EXHIBIT
10.2


 


COLLATERAL
AGREEMENT


 


DATED AS OF


JANUARY 14, 2005


 


MADE
BY


 


UNIVERSAL
COMPRESSION, INC.,


 


AND


 


UNIVERSAL
COMPRESSION HOLDINGS, INC.


 


IN
FAVOR OF


 


WACHOVIA
BANK, NATIONAL ASSOCIATION,


AS
ADMINISTRATIVE AGENT


 





















 


TABLE
OF CONTENTS


 


	
  ARTICLE I Definitions

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
   

  
	
  Section 1.02

  	
  Other Definitional Provisions

  	
   

  
	
  ARTICLE II Grant of Security Interest

  	
   

  
	
  Section 2.01

  	
  Grant of Security Interest

  	
   

  
	
  Section 2.02

  	
  Transfer of Pledged Securities

  	
   

  
	
  ARTICLE III Representations and
  Warranties

  	
   

  
	
  Section 3.01

  	
  Title; No Other Liens

  	
   

  
	
  Section 3.02

  	
  Perfected First Priority Liens

  	
   

  
	
  Section 3.03

  	
  Grantor Information

  	
   

  
	
  Section 3.04

  	
  Pledged Securities

  	
   

  
	
  Section 3.05

  	
  Instruments and Chattel Paper

  	
   

  
	
  Section 3.06

  	
  Truth of Information; Accounts

  	
   

  
	
  Section 3.07

  	
  Governmental Obligors

  	
   

  
	
  ARTICLE IV Covenants

  	
   

  
	
  Section 4.01

  	
  Maintenance of Perfected Security Interest; Further Documentation

  	
   

  
	
  Section 4.02

  	
  Changes in Locations, Name, Etc

  	
   

  
	
  Section 4.03

  	
  Pledged Securities

  	
   

  
	
  Section 4.04

  	
  Instruments and Tangible Chattel Paper

  	
   

  
	
  ARTICLE V Remedial Provisions

  	
   

  
	
  Section 5.01

  	
  UCC and Other Remedies

  	
   

  
	
  Section 5.02

  	
  Collections on Accounts, Etc

  	
   

  
	
  Section 5.03

  	
  Proceeds

  	
   

  
	
  Section 5.04

  	
  Pledged Securities

  	
   

  
	
  Section 5.05

  	
  Private Sales of Pledged Securities

  	
   

  
	
  Section 5.06

  	
  Deficiency

  	
   

  
	
  Section 5.07

  	
  Non-Judicial Enforcement

  	
   

  
	
  ARTICLE VI The Administrative Agent

  	
   

  
	
  Section 6.01

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

  	
   

  
	
  Section 6.02

  	
  Duty of Administrative Agent

  	
   

  
	
  Section 6.03

  	
  Filing of Financing Statements

  	
   

  
	
  Section 6.04

  	
  Authority of Administrative Agent

  	
   

  
	
  ARTICLE VII Subordination of
  Indebtedness

  	
   

  
	
  Section 7.01

  	
  Subordination of All Grantor Claims

  	
   

  
	
  Section 7.02

  	
  Claims in Bankruptcy

  	
   

  
	
  Section 7.03

  	
  Payments Held in Trust

  	
   

  
	
  Section 7.04

  	
  Liens Subordinate

  	
   

  
	
  Section 7.05

  	
  Notation of Records

  	
   

  
	
  ARTICLE VIII Miscellaneous

  	
   

  
	
  Section 8.01

  	
  Waiver

  	
   

  
	
  Section 8.02

  	
  Notices

  	
   

  
	
  Section 8.03

  	
  Amendments in Writing

  	
   

  
	
  Section 8.04

  	
  Successors and Assigns

  	
   

  



 


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  Section 8.05

  	
  Survival; Revival; Reinstatement

  	
   

  
	
  Section 8.06

  	
  Counterparts; Integration; Effectiveness;
  Conflicts

  	
   

  
	
  Section 8.07

  	
  Severability

  	
   

  
	
  Section 8.08

  	
  Governing Law; Submission to Jurisdiction

  	
   

  
	
  Section 8.09

  	
  Headings

  	
   

  
	
  Section 8.10

  	
  Acknowledgments

  	
   

  
	
  Section 8.11

  	
  Additional Capital Stock

  	
   

  
	
  Section 8.12

  	
  Releases

  	
   

  
	
  Section 8.13

  	
  Acceptance

  	
   

  



 


	
  ANNEXES:

  
	
   

  
	
  I

  	
  Form of Supplement

  
	
   

  	
   

  
	
  SCHEDULES:

  
	
  1

  	
  Notice Addresses of Grantors

  
	
  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

  



 


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This COLLATERAL
AGREEMENT, dated as of January 14, 2005, is made by UNIVERSAL COMPRESSION,
INC., a Texas corporation (“UCI”), UNIVERSAL COMPRESSION HOLDINGS, INC.,
a Delaware corporation (“Holdings”, and together with UCI, the “Grantors”), in favor of WACHOVIA BANK,
NATIONAL ASSOCIATION, as administrative agent (in such capacity, together with
its successors in such capacity, the “Administrative
Agent”), for the lenders and other financial institutions (the “Lenders”)
from time to time parties 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
the Grantors, UC Canadian Partnership Holdings Company, a Nova Scotia ULC (the “Canadian
Borrower”, and together with the Grantors, the “Borrowers”), the
Lenders, the Administrative Agent, and the other agents 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
Grantors shall have executed and delivered this Agreement to the Administrative
Agent for the ratable benefit of the Lenders.


 


D.            NOW, THEREFORE, in consideration
of the premises herein and to induce the 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, each Grantor
hereby agrees with the Administrative Agent, for the ratable benefit of the
Lenders, as follows:


 


ARTICLE I


Definitions


 


Section 1.01                                Definitions.


 


(a)                                  As used in this Agreement, each
term defined above shall have the meaning indicated above.  Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement, and the following terms which are defined in
the UCC on the date hereof are used herein as so defined:  Accounts, Chattel Paper, Documents,
Equipment, General Intangibles, Instruments, Inventory, Payment Intangibles and
Tangible Chattel Paper.


 


(b)                                 The following terms have the
following meanings:


 


“Account
Debtor” means any Person (other than any Grantor) obligated on an Account,
Chattel Paper, or General Intangible.


 


“Administrative
Agent” has the meaning assigned to such term in the preamble hereto.


 





















 


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


 


“Borrower
Obligations” means the collective reference to the payment and performance
when due of all indebtedness, liabilities, obligations and undertakings of the
Borrowers and their 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 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 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 that are required to be paid by the Borrowers pursuant
to the terms of the Credit Agreement).


 


“Borrowers”
has the meaning assigned to such term in the preamble hereto.


 


“Canadian
Borrower” has the meaning assigned to such term in the preamble hereto.


 


“Collateral”
has the meaning assigned such term in Section 2.01.


 


“Credit
Agreement” has the meaning assigned to such term in the preamble hereto.


 


“Grantor” has
the meaning assigned to such term in the preamble hereto.


 


“Grantor Claims” has the meaning assigned to
such term in Section 8.01.


 


“Holdings”
has the meaning assigned to such term in the preamble hereto.


 


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


 


“Lenders”
has the meaning assigned to such term in the preamble hereto.


 


“Pledged
Securities” means: (a) the capital stock and certificated membership
interests 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 I); and (b) (i) the certificates or instruments, if any,
representing such capital stock and interests, (ii) all dividends (cash,
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


 


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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.


 


“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 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 documents
made, delivered or given in connection with any of the foregoing.


 


“Secured
Hedging Agreement” means any Hedging Agreement between any Borrower or its
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 the Borrower or its 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).


 


“Securities Act”
means the Securities Act of 1933, as amended.


 


“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.


 


Section 1.02                                Other Definitional
Provisions.


 


(a)                                  The words “hereof,” “herein,” “hereto”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement
unless otherwise specified.


 


(b)                                 The meanings given to terms
defined herein shall be equally applicable to both the singular and plural
forms of such terms.


 


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(c)                                  Where the context requires,
terms relating to the Collateral or any part thereof, when used in relation to
a Grantor, refer to such Grantor’s Collateral or the relevant part thereof.


 


ARTICLE II


Grant
of Security Interest


 


Section 2.01                                Grant
of Security Interest. 
Each Grantor hereby pledges, assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit
of the Secured Creditors, a security interest in all of the following Property
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the “Collateral”), as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations:


 


(1)                                  all Accounts;


 


(2)                                  all Chattel Paper;


 


(3)                                  all Documents;


 


(4)                                  all Equipment;


 


(5)                                  all General Intangibles;


 


(6)                                  all Instruments;


 


(7)                                  all Inventory;


 


(8)                                  all Pledged Securities;


 


(9)                                  all books and records pertaining
to the Collateral; and


 


(10)                            to the extent not otherwise
included, all Proceeds and products of any and all of the foregoing and all
collateral security and guarantees given by any Person with respect to any of
the foregoing.


 


Each reference to Collateral or to any
relevant type or item of Property constituting Collateral shall be deemed to
exclude (i) tangible Property that is not located in the continental United
States (including its possessions), (ii) motor vehicles, forklifts and
trailers, (iii) voting equity interests in any Foreign Subsidiary required to
prevent the Collateral from including more than 65% of all voting equity
interests in such Foreign Subsidiary, (iv) any general intangibles or other
rights arising under any contract, instrument, license or other document if
(but only to the extent that) the grant of a security interest therein would
constitute a material violation of a valid and enforceable restriction in favor
of a third party, unless and until all required consents shall have been
obtained, (v) Property owned by other Persons involved with the ABS Facility or
the 8 7/8% Notes; provided that, upon the transfer of such Property to a
Grantor, such Property shall


 


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become Collateral, and (vi) any Property
subject to a Lien permitted by Section 10.02(b), (c), (e), (f) or (g) of
the Credit Agreement, so long as such Lien is in effect.


 


Section 2.02                                Transfer
of Pledged Securities. 
All certificates or instruments representing or evidencing the Pledged
Securities shall be delivered to and held pursuant hereto by the Administrative
Agent or a Person designated by the 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 Administrative Agent. 
Notwithstanding the preceding sentence, at the Administrative Agent’s
discretion, all Pledged Securities must be delivered or transferred in such
manner as to permit the 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 Administrative Agent otherwise qualifies as a protected purchaser).
During the continuance of an Event of Default, the Administrative Agent shall
have the right, at any time in its discretion and without notice, to transfer
to or to register in the name of the Administrative Agent or any of its
nominees any or all of the Pledged Securities, subject only to the revocable
rights specified in Section 5.05. 
In addition, during the continuance of an Event of Default, the
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.


 


ARTICLE III


Representations
and Warranties


 


To induce the
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 Grantor
hereby represents and warrants to the Administrative Agent and each Lender
that:


 


Section 3.01                                Title; No Other
Liens.  Except for Permitted
Liens and the security interest granted to the Administrative Agent for the
ratable benefit of the Secured Creditors pursuant to this Agreement, such
Grantor is the record and beneficial owner of its respective items of the
Collateral free and clear of any and all Liens and has the power to transfer
each item of the Collateral in which a Lien is granted by it hereunder, free
and clear of any Lien.  Except with
respect to Liens permitted by Section 10.02(b), (c), (e), (f) and (g) of
the Credit Agreement, no financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Administrative
Agent, for the ratable benefit of the Secured Creditors, pursuant to this
Agreement or the Security Instruments or as are filed to secure Liens permitted
by Section 10.02 of the Credit Agreement.


 


Section 3.02                                Perfected
First Priority Liens.  The
security interests granted pursuant to this Agreement (a) upon the completion
of the filings and the other actions specified on Schedule 3
constitute valid perfected security interests in all of the Collateral in favor
of the Administrative Agent, for the ratable benefit of the Secured Creditors,
as collateral security for the Borrower Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b)


 


5





















 


are prior to all other Liens on the Collateral in existence on the date
hereof, except, in each case, for Liens expressly permitted by the Credit
Agreement.


 


Section 3.03                                Grantor Information.  On the date hereof, the correct legal name of
such Grantor, such Grantor’s jurisdiction of organization and organizational
number, and the location(s) of such Grantor’s chief executive office or sole
place of business are specified on Schedule 4.


 


Section 3.04                                Pledged Securities.  The Pledged Securities required to be pledged
hereunder and under the Credit Agreement by such Grantor are listed in Schedule 2.  The shares of Pledged Securities pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the capital stock of each Issuer owned by such Grantor that is a
Domestic Subsidiary and 65% of all the issued and outstanding shares of all
classes of the capital stock of each Issuer that is a Foreign Subsidiary.  All the shares of the Pledged Securities have
been duly and validly issued and are fully paid and nonassessable, and such
Grantor 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 3.05                                Instruments
and Chattel Paper. 
Such Grantor has delivered to the Administrative Agent all Collateral
constituting any Instrument or Chattel Paper in excess of $1,000,000 that is
required to be delivered under Section 4.04.  No Collateral constituting Chattel Paper or
Instruments contains any statement therein to the effect that such Collateral
has been assigned to an identified party other than the Administrative Agent,
and the grant of a security interest in such Collateral in favor of the
Administrative Agent hereunder does not violate the rights of any other Person
as a secured party.


 


Section 3.06                                Truth of
Information; Accounts. 
All information with respect to the Collateral set forth in any schedule or
certificate at any time heretofore or hereafter furnished by such Grantor to
the Administrative Agent is and will be true and correct in all material
respects as of the date furnished.  The
place where each Grantor keeps its records concerning the Accounts, Chattel
Paper and Payment Intangibles is 4444 Brittmoore Road, Houston, Texas 77041.


 


Section 3.07                                Governmental
Obligors.  None of the
Account Debtors on a material portion of such Grantor’s Accounts, Chattel Paper
or Payment Intangibles is a Governmental Authority.


 


ARTICLE IV


Covenants


 


Each Grantor
covenants and agrees with the Administrative Agent and the Lenders that, from
and after the date of this Agreement until the Borrower Obligations under the
Credit Agreement shall have been paid in full in cash, no Letter 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:


 


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Section 4.01                                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 Section 10.08 or
10.14 of the Credit Agreement, each Grantor 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 3.02 and shall defend such
security interest against the claims and demands of all Persons whomsoever;


 


(b)                                 it will furnish to the
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 Administrative Agent may reasonably
request, all in reasonable detail; and


 


(c)                                  at any time and from time to
time, upon the written request of the Administrative Agent, and at the sole
expense of such Grantor, it will promptly and duly execute and deliver, and
have recorded, such further instruments and documents and take such further
actions as the 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 4.02                                Changes in
Locations, Name, Etc.  Such Grantor
recognizes that financing statements pertaining to the Collateral have been or
may be filed where such Grantor is organized. 
Without limitation of Section 9.03 of the Credit Agreement or any
other covenant herein, such Grantor 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
Grantor shall have first (i) notified the Administrative Agent of such change
prior to the effective date of such change, and (ii) taken all action
reasonably requested by the Administrative Agent for the purpose of maintaining
the perfection and priority of the Administrative Agent’s security interests
under this Agreement.  In any notice
furnished pursuant to this Section 4.02, such Grantor 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
Administrative Agent’s security interest in the Collateral.


 


Section 4.03                                Pledged Securities.  In the case of each Grantor, such Grantor
agrees that:


 


(a)                                  if such Grantor 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 capital stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange


 


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for, any shares of the Pledged Securities, or otherwise in respect
thereof, such Grantor 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 Grantor, and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Borrower Obligations; provided, that the foregoing shall apply
to 65% of such shares or rights in the case of an Issuer that is a Foreign
Subsidiary;


 


(b)                                 without the prior written
consent of the Administrative Agent, such Grantor will not (i) unless otherwise
expressly permitted hereby or under the other Loan 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 Grantor
or the Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof;


 


(c)                                  in the case of each Grantor 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
Administrative Agent promptly in writing of the occurrence of any of the events
described in Section 4.03(a) with respect to the Pledged Securities
issued by it and (iii) the terms of Section 5.04(a) and Section 5.05
shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it pursuant to Section 5.04(d) or Section 5.05
with respect to the Pledged Securities issued by it;


 


(d)                                 such Grantor shall furnish to
the Administrative Agent such stock powers and other instruments as may be
reasonably required by the Administrative Agent to assure the transferability
of the Pledged Securities when and as often as may be reasonably requested by
the 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 Grantor (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 Grantor will not permit any Issuer of any of the Pledged Securities
to issue any new shares of any class of capital stock of such Issuer unless
such shares are pledged pursuant to this Agreement.


 


(f)                                    Notwithstanding any contrary
provision contained in this Agreement, with respect to Issuers that are Foreign
Subsidiaries, the Grantors are required to pledge 65% of the


 


8





















 


capital stock of such Issuers (except as otherwise noted on Schedule 2)
and to deliver the applicable stock certificates and stock powers duly executed
in blank for such capital stock to the 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 4.04                                Instruments and Tangible
Chattel Paper.  If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Tangible Chattel Paper having a value in excess of
$1,000,000, such Instrument or Tangible Chattel Paper shall be immediately
delivered to the Administrative Agent, duly endorsed in a manner satisfactory
to the Administrative Agent, to be held as Collateral pursuant to this
Agreement.


 


ARTICLE V
Remedial Provisions


 


Section 5.01                                UCC
and Other Remedies.


 


(a)                                  Upon the occurrence and during
the continuance of an Event of Default, the 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 Borrower
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 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 Grantor 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 Grantor,
which right or equity is hereby waived and released.  If applicable to any particular item of
Collateral, each Grantor further agrees, at the Administrative Agent’s request
following an acceleration of the Indebtedness under Section 11.02(a) of
the Credit Agreement, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor’s premises or elsewhere, unless prohibited by
agreements with unaffiliated third parties. 
Any such sale or transfer by the 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 Grantor, including any
equity or right of redemption, stay or appraisal which Grantor has or may have
under any rule of law, regulation or statute now existing or hereafter adopted
(and such Grantor hereby waives any rights it may have in respect
thereof).  Upon any such sale or
transfer,


 


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the Administrative Agent shall have the right to deliver, assign and
transfer to the purchaser or transferee thereof the Collateral so sold or
transferred.  The 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
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 Borrower Obligations, in accordance with the Credit
Agreement, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-615 of the UCC, need the
Administrative Agent account for the surplus, if any, to any Grantor.  To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
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
Administrative Agent elects not to sell the Collateral, the 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 Borrower
Obligations.  Each and every method of
disposition of the Collateral described in this Agreement shall constitute
disposition in a commercially reasonable manner.


 


(c)                                  The 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                                Collections
on Accounts, Etc.  The
Administrative Agent hereby authorizes each Grantor to collect upon the
Collateral that is represented by Accounts, Instruments, Chattel Paper and
Payment Intangibles subject to the Administrative Agent’s direction and
control, and the Administrative Agent may curtail or terminate said authority
at any time after the occurrence and during the continuance of an Event of
Default.  Upon the request of the
Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall notify the Account
Debtors that the applicable Accounts, Chattel Paper and Payment Intangibles
have been assigned to the Administrative Agent for the ratable benefit of the
Secured Creditors and that payments in respect thereof shall be made directly
to the Administrative Agent.  The
Administrative Agent may in its own name or in the name of others communicate
with the Account Debtors to verify with them to its satisfaction the existence,
amount and terms of any such Accounts, Chattel Paper or Payment
Intangibles.  Anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of its
Accounts to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto.  Neither
the Administrative Agent nor any Lender shall have any obligation or liability
under any Account (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Administrative Agent or any
Lender of any payment relating thereto, nor shall the Administrative Agent or
any Lender be obligated in any manner to perform any of the obligations of any
Grantor under or pursuant to any Account (or any agreement giving rise thereto)
to make any payment, to make any inquiry as to the nature or the sufficiency of
any


 


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payment received by it or as to the sufficiency of any performance by
any party thereunder, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.


 


Section 5.03                                Proceeds.  If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of
Default, any payments of Collateral composed of Accounts, Instruments, Chattel
Paper and Payment Intangibles, when collected or received by each Grantor, and any
other cash or non-cash Proceeds received by each Grantor upon the sale or other
disposition of any Collateral, shall be forthwith (and, in any event, within
two Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Administrative Agent if required, in a special
collateral account maintained by the Administrative Agent, subject to
withdrawal by the Administrative Agent for the ratable benefit of the Secured
Parties only, as hereinafter provided, and, until so turned over, shall be held
by such Grantor in trust for the Administrative Agent for the ratable benefit
of the Secured Creditors, segregated from other funds of any such Grantor.  Each deposit of any such Proceeds shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit. 
All Proceeds (including, without limitation, Proceeds constituting
collections of Accounts, Chattel Paper, Instruments) while held by the
Administrative Agent (or by any Grantor in trust for the Administrative Agent
for the ratable benefit of the Secured Creditors) shall continue to be
collateral security for all of the Borrower Obligations and shall not
constitute payment thereof until applied as hereinafter provided.  At such intervals as may be agreed upon by
each Grantor and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent’s
election, the Administrative Agent shall apply all or any part of the funds on
deposit in said special collateral account on account of the Borrower
Obligations in such order as the Administrative Agent may elect, and any part
of such funds which the Administrative Agent elects not so to apply and deems
not required as collateral security for the Borrower Obligations shall be paid
over from time to time by the Administrative Agent to each Grantor or to
whomsoever may be lawfully entitled to receive the same.


 


Section 5.04                                Pledged Securities.


 


(a)                                  Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Grantor of the Administrative Agent’s intent to exercise
its corresponding rights pursuant to Section 5.04(b), each Grantor
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 Grantor 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 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.


 


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(b)                                 Upon the occurrence and during
the continuance of an Event of Default, upon notice by the Administrative Agent
of its intent to exercise such rights to the relevant Grantor or Grantors, (i)
the 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 Borrower Obligations in
accordance with the Credit Agreement, and (ii) any or all of the Pledged
Securities shall be registered in the name of the Administrative Agent or its
nominee, and (iii) the 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 the
organizational structure of any Issuer, or upon the exercise by any Grantor or
the 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 Administrative Agent may determine), all without liability except to
account for Property actually received by it, but the Administrative Agent
shall have no duty to any Grantor 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
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
Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to the Administrative Agent all such proxies, dividend payment
orders and other instruments as the Administrative Agent may from time to time
reasonably request and (ii) without limiting the effect of clause (i) above,
such Grantor hereby grants to the 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 Borrower
Obligations under the Credit Agreement.


 


(d)                                 Each Grantor hereby authorizes
and instructs each Issuer of any Pledged Securities pledged by such Grantor
hereunder to (i) comply with any instruction received by it from the
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 Grantor,
and each Grantor 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 Administrative Agent.


 


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(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 the Grantor in respect thereof to exercise the voting and other consensual
rights which such Grantor 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 Administrative Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights, but the 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.


 


Section 5.05                                Private Sales of
Pledged Securities.


 


(a)                                  Each Grantor recognizes that the
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 Grantor 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 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 Grantor 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 5.05
valid and binding and in compliance with any and all other applicable
Governmental Requirements.  Each Grantor
further agrees that a breach of any of the covenants contained in this Section 5.05
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 5.05 shall
be specifically enforceable against such Grantor, and such Grantor 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 5.06                                Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Secured Creditor to
collect such deficiency.


 


Section 5.07                                Non-Judicial
Enforcement.  The Administrative
Agent may enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by


 


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law, each Grantor expressly waives any and all legal rights which might
otherwise require the Administrative Agent to enforce its rights by judicial
process.


 


ARTICLE VI


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 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 Grantor hereby irrevocably constitutes
and appoints the 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 Grantor and in
the name of such Grantor 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 Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, 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, effect any repairs or any insurance
called for by the terms of this Agreement or any other Loan Document and pay
all or any part of the premiums therefor and the costs thereof;


 


(ii)                                  execute, in connection with any
sale provided for in Section 5.01 or Section 5.05, 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 Administrative Agent or as the
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 Grantor 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 Grantor 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 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 Administrative
Agent were the absolute owner thereof for all purposes, and do, at the Administrative
Agent’s option and such Grantor’s expense, at any time, or from


 


14





















 


time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
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 Grantor might do.


 


(b)                                 If any Grantor fails to perform
or comply with any of its agreements contained herein within the applicable
grace periods, the 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.


 


(c)                                  The reasonable expenses of the
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 Administrative Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
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
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
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 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 Grantor 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 Administrative Agent and the Secured Creditors hereunder
are solely to protect the Administrative Agent’s and the Secured Creditors’
interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any Secured Creditor to exercise any such powers.  The 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 Grantor
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 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 Borrower Obligations, or to take any steps necessary
to preserve any rights against any Grantor 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 Grantor, to the extent permitted by applicable law, waives any
right of marshaling in


 


15





















 


respect of any and all Collateral, and waives any right to require the
Administrative Agent or any Secured Creditor to proceed against any Grantor or
other Person, exhaust any Collateral or enforce any other remedy which the
Administrative Agent or any Secured Creditor now has or may hereafter have
against each Grantor, any Grantor or other Person.


 


Section 6.03                                Filing of Financing
Statements.  Pursuant to the UCC and
any other applicable law, each Grantor authorizes the 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 Administrative Agent reasonably determines appropriate to perfect the
security interests of the 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 Grantor acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the 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 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 Administrative Agent and the
Grantors, the 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 Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.


 


ARTICLE VII


Subordination
of Indebtedness


 


Section 7.01                                Subordination
of All Grantor Claims. 
As used herein, the term “Grantor Claims”
shall mean all debts and obligations of the Borrowers or any other Grantor to
any other Grantor, whether such debts and obligations now exist or are
hereafter incurred or arise, or whether the obligation of the debtor thereon be
direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or obligations be evidenced
by note, contract, open account, or otherwise, and irrespective of the Person
or Persons in whose favor such debts or obligations may, at their inception,
have been, or may hereafter be created, or the manner in which they have been
or may hereafter be acquired by.  Except
for payments permitted by the Credit Agreement, after and during the
continuation of an Event of Default, no Grantor shall receive or collect,
directly or indirectly, from any obligor in respect thereof any amount upon the
Grantor Claims.


 


Section 7.02                                Claims
in Bankruptcy.  In the
event of receivership, bankruptcy, reorganization, arrangement, debtor’s
relief, or other insolvency proceedings involving any Grantor, the
Administrative Agent on behalf of the Administrative Agent and the Secured
Creditors shall have the right to prove their claim in any proceeding, so as to
establish their rights hereunder and receive directly from the receiver,
trustee or other court custodian, dividends and payments which would otherwise
be payable upon Grantor Claims.  Each
Grantor hereby assigns such dividends and payments to the Administrative Agent
for the benefit of the Administrative 


 


16





















 


Agent and the Secured Creditors for application against the Borrower
Obligations as provided under the Credit Agreement.  Should any Agent or Secured Creditor receive,
for application upon the Borrower Obligations, any such dividend or payment
which is otherwise payable to any Grantor, and which, as between such Grantors,
shall constitute a credit upon the Grantor Claims, then upon payment in full in
cash of the Borrower Obligations, the expiration of all Letters of Credit
outstanding 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 termination of all of the Aggregate Commitments, the
intended recipient shall become subrogated to the rights of the Administrative
Agent and the Secured Creditors to the extent that such payments to the
Administrative Agent and the Lenders on the Grantor Claims have contributed
toward the liquidation of the Borrower Obligations, and such subrogation shall
be with respect to that proportion of the Borrower Obligations which would have
been unpaid if the Administrative Agent and the Secured Creditors had not
received dividends or payments upon the Grantor Claims.


 


Section 7.03                                Payments Held in Trust.  In the event that notwithstanding Section 7.01
and Section 7.02, any Grantor should receive any funds, payments,
claims or distributions which is prohibited by such Sections, then it agrees:
(a) to hold in trust for the Administrative Agent and the Secured Creditors an
amount equal to the amount of all funds, payments, claims or distributions so
received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to
the Administrative Agent, for the benefit of the Secured Creditors; and each
Grantor covenants promptly to pay the same to the Administrative Agent.


 


Section 7.04                                Liens
Subordinate.  Each
Grantor agrees that, until the Borrower Obligations are paid in full in cash,
no Letter 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 the termination of all of the Aggregate Commitments, any Liens
securing payment of the Grantor Claims shall be and remain inferior and subordinate
to any Liens securing payment of the Borrower Obligations, regardless of
whether such encumbrances in favor of such Grantor, the Administrative Agent or
any Secured Creditor presently exist or are hereafter created or attach.  Without the prior written consent of the
Administrative Agent, no Grantor, during the period in which any of the
Borrower Obligations are outstanding or the Aggregate Commitments are in
effect, shall (a) exercise or enforce any creditor’s right it may have against
any debtor in respect of the Grantor Claims, or (b) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceeding
(judicial or otherwise, including without limitation the commencement of or
joinder in any liquidation, bankruptcy, rearrangement, debtor’s relief or
insolvency proceeding) to enforce any Lien held by it.


 


Section 7.05                                Notation
of Records.  Upon the
request of the Administrative Agent, all promissory notes and all accounts
receivable ledgers or other evidence of the Grantor Claims accepted by or held
by any Grantor shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this
Agreement.


 


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ARTICLE VIII


Miscellaneous


 


Section 8.01                                Waiver.  No failure on the part of the 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 8.02                                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 Grantor shall be addressed to such Grantor at its notice address set
forth on Schedule 1.


 


Section 8.03                                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 8.04                                Successors
and Assigns.  The
provisions of this Agreement shall be binding upon the Grantors and their
successors and permitted assigns and shall inure to the benefit of the
Administrative Agent and the Secured Creditors and their respective successors
and permitted assigns; provided that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the
prior written consent of the 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 8.05                                Survival; Revival;
Reinstatement.


 


(a)                                  All covenants, agreements, representations
and warranties made by any Grantor 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 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 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.


 


18





















 


(b)                                 To the extent that any payments
on the Borrower 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
Borrower Obligations so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the 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 Grantors shall take such
action as may be reasonably requested by the Administrative Agent and the
Secured Creditors to effect such reinstatement.


 


Section 8.06                                Counterparts;
Integration; 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 AND THE OTHER LOAN
DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND
SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF. 
THIS AGREEMENT AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.


 


(c)                                  This Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the 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
signature page of this Agreement by telecopy shall be effective as delivery of
a manually executed counterpart of this Agreement.


 


(d)                                 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 8.07                                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 8.08                                Governing Law;
Submission to Jurisdiction.


 


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


 


19





















 


(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 GRANTOR 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 GRANTOR 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 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 GRANTORS IN ANY OTHER
JURISDICTION.


 


(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
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 9.10.


 


20





















 


Section 8.09                                Headings.  Article and Section headings and
the Table of Contents 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 8.10                                Acknowledgments.  Each Grantor 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 Administrative Agent
nor any Secured Creditor has any fiduciary relationship with or duty to any
Grantor arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Grantors, on the one hand, and
the 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
Grantors 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 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 8.11                                Additional Capital Stock.  Each Grantor that is required to pledge
capital stock of its Subsidiaries shall execute and deliver a Supplement in the
form of Annex I hereto, if such capital stock was not previously
pledged.


 


Section 8.12                                Releases.


 


(a)                                  Release Upon Payment in Full.  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 Administrative Agent has (i) retransferred and
delivered all Collateral in its possession to the Grantors, and (ii) executed a
written release or termination statement and reassigned to the Grantors without
recourse or warranty any remaining Collateral and all rights conveyed
hereby.  Upon the complete payment of the
Borrower Obligations under the Credit


 


21





















 


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 Grantors with all covenants and agreements hereof, the
Administrative Agent, at the written request and expense of the Borrowers, will
promptly release, reassign and transfer the Collateral to the Grantors and
declare this Agreement to be of no further force or effect.


 


(b)                                 Partial Releases.  The Grantors are authorized to release any
Collateral that is sold, leased, assigned, conveyed, transferred or otherwise
disposed of in compliance with Sections 10.08, 10.11 and 10.14 of the Credit
Agreement.


 


(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 Administrative Agent 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
Borrower Obligations or otherwise to be in full satisfaction of the Borrower
Obligations, and the Borrower Obligations shall remain in full force and
effect, until the Administrative Agent and the Secured Creditors shall have
applied payments (including, without limitation, collections from Collateral)
towards the Borrower Obligations in the full amount then outstanding or until
such subsequent time as is provided in Section 8.12(a).


 


Section 8.13                                Acceptance.  Each Grantor hereby expressly waives notice
of acceptance of this Agreement, acceptance on the part of the Administrative
Agent and the Secured Creditors being conclusively presumed by their request
for this Agreement and delivery of the same to the Administrative Agent.


 


22





















 


IN WITNESS WHEREOF,
each of the undersigned has caused this Collateral Agreement to be duly
executed and delivered as of the date first above written.


 


 


	
  GRANTORS:

  	
  UNIVERSAL
  COMPRESSION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ J. Michael Anderson

  
	
   

  	
  Name:

  	
  J. Michael Anderson

  
	
   

  	
  Title:

  	
  Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNIVERSAL
  COMPRESSION HOLDINGS,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ J. Michael Anderson

  
	
   

  	
  Name:

  	
  J. Michael Anderson

  
	
   

  	
  Title:

  	
  Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  



 


 


Signature Page – Collateral Agreement


 





















 


	
  Acknowledged and Agreed to as

  of the date hereof by:

  	
   

  
	
   

  	
   

  
	
  ADMINISTRATIVE
  AGENT:

  	
  WACHOVIA
  BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M. Kipp

  
	
   

  	
  Name:

  	
  James M. Kipp

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
				



 


Signature Page – Collateral
Agreement


 





















 


Annex I


 


Supplement


 


SUPPLEMENT,
dated as of
[                 ],
200[   ], made by
[                 ],
a
[                 ]
(the “Grantor”), in favor of Wachovia
Bank, National Association as administrative agent (in such capacity, the “Administrative Agent”) for the financial
institutions (the “Lenders”) parties to the Credit Agreement referred to
below.  All capitalized terms not defined
herein shall have the meaning ascribed to them in such Credit Agreement.


 


W I T N E S S E T H:


 


WHEREAS,
Universal Compression Inc., a Texas corporation (“UCI”), Universal
Compression Holdings, Inc., a Delaware corporation (“Holdings”, and
together with UCI, the “US Borrowers”), UC Canadian Partnership Holdings
Company (the “Canadian Borrower”, and together with the US Borrowers,
the “Borrowers”), the Administrative Agent, the other Agents party
thereto, and the Lenders have entered into a Senior Secured Credit Agreement,
dated as of January 14, 2005 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”);


 


WHEREAS, in
connection with the Credit Agreement, the Grantor has entered into the
Collateral Agreement, dated as of January 14, 2005 (as amended,
supplemented or otherwise modified from time to time, the “Collateral Agreement”) in favor of the
Administrative Agent for the benefit of the Secured Creditors;


 


WHEREAS, the Credit
Agreement requires the Grantor to pledge the capital stock described hereto on Schedule 2-S;
and


 


WHEREAS, the Grantor
has agreed to execute and deliver this Supplement in order to pledge such
capital stock;


 


NOW, THEREFORE, IT
IS AGREED:


 


1.                                       Collateral Agreement.  By executing and delivering this Supplement,
the Grantor, as provided in Section 8.11 of the Collateral Agreement,
hereby pledges and grants a security interest in (a) the capital stock and
certificated membership interests described or referred to in Schedule 2-S
and (b) (i) the certificates or instruments, if any, representing such capital
stock and interests, (ii) all dividends (cash, 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, (vi) all books and
records relating to any of the Property referred to in this definition and
(vii) all proceeds of any of the foregoing (collectively, the “Collateral”). 
Upon execution of this Supplement, such securities will


 


I - 1





















 


constitute “Pledged Securities” for purposes of the Collateral
Agreement with the same force and effect as if originally listed on Schedule 2
thereto.  The information set forth in Schedule 2-S
hereto is hereby added to the information set forth in Schedule 2 to the
Collateral Agreement.  The Grantor hereby
represents and warrants that each of the representations and warranties
contained in Article III of the Collateral Agreement is true and correct
on and as the date hereof (after giving effect to this Supplement) as if made
on and as of such date.


 


2.                                       Governing Law.  This Supplement shall be governed by, and
construed in accordance with, the laws of the State of Texas.


 


IN WITNESS WHEREOF,
the undersigned has caused this Supplement to be duly executed and delivered as
of the date first above written.


 


	
   

  	
  [GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


I - 2





















 


Schedule 1


 


NOTICE ADDRESSES OF
GRANTORS


 


Universal Compression, Inc.


4444 Brittmoore Rd.


Houston, TX 77041


 


Universal Compression Holdings, Inc.


4444 Brittmoore Rd.


Houston, TX 77041


 


1 - 1





















 


Schedule 2


 


DESCRIPTION OF
PLEDGED SECURITIES


 


	
  Owner

  	
   

  	
  Issuer

  	
   

  	
  Percentage

  Owned

  	
   

  	
  Percentage

  Pledged

  	
   

  	
  Type of

  Interest

  	
   

  	
  No. of

  Shares

  	
   

  	
  Certificate

  No.

  	
   

  
	
  Universal
  Compression,

  Inc.

  	
   

  	
  Universal
  Compression International, Inc.

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  capital

  stock

  	
   

  	
  100

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal
  Compression,

  Inc.

  	
   

  	
  Compressor Systems
  International, Inc.

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  capital

  stock

  	
   

  	
  1500

  	
   

  	
  2

  	
   

  



 


2 - 1





















 


Schedule 3


 


FILINGS AND OTHER ACTIONS

REQUIRED TO PERFECT SECURITY INTERESTS


 


1.                                       Filing
of UCC-1 Financing Statement with respect to the Collateral with the Secretary
of State of the State of Texas and
with the Secretary of State of the State of Delaware.


 


2.                                       Delivery to the Administrative
Agent of all Pledged Securities consisting of certificated securities, in each
case properly endorsed for transfer or in blank.


 


3 - 1





















 


Schedule 4


 


LOCATION OF
JURISDICTION OF ORGANIZATION

AND CHIEF EXECUTIVE OFFICE


 


Legal name of UCI:  Universal
Compression, Inc.


Address:  4444 Brittmoore Rd.,
Houston, TX 77041


Jurisdiction of organization: 
Texas


Organizational number: 
0012182200


Location of chief executive office or sole place of business:  see address above


 


Legal name of Holdings: 
Universal Compression Holdings, Inc.


Address:  4444 Brittmoore Rd.,
Houston, TX 77041


Jurisdiction of organization: 
Delaware


Organizational number:  2826730


Location of chief executive office or sole place of business:  see address above


 


4 - 1