Document:

EXHIBIT 10.3

 

PLEDGE AND
SECURITY AGREEMENT

(Assignment of Pledged
Securities)

 

made by

 

UNIVERSAL
COMPRESSION INTERNATIONAL, INC.,

 

ENTERRA
COMPRESSION INVESTMENT COMPANY,

 

UNIVERSAL
COMPRESSION SERVICES, LLC, and

 

UNIVERSAL
COMPRESSION CANADIAN HOLDINGS, INC.,

as Pledgors

 

to

 

WACHOVIA
BANK, NATIONAL ASSOCIATION, 

as Administrative Agent

 

Effective as of January 14,
2005

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE 1

  
	
  Security Interest

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Pledge

  	
   

  
	
  Section 1.02

  	
  Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
  Definitions

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Terms Defined Above

  	
   

  
	
  Section 2.02

  	
  Certain Definitions

  	
   

  
	
  Section 2.03

  	
  Credit Agreement Terms

  	
   

  
	
  Section 2.04

  	
  Section References

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
  Representations and Warranties

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Ownership of Collateral; Encumbrances

  	
   

  
	
  Section 3.02

  	
  No Required Consent

  	
   

  
	
  Section 3.03

  	
  Pledged Securities

  	
   

  
	
  Section 3.04

  	
  First Priority Security Interest

  	
   

  
	
  Section 3.05

  	
  Collateral

  	
   

  
	
  Section 3.06

  	
  Pledgor’s Location

  	
   

  
	
  Section 3.07

  	
  Benefit to the Pledgor

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
  Covenants and Agreements

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Covenants in Credit Agreement

  	
   

  
	
  Section 4.02

  	
  Maintenance of Perfected Security Interest; Further Documentation

  	
   

  
	
  Section 4.03

  	
  Changes in Locations, Name, Etc

  	
   

  
	
  Section 4.04

  	
  Pledged Securities

  	
   

  
	
  Section 4.05

  	
  Certain Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
  Remedial Provisions

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  UCC and Other Remedies

  	
   

  
	
  Section 5.02

  	
  Pledged Securities

  	
   

  
	
  Section 5.03

  	
  Private Sales of Pledged Securities

  	
   

  
	
  Section 5.04

  	
  Non-Judicial Enforcement

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  
	
  The Administrative Agent

  
	
   

  	
   

  	
   

  
	
  Section 6.01

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

  	
   

  

 

i

 

	
  Section 6.02

  	
  Duty of Administrative Agent

  	
   

  
	
  Section 6.03

  	
  Filing of Financing Statements

  	
   

  
	
  Section 6.04

  	
  Authority of Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  
	
  Miscellaneous

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Waiver

  	
   

  
	
  Section 7.02

  	
  Notices

  	
   

  
	
  Section 7.03

  	
  Amendments in Writing

  	
   

  
	
  Section 7.04

  	
  Successors and Assigns

  	
   

  
	
  Section 7.05

  	
  Survival; Revival; Reinstatement

  	
   

  
	
  Section 7.06

  	
  Counterparts; Effectiveness; Conflicts

  	
   

  
	
  Section 7.07

  	
  Severability

  	
   

  
	
  Section 7.08

  	
  Governing Law; Submission to Jurisdiction

  	
   

  
	
  Section 7.09

  	
  Headings

  	
   

  
	
  Section 7.10

  	
  Acknowledgments

  	
   

  
	
  Section 7.11

  	
  Additional Pledgors and Pledgors

  	
   

  
	
  Section 7.12

  	
  Releases

  	
   

  
	
  Section 7.13

  	
  Acceptance

  	
   

  

 

	
  ANNEXES:

  
	
   

  	
   

  
	
  I

  	
  Form of Assumption Agreement

  
	
  II

  	
  Form of Supplement

  
	
   

  	
   

  
	
  SCHEDULES:

  
	
   

  	
   

  
	
  1

  	
  Notice Addresses of Pledgors

  
	
  2

  	
  Description of Pledged Securities

  
	
  3

  	
  Filings and Other Actions Required to
  Perfect Security Interests

  
	
  4

  	
  Location of Jurisdiction of Organization
  and Chief Executive Office

  

 

ii

 

PLEDGE AND
SECURITY AGREEMENT

(Assignment of Pledged
Securities)

 

This PLEDGE
AND SECURITY AGREEMENT dated as of the 14th day of January, 2005, is made by
UNIVERSAL COMPRESSION INTERNATIONAL, INC., a Delaware corporation, ENTERRA
COMPRESSION INVESTMENT COMPANY, a Delaware corporation, UNIVERSAL COMPRESSION
SERVICES, LLC, a Delaware limited liability company, and UNIVERSAL COMPRESSION
CANADIAN HOLDINGS, INC., a Delaware corporation with principal offices at 4444
Brittmoore Road, Houston, Texas 77041 (the “Pledgors”), with and to
WACHOVIA BANK, NATIONAL ASSOCIATION, with offices at 301 South College Street,
Charlotte, North Carolina 28288, as Administrative Agent (in such capacity, the
“Administrative Agent”) for itself and the lenders which are now or
hereafter become parties to the Credit Agreement defined and referred to below
(collectively the “Lenders”).

 

R E C I T A L
S

 

A.                                   Pursuant to that
certain Senior Secured Credit Agreement dated as of January 14, 2005 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Universal Compression, Inc., a
Texas corporation, and Universal Compression Holdings, Inc., a Delaware corporation,
as the US borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia
ULC, as the Canadian borrower, Wachovia Bank, National Association, as US
administrative agent for the Lenders, Congress Financial Corporation (Canada),
as Canadian administrative agent for the Lenders, JPMorgan Chase Bank, N.A., as
the syndication agent, Wachovia Capital Markets, LLC and J.P. Morgan Securities
Inc., as the joint lead arrangers and joint lead book runners, Deutsche Bank
AG, as the documentation agent and each of the Lenders party thereto, the
Borrowers received certain loans and the US Borrowers received extensions of
credit under the Credit Agreement, up to the aggregate principal amount of
$650,000,000.

 

B.                                     The Borrowers, the
Administrative Agent and the Lenders have conditioned their obligations under
the Credit Agreement upon the execution and delivery by the Pledgors of this Agreement,
and the Pledgors have agreed to execute and deliver this Agreement.

 

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

 

ARTICLE 1

Security Interest

 

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

 

1

 

performance of the “Obligations” (as defined in Section 2.02)
and the performance by such Pledgor of this Agreement.

 

Section 1.02                                Collateral.

 

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

 

(b)                                 It
is expressly contemplated that additional Property may from time to time be
pledged, assigned or granted to the Administrative Agent as additional security
for the Obligations, and the term “Collateral” as used herein shall be
deemed for all purposes hereof to include all such additional Property,
together with all other Property of the types described above related thereto; provided,
however, that in no event shall the term “Collateral” include more than
65% of the issued and outstanding shares of capital stock of any Foreign
Subsidiary.  All certificates or
instruments representing or evidencing the Pledged Securities shall be
delivered to and held pursuant hereto by the Administrative Agent or a Person designated
by the Administrative Agent and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, and accompanied by any required transfer tax stamps to
effect the pledge of the Pledged Securities to the Administrative Agent.  Notwithstanding the preceding sentence, at
the Administrative Agent’s discretion, all Pledged Securities must be delivered
or transferred in such manner as to permit the Administrative Agent to be a “protected
purchaser” to the extent of its security interest as provided in Section 8-303
of the UCC (if the Administrative Agent otherwise qualifies as a protected
purchaser). During the continuance of an Event of Default, the Administrative
Agent shall have the right, at any time in its discretion and without notice,
to transfer to or to register in the name of the Administrative Agent or any of
its nominees any or all of the Pledged Securities, subject only to the
revocable rights specified in Section 5.03.  In addition, during the continuance of an
Event of Default, the Administrative Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged
Securities for certificates or instruments of smaller or larger denominations

 

2

 

ARTICLE 2

Definitions

 

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

 

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

 

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

 

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

 

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

 

“Obligations” means the collective reference to the payment and
performance when due of all indebtedness, liabilities, obligations and
undertakings of the Borrowers and their Subsidiaries (including, without
limitation, all Indebtedness) of every kind or description arising out of or
outstanding under, advanced or issued pursuant, or evidenced by, the Secured
Documents, including, without limitation, the unpaid principal of and interest
on the Aggregate Credit Exposure and all other obligations and liabilities of
the Borrowers and their Subsidiaries (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and LC Exposure and interest accruing after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrowers, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to the Secured Creditors, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, arising out of or
outstanding under, advanced or issued pursuant, or evidenced by, the Secured
Documents, whether on account of principal, interest, premium, reimbursement
obligations, payments in respect of an early termination date, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all reasonable
costs, fees and disbursements of counsel that are required to be paid by the
Borrowers pursuant to the terms of the Credit Agreement).

 

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

 

“Proceeds” means all “proceeds” as such term is defined in Section 9-102(65)
of the UCC and, in any event, shall include, without limitation, all dividends
or other income from the Pledged Securities, collections thereon or distributions
or payments with respect thereto.

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 3

Representations
and Warranties

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 4

Covenants and Agreements

 

Each Pledgor
covenants and agrees with the Administrative Agent and the Lenders that, from
and after the date of this Agreement until the Obligations under the Credit
Agreement shall

 

5

 

have been paid in full in cash, no Letters of Credit shall be
outstanding (except for Letters of Credit secured by cash collateral as
permitted in Section 2.01(b)(iii) of the Credit Agreement) and all of the
Aggregate Commitments shall have terminated:

 

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

 

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

 

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

 

(b)                                 it
will furnish to the 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 Pledgor, 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 4.03                                Changes
in Locations, Name, Etc. 
Such Pledgor recognizes that financing statements pertaining to the
Collateral have been or may be filed where such Pledgor is organized.  Without limitation of Section 9.03 of
the Credit Agreement or any other covenant herein, such Pledgor will not cause
or permit any change in its (a) corporate name, (b) its identity or corporate
structure or in the jurisdiction in which it is incorporated or formed, (c) its
jurisdiction of organization or its organizational identification number in
such jurisdiction of organization or (d) its federal taxpayer identification
number, unless, in each case, such Pledgor shall have first (i) notified the
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 4.03,
such Pledgor will expressly state in a conspicuous manner that the notice is
required by this Agreement and contains facts that may require additional
filings of financing statements or other

 

6

 

notices for the purposes of continuing perfection of the Administrative
Agent’s security interest in the Collateral.

 

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

 

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

 

(b)                                 without
the prior written consent of the Administrative Agent, such Pledgor will not (i)
unless otherwise expressly permitted hereby or under the other Loan Documents,
vote to enable, or take any other action to permit, any Issuer to issue any
capital stock of any nature or to issue any other securities convertible into
or granting the right to purchase or exchange for any capital stock of any
nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) except as set forth in the Credit Agreement, create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Pledged Securities or Proceeds thereof, or
any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Pledgor or the Administrative Agent to sell, assign or
transfer any of the Pledged Securities or Proceeds thereof;

 

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

 

(d)                                 such
Pledgor shall furnish to the Administrative Agent such stock powers and other
instruments as may be reasonably required by the Administrative Agent to assure
the

 

7

 

transferability of the Pledged Securities when and as often as may be
reasonably requested by the Administrative Agent; and

 

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

 

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

 

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

 

ARTICLE 5

Remedial Provisions

 

Section 5.01                                UCC and Other
Remedies.

 

(a)                                  Upon
the occurrence and during the continuance of an Event of Default, the
Administrative Agent, on behalf of the Secured Creditors, may exercise, in
addition to all other rights and remedies granted to them in this Agreement,
the other Loan Documents and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law or otherwise available at law
or equity.  Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Pledgor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
any Secured Creditor or elsewhere upon such commercially reasonable terms and
conditions as it may deem advisable and at such commercially reasonable prices
as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk.  Any
Secured Creditor shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Pledgor, which right or equity is hereby waived and
released.  Any such sale or transfer by

 

8

 

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 any Pledgor, including any equity or right of redemption,
stay or appraisal which any Pledgor has or may have under any rule of law,
regulation or statute now existing or hereafter adopted (and such Pledgor
hereby waives any rights it may have in respect thereof).  Upon any such sale or transfer, the
Administrative Agent shall have the right to deliver, assign and transfer to
the purchaser or transferee thereof the Collateral so sold or transferred.  The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 5.01,
after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Secured Creditors hereunder, including, without
limitation, reasonable attorneys’ fees and disbursements, to the payment in
whole or in part of the 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 Pledgor.  To the extent permitted by applicable law,
each Pledgor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Secured Creditor arising out of the exercise by
them of any rights hereunder.  If any notice
of a proposed sale or other disposition of Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition.

 

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

 

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

 

Section 5.02                                Pledged Securities.

 

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

 

9

 

(b)                                 Upon
the occurrence and during the continuance of an Event of Default, upon notice
by the Administrative Agent of its intent to exercise such rights to the
relevant Pledgor or Pledgors, (i) the Administrative Agent shall have the right
to receive any and all cash dividends, payments, Property or other Proceeds
paid in respect of the Pledged Securities and make application thereof to the
Obligations in accordance with the Credit Agreement, and (ii) any or all of the
Pledged Securities shall be registered in the name of the Administrative Agent
or its nominee, and (iii) the Administrative Agent or its nominee may exercise
(A) all voting, consent, corporate and other rights pertaining to such Pledged
Securities at any meeting of shareholders (or other equivalent body) of the
relevant Issuer or Issuers or otherwise and (B) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
organizational structure of any Issuer, or upon the exercise by any Pledgor or
the Administrative Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for Property actually received by it, but the Administrative
Agent shall have no duty to any Pledgor to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay in so
doing.

 

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

 

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

 

10

 

pay any dividends or other payments with respect to the Pledged
Securities directly to the Administrative Agent.

 

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

 

Section 5.03                                Private Sales of
Pledged Securities.

 

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

 

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

 

Section 5.04                                Non-Judicial
Enforcement.  The
Administrative Agent may enforce its rights hereunder without prior judicial
process or judicial hearing, and to the extent permitted by

 

11

 

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

 

ARTICLE 6

The Administrative Agent

 

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

 

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

 

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

 

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

 

(iii)                               (A)
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall direct; (B) ask or
demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral; (C) in the name of such Pledgor or its own
name, or otherwise, take possession of and indorse and collect any check,
draft, note, acceptance or other instrument for the payment of moneys due with
respect to any Collateral and commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (D) defend any suit, action or proceeding brought
against such Pledgor with respect to any Collateral; (E) settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the 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

 

12

 

Agent were the
absolute owner thereof for all purposes, and do, at the Administrative Agent’s
option and such Pledgor’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
Creditors’ security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Pledgor might do.

 

(b)                                 If
any Pledgor fails to perform or comply with any of its agreements contained
herein within the applicable grace periods, the 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 Pledgor, shall be
payable by such Pledgor to the Administrative Agent on demand.

 

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

 

Section 6.02           Duty
of Administrative Agent. 
The Administrative Agent’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the UCC or otherwise, shall be to deal with it in
the same manner as the Administrative Agent deals with similar Property for its
own account and shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which comparable secured
parties accord comparable collateral.  To
the fullest extent permitted under applicable law, neither the Administrative
Agent, any Secured Creditor nor any of their respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Pledgor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. 
The powers conferred on the Administrative Agent and the Secured
Creditors hereunder are solely to protect the Administrative Agent’s and the
Secured Creditors’ interests in the Collateral and shall not impose any duty
upon the Administrative Agent or any Secured Creditor to exercise any such
powers.  The Administrative Agent and the
Secured Creditors shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.  To the
fullest extent permitted by applicable law, the Administrative Agent shall be
under no duty whatsoever to make or give any presentment, notice of dishonor,
protest, demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection
with any Collateral or the Obligations, or to take any steps necessary to
preserve any rights against any Pledgor or other Person or ascertaining or
taking

 

13

 

action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not it has or
is deemed to have knowledge of such matters. 
Each Pledgor, to the extent permitted by applicable law, waives any
right of marshaling in respect of any and all Collateral, and waives any right
to require the Administrative Agent or any Secured Creditor to proceed against
any Pledgor or other Person, exhaust any Collateral or enforce any other remedy
which the Administrative Agent or any Secured Creditor now has or may hereafter
have against each Pledgor, any Pledgor or other Person.

 

Section 6.03                                Filing of Financing Statements.  Pursuant to the UCC and any other applicable
law, each Pledgor 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 Pledgor acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
between the Administrative Agent and the Secured Creditors, be governed by the
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Administrative Agent and the
Pledgors, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Secured Creditors with full and valid authority so to act or
refrain from acting, and no Pledgor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.

 

ARTICLE 7

Miscellaneous

 

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

 

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

 

14

 

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

 

Section 7.04                                Successors
and Assigns.  The
provisions of this Agreement shall be binding upon the Pledgors and their
successors and permitted assigns and shall inure to the benefit of the
Administrative Agent and the Secured Creditors and their respective successors
and permitted assigns; provided that no Pledgor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent and the Lenders unless
otherwise permitted by the terms of the Credit Agreement or this Agreement, and
any such purported assignment, transfer or delegation shall be null and void.

 

Section 7.05                                Survival; Revival;
Reinstatement.

 

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

 

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

 

Section 7.06                                Counterparts;
Effectiveness; Conflicts.

 

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

 

15

 

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

 

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

 

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

 

Section 7.08                                Governing Law;
Submission to Jurisdiction.

 

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

 

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

 

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

 

16

 

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

 

(e)                                  EACH
PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY SECURITY INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN;
(ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OF
THE ADMINISTRATIVE AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE SECURITY INSTRUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 9.10.

 

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

 

Section 7.10                                Acknowledgments.  Each Pledgor hereby acknowledges that:

 

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

 

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

 

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

 

(d)                                 Each
of the parties hereto specifically agrees that it has a duty to read this
Agreement, the Security Instruments and the other Loan Documents and agrees
that it is charged with notice and knowledge of the terms of this Agreement,
the Security Instruments and the other Loan Documents; that it has in fact read
this Agreement, the Security Instruments and the

 

17

 

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

 

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

 

Section 7.12                                Releases.

 

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

 

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

 

(c)                                  Retention
in Satisfaction.  Except as may be
expressly applicable pursuant to Section 9-620 of the UCC, no action taken or omission to act by
the Administrative Agent or the Secured Creditors hereunder, including, without
limitation, any exercise of voting or consensual rights or any other action
taken or inaction, shall be deemed to constitute a retention of the Collateral
in satisfaction of the Obligations or otherwise to be in full satisfaction of
the Obligations, and the Obligations shall remain in full force and effect,
until the Administrative

 

18

 

Agent and the Secured Creditors shall have applied payments (including,
without limitation, collections from Collateral) towards the Obligations in the
full amount then outstanding or until such subsequent time as is provided in Section 7.12(a).

 

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

 

[Signatures
begin on next page]

 

19

 

	
  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

  
				

 

 

Signature Page – Pledge and
Security Agreement

 

 

	
  ADMINISTRATIVE
  AGENT:

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M. Kipp

  
	
   

  	
  Name:

  	
  James M.
  Kipp

  
	
   

  	
  Title:

  	
  Managing
  Director

  
				

 

 

Signature Page – Pledge and
Security Agreement

 

 

Annex
I

 

Assumption
Agreement

 

ASSUMPTION AGREEMENT, dated as of
[                 ],
200[   ], made by
[                 ],
a
[                 ]
(the “Additional Pledgor”), in favor of
Wachovia Bank, National Association, as administrative agent (in such capacity,
the “Administrative Agent”) for the
financial institutions or entities (the “Lenders”) parties to the Credit
Agreement referred to below and, in the case of any Hedging Agreement referred
to in the Pledge and Security Agreement referred to below, any Lender Affiliate
(as defined in the Credit Agreement). 
All capitalized terms not defined herein shall have the meaning ascribed
to them in such Credit Agreement.

 

W I T N E S S E T H:

 

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

 

WHEREAS, in connection with the Credit
Agreement, certain Subsidiaries of the US Borrowers (other than the Additional
Pledgor) have entered into the Pledge and Security Agreement, dated as of January 14,
2005 (as amended, supplemented or otherwise modified from time to time, the “Pledge
and Security Agreement”) in favor of the Administrative Agent for the
benefit of the Secured Creditors;

 

WHEREAS, the Credit Agreement requires the
Additional Pledgor to become a party to the Pledge and Security Agreement; and

 

WHEREAS, the Additional Pledgor has agreed to
execute and deliver this Assumption Agreement in order to become a party to the
Pledge and Security Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.                                       Pledge and
Security Agreement.  By executing and
delivering this Assumption Agreement, the Additional Pledgor, as provided in Section 7.11
of the Pledge and Security Agreement, hereby becomes a party to the Pledge and
Security Agreement as a Pledgor thereunder with the same force and effect as if
originally named therein as a Pledgor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Pledgor thereunder and expressly grants to the Administrative Agent, for the
benefit of the Secured Creditors, a security interest in all Collateral now
owned or hereafter acquired by such Additional Pledgor to secure all of such
Additional Pledgor’s obligations and liabilities thereunder.  The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules 1 through 4 to
the Pledge and Security Agreement.  The 

 

I - 1

 

Additional Pledgor hereby represents and warrants that each of the
representations and warranties contained in Article 3 of the Pledge and
Security Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.

 

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

 

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

 

	
   

  	
  [ADDITIONAL
  PLEDGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

I - 2

 

Annex II

 

Supplement

 

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

 

W I T N E S S E T H:

 

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

 

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

 

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

 

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

 

NOW, THEREFORE, IT IS AGREED:

 

1.                                       Pledge and
Security Agreement.  By executing and
delivering this Supplement, the Pledgor, as provided in Section 7.11 of
the Pledge and Security Agreement, hereby pledges and grants a security
interest in (a) the capital stock and certificated membership interests
described or referred to in Schedule 2-S and (b) (i) the
certificates or instruments, if any, representing such capital stock and
interests, (ii) all dividends (cash, capital stock or otherwise), cash,
instruments, rights to subscribe, purchase or sell and all other rights and
Property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such securities and interests (iii)
all replacements, additions to and substitutions for any of the Property
referred to in this definition, including, without limitation, claims against
third parties, (iv) the proceeds, interest, profits and other income of or on
any of the Property referred to in this definition, (v) all security
entitlements in respect of any of the foregoing, if any, (vi) all books and
records relating to any of the Property referred to in this definition and
(vii) all proceeds of any of the foregoing (collectively, the “Collateral”). 
Upon execution of this Supplement, such

 

II - 1

 

securities will constitute “Pledged Securities” for purposes of the Pledge
and Security Agreement with the same force and effect as if originally listed
on Schedule 2 thereto.  The
information set forth in Schedule 2-S hereto is hereby added to the
information set forth in Schedule 2 to the Pledge and Security
Agreement.  The Pledgor hereby represents
and warrants that each of the representations and warranties contained in Article 3
of the Pledge and Security Agreement is true and correct on and as the date
hereof (after giving effect to this Supplement) as if made on and as of such
date.

 

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

 

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

 

	
   

  	
  [PLEDGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

II - 2

 

Schedule 1

 

NOTICE
ADDRESSES OF PLEDGORS

 

Universal Compression
International, Inc.

4444 Brittmoore Rd.

Houston, TX 77041

 

Enterra Compression Investment
Company

4444 Brittmoore Rd.

Houston, TX 77041

 

Universal Compression Services,
LLC

4444 Brittmoore Rd.

Houston, TX 77041

 

Universal Compression Canadian
Holdings, Inc.

4444 Brittmoore Rd.

Houston, TX 77041

 

1 - 1

 

Schedule 2

 

DESCRIPTION OF PLEDGED SECURITIES

 

	
  Issuer

  	
   

  	
  Owner

  	
   

  	
  Stock

  Cert.

  No.

  	
   

  	
  No. of

  Shares

  Pledged

  	
   

  	
  Percentage

  of Issued

  Stock

  Pledged

  	
   

  
	
  Universal Compression International Ltd. (Cayman Island)

  	
   

  	
  Universal Compression International, Inc.

  	
   

  	
  4

  	
   

  	
  65

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Compression Services de Mexico, S.A. de C.V. (Mexico)

  	
   

  	
  Universal Compression International, Inc.

  	
   

  	
  1

  	
   

  	
  97,500

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Enterra
  Compression Investment Company (Delaware)

  	
   

  	
  Universal Compression International, Inc.

  	
   

  	
  4

  	
   

  	
  1,002

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression de Mexico, S.A. de C.V. (Mexico)

  	
   

  	
  Universal Compression International, Inc.

  	
   

  	
  3

  	
   

  	
  32,500

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression de Venezuela Unicom, C.A. (Venezuela)

  	
   

  	
  Universal Compression International, Inc.

  	
   

  	
  1

  	
   

  	
  35,186,328

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression Canadian Holdings, Inc. (Delaware)

  	
   

  	
  Enterra Compression Investment Company

  	
   

  	
  2

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UCO Compression Holding, L.L.C. (Delaware)

  	
   

  	
  Enterra Compression Investment Company

  	
   

  	
  3

  	
   

  	
  640

  	
   

  	
  64

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UCO Compression Holding, L.L.C. (Delaware)

  	
   

  	
  Enterra Compression Investment Company

  	
   

  	
  4

  	
   

  	
  360

  	
   

  	
  36

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression Services, LLC (Delaware)

  	
   

  	
  Enterra Compression Investment Company

  	
   

  	
  6

  	
   

  	
  3,600

  	
   

  	
  36

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression Services, LLC (Delaware)

  	
   

  	
  Enterra Compression Investment Company

  	
   

  	
  7

  	
   

  	
  6,400

  	
   

  	
  64

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression (Ontario) Ltd. (British Virgin Islands)

  	
   

  	
  Universal Compression Canadian Holdings, Inc.

  	
   

  	
  5

  	
   

  	
  46,216,501

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression Services de Venezuela, C.A. (Venezuela)

  	
   

  	
  Universal Compression Services, LLC (formerly Universal Compression
  Services, L.P.)

  	
   

  	
  1

  	
   

  	
  2,317,657

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Universal Compression (Australia) Pty Ltd (Australia)

  	
   

  	
  Universal Compression Services, LLC (formerly Universal Compression
  Services, L.P.)

  	
   

  	
  2

  	
   

  	
  65

  	
   

  	
  65

  	
  %

  

 

2 - 1

 

Schedule 3

 

FILINGS AND OTHER ACTIONS

REQUIRED TO
PERFECT SECURITY INTERESTS

 

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

 

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

 

3 - 1

 

Schedule 4

 

LOCATION OF JURISDICTION OF ORGANIZATION 

AND CHIEF EXECUTIVE OFFICE

 

Legal name of Pledgor:  Universal Compression International, Inc.

Address:  4444 Brittmoore Rd., Houston, TX 77041

Jurisdiction of
organization:  Delaware

Organizational number:  2931334

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

 

Legal name of Pledgor:  Enterra Compression Investment Company

Address:  4444 Brittmoore Rd., Houston, TX 77041

Jurisdiction of organization:  Delaware

Organizational number:  2570044

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

 

Legal name of Pledgor:  Universal Compression Services, LLC

Address:  4444 Brittmoore Rd., Houston, TX 77041

Jurisdiction of organization:  Delaware

Organizational number:  3000319

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

 

Legal name of Pledgor:  Universal Compression Canadian Holdings, Inc.

Address:  4444 Brittmoore Rd., Houston, TX 77041

Jurisdiction of
organization:  Delaware

Organizational number:  3763529

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

 

4 - 1EXHIBIT 10.4

 

AMENDMENT NUMBER 1

TO THE HEAD LESSEE SECURITY AGREEMENT

 

THIS AMENDMENT NUMBER 1, dated as of January 14, 2004 (the “Amendment”) to the
Head Lessee Security Agreement, dated as of December 31, 2002 (as amended,
modified or supplemented from time to time as permitted thereby, the “Agreement”), by and
between BRL Universal Compression Funding I 2002, L.P. (the “Secured Party”) and
UCO Compression 2002 LLC (the “Grantor”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Party and the Grantor have previously entered into
the Agreement;

 

WHEREAS, the parties desire to amend the Agreement in order to modify Schedule 10
attached to the Agreement;

 

NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:

 

SECTION 1. Defined Terms.
Capitalized terms used in this Amendment and not otherwise defined herein shall
have the meanings assigned in the Agreement.

 

SECTION 2. Full Force and
Effect. Other than as specifically modified hereby, the Agreement
shall remain in full force and effect in accordance with the terms and
provisions thereof and is hereby ratified and confirmed by the parties hereto.

 

SECTION 3. Amendment to the
Agreement. Effective on the date hereof, following the execution and
delivery hereof, Schedule 10 attached to the Agreement shall be deleted in
its entirety and replaced with Schedule 1 attached hereto and made a part hereof.

 

SECTION 4. Representations and
Warranties. In order to induce the Interest Rate Hedge Provider, the
Indenture Trustee and the Control Party to enter into this Amendment, the
Grantor and the Secured Party each hereby represents and warrants unto each of
the Interest Rate Hedge Provider, the Indenture Trustee and the Control Party
as set forth in this Section 4:

 

(a)          Grantor
hereby confirms that each of the representations and warranties set forth in Section 4
of the Agreement are true and correct as of the Effective Date with the same
effect as though each had been made as of such date, except to the extent that
any of such representations and warranties expressly relate to earlier dates in
which case such representations and warranties shall be correct as of such
earlier date.

 

(b)         The
Grantor represents and warrants that, immediately prior to the effectiveness of
and after giving effect to, the amendments contemplated hereby, no Event of
Default, Manager Default, Head Lease Event of Default, Universal Event, Trigger
Event or Prospective Trigger Event has occurred and is continuing.

 

(c)          Each
of the Secured Party and the Grantor hereby represents and warrants to the
parties hereto that it possesses all requisite power and authority to execute,
and deliver, and to perform each of its obligations under this Amendment and to
effect the transactions contemplated hereby, all of which have been duly
authorized and approved by all necessary limited partnership or limited
liability company action, as applicable, and for which no consent of any
Governmental Authority or any other person is required, and agrees to furnish
the Deal Agent with evidence of such authorization and approval upon request.

 

(d)         No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery

 

1

 

or performance by any of the Grantor and the Secured Party of this
Amendment or any other documents to be executed by any of the Grantor and the
Secured Party in connection with this Amendment.

 

(e)          This
Amendment constitutes, and each other document executed by each of the Grantor
and the Secured Party in connection with this Amendment will, upon the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of each of the Grantor and the Secured Party enforceable in
accordance with its terms.

 

SECTION 5. Conditions Precedent.
The effectiveness of this Amendment shall be upon satisfaction of each of the
conditions set forth in this Section 5:

 

(a)          The
Deal Agent has received counterparts of this Amendment and such related
documentation as the Deal Agent or its counsel shall determine in their
reasonable discretion, in form and substance satisfactory to the Deal Agent,
duly executed and delivered by the Grantor, the Secured Party and the Indenture
Trustee, as applicable;

 

(b)         The
Deal Agent has received a certificate from each of the Grantor and the Secured
Party dated as of the Effective Date stating that (i) all representations
and warranties of the Grantor and the Secured Party, as the case may be, set
forth in the Agreement, as amended hereby, each of the other Related Documents,
and this Amendment are true and correct; and (ii) no Event of Default,
Manager Default, Head Lease Event of Default, Universal Event, Trigger Event or
Prospective Trigger Event has occurred and is continuing;

 

(c)          The
Deal Agent has received certified resolutions of the Grantor approving this
Amendment and the other documents executed in connection herewith and
certifying as of the Effective Date: the names and true signatures of persons
authorized to sign this Amendment on behalf of the Grantor;

 

(d)         No
Event of Default, Manager Default, Head Lease Event of Default, Universal
Event, Trigger Event or Prospective Trigger Event has occurred and is
continuing; and

 

(e)          That
certain Amendment Number 2 to Indenture, that certain Amendment Number 1 to the
Irrevocable Letter of Credit No. SM201468W, that certain Amendment Number 2 to
Amended and Restated Agreement of Limited Partnership of BRL Universal
Compression Funding I 2002, L.P. and that certain Amendment Number 2 to
Series 2002-1 Note Purchase Agreement shall each be effective.

 

SECTION 6. Miscellaneous
Provisions.

 

(a)          This
Amendment shall become effective as of the Effective Date.

 

(b)         This
Amendment shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

 

(c)          On
and after the execution and delivery hereof, (i) this Amendment shall be a
part of the Agreement, and (ii) each reference in the Agreement to “this
Agreement” or “hereof”, “hereunder” or words of like import, and each reference
in any other document to the Agreement shall mean and be a reference to the
Agreement as amended or modified hereby.

 

SECTION 7. Execution in Counterparts.
This Amendment may be executed by the parties hereto in separate counterparts,
each of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.

 

SECTION 8. Governing Law.
THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES, PROVIDED THAT SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY, AND THE
OBLIGATIONS, 

 

2

 

RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[Signature Page to Follow.]

 

3

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment on the date first above written.

 

	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
  UCO COMPRESSION 2002 LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. BRADLEY CHILDERS

  
	
   

  	
  Name:

  	
  D. Bradley Childers

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  SECURED PARTY:

  
	
   

  	
   

  
	
   

  	
  BRL UNIVERSAL COMPRESSION FUNDING I 2002,
  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BRL Universal Compression Management 2002, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ GREGORY C. GREENE

  
	
   

  	
   

  	
  Name:

  	
  Gregory C. Greene

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

In accordance with Section 608 of the Indenture and Section 11.12
of the Agreement, the undersigned hereby consents to this Amendment:

 

	
  INDENTURE TRUSTEE:

  
	
   

  
	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION, SUCCESSOR BY MERGER TO

  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION

  
	
   

  
	
  By:

  	
  /s/ EDNA BARBER

  	
   

  
	
  Name:

  	
  Edna Barber

  	
   

  
	
  Title:

  	
  Assistant Vice President

  	
   

  
	
   

  	
   

  
	
  INTEREST RATE HEDGE PROVIDER:

  
	
   

  
	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  
	
  By:

  	
  /s/ MATTHEW MAGIDSON

  	
   

  
	
  Name:

  	
  Matthew Magidson

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  

 

4

 

	
  CONTROL PARTY:

  
	
   

  
	
  AMBAC ASSURANCE CORPORATION

  
	
   

  
	
  By:

  	
  /s/ JENNIFER J. BARATTA

  	
   

  
	
  Name:

  	
  Jennifer J. Baratta

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  

 

5

 

SCHEDULE 1

 

	
  Period Ending

  	
   

  	
  Maximum Drawing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  01/20/04

  	
   

  	
  11,637,774.51

  	
   

  	
   

  
	
  02/20/04

  	
   

  	
  11,637,774.51

  	
   

  	
   

  
	
  03/20/04

  	
   

  	
  11,637,774.51

  	
   

  	
   

  
	
  04/20/04

  	
   

  	
  11,637,774.51

  	
   

  	
   

  
	
  05/20/04

  	
   

  	
  11,637,774.51

  	
   

  	
   

  
	
  06/20/04

  	
   

  	
  11,565,659.30

  	
   

  	
   

  
	
  07/20/04

  	
   

  	
  11,493,544.09

  	
   

  	
   

  
	
  08/20/04

  	
   

  	
  11,421,428.88

  	
   

  	
   

  
	
  09/20/04

  	
   

  	
  11,349,313.67

  	
   

  	
   

  
	
  10/20/04

  	
   

  	
  11,277,198.46

  	
   

  	
   

  
	
  11/20/04

  	
   

  	
  11,205,083.25

  	
   

  	
   

  
	
  12/20/04

  	
   

  	
  11,132,968.04

  	
   

  	
   

  
	
  01/20/05

  	
   

  	
  11,060,852.83

  	
   

  	
   

  
	
  02/20/05

  	
   

  	
  10,988,737.62

  	
   

  	
   

  
	
  03/20/05

  	
   

  	
  10,916,622.41

  	
   

  	
   

  
	
  04/20/05

  	
   

  	
  10,844,507.20

  	
   

  	
   

  
	
  05/20/05

  	
   

  	
  10,772,391.99

  	
   

  	
   

  
	
  06/20/05

  	
   

  	
  10,700,276.77

  	
   

  	
   

  
	
  07/20/05

  	
   

  	
  10,628,161.56

  	
   

  	
   

  
	
  08/20/05

  	
   

  	
  10,556,046.35

  	
   

  	
   

  
	
  09/20/05

  	
   

  	
  10,483,931.14

  	
   

  	
   

  
	
  10/20/05

  	
   

  	
  10,411,815.93

  	
   

  	
   

  
	
  11/20/05

  	
   

  	
  10,339,700.72

  	
   

  	
   

  
	
  12/20/05

  	
   

  	
  10,267,585.51

  	
   

  	
   

  
	
  01/20/06

  	
   

  	
  10,195,470.30

  	
   

  	
   

  
	
  02/20/06

  	
   

  	
  10,123,355.09

  	
   

  	
   

  
	
  03/20/06

  	
   

  	
  10,051,239.88

  	
   

  	
   

  
	
  04/20/06

  	
   

  	
  9,979,124.67

  	
   

  	
   

  
	
  05/20/06

  	
   

  	
  9,907,009.46

  	
   

  	
   

  
	
  06/20/06

  	
   

  	
  9,834,894.25

  	
   

  	
   

  
	
  07/20/06

  	
   

  	
  9,762,779.04

  	
   

  	
   

  
	
  08/20/06

  	
   

  	
  9,690,663.83

  	
   

  	
   

  
	
  09/20/06

  	
   

  	
  9,618,548.62

  	
   

  	
   

  
	
  10/20/06

  	
   

  	
  9,546,433.41

  	
   

  	
   

  
	
  11/20/06

  	
   

  	
  9,474,318.20

  	
   

  	
   

  
	
  12/20/06

  	
   

  	
  9,402,202.99

  	
   

  	
   

  
	
  01/20/07

  	
   

  	
  9,330,087.78

  	
   

  	
   

  
	
  02/20/07

  	
   

  	
  9,257,972.57

  	
   

  	
   

  
	
  03/20/07

  	
   

  	
  9,185,857.36

  	
   

  	
   

  
	
  04/20/07

  	
   

  	
  9,113,742.15

  	
   

  	
   

  
	
  05/20/07

  	
   

  	
  9,041,626.94

  	
   

  	
   

  
	
  06/20/07

  	
   

  	
  8,969,511.73

  	
   

  	
   

  
	
  07/20/07

  	
   

  	
  8,897,396.52

  	
   

  	
   

  
	
  08/20/07

  	
   

  	
  8,825,281.30

  	
   

  	
   

  
	
  09/20/07

  	
   

  	
  8,753,166.09

  	
   

  	
   

  

 

 

	
  10/20/07

  	
   

  	
  8,681,050.88

  	
   

  	
   

  
	
  11/20/07

  	
   

  	
  8,608,935.67

  	
   

  	
   

  
	
  12/20/07

  	
   

  	
  8,536,820.46

  	
   

  	
   

  
	
  01/20/08

  	
   

  	
  8,464,705.25

  	
   

  	
   

  
	
  02/20/08

  	
   

  	
  8,392,590.04

  	
   

  	
   

  
	
  03/20/08

  	
   

  	
  8,320,474.83

  	
   

  	
   

  
	
  04/20/08

  	
   

  	
  8,248,359.62

  	
   

  	
   

  
	
  05/20/08

  	
   

  	
  8,176,244.41

  	
   

  	
   

  
	
  06/20/08

  	
   

  	
  8,104,129.20

  	
   

  	
   

  
	
  07/20/08

  	
   

  	
  8,032,013.99

  	
   

  	
   

  
	
  08/20/08

  	
   

  	
  7,959,898.78

  	
   

  	
   

  
	
  09/20/08

  	
   

  	
  7,887,783.57

  	
   

  	
   

  
	
  10/20/08

  	
   

  	
  7,815,668.36

  	
   

  	
   

  
	
  11/20/08

  	
   

  	
  7,743,553.15

  	
   

  	
   

  
	
  12/20/08

  	
   

  	
  7,671,437.94

  	
   

  	
   

  
	
  01/20/09

  	
   

  	
  7,599,322.73

  	
   

  	
   

  
	
  02/20/09

  	
   

  	
  7,527,207.52

  	
   

  	
   

  
	
  03/20/09

  	
   

  	
  7,455,092.31

  	
   

  	
   

  
	
  04/20/09

  	
   

  	
  7,382,977.10

  	
   

  	
   

  
	
  05/20/09

  	
   

  	
  7,310,861.89

  	
   

  	
   

  
	
  06/20/09

  	
   

  	
  7,238,746.68

  	
   

  	
   

  
	
  07/20/09

  	
   

  	
  7,166,631.47

  	
   

  	
   

  
	
  08/20/09

  	
   

  	
  7,094,516.26

  	
   

  	
   

  
	
  09/20/09

  	
   

  	
  7,022,401.05

  	
   

  	
   

  
	
  10/20/09

  	
   

  	
  6,950,285.83

  	
   

  	
   

  
	
  11/20/09

  	
   

  	
  6,878,170.62

  	
   

  	
   

  
	
  12/20/09

  	
   

  	
  6,806,055.41

  	
   

  	
   

  
	
  01/20/10

  	
   

  	
  6,733,940.20

  	
   

  	
   

  
	
  02/20/10

  	
   

  	
  6,661,824.99

  	
   

  	
   

  
	
  03/20/10

  	
   

  	
  6,589,709.78

  	
   

  	
   

  
	
  04/20/10

  	
   

  	
  6,517,594.57

  	
   

  	
   

  
	
  05/20/10

  	
   

  	
  6,445,479.36

  	
   

  	
   

  
	
  06/20/10

  	
   

  	
  6,373,364.15

  	
   

  	
   

  
	
  07/20/10

  	
   

  	
  6,301,248.94

  	
   

  	
   

  
	
  08/20/10

  	
   

  	
  6,229,133.73

  	
   

  	
   

  
	
  09/20/10

  	
   

  	
  6,157,018.52

  	
   

  	
   

  
	
  10/20/10

  	
   

  	
  6,084,903.31

  	
   

  	
   

  
	
  11/20/10

  	
   

  	
  6,012,788.10

  	
   

  	
   

  
	
  12/20/10

  	
   

  	
  5,940,672.89

  	
   

  	
   

  
	
  01/20/11

  	
   

  	
  5,868,557.68

  	
   

  	
   

  
	
  02/20/11

  	
   

  	
  5,796,442.47

  	
   

  	
   

  
	
  03/20/11

  	
   

  	
  5,724,327.26

  	
   

  	
   

  
	
  04/20/11

  	
   

  	
  5,652,212.05

  	
   

  	
   

  
	
  05/20/11

  	
   

  	
  5,580,096.84

  	
   

  	
   

  
	
  06/20/11

  	
   

  	
  5,507,981.63

  	
   

  	
   

  
	
  07/20/11

  	
   

  	
  5,435,866.42

  	
   

  	
   

  
	
  08/20/11

  	
   

  	
  5,363,751.21

  	
   

  	
   

  
	
  09/20/11

  	
   

  	
  5,291,636.00

  	
   

  	
   

  

 

2

 

	
  10/20/11

  	
   

  	
  5,219,520.79

  	
   

  	
   

  
	
  11/20/11

  	
   

  	
  5,147,405.58

  	
   

  	
   

  
	
  12/20/11

  	
   

  	
  5,075,290.36

  	
   

  	
   

  
	
  01/20/12

  	
   

  	
  5,003,175.15

  	
   

  	
   

  
	
  02/20/12

  	
   

  	
  4,931,059.94

  	
   

  	
   

  
	
  03/20/12

  	
   

  	
  4,858,944.73

  	
   

  	
   

  
	
  04/20/12

  	
   

  	
  4,786,829.52

  	
   

  	
   

  
	
  05/20/12

  	
   

  	
  4,714,714.31

  	
   

  	
   

  
	
  06/20/12

  	
   

  	
  4,642,599.10

  	
   

  	
   

  
	
  07/20/12

  	
   

  	
  4,570,483.89

  	
   

  	
   

  
	
  08/20/12

  	
   

  	
  4,498,368.68

  	
   

  	
   

  
	
  09/20/12

  	
   

  	
  4,426,253.47

  	
   

  	
   

  
	
  10/20/12

  	
   

  	
  4,354,138.26

  	
   

  	
   

  
	
  11/20/12

  	
   

  	
  4,282,023.05

  	
   

  	
   

  
	
  12/20/12

  	
   

  	
  4,209,907.84

  	
   

  	
   

  
	
  01/20/13

  	
   

  	
  4,209,907.84

  	
   

  	
   

  
	
  02/20/13

  	
   

  	
  4,209,907.84

  	
   

  	
   

  

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}]]