**Exhibit10.20**

***EXECUTIONVERSION***

 

**PLEDGE AND SECURITY AGREEMENT**(Assignment of Pledged Securities)

 

made by

**UNIVERSAL COMPRESSION INTERNATIONAL INC.,**

**ENTERRA COMPRESSION INVESTMENTCOMPANY,**

**UNIVERSAL COMPRESSION SERVICES, LLC,**

**UNIVERSAL COMPRESSION CANADIANHOLDINGS, INC.,**

**UCI GP LP LLC, and**

**UCO GP, LLC,**as Pledgors

 

to

 

**WACHOVIA BANK, NATIONAL ASSOCIATION,**as US Administrative Agent

 

Effective as of October 20, 2006

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**TABLE OFCONTENTS**
|         |   | **ARTICLE 1**                                                      |   |   |
|--------------|--------|--------------------------------------------------------------------|--------|--------|
|         |   | **Security  Interest**                                             |   |   |
|         |   | ** **                                                         |   |   |
| Section 1.01 |   | Pledge                                                             |   | 2      |
| Section 1.02 |   | Collateral                                                         |   | 2      |
| Section 1.03 |   | No Subrogation                                                     |   | 3      |
| Section 1.04 |   | Amendments, Etc. with respect to the Obligations                   |   | 3      |
| Section 1.05 |   | Waivers                                                            |   | 4      |
| Section 1.06 |   | Pledge Absolute and Unconditional                                  |   | 4      |
| Section 1.07 |   | Reinstatement                                                      |   | 6      |
|         |   |                                                               |   |   |
|         |   | **ARTICLE  2**                                                     |   |   |
|         |   | **Definitions**                                                    |   |   |
|         |   |                                                               |   |   |
| Section 2.01 |   | Terms Defined Above                                                |   | 6      |
| Section 2.02 |   | Certain Definitions                                                |   | 6      |
| Section 2.03 |   | Credit Agreement Terms                                             |   | 8      |
| Section 2.04 |   | Section References                                                 |   | 8      |
|         |   |                                                               |   |   |
|         |   | **ARTICLE  3**                                                     |   |   |
|         |   | **Representations  and Warranties**                                |   |   |
|         |   |                                                               |   |   |
| Section 3.01 |   | Ownership of Collateral; Encumbrances                              |   | 8      |
| Section 3.02 |   | No Required Consent                                                |   | 8      |
| Section 3.03 |   | Pledged Securities                                                 |   | 8      |
| Section 3.04 |   | First Priority Security Interest                                   |   | 8      |
| Section 3.05 |   | Collateral                                                         |   | 9      |
| Section 3.06 |   | Pledgor’s Location                                            |   | 9      |
| Section 3.07 |   | Benefit to the Pledgor                                             |   | 9      |
|         |   |                                                               |   |   |
|         |   | **ARTICLE  4**                                                     |   |   |
|         |   | **Covenants  and Agreements**                                      |   |   |
|         |   |                                                               |   |   |
| Section 4.01 |   | Covenants in Credit Agreement                                      |   | 9      |
| Section 4.02 |   | Maintenance of Perfected Security Interest; Further  Documentation |   | 9      |
| Section 4.03 |   | Changes in Locations, Name, Etc                                    |   | 10     |
| Section 4.04 |   | Pledged Securities                                                 |   | 10     |
| Section 4.05 |   | Certain Liabilities                                                |   | 11     |
| Section 4.06 |   | Article 8 of the UCC                                               |   | 12     |
|         |   |                                                               |   |   |
|         |   | **ARTICLE  5**                                                     |   |   |
|         |   | **Remedial  Provisions**                                           |   |   |
|         |   |                                                               |   |   |
| Section 5.01 |   | UCC and Other Remedies                                             |   | 12     |
| Section 5.02 |   | Pledged Securities                                                 |   | 13     |

 

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| Section 5.03 |   | Private Sales of Pledged Securities                               |   | 15     |
|--------------|--------|-------------------------------------------------------------------|--------|--------|
| Section 5.04 |   | Non-Judicial Enforcement                                          |   | 15     |
|         |   |                                                              |   |   |
|         |   | **ARTICLE  6**                                                    |   |   |
|         |   | **The  Administrative Agent**                                     |   |   |
|         |   | ** **                                                        |   |   |
| Section 6.01 |   | Administrative Agent’s Appointment as  Attorney-in-Fact, Etc |   | 15     |
| Section 6.02 |   | Duty of Administrative Agent                                      |   | 17     |
| Section 6.03 |   | Filing of Financing Statements                                    |   | 18     |
| Section 6.04 |   | Authority of Administrative Agent                                 |   | 18     |
|         |   |                                                              |   |   |
|         |   | **ARTICLE  7**                                                    |   |   |
|         |   | **Miscellaneous**                                                 |   |   |
|         |   | ** **                                                        |   |   |
| Section 7.01 |   | Waiver                                                            |   | 18     |
| Section 7.02 |   | Notices                                                           |   | 18     |
| Section 7.03 |   | Amendments in Writing                                             |   | 18     |
| Section 7.04 |   | Successors and Assigns                                            |   | 18     |
| Section 7.05 |   | Survival; Revival; Reinstatement                                  |   | 19     |
| Section 7.06 |   | Counterparts; Effectiveness; Conflicts                            |   | 19     |
| Section 7.07 |   | Severability                                                      |   | 20     |
| Section 7.08 |   | Governing Law; Submission to Jurisdiction                         |   | 20     |
| Section 7.09 |   | Headings                                                          |   | 21     |
| Section 7.10 |   | Acknowledgments                                                   |   | 21     |
| Section 7.11 |   | Additional Pledgors and Pledgors                                  |   | 22     |
| Section 7.12 |   | Releases                                                          |   | 22     |
| Section 7.13 |   | Acceptance                                                        |   | 23     |

 

 

ANNEXES:

I                                            Formof Assumption Agreement

II                                        Formof Supplement

 

SCHEDULES:

1                                          NoticeAddresses of Pledgors

2                                          Descriptionof Pledged Securities

3                                          Filingsand Other Actions Required to Perfect Security Interests

4                                          Locationof Jurisdiction of Organization and Chief Executive Office

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**PLEDGE AND SECURITY AGREEMENT**

(Assignment of Pledged Securities)

This PLEDGE AND SECURITY AGREEMENT, dated as of October20, 2006, is made by UNIVERSAL COMPRESSION INTERNATIONAL, INC., a Delawarecorporation, ENTERRA COMPRESSION INVESTMENT COMPANY, a Delaware corporation,UNIVERSAL COMPRESSION SERVICES, LLC, a Delaware limited liability company,UNIVERSAL COMPRESSION CANADIAN HOLDINGS, INC., a Delaware corporation, UCI GPLP LLC, a Delaware limited liability company and UCO GP, LLC, a Delawarelimited liability company with principal offices at 4444 Brittmoore Road,Houston, Texas 77041 (the “Pledgors”), in favor of WACHOVIA BANK,NATIONAL ASSOCIATION, with offices at 301 South College Street, Charlotte,North Carolina 28288, as Administrative Agent (in such capacity, the “US AdministrativeAgent”) for itself and the lenders and other financial institutions (the “Lenders”)from time to time party to the Senior Secured Credit Agreement dated of evendate herewith (as amended, supplemented or otherwise modified from time totime, the “Credit Agreement”), among Universal Compression, Inc., aTexas corporation (“UCI”), and Universal Compression Holdings, Inc., aDelaware corporation (“Holdings” and together with UCI, the “USBorrowers”), UC Canadian Partnership Holdings Company, a Nova Scotiaunlimited liability company (“UC Canadian Holdings”), and UniversalCompression Canada, Limited Partnership, a Nova Scotia limited partnership (“UniversalCanada” and together with UC Canadian Partnership, the “Canadian Borrowers”and together with the US Borrowers, the “Borrowers”), the USAdministrative Agent, Wachovia Capital Finance Corporation (Canada), asCanadian Administrative Agent, Deutsche Bank Trust Company Americas, as SyndicationAgent, Wachovia Capital Markets, LLC and Deutsche Bank Securities Inc., as theJoint Lead Arrangers and Joint Lead Book Runners, and each of the other Agentsand Lenders party thereto.

R E C I T A L S

A.                                   TheBorrowers have requested that the Lenders provide certain loans to andextensions of credit on behalf of the Borrowers.

B.                                     TheLenders have agreed to make such loans and extensions of credit subject to theterms and conditions of the Credit Agreement.

C.                                     Itis a condition precedent and a continuing covenant to the obligation of theLenders to make their loans and extensions of credit to the Borrowers under theCredit Agreement that the Pledgors shall have executed and delivered thisAgreement to the US Administrative Agent for the ratable benefit of theLenders.

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

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**ARTICLE****1****Security Interest**

Section 1.01                                Pledge.  Each Pledgor hereby pledges, assignstransfers and grants to the US Administrative Agent for the ratable benefit ofthe Secured Creditors a security interest in and right of set-off against allof the Pledgor’s rights, whether now owned or hereafter acquired, in and to theassets referred to in Section 1.02 (the “Collateral”) tosecure the prompt payment and performance of the “Obligations” (asdefined in Section 2.02) and the performance by such Pledgor ofthis Agreement.

Section 1.02                                Collateral.

(a)                                  TheCollateral consists of the “Pledged Securities” which means: (a) the certificatedCapital Stock and the limited partnership interests and general partnershipinterests in UCO General Partner, LP all as described or referred to inSchedule 2 (as the same may be supplemented from time to time pursuant to aSupplement in substantially the form of Annex II); and (b) (i) thecertificates or instruments, if any, representing such certificated CapitalStock and interests, (ii) all dividends (cash, certificated Capital Stock orotherwise), cash, instruments, rights to subscribe, purchase or sell and allother rights and Property from time to time received, receivable or otherwisedistributed in respect of or in exchange for any or all of such securities andinterests, (iii) all replacements, additions to and substitutions for any ofthe Property referred to in this definition, including, without limitation,claims against third parties, (iv) the proceeds, interest, profits and otherincome of or on any of the Property referred to in this definition, (v) allsecurity entitlements in respect of any of the foregoing, if any and (vi) allbooks and records relating to any of the Property referred to in thisdefinition.

(b)                                       Itis expressly contemplated that additional Property may from time to time bepledged, assigned or granted to the US Administrative Agent as additionalsecurity for the Obligations, and the term “Collateral” as used hereinshall be deemed for all purposes hereof to include all such additionalProperty, together with all other Property of the types described above relatedthereto; provided, however, that in no event shall the term “Collateral”include more than 65% of the issued and outstanding shares of Capital Stock ofany Foreign Subsidiary.  All certificatesor instruments representing or evidencing the Pledged Securities shall bedelivered to and held pursuant hereto by the US Administrative Agent or aPerson designated by the US Administrative Agent and shall be in suitable formfor transfer by delivery, or shall be accompanied by duly executed instrumentsof transfer or assignment in blank, and accompanied by any required transfertax stamps to effect the pledge of the Pledged Securities to the US AdministrativeAgent.  Notwithstanding the precedingsentence, at the US Administrative Agent’s discretion, all Pledged Securitiesmust be delivered or transferred in such manner as to permit the US AdministrativeAgent to be a “protected purchaser” to the extent of its security interest asprovided in Section 8.303 of the UCC (if the US Administrative Agent otherwisequalifies as a protected purchaser). During the continuance of an Event ofDefault, the US Administrative Agent shall have the 

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

Section 1.03                                NoSubrogation.  Notwithstanding anypayment made by any Pledgor hereunder or any set-off or application of funds ofany Pledgor by any Secured Creditor, no Pledgor shall be entitled to besubrogated to any of the rights of any Secured Creditor against any Borrower orany other Pledgor or any collateral security or pledge or guarantee or right ofoffset held by any Secured Creditor for the payment of the Obligations, norshall any Pledgor seek or be entitled to seek any indemnity, exoneration,participation, contribution or reimbursement from any Borrower or any otherPledgor in respect of payments made by such Pledgor hereunder, until allamounts owing to the Secured Creditors on account of the Obligations areirrevocably and indefeasibly paid in full in cash, no Letter of Credit isoutstanding (except for Letters of Credit secured by cash collateral aspermitted in Section 2.01(b)(iii) of the Credit Agreement) and all of theAggregate Commitments are terminated.  Ifany amount shall be paid to any Pledgor on account of such subrogation rightsat any time when all of the 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 Pledgor in trust for the Secured Creditors,and shall, forthwith upon receipt by such Pledgor, be turned over to the USAdministrative Agent in the exact form received by such Pledgor (duly indorsedby such Pledgor to the US Administrative Agent, if required), to be appliedagainst the Obligations, whether matured or unmatured, in accordance withSection 11.02(c) of the Credit Agreement.

Section 1.04                                Amendments,Etc. with respect to the Obligations. Each Pledgor shall remain obligated hereunder, and such Pledgor’sobligations hereunder shall not be released, discharged or otherwise affected,notwithstanding that, without any reservation of rights against any Pledgor andwithout notice to, demand upon or further assent by any Pledgor (which notice,demand and assent requirements are hereby expressly waived by such Pledgor), (a)any demand for payment of any of the Obligations made by any Secured Creditormay be rescinded by such Secured Creditor or otherwise and any of theObligations continued; (b) the Obligations, the liability of any other Personupon or for any part thereof or any collateral security or pledge or guaranteetherefor or right of offset with respect thereto, may, from time to time, inwhole or in part, be renewed, extended, amended, modified, accelerated,compromised, waived, surrendered or released by, or any indulgence orforbearance in respect thereof granted by, any Secured Creditor; (c) any SecuredDocument may be amended, modified, supplemented or terminated, in whole or inpart, 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 Obligations may be sold, exchanged,waived, surrendered or released; (e) any additional guarantors, makers orendorsers of the Obligations may from time to time be obligated on theObligations or any additional security or collateral for the payment and 

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

Section 1.05                                Waivers.  Each Pledgor hereby waives any and all noticeof the creation, renewal, extension or accrual of any of the Obligations andnotice of or proof of reliance by any Secured Creditor upon the pledgecontained in this ARTICLE I or acceptance of the pledge contained in thisARTICLE I; the Obligations, and any of them, shall conclusively be deemed tohave been created, contracted or incurred, or renewed, extended, amended orwaived, in reliance upon the pledge contained in this ARTICLE I and no noticeof creation of the Obligations or any extension of credit already or hereaftercontracted by or extended to the Borrowers need be given to any Pledgor; andall dealings between any Borrower and any of the Pledgors, on the one hand, andthe Secured Creditors, on the other hand, likewise shall be conclusivelypresumed to have been had or consummated in reliance upon the pledge containedin this ARTICLE I.  Each Pledgor waivesdiligence, presentment, protest, demand for payment and notice of default ornonpayment to or upon any Borrower or any of the Pledgors with respect to theObligations.

Section 1.06                                PledgeAbsolute and Unconditional.

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

(i)                                     theinvalidity or unenforceability of any Secured Document, any of the Obligationsor any other collateral security therefor or pledge or guarantee or right ofoffset with respect thereto at any time or from time to time held by any SecuredCreditor;

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

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

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(iv)                              anysale, lease or transfer of any or all of the assets of any Borrower or anyother Pledgor, or any changes in the shareholders of any Borrower or thePledgor;

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

(vi)                              thefact that any Collateral or Lien contemplated or intended to be given, createdor granted as security for the repayment of the Obligations shall not beproperly perfected or created, or shall prove to be unenforceable orsubordinate to any other Lien, it being recognized and agreed by each of thePledgors that it is not entering into this Agreement in reliance on, or incontemplation of the benefits of, the validity, enforceability, collectabilityor value of any of the Collateral for the Obligations;

(vii)                           theabsence of any attempt to collect the Obligations or any part of them from anyPledgor;

(viii)                        (A) any SecuredCreditor’s election, in any proceeding instituted under chapter 11 of the BankruptcyCode, 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 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 Secured Creditorsor any of them for any reason; or (G) failure by any Secured Creditor to fileor enforce a claim against any Borrower or any Borrower’s estate in anybankruptcy or insolvency case or proceeding; or

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

(b)                                 Whenmaking any demand hereunder or otherwise pursuing its rights and remedieshereunder against any Pledgor, any Secured Creditor may, but shall be under noobligation to, join or make a similar demand on or otherwise pursue or exhaustsuch rights and remedies as it may have against any Borrower, any other Pledgoror any other Person or against any collateral security or pledge or guaranteefor the Obligations or any right of offset with respect thereto, and anyfailure by any Secured Creditor to make any such demand, to pursue such otherrights or remedies or to collect any payments from any 

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

Section 1.07                                Reinstatement.  The pledge contained in this ARTICLE I shallcontinue to be effective, or be reinstated, as the case may be, if at any timepayment, or any part thereof, of any of the Obligations is rescinded or mustotherwise be restored or returned by any Secured Creditor upon the insolvency,bankruptcy, dissolution, liquidation or reorganization of any Borrower or anyPledgor, or upon or as a result of the appointment of a receiver, intervenor orconservator of, or trustee or similar officer for, any Borrower or any Pledgoror any substantial part of its Property, or otherwise, all as though suchpayments had not been made.

**ARTICLE 2****Definitions**

Section 2.01                                TermsDefined Above.  As used in thisAgreement, the terms defined above shall have the meanings respectivelyassigned to them.

Section 2.02                                CertainDefinitions.  As used in thisAgreement, the following terms shall have the following meanings, unless thecontext otherwise requires:

“Agreement” meansthis Pledge and Security Agreement, as the same may from time to time beamended, supplemented or otherwise modified.

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

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

“Obligations”means the collective reference to the payment and performance when due of allindebtedness, liabilities, obligations and undertakings of the Borrowers andtheir Restricted Subsidiaries (including, without limitation, all Indebtedness)of every kind or description arising out of or outstanding under, advanced orissued pursuant, or evidenced by, the Secured Documents, including, withoutlimitation, the unpaid principal of and interest on the Aggregate CreditExposure and all other obligations and liabilities of the Borrowers and their RestrictedSubsidiaries (including, without limitation, interest accruing at the thenapplicable rate provided in the Credit Agreement after the maturity of theLoans and LC Exposure and interest accruing after the filing of any petition inbankruptcy, or the commencement of any insolvency, reorganization or likeproceeding, relating to the Borrowers, whether or not a claim for post-filingor post-petition interest is allowed in such proceeding) to the SecuredCreditors, whether direct or indirect, absolute or contingent, due or to becomedue, or now existing or hereafter incurred, arising out of 

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or outstanding under,advanced or issued pursuant, or evidenced by, the Secured Documents, whether onaccount of principal, interest, premium, reimbursement obligations, payments inrespect of an early termination date, fees, indemnities, costs, expenses orotherwise (including, without limitation, all reasonable costs, fees anddisbursements of counsel that are required to be paid by the Borrowers pursuantto the terms of the Credit Agreement).

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

“Proceeds” meansall “proceeds” as such term is defined in Section 9.102(65) of the UCC and, inany event, shall include, without limitation, all dividends or other incomefrom the Pledged Securities, collections thereon or distributions or paymentswith respect thereto.

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

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

“Secured HedgingAgreement” 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 aLender, including any Hedging Agreement between such Persons in existence priorto the date hereof, but excluding any Hedging Agreement now existing orhereafter arising in connection with the ABS Facility.  For the avoidance of doubt, a HedgingAgreement ceases to be a Secured Hedging Agreement if the Person that is thecounterparty to a Borrower or its Restricted Subsidiary under a HedgingAgreement ceases to be a Lender under the Credit Agreement (or, in the case ofan Affiliate of a Lender, the Person affiliated therewith ceases to be a Lenderunder the Credit Agreement).

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

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Section 2.03                                CreditAgreement Terms.  Unless otherwisedefined herein, terms defined in the Credit Agreement and used herein shallhave the meanings given to them in the Credit Agreement.

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

**ARTICLE 3****Representations andWarranties**

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

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

Section 3.02                                NoRequired Consent.  No authorization,consent, approval or other action by, and no notice to or filing with, anygovernmental authority or regulatory body (other than the filing of financingstatements) is required for (a) the due execution, delivery andperformance by such Pledgor of this Agreement, (b) the grant by suchPledgor of the security interest granted by this Agreement or (c) theperfection of such security interest.

Section 3.03                                PledgedSecurities.  The Pledged Securitiesrequired to be pledged hereunder and under the Credit Agreement by such Pledgorare listed on Schedule 2.  Theshares and interests of Pledged Securities pledged by such Pledgor hereunderconstitute all the issued and outstanding shares and interests of all classesof the Capital Stock of each Issuer owned by such Pledgor (or in the case ofany Issuer that is a Foreign Subsidiary, 65% of all the issued and outstandingshares and interests of all classes of the Capital Stock of such Issuer (exceptas otherwise noted on Schedule 2)). All the shares and interests of the Pledged Securities have been dulyand validly issued and are fully paid and nonassessable, and such Pledgor isthe record and beneficial owner of, and has good title to, the PledgedSecurities pledged by it hereunder, free of any and all Liens or options infavor of, or claims of, any other Person, except the security interest createdby this Agreement, and has the power to transfer the Pledged Securities inwhich a Lien is granted by it hereunder, free and clear of any other Lien.

Section 3.04                                FirstPriority Security Interest.  Thepledge of Pledged Securities pursuant to this Agreement and the filing ofappropriate financing statements in the locations described on Schedule 3create a valid and perfected first priority security interest in theCollateral, enforceable against such Pledgor and all third parties and securingpayment of the Obligations.

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

Section 3.06                                Pledgor’sLocation.  On the date hereof, thecorrect legal name of such Pledgor, such Pledgor’s jurisdiction of organizationand organizational number, and the location(s) of such Pledgor’s chiefexecutive office or sole place of business are specified on Schedule 4.

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

**ARTICLE 4****Covenants and Agreements**

Each Pledgor covenants and agrees with the US AdministrativeAgent and the Lenders that, from and after the date of this Agreement until theObligations under the Credit Agreement shall have been paid in full in cash, noLetters of Credit shall be outstanding (except for Letters of Credit secured bycash collateral as permitted in Section 2.01(b)(iii) of the Credit Agreement)and all of the Aggregate Commitments shall have terminated:

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

Section 4.02                                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 Sections 10.08 and 10.14 of the Credit Agreement, each Pledgoragrees that:

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

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

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(c)                                  atany time and from time to time, upon the written request of the US AdministrativeAgent, and at the sole expense of such Pledgor, it will promptly and dulyexecute and deliver, and have recorded, such further instruments and documentsand take such further actions as the US Administrative Agent may reasonablydeem necessary for the purpose of obtaining or preserving the full benefits ofthis Agreement and of the rights and powers herein granted, including, withoutlimitation, the delivery of certificated securities and the filing of anyfinancing or continuation statements under the UCC (or other similar domesticlaws) in effect in any jurisdiction with respect to the security interestscreated hereby.

Section 4.03                                Changes in Locations, Name, Etc.  Such Pledgor recognizes that financingstatements pertaining to the Collateral have been or may be filed where suchPledgor is organized.  Without limitationof Section 9.03 of the Credit Agreement or any other covenant herein, suchPledgor 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 Pledgorshall 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 4.03, such Pledgor 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 US AdministrativeAgent’s security interest in the Collateral.

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

(a)                                  ifsuch Pledgor shall become entitled to receive or shall receive any stockcertificate (including, without limitation, any certificate representing astock dividend or a distribution in connection with any reclassification,increase or reduction of capital or any certificate issued in connection withany reorganization), option or rights in respect of the Pledged Securities ofany Issuer, whether in addition to, in substitution of, as a conversion of, orin exchange for, any shares or interests of the Pledged Securities, orotherwise in respect thereof, such Pledgor shall accept the same as the agentof the Secured Creditors, hold the same in trust for the Secured Creditors,segregated from other Property of such Pledgor, and deliver the same forthwithto the US Administrative Agent in the exact form received, duly indorsed bysuch Pledgor to the US Administrative Agent, if required, together with anundated stock power covering such certificate duly executed in blank by suchPledgor and with, if the US Administrative Agent so requests, signatureguaranteed, to be held by the US Administrative Agent, subject to the termshereof, as additional collateral security for the Obligations; provided, thatthe foregoing shall apply to 65% of such shares, interests or rights in thecase of an Issuer that is a Foreign Subsidiary;

(b)                                 withoutthe prior written consent of the US Administrative Agent, such Pledgor will not(i) unless otherwise expressly permitted hereby or under the other Loan 

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

(c)                                  inthe case of each Pledgor that is an Issuer, such Issuer agrees that (i) it willbe bound by the terms of this Agreement relating to the Pledged Securitiesissued by it and will comply with such terms insofar as such terms areapplicable to it, (ii) it will notify the US Administrative Agent promptly inwriting of the occurrence of any of the events described in Section 4.04(a)with respect to the Pledged Securities issued by it and (iii) the terms of Section5.02(a) and Section 5.03 shall apply to it, *mutatis mutandis*, with respect toall actions that may be required of it pursuant to Section 5.02(d) or Section5.03 with respect to the Pledged Securities issued by it;

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

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

(f)                                    Notwithstandingany contrary provisions contained in this Agreement, with respect to Issuersthat are Foreign Subsidiaries, the Pledgors are required to pledge 65% of the CapitalStock of such Issuers (except as otherwise noted on Schedule 2) and todeliver the applicable 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.

Section 4.05                                CertainLiabilities.  Such Pledgor herebyassumes all liability for the Collateral, the security interest createdhereunder and any use, possession, maintenance, management, enforcement orcollection of any or all of the Collateral.

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Section 4.06                                Article8 of the UCC.  To the extent that anyPledgor has opted into Article 8 of the UCC, such Pledgor may not opt out ofArticle 8 of the UCC without the prior written consent of the US AdministrativeAgent.

**ARTICLE 5****Remedial Provisions**

Section 5.01                                UCC and Other Remedies.

(a)                                  Uponthe occurrence and during the continuance of an Event of Default, the US AdministrativeAgent, on behalf of the Secured Creditors, may exercise, in addition to allother rights and remedies granted to them in this Agreement, the other LoanDocuments and in any other instrument or agreement securing, evidencing orrelating to the Obligations, all rights and remedies of a secured party underthe UCC or any other applicable law or otherwise available at law orequity.  Without limiting the generalityof the foregoing, the US Administrative Agent, without demand of performance orother demand, presentment, protest, advertisement or notice of any kind (exceptany notice required by law referred to below) to or upon any Pledgor or anyother Person (all and each of which demands, defenses, advertisements andnotices are hereby waived), may in such circumstances forthwith collect,receive, appropriate and realize upon the Collateral, or any part thereof,and/or may forthwith sell, lease, assign, give option or options to purchase,or otherwise dispose of and deliver the Collateral or any part thereof (orcontract to do any of the foregoing), in one or more parcels at public orprivate sale or sales, at any exchange, broker’s board or office of any SecuredCreditor or elsewhere upon such commercially reasonable terms and conditions asit may deem advisable and at such commercially reasonable prices as it may deembest, for cash or on credit or for future delivery without assumption of anycredit risk.  Any Secured Creditor shallhave the right upon any such public sale or sales, and, to the extent permittedby law, upon any such private sale or sales, to purchase the whole or any partof the Collateral so sold, free of any right or equity of redemption in anyPledgor, which right or equity is hereby waived and released.  Any such sale or transfer by the US AdministrativeAgent either to itself or to any other Person shall, to the fullest extentpermitted under applicable law, be absolutely free from any claim of right byany Pledgor, including any equity or right of redemption, stay or appraisalwhich any Pledgor has or may have under any rule of law, regulation or statutenow existing or hereafter adopted (and such Pledgor hereby waives any rights itmay have in respect thereof).  Upon anysuch sale or transfer, the US Administrative Agent shall have the right todeliver, assign and transfer to the purchaser or transferee thereof theCollateral so sold or transferred.  The USAdministrative Agent shall apply the net proceeds of any action taken by itpursuant to this Section 5.01, after deducting all reasonable costs andexpenses of every kind incurred in connection therewith or incidental to thecare or safekeeping of any of the Collateral or in any way relating to theCollateral or the rights of the US Administrative Agent and the SecuredCreditors hereunder, including, without limitation, reasonable attorneys’ feesand disbursements, to the payment in whole or in part of the Obligations, inaccordance with the Credit Agreement, and only after such application and afterthe payment by the US Administrative Agent of any other amount required by anyprovision of law, including, without limitation, Section 9.615 of the UCC, needthe US Administrative Agent account for the surplus, if any, to anyPledgor.  To the extent permitted by 

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applicable law, eachPledgor waives all claims, damages and demands it may acquire against the USAdministrative Agent or any Secured Creditor arising out of the exercise bythem of any rights hereunder.  If anynotice of a proposed sale or other disposition of Collateral shall be requiredby law, such notice shall be deemed reasonable and proper if given at least 10days before such sale or other disposition.

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

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

Section 5.02                                Pledged Securities.

(a)                                  Unlessan Event of Default shall have occurred and be continuing and the US AdministrativeAgent shall have given notice to the relevant Pledgor of the US AdministrativeAgent’s intent to exercise its corresponding rights pursuant to Section 5.02,each Pledgor shall be permitted to receive all cash dividends paid in respectof the Pledged 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 Pledgor 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 US AdministrativeAgent, enable or permit any Issuer of Pledged Securities to issue any CapitalStock or to issue any other securities convertible into or granting the rightto purchase or exchange for any Capital Stock of any Issuer of PledgedSecurities other than as permitted by the Credit Agreement.

(b)                                 Uponthe occurrence and during the continuance of an Event of Default, upon noticeby the US Administrative Agent of its intent to exercise such rights to therelevant Pledgor or Pledgors, (i) the US Administrative Agent shall have theright to receive any and all cash dividends, payments, Property or otherProceeds paid in respect of the Pledged Securities and make application thereofto the Obligations in accordance with the Credit Agreement, and (ii) any or allof the Pledged Securities shall be registered in the name of the US AdministrativeAgent or its nominee, and (iii) the US Administrative Agent or its nominee mayexercise (A) all voting, consent, corporate and other rights pertaining to suchPledged Securities at any meeting of shareholders (or other equivalent body) ofthe relevant Issuer or Issuers or otherwise and (B) any and all rights ofconversion, exchange and subscription and any other rights, privileges or optionspertaining to such Pledged Securities as if it were the absolute owner 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 

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the organizationalstructure of any Issuer, or upon the exercise by any Pledgor or the US AdministrativeAgent of any right, privilege or option pertaining to such Pledged Securities,and in connection therewith, the right to deposit and deliver any and all ofthe Pledged Securities with any committee, depositary, transfer agent,registrar or other 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 Pledgor to exercise any such right, privilege or option and shall not beresponsible for any failure to do so or delay in so doing.

(c)                                  Inorder to permit the US Administrative Agent to exercise the voting and otherconsensual rights that it may be entitled to exercise pursuant hereto and toreceive all dividends and other distributions that it may be entitled toreceive hereunder, (i) each Pledgor shall promptly execute and deliver (orcause to be executed and delivered) to the US Administrative Agent all suchproxies, dividend payment orders and other instruments as the US AdministrativeAgent may from time to time reasonably request and (ii) without limiting theeffect of clause (i) above, such Pledgor hereby grants to the US AdministrativeAgent an irrevocable proxy to vote all or any part of the Pledged Securitiesand to exercise all other rights, powers, privileges and remedies to which aholder of the Pledged Securities would be entitled (including giving orwithholding written consents of shareholders calling special meetings ofshareholders and voting at such meetings), which proxy shall be effective,automatically and without the necessity of any action (including any transferof any Pledged Securities on the record books of the Issuer thereof) by anyother Person (including the Issuer of such Pledged Securities or any officer oragent thereof) upon the occurrence and during the continuance of an Event ofDefault and which proxy shall only terminate upon the payment in full in cashof the Obligations under the Credit Agreement.

(d)                                 EachPledgor hereby authorizes and instructs each Issuer of any Pledged Securitiespledged by such Pledgor hereunder to (i) comply with any instruction receivedby it from the US Administrative Agent in writing that (A) states that an Eventof Default has occurred and is continuing and (B) is otherwise in accordancewith the terms of this Agreement, without any other or further instructionsfrom such Pledgor, and each Pledgor agrees that each Issuer shall be fullyprotected in so complying, and (ii) unless otherwise expressly permittedhereby, pay any dividends or other payments with respect to the PledgedSecurities directly to the US Administrative Agent.

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

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Section 5.03                                PrivateSales of Pledged Securities.

(a)                                  EachPledgor recognizes that the US Administrative Agent may be unable to effect apublic sale of any or all the Pledged Securities, by reason of certainprohibitions contained in the Securities Act and applicable state securitieslaws or otherwise or may determine that a public sale is impracticable or notcommercially reasonable and, accordingly, may resort to one or more privatesales thereof to a restricted group of purchasers which will be obliged toagree, among other things, to acquire such securities for their own account forinvestment and not with a view to the distribution or resale thereof.  Each Pledgor 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, agrees thatany 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)                                 EachPledgor agrees to use its best commercially reasonable efforts to do or causeto be done all such other acts as may reasonably be necessary to make such saleor sales of all or any portion of the Pledged Securities pursuant to this Section5.03 valid and binding and in compliance with any and all other applicableGovernmental Requirements.  Each Pledgorfurther agrees that a breach of any of the covenants contained in this Section5.03 will cause irreparable injury to the Secured Creditors, that theSecured Creditors have no adequate remedy at law in respect of such breach and,as a consequence, that each and every covenant contained in this Section5.03 shall be specifically enforceable against such Pledgor, and suchPledgor hereby waives and agrees not to assert any defenses against an actionfor specific performance of such covenants except for a defense that no Eventof Default has occurred or is continuing under the Credit Agreement.

Section 5.04                                Non-JudicialEnforcement.  The US AdministrativeAgent may enforce its rights hereunder without prior judicial process orjudicial hearing, and to the extent permitted by law, each Pledgor expresslywaives any and all legal rights which might otherwise require theAdministrative Agent to enforce its rights by judicial process.

**ARTICLE 6****The Administrative Agent**

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

(a)                                  Anythingin this Section 6.01(a) to the contrary notwithstanding, the US AdministrativeAgent agrees that it will not exercise any rights under the power of attorneyprovided for in this Section 6.01(a) unless an Event of Default shallhave occurred and be continuing.  EachPledgor hereby irrevocably constitutes and appoints the US Administrative Agentand any officer or agent thereof, with full power of substitution, as its trueand lawful attorney-in-fact with full irrevocable power and authority in theplace and stead of such Pledgor 

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

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

(ii)                                  execute,in connection with any sale provided for in Section 5.01 or Section5.03, any endorsements, assignments or other instruments of conveyance ortransfer with respect to the Collateral; and

(iii)                               (A) direct any partyliable for any payment under any of the Collateral to make payment of any andall moneys due or to become due thereunder directly to the US AdministrativeAgent or as the US Administrative Agent shall direct; (B) ask or demand for,collect, and receive payment of and receipt for, any and all moneys, claims andother amounts due or to become due at any time in respect of or arising out ofany Collateral; (C) in the name of such Pledgor or its own name, or otherwise,take possession of and indorse and collect any check, draft, note, acceptanceor other instrument for the payment of moneys due with respect to anyCollateral and commence and prosecute any suits, actions or proceedings at lawor in equity in any court of competent jurisdiction to collect the Collateralor any portion thereof and to enforce any other right in respect of anyCollateral; (D) defend any suit, action or proceeding brought against suchPledgor with respect to any Collateral; (E) settle, compromise or adjust anysuch suit, action or proceeding and, in connection therewith, give such dischargesor releases 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 Pledgor’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 Pledgor might do.

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

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(c)                                  Thereasonable expenses of the US Administrative Agent incurred in connection withactions undertaken as provided in this Section 6.01, together withinterest thereon at a rate per annum equal to the Post-Default Rate, but in noevent to exceed the Highest Lawful Rate, from the date of payment by the US AdministrativeAgent to the date reimbursed by the relevant Pledgor, shall be payable by suchPledgor to the US Administrative Agent on demand.

(d)                                 Allpowers, authorizations and agencies contained in this Agreement are coupledwith an interest and are irrevocable until this Agreement is terminated and thesecurity interests created hereby are released.

Section 6.02                                Duty of 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 US AdministrativeAgent deals with similar Property for its own account and shall be deemed tohave exercised reasonable care in the custody and preservation of theCollateral in its possession if the Collateral is accorded treatmentsubstantially equal to that which comparable secured parties accord comparablecollateral.  To the fullest extentpermitted under applicable law, neither the US Administrative Agent, anySecured Creditor nor any of their respective officers, directors, employees oragents shall be liable for failure to demand, collect or realize upon any of theCollateral or for any delay in doing so or shall be under any obligation tosell or otherwise dispose of any Collateral upon the request of any Pledgor orany other Person or to take any other action whatsoever with regard to theCollateral or any part thereof.  Thepowers conferred on the US Administrative Agent and the Secured Creditorshereunder are solely to protect the US Administrative Agent’s and the SecuredCreditors’ interests in the Collateral and shall not impose any duty upon the USAdministrative Agent or 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 Pledgorfor 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 connection withany Collateral or the Obligations, or to take any steps necessary to preserveany rights against any Pledgor or other Person or ascertaining or taking actionwith respect to calls, conversions, exchanges, maturities, tenders or othermatters relative to any Collateral, whether or not it has or is deemed to haveknowledge of such matters.  Each Pledgor,to the extent permitted by applicable law, waives any right of marshaling inrespect of any and all Collateral, and waives any right to require the US AdministrativeAgent or any Secured Creditor to proceed against any Pledgor or other Person,exhaust any Collateral or enforce any other remedy which the US AdministrativeAgent or any Secured Creditor now has or may hereafter have against eachPledgor, any Pledgor or other Person.

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Section 6.03                                Filingof Financing Statements.  Pursuant tothe UCC and any other applicable law, each Pledgor authorizes the US AdministrativeAgent to file or record financing statements and other filing or recordingdocuments or instruments with respect to the Collateral in such form and insuch offices as the US Administrative Agent reasonably determines appropriateto perfect the security interests of the US Administrative Agent under thisAgreement.  A photographic or other reproductionof this Agreement shall be sufficient as a financing statement or other filingor recording document or instrument for filing or recording in anyjurisdiction.

Section 6.04                                Authorityof Administrative Agent.  EachPledgor acknowledges that the rights and responsibilities of the US AdministrativeAgent under this Agreement with respect to any action taken by the US AdministrativeAgent or the exercise or non-exercise by the US Administrative Agent of anyoption, voting right, request, judgment or other right or remedy provided forherein or resulting or arising out of this Agreement shall, as between the US AdministrativeAgent and the Secured Creditors, be governed by the Credit Agreement and bysuch other agreements with respect thereto as may exist from time to time amongthem, but, as between the US Administrative Agent and the Pledgors, the US AdministrativeAgent shall be conclusively presumed to be acting as agent for the SecuredCreditors with full and valid authority so to act or refrain from acting, andno Pledgor shall be under any obligation, or entitlement, to make any inquiryrespecting such authority.

**ARTICLE 7Miscellaneous**

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

Section 7.02                                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 Pledgor shall be addressed to such Pledgor at its notice addressset forth on Schedule 1.

Section 7.03                                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.

Section 7.04                                Successorsand Assigns.  The provisions of thisAgreement shall be binding upon the Pledgors and their successors and permittedassigns and shall inure to the 

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benefit of the US Administrative Agent and the SecuredCreditors and their respective successors and permitted assigns; provided thatno Pledgor may assign, transfer or delegate any of its rights or obligationsunder this Agreement without the prior written consent of the US AdministrativeAgent and the Lenders unless otherwise permitted by the terms of the CreditAgreement or this Agreement, and any such purported assignment, transfer ordelegation shall be null and void.

Section 7.05                                Survival;Revival; Reinstatement.

(a)                                  Allcovenants, agreements, representations and warranties made by any Pledgorherein and in the certificates or other instruments delivered in connectionwith or pursuant to this Agreement or any other Loan Document to which it is aparty shall be considered to have been relied upon by the US AdministrativeAgent, the other Agents, the Issuing Bank and the Lenders and shall survive theexecution and delivery of this Agreement and the making of any Loans andissuance of any Letters of Credit, regardless of any investigation made by anysuch other party or on its behalf and notwithstanding that the US AdministrativeAgent, the other Agents, the Issuing Bank or any Lender may have had notice orknowledge of any Default or incorrect representation or warranty at the timeany credit is extended hereunder, and shall continue in full force and effectas long as the principal of or any accrued interest on any Loan or any fee orany other amount payable under the Credit Agreement is outstanding and unpaidor any Letter of Credit is outstanding and so long as the Aggregate Commitmentshave not expired or terminated.

(b)                                 Tothe extent that any payments on the Obligations or proceeds of any Collateralare subsequently invalidated, declared to be fraudulent or preferential, setaside or required to be repaid to a trustee, debtor in possession, receiver orother Person under any bankruptcy law, common law or equitable cause, then tosuch extent, the Obligations so satisfied shall be revived and continue as ifsuch payment or proceeds had not been received and the US Administrative Agent’sand the 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 Pledgors shall take suchaction as may be reasonably requested by the US Administrative Agent and theSecured Creditors to effect such reinstatement.

Section 7.06                                Counterparts;Effectiveness; Conflicts.

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

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

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signature page of thisAgreement by telecopy shall be effective as delivery of a manually executedcounterpart of this Agreement.

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

Section 7.07                                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.

Section 7.08                                GoverningLaw; Submission to Jurisdiction.

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

(b)                                 ANYLEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOANDOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITEDSTATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION ANDDELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY ACCEPTS FOR ITSELF AND(TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY ANDUNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANYOBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUEOR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTERHAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH 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)                                  EACHPLEDGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THEAFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIESTHEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PLEDGOR ATITS ADDRESS SET FORTH ON SCHEDULE 1 HERETO OR AS UPDATED FROM TIME TOTIME, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.

(d)                                 NOTHINGHEREIN SHALL AFFECT THE RIGHT OF THE US ADMINISTRATIVE AGENT OR ANY LENDER ORANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW ORTO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE PLEDGORS IN ANYOTHER JURISDICTION.

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

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

Section 7.10                                Acknowledgments.  Each Pledgor hereby acknowledges that:

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

(b)                                 neitherthe US Administrative Agent nor any Secured Creditor has any fiduciaryrelationship with or duty to any Pledgor arising out of or in connection withthis Agreement or any of the other Loan Documents, and the relationship betweenthe Pledgors, on the one hand, and the US Administrative Agent and SecuredCreditors, on the other hand, in connection herewith or therewith is solelythat of debtor and creditor;

(c)                                  nojoint venture is created hereby or by the other Loan Documents or otherwiseexists by virtue of the transactions contemplated hereby among the Secured Creditorsor among the Pledgors and the Secured Creditors; and

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

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Security Instrumentsresult in one party assuming the liability inherent in some aspects of thetransaction and relieving the other party of its responsibility for suchliability.  **EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THEVALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT ANDTHE SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGEOF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”**

Section 7.11                                AdditionalPledgors and Pledgors.  EachSubsidiary of a US Borrower that is required to become a party to thisAgreement pursuant to Section 9.09(a) of the Credit Agreement shall become aPledgor for all purposes of this Agreement upon execution and delivery by suchSubsidiary of an Assumption Agreement in the form of Annex I hereto andshall thereafter have the same rights, benefits and obligations as a Pledgorparty hereto on the date hereof.  EachPledgor that is required to pledge certificated Capital Stock of itsSubsidiaries shall execute and deliver a Supplement in the form of Annex IIhereto, if such certificated Capital Stock were not previously pledged.

Section 7.12                                Releases.

(a)                                  FullRelease.  The grant of a securityinterest hereunder and all of rights, powers and remedies in connectionherewith shall remain in full force and effect until the US AdministrativeAgent has (i) retransferred and delivered all Collateral in its possession tothe Pledgors, and (ii) executed a written release or termination statement andreassigned to the Pledgors without recourse or warranty any remainingCollateral and all rights conveyed hereby. Pursuant to the satisfaction of the conditions set forth in Section9.09(b) of the Credit Agreement or upon the complete payment of the Obligationsunder the Credit Agreement (except for Letters of Credit secured by cashcollateral as permitted in Section 2.01(b)(iii) of the Credit Agreement) andthe compliance by the Pledgors with all covenants and agreements hereof, the USAdministrative Agent, at the written request and expense of the Borrowers, willpromptly release, reassign and transfer the Collateral to the Pledgors anddeclare this Agreement to be of no further force or effect.

(b)                                 PartialRelease.  Notwithstanding anythingcontained herein to the contrary, the Pledgors are authorized to release anyCollateral that is sold, leased, assigned, exchanged, conveyed, transferred orotherwise disposed of in compliance with Sections 10.08, 10.11 and 10.14 of theCredit Agreement at which point the liens and security interests shallterminate with respect to such Collateral and this Agreement shall have nofurther force or effect with respect to such released Collateral; providedthat so long as the lien in favor of the US Administrative Agent continues inthe proceeds of such sale, lease, assignment, exchange, conveyance, transfer orother disposal of such Collateral, or to the extent such Collateral is sold,leased, assigned, exchanged, conveyed, transferred or otherwise disposed of toany Borrower or any Subsidiary Guarantor, such lien continues in suchCollateral.

(c)                                  Retentionin Satisfaction.  Except as may beexpressly applicable pursuant to Section **9.620** of the UCC, no action taken or omission to act bythe US Administrative Agent 

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or the Secured Creditorshereunder, including, without limitation, any exercise of voting or consensualrights or any other action taken or inaction, shall be deemed to constitute aretention of the Collateral in satisfaction of the Obligations or otherwise tobe in full satisfaction of the Obligations, and the Obligations shall remain infull force and effect, until the US Administrative Agent and the SecuredCreditors shall have applied payments (including, without limitation,collections from Collateral) towards the Obligations in the full amount thenoutstanding or until such subsequent time as is provided in Section 7.12(a).

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

 

**[Signaturesbegin on next page]**

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| PLEDGORS: | UNIVERAL COMPRESSION INTERNATIONAL, INC. |
|-----------|------------------------------------------|
|      |                                     |   |
|      |                                     |   |
|      | By:                                      | /s/ J. Michael Anderson |   |
|      | Name:                                    | J. Michael Anderson |   |
|      | Title:                                   | Senior Vice President and Chief Financial Officer |   |
|      |                                     |   |
|      |                                     |   |
|      | UNIVERSAL COMPRESSION CANADIAN           |
|      | HOLDINGS, INC.                           |
|      |                                     |
|      |                                     |
|      | By:                                      | /s/ J. Michael Anderson |   |
|      | Name:                                    | J. Michael Anderson |   |
|      | Title:                                   | Senior Vice President and Chief Financial Officer |   |
|      |                                     |   |
|      |                                     |   |
|      | ENTERRA COMPRESSION INVESTMENT COMPANY   |
|      |                                     |
|      | By:                                      | /s/ J. Michael Anderson |   |
|      | Name:                                    |  J. Michael Anderson |   |
|      | Title:                                   | Senior Vice President and Chief Financial Officer |   |
|      |                                     |   |
|      |                                     |   |
|      | UNIVERSAL  COMPRESSION SERVICES, LLC     |
|      |                                     |
|      | By:                                      | /s/ J. Michael Anderson |   |
|      | Name:                                    |  J. Michael Anderson |   |
|      | Title:                                   | Senior Vice President and Chief Financial Officer |   |
|      |                                     |   |
|      |                                     |   |
|      | UCI GP LP LLC                            |
|      |                                     |
|      |                                     |
|      | By:                                      | /s/ Pamela A. Jasinki |   |
|      | Name:                                    |  Pamela A. Jasinski |   |
|      | Title:                                   |  Manager |   |
|      |                                     |   |
|      | UCO GP, LLC                              |
|      |                                     |   |
|      | By:                                      | /s/ J. Michael Anderson |   |
|      | Name:                                    |  J. Michael Anderson |   |
|      | Title:                                   | Senior Vice President and Chief Financial Officer |   |
|           |                                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Signature Page – Pledge andSecurity Agreement

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| US ADMINISTRATIVE AGENT: | WACHOVIA BANK, NATIONAL ASSOCIATION, |
|--------------------------|--------------------------------------|
|                     | as US Administrative Agent           |
|                     |                                 |
|                     |                                 |
|                     | By:                                  | /s/ Todd Schanzlin |
|                     | Name:                                | Todd Schanzlin |
|                     | Title:                               | Vice President |

 

 

 

 

Signature Page – Pledge andSecurity Agreement

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