereunder shall not be released, discharged or otherwise affected,
notwithstanding that, without any reservation of rights against any Pledgor and
without notice to, demand upon or further assent by any Pledgor (which notice,
demand and assent requirements are hereby expressly waived by such Pledgor), (a)
any demand for payment of any of the Obligations made by any Secured Creditor
may be rescinded by such Secured Creditor or otherwise and any of the
Obligations continued; (b) the Obligations, the liability of any other Person
upon or for any part thereof or any collateral security or pledge or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by, or any indulgence or
forbearance in respect thereof granted by, any Secured Creditor; (c) any Secured
Document may be amended, modified, supplemented or terminated, in whole or in
part, as the Secured Creditors may deem advisable from time to time; (d) any
collateral security, pledge, guarantee or right of offset at any time held by
any Secured Creditor for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released; (e) any additional guarantors, makers or
endorsers of the Obligations may from time to time be obligated on the
Obligations or any additional security or collateral for the payment and 



 3
 








performance of the Obligations may from time to time
secure the Obligations; and (f) any other event shall occur which constitutes a
defense or release of sureties generally. 
No Secured Creditor shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the
Obligations or for the pledge contained in this ARTICLE I or any Property
subject thereto.


Section 1.05                                Waivers.  Each Pledgor hereby waives any and all notice
of the creation, renewal, extension or accrual of any of the Obligations and
notice of or proof of reliance by any Secured Creditor upon the pledge
contained in this ARTICLE I or acceptance of the pledge contained in this
ARTICLE I; the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the pledge contained in this ARTICLE I and no notice
of creation of the Obligations or any extension of credit already or hereafter
contracted by or extended to the Borrowers need be given to any Pledgor; and
all dealings between any Borrower and any of the Pledgors, on the one hand, and
the Secured Creditors, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the pledge contained
in this ARTICLE I.  Each Pledgor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon any Borrower or any of the Pledgors with respect to the
Obligations.


Section 1.06                                Pledge
Absolute and Unconditional.


(a)                                  Except
as provided in Section 7.12, each Pledgor understands and agrees that
the pledge contained in this ARTICLE I is, and shall be construed as, a
continuing, completed, absolute and unconditional pledge, and each Pledgor
hereby waives any defense of a surety or guarantor or Pledgor or any other
obligor on any obligations arising in connection with or in respect of any of
the following and hereby agrees that its obligations hereunder shall not be
discharged or otherwise affected as a result of, any of the following:


(i)                                     the
invalidity or unenforceability of any Secured Document, any of the Obligations
or any other collateral security therefor or pledge or guarantee or right of
offset with respect thereto at any time or from time to time held by any Secured
Creditor;


(ii)                                  any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by any
Borrower or any other Person against any Secured Creditor;


(iii)                               the
insolvency, bankruptcy arrangement, reorganization, adjustment, composition,
liquidation, disability, dissolution or lack of power of any Borrower or any
other Pledgor or any other Person at any time liable for the payment of all or
part of the Obligations, including any discharge of, or bar or stay against
collecting, any Obligation (or any part of them or interest therein) in or as a
result of such proceeding;



 4
 








(iv)                              any
sale, lease or transfer of any or all of the assets of any Borrower or any
other Pledgor, or any changes in the shareholders of any Borrower or the
Pledgor;


(v)                                 any
change in the corporate existence (including its constitution, laws, rules,
regulations or power), structure or ownership of any Pledgor;


(vi)                              the
fact that any Collateral or Lien contemplated or intended to be given, created
or granted as security for the repayment of the Obligations shall not be
properly perfected or created, or shall prove to be unenforceable or
subordinate to any other Lien, it being recognized and agreed by each of the
Pledgors that it is not entering into this Agreement in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectability
or value of any of the Collateral for the Obligations;


(vii)                           the
absence of any attempt to collect the Obligations or any part of them from any
Pledgor;


(viii)                        (A) any Secured
Creditor’s election, in any proceeding instituted under chapter 11 of the Bankruptcy
Code, of the application of Section 1111(b)(2) of the Bankruptcy Code; (B) any
borrowing or grant of a Lien by the Borrowers, as debtor-in-possession, or
extension of credit, under Section 364 of the Bankruptcy Code; (C) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion
of any Secured Creditor’s claim (or claims) for repayment of the Obligations;
(D) any use of cash collateral under Section 363 of the Bankruptcy Code; (E)
any agreement or stipulation as to the provision of adequate protection in any
bankruptcy proceeding; (F) the avoidance of any Lien in favor of the Secured Creditors
or any of them for any reason; or (G) failure by any Secured Creditor to file
or enforce a claim against any Borrower or any Borrower’s estate in any
bankruptcy or insolvency case or proceeding; or


(ix)                                any
other circumstance or act whatsoever, including any action or omission of the
type described in Section 1.04 (with or without notice to or knowledge
of the Borrowers or such Pledgor), which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrowers for the
Obligations, or of such Pledgor under the pledge contained in this ARTICLE I,
in bankruptcy or in any other instance.


(b)                                 When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against any Pledgor, any Secured Creditor may, but shall be under no
obligation to, join or make a similar demand on or otherwise pursue or exhaust
such rights and remedies as it may have against any Borrower, any other Pledgor
or any other Person or against any collateral security or pledge or guarantee
for the Obligations or any right of offset with respect thereto, and any
failure by any Secured Creditor to make any such demand, to pursue such other
rights or remedies or to collect any payments from any 



 5
 








Borrower, any other Pledgor or any other Person or to realize upon any
such collateral security or pledge or guarantee or to exercise any such right
of offset, or any release of any Borrower, any other Pledgor or any other
Person or any such collateral security, guarantee or pledge or right of offset,
shall not relieve any Pledgor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of any Secured Creditor against any Pledgor.  For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.


Section 1.07                                Reinstatement.  The pledge contained in this ARTICLE I 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 is rescinded or must
otherwise be restored or returned by any Secured Creditor upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Borrower or any
Pledgor, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, any Borrower or any Pledgor
or any substantial part of its Property, or otherwise, all as though such
payments had not been made.


ARTICLE 2

Definitions


Section 2.01                                Terms
Defined Above.  As used in this
Agreement, the terms defined above shall have the meanings respectively
assigned to them.


Section 2.02                                Certain
Definitions.  As used in this
Agreement, the following terms shall have the following meanings, unless the
context otherwise requires:


“Agreement” means
this Pledge and Security Agreement, as the same may from time to time be
amended, supplemented or otherwise modified.


“Event of Default”
means any event specified in Section 6.01.


“Issuers” means
the collective reference to each issuer of Pledged Securities.


“Obligations”
means the collective reference to the payment and performance when due of all
indebtedness, liabilities, obligations and undertakings of the Borrowers and
their Restricted Subsidiaries (including, without limitation, all Indebtedness)
of every kind or description arising out of or outstanding under, advanced or
issued pursuant, or evidenced by, the Secured Documents, including, without
limitation, the unpaid principal of and interest on the Aggregate Credit
Exposure and all other obligations and liabilities of the Borrowers and their Restricted
Subsidiaries (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Loans and LC Exposure and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrowers, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) to the Secured
Creditors, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, arising out of 



 6
 








or outstanding under,
advanced or issued pursuant, or evidenced by, the Secured Documents, whether on
account of principal, interest, premium, reimbursement obligations, payments in
respect of an early termination date, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all reasonable costs, fees and
disbursements of counsel that are required to be paid by the Borrowers pursuant
to the terms of the Credit Agreement).


“Pledged Securities”
has the meaning assigned in Section 1.02(a).


“Proceeds” means
all “proceeds” as such term is defined in Section 9.102(65) of the UCC and, in
any event, shall include, without limitation, all dividends or other income
from the Pledged Securities, collections thereon or distributions or payments
with respect thereto.


“Secured Creditors”
means the collective reference to the US Administrative Agent, the Issuing
Banks, the Lenders and the Lenders and Affiliates of Lenders that are parties
to Secured Hedging Agreements.


“Secured Documents”
means the collective reference to the Credit Agreement, the other Loan
Documents, each Secured Hedging Agreement and any other document made,
delivered or given in connection with any of the foregoing.


“Secured Hedging
Agreement” means any Hedging Agreement between any Borrower or its Restricted
Subsidiary and any Lender or any Affiliate of any Lender while such Person (or,
in the case of an Affiliate of a Lender, the Person affiliated therewith) is a
Lender, including any Hedging Agreement between such Persons in existence prior
to the date hereof, but excluding any Hedging Agreement now existing or
hereafter arising in connection with the ABS Facility.  For the avoidance of doubt, a Hedging
Agreement ceases to be a Secured Hedging Agreement if the Person that is the
counterparty to a Borrower or its Restricted Subsidiary under a Hedging
Agreement ceases to be a Lender under the Credit Agreement (or, in the case of
an Affiliate of a Lender, the Person affiliated therewith ceases to be a Lender
under the Credit Agreement).


“UCC” means the
Uniform Commercial Code as from time to time in effect in the State of Texas;
provided, however, that, in the event that, by reason of mandatory provisions
of law, any of the attachment, perfection or priority of the Secured Creditors’
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of Texas, the term “UCC”
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection,
the effect thereof or priority and for purposes of definitions related to such
provisions.



 7
 








Section 2.03                                Credit
Agreement Terms.  Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.


Section 2.04                                Section References.  Unless otherwise provided for herein, all
references herein to Sections are to Sections of this Agreement.


ARTICLE 3

Representations and
Warranties


To induce the US Administrative Agent and the Lenders
to enter into the Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrowers thereunder and to induce the Lenders
(and their Affiliates) to enter into Hedging Agreements with the Borrowers and
their Subsidiaries, each Pledgor hereby represents and warrants to the US Administrative
Agent and each Lender that:


Section 3.01                                Ownership
of Collateral; Encumbrances.  Except
as otherwise permitted by the Credit Agreement, the Pledgors are the record and
beneficial owners of the Collateral free and clear of any Lien except for the
security interest created by this Agreement, and the Pledgors have full right,
power and authority to pledge, assign and grant a security interest in the
Collateral to the US Administrative Agent.


Section 3.02                                No
Required Consent.  No authorization,
consent, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body (other than the filing of financing
statements) is required for (a) the due execution, delivery and
performance by such Pledgor of this Agreement, (b) the grant by such
Pledgor of the security interest granted by this Agreement or (c) the
perfection of such security interest.


Section 3.03                                Pledged
Securities.  The Pledged Securities
required to be pledged hereunder and under the Credit Agreement by such Pledgor
are listed on Schedule 2.  The
shares and interests of Pledged Securities pledged by such Pledgor hereunder
constitute all the issued and outstanding shares and interests of all classes
of the Capital Stock of each Issuer owned by such Pledgor (or in the case of
any Issuer that is a Foreign Subsidiary, 65% of all the issued and outstanding
shares and interests of all classes of the Capital Stock of such Issuer (except
as otherwise noted on Schedule 2)). 
All the shares and interests of the Pledged Securities have been duly
and validly issued and are fully paid and nonassessable, and such Pledgor is
the record and beneficial owner of, and has good title to, the Pledged
Securities pledged by it hereunder, free of any and all Liens or options in
favor of, or claims of, any other Person, except the security interest created
by this Agreement, and has the power to transfer the Pledged Securities in
which a Lien is granted by it hereunder, free and clear of any other Lien.


Section 3.04                                First
Priority Security Interest.  The
pledge of Pledged Securities pursuant to this Agreement and the filing of
appropriate financing statements in the locations described on Schedule 3
create a valid and perfected first priority security interest in the
Collateral, enforceable against such Pledgor and all third parties and securing
payment of the Obligations.



 8
 








Section 3.05                                Collateral.  All statements to other information provided
by such Pledgor to the US Administrative Agent describing or with respect to
the Collateral is or (in the case of subsequently furnished information) will
be when provided correct and complete in all material respects.


Section 3.06                                Pledgor’s
Location.  On the date hereof, the
correct legal name of such Pledgor, such Pledgor’s jurisdiction of organization
and organizational number, and the location(s) of such Pledgor’s chief
executive office or sole place of business are specified on Schedule 4.


Section 3.07                                Benefit to the Pledgor.  The Borrowers are members of an affiliated
group of companies that includes each Pledgor. 
Each Pledgor is a Subsidiary of a US Borrower, and its guaranty and
surety obligations pursuant to this Agreement reasonably may be expected to
benefit, directly or indirectly, the Borrowers, and it has determined that this
Agreement is necessary and convenient to the conduct, promotion and attainment
of the business of such Pledgor and the Borrowers.


ARTICLE 4

Covenants and Agreements


Each Pledgor covenants and agrees with the US Administrative
Agent and the Lenders that, from and after the date of this Agreement until the
Obligations under the Credit Agreement shall have been paid in full in cash, no
Letters of Credit shall be outstanding (except for Letters of Credit secured by
cash collateral as permitted in Section 2.01(b)(iii) of the Credit Agreement)
and all of the Aggregate Commitments shall have terminated:


Section 4.01                                Covenants in Credit Agreement.  In the case of each Pledgor, such Pledgor
shall take, or shall refrain from taking, as the case may be, each action that
is necessary to be taken or not taken, as the case may be, so that no Default
or Event of Default is caused by the failure to take such action or to refrain
from taking such action by such Pledgor or any of its Subsidiaries.


Section 4.02                                Maintenance of Perfected Security Interest; Further
Documentation.  Except as set
forth in the Credit Agreement, including, without limitation, any merger,
consolidation, liquidation, sale, assignment, transfer or other disposition
permitted by Sections 10.08 and 10.14 of the Credit Agreement, each Pledgor
agrees that:


(a)                                  it
shall maintain the security interest created by this Agreement as a perfected
security interest having at least the priority described in Section 3.04
and shall defend such security interest against the claims and demands of all
Persons whomsoever;


(b)                                 it
will furnish to the US Administrative Agent and the Lenders from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the US Administrative
Agent may reasonably request, all in reasonable detail; and



 9
 








(c)                                  at
any time and from time to time, upon the written request of the US Administrative
Agent, and at the sole expense of such Pledgor, it will promptly and duly
execute and deliver, and have recorded, such further instruments and documents
and take such further actions as the US Administrative Agent may reasonably
deem necessary for the purpose of obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted, including, without
limitation, the delivery of certificated securities and the filing of any
financing or continuation statements under the UCC (or other similar domestic
laws) in effect in any jurisdiction with respect to the security interests
created hereby.


Section 4.03                                Changes in Locations, Name, Etc.  Such Pledgor recognizes that financing
statements pertaining to the Collateral have been or may be filed where such
Pledgor is organized.  Without limitation
of Section 9.03 of the Credit Agreement or any other covenant herein, such
Pledgor will not cause or permit any change in its (a) corporate name, (b) its
identity or corporate structure or in the jurisdiction in which it is
incorporated or formed, (c) its jurisdiction of organization or its
organizational identification number in such jurisdiction of organization or (d)
its federal taxpayer identification number, unless, in each case, such Pledgor
shall have first (i) notified the US Administrative Agent of such change prior
to the effective date of such change, and (ii) taken all action reasonably
requested by the US Administrative Agent for the purpose of maintaining the
perfection and priority of the US Administrative Agent’s security interests
under this Agreement.  In any notice
furnished pursuant to this Section 4.03, such Pledgor will expressly
state in a conspicuous manner that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements or
other notices for the purposes of continuing perfection of the US Administrative
Agent’s security interest in the Collateral.


Section 4.04                                Pledged Securities.  In the case of each Pledgor, such Pledgor
agrees that:


(a)                                  if
such Pledgor shall become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection with
any reorganization), option or rights in respect of the Pledged Securities of
any Issuer, whether in addition to, in substitution of, as a conversion of, or
in exchange for, any shares or interests of the Pledged Securities, or
otherwise in respect thereof, such Pledgor shall accept the same as the agent
of the Secured Creditors, hold the same in trust for the Secured Creditors,
segregated from other Property of such Pledgor, and deliver the same forthwith
to the US Administrative Agent in the exact form received, duly indorsed by
such Pledgor to the US Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Pledgor and with, if the US Administrative Agent so requests, signature
guaranteed, to be held by the US Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations; provided, that
the foregoing shall apply to 65% of such shares, interests or rights in the
case of an Issuer that is a Foreign Subsidiary;


(b)                                 without
the prior written consent of the US Administrative Agent, such Pledgor will not
(i) unless otherwise expressly permitted hereby or under the other Loan 



 10
 








Documents, vote to
enable, or take any other action to permit, any Issuer to issue any Capital
Stock of any nature or to issue any other securities convertible into or granting
the right to purchase or exchange for any Capital Stock of any nature of any
Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Pledged Securities or Proceeds thereof
(except pursuant to a transaction expressly permitted by the Credit Agreement),
(iii) except as set forth in the Credit Agreement, create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Pledged Securities or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Pledgor
or the US Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof;


(c)                                  in
the case of each Pledgor that is an Issuer, such Issuer agrees that (i) it will
be bound by the terms of this Agreement relating to the Pledged Securities
issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the US Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 4.04(a)
with respect to the Pledged Securities issued by it and (iii) the terms of Section
5.02(a) and Section 5.03 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 5.02(d) or Section
5.03 with respect to the Pledged Securities issued by it;


(d)                                 such
Pledgor shall furnish to the US Administrative Agent such stock powers and
other instruments as may be reasonably required by the US Administrative Agent
to assure the transferability of the Pledged Securities when and as often as
may be reasonably requested by the US Administrative Agent; and


(e)                                  the
Pledged Securities will at all times constitute not less than 100% of the Capital
Stock of the Issuer thereof owned by any Pledgor (or in the case of any Issuer
that is a Foreign Subsidiary, not less than 65% of the Capital Stock of such
Issuer (except as otherwise noted on Schedule 2)).  Such Pledgor will not permit any Issuer of
any of the Pledged Securities to issue any new shares or interests of any class
of Capital Stock of such Issuer unless such shares are pledged pursuant to this
Agreement.


(f)                                    Notwithstanding
any contrary provisions contained in this Agreement, with respect to Issuers
that are Foreign Subsidiaries, the Pledgors are required to pledge 65% of the Capital
Stock of such Issuers (except as otherwise noted on Schedule 2) and to
deliver the applicable certificates and stock powers duly executed in blank for
such Capital Stock to the US Administrative Agent but shall not be required to
take any additional actions to perfect the security interest of the Secured
Creditors in such Pledged Securities.


Section 4.05                                Certain
Liabilities.  Such Pledgor hereby
assumes all liability for the Collateral, the security interest created
hereunder and any use, possession, maintenance, management, enforcement or
collection of any or all of the Collateral.



 11
 








Section 4.06                                Article
8 of the UCC.  To the extent that any
Pledgor has opted into Article 8 of the UCC, such Pledgor may not opt out of
Article 8 of the UCC without the prior written consent of the US Administrative
Agent.


ARTICLE 5

Remedial Provisions


Section 5.01                                UCC and Other Remedies.


(a)                                  Upon
the occurrence and during the continuance of an Event of Default, the US Administrative
Agent, on behalf of the Secured Creditors, may exercise, in addition to all
other rights and remedies granted to them in this Agreement, the other Loan
Documents and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the UCC or any other applicable law or otherwise available at law or
equity.  Without limiting the generality
of the foregoing, the US Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon any Pledgor or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase,
or otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker’s board or office of any Secured
Creditor or elsewhere upon such commercially reasonable terms and conditions as
it may deem advisable and at such commercially reasonable prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk.  Any Secured Creditor shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in any
Pledgor, which right or equity is hereby waived and released.  Any such sale or transfer by the US Administrative
Agent either to itself or to any other Person shall, to the fullest extent
permitted under applicable law, be absolutely free from any claim of right by
any Pledgor, including any equity or right of redemption, stay or appraisal
which any Pledgor has or may have under any rule of law, regulation or statute
now existing or hereafter adopted (and such Pledgor hereby waives any rights it
may have in respect thereof).  Upon any
such sale or transfer, the US Administrative Agent shall have the right to
deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred.  The US
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 5.01, after deducting all reasonable costs and
expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the US Administrative Agent and the Secured
Creditors hereunder, including, without limitation, reasonable attorneys’ fees
and disbursements, to the payment in whole or in part of the Obligations, in
accordance with the Credit Agreement, and only after such application and after
the payment by the US Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9.615 of the UCC, need
the US Administrative Agent account for the surplus, if any, to any
Pledgor.  To the extent permitted by 



 12
 








applicable law, each
Pledgor waives all claims, damages and demands it may acquire against the US
Administrative Agent or any Secured Creditor arising out of the exercise by
them of any rights hereunder.  If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.


(b)                                 In
the event that the US Administrative Agent elects not to sell the Collateral,
the US Administrative Agent retains its rights to dispose of or utilize the
Collateral or any part or parts thereof in any manner authorized or permitted
by law or in equity, and to apply the proceeds of the same towards payment of
the Obligations.  Each and every method
of disposition of the Collateral described in this Agreement shall constitute
disposition in a commercially reasonable manner.


(c)                                  The
US Administrative Agent may appoint any Person as agent to perform any act or
acts necessary or incident to any sale or transfer of the Collateral.


Section 5.02                                Pledged Securities.


(a)                                  Unless
an Event of Default shall have occurred and be continuing and the US Administrative
Agent shall have given notice to the relevant Pledgor of the US Administrative
Agent’s intent to exercise its corresponding rights pursuant to Section 5.02,
each Pledgor shall be permitted to receive all cash dividends paid in respect
of the Pledged Securities paid in the normal course of business of the relevant
Issuer, to the extent permitted in the Credit Agreement, and to exercise all
voting, consent and corporate rights with respect to the Pledged Securities;
provided, however, that no vote shall be cast, consent given or right exercised
or other action taken by such Pledgor that would impair the Collateral or
result in any violation of any provision of the Credit Agreement, this
Agreement or any other Loan Document or, without the prior consent of the US Administrative
Agent, enable or permit any Issuer of Pledged Securities to issue any Capital
Stock or to issue any other securities convertible into or granting the right
to purchase or exchange for any Capital Stock of any Issuer of Pledged
Securities other than as permitted by the Credit Agreement.


(b)                                 Upon
the occurrence and during the continuance of an Event of Default, upon notice
by the US Administrative Agent of its intent to exercise such rights to the
relevant Pledgor or Pledgors, (i) the US Administrative Agent shall have the
right to receive any and all cash dividends, payments, Property or other
Proceeds paid in respect of the Pledged Securities and make application thereof
to the Obligations in accordance with the Credit Agreement, and (ii) any or all
of the Pledged Securities shall be registered in the name of the US Administrative
Agent or its nominee, and (iii) the US Administrative Agent or its nominee may
exercise (A) all voting, consent, corporate and other rights pertaining to such
Pledged Securities at any meeting of shareholders (or other equivalent body) of
the relevant Issuer or Issuers or otherwise and (B) any and all rights of
conversion, exchange and subscription and any other rights, privileges or options
pertaining to such Pledged Securities as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in 



 13
 








the organizational
structure of any Issuer, or upon the exercise by any Pledgor or the US Administrative
Agent of any right, privilege or option pertaining to such Pledged Securities,
and in connection therewith, the right to deposit and deliver any and all of
the Pledged Securities with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the US Administrative
Agent may determine), all without liability except to account for Property
actually received by it, but the US Administrative Agent shall have no duty to
any Pledgor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.


(c)                                  In
order to permit the US Administrative Agent to exercise the voting and other
consensual rights that it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions that it may be entitled to
receive hereunder, (i) each Pledgor shall promptly execute and deliver (or
cause to be executed and delivered) to the US Administrative Agent all such
proxies, dividend payment orders and other instruments as the US Administrative
Agent may from time to time reasonably request and (ii) without limiting the
effect of clause (i) above, such Pledgor hereby grants to the US Administrative
Agent an irrevocable proxy to vote all or any part of the Pledged Securities
and to exercise all other rights, powers, privileges and remedies to which a
holder of the Pledged Securities would be entitled (including giving or
withholding written consents of shareholders calling special meetings of
shareholders and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer
of any Pledged Securities on the record books of the Issuer thereof) by any
other Person (including the Issuer of such Pledged Securities or any officer or
agent thereof) upon the occurrence and during the continuance of an Event of
Default and which proxy shall only terminate upon the payment in full in cash
of the Obligations under the Credit Agreement.


(d)                                 Each
Pledgor hereby authorizes and instructs each Issuer of any Pledged Securities
pledged by such Pledgor hereunder to (i) comply with any instruction received
by it from the US Administrative Agent in writing that (A) states that an Event
of Default has occurred and is continuing and (B) is otherwise in accordance
with the terms of this Agreement, without any other or further instructions
from such Pledgor, and each Pledgor agrees that each Issuer shall be fully
protected in so complying, and (ii) unless otherwise expressly permitted
hereby, pay any dividends or other payments with respect to the Pledged
Securities directly to the US Administrative Agent.


(e)                                  Upon
the occurrence and during the continuance of an Event of Default, if the Issuer
of any Pledged Securities is the subject of bankruptcy, insolvency,
receivership, custodianship or other proceedings under the supervision of any
Governmental Authority, then all rights of each Pledgor in respect thereof to
exercise the voting and other consensual rights which such Pledgor would
otherwise be entitled to exercise with respect to the Pledged Securities issued
by such Issuer shall cease, and all such rights shall thereupon become vested
in the US Administrative Agent who shall thereupon have the sole right to
exercise such voting and other consensual rights, but the US Administrative
Agent shall have no duty to exercise any such voting or other consensual rights
and shall not be responsible for any failure to do so or delay in so doing.



 14
 








Section 5.03                                Private
Sales of Pledged Securities.


(a)                                  Each
Pledgor recognizes that the US Administrative Agent may be unable to effect a
public sale of any or all the Pledged Securities, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise or may determine that a public sale is impracticable or not
commercially reasonable and, accordingly, may resort to one or more private
sales thereof to a restricted group of purchasers which will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof.  Each Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a commercially
reasonable manner.  The US Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged
Securities for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.


(b)                                 Each
Pledgor agrees to use its best commercially reasonable efforts to do or cause
to be done all such other acts as may reasonably be necessary to make such sale
or sales of all or any portion of the Pledged Securities pursuant to this Section
5.03 valid and binding and in compliance with any and all other applicable
Governmental Requirements.  Each Pledgor
further agrees that a breach of any of the covenants contained in this Section
5.03 will cause irreparable injury to the Secured Creditors, that the
Secured Creditors have no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section
5.03 shall be specifically enforceable against such Pledgor, and such
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event
of Default has occurred or is continuing under the Credit Agreement.


Section 5.04                                Non-Judicial
Enforcement.  The US Administrative
Agent may enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by law, each Pledgor expressly
waives any and all legal rights which might otherwise require the
Administrative Agent to enforce its rights by judicial process.


ARTICLE 6

The Administrative Agent


Section 6.01                                Administrative
Agent’s Appointment as Attorney-in-Fact, Etc.


(a)                                  Anything
in this Section 6.01(a) to the contrary notwithstanding, the US Administrative
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 6.01(a) unless an Event of Default shall
have occurred and be continuing.  Each
Pledgor hereby irrevocably constitutes and appoints the US Administrative Agent
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of such Pledgor 



 15
 








and in the name of such
Pledgor or in its own name, for the purpose of carrying out the terms of this
Agreement, to take any and all reasonably appropriate action and to execute any
and all documents and instruments which may be reasonably necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Pledgor hereby gives the US Administrative
Agent the power and right, on behalf of such Pledgor, without notice to or
assent by such Pledgor, to do any or all of the following:


(i)                                     unless
being disputed under Section 9.03(a) of the Credit Agreement, pay or discharge
Taxes and Liens levied or placed on or threatened against the Collateral;


(ii)                                  execute,
in connection with any sale provided for in Section 5.01 or Section
5.03, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and


(iii)                               (A) direct any party
liable for any payment under any of the Collateral to make payment of any and
all moneys due or to become due thereunder directly to the US Administrative
Agent or as the US Administrative Agent shall direct; (B) ask or demand for,
collect, and receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (C) in the name of such Pledgor or its own name, or otherwise,
take possession of and indorse and collect any check, draft, note, acceptance
or other instrument for the payment of moneys due with respect to any
Collateral and commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral
or any portion thereof and to enforce any other right in respect of any
Collateral; (D) defend any suit, action or proceeding brought against such
Pledgor with respect to any Collateral; (E) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such discharges
or releases as the US Administrative Agent may deem appropriate; and (F)
generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
US Administrative Agent were the absolute owner thereof for all purposes, and
do, at the US Administrative Agent’s option and such Pledgor’s expense, at any
time, or from time to time, all acts and things which the US Administrative
Agent deems necessary to protect, preserve or realize upon the Collateral and
the US Administrative Agent’s and the Secured Creditors’ security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as such Pledgor might do.


(b)                                 If
any Pledgor fails to perform or comply with any of its agreements contained
herein within the applicable grace periods, the US Administrative Agent, at its
option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement.



 16
 








(c)                                  The
reasonable expenses of the US Administrative Agent incurred in connection with
actions undertaken as provided in this Section 6.01, together with
interest thereon at a rate per annum equal to the Post-Default Rate, but in no
event to exceed the Highest Lawful Rate, from the date of payment by the US Administrative
Agent to the date reimbursed by the relevant Pledgor, shall be payable by such
Pledgor to the US Administrative Agent on demand.


(d)                                 All
powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.


Section 6.02                                Duty of Administrative Agent.  The US Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section  9.207
of the UCC or otherwise, shall be to deal with it in the same manner as the US Administrative
Agent deals with similar Property for its own account and shall be deemed to
have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which comparable secured parties accord comparable
collateral.  To the fullest extent
permitted under applicable law, neither the US Administrative Agent, any
Secured Creditor nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Pledgor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.  The
powers conferred on the US Administrative Agent and the Secured Creditors
hereunder are solely to protect the US Administrative Agent’s and the Secured
Creditors’ interests in the Collateral and shall not impose any duty upon the US
Administrative Agent or any Secured Creditor to exercise any such powers.  The US Administrative Agent and the Secured
Creditors shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Pledgor
for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct.  To the fullest
extent permitted by applicable law, the US Administrative Agent shall be under
no duty whatsoever to make or give any presentment, notice of dishonor,
protest, demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps necessary to preserve
any rights against any Pledgor or other Person or ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not it has or is deemed to have
knowledge of such matters.  Each Pledgor,
to the extent permitted by applicable law, waives any right of marshaling in
respect of any and all Collateral, and waives any right to require the US Administrative
Agent or any Secured Creditor to proceed against any Pledgor or other Person,
exhaust any Collateral or enforce any other remedy which the US Administrative
Agent or any Secured Creditor now has or may hereafter have against each
Pledgor, any Pledgor or other Person.



 17
 








Section 6.03                                Filing
of Financing Statements.  Pursuant to
the UCC and any other applicable law, each Pledgor authorizes the US Administrative
Agent to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral in such form and in
such offices as the US Administrative Agent reasonably determines appropriate
to perfect the security interests of the US Administrative Agent under this
Agreement.  A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any
jurisdiction.


Section 6.04                                Authority
of Administrative Agent.  Each
Pledgor acknowledges that the rights and responsibilities of the US Administrative
Agent under this Agreement with respect to any action taken by the US Administrative
Agent or the exercise or non-exercise by the US Administrative Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the US Administrative
Agent and the Secured Creditors, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the US Administrative Agent and the Pledgors, the US Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Creditors with full and valid authority so to act or refrain from acting, and
no Pledgor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.


ARTICLE 7

Miscellaneous


Section 7.01                                Waiver.  No failure on the part of the US Administrative
Agent or any Secured Creditor to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, privilege or remedy or any
abandonment or discontinuance of steps to enforce such right, power, privilege
or remedy under this Agreement or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power,
privilege or remedy under this Agreement or any other Loan Document preclude or
be construed as a waiver of any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy.  The remedies provided herein are cumulative
and not exclusive of any remedies provided by law or equity.


Section 7.02                                Notices.  All notices and other communications provided
for herein shall be given in the manner and subject to the terms of Section
13.02 of the Credit Agreement; provided that any such notice, request or demand
to or upon any Pledgor shall be addressed to such Pledgor at its notice address
set forth on Schedule 1.


Section 7.03                                Amendments
in Writing.  None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 13.04 of the Credit Agreement.


Section 7.04                                Successors
and Assigns.  The provisions of this
Agreement shall be binding upon the Pledgors and their successors and permitted
assigns and shall inure to the 



 18
 








benefit of the US Administrative Agent and the Secured
Creditors and their respective successors and permitted assigns; provided that
no Pledgor may assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the US Administrative
Agent and the Lenders unless otherwise permitted by the terms of the Credit
Agreement or this Agreement, and any such purported assignment, transfer or
delegation shall be null and void.


Section 7.05                                Survival;
Revival; Reinstatement.


(a)                                  All
covenants, agreements, representations and warranties made by any Pledgor
herein and in the certificates or other instruments delivered in connection
with or pursuant to this Agreement or any other Loan Document to which it is a
party shall be considered to have been relied upon by the US Administrative
Agent, the other Agents, the Issuing Bank and the Lenders and shall survive the
execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the US Administrative
Agent, the other Agents, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under the Credit Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Aggregate Commitments
have not expired or terminated.


(b)                                 To
the extent that any payments on the Obligations or proceeds of any Collateral
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver or
other Person under any bankruptcy law, common law or equitable cause, then to
such extent, the Obligations so satisfied shall be revived and continue as if
such payment or proceeds had not been received and the US Administrative Agent’s
and the Secured Creditors’ Liens, security interests, rights, powers and remedies
under this Agreement and each other Loan Document shall continue in full force
and effect.  In such event, each Loan
Document shall be automatically reinstated and the Pledgors shall take such
action as may be reasonably requested by the US Administrative Agent and the
Secured Creditors to effect such reinstatement.


Section 7.06                                Counterparts;
Effectiveness; Conflicts.


(a)                                  This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.


(b)                                 This
Agreement shall become effective when it shall have been executed by the US Administrative
Agent and when the US Administrative Agent shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit
of the parties hereto, the Lenders and their respective successors and assigns.  Delivery of an executed counterpart of a 



 19
 








signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.


(c)                                  In
the event of a conflict between the provisions hereof and the provisions of the
Credit Agreement, the provisions of the Credit Agreement shall control.


Section 7.07                                Severability.  Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.


Section 7.08                                Governing
Law; Submission to Jurisdiction.


(a)                                  THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF TEXAS.


(b)                                 ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY ACCEPTS FOR ITSELF AND
(TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.  THIS SUBMISSION TO
JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING
JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.


(c)                                  EACH
PLEDGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PLEDGOR AT
ITS ADDRESS SET FORTH ON SCHEDULE 1 HERETO OR AS UPDATED FROM TIME TO
TIME, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.


(d)                                 NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE US ADMINISTRATIVE AGENT OR ANY LENDER OR
ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE PLEDGORS IN ANY
OTHER JURISDICTION.



 20
 








(e)                                  EACH
PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY SECURITY INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN;
(ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF
THE US ADMINISTRATIVE AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE SECURITY INSTRUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 7.08.


Section 7.09                                Headings.  Article and Section headings used herein are
for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting,
this Agreement.


Section 7.10                                Acknowledgments.  Each Pledgor hereby acknowledges that:


(a)                                  it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;


(b)                                 neither
the US Administrative Agent nor any Secured Creditor has any fiduciary
relationship with or duty to any Pledgor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Pledgors, on the one hand, and the US Administrative Agent and Secured
Creditors, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor;


(c)                                  no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Secured Creditors
or among the Pledgors and the Secured Creditors; and


(d)                                 Each
of the parties hereto specifically agrees that it has a duty to read this
Agreement, the Security Instruments and the other Loan Documents and agrees
that it is charged with notice and knowledge of the terms of this Agreement,
the Security Instruments and the other Loan Documents; that it has in fact read
this Agreement, the Security Instruments and the other Loan Documents and is
fully informed and has full notice and knowledge of the terms, conditions and
effects thereof; that it has been represented by independent legal counsel of
its choice throughout the negotiations preceding its execution of this
Agreement and the Security Instruments; and has received the advice of its
attorney in entering into this Agreement and the Security Instruments; and that
it recognizes that certain of the terms of this Agreement and the 



 21
 








Security Instruments
result in one party assuming the liability inherent in some aspects of the
transaction and relieving the other party of its responsibility for such
liability.  EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”


Section 7.11                                Additional
Pledgors and Pledgors.  Each
Subsidiary of a US Borrower that is required to become a party to this
Agreement pursuant to Section 9.09(a) of the Credit Agreement shall become a
Pledgor for all purposes of this Agreement upon execution and delivery by such
Subsidiary of an Assumption Agreement in the form of Annex I hereto and
shall thereafter have the same rights, benefits and obligations as a Pledgor
party hereto on the date hereof.  Each
Pledgor that is required to pledge certificated Capital Stock of its
Subsidiaries shall execute and deliver a Supplement in the form of Annex II
hereto, if such certificated Capital Stock were not previously pledged.


Section 7.12                                Releases.


(a)                                  Full
Release.  The grant of a security
interest hereunder and all of rights, powers and remedies in connection
herewith shall remain in full force and effect until the US Administrative
Agent has (i) retransferred and delivered all Collateral in its possession to
the Pledgors, and (ii) executed a written release or termination statement and
reassigned to the Pledgors without recourse or warranty any remaining
Collateral and all rights conveyed hereby. 
Pursuant to the satisfaction of the conditions set forth in Section
9.09(b) of the Credit Agreement or upon the complete payment of the Obligations
under the Credit Agreement (except for Letters of Credit secured by cash
collateral as permitted in Section 2.01(b)(iii) of the Credit Agreement) and
the compliance by the Pledgors with all covenants and agreements hereof, the US
Administrative Agent, at the written request and expense of the Borrowers, will
promptly release, reassign and transfer the Collateral to the Pledgors and
declare this Agreement to be of no further force or effect.


(b)                                 Partial
Release.  Notwithstanding anything
contained herein to the contrary, the Pledgors are authorized to release any
Collateral that is sold, leased, assigned, exchanged, conveyed, transferred or
otherwise disposed of in compliance with Sections 10.08, 10.11 and 10.14 of the
Credit Agreement at which point the liens and security interests shall
terminate with respect to such Collateral and this Agreement shall have no
further force or effect with respect to such released Collateral; provided
that so long as the lien in favor of the US Administrative Agent continues in
the proceeds of such sale, lease, assignment, exchange, conveyance, transfer or
other disposal of such Collateral, or to the extent such Collateral is sold,
leased, assigned, exchanged, conveyed, transferred or otherwise disposed of to
any Borrower or any Subsidiary Guarantor, such lien continues in such
Collateral.


(c)                                  Retention
in Satisfaction.  Except as may be
expressly applicable pursuant to Section 9.620 of the UCC, no action taken or omission to act by
the US Administrative Agent 



 22
 








or the Secured Creditors
hereunder, including, without limitation, any exercise of voting or consensual
rights or any other action taken or inaction, shall be deemed to constitute a
retention of the Collateral in satisfaction of the Obligations or otherwise to
be in full satisfaction of the Obligations, and the Obligations shall remain in
full force and effect, until the US Administrative Agent and the Secured
Creditors shall have applied payments (including, without limitation,
collections from Collateral) towards the Obligations in the full amount then
outstanding or until such subsequent time as is provided in Section 7.12(a).


Section 7.13                                Acceptance.  Each Pledgor hereby expressly waives notice
of acceptance of this Agreement, acceptance on the part of the US Administrative
Agent and the Secured Creditors being conclusively presumed by their request
for this Agreement and delivery of the same to the US Administrative Agent.


 


[Signatures
begin on next page]



 23














	
  PLEDGORS:

  	
  UNIVERAL COMPRESSION INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
  J. Michael Anderson

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UNIVERSAL COMPRESSION CANADIAN 

  
	
   

  	
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Michael Anderson

  	
   

  
	
   

  	
  Name: 

  	
  J. Michael Anderson

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENTERRA COMPRESSION INVESTMENT COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
   J. Michael Anderson

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UNIVERSAL
  COMPRESSION SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
   J. Michael Anderson

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UCI GP LP LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela A. Jasinki

  	
   

  
	
   

  	
  Name:

  	
   Pamela A. Jasinski

  	
   

  
	
   

  	
  Title:

  	
   Manager

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UCO GP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
   J. Michael Anderson

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  	
   

  
																			



 


Signature Page – Pledge and
Security Agreement











 


	
  US ADMINISTRATIVE AGENT:

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as US Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Schanzlin

  
	
   

  	
  Name:

  	
  Todd Schanzlin

  
	
   

  	
  Title:

  	
  Vice President

  



 


 


 


 


Signature Page – Pledge and
Security Agreement