exv10w3






Exhibit 10.3




EXECUTION VERSION




Collateral Agreement




Dated as of



July 8, 2011



Made by



Exterran Holdings, Inc.,



EES Leasing LLC,



EXH GP LP LLC,



EXH MLP LP LLC,



and



Exterran Energy Solutions, L.P.,



in Favor of



WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent 



 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I

	Definitions

	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Other Definitional Provisions
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II

	Grant of Security Interest

	 
	 	 	 	 
	Section 2.01 Grant of Security Interest
	 	 	3	 
	Section 2.02 No Subrogation
	 	 	4	 
	Section 2.03 Amendments, Etc. With Respect to the Obligations
	 	 	5	 
	Section 2.04 Waivers
	 	 	5	 
	Section 2.05 Pledge Absolute and Unconditional
	 	 	5	 
	Section 2.06 Reinstatement
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III

	Representations and Warranties

	 
	 	 	 	 
	Section 3.01 Title; No Other Liens
	 	 	7	 
	Section 3.02 Perfected First Priority Liens
	 	 	8	 
	Section 3.03 Grantor Information
	 	 	8	 
	Section 3.04 Instruments and Chattel Paper
	 	 	8	 
	Section 3.05 Truth of Information; Accounts
	 	 	8	 
	Section 3.06 Governmental Obligors
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV

	Covenants

	 
	 	 	 	 
	Section 4.01 Maintenance of Perfected Security Interest; Further Documentation
	 	 	8	 
	Section 4.02 Changes in Locations, Name, Etc.
	 	 	9	 
	Section 4.03 Instruments and Tangible Chattel Paper
	 	 	9	 
	 
	 	 	 	 
	ARTICLE V

	Remedial Provisions

	 
	 	 	 	 
	Section 5.01 UCC and Other Remedies
	 	 	9	 
	Section 5.02 Collections on Accounts, Etc.
	 	 	11	 
	Section 5.03 Proceeds
	 	 	11	 
	Section 5.04 Deficiency
	 	 	12	 
	Section 5.05 Non-Judicial Enforcement
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VI

	The Administrative Agent

	 
	 	 	 	 
	Section 6.01 Administrative Agent’s Appointment as Attorney-in-Fact, Etc.
	 	 	12	 
	Section 6.02 Duty of Administrative Agent
	 	 	13	 
	Section 6.03 Filing of Financing Statements
	 	 	14	 
	Section 6.04 Authority of Administrative Agent
	 	 	14	 






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	 	 	Page	 
	ARTICLE VII

	Subordination of Obligations

	 
	 	 	 	 
	Section 7.01 Subordination of All Grantor Claims
	 	 	14	 
	Section 7.02 Claims in Bankruptcy
	 	 	15	 
	Section 7.03 Payments Held in Trust
	 	 	15	 
	Section 7.04 Liens Subordinate
	 	 	15	 
	 
	 	 	 	 
	ARTICLE VIII

	Miscellaneous

	 
	 	 	 	 
	Section 8.01 Waiver
	 	 	16	 
	Section 8.02 Notices
	 	 	16	 
	Section 8.03 Amendments in Writing
	 	 	16	 
	Section 8.04 Successors and Assigns
	 	 	16	 
	Section 8.05 Survival; Revival; Reinstatement
	 	 	16	 
	Section 8.06 Counterparts; Integration; Effectiveness; Conflicts
	 	 	17	 
	Section 8.07 Severability
	 	 	17	 
	Section 8.08 Governing Law; Submission to Jurisdiction
	 	 	17	 
	Section 8.09 Headings
	 	 	19	 
	Section 8.10 Acknowledgments
	 	 	19	 
	Section 8.11 Additional Grantors
	 	 	19	 
	Section 8.12 Releases
	 	 	20	 
	Section 8.13 Acceptance
	 	 	20	 






ANNEXES:



I          Form of Additional Grantor Supplement



SCHEDULES:



1          Notice Addresses of Grantors


2          Filings and Other Actions Required to Perfect Security Interests


3          Location of Jurisdiction of Organization and Chief Executive Office




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     This COLLATERAL AGREEMENT, dated as of July 8, 2011, is made by EXTERRAN HOLDINGS, INC., a
Delaware corporation (“EXH”), EES LEASING LLC, a Delaware limited liability company
(“EES Leasing”), EXH GP LP LLC, a Delaware limited liability company (“EXH GP”),
EXH MLP LP LLC, a Delaware limited liability company (“EXH MLP”), and EXTERRAN ENERGY
SOLUTIONS, L.P., a Delaware limited partnership (“EESLP” and collectively with EXH, EES
Leasing, EXH GP and EXH MLP, the “Grantors” and each individually, a “Grantor”), in
favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent (in such capacity,
together with its successors in such capacity, the “Administrative Agent”), for the lenders
and other financial institutions (the “Lenders”) from time to time party to the Senior
Secured Credit Agreement dated of even date herewith (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among EXH, as Borrower (the
“Borrower”), the Administrative Agent, the Lenders and other Agents party thereto.



     WHEREAS, the Borrower has requested that the Lenders provide certain loans to the Borrower and
extensions of credit on behalf of the Borrower and its Restricted Subsidiaries;



     WHEREAS, the Lenders have agreed to make such loans and extensions of credit subject to the
terms and conditions of the Credit Agreement; and



     WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower and its Restricted Subsidiaries under the Credit Agreement
that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for
the ratable benefit of the Secured Parties (as defined below);



     NOW, THEREFORE, in consideration of the premises herein and to induce the Administrative Agent
and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their
respective loans and extensions of credit to the Borrower thereunder, each Grantor hereby agrees
with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows:



ARTICLE I

DEFINITIONS




     Section 1.01 Definitions.



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




          (b) The following terms have the following meanings:




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



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



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



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



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



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



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



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



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



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



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



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



     “Grantor Claims” has the meaning assigned to such term in Section 7.01.



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



     “Payment in Full” means (a) all the Obligations shall have been paid in full in cash
(other than (i) indemnity obligations that survive the termination of this Agreement for which no
notice of claim has been received by the Guarantors and (ii) obligations in respect of Letters of
Credit secured by cash collateral or for which one or more Support Letters of Credit have been
provided as permitted in Section 2.07(a)(iii) of the Credit Agreement), (b) no Letter of Credit
shall be outstanding (except for Letters of Credit secured by cash collateral as permitted in
Section 2.07(a)(iii) of the Credit Agreement) and (c) all of the Aggregate Commitments have expired
or are terminated.



     “Proceeds” means all “proceeds” as such term is defined in Section 9.102(65) of the
UCC.



     “Secured Documents” means, collectively, the Credit Agreement, the other Loan
Documents, each Secured Hedging Agreement, each Secured Treasury Management Agreement and any other
documents made, delivered or given in connection with any of the foregoing.



     “Secured Hedging Agreement” means any Hedging Agreement between any Borrower or its
Restricted Subsidiary and any Secured Hedging Provider.



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     “Secured Parties” means collectively, the Administrative Agent, each Issuing Bank,
each Lender, each Secured Hedging Provider and each Secured Treasury Management Counterparty.



     “Secured Treasury Management Agreement” means any Treasury Management Agreement
between any Borrower or its Restricted Subsidiary and any Secured Treasury Management Counterparty.



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



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



     Section 1.02 Other Definitional Provisions.



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




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




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




ARTICLE II

GRANT OF SECURITY INTEREST




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



          (a) all Accounts;




          (b) all Chattel Paper;




          (c) all Documents;







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          (d) all Equipment;




          (e) all General Intangibles;




          (f) all Instruments;




          (g) all Inventory;




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




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



Each reference to Collateral or to any relevant type or item of Property constituting Collateral
shall be deemed to exclude (i) tangible Property that is not located in the continental United
States (including its possessions), (ii) motor vehicles, forklifts, trailers photocopiers or any
property which may be covered by a certificate of title, (iii) any assets of any CFC, (iv) any
lease, license, contract, property rights or agreement to which the Borrower or any Subsidiary is a
party or any of its rights or interests thereunder if and for so long as the grant of such security
interest shall constitute or result in (A) the abandonment, invalidation or unenforceability of any
right, title or interest of such Person therein or (B) in a breach or termination pursuant to the
terms of, or a default under, any such lease, license, contract property rights or agreement (other
than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code); provided, however that such security
interest shall, unless otherwise not excluded from the Collateral under the Loan Documents, attach
immediately at such time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach immediately to any
portion of such lease, license, contract, property rights or agreement that does not result in any
of the consequences specified in (A) or (B) above, (v) any Property subject to a Lien permitted by
Section 9.02(b), (d) or (e) of the Credit Agreement, (vi) any Property owned by EXLP or its
Subsidiaries, (vii) any Property of any ABS Subsidiary and (viii) the GP Interests and IDRs.




     Section 2.02 No Subrogation. Notwithstanding any payment made by any Grantor
hereunder or any set-off or application of funds of any Grantor by any Secured Party, no Grantor
shall be entitled to be subrogated to any of the rights of any Secured Party against the Borrower
or any other Grantor or any collateral security or pledge or guarantee or right of offset held by
any Secured Party for the payment of the Obligations, nor shall any Grantor seek or be entitled to
seek any indemnity, exoneration, participation, contribution or reimbursement from the Borrower or
any other Grantor in respect of payments made by such Grantor hereunder, until Payment in Full. If
any amount shall be paid to any Grantor on account of such subrogation rights at any time prior to
Payment in Full, such amount shall be held by such Grantor in trust for the Secured Parties, and
shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the
exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required), to be applied against the Obligations, whether matured or unmatured, in accordance with
Section 10.02(c) of the Credit Agreement.



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     Section 2.03 Amendments, Etc. With Respect to the Obligations. Each Grantor shall
remain obligated hereunder, and such Grantor’s obligations hereunder shall not be released,
discharged or otherwise affected, notwithstanding that, without any reservation of rights against
any Grantor and without 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 Obligations made by any Secured Party may be rescinded by such Secured Party
or otherwise and any of the Obligations continued; (b) the Obligations, the liability of any other
Person upon or for any part thereof or any collateral security or pledge or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or released by, or any
indulgence or forbearance in respect thereof granted by, any Secured Party; (c) any Secured
Document may be amended, modified, supplemented, restated, replaced or terminated, in whole or in
part, as the applicable Secured Parties may deem advisable from time to time; (d) any collateral
security, pledge, guarantee or right of offset at any time held by any Secured Party for the
payment of the Obligations may be sold, exchanged, waived, surrendered, restated, replaced or
released; (e) any additional guarantors, makers or endorsers of the Obligations may from time to
time be obligated on the Obligations or any additional security or collateral for the payment and
performance of the Obligations may from time to time secure the Obligations; and (f) any other
event shall occur which constitutes a defense or release of sureties generally. No Secured Party
shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as
security for the Obligations or for the pledge and security grants contained in this Article II or
any Property subject thereto.



     Section 2.04 Waivers. Each Grantor hereby waives any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any
Secured Party upon the pledge and security grants contained in this Article II or acceptance of the
pledge and security grants contained in this Article II; the Obligations, and any part thereof,
shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the pledge and security grants contained in this Article II and
no notice of creation of the Obligations or any extension of credit already or hereafter contracted
by or extended to the Borrower need be given to any Grantor; and all dealings between the Borrower
and any of the Grantors, on the one hand, and the Secured Parties, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon the pledge and
security grants contained in this Article II. Each Grantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Borrower or any of the
Grantors with respect to the Obligations.



     Section 2.05 Pledge Absolute and Unconditional.



          (a) Except as provided in Section 8.12, each Grantor understands and agrees that the pledge
and security grant contained in this Article II is, and shall be construed as, a continuing,
complete, absolute and unconditional pledge and security grant, and each Grantor hereby waives any
defense of a surety or guarantor or any other obligor on any obligations arising in connection with
or in respect of any of the following and hereby agrees that its Obligations hereunder shall not be
discharged or otherwise affected as a result of, any of the following:







5









 








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



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



               (iii) the insolvency, bankruptcy arrangement, reorganization, adjustment, composition,
liquidation, disability, dissolution or lack of power of the Borrower or any other Grantor or any
other Person at any time liable for the payment of all or part of the Obligations, including any
discharge of, or bar or stay against collecting, the Obligations (or any part thereof 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 the Borrower or any other Grantor, or any changes in the shareholders of the Borrower or any
other Grantor;



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



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



               (vii) the absence of any attempt to collect the Obligations or any part thereof from any
Grantor;



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



               (ix) any other circumstance or act whatsoever, including any action or omission of the type
described in Section 2.03 (with or without notice to or knowledge of the Borrower or such Grantor),
which constitutes, or might be construed to constitute, an equitable or legal discharge of the
Borrower for the Obligations, or of such Grantor under the pledge and security grants contained in
this Article II, in bankruptcy or in any other instance.



6









 





          (b) When making any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Grantor, any Secured Party may, but shall be under no obligation to, join or make a
similar demand on or otherwise pursue or exhaust such rights and remedies as it may have against
the Borrower, any other Grantor or any other Person liable on the Obligations or against any
collateral security or pledge or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by any Secured Party to make any such demand, to pursue such other rights
or remedies or to collect any payments from the Borrower, any other Grantor or any such other
Person or to realize upon any such collateral security or pledge or guarantee or to exercise any
such right of offset, or any release of the Borrower, any other Grantor or any such other Person or
any such collateral security, guarantee or pledge or right of offset, shall not relieve any such
Grantor of any obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of any Secured Party against
any such Grantor. For the purposes hereof “demand” shall include the commencement and continuance
of any legal proceedings.




     Section 2.06 Reinstatement. The pledge and security grants contained in this Article
II shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned
by any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any other Grantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or any other Grantor
or any substantial part of its Property, or otherwise, all as though such payments had not been
made.



ARTICLE III

REPRESENTATIONS AND WARRANTIES




     To induce (a) the Administrative Agent and the Lenders to enter into the Credit Agreement, (b)
the Lenders to make their respective extensions of credit to the Borrower thereunder, (c) the
Secured Hedging Providers to enter into Hedging Agreements with the Borrower or any of its
Restricted Subsidiaries and (d) the Secured Treasury Management Counterparties to enter into
Secured Treasury Management Agreements with the Borrower or any of its Restricted Subsidiaries,
each Grantor hereby represents and warrants to the Administrative Agent and each Secured Party
that:



     Section 3.01 Title; No Other Liens. Except for Permitted Liens and the security
interest granted to the Administrative Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement, such Grantor is the record and beneficial owner of its respective items
of the Collateral free and clear of any and all Liens and has the power to transfer each item of
the Collateral in which a Lien is granted by it hereunder, free and clear of any Lien. Except with
respect to Liens permitted by Section 9.02(b), (c), (d), (e), (g) or (h) of the Credit Agreement,
no financing statement or other public notice with respect to all or any part of the Collateral is
on file or of record in any public office, except such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement or
the Security Instruments or as are filed to perfect Liens permitted by Section 9.02 of the Credit
Agreement.



7









 





     Section 3.02 Perfected First Priority Liens. The security interests granted pursuant
to this Agreement (a) upon the completion of the filings and the other actions specified on
Schedule 2 constitute valid perfected security interests in all of the Collateral in favor
of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security
for the Obligations, enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor and (b) are prior
to all other Liens on the Collateral in existence on the date hereof, except, in each case, for
Liens expressly permitted by the Credit Agreement.



     Section 3.03 Grantor Information. On the date hereof, the correct legal name of such
Grantor, such Grantor’s jurisdiction of organization and organizational number, and the location(s)
of such Grantor’s chief executive office or sole place of business are specified on Schedule
3.



     Section 3.04 Instruments and Chattel Paper. Such Grantor has delivered to the
Administrative Agent all Collateral constituting any Instrument or Chattel Paper in excess of
$5,000,000 that is required to be delivered under Section 4.03. No Collateral constituting Chattel
Paper or Instruments contains any statement therein to the effect that such Collateral has been
assigned to an identified party other than the Administrative Agent, and the grant of a security
interest in such Collateral in favor of the Administrative Agent hereunder does not violate the
rights of any other Person as a secured party.



     Section 3.05 Truth of Information; Accounts. All information with respect to the
Collateral set forth in any schedule or certificate at any time heretofore or hereafter furnished
by such Grantor to the Administrative Agent is and will be true and correct in all material
respects as of the date furnished. The place where each Grantor keeps its records concerning the
Accounts, Chattel Paper and Payment Intangibles is 16666 Northchase Drive, Houston, Texas 77060.



     Section 3.06 Governmental Obligors. None of the Account Debtors on a material portion
of such Grantor’s Accounts, Chattel Paper or Payment Intangibles is a Governmental Authority.



ARTICLE IV

COVENANTS




     Each Grantor covenants and agrees with the Administrative Agent and the Secured Parties that,
from and after the date of this Agreement until Payment in Full:



     Section 4.01 Maintenance of Perfected Security Interest; Further Documentation.
Except as set forth in the Credit Agreement, including, without limitation, any merger,
consolidation, liquidation, sale, assignment, transfer or other disposition permitted by Section
9.02(g), 9.06, 9.08 or 9.11 of the Credit Agreement, each Grantor agrees that:



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







8









 








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




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




     Section 4.02 Changes in Locations, Name, Etc. Such Grantor recognizes that financing
statements pertaining to the Collateral have been or may be filed where such Grantor is organized.
Without limitation of Section 8.03 of the Credit Agreement or any other covenant herein, such
Grantor will not cause or permit any change in its (a) corporate name, (b) its identity or
corporate structure, (c) its jurisdiction of organization or its organizational identification
number in such jurisdiction of organization or (d) its federal taxpayer identification number,
unless, in each case, such Grantor shall have first (i) notified the Administrative Agent of such
change prior to the effective date of such change, and (ii) taken all action reasonably requested
by the Administrative Agent for the purpose of maintaining the perfection and priority of the
Administrative Agent’s security interests under this Agreement. In any notice furnished pursuant
to this Section 4.02, such Grantor will expressly state in a conspicuous manner that the notice is
required by this Agreement and contains facts that may require additional filings of financing
statements or other notices for the purposes of continuing perfection of the Administrative Agent’s
security interest in the Collateral.



     Section 4.03 Instruments and Tangible Chattel Paper. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible
Chattel Paper having a value in excess of $5,000,000, such Instrument or Tangible Chattel Paper
shall be immediately delivered to the Administrative Agent, duly endorsed in a manner satisfactory
to the Administrative Agent, to be held as Collateral pursuant to this Agreement.



ARTICLE V

REMEDIAL PROVISIONS




     Section 5.01 UCC and Other Remedies.



          (a) Upon the occurrence and during the continuance of an Event of Default, the Administrative
Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies
granted to them in this Agreement, the other Loan Documents and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law or otherwise available at law or equity. Without
limiting the generality of the foregoing, the Administrative Agent,






9









 







without demand of performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or upon any Grantor or any
other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to
do any of the foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of any Secured Party or elsewhere upon such commercially
reasonable terms and conditions as it may deem advisable and at such commercially reasonable prices
as it may deem best, for cash or on credit or for future delivery without assumption of any credit
risk. Any Secured Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or
equity is hereby waived and released. If applicable to any particular item of Collateral, each
Grantor further agrees, at the Administrative Agent’s request following an acceleration of the
Obligations under Section 10.02(a) of the Credit Agreement, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor’s premises or elsewhere, unless prohibited by agreements with
unaffiliated third parties. Any such sale or transfer by the Administrative Agent either to itself
or to any other Person shall, to the fullest extent permitted under applicable law, be absolutely
free from any claim of right by Grantor, including any equity or right of redemption, stay or
appraisal which Grantor has or may have under any rule of law, regulation or statute now existing
or hereafter adopted (and such Grantor hereby waives any rights it may have in respect thereof).
Upon any such sale or transfer, the Administrative Agent shall have the right to deliver, assign
and transfer to the purchaser or transferee thereof the Collateral so sold or transferred. The
Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 5.01, after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Administrative Agent and the Secured Parties
hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the
payment in whole or in part of the Obligations, in accordance with the Credit Agreement, and only
after such application and after the payment by the Administrative Agent of any other amount
required by any provision of law, including, without limitation, Section 9.615 of the UCC, need the
Administrative Agent account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Secured Party arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before
such sale or other disposition.




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







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




     Section 5.02 Collections on Accounts, Etc. The Administrative Agent hereby authorizes
each Grantor to collect upon the Collateral that is represented by Accounts, Instruments, Chattel
Paper and Payment Intangibles subject to the Administrative Agent’s direction and control, and the
Administrative Agent may curtail or terminate said authority at any time after the occurrence and
during the continuance of an Event of Default. Upon the request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of Default, each Grantor shall
notify the Account Debtors that the applicable Accounts, Chattel Paper and Payment Intangibles have
been assigned to the Administrative Agent for the ratable benefit of the Secured Parties and that
payments in respect thereof shall be made directly to the Administrative Agent. After the
occurrence and during the continuance of an Event of Default, the Administrative Agent may in its
own name or in the name of others communicate with the Account Debtors to verify with them to its
satisfaction the existence, amount and terms of any such Accounts, Chattel Paper or Payment
Intangibles. Anything herein to the contrary notwithstanding, each Grantor shall remain liable
under each of its Accounts to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any obligation or liability
under any Account (or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Administrative Agent or any Lender of any payment relating thereto,
nor shall the Administrative Agent or any Lender be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Account (or any agreement giving rise thereto)
to make any payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at any time or times.



     Section 5.03 Proceeds. If required by the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, any payments of Collateral composed
of Accounts, Instruments, Chattel Paper and Payment Intangibles, when collected or received by each
Grantor, and any other cash or non-cash Proceeds received by each Grantor upon the sale or other
disposition of any Collateral, shall be forthwith (and, in any event, within two (2) Business Days)
deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a special collateral account maintained by the Administrative
Agent, subject to withdrawal by the Administrative Agent for the ratable benefit of the Secured
Parties only, as hereinafter provided, and, until so turned over, shall be held by such Grantor in
trust for the Administrative Agent for the ratable benefit of the Secured Parties, segregated from
other funds of such Grantor. Each deposit of any such Proceeds shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included in the deposit.
All Proceeds (including, without limitation, Proceeds constituting collections of Accounts, Chattel
Paper, Instruments) while held by the Administrative Agent (or by any Grantor in trust for the
Administrative Agent for the ratable benefit of the Secured Parties) shall continue to be
collateral security for all of the Obligations and shall not constitute payment thereof until
applied as hereinafter provided. At such intervals as may be agreed upon



11









 




by each Grantor and the Administrative Agent, or, if an Event of Default shall have occurred
and be continuing, at any time at the Administrative Agent’s election, the Administrative Agent
shall apply all or any part of the funds on deposit in said special collateral account on account
of the Obligations in such order as the Administrative Agent may elect, and any part of such funds
which the Administrative Agent elects not so to apply and deems not required as collateral security
for the Obligations shall be paid over from time to time by the Administrative Agent to each
Grantor or to whomsoever may be lawfully entitled to receive the same.




     Section 5.04 Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to pay its obligations
and the fees and disbursements of any attorneys employed by the Administrative Agent or any Secured
Party to collect such deficiency.



     Section 5.05 Non-Judicial Enforcement. The Administrative Agent may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the extent permitted by
law, each Grantor expressly waives any and all legal rights which might otherwise require the
Administrative Agent to enforce its rights by judicial process.



ARTICLE VI

THE ADMINISTRATIVE AGENT




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



          (a) Anything in this Section 6.01(a) to the contrary notwithstanding, the Administrative Agent
agrees that it will not exercise any rights under the power of attorney provided for in this
Section 6.01(a) unless an Event of Default shall have occurred and be continuing. Each Grantor
hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in the name of such
Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take
any and all reasonably appropriate action and to execute any and all documents and instruments
which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the Administrative
Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:




               (i) unless being disputed under Section 8.03(a) of the Credit Agreement, pay or discharge
Taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement or any other Loan Document and pay all or any
part of the premiums therefor and the costs thereof;



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



               (iii) (A) direct any party liable for any payment under any of the Collateral to make payment
of any and all moneys due or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (B) ask or demand for,



12









 




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




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




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




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




     Section 6.02 Duty of Administrative Agent. The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral in its possession,
under Section 9.207 of the UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar Property for its own account and shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which comparable secured parties
accord comparable collateral. To the fullest extent permitted under applicable law, neither the
Administrative Agent, any Secured Party nor any of their respective officers, directors, employees
or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers conferred on the
Administrative Agent and the Secured Parties hereunder are solely to protect the Administrative
Agent’s and the Secured Parties’ interests in the Collateral and shall not impose



13









 




any duty upon the Administrative Agent or any Secured Party to exercise any such powers. The
Administrative Agent and the Secured Parties shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence, willful misconduct or bad faith. To the
fullest extent permitted by applicable law, the Administrative Agent shall be under no duty
whatsoever to make or give any presentment, notice of dishonor, protest, demand for performance,
notice of non-performance, notice of intent to accelerate, notice of acceleration, or other notice
or demand in connection with any Collateral or the Obligations, or to take any steps necessary to
preserve any rights against any Grantor or other Person or ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not it has or is deemed to have knowledge of such matters. Each Grantor, to
the extent permitted by applicable law, waives any right of marshaling in respect of any and all
Collateral, and waives any right to require the Administrative Agent or any Secured Party to
proceed against any Grantor or other Person, exhaust any Collateral or enforce any other remedy
which the Administrative Agent or any Secured Party now has or may hereafter have against each
Grantor, any Grantor or other Person.




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



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



ARTICLE VII

SUBORDINATION OF OBLIGATIONS




     Section 7.01 Subordination of All Grantor Claims. As used herein, the term
“Grantor Claims” shall mean all debts and obligations of the Borrower or any other Grantor
to any other Grantor, whether such debts and obligations now exist or are hereafter incurred or
arise, or whether the obligation of the debtor thereon be direct, contingent, primary, secondary,
several, joint and several, or otherwise, and irrespective of whether such debts or obligations be
evidenced by note, contract, open account, or otherwise, and irrespective of the Person or



14









 




Persons in whose favor such debts or obligations may, at their inception, have been, or may
hereafter be created, or the manner in which they have been or may hereafter be acquired. Except
for payments permitted by the Credit Agreement, after and during the continuation of an Event of
Default and after notice from the Administrative Agent, no Grantor shall receive or collect,
directly or indirectly, from any obligor in respect thereof any amount upon the Grantor Claims.




     Section 7.02 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings involving any
Grantor, the Administrative Agent on behalf of the Secured Parties shall have the right to prove
their claim in any proceeding, so as to establish their rights hereunder and receive directly from
the receiver, trustee or other court custodian, dividends and payments which would otherwise be
payable upon Grantor Claims. Each Grantor hereby assigns such dividends and payments to the
Administrative Agent for the benefit of the Secured Parties for application against the Obligations
as provided under the Credit Agreement. Should any Secured Party receive, for application upon the
Obligations, any such dividend or payment which is otherwise payable to any Grantor, and which, as
between such Grantors, shall constitute a credit upon the Grantor Claims, then upon Payment in
Full, the intended recipient shall become subrogated to the rights of such Secured Party to the
extent that such dividend or payment has contributed toward the liquidation of the Obligations, and
such subrogation shall be with respect to that proportion of the Obligations which would have been
unpaid if such Secured Party had not received such dividend or payment.



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



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



15









 





ARTICLE VIII

MISCELLANEOUS




     Section 8.01 Waiver. No failure on the part of the Administrative Agent or any
Secured Party to exercise and no delay in exercising, and no course of dealing with respect to, any
right, power, privilege or remedy or any abandonment or discontinuance of steps to enforce such
right, power, privilege or remedy under this Agreement or any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power, privilege or remedy
under this Agreement or any other Loan Document preclude or be construed as a waiver of any other
or further exercise thereof or the exercise of any other right, power, privilege or remedy. The
remedies provided herein are cumulative and not exclusive of any remedies provided by law or
equity.



     Section 8.02 Notices. All notices and other communications provided for herein shall
be given in the manner and subject to the terms of Section 12.01 of the Credit Agreement; provided
that any such notice, request or demand to or upon any Grantor shall be addressed to such Grantor
at its notice address set forth on Schedule 1.



     Section 8.03 Amendments in Writing. None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except in accordance with Section 12.02
of the Credit Agreement.



     Section 8.04 Successors and Assigns. The provisions of this Agreement shall be
binding upon the Grantors and their successors and permitted assigns and shall inure to the benefit
of the Administrative Agent and the Secured Parties and their respective successors and permitted
assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Administrative Agent and the Lenders
unless otherwise permitted by the terms of the Credit Agreement or this Agreement, and any such
purported assignment, transfer or delegation shall be null and void.



     Section 8.05 Survival; Revival; Reinstatement.



          (a) All covenants, agreements, representations and warranties made by any Grantor herein and
in the certificates or other instruments delivered in connection with or pursuant to this Agreement
or any other Loan Document to which it is a party shall be considered to have been relied upon by
the Administrative Agent, the other Agents, the Issuing Banks, the Lenders and the other Secured
Parties and shall survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the other Agents, the Issuing
Banks, any Lender or any other Secured Party may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under the Credit Agreement,
and shall continue in full force and effect until Payment in Full has occurred.




          (b) To the extent that any payments on the Obligations or proceeds of any Collateral are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver or other Person under any






16









 







bankruptcy law, common law or equitable cause, then to such extent, the Obligations so
satisfied shall be revived and continue as if such payment or proceeds had not been received and
the Administrative Agent’s and the Secured Parties’ Liens, security interests, rights, powers and
remedies under this Agreement and each other Loan Document shall continue in full force and effect.
In such event, each Loan Document shall be automatically reinstated and the Grantors shall take
such action as may be reasonably requested by the Administrative Agent and the Secured Parties to
effect such reinstatement.




     Section 8.06 Counterparts; Integration; Effectiveness; Conflicts.



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




          (b) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING
AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL
PREVIOUS AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF. THIS AGREEMENT AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.




          (c) This Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties hereto, the Secured Parties and their
respective successors and permitted assigns. Delivery of an executed counterpart of a signature
page of this Agreement by facsimile or other electronic transmission shall be effective as delivery
of a manually executed counterpart of this Agreement.




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




     Section 8.07 Severability. Any provision of this Agreement or any other Loan Document
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof or thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.



     Section 8.08 Governing Law; Submission to Jurisdiction.



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







17









 








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




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




          (d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER
PARTY HERETO IN ANY OTHER JURISDICTION.




          (e) EACH PARTY HERETO HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF THE ADMINISTRATIVE
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (iv)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 8.08.







18









 








     Section 8.09 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.



     Section 8.10 Acknowledgments. Each Grantor hereby acknowledges that:



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




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




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




          (d) each of the parties hereto specifically agrees that it has a duty to read this Agreement
and the other Loan Documents and agrees that it is charged with notice and knowledge of the terms
of this Agreement and the other Loan Documents; that it has in fact read this Agreement and the
other Loan Documents and is fully informed and has full notice and knowledge of the terms,
conditions and effects thereof; that it has been represented by independent legal counsel of its
choice throughout the negotiations preceding its execution of this Agreement and the other Loan
Documents; and has received the advice of its attorney in entering into this Agreement and the
other Loan Documents; and that it recognizes that certain of the terms of this Agreement and the
other Loan Documents result in one party assuming the liability inherent in some aspects of the
transaction and relieving the other party of its responsibility for such liability. EACH PARTY
HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY
HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”




     Section 8.11 Additional Grantors. Upon the execution and delivery by any Person of an
Additional Grantor Supplement in substantially the form of Annex I hereto: (i) such Person
shall become and be a Grantor hereunder, and each reference in this Agreement to a “Grantor” shall
also mean and be a reference to such Person, and each reference in any other Loan Document to a
“Grantor” shall also mean and be a reference to such Person; and (ii) each reference herein to
“this Agreement,” “hereunder,” “hereof” or words of like import referring to this Agreement, and
each reference in any other Loan Document to the “Collateral Agreement,” “thereunder,” “thereof” or
words of like import referring to this Agreement, shall mean and be a reference to this Agreement
as supplemented by such Additional Grantor Supplement.



19









 





     Section 8.12 Releases.



          (a) Full Release. The grant of a security interest in the Collateral hereunder and
all of the rights, powers and remedies in connection herewith shall remain in full force and effect
until the Administrative Agent has (i) delivered all Collateral in its possession to the Grantors
and (ii) executed a written release or termination statement and reassigned to the Grantors,
without recourse or warranty, any remaining Collateral and all rights conveyed hereby. Upon
satisfaction of the conditions set forth in Section 8.07(c) of the Credit Agreement or upon Payment
in Full, the Administrative Agent, at the written request and expense of the Borrower, will
promptly release, reassign and transfer the Collateral to the Grantors and declare this Agreement
to be of no further force or effect.




          (b) Partial Release. Notwithstanding anything contained herein to the contrary, the
Grantors are authorized to release any Collateral that is sold, leased, assigned, exchanged,
conveyed, transferred or otherwise disposed of in compliance with Sections 9.02(g), 9.06, 9.08 and
9.11 of the Credit Agreement, at which point the liens and security interests shall terminate with
respect to such Collateral and this Agreement shall have no further force or effect with respect to
such released Collateral; provided that so long as the lien in favor of the Administrative Agent
continues in the proceeds of such sale, lease, assignment, exchange, conveyance, transfer or other
disposal of such Collateral, or to the extent such Collateral is sold, leased, assigned, exchanged,
conveyed, transferred or otherwise disposed of to the Borrower or any Guarantor, such lien
continues in such Collateral.




          (c) Retention in Satisfaction. Except as may be expressly applicable pursuant to
Section 9.620 of the UCC, no action taken or omission to act by the Administrative Agent or the
Secured Parties hereunder, including, without limitation, any exercise of voting or consensual
rights or any other action taken or inaction, shall be deemed to constitute a retention of the
Collateral in satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect, until the Administrative
Agent and the Secured Parties shall have applied payments (including, without limitation,
collections from Collateral) towards the Obligations in the full amount then outstanding or until
such subsequent time as is provided in Section 8.12(a).




          (d) Release of Grantors. At the request and sole expense of the Borrower, a Grantor
shall be released from its obligations hereunder pursuant to Section 8.07(c)(iii) of the Credit
Agreement. Upon such release, the Administrative Agent shall execute and deliver to the Borrower
all documents and instruments reasonably requested by the Borrower to further evidence such
release.




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



[Signatures Begin Next Page]






20









 







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




	 	 	 	 	 
	GRANTORS:       	EXTERRAN HOLDINGS, INC.

 	 
	 	By:  	/s/ J. Michael Anderson
 	 
	 	 	J. Michael Anderson 	 
	 	 	Senior Vice President and Chief Financial Officer 	 
	 
	 	EES LEASING LLC.

 	 
	 	By:  	/s/ J. Michael Anderson
 	 
	 	 	J. Michael Anderson 	 
	 	 	Senior Vice President and Chief Financial Officer 	 
	 
	 	EXH GP LP LLC

 	 
	 	By:  	/s/ Pamela Jasinski
 	 
	 	 	Pamela Jasinski 	 
	 	 	Manager 	 
	 
	 	EXH MLP LP LLC

 	 
	 	By:  	/s/ Pamela Jasinski  	 
	 	 	Pamela Jasinski 	 
	 	 	Manager 	 
	 	 	 	 
	 
	 	EXTERRAN ENERGY SOLUTIONS, L.P.

 	 
	 	By:  	/s/ J. Michael Anderson
 	 
	 	 	J. Michael Anderson 	 
	 	 	Senior Vice President and Chief Financial Officer 	 
	 



Signature Page

Collateral Agreement





 









 





Acknowledged and Agreed to as

of the date hereof by:




	 	 	 	 	 	 	 

	ADMINISTRATIVE	 	WELLS FARGO BANK, NATIONAL ASSOCIATION	 	 
	AGENT:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Donald W. Herrick, Jr.
 

Donald W. Herrick, Jr.
	 	 
	 

	 	Title:
	 	Director	 	 






Signature Page

Collateral Agreement




 









 





Annex I




FORM OF ADDITIONAL GRANTOR SUPPLEMENT




     SUPPLEMENT, dated as of [     ], 201[     ], made by [     ], a [     ] (the “Additional Grantor”), in
favor of Wells Fargo Bank, National Association as administrative agent (in such capacity, the
“Administrative Agent”) for the financial institutions (the “Lenders”) parties to
the Credit Agreement referred to below. All capitalized terms not defined herein shall have the
meanings ascribed to them in such Credit Agreement or the Collateral Agreement referred to below.


W I T N E S S E T H:




     WHEREAS, EXTERRAN HOLDINGS, INC., a Delaware corporation (the “Borrower”), the
Administrative Agent and the Lenders have entered into that certain Senior Secured Credit
Agreement, dated as of July 8, 2011 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”);



     WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Affiliates
have entered into a Collateral Agreement, dated as of July 8, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Collateral Agreement”) in favor
of the Administrative Agent for the benefit of the Secured Parties;



     WHEREAS, the Credit Agreement requires the Additional Grantor to execute and deliver this
Supplement to the Administrative Agent, and the Additional Grantor has agreed to execute and
deliver this Supplement to the Administrative Agent;



     NOW, THEREFORE, IT IS AGREED:



     SECTION 1. Grant of Security Interest. The Additional Grantor hereby pledges,
assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent,
for the ratable benefit of the Secured Parties, a security interest in all of the following
Property now owned or at any time hereafter acquired by the Additional Grantor or in which the
Additional Grantor now has or at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of
the Obligations:



          (a) all Accounts;




          (b) all Chattel Paper;




          (c) all Documents;




          (d) all Equipment;




          (e) all General Intangibles;




Annex I-1









 





          (f) all Instruments;




          (g) all Inventory;




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




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



Each reference to Collateral or to any relevant type or item of Property constituting Collateral
shall be deemed to exclude (i) tangible Property that is not located in the continental United
States (including its possessions), (ii) motor vehicles, forklifts, trailers photocopiers or any
property which may be covered by a certificate of title, (iii) any assets of any CFC, (iv) any
lease, license, contract, property rights or agreement to which the Borrower or any Subsidiary is a
party or any of its rights or interests thereunder if and for so long as the grant of such security
interest shall constitute or result in (A) the abandonment, invalidation or unenforceability of any
right, title or interest of such Person therein or (B) in a breach or termination pursuant to the
terms of, or a default under, any such lease, license, contract property rights or agreement (other
than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code); provided, however that such security
interest shall, unless otherwise not excluded from the Collateral under the Loan Documents, attach
immediately at such time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach immediately to any
portion of such lease, license, contract, property rights or agreement that does not result in any
of the consequences specified in (A) or (B) above, (v) any Property subject to a Lien permitted by
Section 9.02(b), (d) or (e) of the Credit Agreement, (vi) any Property owned by EXLP or its
Subsidiaries, (vii) any Property of any ABS Subsidiary and (viii) the GP Interests and IDRs..




     The Additional Grantor hereby acknowledges that the Obligations is owed to the various Secured
Parties and that each Secured Party is entitled to the benefits of the Collateral given under this
Supplement and the Collateral Agreement, provided, however, that only the
Administrative Agent shall be entitled to exercise any remedies relating to the Collateral given
under this Supplement and the Collateral Agreement.



     SECTION 2. Obligations Under the Collateral Agreement. The Additional Grantor hereby
agrees, as provided in Section 8.12 of the Collateral Agreement, as of the date first above
written, to be bound as a Grantor by all of the terms and conditions of the Collateral Agreement to
the same extent as each of the other Grantors thereunder. The undersigned further agrees, as of
the date first above written, that each reference in the Collateral Agreement to a “Grantor” shall
also mean and be a reference to the undersigned, and each reference in any other Loan Document to a
“Grantor” or an “Obligor” shall also mean and be a reference to the undersigned. The information
set forth in Annex A hereto is hereby added to the information set forth in Schedules
___________1 to the Collateral Agreement.





 




			
	1	 	Refer to each Schedule which needs
to be supplemented.




Annex I-2









 










     SECTION 3. Representations, Warranties and Covenants. The Additional Grantor hereby
(a) makes each representation and warranty set forth in Article III of the Collateral Agreement
(assuming that all references in such Article III to a specific date refer to the date hereof) and
(b) undertakes each covenant and obligation set forth in Article IV of the Collateral Agreement, in
each case to the same extent as each other Grantor.



     SECTION 4. Governing Law. This Supplement shall be governed by, and construed in
accordance with, the laws of the State of Texas.



Annex I-3









 





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



	 	 	 	 	 	 	 

	 	 	[ADDITIONAL GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 











Annex I-4









 








Annex A

to Additional Grantor Supplement



[Information to Supplement Schedules to Collateral Agreement]



Annex A-1









 





Schedule 1

Notice Addresses of Grantors




Exterran Holdings, Inc.

16666 Northchase Drive

Houston, TX 77060




EES Leasing LLC

16666 Northchase Drive

Houston, TX 77060




EXH GP LP LLC

16666 Northchase Drive

Houston, TX 77060




EXH MLP LP LLC

16666 Northchase Drive

Houston, TX 77060




Exterran Energy Solutions, L.P.

16666 Northchase Drive

Houston, TX 77060




Schedule 1-1









 





Schedule 2

Filings and Other Actions Required to Perfect Security Interests





	1.	 	Filing of UCC-1 Financing Statements, naming each Grantor as debtor and the Administrative
Agent as secured party, and describing the Collateral, with the Secretary of State of the
State of Delaware.





Schedule 2-1









 





Schedule 3

Location of Jurisdiction of Organization and Chief Executive Office




	 	 	 

	Legal name of EXH:

	 	Exterran Holdings, Inc.
	Address:

	 	16666 Northchase Drive
	 

	 	Houston, TX 77060 
	Jurisdiction of organization:

	 	Delaware
	Organizational number:

	 	4295474 
	Location of chief executive office or sole place of business:

	 	see address above
	 
	 	 
	Legal name of EES:

	 	EES Leasing LLC.
	Address:

	 	16666 Northchase Drive
	 

	 	Houston, TX 77060 
	Jurisdiction of organization:

	 	Delaware
	Organizational number:

	 	4404686 
	Location of chief executive office or sole place of business:

	 	see address above
	 
	 	 
	Legal name of EXH GP:

	 	EXH GP LP LLC
	Address:

	 	16666 Northchase Drive
	 

	 	Houston, TX 77060 
	Jurisdiction of organization:

	 	Delaware
	Organizational number:

	 	4229732 
	Location of chief executive office or sole place of business:

	 	see address above
	 
	 	 
	Legal name of EXH MLP:

	 	EXH MLP LP LLC
	Address:

	 	16666 Northchase Drive
	 

	 	Houston, TX 77060 
	Jurisdiction of organization:

	 	Delaware
	Organizational number:

	 	422737 
	Location of chief executive officer or sole place of business:

	 	see address above
	 
	 	 
	Legal name of EESLP:

	 	Exterran Energy Solutions, L.P.
	Address:

	 	16666 Northchase Drive
	 

	 	Houston, TX 77060 
	Jurisdiction of organization:

	 	Delaware
	Organizational number:

	 	3326660 
	Location of chief executive officer or sole place of business:

	 	see address above







Schedule 3-1