**Exhibit 10.21**

***EXECUTION VERSION***

** **

**COLLATERAL AGREEMENT**

 

**DATED AS OFOCTOBER 20, 2006**

 

**MADE BY**

 

**UNIVERSAL COMPRESSION, INC.;**

**UNIVERSAL COMPRESSION HOLDINGS,INC.;**

**UCI COMPRESSOR HOLDING, L.P.;**

**AND**

**UCI MLP LP LLC**

 

**IN FAVOR OF**

 

**WACHOVIA BANK, NATIONAL ASSOCIATION,AS US ADMINISTRATIVE AGENT**

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**TABLE OFCONTENTS**
|                                                | ** ** | ** **                                                           | ** ** | **Page** |
|------------------------------------------------|------------|----------------------------------------------------------------------|------------|----------|
| **ARTICLE I Definitions**                      |       | 1                                                                    |
| Section 1.01                                   |       | Definitions                                                          |       | 1        |
| Section 1.02                                   |       | Other Definitional Provisions                                        |       | 4        |
| **ARTICLE II Grant of Security Interest**      |       | 4                                                                    |
| Section 2.01                                   |       | Grant of Security Interest                                           |       | 4        |
| Section 2.02                                   |       | Transfer of Pledged Securities                                       |       | 5        |
| Section 2.03                                   |       | No Subrogation                                                       |       | 5        |
| Section 2.04                                   |       | Amendments, Etc. with respect to the Obligations                     |       | 6        |
| Section 2.05                                   |       | Waivers                                                              |       | 6        |
| Section 2.06                                   |       | Pledge Absolute and Unconditional                                    |       | 7        |
| Section 2.07                                   |       | Reinstatement                                                        |       | 8        |
| **ARTICLE III Representations and Warranties** |       | 9                                                                    |
| Section 3.01                                   |       | Title; No Other Liens                                                |       | 9        |
| Section 3.02                                   |       | Perfected First Priority Liens                                       |       | 9        |
| Section 3.03                                   |       | Grantor Information                                                  |       | 9        |
| Section 3.04                                   |       | Pledged Securities                                                   |       | 9        |
| Section 3.05                                   |       | Instruments and Chattel Paper                                        |       | 10       |
| Section 3.06                                   |       | Truth of Information; Accounts                                       |       | 10       |
| Section 3.07                                   |       | Governmental Obligors                                                |       | 10       |
| **ARTICLE IV Covenants**                       |       | 10                                                                   |
| Section 4.01                                   |       | Maintenance of Perfected Security Interest; Further  Documentation   |       | 10       |
| Section 4.02                                   |       | Changes in Locations, Name, Etc                                      |       | 11       |
| Section 4.03                                   |       | Pledged Securities                                                   |       | 11       |
| Section 4.04                                   |       | Instruments and Tangible Chattel Paper                               |       | 12       |
| Section 4.05                                   |       | Article 8 of the UCC                                                 |       | 12       |
| **ARTICLE V Remedial Provisions**              |       | 13                                                                   |
| Section 5.01                                   |       | UCC and Other Remedies                                               |       | 13       |
| Section 5.02                                   |       | Collections on Accounts, Etc                                         |       | 14       |
| Section 5.03                                   |       | Proceeds                                                             |       | 14       |
| Section 5.04                                   |       | Pledged Securities                                                   |       | 15       |
| Section 5.05                                   |       | Private Sales of Pledged Securities                                  |       | 17       |
| Section 5.06                                   |       | Deficiency                                                           |       | 17       |
| Section 5.07                                   |       | Non-Judicial Enforcement                                             |       | 17       |
| **ARTICLE VI The US Administrative Agent**     |       | 17                                                                   |
| Section 6.01                                   |       | US Administrative Agent’s Appointment as  Attorney-in-Fact, Etc |       | 17       |
| Section 6.02                                   |       | Duty of US Administrative Agent                                      |       | 19       |
| Section 6.03                                   |       | Filing of Financing Statements                                       |       | 19       |
| Section 6.04                                   |       | Authority of US Administrative Agent                                 |       | 20       |
| **ARTICLE VII Subordination of Indebtedness**  |       | 20                                                                   |
| Section 7.01                                   |       | Subordination of All Grantor Claims                                  |       | 20       |
| Section 7.02                                   |       | Claims in Bankruptcy                                                 |       | 20       |
| Section 7.03                                   |       | Payments Held in Trust                                               |       | 21       |
| Section 7.04                                   |       | Liens Subordinate                                                    |       | 21       |

 

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| Section 7.05                   |   | Notation of Records                                 |   | 21 |
|--------------------------------|--------|-----------------------------------------------------|--------|----|
| **ARTICLE VIII Miscellaneous** |   | 21                                                  |
| Section 8.01                   |   | Waiver                                              |   | 21 |
| Section 8.02                   |   | Notices                                             |   | 22 |
| Section 8.03                   |   | Amendments in Writing                               |   | 22 |
| Section 8.04                   |   | Successors and Assigns                              |   | 22 |
| Section 8.05                   |   | Survival; Revival; Reinstatement                    |   | 22 |
| Section 8.06                   |   | Counterparts; Integration; Effectiveness; Conflicts |   | 23 |
| Section 8.07                   |   | Severability                                        |   | 23 |
| Section 8.08                   |   | Governing Law; Submission to Jurisdiction           |   | 23 |
| Section 8.09                   |   | Headings                                            |   | 24 |
| Section 8.10                   |   | Acknowledgments                                     |   | 24 |
| Section 8.11                   |   | Additional Capital Stock                            |   | 25 |
| Section 8.12                   |   | Releases                                            |   | 25 |
| Section 8.13                   |   | Acceptance                                          |   | 26 |

 

 

 

 

 

 

ANNEXES:

I                                            Form of Supplement

 

SCHEDULES:

1                                          Notice Addresses of Grantors

2                                          Description of PledgedSecurities

3                                          Filings and Other ActionsRequired to Perfect Security Interests

4                                          Location of Jurisdiction ofOrganization and Chief Executive Office

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ThisCOLLATERAL AGREEMENT, dated as of October 20, 2006, is made by UNIVERSALCOMPRESSION, INC., a Texas corporation (“UCI”), UNIVERSAL COMPRESSIONHOLDINGS, INC., a Delaware corporation (“Holdings”, and together withUCI, the “US Borrowers”),UCI COMPRESSOR HOLDING, L.P., a Delaware limited partnership (“UCICompressor”) and UCI MLP LP LLC, a Delaware limited liability company(collectively with the US Borrowers and UCI Compressor, the “Grantors”),in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent (insuch capacity, together with its successors in such capacity, the “US Administrative Agent”), for the lenders andother financial institutions (the “Lenders”) from time to time party tothe Senior Secured Credit Agreement dated of even date herewith (as amended,supplemented or otherwise modified from time to time, the “Credit Agreement”), among UCI, Holdings, UniversalCompression Canada, Limited Partnership, a Nova Scotia limited partnership (“UniversalCanada”) and UC Canadian Partnership Holdings Company, a Nova Scotia unlimitedliability company (“UC Canadian Holdings”, and together with UniversalCanada, the “Canadian Borrowers”, and together with the US Borrowers,the “Borrowers”), the US Administrative Agent, Wachovia Capital FinanceCorporation (Canada), as Canadian Administrative Agent, Deutsche Bank TrustCompany Americas, as Syndication Agent, Wachovia Capital Markets, LLC andDeutsche Bank Securities Inc., as the Joint Lead Arrangers and Joint Lead BookRunners, and each of the other Agents and Lenders party thereto.

**R E C I T A L S**

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

B.                                     The Lenders have agreed to makesuch loans and extensions of credit subject to the terms and conditions of theCredit Agreement.

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

D.                                    NOW, THEREFORE, in considerationof the premises herein and to induce the US Administrative Agent and theLenders to enter into the Credit Agreement and to induce the Lenders to maketheir respective extensions of credit to the Borrowers thereunder, each Grantorhereby agrees with the US Administrative Agent, for the ratable benefit of theLenders, as follows:

**ARTICLE I****Definitions**

Section1.01                                Definitions.

(a)                                  As used in this Agreement, eachterm defined above shall have the meaning indicated above.  Unless otherwise defined herein, termsdefined in the Credit Agreement and used herein shall have the meanings givento them in the Credit Agreement, and the following terms which are defined inthe UCC on the date hereof are used herein as so 

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defined:  Accounts, Chattel Paper, Documents,Equipment, General Intangibles, Instruments, Inventory, Payment Intangibles andTangible Chattel Paper.

(b)                                 The following terms have thefollowing meanings:

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

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

“BorrowerObligations” means the collective reference to the payment and performancewhen due of all indebtedness, liabilities, obligations and undertakings of theBorrowers and their Restricted Subsidiaries (including, without limitation, allIndebtedness) 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 AggregateCredit Exposure and all other obligations and liabilities of the Borrowers andtheir Restricted Subsidiaries (including, without limitation, interest accruingat the then applicable rate provided in the Credit Agreement after the maturityof the Loans and LC Exposure and interest accruing after the filing of anypetition in bankruptcy, or the commencement of any insolvency, reorganizationor like proceeding, relating to the Borrowers, whether or not a claim forpost-filing or post-petition interest is allowed in such proceeding) to theSecured Creditors, whether direct or indirect, absolute or contingent, due orto become due, or now existing or hereafter incurred, arising out of oroutstanding under, advanced or issued pursuant, or evidenced by, the SecuredDocuments, whether on account of principal, interest, premium, reimbursementobligations, payments in respect of an early termination date, fees,indemnities, costs, expenses or otherwise (including, without limitation, allreasonable costs, fees and disbursements that are required to be paid by theBorrowers pursuant to the terms of the Credit Agreement).

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

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

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

“CreditAgreement” 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 tosuch term in Section 7.01.

“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.

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“PledgedSecurities” means: (a) the certificated Capital Stock described or referredto in Schedule 2 (as the same may be supplemented from time to timepursuant to a Supplement in substantially the form of Annex I); and (b)(i) the certificates or instruments, if any, representing such certificated CapitalStock, (ii) all dividends (cash, certificated Capital Stock or otherwise),cash, instruments, rights to subscribe, purchase or sell and all other rightsand Property from time to time received, receivable or otherwise distributed inrespect of or in exchange for any or all of such securities and interests,(iii) all replacements, additions to and substitutions for any of the Propertyreferred to in this definition, including, without limitation, claims againstthird parties, (iv) the proceeds, interest, profits and other income of or onany of the Property referred to in this definition, (v) all securityentitlements in respect of any of the foregoing, if any and (vi) all books andrecords 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, shallinclude, without limitation, all dividends or other income from the PledgedSecurities, collections thereon or distributions or payments with respectthereto.

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

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

“SecuredHedging Agreement” means any Hedging Agreement between any Borrower or its RestrictedSubsidiary 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 thedate hereof, but excluding any Hedging Agreement now existing or hereafterarising in connection with the ABS Facility. For the avoidance of doubt, a Hedging Agreement ceases to be a SecuredHedging Agreement if the Person that is the counterparty to the Borrower or itsRestricted Subsidiary under a Hedging Agreement ceases to be a Lender under theCredit Agreement (or, in the case of an Affiliate of a Lender, the Personaffiliated therewith ceases to be a Lender under the Credit Agreement).

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

“UCCanadian Holdings” has the meaning assigned to such term in the preamblehereto.

“UCC”means the Uniform Commercial Code as from time to time in effect in the Stateof Texas; provided, however, that, in the event that, by reason of mandatoryprovisions of law, any of the attachment, perfection or priority of the SecuredCreditors’ security interest in any Collateral is governed by the UniformCommercial 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 suchother jurisdiction for purposes of the provisions hereof relating to such attachment,perfection, the effect thereof or priority and for purposes of definitionsrelated to such provisions.

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

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

“USAdministrative Agent” has the meaning assigned to such term in the preamblehereto.

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

Section1.02                                OtherDefinitional Provisions.

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

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

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

**ARTICLE II****Grant ofSecurity Interest**

Section2.01                                Grantof Security Interest.  Each Grantorhereby pledges, assigns and transfers to the US Administrative Agent, andhereby grants to the US Administrative Agent, for the ratable benefit of theSecured Creditors, a security interest in all of the following Property nowowned or at any time hereafter acquired by such Grantor or in which suchGrantor now has or at any time in the future may acquire any right, title orinterest (collectively, the “Collateral”), as collateral security forthe prompt and complete payment and performance when due (whether at the statedmaturity, 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 pertainingto the Collateral; and

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(10)                            to the extent not otherwiseincluded, all Proceeds and products of any and all of the foregoing and allcollateral security and guarantees given by any Person with respect to any ofthe foregoing.

Each reference to Collateral orto any relevant type or item of Property constituting Collateral shall bedeemed to exclude (i) tangible Property that is not located in the continentalUnited States (including its possessions), (ii) motor vehicles, forklifts andtrailers, (iii) voting equity interests in any Foreign Subsidiary required toprevent the Collateral from including more than 65% of all voting equityinterests in such Foreign Subsidiary, (iv) any general intangibles or otherrights arising under any contract, instrument, license or other document if(but only to the extent that) the grant of a security interest therein wouldconstitute a material violation of a valid and enforceable restriction in favorof a third party, unless and until all required consents shall have beenobtained, (v) Property owned by or assigned to the ABS Subsidiaries and the CapitalStock of such ABS Subsidiaries; provided that, upon the transfer of suchProperty to a Grantor, such Property shall become Collateral, (vi) any Propertysubject to a Lien permitted by Section 10.02(b), (c), (e) or (g) of the CreditAgreement, so long as such Lien is in effect, and (vii) any Property ownedby a member of the UCLP Group.

Section2.02                                Transferof Pledged Securities.  Allcertificates or instruments representing or evidencing the Pledged Securitiesshall be delivered to and held pursuant hereto by the US Administrative Agentor a Person designated by the US Administrative Agent and shall be in suitableform for transfer by delivery, or shall be accompanied by duly executedinstruments of transfer or assignment in blank, and accompanied by any requiredtransfer tax stamps to effect the pledge of the Pledged Securities to the USAdministrative Agent.  Notwithstandingthe preceding sentence, at the US Administrative Agent’s discretion, allPledged Securities must be delivered or transferred in such manner as to permitthe US Administrative Agent to be a “protected purchaser” to the extent of itssecurity interest as provided in Section 8.303 of the UCC (if the USAdministrative Agent otherwise qualifies as a protected purchaser). During thecontinuance of an Event of Default, the US Administrative Agent shall have theright, at any time in its discretion and without notice, to transfer to or toregister in the name of the US Administrative Agent or any of its nominees anyor all of the Pledged Securities, subject only to the revocable rightsspecified in Section 5.05.  Inaddition, during the continuance of an Event of Default, the US AdministrativeAgent shall have the right at any time to exchange certificates or instrumentsrepresenting or evidencing Pledged Securities for certificates or instrumentsof smaller or larger denominations.

Section2.03                                NoSubrogation.  Notwithstanding anypayment made by any Grantor hereunder or any set-off or application of funds ofany Grantor by any Secured Creditor, no Grantor shall be entitled to besubrogated to any of the rights of any Secured Creditor against any Borrower orany other Grantor or any collateral security or pledge or guarantee or right ofoffset held by any Secured Creditor for the payment of the Borrower Obligations,nor shall any Grantor seek or be entitled to seek any indemnity, exoneration,participation, contribution or reimbursement from any Borrower or any other Grantorin respect of payments made by such Grantor hereunder, until all amounts owingto the Secured Creditors on account of the Borrower Obligations are irrevocablyand indefeasibly paid in full in cash, no Letter of Credit is outstanding(except for Letters of Credit secured by cash collateral as permitted inSection 2.01(b)(iii) of the Credit Agreement) and all of the AggregateCommitments are terminated.  If 

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any amount shallbe paid to any Grantor on account of such subrogation rights at any time whenall of the Borrower Obligations shall not have been irrevocably andindefeasibly paid in full in cash, any Letter of Credit is outstanding (exceptfor Letters of Credit secured by cash collateral as permitted in Section2.01(b)(iii) of the Credit Agreement) or any of the Aggregate Commitments arein effect, such amount shall be held by such Grantor in trust for the SecuredCreditors, and shall, forthwith upon receipt by such Grantor, be turned over tothe US Administrative Agent in the exact form received by such Grantor (dulyindorsed by such Grantor to the US Administrative Agent, if required), to beapplied against the Borrower Obligations, whether matured or unmatured, inaccordance with Section 11.02(c) of the Credit Agreement.

Section2.04                                Amendments,Etc. with respect to the Obligations. Each Grantor shall remain obligated hereunder, and such Grantor’sobligations hereunder shall not be released, discharged or otherwise affected,notwithstanding that, without any reservation of rights against any Grantor andwithout notice to, demand upon or further assent by any Grantor (which notice,demand and assent requirements are hereby expressly waived by such Grantor), (a)any demand for payment of any of the Borrower Obligations made by any SecuredCreditor may be rescinded by such Secured Creditor or otherwise and any of the BorrowerObligations continued; (b) the Borrower Obligations, the liability of any otherPerson upon or for any part thereof or any collateral security or pledge orguarantee therefor or right of offset with respect thereto, may, from time totime, in whole or in part, be renewed, extended, amended, modified,accelerated, compromised, waived, surrendered or released by, or any indulgenceor forbearance in respect thereof granted by, any Secured Creditor; (c) anySecured Document may be amended, modified, supplemented or terminated, in wholeor in part, as the Secured Creditors may deem advisable from time to time; (d) anycollateral security, pledge, guarantee or right of offset at any time held byany Secured Creditor for the payment of the Borrower Obligations may be sold,exchanged, waived, surrendered or released; (e) any additional guarantors,makers or endorsers of the Borrower Obligations may from time to time beobligated on the Borrower Obligations or any additional security or collateralfor the payment and performance of the Borrower Obligations may from time totime secure the Borrower Obligations; and (f) any other event shall occur whichconstitutes a defense or release of sureties generally.  No Secured Creditor shall have any obligationto protect, secure, perfect or insure any Lien at any time held by it assecurity for the Borrower Obligations or for the pledge and security grants containedin this ARTICLE II or any Property subject thereto.

Section2.05                                Waivers.  Each Grantor hereby waives any and all noticeof the creation, renewal, extension or accrual of any of the Borrower Obligationsand notice of or proof of reliance by any Secured Creditor upon the pledge andsecurity grants contained in this ARTICLE II or acceptance of the pledge andsecurity grants contained in this ARTICLE II; the Borrower Obligations, and anyof them, shall conclusively be deemed to have been created, contracted orincurred, or renewed, extended, amended or waived, in reliance upon the pledge andsecurity grants contained in this ARTICLE II and no notice of creation of the BorrowerObligations or any extension of credit already or hereafter contracted by orextended to the Borrowers need be given to any Grantor; and all dealingsbetween any Borrower and any of the Grantors, on the one hand, and the SecuredCreditors, on the other hand, likewise shall be conclusively presumed to havebeen had or consummated in reliance upon the pledge and security grants containedin this ARTICLE II.  Each Grantor waivesdiligence, presentment, 

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protest, demandfor payment and notice of default or nonpayment to or upon any Borrower or anyof the Grantors with respect to the Borrower Obligations.

Section2.06                                PledgeAbsolute and Unconditional.

(a)                                  Except as provided in Section8.12, each Grantor understands and agrees that the pledge and securitygrants contained in this ARTICLE II is, and shall be construed as, acontinuing, completed, absolute and unconditional pledge and security grant,and each Grantor hereby waives any defense of a surety or guarantor or Grantor orany other obligor on any obligations arising in connection with or in respectof any of the following and hereby agrees that its obligations hereunder shallnot be discharged or otherwise affected as a result of, any of the following:

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

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

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

(iv)                              any sale, lease, assignment,exchange, conveyance or transfer of any or all of the assets of any Borrower orany other Grantor, or any changes in the shareholders of any Borrower or the Grantor;

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

(vi)                              the fact that any Collateral orLien contemplated or intended to be given, created or granted as security forthe repayment of the Borrower Obligations shall not be properly perfected orcreated, or shall prove to be unenforceable or subordinate to any other Lien,it being recognized and agreed by each of the Grantors that it is not enteringinto this Agreement in reliance on, or in contemplation of the benefits of, thevalidity, enforceability, collectibility or value of any of the Collateral forthe Borrower Obligations;

(vii)                           the absence of any attempt tocollect the Borrower Obligations or any part of them from any Grantor;

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(viii)                        (A) any Secured Creditor’selection, in any proceeding instituted under chapter 11 of the Bankruptcy Code,of the application of Section 1111(b)(2) of the Bankruptcy Code; (B) anyborrowing or grant of a Lien by the Borrowers, as debtor-in-possession, orextension of credit, under Section 364 of the Bankruptcy Code; (C) thedisallowance, under Section 502 of the Bankruptcy Code, of all or any portionof any Secured Creditor’s claim (or claims) for repayment of the Borrower 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 anybankruptcy proceeding; (F) the avoidance of any Lien in favor of the SecuredCreditors or any of them for any reason; or (G) failure by any Secured Creditorto file or enforce a claim against any Borrower or any Borrower’s estate in anybankruptcy or insolvency case or proceeding; or

(ix)                                any other circumstance or actwhatsoever, including any action or omission of the type described in Section2.04 (with or without notice to or knowledge of the Borrowers or such Grantor),which constitutes, or might be construed to constitute, an equitable or legaldischarge of the Borrowers for the Borrower Obligations, or of such Grantor underthe pledge and security grants contained in this ARTICLE II, in bankruptcy orin any other instance.

(b)                                 When making any demand hereunderor otherwise pursuing its rights and remedies hereunder against any Grantor,any Secured Creditor may, but shall be under no obligation to, join or make asimilar demand on or otherwise pursue or exhaust such rights and remedies as itmay have against any Borrower, any other Grantor or any other Person or againstany collateral security or pledge or guarantee for the Borrower Obligations orany right of offset with respect thereto, and any failure by any SecuredCreditor to make any such demand, to pursue such other rights or remedies or tocollect any payments from any Borrower, any other Grantor or any other Personor to realize upon any such collateral security or pledge or guarantee or toexercise any such right of offset, or any release of any Borrower, any other Grantoror any other Person or any such collateral security, guarantee or pledge orright of offset, shall not relieve any Grantor of any obligation or liabilityhereunder, and shall not impair or affect the rights and remedies, whetherexpress, implied or available as a matter of law, of any Secured Creditoragainst any Grantor.  For the purposeshereof “demand” shall include the commencement and continuance of any legalproceedings.

Section 2.07                                Reinstatement.  The pledge and security grants contained inthis ARTICLE II shall continue to be effective, or be reinstated, as the casemay be, if at any time payment, or any part thereof, of any of the Borrower Obligationsis rescinded or must otherwise be restored or returned by any Secured Creditorupon the insolvency, bankruptcy, dissolution, liquidation or reorganization ofany Borrower or any Grantor, or upon or as a result of the appointment of areceiver, intervenor or conservator of, or trustee or similar officer for, anyBorrower or any Grantor or any substantial part of its Property, or otherwise,all as though such payments had not been made.

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**ARTICLE III****Representationsand Warranties**

Toinduce the US Administrative Agent and the Lenders to enter into the CreditAgreement and to induce the Lenders to make their respective extensions ofcredit to the Borrowers thereunder and to induce the Lenders (and theirAffiliates) to enter into Hedging Agreements with the Borrowers and their RestrictedSubsidiaries, each Grantor hereby represents and warrants to the USAdministrative Agent and each Lender that:

Section 3.01                                Title; No Other Liens.  Except for Permitted Liens and the securityinterest granted to the US Administrative Agent for the ratable benefit of theSecured Creditors pursuant to this Agreement, such Grantor is the record andbeneficial owner of its respective items of the Collateral free and clear ofany and all Liens and has the power to transfer each item of the Collateral inwhich a Lien is granted by it hereunder, free and clear of any Lien.  Except with respect to Liens permitted bySection 10.02(b), (c), (e) or (g) of the Credit Agreement, no financingstatement or other public notice with respect to all or any part of theCollateral is on file or of record in any public office, except such as havebeen filed in favor of the US Administrative Agent, for the ratable benefit ofthe Secured Creditors, pursuant to this Agreement or the Security Instrumentsor as are filed to secure Liens permitted by Section 10.02 of the CreditAgreement.

Section 3.02                                Perfected First Priority Liens.  The security interests granted pursuant tothis Agreement (a) upon the completion of the filings and the other actionsspecified on Schedule 3 constitute valid perfected security interests inall of the Collateral in favor of the US Administrative Agent, for the ratablebenefit of the Secured Creditors, as collateral security for the BorrowerObligations, enforceable in accordance with the terms hereof against allcreditors of such Grantor and any Persons purporting to purchase any Collateralfrom such Grantor and (b) are prior to all other Liens on the Collateral inexistence on the date hereof, except, in each case, for Liens expresslypermitted by the Credit Agreement.

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

Section 3.04                                Pledged Securities.  The Pledged Securities required to be pledgedhereunder and under the Credit Agreement by such Grantor are listed in Schedule2.  The shares of Pledged Securitiespledged by such Grantor hereunder except for LP Units and Subordinated Units, constituteall the issued and outstanding shares of all classes of the Capital Stock ofeach Issuer owned by such Grantor that is a Domestic Subsidiary and 65% of allthe issued and outstanding shares of all classes of the Capital Stock of eachIssuer (except as otherwise noted on Schedule 2) that is a ForeignSubsidiary.  All the shares of thePledged Securities have been duly and validly issued and are fully paid andnonassessable, and such Grantor is the record and beneficial owner of, and hasgood title to, the Pledged Securities pledged by it hereunder, free of any andall Liens or options in favor of, or claims of, any other Person, except thesecurity interest created by this Agreement, and has the power to transfer thePledged Securities in which a Lien is granted by it hereunder, free and clearof any other Lien.

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Section3.05                                Instrumentsand Chattel Paper.  Such Grantor hasdelivered to the US Administrative Agent all Collateral constituting anyInstrument or Chattel Paper in excess of $1,000,000 that is required to bedelivered under Section 4.04.  NoCollateral constituting Chattel Paper or Instruments contains any statementtherein to the effect that such Collateral has been assigned to an identifiedparty other than the US Administrative Agent, and the grant of a securityinterest in such Collateral in favor of the US Administrative Agent hereunderdoes not violate the rights of any other Person as a secured party.

Section3.06                                Truthof Information; Accounts.  Allinformation with respect to the Collateral set forth in any schedule orcertificate at any time heretofore or hereafter furnished by such Grantor tothe US Administrative Agent is and will be true and correct in all materialrespects as of the date furnished.  Theplace where each Grantor keeps its records concerning the Accounts, ChattelPaper and Payment Intangibles is 4444 Brittmoore Road, Houston, Texas 77041.

Section3.07                                GovernmentalObligors.  None of the AccountDebtors on a material portion of such Grantor’s Accounts, Chattel Paper orPayment Intangibles is a Governmental Authority.

**ARTICLE IV****Covenants**

EachGrantor covenants and agrees with the US Administrative Agent and the Lendersthat, from and after the date of this Agreement until the Borrower Obligationsunder the Credit Agreement shall have been paid in full in cash, no Letter ofCredit shall be outstanding (except for Letters of Credit secured by cashcollateral as permitted in Section 2.01(b)(iii) of the Credit Agreement) and allof the Aggregate Commitments shall have terminated:

Section 4.01                                Maintenance of Perfected Security Interest; FurtherDocumentation.  Except as setforth in the Credit Agreement, including, without limitation, any merger,consolidation, liquidation, sale, assignment, transfer or other dispositionpermitted by Section 10.08 or 10.14 of the Credit Agreement, each Grantoragrees that:

(a)                                  it shall maintain the securityinterest created by this Agreement as a perfected security interest having atleast the priority described in Section 3.02 and shall defend suchsecurity interest against the claims and demands of all Persons whomsoever;

(b)                                 it will furnish to the USAdministrative Agent and the Lenders from time to time statements and schedulesfurther identifying and describing the Collateral and such other reports inconnection with the Collateral as the US Administrative Agent may reasonablyrequest, all in reasonable detail; and

(c)                                  at any time and from time totime, upon the written request of the US Administrative Agent, and at the soleexpense of such Grantor, it will promptly and duly execute and deliver, andhave recorded, such further instruments and documents and take such furtheractions as the US Administrative Agent may reasonably deem necessary for thepurpose of obtaining or preserving the full benefits of this Agreement and ofthe rights and powers herein granted, including, without limitation, thedelivery of certificated securities  andthe filing of any 

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financing orcontinuation statements under the UCC (or other similar domestic laws) ineffect in any jurisdiction with respect to the security interests createdhereby.

Section 4.02                                Changes in Locations, Name, Etc.  Such Grantor recognizes that financingstatements pertaining to the Collateral have been or may be filed where suchGrantor is organized.  Without limitationof Section 9.03 of the Credit Agreement or any other covenant herein, suchGrantor will not cause or permit any change in its (a) corporate name, (b) itsidentity or corporate structure or in the jurisdiction in which it isincorporated or formed, (c) its jurisdiction of organization or itsorganizational identification number in such jurisdiction of organization or (d)its federal taxpayer identification number, unless, in each case, such Grantorshall have first (i) notified the US Administrative Agent of such change priorto the effective date of such change, and (ii) taken all action reasonablyrequested by the US Administrative Agent for the purpose of maintaining theperfection and priority of the US Administrative Agent’s security interestsunder this Agreement.  In any noticefurnished pursuant to this Section 4.02, such Grantor will expresslystate in a conspicuous manner that the notice is required by this Agreement andcontains facts that may require additional filings of financing statements orother notices for the purposes of continuing perfection of the USAdministrative Agent’s security interest in the Collateral.

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

(a)                                  if such Grantor shall becomeentitled to receive or shall receive any stock certificate (including, withoutlimitation, any certificate representing a stock dividend or a distribution inconnection with any reclassification, increase or reduction of capital or anycertificate issued in connection with any reorganization), option or rights inrespect of the Pledged Securities of any Issuer, whether in addition to, insubstitution of, as a conversion of, or in exchange for, any shares of thePledged Securities, or otherwise in respect thereof, such Grantor shall acceptthe same as the agent of the Secured Creditors, hold the same in trust for theSecured Creditors, segregated from other Property of such Grantor, and deliverthe same forthwith to the US Administrative Agent in the exact form received,duly indorsed by such Grantor to the US Administrative Agent, if required,together with an undated stock power covering such certificate duly executed inblank by such Grantor and with, if the US Administrative Agent so requests,signature guaranteed, to be held by the US Administrative Agent, subject to theterms hereof, as additional collateral security for the Borrower Obligations;provided, that the foregoing shall apply to 65% of such shares or rights in thecase of an Issuer that is a Foreign Subsidiary;

(b)                                 without the prior writtenconsent of the US Administrative Agent, such Grantor will not (i) unlessotherwise expressly permitted hereby or under the other Loan Documents, vote toenable, or take any other action to permit, any Issuer (other than UCLP) toissue any Capital Stock of any nature or to issue any other securitiesconvertible into or granting the right to purchase or exchange for any CapitalStock of any nature of any Issuer, (ii) sell, assign, transfer, exchange, orotherwise dispose of, or grant any option with respect to, the PledgedSecurities or Proceeds thereof (except pursuant to a transaction expresslypermitted by the Credit Agreement), (iii) except as set forth in the CreditAgreement, create, incur or permit to exist any Lien or option in favor of, orany claim of any Person with respect to, any of the 

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PledgedSecurities or Proceeds thereof, or any interest therein, except for thesecurity interests created by this Agreement or (iv) enter into any agreementor undertaking restricting the right or ability of such Grantor or the USAdministrative Agent to sell, assign or transfer any of the Pledged Securitiesor Proceeds thereof;

(c)                                  in the case of each Grantor thatis an Issuer, such Issuer agrees that (i) it will be bound by the terms of thisAgreement relating to the Pledged Securities issued by it and will comply withsuch terms insofar as such terms are applicable to it, (ii) it will notify the USAdministrative Agent promptly in writing of the occurrence of any of the eventsdescribed in Section 4.03(a) with respect to the Pledged Securitiesissued by it and (iii) the terms of Section 5.04(a) and Section 5.05shall apply to it, *mutatismutandis*, with respect to all actions that may be required of itpursuant to Section 5.04(d) or Section 5.05 with respect to thePledged Securities issued by it;

(d)                                 such Grantor shall furnish tothe US Administrative Agent such stock powers and other instruments as may bereasonably required by the US Administrative Agent to assure thetransferability of the Pledged Securities when and as often as may bereasonably requested by the US Administrative Agent; and

(e)                                  the Pledged Securities (exceptfor LP Units and Subordinated Units) will at all times constitute not less than100% of the Capital Stock of the Issuer thereof owned by any Grantor (or in thecase of any Issuer that is a Foreign Subsidiary, not less than 65% of the CapitalStock of such Issuer (except as otherwise noted on Schedule 2)).  Such Grantor will not permit any Issuer ofany of the Pledged Securities (other than UCLP) to issue any new shares of anyclass of Capital Stock of such Issuer unless such shares are pledged pursuantto this Agreement.

(f)                                    Notwithstanding any contraryprovision contained in this Agreement, with respect to Issuers that are ForeignSubsidiaries, the Grantors are required to pledge 65% of the Capital Stock ofsuch Issuers (except as otherwise noted on Schedule 2) and to deliverthe applicable stock certificates and stock powers duly executed in blank forsuch Capital Stock to the US Administrative Agent but shall not be required totake any additional actions to perfect the security interest of the SecuredCreditors in such Pledged Securities.

Section4.04                                Instrumentsand Tangible Chattel Paper.  If anyamount payable under or in connection with any of the Collateral shall be orbecome evidenced by any Instrument or Tangible Chattel Paper having a value inexcess of $1,000,000, such Instrument or Tangible Chattel Paper shall beimmediately delivered to the US Administrative Agent, duly endorsed in a mannersatisfactory to the US Administrative Agent, to be held as Collateral pursuantto this Agreement.

Section4.05                                Article8 of the UCC.  To the extent that anyGrantor has opted into Article 8 of the UCC, such Grantor may not opt outof Article 8 of the UCC without the prior written consent of the USAdministrative Agent.

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**ARTICLE V****RemedialProvisions**

Section 5.01                                UCC and Other Remedies.

(a)                                  Upon the occurrence and duringthe continuance of an Event of Default, the US Administrative Agent, on behalfof the Secured Creditors, may exercise, in addition to all other rights andremedies granted to them in this Agreement, the other Loan Documents and in anyother instrument or agreement securing, evidencing or relating to the BorrowerObligations, all rights and remedies of a secured party under the UCC or anyother applicable law or otherwise available at law or equity.  Without limiting the generality of theforegoing, the US Administrative Agent, without demand of performance or otherdemand, presentment, protest, advertisement or notice of any kind (except anynotice required by law referred to below) to or upon any Grantor or any otherPerson (all and each of which demands, defenses, advertisements and notices arehereby waived), may in such circumstances forthwith collect, receive,appropriate and realize upon the Collateral, or any part thereof, and/or mayforthwith sell, lease, assign, give option or options to purchase, or otherwisedispose of and deliver the Collateral or any part thereof (or contract to doany of the foregoing), in one or more parcels at public or private sale orsales, at any exchange, broker’s board or office of any Secured Creditor orelsewhere upon such commercially reasonable terms and conditions as it may deemadvisable and at such commercially reasonable prices as it may deem best, forcash or on credit or for future delivery without assumption of any credit risk.  Any Secured Creditor shall have the rightupon any such public sale or sales, and, to the extent permitted by law, uponany such private sale or sales, to purchase the whole or any part of theCollateral 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 ofCollateral, each Grantor further agrees, at the US Administrative Agent’srequest following an acceleration of the Indebtedness under Section 11.02(a) ofthe Credit Agreement, to assemble the Collateral and make it available to the USAdministrative Agent at places which the US Administrative Agent shallreasonably select, whether at such Grantor’s premises or elsewhere, unlessprohibited by agreements with unaffiliated third parties.  Any such sale or transfer by the USAdministrative Agent either to itself or to any other Person shall, to thefullest extent permitted under applicable law, be absolutely free from anyclaim of right by Grantor, including any equity or right of redemption, stay orappraisal which Grantor has or may have under any rule of law, regulation orstatute now existing or hereafter adopted (and such Grantor hereby waives anyrights it may have in respect thereof). Upon any such sale or transfer, the US Administrative Agent shall havethe right to deliver, assign and transfer to the purchaser or transfereethereof the Collateral so sold or transferred. The US Administrative Agent shall apply the net proceeds of any actiontaken by it pursuant to this Section 5.01, after deducting allreasonable costs and expenses of every kind incurred in connection therewith orincidental to the care or safekeeping of any of the Collateral or in any wayrelating to the Collateral or the rights of the US Administrative Agent and theSecured Creditors hereunder, including, without limitation, reasonableattorneys’ fees and disbursements, to the payment in whole or in part of theBorrower Obligations, in accordance with the Credit Agreement, and only aftersuch application and after the payment by the US Administrative Agent of anyother amount required by any provision of law, including, without limitation,Section 9.615 of the UCC, need the US Administrative Agent account for thesurplus, if any, to any Grantor.  To theextent permitted by applicable law, each Grantor waives all 

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claims, damagesand demands it may acquire against the US Administrative Agent or any SecuredCreditor arising out of the exercise by them of any rights hereunder.  If any notice of a proposed sale or otherdisposition of Collateral shall be required by law, such notice shall be deemedreasonable and proper if given at least 10 days before such sale or otherdisposition.

(b)                                 In the event that the USAdministrative Agent elects not to sell the Collateral, the US AdministrativeAgent retains its rights to dispose of or utilize the Collateral or any part orparts thereof in any manner authorized or permitted by law or in equity, and toapply the proceeds of the same towards payment of the BorrowerObligations.  Each and every method ofdisposition of the Collateral described in this Agreement shall constitutedisposition in a commercially reasonable manner.

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

Section 5.02                                Collectionson Accounts, Etc.  The USAdministrative Agent hereby authorizes each Grantor to collect upon theCollateral that is represented by Accounts, Instruments, Chattel Paper andPayment Intangibles subject to the US Administrative Agent’s direction andcontrol, and the US Administrative Agent may curtail or terminate saidauthority at any time after the occurrence and during the continuance of anEvent of Default.  Upon the request ofthe US Administrative Agent at any time after the occurrence and during thecontinuance of an Event of Default, each Grantor shall notify the AccountDebtors that the applicable Accounts, Chattel Paper and Payment Intangibleshave been assigned to the US Administrative Agent for the ratable benefit ofthe Secured Creditors and that payments in respect thereof shall be madedirectly to the US Administrative Agent. The US Administrative Agent may in its own name or in the name of otherscommunicate with the Account Debtors to verify with them to its satisfactionthe existence, amount and terms of any such Accounts, Chattel Paper or PaymentIntangibles.  Anything herein to thecontrary notwithstanding, each Grantor shall remain liable under each of itsAccounts to observe and perform all the conditions and obligations to beobserved and performed by it thereunder, all in accordance with the terms ofany agreement giving rise thereto.  Neitherthe US Administrative Agent nor any Lender shall have any obligation orliability under any Account (or any agreement giving rise thereto) by reason ofor arising out of this Agreement or the receipt by the US Administrative Agentor any Lender of any payment relating thereto, nor shall the US AdministrativeAgent or any Lender be obligated in any manner to perform any of theobligations of any Grantor under or pursuant to any Account (or any agreementgiving rise thereto) to make any payment, to make any inquiry as to the natureor the sufficiency of any payment received by it or as to the sufficiency ofany performance by any party thereunder, to present or file any claim, to takeany action to enforce any performance or to collect the payment of any amountswhich may have been assigned to it or to which it may be entitled at any timeor times.

Section 5.03                                Proceeds.  If required by the US Administrative Agent atany time after the occurrence and during the continuance of an Event ofDefault, any payments of Collateral composed of Accounts, Instruments, ChattelPaper and Payment Intangibles, when collected or received by each Grantor, andany other cash or non-cash Proceeds received by each Grantor upon the sale orother disposition of any Collateral, shall be forthwith (and, in any event, withintwo Business Days) deposited by such Grantor in the exact form received, dulyindorsed 

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by such Grantorto the US Administrative Agent if required, in a special collateral accountmaintained by the US Administrative Agent, subject to withdrawal by the USAdministrative Agent for the ratable benefit of the Secured Parties only, ashereinafter provided, and, until so turned over, shall be held by such Grantorin trust for the US Administrative Agent for the ratable benefit of the SecuredCreditors, segregated from other funds of any such Grantor.  Each deposit of any such Proceeds shall beaccompanied by a report identifying in reasonable detail the nature and sourceof the payments included in the deposit. All Proceeds (including, without limitation, Proceeds constitutingcollections of Accounts, Chattel Paper, Instruments) while held by the USAdministrative Agent (or by any Grantor in trust for the US AdministrativeAgent for the ratable benefit of the Secured Creditors) shall continue to becollateral security for all of the Borrower Obligations and shall notconstitute payment thereof until applied as hereinafter provided.  At such intervals as may be agreed upon byeach Grantor and the US Administrative Agent, or, if an Event of Default shallhave occurred and be continuing, at any time at the US Administrative Agent’selection, the US Administrative Agent shall apply all or any part of the fundson deposit in said special collateral account on account of the BorrowerObligations in such order as the US Administrative Agent may elect, and anypart of such funds which the US Administrative Agent elects not so to apply anddeems not required as collateral security for the Borrower Obligations shall bepaid over from time to time by the US Administrative Agent to each Grantor orto whomsoever may be lawfully entitled to receive the same.

Section 5.04                                Pledged Securities.

(a)                                  Unless an Event of Default shallhave occurred and be continuing and the US Administrative Agent shall havegiven notice to the relevant Grantor of the US Administrative Agent’s intent toexercise its corresponding rights pursuant to Section 5.04(b), eachGrantor shall be permitted to receive all cash dividends paid in respect of thePledged Securities paid in the normal course of business of the relevantIssuer, to the extent permitted in the Credit Agreement, and to exercise allvoting, consent and corporate rights with respect to the Pledged Securities;provided, however, that no vote shall be cast, consent given or right exercisedor other action taken by such Grantor that would impair the Collateral orresult in any violation of any provision of the Credit Agreement, thisAgreement or any other Loan Document or, without the prior consent of the USAdministrative Agent, enable or permit any Issuer of Pledged Securities otherthan UCLP to issue any Capital Stock or to issue any other securitiesconvertible into or granting the right to purchase or exchange for any CapitalStock of any Issuer of Pledged Securities other than as permitted by the CreditAgreement.

(b)                                 Upon the occurrence and duringthe continuance of an Event of Default, upon notice by the US AdministrativeAgent of its intent to exercise such rights to the relevant Grantor orGrantors, (i) the US Administrative Agent shall have the right to receive anyand all cash dividends, payments, Property or other Proceeds paid in respect ofthe Pledged Securities and make application thereof to the Borrower Obligationsin accordance with the Credit Agreement, and (ii) any or all of the PledgedSecurities shall be registered in the name of the US Administrative Agent orits nominee, and (iii) the US Administrative Agent or its nominee may exercise(A) all voting, consent, corporate and other rights pertaining to such PledgedSecurities at any meeting of shareholders (or other equivalent body) of therelevant Issuer or Issuers or otherwise and (B) any and all rights ofconversion, exchange and subscription and any other rights, privileges oroptions pertaining to such Pledged Securities as if it were the absolute owner 

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thereof(including, without limitation, the right to exchange at its discretion any andall of the Pledged Securities upon the merger, consolidation, reorganization,recapitalization or other fundamental change in the organizational structure ofany Issuer, or upon the exercise by any Grantor or the US Administrative Agentof any right, privilege or option pertaining to such Pledged Securities, and inconnection therewith, the right to deposit and deliver any and all of thePledged Securities with any committee, depositary, transfer agent, registrar orother designated agency upon such terms and conditions as the US AdministrativeAgent may determine), all without liability except to account for Propertyactually received by it, but the US Administrative Agent shall have no duty toany Grantor to exercise any such right, privilege or option and shall not beresponsible for any failure to do so or delay in so doing.

(c)                                  In order to permit the USAdministrative Agent to exercise the voting and other consensual rights that itmay be entitled to exercise pursuant hereto and to receive all dividends andother distributions that it may be entitled to receive hereunder, (i) eachGrantor shall promptly execute and deliver (or cause to be executed anddelivered) to the US Administrative Agent all such proxies, dividend paymentorders and other instruments as the US Administrative Agent may from time totime reasonably request and (ii) without limiting the effect of clause (i)above, such Grantor hereby grants to the US Administrative Agent an irrevocableproxy to vote all or any part of the Pledged Securities and to exercise allother rights, powers, privileges and remedies to which a holder of the PledgedSecurities would be entitled (including giving or withholding written consentsof shareholders calling special meetings of shareholders and voting at suchmeetings), which proxy shall be effective, automatically and without thenecessity of any action (including any transfer of any Pledged Securities onthe record books of the Issuer thereof) by any other Person (including theIssuer of such Pledged Securities or any officer or agent thereof) upon theoccurrence and during the continuance of an Event of Default and which proxyshall only terminate upon the payment in full in cash of the BorrowerObligations under the Credit Agreement.

(d)                                 Each Grantor hereby authorizesand instructs each Issuer of any Pledged Securities pledged by such Grantorhereunder to (i) comply with any instruction received by it from the USAdministrative Agent in writing that (A) states that an Event of Default hasoccurred and is continuing and (B) is otherwise in accordance with the terms ofthis Agreement, without any other or further instructions from such Grantor,and each Grantor agrees that each Issuer shall be fully protected in socomplying, and (ii) unless otherwise expressly permitted hereby, pay anydividends or other payments with respect to the Pledged Securities directly tothe US Administrative Agent.

(e)                                  Upon the occurrence and duringthe continuance of an Event of Default, if the Issuer of any Pledged Securitiesis the subject of bankruptcy, insolvency, receivership, custodianship or otherproceedings under the supervision of any Governmental Authority, then allrights of the Grantor in respect thereof to exercise the voting and otherconsensual rights which such Grantor would otherwise be entitled to exercisewith respect to the Pledged Securities issued by such Issuer shall cease, andall such rights shall thereupon become vested in the US Administrative Agentwho shall thereupon have the sole right to exercise such voting and otherconsensual rights, but the US Administrative Agent shall have no duty toexercise any such voting or other consensual rights and shall not beresponsible for any failure to do so or delay in so doing.

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Section5.05                                PrivateSales of Pledged Securities.

(a)                                  Each Grantor recognizes that theUS Administrative Agent may be unable to effect a public sale of any or all thePledged Securities, by reason of certain prohibitions contained in theSecurities Act and applicable state securities laws or otherwise or maydetermine that a public sale is impracticable or not commercially reasonableand, accordingly, may resort to one or more private sales thereof to arestricted group of purchasers which will be obliged to agree, among otherthings, to acquire such securities for their own account for investment and notwith a view to the distribution or resale thereof.  Each Grantor acknowledges and agrees that anysuch private sale may result in prices and other terms less favorable than ifsuch sale were a public sale and, notwithstanding such circumstances, agreesthat any such private sale shall be deemed to have been made in a commerciallyreasonable manner.  The US AdministrativeAgent shall be under no obligation to delay a sale of any of the PledgedSecurities for the period of time necessary to permit the Issuer thereof toregister such securities for public sale under the Securities Act, or underapplicable state securities laws, even if such Issuer would agree to do so.

(b)                                 Each Grantor agrees to use itsbest commercially reasonable efforts to do or cause to be done all such otheracts as may reasonably be necessary to make such sale or sales of all or anyportion of the Pledged Securities pursuant to this Section 5.05 validand binding and in compliance with any and all other applicable GovernmentalRequirements.  Each Grantor furtheragrees that a breach of any of the covenants contained in this Section 5.05will cause irreparable injury to the Secured Creditors, that the SecuredCreditors have no adequate remedy at law in respect of such breach and, as aconsequence, that each and every covenant contained in this Section 5.05shall be specifically enforceable against such Grantor, and such Grantor herebywaives and agrees not to assert any defenses against an action for specificperformance of such covenants except for a defense that no Event of Default hasoccurred or is continuing under the Credit Agreement.

Section5.06                                Deficiency.  Each Grantor shall remain liable for anydeficiency if the proceeds of any sale or other disposition of the Collateralare insufficient to pay its obligations and the fees and disbursements of any attorneysemployed by the US Administrative Agent or any Secured Creditor to collect suchdeficiency.

Section5.07                                Non-JudicialEnforcement.  The US AdministrativeAgent may enforce its rights hereunder without prior judicial process orjudicial hearing, and to the extent permitted by law, each Grantor expresslywaives any and all legal rights which might otherwise require the USAdministrative Agent to enforce its rights by judicial process.

**ARTICLE VI****The USAdministrative Agent**

Section6.01                                USAdministrative Agent’s Appointment as Attorney-in-Fact, Etc.

(a)                                  Anything in this Section6.01(a) to the contrary notwithstanding, the US Administrative Agent agreesthat it will not exercise any rights under the power of attorney 

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provided for inthis Section 6.01(a) unless an Event of Default shall have occurred andbe continuing.  Each Grantor herebyirrevocably constitutes and appoints the US Administrative Agent and anyofficer or agent thereof, with full power of substitution, as its true andlawful attorney-in-fact with full irrevocable power and authority in the placeand 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 andall reasonably appropriate action and to execute any and all documents andinstruments which may be reasonably necessary or desirable to accomplish thepurposes of this Agreement, and, without limiting the generality of theforegoing, each Grantor hereby gives the US Administrative Agent the power andright, 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 underSection 9.03(a) of the Credit Agreement, pay or discharge Taxes and Lienslevied or placed on or threatened against the Collateral, effect any repairs orany insurance called for by the terms of this Agreement or any other LoanDocument and pay all or any part of the premiums therefor and the coststhereof;

(ii)                                  execute, in connection with anysale provided for in Section 5.01 or Section 5.05, anyendorsements, assignments or other instruments of conveyance or transfer withrespect to the Collateral; and

(iii)                               (A) direct any party liable forany payment under any of the Collateral to make payment of any and all moneysdue or to become due thereunder directly to the US Administrative Agent or asthe US Administrative Agent shall direct; (B) ask or demand for, collect, andreceive payment of and receipt for, any and all moneys, claims and otheramounts due or to become due at any time in respect of or arising out of anyCollateral; (C) in the name of such Grantor or its own name, or otherwise, takepossession of and indorse and collect any check, draft, note, acceptance orother instrument for the payment of moneys due with respect to any Collateraland commence and prosecute any suits, actions or proceedings at law or inequity in any court of competent jurisdiction to collect the Collateral or anyportion thereof and to enforce any other right in respect of any Collateral;(D) defend any suit, action or proceeding brought against such Grantor withrespect to any Collateral; (E) settle, compromise or adjust any such suit,action or proceeding and, in connection therewith, give such discharges orreleases as the US Administrative Agent may deem appropriate; and (F)generally, sell, transfer, pledge and make any agreement with respect to orotherwise deal with any of the Collateral as fully and completely as though theUS Administrative Agent were the absolute owner thereof for all purposes, anddo, at the US Administrative Agent’s option and such Grantor’s expense, at anytime, or from time to time, all acts and things which the US AdministrativeAgent deems necessary to protect, preserve or realize upon the Collateral andthe US Administrative Agent’s and the Secured Creditors’ security intereststherein and to effect the intent of this Agreement, all as fully andeffectively as such Grantor might do.

(b)                                 If any Grantor fails to performor comply with any of its agreements contained herein within the applicablegrace periods, the US Administrative Agent, at its option, but without anyobligation so to do, may perform or comply, or otherwise cause performance orcompliance, with such agreement.

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

(d)                                 All powers, authorizations andagencies contained in this Agreement are coupled with an interest and areirrevocable until this Agreement is terminated and the security interestscreated hereby are released.

Section 6.02                                Duty of US Administrative Agent.  The US Administrative Agent’s sole duty withrespect to the custody, safekeeping and physical preservation of the Collateralin its possession, under Section****9.207of the UCC or otherwise, shall be to deal with it in the same manner as the USAdministrative Agent deals with similar Property for its own account and shallbe deemed to have exercised reasonable care in the custody and preservation ofthe Collateral in its possession if the Collateral is accorded treatmentsubstantially equal to that which comparable secured parties accord comparablecollateral.  To the fullest extent permittedunder applicable law, neither the US Administrative Agent, any Secured Creditornor any of their respective officers, directors, employees or agents shall beliable for failure to demand, collect or realize upon any of the Collateral orfor any delay in doing so or shall be under any obligation to sell or otherwisedispose of any Collateral upon the request of any Grantor or any other Personor to take any other action whatsoever with regard to the Collateral or anypart thereof.  The powers conferred onthe US Administrative Agent and the Secured Creditors hereunder are solely toprotect the US Administrative Agent’s and the Secured Creditors’ interests inthe Collateral and shall not impose any duty upon the US Administrative Agentor any Secured Creditor to exercise any such powers.  The US Administrative Agent and the SecuredCreditors shall be accountable only for amounts that they actually receive as aresult of the exercise of such powers, and neither they nor any of theirofficers, directors, employees or agents shall be responsible to any Grantorfor any act or failure to act hereunder, except for their own gross negligenceor willful misconduct.  To the fullestextent permitted by applicable law, the US Administrative Agent shall be underno duty whatsoever to make or give any presentment, notice of dishonor,protest, demand for performance, notice of non-performance, notice of intent toaccelerate, notice of acceleration, or other notice or demand in connectionwith any Collateral or the Borrower Obligations, or to take any steps necessaryto preserve any rights against any Grantor or other Person or ascertaining ortaking action with respect to calls, conversions, exchanges, maturities,tenders or other matters relative to any Collateral, whether or not it has oris deemed to have knowledge of such matters. Each Grantor, to the extent permitted by applicable law, waives anyright of marshaling in respect of any and all Collateral, and waives any rightto require the US Administrative Agent or any Secured Creditor to proceedagainst any Grantor or other Person, exhaust any Collateral or enforce anyother remedy which the US Administrative Agent or any Secured Creditor now hasor may hereafter have against each Grantor, any Grantor or other Person.

Section6.03                                Filingof Financing Statements.  Pursuant tothe UCC and any other applicable law, each Grantor authorizes the USAdministrative Agent to file or record financing statements and other filing orrecording documents or instruments with respect to the Collateral 

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in such form andin such offices as the US Administrative Agent reasonably determinesappropriate to perfect the security interests of the US Administrative Agentunder this Agreement.  A photographic orother reproduction of this Agreement shall be sufficient as a financingstatement or other filing or recording document or instrument for filing orrecording in any jurisdiction.

Section6.04                                Authorityof US Administrative Agent.  EachGrantor acknowledges that the rights and responsibilities of the USAdministrative Agent under this Agreement with respect to any action taken bythe US Administrative Agent or the exercise or non-exercise by the USAdministrative Agent of any option, voting right, request, judgment or otherright or remedy provided for herein or resulting or arising out of thisAgreement shall, as between the US Administrative Agent and the SecuredCreditors, be governed by the Credit Agreement and by such other agreementswith respect thereto as may exist from time to time among them, but, as betweenthe US Administrative Agent and the Grantors, the US Administrative Agent shallbe conclusively presumed to be acting as agent for the Secured Creditors withfull and valid authority so to act or refrain from acting, and no Grantor shallbe under any obligation, or entitlement, to make any inquiry respecting suchauthority.

**ARTICLE VII****Subordinationof Indebtedness**

Section7.01                                Subordinationof All Grantor Claims.  As usedherein, the term “Grantor Claims” shallmean all debts and obligations of the Borrowers or any other Grantor to anyother Grantor, whether such debts and obligations now exist or are hereafterincurred or arise, or whether the obligation of the debtor thereon be direct,contingent, primary, secondary, several, joint and several, or otherwise, andirrespective of whether such debts or obligations be evidenced by note,contract, open account, or otherwise, and irrespective of the Person or Personsin whose favor such debts or obligations may, at their inception, have been, ormay hereafter be created, or the manner in which they have been or mayhereafter be acquired by.  Except forpayments permitted by the Credit Agreement, after and during the continuationof an Event of Default, no Grantor shall receive or collect, directly orindirectly, from any obligor in respect thereof any amount upon the GrantorClaims.

Section7.02                                Claimsin Bankruptcy.  In the event ofreceivership, bankruptcy, reorganization, arrangement, debtor’s relief, orother insolvency proceedings involving any Grantor, the US Administrative Agenton behalf of the US Administrative Agent and the Secured Creditors shall havethe right to prove their claim in any proceeding, so as to establish theirrights hereunder and receive directly from the receiver, trustee or other courtcustodian, dividends and payments which would otherwise be payable upon GrantorClaims.  Each Grantor hereby assigns suchdividends and payments to the US Administrative Agent for the benefit of the USAdministrative Agent and the Secured Creditors for application against theBorrower Obligations as provided under the Credit Agreement.  Should any Agent or Secured Creditor receive,for application upon the Borrower Obligations, any such dividend or paymentwhich 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 incash of the Borrower Obligations, the expiration of all Letters of Creditoutstanding under the Credit Agreement (except for Letters of Credit secured bycash collateral as permitted in Section 2.01(b)(iii) of the Credit Agreement)and the 

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termination of allof the Aggregate Commitments, the intended recipient shall become subrogated tothe rights of the US Administrative Agent and the Secured Creditors to theextent that such payments to the US Administrative Agent and the Lenders on theGrantor Claims have contributed toward the liquidation of the BorrowerObligations, and such subrogation shall be with respect to that proportion ofthe Borrower Obligations which would have been unpaid if the US AdministrativeAgent and the Secured Creditors had not received dividends or payments upon theGrantor Claims.

Section7.03                                PaymentsHeld in Trust.  In the event thatnotwithstanding Section 7.01 and Section 7.02, any Grantor shouldreceive any funds, payments, claims or distributions which is prohibited bysuch Sections, then it agrees: (a) to hold in trust for the US AdministrativeAgent and the Secured Creditors an amount equal to the amount of all funds,payments, claims or distributions so received, and (b) that it shall haveabsolutely no dominion over the amount of such funds, payments, claims ordistributions except to pay them promptly to the US Administrative Agent, forthe benefit of the Secured Creditors; and each Grantor covenants promptly topay the same to the US Administrative Agent.

Section7.04                                LiensSubordinate.  Each Grantor agreesthat, until the Borrower Obligations are paid in full in cash, no Letter of Creditshall be outstanding (except for Letters of Credit secured by cash collateralas permitted in Section 2.01(b)(iii) of the Credit Agreement) and thetermination of all of the Aggregate Commitments, any Liens securing payment ofthe Grantor Claims shall be and remain inferior and subordinate to any Lienssecuring payment of the Borrower Obligations, regardless of whether suchencumbrances in favor of such Grantor, the US Administrative Agent or anySecured Creditor presently exist or are hereafter created or attach.  Without the prior written consent of the USAdministrative Agent, no Grantor, during the period in which any of theBorrower Obligations are outstanding or the Aggregate Commitments are ineffect, shall (a) exercise or enforce any creditor’s right it may have againstany 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 orjoinder in any liquidation, bankruptcy, rearrangement, debtor’s relief orinsolvency proceeding) to enforce any Lien held by it.

Section7.05                                Notationof Records.  Upon the request of the USAdministrative Agent, all promissory notes and all accounts receivable ledgersor other evidence of the Grantor Claims accepted by or held by any Grantorshall contain a specific written notice thereon that the indebtedness evidencedthereby is subordinated under the terms of this Agreement.

**ARTICLE VIII****Miscellaneous**

Section8.01                                Waiver.  No failure on the part of the USAdministrative Agent or any Secured Creditor to exercise and no delay inexercising, and no course of dealing with respect to, any right, power,privilege or remedy or any abandonment or discontinuance of steps to enforcesuch right, power, privilege or remedy under this Agreement or any other LoanDocument shall operate as a waiver thereof, nor shall any single or partialexercise of any right, power, privilege or remedy under this Agreement or anyother Loan Document preclude or be construed as a waiver of any other orfurther exercise thereof or the exercise of any other right, power, privilege 

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or remedy.  The remedies provided herein are cumulativeand not exclusive of any remedies provided by law or equity

Section8.02                                Notices.  All notices and other communications providedfor herein shall be given in the manner and subject to the terms of Section13.02 of the Credit Agreement; provided that any such notice, request or demandto or upon any Grantor shall be addressed to such Grantor at its notice addressset forth on Schedule 1.

Section8.03                                Amendmentsin Writing.  None of the terms orprovisions of this Agreement may be waived, amended, supplemented or otherwisemodified except in accordance with Section 13.04 of the Credit Agreement.

Section8.04                                Successorsand Assigns.  The provisions of thisAgreement shall be binding upon the Grantors and their successors and permittedassigns and shall inure to the benefit of the US Administrative Agent and theSecured Creditors and their respective successors and permitted assigns;provided that no Grantor may assign, transfer or delegate any of its rights orobligations under this Agreement without the prior written consent of the USAdministrative Agent and the Lenders unless otherwise permitted by the terms ofthe Credit Agreement or this Agreement, and any such purported assignment,transfer or delegation shall be null and void.

Section8.05                                Survival;Revival; Reinstatement.

(a)                                  All covenants, agreements,representations and warranties made by any Grantor herein and in thecertificates or other instruments delivered in connection with or pursuant tothis Agreement or any other Loan Document to which it is a party shall beconsidered to have been relied upon by the US Administrative Agent, the otherAgents, the Issuing Bank and the Lenders and shall survive the execution anddelivery of this Agreement and the making of any Loans and issuance of anyLetters of Credit, regardless of any investigation made by any such other partyor on its behalf and notwithstanding that the US Administrative Agent, theother Agents, the Issuing Bank or any Lender may have had notice or knowledgeof any Default or incorrect representation or warranty at the time any creditis extended hereunder, and shall continue in full force and effect as long asthe principal of or any accrued interest on any Loan or any fee or any otheramount payable under the Credit Agreement is outstanding and unpaid or anyLetter of Credit is outstanding and so long as the Aggregate Commitments havenot expired or terminated.

(b)                                 To the extent that any paymentson the Borrower Obligations or proceeds of any Collateral are subsequentlyinvalidated, declared to be fraudulent or preferential, set aside or requiredto be repaid to a trustee, debtor in possession, receiver or other Person underany bankruptcy law, common law or equitable cause, then to such extent, theBorrower Obligations so satisfied shall be revived and continue as if suchpayment or proceeds had not been received and the US Administrative Agent’s andthe Secured Creditors’ Liens, security interests, rights, powers and remediesunder this Agreement and each other Loan Document shall continue in full forceand effect.  In such event, each LoanDocument shall be automatically reinstated and the Grantors shall take suchaction as may be reasonably requested by the US Administrative Agent and theSecured Creditors to effect such reinstatement.

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Section8.06                                Counterparts;Integration; Effectiveness; Conflicts.

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

(b)                                 **THISAGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT ANDUNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS ANDUNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF ANDTHEREOF.  THIS AGREEMENT AND THE LOANDOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BECONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.  THERE ARE NOUNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.**

(c)                                  This Agreement shall become effectivewhen it shall have been executed by the US Administrative Agent and when the USAdministrative Agent shall have received counterparts hereof which, when takentogether, bear the signatures of each of the other parties hereto, andthereafter shall be binding upon and inure to the benefit of the partieshereto, the Lenders and their respective successors and assigns.  Delivery of an executed counterpart of asignature page of this Agreement by telecopy shall be effective as delivery ofa manually executed counterpart of this Agreement.

(d)                                 In the event of a conflictbetween the provisions hereof and the provisions of the Credit Agreement, theprovisions of the Credit Agreement shall control.

Section8.07                                Severability.  Any provision of this Agreement or any otherLoan Document held to be invalid, illegal or unenforceable in any jurisdictionshall, as to such jurisdiction, be ineffective to the extent of suchinvalidity, illegality or unenforceability without affecting the validity,legality and enforceability of the remaining provisions hereof or thereof; andthe invalidity of a particular provision in a particular jurisdiction shall notinvalidate such provision in any other jurisdiction.

Section8.08                                GoverningLaw; Submission to Jurisdiction.

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

(b)                                 ANY LEGAL ACTION OR PROCEEDINGWITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT INTHE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THESOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,EACH OF THE PARTIES HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BYLAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTIONOF THE AFORESAID COURTS.  EACH PARTYHEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANYOBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NONCONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCHACTION OR PROCEEDING IN SUCH 

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RESPECTIVEJURISDICTIONS.  THIS SUBMISSION TOJURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAININGJURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.

(c)                                  EACH GRANTOR IRREVOCABLYCONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANYSUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED ORCERTIFIED MAIL, POSTAGE PREPAID, TO SUCH GRANTOR AT ITS ADDRESS SET FORTH ON SCHEDULE1 HERETO OR AS UPDATED FROM TIME TO TIME, SUCH SERVICE TO BECOME EFFECTIVETHIRTY (30) DAYS AFTER SUCH MAILING.

(d)                                 NOTHING HEREIN SHALL AFFECT THERIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY HOLDER OF A NOTE TOSERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGALPROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GRANTORS IN ANY OTHERJURISDICTION.

(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 ORANY SECURITY INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLYWAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TOCLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE ORCONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUALDAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF THEADMINISTRATIVE AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLYOR 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 BEENINDUCED TO ENTER INTO THIS AGREEMENT, THE SECURITY INSTRUMENTS AND THETRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUALWAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 8.08.

Section8.09                                Headings.  Article and Section headings and the Table ofContents used herein are for convenience of reference only, are not part ofthis Agreement and shall not affect the construction of, or be taken intoconsideration in interpreting, this Agreement.

Section8.10                                Acknowledgments.  Each Grantor hereby acknowledges that:

(a)                                  it has been advised by counselin the negotiation, execution and delivery of this Agreement and the other LoanDocuments to which it is a party;

(b)                                 neither the US AdministrativeAgent nor any Secured Creditor has any fiduciary relationship with or duty toany Grantor arising out of or in connection with this Agreement or any of theother Loan Documents, and the relationship between the Grantors, on 

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the one hand,and the US Administrative Agent and Secured Creditors, on the other hand, inconnection herewith or therewith is solely that of debtor and creditor;

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

(d)                                 Each of the parties heretospecifically agrees that it has a duty to read this Agreement, the SecurityInstruments and the other Loan Documents and agrees that it is charged withnotice and knowledge of the terms of this Agreement, the Security Instrumentsand the other Loan Documents; that it has in fact read this Agreement, theSecurity Instruments and the other Loan Documents and is fully informed and hasfull notice and knowledge of the terms, conditions and effects thereof; that ithas been represented by independent legal counsel of its choice throughout thenegotiations preceding its execution of this Agreement and the SecurityInstruments; and has received the advice of its attorney in entering into thisAgreement and the Security Instruments; and that it recognizes that certain ofthe terms of this Agreement and the Security Instruments result in one partyassuming the liability inherent in some aspects of the transaction andrelieving the other party of its responsibility for such liability.  **EACH PARTYHERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY ORENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE SECURITYINSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCHPROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”**

Section8.11                                AdditionalCapital Stock.  Each Grantor that isrequired to pledge certificated Capital Stock of its Subsidiaries shall executeand deliver a Supplement in the form of Annex I hereto, if such certificatedCapital Stock was not previously pledged.

Section8.12                                Releases.

(a)                                  Full Release.  The grant of a security interest hereunderand all of rights, powers and remedies in connection herewith shall remain infull force and effect until the US Administrative Agent has (i) retransferredand delivered all Collateral in its possession to the Grantors, and (ii)executed a written release or termination statement and reassigned to theGrantors without recourse or warranty any remaining Collateral and all rightsconveyed hereby.  Pursuant to thesatisfaction of the conditions set forth in Section 9.09(b) of the CreditAgreement or upon the complete payment of the Borrower Obligations under theCredit Agreement (except for Letters of Credit secured by cash collateral aspermitted in Section 2.01(b)(iii) of the Credit Agreement) and the complianceby the Grantors with all covenants and agreements hereof and the termination ofthe Aggregate Commitments, the US Administrative Agent, at the written requestand expense of the Borrowers, will promptly release, reassign and transfer theCollateral to the Grantors and declare this Agreement to be of no further forceor effect.

(b)                                 Partial Release.  Notwithstanding anything contained herein tothe contrary, the Grantors are authorized to release any Collateral that issold, leased, assigned, exchanged, conveyed, transferred or otherwise disposedof in compliance with Sections 10.08, 10.11 and 10.14 of the Credit Agreementat which point the liens and security interests shall 

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terminate withrespect to such Collateral and this Agreement shall have no further force oreffect with respect to such released Collateral; provided that so longas the lien in favor of the US Administrative Agent continues in the proceedsof such sale, lease, assignment, exchange, conveyance, transfer or other disposalof such Collateral, or to the extent such Collateral is sold, leased, assigned,exchanged, conveyed, transferred or otherwise disposed of to any Borrower orany Subsidiary Guarantor, such lien continues in such Collateral.

(c)                                  Retention in Satisfaction.  Except as may be expressly applicablepursuant to Section **9.620** ofthe UCC, no action taken or omission to act by the US Administrative Agent orthe Secured Creditors hereunder, including, without limitation, any exercise ofvoting or consensual rights or any other action taken or inaction, shall bedeemed to constitute a retention of the Collateral in satisfaction of theBorrower Obligations or otherwise to be in full satisfaction of the BorrowerObligations, and the Borrower Obligations shall remain in full force andeffect, until the US Administrative Agent and the Secured Creditors shall haveapplied payments (including, without limitation, collections from Collateral)towards the Borrower Obligations in the full amount then outstanding or until suchsubsequent time as is provided in Section 8.12(a).

Section8.13                                Acceptance.  Each Grantor hereby expressly waives noticeof acceptance of this Agreement, acceptance on the part of the USAdministrative Agent and the Secured Creditors being conclusively presumed bytheir request for this Agreement and delivery of the same to the USAdministrative Agent.

***[SIGNATUREPAGES TO FOLLOW]***

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INWITNESS WHEREOF, each of the undersigned has caused this Collateral Agreementto 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 |
| ** **    |                                 |   |
| ** **    |                                 |   |
|          | **UCI COMPRESSOR HOLDING,  L.P.**    |
|          | ** **                           |
| ** **    | **By:**                              | **UCI  LEASING HOLDING GP LLC,** |
| ** **    |                                 | **its general partner** |
| ** **    |                                 | ** ** |
| ** **    |                                 | ** ** |
|          | By:                                  | /s/ J. Michael Anderson |
|          | Name:                                | J. Michael Anderson |
|          | Title:                               | Senior Vice President and |
|          |                                 | Chief Financial Officer |
| ** **    |                                 |   |
| ** **    |                                 |   |
|          | **UCI  MLP LP LLC**                  |
|          | ** **                           |
|          | ** **                           |
|          | By:                                  | /s/ Pamela Jasinki |
|          | Name:                                | Pamela A. Jasinski |
|          | Title:                               | Manager |

 

Signature Page –Collateral Agreement

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| Acknowledged and Agreed to  as |   |                         |
|--------------------------------|--------|------------------------------|
| of the date  hereof by:        |   |                         |
|                           |   |                         |
| **ADMINISTRATIVE AGENT:**      |   | **WACHOVIA  BANK, NATIONAL** |
|                           |   | **ASSOCIATION**              |
|                           |   |                         |
|                           |   |                         |
|                           | By:    | /s/ Todd Schanzlin           |
|                           | Name:  | Todd Schanzlin               |
|                           | Title: | Vice President               |
|                                |        |                              |  |

 

 

Acknowledgment Page –Collateral Agreement

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