Document:

exv10w1

 

EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

BY AND AMONG

OIL & GAS RENTAL SERVICES, INC.,

AS SELLER,

AND

ALLIS-CHALMERS ENERGY INC.,

AS BUYER

October 25, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE 1. PURCHASE AND SALE OF ASSETS	 	 	1	 
	Section 1.1
	 	Purchase and Sale	 	 	1	 
	Section 1.2
	 	Excluded Assets	 	 	2	 
	Section 1.3
	 	Purchase Price	 	 	3	 
	Section 1.4
	 	Deposit	 	 	3	 
	Section 1.5
	 	Allocation of Purchase Price and Working Capital Adjustment	 	 	5	 
	Section 1.6
	 	Working Capital Adjustment	 	 	5	 
	Section 1.7
	 	Assumed Liabilities	 	 	6	 
	Section 1.8
	 	Sales and Transfer Taxes	 	 	6	 
	Section 1.9
	 	Closing	 	 	7	 
	Section 1.10
	 	Transactions and Documents at Closing	 	 	7	 
	ARTICLE 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER	 	 	9	 
	Section 2.1
	 	Organization and Good Standing of Seller	 	 	9	 
	Section 2.2
	 	Enforceability	 	 	9	 
	Section 2.3
	 	Due Authorization; Valid Execution; No Inconsistent Obligations	 	 	9	 
	Section 2.4
	 	Consents	 	 	10	 
	Section 2.5
	 	Title to Assets; Sufficiency	 	 	10	 
	Section 2.6
	 	Employees	 	 	10	 
	Section 2.7
	 	Franchises, Licenses, Personal Property, Assigned Contracts	 	 	10	 
	Section 2.8
	 	Real Property	 	 	11	 
	Section 2.9
	 	Litigation	 	 	11	 
	Section 2.10
	 	Financial Statements	 	 	11	 
	Section 2.11
	 	Taxes	 	 	12	 
	Section 2.12
	 	Employee Benefit Matters	 	 	12	 
	Section 2.13
	 	Compliance with Laws	 	 	13	 
	Section 2.14
	 	Environmental Matters	 	 	13	 
	Section 2.15
	 	Insurance	 	 	14	 
	Section 2.16
	 	Authority to Conduct Business and Intellectual Property Rights	 	 	14	 
	Section 2.17
	 	No Brokers	 	 	14	 
	Section 2.18
	 	Securities Laws	 	 	14	 
	Section 2.19
	 	Full Disclosure	 	 	15	 
	Section 2.20
	 	No Other Representations or Warranties	 	 	15	 
	ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	15	 
	Section 3.1
	 	Organization	 	 	15	 
	Section 3.2
	 	Enforceability	 	 	15	 
	Section 3.3
	 	Due Authorization; Valid Execution; No Inconsistent Obligations	 	 	15	 
	Section 3.4
	 	Capitalization	 	 	16	 
	Section 3.5
	 	Consents	 	 	16	 
	Section 3.6
	 	Legal Proceedings	 	 	16	 
	Section 3.7
	 	Public Disclosure Documents	 	 	16	 
	Section 3.8
	 	Litigation and Liabilities	 	 	17	 
	Section 3.9
	 	Absence of Certain Changes	 	 	17	 
	Section 3.10
	 	Taxes	 	 	17	 
	Section 3.11
	 	Title to Properties	 	 	18	 
	Section 3.12
	 	Insurance	 	 	18	 
	Section 3.13
	 	Environmental Laws	 	 	18	 
	Section 3.14
	 	No Brokers	 	 	18	 
	ARTICLE 4. CONDUCT OF BUSINESS PENDING CLOSING	 	 	18	 
	Section 4.1
	 	Business in the Ordinary Course	 	 	18	 
	Section 4.2
	 	Compensation	 	 	19	 

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	ARTICLE 5. CONDITIONS TO OBLIGATIONS OF BUYER	 	 	19	 
	Section 5.1
	 	Representations and Warranties	 	 	19	 
	Section 5.2
	 	Compliance with Agreements and Conditions	 	 	19	 
	Section 5.3
	 	Closing Deliveries	 	 	19	 
	Section 5.4
	 	Resolutions	 	 	19	 
	Section 5.5
	 	Opinion of Counsel	 	 	19	 
	Section 5.6
	 	Government Consents	 	 	19	 
	Section 5.7
	 	Title Insurance	 	 	19	 
	Section 5.8
	 	Permits	 	 	21	 
	Section 5.9
	 	Required Consents	 	 	21	 
	Section 5.10
	 	Release of Certain Liens	 	 	21	 
	Section 5.11
	 	No Inconsistent Requirements	 	 	21	 
	Section 5.12
	 	Appraisal and Other Due Diligence	 	 	21	 
	Section 5.13
	 	Minimum 2006 Adjusted EBITDA	 	 	22	 
	Section 5.14
	 	No Material Adverse Effect	 	 	22	 
	Section 5.15
	 	Delivery of Disclosure Items	 	 	22	 
	ARTICLE 6. CONDITIONS TO OBLIGATIONS OF SELLER	 	 	22	 
	Section 6.1
	 	Representations and Warranties	 	 	22	 
	Section 6.2
	 	Compliance with Agreements and Conditions	 	 	23	 
	Section 6.3
	 	Closing Deliveries	 	 	23	 
	Section 6.4
	 	Resolutions	 	 	23	 
	Section 6.5
	 	No Inconsistent Requirements	 	 	23	 
	Section 6.6
	 	Board Representation	 	 	23	 
	Section 6.7
	 	Shareholder Approval	 	 	23	 
	Section 6.8
	 	No Material Adverse Effect	 	 	23	 
	Section 6.9
	 	Delivery of Disclosure Items	 	 	23	 
	Section 6.10
	 	Opinion of Counsel	 	 	23	 
	ARTICLE 7. INDEMNITIES	 	 	23	 
	Section 7.1
	 	Indemnification of Buyer	 	 	23	 
	Section 7.2
	 	Indemnification of Seller	 	 	24	 
	Section 7.3
	 	Defense of Claims	 	 	24	 
	Section 7.4
	 	Limits on Indemnification	 	 	25	 
	Section 7.5
	 	Exclusive Remedies	 	 	26	 
	Section 7.6
	 	Allocation	 	 	26	 
	ARTICLE 8. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS	 	 	26	 
	Section 8.1
	 	Survival	 	 	26	 
	ARTICLE 9. ADDITIONAL AGREEMENTS	 	 	26	 
	Section 9.1
	 	Cooperation	 	 	26	 
	Section 9.2
	 	Access	 	 	27	 
	Section 9.3
	 	Non-Compete	 	 	27	 
	Section 9.4
	 	Transferred Employees; Severance	 	 	28	 
	Section 9.5
	 	Employee Benefits and Welfare Plans	 	 	28	 
	Section 9.6
	 	Consents; Assignments; Additional Post-Closing Covenants	 	 	29	 
	Section 9.7
	 	Expenses	 	 	29	 
	Section 9.8
	 	Exclusivity	 	 	29	 
	Section 9.9
	 	Public Disclosure	 	 	29	 
	Section 9.10
	 	Lock-Ups	 	 	30	 
	Section 9.11
	 	Delivery of Disclosure Items	 	 	30	 
	Section 9.12
	 	Environmental Matters	 	 	30	 
	Section 9.13
	 	Post-Closing Title Insurance Matters	 	 	31	 
	Section 9.14
	 	Post-Closing Auditor Matters	 	 	31	 
	Section 9.15
	 	Post-Closing Accounting Matters	 	 	31	 
	Section 9.16
	 	Tax Cooperation	 	 	31	 

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	ARTICLE 10. TERMINATION	 	 	31	 
	Section 10.1
	 	Termination	 	 	31	 
	Section 10.2
	 	Obligations upon Termination	 	 	32	 
	ARTICLE 11. MISCELLANEOUS	 	 	32	 
	Section 11.1
	 	Notices	 	 	32	 
	Section 11.2
	 	Counterparts	 	 	33	 
	Section 11.3
	 	Entire Agreement	 	 	33	 
	Section 11.4
	 	Assignment; Binding Effect	 	 	34	 
	Section 11.5
	 	Governing Law	 	 	34	 
	Section 11.6
	 	Partial Invalidity and Severability	 	 	34	 
	Section 11.7
	 	Amendment; Waiver	 	 	34	 
	Section 11.8
	 	No Third-Party Beneficiaries	 	 	34	 
	Section 11.9
	 	Headings; Construction	 	 	34	 
	Section 11.10
	 	Time of Performance	 	 	34	 
	Section 11.11
	 	Exhibits, Schedules, Etc.	 	 	34	 
	Section 11.12
	 	Arbitration	 	 	35	 
	Section 11.13
	 	Knowledge	 	 	35	 
	Section 11.14
	 	Disclosure Schedules	 	 	35	 

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ASSET PURCHASE AGREEMENT

          THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into effective as of
the 25th day of October, 2006, by and between OIL & GAS RENTAL SERVICES, INC., a Louisiana
corporation (“Seller”), and ALLIS-CHALMERS ENERGY INC., a Delaware corporation
(“Buyer”).

W I T N E S S E T H:

          WHEREAS, Seller is engaged in the business of providing specialized rental tool equipment to
oil and gas companies (collectively, the “Business”); and

          WHEREAS, subject to the terms and conditions herein contained, Seller desires to sell and
transfer to Buyer, and Buyer desires to acquire from Seller, substantially all of the assets of
Seller, other than the Excluded Assets (as defined in Section 1.2 below), which are used or usable
in the conduct and operation of the Business, and Seller desires to transfer to Buyer, and Buyer
desires to assume and timely discharge, the Assumed Liabilities (as defined herein);

          NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements herein contained, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE
1. PURCHASE AND SALE OF ASSETS.

     Section 1.1 Purchase and Sale. Subject to the terms and conditions contained herein, Seller agrees to sell, transfer,
convey and assign to Buyer, and Buyer agrees to purchase and acquire from Seller, on the Closing
Date (as defined in Section 1.9 below), all of the assets and properties of Seller used or usable
in the conduct and operation of the Business as of the Closing Date, except for the Excluded Assets
(as such term is defined below), including without limitation the following (collectively, the
“Transferred Assets”):

     (a) Equipment and Inventory. The equipment, tools, machinery, vehicles, trailers,
implements, parts, supplies and other personal property (“Equipment”) and the raw
materials, work-in-progress, finished goods, stores and supplies (“Inventory”), in each
case, used or usable in the conduct and operation of the Business, including without limitation as
described in Schedule 1.1(a);

     (b) Permits. Except as expressly included in the Excluded Assets, all permits,
authorizations, certificates, approvals, registrations, variances, exemptions, rights-of-way,
licenses and other rights of every kind and character (“Permits”) (i) under any (A)
federal, state, local or foreign statute, ordinance or regulation, (B) order, writ, injunction,
decree, judgment, award or determination of any federal, state, municipal or other governmental or
quasi-governmental authority of any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, unit, body or Person and any court or other tribunal),
domestic or foreign (all of the foregoing in these subparts (A) and (B), a “Governmental
Authority”) or (C) contract with any Governmental Authority or (ii) granted by any Governmental
Authority relating to all or any of the Transferred Assets, including without limitation those
Permits listed in Schedule 1.1(b);

     (c) Intangible Assets. All right, title and interest of Seller in, to and under all
patents, proprietary technology, know-how, data, copyrights, licenses, trademarks, service marks,
trade names, trade secrets, technical information, designs, processes, internet domain names,
rights, privileges and other intangible property of any nature whatsoever (and any and all
improvements thereof and registrations and applications therefor) used in the operation of the
Transferred Assets and the right to recover for infringement thereon, and
all goodwill associated with the Transferred Assets, including without limitation as described
in Schedule 1.1(c);

     (d) Books and Records. Copies of all of Seller’s books, records, papers and
instruments that relate to the Transferred Assets, including without limitation copies of
specifications, machinery diagrams,

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accounting and financial records (including work papers) for
the most recent five (5) year period, personnel and labor records, environmental records and
reports, sales and property tax records and returns for the most recent five (5) year period, sales
records for the most recent five (5) year period, customer data and lists and supplier data and
lists;

     (e) Prepaid Expenses. All prepaid rentals, other prepaid expenses, bonds, deposits
and financial assurance requirements, excluding prepaid insurance premiums (collectively,
“Prepaids”);

     (f) Assigned Contracts. Seller’s rights and claims in, to and under the contracts,
personal property leases, licenses and agreements which relate to the Business that are identified
in Schedule 1.1(f) (collectively, the “Assigned Contracts”);

     (g) Goodwill. The goodwill and going concern value of the Business;

     (h) Claims, Insurance Proceeds, Etc. All claims, choses-in-action, rights in action,
rights to tender claims or demands, rights to insurance proceeds and insurance claims of Seller
relating to all or any part of the Transferred Assets and, to the extent transferable, the benefit
of and the right to enforce the covenants and warranties, if any, that Seller is entitled to
enforce with respect to the Transferred Assets in all instances for claims arising after the
Closing Date;

     (i) Telephone Numbers; URLs. All telephone and fax numbers and Internet URLs used by
Seller in the Business;

     (j) Hardware and Software. All right, title and interest of Seller in computer
equipment, hardware, and software used in the Business, including without limitation all central
processing units, terminals, disk drives, hard drives, drivers, routers, printers, keyboards,
screens, peripherals (and other input/output devices), modems and other communication controllers,
and any and all parts and appurtenances thereto, together with all intellectual property used by
Seller in the operation of such computer equipment and hardware, including without limitation all
owned and proprietary software, all of Seller’s rights under any licenses related to Seller’s use,
at any time, of such computer equipment, hardware or software, and all leases pursuant to which
Seller leases any computer equipment, hardware or software, insofar and only insofar as any of the
foregoing relates to the Business;

     (k) Real Property. Subject to Section 9.12, Seller’s real property and the
structures, improvements, buildings and fixtures located thereon, and all of Seller’s interests in
real property, including all leaseholds, easements, rights of way, licenses and other interests in
real property, including without limitation as described on Schedule 1.1(k) (collectively,
the “Real Property”);

     (l) Receivables. Subject to Section 1.6, Seller’s Working Capital mentioned in
Section 1.6 and without duplication, all notes and accounts receivable arising from the conduct of
the Business in existence at the close of business on the Closing Date, including without
limitation as described on Schedule 1.1(l) (collectively, the “Receivables”);

     (m) Interests in Oil and Gas Properties and Investments. All of Seller’s direct and
indirect interests or investments in oil and gas producing properties, whether in the form of
working interests, contract rights, mineral rights, joint venture agreements, equity ownership in
other entities (including without limitation partnership interests, stock ownership in other
corporations and membership interests in limited liability companies), or otherwise, as more fully
described on Schedule 1.1(m); and

     (n) Other Property. All other or additional privileges, rights, interests, properties
and assets of Seller of every kind and description and wherever located that are used or intended
for use in connection with, or that are necessary to the continued conduct of, the Business as
presently being conducted.

     Section 1.2 Excluded Assets. The Transferred Assets shall not include, and Seller
shall retain all right, title and
interest in and to, (a) any of the rights of Seller under this Agreement or the other Transaction

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Documents (as defined below), (b) the original corporate minute books, stock records and accounting
records and work papers of Seller, (c) originals of all of Seller’s books, records, papers and
instruments that do not relate to the Transferred Assets, (d) the originals of all books and
records provided to Buyer pursuant to Section 1.1(d), (e) subject to Section 1.6, all cash, cash
equivalents, short term investments and marketable securities of Seller, (f) all Real Property that
may be excluded from the Transferred Assets in accordance with Section 9.12, (g) all Working
Capital (as defined below) in excess of $11,300,000, (h) all Receivables that do not constitute
Working Capital (as defined below) and (i) all claims, choses-in-action, rights in action, rights
to tender claims or demands, rights to insurance proceeds and insurance claims of Seller relating
to all or any part of the Transferred Assets and the benefit of and the right to enforce the
covenants and warranties, if any, that Seller is entitled to enforce with respect to the
Transferred Assets in all instances for claims arising prior to the Closing Date (collectively, the
“Excluded Assets”).

     Section 1.3 Purchase Price. The purchase price payable by Buyer to Seller for the Transferred Assets shall consist of:

     (a) $291,000,000 in cash payable at the Closing in immediately available funds to such account
or accounts previously designated by Seller (the “Closing Cash Consideration”); provided,
however, that the Closing Cash Consideration shall be subject to adjustment as provided in Section
1.4; and

     (b) 3,200,000 shares of common stock, par value $0.01 per share, of Buyer (“Common
Stock”) (such shares of Common Stock being referred to herein as the “Stock
Consideration” and, together with the Closing Cash Consideration, the “Purchase
Price”).

     Section 1.4 Deposit.

     (a) Upon the execution and delivery of this Agreement by each of the parties hereto, Buyer
shall pay to Seller $9,000,000 in cash, to be deposited by Seller into an interest bearing bank
account (the “Transaction Account”) maintained by Seller with a commercial bank in the
United States of America selected by Seller. Such amount, together with any earnings thereon while
in such account shall be maintained in cash or cash equivalents and shall be referred to herein as
the “Deposit.” The Deposit shall be maintained in the Transaction Account at all times
prior to disbursement from such account to Buyer or retention of the Deposit by Seller in
accordance with the provisions of this Agreement.

     (b) If the Closing occurs on or prior to December 31, 2006, then the Deposit shall be retained
by Seller free of any restriction, and the Closing Cash Consideration shall be reduced by the
amount of the Deposit.

     (c) If the Closing does not occur on or prior to December 31, 2006, and as of such date, all
of the Deposit Forfeiture Conditions (as defined below) shall have been satisfied, then the Deposit
shall be retained by Seller, as liquidated damages, and in such event, Seller, without any further
act or consent by Buyer, shall be free to disburse the Deposit from the Transaction Account to one
of Seller’s other accounts, this Agreement shall terminate (except that Section 1.4 and Section 9.7
and ARTICLE 11 shall survive such termination), and neither party shall have any further liability
to the other party in connection with this Agreement or the transactions contemplated by this
Agreement. The parties hereto acknowledge that the
potential damages that would be incurred by Seller upon a failure by Buyer to consummate
Buyer’s acquisition of the Transferred Assets by such date as contemplated by this Agreement,
despite the satisfaction of the Deposit Forfeiture Conditions, are impossible to calculate, predict
or estimate with any meaningful degree of accuracy, and further acknowledge and agree that such
payment of the Deposit to Seller as liquidated damages is not intended, and shall not be construed,
as a penalty and that such liquidated damages have been freely negotiated. As used herein,
“Deposit Forfeiture Conditions” means, collectively, the following:

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     (i) Seller shall have produced Adjusted EBITDA for the fiscal year ended October 31,
2006 of not less than $46,000,000. For purposes of this Agreement, “Adjusted
EBITDA” shall be calculated as required pursuant to Section 5.13.

     (ii) Buyer shall have determined to its reasonable satisfaction based on information
from the original manufacturers or a process mutually acceptable to Seller and Buyer that
the sum of (i) the replacement cost (brand new) for those Transferred Assets constituting
Seller’s rental equipment inventory and repair parts and supplies inventory and (ii) the
fair market value based on current appraisals of the other Transferred Assets, is at least
$200,000,000.

     (iii) The Federal Trade Commission and the Department of Justice shall have approved
the transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “HSR Act”), or any applicable waiting periods thereunder shall have expired or
been terminated, in any case, without any requirement for any party to effect any
divestiture.

     (iv) After the date of this Agreement, there shall not have occurred a Fundamental
Adverse Change. For the purposes of this Agreement, “Fundamental Adverse Change”
means the occurrence of (i) the cancellation of customer orders which orders are for amounts
that in the aggregate would exceed 20% of Seller’s total revenue for the fiscal year ended
October 31, 2006 or (ii) loss or damage (without the reasonable possibility of replacement
or repair to brand new standards within 45 days of the occurrence of the loss or damage) of
one or more items of Equipment that in the aggregate constitute at least 20% of the
replacement cost (brand new) of all the Equipment.

     (v) The shareholders of Seller shall have approved the execution and delivery of this
Agreement and all other Transaction Documents to which Seller is a party and the
consummation of the transactions contemplated hereby and thereby.

     (vi) Seller shall not have terminated this Agreement pursuant to Section 10.1(a)(v).

     (vii) Buyer shall have received the title insurance commitments and other items
mentioned in Section 5.7 hereof, in each case, relating to any of the Real Property
constituting part of the Transferred Assets.

     (viii) The representations and warranties of Seller contained in Section 2.1, Section
2.2, Section 2.3, Section 2.5, Section 2.8(a) and Section 2.10 of this Agreement shall be
true and correct in all material respects as though made on December 31, 2006.

     (ix) There shall have been no fraud committed by or on behalf of Seller in connection
with the transactions contemplated by this Agreement.

     (d) If the Closing does not occur on or prior to December 31, 2006, and as of such date, any
of the Deposit Forfeiture Conditions has not been fulfilled and satisfied, then Seller shall
immediately return the Deposit to Buyer, this Agreement shall terminate (except that Section 1.4
and Section 9.7 and ARTICLE 11 shall survive), neither party shall have any further liability to
the other party in connection with this Agreement and the transactions contemplated by this
Agreement; provided, however, that if either of the Deposit Forfeiture Conditions set forth in
Section 1.4(c)(ii), Section 1.4(c)(iii) or Section 1.4(c)(vii) has not been fulfilled or satisfied
primarily as a result of action or inaction of Buyer, then the Deposit shall be
retained by Seller in the Transaction Account until January 31, 2007 on which date (x) the
Deposit shall be retained by Seller if all Deposit Forfeiture Conditions have been fulfilled or
satisfied and the Closing has not occurred by January 31, 2007, (y) the Deposit shall be retained
by Seller at the Closing and credited against the Closing Cash Consideration if all Deposit
Forfeiture Conditions have been fulfilled or satisfied and the Closing occurs on or prior to
January 31, 2007 or (z) the Deposit shall be retained by Seller if the Deposit Forfeiture
Conditions have not been fulfilled or satisfied. Upon the occurrence of the events specified in
clauses (x) or (z) of the immediately preceding sentence, this Agreement shall terminate (except
that Section

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1.4 and Section 9.7 and ARTICLE 11 shall survive) and neither party shall have any
further liability to the other party in connection with this Agreement and the transactions
contemplated by this Agreement. Furthermore, if the Closing does not occur on or prior to December
31, 2006, and as of such date, the Deposit Forfeiture Condition set forth in Section 1.4(c)(vi) has
not been fulfilled and satisfied, then in addition to the return of the Deposit to Buyer in
accordance with the first sentence of this Section 1.4(d), Seller shall immediately pay to Buyer an
additional $1,000,000 in cash.

     Section 1.5 Allocation of Purchase Price and Working Capital Adjustment. As soon as practicable after the Adjustment Date (as defined in Section 1.6 below), the
parties shall mutually agree to the allocation of the Purchase Price and the Working Capital
Adjustment, if any, among the Transferred Assets on an asset-per-asset basis, in accordance with
the rules of Section 1060 of the Internal Revenue Code of 1986, as amended (the “Code”),
and the Treasury Regulations promulgated thereunder, and shall jointly prepare an IRS Form 8883
evidencing such allocation of the Purchase Price and the Working Capital Adjustment, if any. The
parties shall use the amounts allocated pursuant to the preceding sentence for purposes of filing
all tax returns, and shall not take any position inconsistent therewith on any tax return or for
any other Tax (as defined in Section 2.11 below) purpose.

     Section 1.6 Working Capital Adjustment. In accordance with the provisions of this Section 1.6, and at the time therein set forth,
Buyer shall pay to Seller or, as the case may be, Seller shall pay to Buyer, in immediately
available funds, the amount of the Working Capital Adjustment (as defined below).

     (a) For the purposes of this Agreement, the term “Working Capital” shall mean, as of a
particular date, the working capital of the Business, which working capital shall be computed in
accordance with the methods, formulae, prorations and reserves set forth in Annex A
attached hereto, and shall equal: (i) the aggregate amount of the current assets relating to the
Business, which is comprised of (A) the Receivables (other than any Receivables that are more than
120 days old, unless and to the extent otherwise agreed by the parties hereto), net of reserves,
(B) the amount of the Prepaids and (C) cash, cash equivalents, short-term investments and
marketable securities; minus (ii) the aggregate amount of the current portion of the Assumed
Liabilities. The amounts of all items to be used in the calculation of Working Capital will be
based upon United States generally accepted accounting principles (“GAAP”), consistently
applied. Notwithstanding anything to the contrary in this Agreement, the Deposit shall not
constitute an asset or a liability for purposes of the calculation of Working Capital.

     (b) The Working Capital on the Closing Date shall be $11,300,000 (the “Target Working
Capital”) and shall be included in the Transferred Assets.

     (c) Within forty-five (45) days after the Closing Date, Buyer shall deliver to Seller a
statement of the Working Capital of the Business as of the Effective Time on the Closing Date (the
“Statement of the Closing Date Working Capital” or “Statement”), which Statement
shall (i) have been prepared by Buyer, after consultation with Seller, and reviewed by Buyer’s
auditors, UHY LLP (or such other firm of independent certified public accountants appointed by
Buyer for this purpose), in accordance with GAAP consistently applied, the provisions of Annex
A and the provisions hereof, and (ii) set forth the Working Capital of the Business as of the
Effective Time on the Closing Date (the “Closing Date Working Capital”). Following
delivery by Buyer to Seller of the Statement of the Closing Date Working Capital, Buyer and its
auditors shall
permit Seller and its auditors at the earliest practicable date access to and copies of the
work papers and calculations related thereto, and consult with Seller and its auditors as to any
questions they may have.

     (d) Any dispute which may arise between Buyer and Seller as to the Closing Date Working
Capital shall be resolved in the following manner:

     (i) If Seller disputes the calculation of the Closing Date Working Capital, or any
portion thereof, Seller shall notify Buyer in writing within fifteen (15) days after its
receipt of the Statement, and shall specify therein in reasonable detail the basis and
reason for such dispute and the amount which is in dispute;

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     (ii) During the fifteen (15) day period following the date of such notice from Seller,
Buyer and Seller shall attempt to resolve such dispute; and

     (iii) If at the end of the fifteen (15) day period specified in clause (ii) above, the
parties shall have failed to reach agreement with respect to such dispute, the matter shall
be referred to the Houston, Texas office of such firm of independent certified public
accountants as the parties mutually agree, who shall act as an arbitrator. The arbitrator
shall be instructed to use every reasonable effort to perform such services within thirty
(30) days of the submission to it of the Statement of the Closing Date Working Capital and
the related dispute and, in any case, as soon as practicable after such submission. Each of
the parties shall bear all costs and expenses incurred by it in connection with such
arbitration, and the fees of the arbitrator shall be paid entirely by the party whose
assertions regarding the Closing Date Working Capital differ by the greatest amount from the
final Closing Date Working Capital determined by the arbitrator. This provision for
arbitration shall be specifically enforceable by the parties and the decision of the
arbitrator in accordance with the provisions hereof shall be final and binding and there
shall be no right of appeal therefrom.

     (e) The latest to occur of (i) the date on which Seller accepts, or forfeits its right to
contest, the Closing Date Working Capital disclosed in the Statement or (ii) the date on which the
Closing Date Working Capital is determined in accordance with the provisions of Section 1.6(d) is
referred to herein as the “Adjustment Date”.

     (f) Within ten (10) days after the Adjustment Date:

     (i) Buyer shall pay to Seller, in immediately available funds, an amount equal to the
difference (if any, and if a positive result) between (A) the Closing Date Working Capital,
minus (B) the Target Working Capital; or, alternatively

     (ii) Seller shall pay to Buyer, in immediately available funds, an amount equal to the
difference (if any, and if a positive result) between (A) the Target Working Capital minus
(B) the Closing Date Working Capital.

The amount, if any, payable as a result of the calculation in clauses (i) or (ii) above is referred
to herein as the “Working Capital Adjustment.”

     Section 1.7 Assumed Liabilities. At the Closing, Seller shall transfer to Buyer, and Buyer shall assume, the Assumed
Liabilities. For purposes of this Agreement, “Assumed Liabilities” shall mean only the
following liabilities of Seller: (a) the accounts payable and accrued expenses arising from the
conduct of the Business (“Payables”) in existence at the close of business on the Closing
Date, (b) all obligations and liabilities with respect to the Transferred Employees attributable to
the conduct of the Business from and after the Closing Date and (c) all obligations and liabilities
of Seller with respect to the Transferred Assets, but only to the extent that such obligations (i)
arise after the Closing Date, (ii) do not arise from or relate to any breach by Seller of any
provision of such Assigned Contracts and (iii) do not arise from or relate to any event,
circumstance or condition occurring or
existing on or prior to the Closing Date, that, with notice or lapse of time or both, would
constitute or result in a breach of such Assigned Contracts. OTHER THAN AS SET FORTH IN THE
IMMEDIATELY PRECEDING SENTENCE, BUYER SHALL NOT ASSUME ANY OBLIGATION OR LIABILITY OF SELLER OR THE
BUSINESS OF ANY KIND, AND SELLER SHALL PAY, SATISFY AND PERFORM ALL OF ITS REMAINING OBLIGATIONS,
WHETHER FIXED, CONTINGENT, KNOWN OR UNKNOWN AND WHETHER EXISTING AS OF THE CLOSING OR ARISING PRIOR
TO THE CLOSING, WHICH MAY AFFECT IN ANY WAY THE TRANSFERRED ASSETS.

     Section 1.8 Sales and Transfer Taxes. Except for vehicle transfer taxes, if any (which shall be the sole responsibility of
Buyer), Seller shall be responsible for the payment of all stamp, documentary, registration, sales,
use, excise, transfer, value added and similar Taxes (including any penalties and interest)

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imposed by any Governmental Authority in any jurisdiction in connection with the sale of the Transferred
Assets contemplated herein (collectively, the “Transfer Taxes”). Seller shall provide
Buyer with an exemption certificate and any additional documents reasonably requested by Buyer to
ensure that the transactions contemplated by this Agreement shall not be subject to any Transfer
Taxes. The parties contemplate that the transfer of the Transferred Assets pursuant to this
Agreement qualifies as an occasional sale and is generally exempt from sales tax under Texas Tax
Code Sections 151.304(a) and 151.304(b)(2) and 34 Texas Administrative Code Section 3.316(d) and
Louisiana Revised Statutes Section 47:301(1)(c).

     Section 1.9 Closing. The consummation of the transactions contemplated in this Agreement (the “Closing”)
shall take place at the offices of Andrews Kurth LLP, legal counsel to Buyer, located at 600
Travis, Suite 4200, Houston, Texas 77002, on the earliest practicable date after all conditions to
the Closing (as set forth in ARTICLE 5 and ARTICLE 6 hereof) shall have been satisfied or waived
(the “Closing Date”), and shall be effective as of 12:01 a.m. Central Time on the Closing
Date (the “Effective Time”). Subject to the immediately preceding sentence, the parties
hereto will use their commercially reasonable efforts to consummate such transactions by the later
of (a) November 30, 2006 and (b) seven (7) days after the date of receipt by Buyer of Seller’s
audited balance sheet as of, and audited statements of income, shareholders’ equity and cash flows
for, the fiscal year ended, October 31, 2006 (collectively, the “Fiscal 2006 Financial
Statements”); provided, however, that (subject to Section 1.4(d))the Closing Date shall occur,
if at all, on or prior to December 31, 2006.

     Section 1.10 Transactions and Documents at Closing.

     (a) Seller’s Deliveries. At the Effective Time, Seller shall convey to Buyer the
Transferred Assets, free and clear of any lien, pledge, hypothecation, mortgage, security interest,
trust, preference, option, claim, charge, encumbrance or restriction of any nature (collectively,
“Liens”), and in furtherance thereof Seller shall deliver, or cause to be delivered, to
Buyer the following documents on the Closing Date:

     (i) a Bill of Sale and Assumption Agreement in substantially the form attached hereto
as Exhibit A (the “Bill of Sale and Assumption Agreement”), duly executed by
Seller assigning the Transferred Assets to Buyer;

     (ii) a Special Warranty Deed for Texas and an Act of Sale With Limited Warranty for
Louisiana with respect to the Real Property, in each case, in such customary form as shall
be agreed by the parties hereto (each a “Real Estate Transfer Document” and
collectively, the “Real Estate Transfer Documents”), duly executed by Seller;

     (iii) any such other bills of sale, assignments, certificates of title, documents and
other instruments of transfer and conveyance as Buyer shall reasonably request;

     (iv) estoppel certificates (collectively, the “Estoppel Certificates”), in such
customary form as shall be agreed by the parties hereto, executed by all parties other than
Seller to the material Assigned Contracts and any leases, in each case as reasonably
required by Buyer;

     (v) any required real property affidavit or statement with respect to the Real Property
located in the State of Louisiana;

     (vi) a zoning certificate issued by the government authority that has zoning
jurisdiction over the Real Property or a zoning opinion letter of counsel, in either case,
in a form reasonably acceptable to Buyer;

     (vii) Non-Compete Agreements in substantially the form attached hereto as Exhibit
B (each a “Non-Compete Agreement” and collectively, the “Non-Compete
Agreements”), duly executed by each of the persons named on Annex B;

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     (viii) Employment Agreements in substantially the forms attached hereto as Exhibits
C-1, C-2, C-3 and C-4 (each an “Employment Agreement”
and collectively, the “Employment Agreements”), duly executed by each of the persons
named on Annex B;

     (ix) an Investor Rights Agreement in substantially the form attached hereto as
Exhibit D (the “Investor Rights Agreement”), duly executed by Seller;

     (x) a Non-Foreign Seller Affidavit (as defined in Section 2.11(c) below), duly executed
on behalf of Seller; and

     (xi) a certificate or certificates executed on behalf of Seller, certifying (A) that
the representations and warranties of Seller contained in this Agreement are true and
correct in all material respects, in each case on the date of this Agreement and on the
Closing Date as though made on the Closing Date, except to the extent such representations
and warranties speak only as of an earlier date, (B) that Seller has performed and complied
with all agreements, covenants and conditions contained in this Agreement to be performed or
complied with by Seller upon or prior to Closing, (C) as to the absence of any Material
Adverse Effect on the Business prior to the Closing and (D) incumbency.

     (b) Buyer’s Deliveries. At the Effective Time, Buyer shall receive from Seller the
Transferred Assets, free and clear of any and all Liens, and Buyer shall assume and agree to timely
discharge the Assumed Liabilities, and in furtherance thereof Buyer shall deliver, or cause to be
delivered, to Seller the following on the Closing Date:

     (i) the Bill of Sale and Assumption Agreement, duly executed by Buyer;

     (ii) each of the Real Estate Transfer Documents, duly executed by Buyer, as applicable;

     (iii) each of the Non-Compete Agreements, duly executed by Buyer or Allis-Chalmers
Rental Tools, Inc., a Texas corporation (“Rental Tools”), as applicable;

     (iv) each of the Employment Agreements, duly executed by Buyer or Rental Tools, as
applicable;

     (v) the Investor Rights Agreement, duly executed by Buyer;

     (vi) the Closing Cash Consideration;

     (vii) stock certificates representing the Stock Consideration, duly executed by Buyer;
and

     (viii) a certificate or certificates executed on behalf of Buyer, certifying (A) that
the representations and warranties of Buyer contained in this Agreement are true and correct
in all material respects, in each case on the date of this Agreement and on the Closing Date
as though made on the Closing Date, except to the extent such representations and warranties
speak only as of an earlier date, (B) that Buyer has performed and complied with all
agreements, covenants and conditions contained in this Agreement to be performed or complied
with by Buyer upon or prior to Closing, (C) as to the absence of any Material Adverse Effect
on Buyer prior to the Closing and (D) incumbency.

     (c) All deliveries, payments and other transactions and documents relating to the Closing
shall be interdependent and none shall be effective unless and until all are effective (except to
the extent that the party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing).

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     (d) Each party shall, at the request of any other party from time to time and at any time,
whether on or after the Closing Date, and without further consideration, execute and deliver such
assignments, transfers, assumptions, conveyances, powers of attorney, receipts, acknowledgments,
acceptances and assurances as may be reasonably necessary to procure for the party so requesting,
and its successors and assigns, or for aiding and assisting in collecting and reducing to
possession, any and all of the Transferred Assets, or otherwise to satisfy and perform the
obligations of the parties hereunder.

     (e) For the purposes of this Agreement, the term “Transaction Documents” means,
collectively, this Agreement and each of the other instruments, agreements and documents
contemplated thereby or deliverable in connection with the consummation of the transactions
contemplated thereby, including without limitation the Bill of Sale and Assumption Agreement, the
Real Estate Transfer Documents, the Estoppel Certificates, the Non-Compete Agreements, the
Employment Agreements and the Investor Rights Agreement.

ARTICLE 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.

     To induce Buyer to enter into this Agreement and to purchase the Transferred Assets from
Seller, Seller hereby represents, warrants and covenants to Buyer as follows:

     Section 2.1 Organization and Good Standing of Seller. Seller is a corporation duly organized, validly existing and in good standing under the
Laws (as defined in Section 2.3 below) of the State of Louisiana and is qualified to transact
business and is in good standing as a foreign entity in the jurisdictions where it is required to
qualify in order to conduct its businesses as presently conducted and in which the failure to so
qualify would have a Material Adverse Effect on Seller. Seller has the corporate power and
authority to own, lease or operate all properties and assets now owned, leased or operated by it
and to carry on its businesses as now conducted. For the purposes of this Agreement, “Material
Adverse Effect” means any adverse change, circumstance or effect that, individually or in the
aggregate with all other changes, circumstances or effects, is or would reasonably likely be
materially adverse to the business, operations, assets, liabilities (including, without limitation,
contingent liabilities) or condition (financial or otherwise), or results of operations of a person
and it subsidiaries, taken as a whole; provided that, Material Adverse Effect shall not include any
event, change in or effect upon financial condition, operating results or business of such person
and its subsidiaries, directly or indirectly arising out of, attributable to or as a consequence
of: (1) changes in law or any Governmental Authority’s policies or regulations or conditions,
events or circumstances, in all such cases, generally affecting the oil and gas industry, relevant
securities markets or the overall economy of the United States of America, (2) disruption resulting
from transactions contemplated by this Agreement, including the public announcement thereof or (3)
Reportable Conditions and recognized environmental conditions identified during a Phase I or Phase
II assessment and any subsequent actions taken in response thereto.

     Section 2.2 Enforceability . Seller has full corporate power and authority to make, execute and perform this Agreement
and the other Transaction Documents to which it is a party, and to carry out the transactions
contemplated hereby and thereby in accordance with their respective terms. There are no
outstanding contracts, demands, commitments or other agreements or arrangements under which Seller
is or may become obligated to sell, transfer or assign any of the Transferred Assets. This
Agreement and the other Transaction Documents to which Seller is a party constitute the valid and
legally binding obligations of Seller enforceable against it in accordance with their respective
terms, subject to general equity principles and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors generally.

     Section 2.3 Due Authorization; Valid Execution; No Inconsistent Obligations. This Agreement and the other Transaction Documents to which Seller is a party and all
transactions required hereunder or thereunder to be performed by Seller have been duly and validly
authorized and approved by all necessary corporate action on the part of Seller (including without
limitation all requisite approvals of Seller’s Board of Directors), other than the requisite
approval of Seller’s shareholders (which will be obtained on or prior to the Closing Date). This
Agreement has been, and the other Transaction Documents to which Seller is a party will

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be (on or prior to the Closing Date), duly and validly executed and delivered on behalf of Seller. Except as
set forth in Schedule 2.3, neither the execution and delivery of this Agreement or the
other Transaction Documents to which Seller is a party nor the consummation of the transactions
contemplated herein or therein will result in a violation or breach of, or constitute a default
under any term or provision of (a) the Certificate of Incorporation, Bylaws or other organizational
documents of Seller or (b) (i) any indenture, note, mortgage, bond, security agreement, loan
agreement, guaranty, pledge, or other instrument, contract, agreement or commitment, (ii) any law,
statute, rule, regulation, Permit, ordinance, order, judgment, award, writ, injunction, consent
judgment, consent order or decree or other pronouncement having the effect of law of any
Governmental Authority (“Law”), (iii) any applicable ruling or order of any Governmental
Authority, or (iv) any other commitment or restriction, in each case, to which Seller is a party or
by which any of the Transferred Assets is subject or bound, nor will such actions result in the
creation of any Lien on any of the Transferred Assets.

     Section 2.4 Consents. Except as set forth in Schedule 2.4, the execution and delivery of the Transaction
Documents by Seller and the consummation of the transactions contemplated by the Transaction
Documents do not require the consent, approval or action of, or any filing with or notice to, (a)
any Governmental Authority, or (b) any individual, partnership, corporation, limited liability
company, incorporated or unincorporated association, joint stock company, trust, joint venture,
unincorporated organization, or Governmental Authority (collectively, “Person”) pursuant to
or under any indenture, note, mortgage, bond, security agreement, loan agreement, guaranty, pledge
or other instrument, lease, contract, agreement or commitment to which Seller is a party or by
which any of the Transferred Assets are subject or bound.

     Section 2.5 Title to Assets; Sufficiency. Seller has, and upon consummation of the transactions contemplated by this Agreement at the
Closing, Buyer will have, good and marketable title to all of the Transferred Assets, real and
personal, moveable and immovable, tangible and intangible, free and clear of any and all Liens of
any kind or character, except (a) liens for current taxes not yet due and liens arising by
operation of law with respect to obligations that are not delinquent or are being contested in good
faith and described in Schedule 2.5, (b) with respect to Real Property, (i) minor
imperfections of title, if any, none of which is substantial in amount, detracts from the value or
impairs the use of the property subject thereto, or impairs the operations of Seller and (ii)
zoning laws and other land use restrictions that do not impair the present or Seller’s present use
of the property
subject thereto, and (c) other restrictions set forth in Schedule 2.5. Seller has the
full right to sell, convey, transfer, assign and deliver the Transferred Assets to Buyer.

     Section 2.6 Employees. Schedule 2.6 (i) sets forth the names, titles, rates of pay and tenure of each
employee who provides services to the Business and (ii) describes each written or oral employment
agreement, if any, to which each such employee is a party in connection with the services that it
provides to the Business. To Seller’s Knowledge, Seller has and currently is conducting the
Business in full compliance with all Laws relating to employment, employee practices, terms and
conditions of employment, wages and hours and nondiscrimination in employment. Except as set forth
in Schedule 2.6, no employee of the Business is absent from work on any form of leave,
including without limitation medical leave, disability, leave under the Family and Medical Leave
Act of 1993 or otherwise or has notified Seller of his or her intent to take such leave.

     Section 2.7 Franchises, Licenses, Personal Property, Assigned Contracts. Except for the Excluded Assets, the Transferred Assets include all Permits required to own,
lease or otherwise hold and operate the Transferred Assets and conduct the Business as presently
conducted by Seller (except for those Permits set forth on Schedule 2.7, which cannot be
transferred or assigned by Seller to Buyer in accordance with applicable Law). Subject to Section
2.5 hereof, all of the equipment and other tangible personal property which are a part of the
Transferred Assets will be transferred to Buyer pursuant to this Agreement on an “as is, where is”
basis. All of the Assigned Contracts are valid and in full force and effect in accordance with
their terms.

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     Section 2.8 Real Property.

     (a) Seller owns or has the right to exclusively occupy and use all the Real Property,
including the Real Property which is owned in fee by Seller and constitutes part of the Transferred
Assets (the “Owned Real Property”) and the Real Property leased to Seller pursuant to any
Assigned Contracts (the “Leased Real Property”). Seller has good and marketable fee simple
title to all the Owned Real Property, and to all buildings, structures and other improvements
thereon and all fixtures thereto.

     (b) All agreements included within the Assigned Contracts which relate to or provide leases,
easements, rights of way, licenses and other non-fee ownership interests in Real Property
(collectively the “Realty Use Rights”) are valid and in full force and effect in accordance
with their terms. On or before the Disclosure Delivery Deadline (as defined in Section 5.14),
Seller shall have furnished Buyer with copies of all Realty Use Rights, all of which are identified
on Schedule 2.8(b). Seller is lawfully in exclusive possession of all Leased Real
Property, and all conditions precedent to the obligation of Seller to take possession and continue
to occupy all Leased Real Property have been fulfilled. All of the Owned Real Property is free
from any material use or occupancy restrictions, except those imposed by applicable zoning laws,
ordinances and regulations, and from all special taxes or assessments, except those generally
applicable to other properties in the tax districts in which such Owned Real Property is located.
No options have been granted to others to purchase, lease or otherwise acquire any interest in the
Owned Real Property. On or before to the Disclosure Delivery Deadline, Seller shall have delivered
to Buyer true and correct copies of all deeds, mortgages, title insurance policies, land surveys
and other documents relating to or affecting the title to the Owned Real Property (collectively,
the “Owned Real Property Title Documents”), and all of the same are identified on
Schedule 2.8(b). No condemnation proceeding is pending or, to Seller’s Knowledge,
threatened which would impair the occupancy, use or value of any Real Property.

     Section 2.9 Litigation. There are no actions, suits, claims, demands or proceedings pending, or to the Knowledge of
Seller, threatened against, by or affecting Seller, the Business or the Transferred Assets in any
court or before any arbitrator, private alternative dispute resolution system or Governmental
Authority, the eventual outcome of which could have a Material Adverse Effect on the Transferred
Assets, or which could prevent or impede the transactions contemplated by this Agreement. Seller
has not been charged with, nor to the Knowledge of Seller, is it under investigation with respect
to any charge concerning, any violation of any provision of any federal, state or other applicable
Law, decree or governmental restriction with respect to the Business and/or the Transferred Assets.
There are no unsatisfied judgments against Seller or any consent decrees, writs, restraining
orders, or preliminary or permanent injunctions to which Seller, the Business or any of the
Transferred Assets are subject.

     Section 2.10 Financial Statements. Annex C includes the following financial statements of Seller (collectively, the
“Initial Financial Statements” and collectively with the Fiscal 2006 Financial Statements,
the “Financial Statements”) (a) audited balance sheets as of October 31, 2005 and 2004, (b)
audited statements of income for the years ended October 31, 2005 and 2004, (c) audited statements
of shareholders’ equity for the years ended October 31, 2005 and 2004 and (d) audited statements of
cash flows for the years ended October 31, 2005 and 2004. The Initial Financial Statements have
been (and the Fiscal 2006 Financial Statements will be) prepared in accordance with GAAP. The
Initial Financial Statements present (and the Fiscal 2006 Financial Statements will present) fairly
in all material respects the financial position of Seller and the Business as of the respective
dates indicated therein and the results of operations and changes in shareholders’ equity and cash
flow for the respective periods indicated therein. Except as set forth in Annex C, Seller
will not have as of the date of the Fiscal 2006 Financial Statements, and Seller will not have
incurred since that date, any Liabilities relating to the Transferred Assets or the Business,
except Liabilities: (i) that, if required by GAAP to be accrued or reserved against, are accrued
or adequately reserved against in the Fiscal 2006 Financial Statements; or (ii) that were incurred
after the date of the Fiscal 2006 Financial Statements in the ordinary course of business of Seller
and which could not reasonably be expected to have a Material Adverse Effect with respect to the
Transferred Assets or the Business. For purposes hereof, “Liabilities” shall mean, with
respect to the Transferred Assets or the Business, any debt, obligation or other liability related
to the Transferred Assets or the Business, whether absolute, accrued, contingent, fixed or
otherwise, or whether

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due or to become due, including without limitation liabilities for Taxes,
material forward or long-term commitments, or unrealized or anticipated losses from any of the
Assigned Contracts.

     Section 2.11 Taxes.

     (a) All taxes, charges, fees, levies, imposts, duties, licenses or other assessments
(including without limitation all income, property, sales, use, customs, franchise, value added, ad
valorem, withholding, employees’ income withholding, and social security taxes, and all other taxes
imposed on Seller or its income, properties, sales, franchises, operations or Plans or trusts), and
all deposits in connection therewith required by applicable Law, imposed by any Governmental
Authority or taxing authority, and all interest and penalties thereon (all of the foregoing
hereafter collectively referred to as “Taxes”), with respect to the Transferred Assets
and/or the Business, which are due and payable by the Business or Seller for all periods through
the date hereof, whether or not shown on any return or report, have been duly and timely paid in
full, and adequate reserves for all other Taxes, whether or not due and payable, and whether or not
disputed, have been set up on the books of Seller and will be used for payment of such Taxes.

     (b) Seller has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor, creditor or other
third party.

     (c) Seller has duly and timely filed all Tax reports and returns which are required to be
filed with respect to the Transferred Assets and/or the Business. All such Tax reports and returns
are correct and
complete in all material respects. There are no Tax liens filed against Seller or encumbering
any of the Transferred Assets or the Business. There are no audits, claims, assessments, levies,
administrative proceedings or lawsuits pending, or to the Knowledge of Seller, threatened, by any
taxing authority with respect to the payment of Taxes relating to the Transferred Assets or the
Business. Seller is not a foreign person under Section 1445(a) of the Code and will furnish Buyer
with a certificate as described in Treas. Reg. 1.1445-2(b)(2) (“Non-Foreign Seller
Affidavit”) prior to Closing. Each year Seller negotiates with the applicable Governmental
Authority the valuations and renditions of the Transferred Assets for ad valorem and real property
Taxes, and Seller does not warrant and represent to Buyer that the valuations and renditions of the
Transferred Assets for ad valorem or real property tax purposes prior to the Closing Date will
remain in effect from and after the Closing Date.

     (d) Notwithstanding any provision of this Agreement to the contrary, the parties agree that
any ad valorem, property and similar Taxes relating to the Transferred Assets and/or the Business
for the year 2006 shall be pro-rated as of the Effective Time based on the portion of the year each
party owns the Transferred Assets and/or the Business, and paid by Buyer when they become due after
the date hereof. In the event the amount of any such Taxes cannot be ascertained as of the
Effective Time, proration shall be made on the basis of the preceding year, Seller shall receive a
credit against any such accrued tax liability in the Closing Date Working Capital for Seller’s pro
rata portion of such Taxes, and to the extent that such proration may be inaccurate, Seller and
Buyer agree to make such payment promptly to the other party after the Tax statements have been
received as is necessary to allocate such Taxes properly between Seller and Buyer as of the
Effective Time for the portion of the tax year that Seller and Buyer owned the assets subject to
such Taxes.

     Section 2.12 Employee Benefit Matters.

     (a) On or before the Disclosure Delivery Deadline, Seller shall have provided Buyer a copy of
all plans, programs, and similar agreements, commitments or arrangements maintained by or on behalf
of Seller or any other party that provide benefits or compensation to, or for the benefit of,
current or former Business employees of Seller (“Plan” or “Plans”).

     (b) With respect to each such Plan: (i) no litigation or administrative or other proceeding is
pending or, to the Knowledge of Seller threatened, involving such Plan, except any Plan
administrative proceeding involving a routine claim for benefits; (ii) such Plan has been
administered and operated in compliance with, and has been amended to comply with all applicable
Laws, including without limitation the

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Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), the Code, and the regulations issued under ERISA and the Code; and (iii) Seller
has made and as of the Closing Date will have made or accrued, all payments and contributions
required to be made under the provisions of such Plan or required to be made under applicable Laws
with respect to any period prior to the Closing Date, such amounts to be determined using the
ongoing actuarial and funding assumptions of the Plan.

     (c) There are no actions, suits or claims pending or, to the Knowledge of Seller, threatened
(other than routine claims for benefits) with respect to any Plan.

     Section 2.13 Compliance with Laws. Seller: (a) has not committed a violation of any requirement of any Law and is in
compliance with all Laws; (b) has not received written notice of the violation of any material
requirement of any Law; and (c) is not subject to any Liability for past or continuing violation of
any Law. No investigation or review by any Governmental Authority with respect to Seller, the
Business or the Transferred Assets is pending or, to the Knowledge of Seller, threatened, and
Seller has not received notice from any Governmental Authority of an intention to conduct the same.

     Section 2.14 Environmental Matters.

     (a) Except as set forth in Schedule 2.14, Seller holds and is in compliance in all
material respects with all required environmental Permits, and is in compliance in all material
respects with all Environmental Laws in connection with the Business or the Transferred Assets.
All such environmental Permits are listed on Schedule 2.14 and, except as set forth in
Schedule 2.14, none would terminate as a consequence of the transactions contemplated by
this Agreement. Seller has made, or will make, timely application for renewal of all environmental
Permits that were scheduled to expire prior to the Closing, such that all environmental Permits
will remain in full force and effect after the Closing. For purposes of this Agreement,
“Environmental Laws” means collectively, all federal, state, local and municipal
environmental laws, rules, regulations, ordinances and codes applicable to Seller’s operations,
including but not limited to the following laws and regulations: (1) Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. §9601, et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1985, Pub. L 99-499, 100 Stat. 1613, as amended;
(2) The Resource Conservation and Recovery Act of 1976, 42 U.S.C. §6901, et seq., as amended; (3)
The Clean Water Act, 33 U.S.C. §1251, et seq., as amended; (4) The Clean Air Act, 33 U.S.C. §7431,
et seq.; (5) The Toxic Substances Control Act, 15 U.S.C. §2601, et seq., as amended; and (6) State
law counterparts to the federal programs identified in the immediately preceding clauses (1)
through (5).

     (b) Except as set forth in Schedule 2.14, Seller has at all times complied in all
material respects with all applicable Environmental Laws and Permits related to the Business, the
Transferred Assets and any property owned, operated or leased by Seller in connection with the
Transferred Assets.

     (c) Except as set forth in Schedule 2.14, no Reportable Conditions exist, as of
Closing, that have given rise to Claims (as defined in this sub-paragraph) against the Business or
Transferred Assets based on the threat of injury or damage to human health or the environment,
whether or not such claims have arisen under or are related to any Environmental Laws,
environmental Permits, or are connected with any Releases or presence of Hazardous Substances or
petroleum products, on, at, in, under or from the Transferred Assets or the Business. As used
herein, (i) “Reportable Conditions” means any Release that would require, pursuant to
applicable Environmental Laws, notification by Seller to any Governmental Authority, (ii)
“Claims” means any suit, action, investigation, proceeding or written demand by any Person,
whether based in contract, tort, implied or express warranty, strict liability, criminal or civil
statute, or common law; (iii) “Releases” means any spill, leak, discharge, abandonment,
disposal, pumping, pouring, emitting, emptying, leaching, dumping, depositing, dispersing or
allowing to escape or migrate into or through the Real Property of any Hazardous Substances; and
(iv) “Hazardous Substances” shall have the meaning set forth in any of the applicable
Environmental Laws.

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     (d) To the Knowledge of Seller, except as contemplated hereby or described on Schedule
2.14, there have been no environmental inspections, investigations, studies, audits, tests,
reviews or other analyses conducted in relation to the Transferred Assets or the Business within
the past five (5) years.

     Section 2.15 Insurance. Schedule 2.15 sets forth a correct and complete list and description of all
policies of insurance (including policies providing property, casualty, liability, workers’
compensation, and bond and surety arrangements) under which Seller currently is insured, at all
times between the date hereof and the Closing Date, including (a) the name of the insurer, (b) the
period of coverage and (c) the type and amount of coverage. With respect to each such insurance
policy set forth on Schedule 2.15, at all times between the date hereof and the Closing
Date, (i) each such policy is in full force and effect, (ii) all premiums currently payable or
previously due and payable with respect to all periods up to and including the Closing Date have
been paid or accrued, (iii) no written notice of cancellation or termination has been received with
respect to any such policy, (iv) to Seller’s Knowledge, Seller is not in breach or default
(including the giving of notice
thereunder), (v) each such policy will remain in full force and effect (other than on account
of actions which may be taken by the insurance company that is a party thereto, without regard to
any action by Seller) through the Closing without the payment of additional premiums, and (vi) no
party to the policy has repudiated, or given written notice of an intent to repudiate, any
provision thereof.

     Section 2.16 Authority to Conduct Business and Intellectual Property Rights. Schedule 2.16 describes all patents and patent applications which are used or
valuable in the operation of the Business (in each such case, identifying the date(s) and
jurisdiction(s) in which the patent was granted or applied for and the number of such patent or
application), and to Seller’s Knowledge such patents and patent applications do not infringe on any
rights of any third party. Seller is not a party to, either as licensor or licensee, and is not
bound by or subject to, any license agreement for any patent, process, trademark, service mark,
trade name or copyright, except as described in Schedule 2.16. All trademarks, service
marks, trade names, and applications therefor or registrations thereof, owned or used by Seller in
the Business are listed in Schedule 2.16, and, as applicable and to the extent indicated
thereon, have been duly registered in, filed in or issued by the U.S. Patent and Trademark Office
or the corresponding agency or office of the states of the United States indicated.

     Section 2.17 No Brokers. Except for Simmons & Co. and its Affiliates, whose fees shall be the sole responsibility of
Seller (and for which Buyer shall have no liability whatsoever), Seller has not made any agreement
or taken any other action which might cause anyone to become entitled to a broker’s fee or
commission as a result of the transactions contemplated hereunder.

     Section 2.18 Securities Laws.

     (a) Seller is acquiring the Stock Consideration for its own account, without a view to the
distribution thereof in violation of the Securities Act of 1933, as amended (the “Securities
Act”). Seller does not have any contract, undertaking, agreement, understanding or arrangement
with any person to sell, transfer or pledge to any Person any part or all of the Stock
Consideration, or any interest therein, nor does Seller have any present plans to enter into the
same. Seller agrees that it will not transfer any of the Stock Consideration except in compliance
with applicable United States and other securities laws.

     (b) Seller is an “accredited investor” within the meaning of Regulation D under the Securities
Act and was not organized solely for the purpose of acquiring any of the Stock Consideration.
Seller has adequate means of providing for its current needs and contingencies, has no need now,
and anticipates no need in the foreseeable future, to sell any portion of the Stock Consideration,
and currently has sufficient net worth and financial liquidity to afford a complete loss of its
investment in Buyer. Seller has such knowledge and experience in financial and business matters so
that Seller is capable of evaluating the merits and risks of an investment in Buyer and has made
such evaluation. Seller fully understands that the Stock Consideration is a speculative investment
which involves a high degree of risk of loss of Seller’s entire investment. No person or entity,
other than Buyer or its authorized representatives, has offered the Stock Consideration to Seller.
Seller is able to bear the economic risk of an investment in the Stock Consideration.

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     (c) Seller understands that Buyer has not registered the Stock Consideration under the
Securities Act, and Seller agrees that the Stock Consideration may not be sold or transferred or
offered for sale or transfer by it without registration under the Securities Act or the
availability of an exemption therefrom. Seller has had an opportunity to ask questions of and
receive answers from the management and authorized representatives of Buyer, and to review any
other relevant documents and records concerning the business of Buyer, including all of Buyer’s
current filings with the SEC, and the terms and conditions of this investment, and that any such
questions have been answered to Seller’s full satisfaction. Seller understands that no
Governmental Authority has passed upon or made any recommendation or endorsement of an
investment in the Stock Consideration.

     Section 2.19 Full Disclosure. No representation or warranty of Seller contained in this ARTICLE 2 contains or will
contain any untrue statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.

     Section 2.20 No Other Representations or Warranties. Except for the representations and warranties contained herein (including any annexes,
exhibits, schedules or other attachments hereto and any certificates or other documents delivered
in connection with the consummation of the transactions contemplated hereby), the Transferred
Assets are being sold by Seller to Buyer “as is, where is” and Seller makes no express or implied
representations or warranties with respect to the Transferred Assets, the Assumed Liabilities, the
Business or any other matters, including without limitation the implied warranties of
merchantability or of fitness for a particular purpose.

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.

     To induce Seller to enter into this Agreement and to sell the Transferred Assets to Buyer,
Buyer hereby represents, warrants and covenants to Seller as follows:

     Section 3.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware.

     Section 3.2 Enforceability. Buyer has full corporate power and authority to make, execute and perform this Agreement
and the other Transaction Documents to which it is a party, and to carry out the transactions
contemplated hereby and thereby in accordance with their respective terms. This Agreement and the
other Transaction Documents to which Buyer is a party constitute the valid and legally binding
obligations of Buyer enforceable against it in accordance with their respective terms, subject to
general equity principles and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors generally.

     Section 3.3 Due Authorization; Valid Execution; No Inconsistent Obligations. This Agreement and the other Transaction Documents to which Buyer is a party and all
transactions required hereunder or thereunder to be performed by Buyer have been duly and validly
authorized and approved by all necessary corporate action on the part of Buyer (including without
limitation all requisite approvals of Buyer’s Board of Directors). This Agreement has been, and
the other Transaction Documents to which Buyer is a party will be (on or prior to the Closing
Date), duly and validly executed and delivered on behalf of Buyer. Except as set forth in
Schedule 3.3, neither the execution and delivery of this Agreement or the other Transaction
Documents to which Buyer is a party nor the consummation of the transactions contemplated herein or
therein will result in a violation or breach of, or constitute a default under any term or
provision of (a) the Certificate of Incorporation, Bylaws or other organizational documents of
Buyer or (b) (i) any indenture, note, mortgage, bond, security agreement, loan agreement, guaranty,
pledge, or other instrument, contract, agreement or commitment, (ii) any Law, (iii) any applicable
ruling or order of any Governmental Authority, or (iv) any other commitment or restriction, in each
case, to which Buyer is a party or by which any of its properties or assets is subject or bound,
except, with respect solely to clause (iv) above,
for such violations, breaches or defaults which would not, individually or in the aggregate,
prevent or materially delay the consummation of

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the transactions contemplated by this Agreement or
the other Transaction Documents or the performance by Buyer of any of its obligations hereunder or
thereunder.

     Section 3.4 Capitalization.

     (a) The authorized capital stock of Buyer consists of 100,000,000 shares of Common Stock, and
10,000,000 undesignated preferred shares, par value $0.01 per share (“Preferred Stock”).
As of October 23, 2006, there were (i) 24,586,848 shares of Common Stock issued and outstanding
(exclusive of unvested restricted shares), (ii) no shares of Preferred Stock issued and
outstanding, and (iii) 1,555,501 shares of Common Stock issuable pursuant to options granted under
the stock options plans of Buyer or warrants described in the Buyer Reports. All issued and
outstanding shares of Common Stock (i) are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, (ii) were not issued in violation of the terms of any
agreement or other understanding binding upon Buyer and (iii) were issued in compliance with all
charter documents of Buyer and all applicable U.S. federal and state securities laws, rules and
regulations.

     (b) The shares of Common Stock to be issued as the Stock Consideration hereunder have been
duly authorized and, upon issuance and payment therefor, shall be validly issued, fully paid and
non-assessable. Upon delivery of such shares pursuant to the terms of this Agreement, good and
valid title to such shares, free and clear of any and all Liens (except for any and all
restrictions contemplated by this Agreement and/or applicable federal and state securities laws),
will pass to Seller.

     (c) Neither the execution and delivery of this Agreement or any other Transaction Document by
Buyer, nor the consummation by Buyer of the transactions contemplated hereby or thereby to be
performed by it, nor compliance by Buyer with any of the terms or provisions hereof or thereof,
will result in the vesting in any third-party any option, warrant, right, subscription, call,
unsatisfied preemptive right, convertible or exchangeable security, or other agreement or right of
any kind to purchase or otherwise acquire any ownership interest in Buyer, or give rise to any
third party rights to indemnification or reimbursement from Buyer.

     Section 3.5 Consents. Except for (i) the filings, notifications, authorizations, consents, orders or approvals
listed in Schedule 3.5 and (ii) such other filings, notifications, authorizations,
consents, orders or approvals, the failure of which to make or obtain would not, individually or in
the aggregate, prevent or materially delay the consummation of the transactions contemplated by
this Agreement or the other Transaction Documents or the performance by Buyer of any of its
obligations hereunder or thereunder, no authorizations, consents, orders or approvals of or filings
or notifications to any Governmental Authority or third party are necessary in connection with the
execution and delivery by Buyer of this Agreement or any other Transaction Document, and the
consummation by Buyer of the transactions contemplated hereby or thereby.

     Section 3.6 Legal Proceedings. Buyer is not a party to any, and there are no pending or, to Buyer’s Knowledge, threatened,
actions or proceedings against or otherwise affecting Buyer or its properties or assets or
challenging the validity or propriety of the transactions contemplated by this Agreement or any
other Transaction Document which, if adversely determined, would, individually or in the aggregate,
prevent or materially delay the consummation of the transactions contemplated by this Agreement or
the other Transaction Documents or the performance by Buyer of any of its obligations hereunder or
thereunder, and there is no injunction, order, judgment, decree or regulatory restriction imposed
upon Buyer or its properties or assets which would, individually or in the aggregate, prevent or
materially delay the consummation of the transactions contemplated by this Agreement
or the other Transaction Documents or the performance by Buyer of any of its obligations
pursuant to this Agreement.

     Section 3.7 Public Disclosure Documents.

     (a) Buyer has made available to Seller each registration statement, report, proxy statement or
information statement (other than preliminary materials) filed by Buyer with the Securities and
Exchange

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Commission (“SEC”) since December 31, 2003, each in the form (including exhibits
and any amendments thereto) filed with the SEC prior to the date hereof (collectively, the
“Buyer Reports”), and Buyer has filed all forms, reports and documents required to be filed
by it with the SEC pursuant to relevant securities statutes, regulations, policies and rules since
such time. As of their respective dates, the Buyer Reports (i) were prepared in accordance with
the applicable requirements of the American Stock Exchange, the Securities Act, the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations
thereunder and complied with the then applicable accounting requirements and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the circumstances under
which they were made, not misleading except for such statements, if any, as have been modified or
superseded by subsequent filings with the SEC prior to the date hereof. Each of the consolidated
balance sheets included in or incorporated by reference into the Buyer Reports (including the
related notes and schedules) fairly presents in all material respects the consolidated financial
position of Buyer and its subsidiaries as of its date and each of the consolidated statements of
operations, cash flows and stockholders’ equity included in or incorporated by reference into the
Buyer Reports (including any related notes and schedules) fairly presents in all material respects
the results of operations, cash flows or changes in stockholders’ equity, as the case may be, of
Buyer and its subsidiaries for the periods set forth therein (subject, in the case of unaudited
statements, to such exceptions as may be permitted by Form l0-Q of the SEC), in each case in
accordance with GAAP consistently applied during the periods involved, except as may be noted
therein, and except that the unaudited interim financial statements were or are subject to normal
and recurring year-end adjustments that were not or are not expected to be material in amount or
effect.

     (b) Except as disclosed in the Buyer Reports, Buyer’s auditors and the audit committee of the
Board of Directors of Buyer have not been advised of(i) any significant deficiencies in the design
or operation of internal controls that could adversely affect Buyer’s ability to record, process,
summarize and report financial data nor any material weaknesses in internal controls; or (ii) any
fraud, whether or not material, that involves management or other employees who have a significant
role in Buyer’s internal controls. There have been no significant changes in internal controls or
in other factors that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses.

     Section 3.8 Litigation and Liabilities. There are no actions, suits or proceedings pending against Buyer or any of its subsidiaries
or, to Buyer’s Knowledge, threatened against Buyer or any of its subsidiaries, at law or in equity,
or before or by any federal, state or foreign commission, court, board, bureau, agency or
instrumentality, other than those that would not have a Material Adverse Effect on Buyer. There
are no outstanding judgments, decrees, injunctions, awards or orders against Buyer or any of its
subsidiaries. There are no obligations or liabilities of any nature, whether accrued, absolute,
contingent or otherwise, of Buyer or any of its subsidiaries, other than those liabilities and
obligations (a) that are disclosed in the Buyer Reports, (b) that have been incurred in the
ordinary course of business since December 31, 2005 or (c) that are related to expenses associated
with the transactions contemplated by this Agreement.

     Section 3.9 Absence of Certain Changes. Since December 31, 2005, there has not been (i) any Material Adverse Effect with respect to
Buyer; (ii) through the date hereof, any material change by Buyer or any of its subsidiaries
(viewed on a consolidated basis) in any of its accounting methods, principles or practices or any
of its tax methods, practices or elections, except for changes required by GAAP; or (iii) any
material damage, destruction, or loss to the business or properties of Buyer and its subsidiaries,
taken as a whole, not covered by insurance.

     Section 3.10 Taxes. Buyer and its subsidiaries have filed all federal, state and local income and franchise tax
returns required to be filed through the date hereof and have paid all Taxes due thereon, and no
Tax deficiency has been determined adversely to Buyer or any of its subsidiaries which has had, nor
does Buyer have any Knowledge of any Tax deficiency which, if determined adversely to Buyer or any
of its subsidiaries would have, a Material Adverse Effect on Buyer. The charges, accruals and
reserves on the books of Buyer and its subsidiaries in respect of Taxes or other governmental
charges are, in the opinion of Buyer, adequate.

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     Section 3.11 Title to Properties. Buyer and each of its subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them, in each case free
and clear of all Liens, except such as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such property by Buyer and
its subsidiaries; and all assets held under lease by Buyer and its subsidiaries are held by them
under valid, subsisting and enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by Buyer and its
subsidiaries.

     Section 3.12 Insurance. Buyer and each of its subsidiaries carry, or are covered by, insurance in such amounts and
covering such risks as they reasonably deem sufficient for the conduct of their respective
businesses and the value of their respective properties, and neither Buyer nor any subsidiary has
received notice of cancellation or non-renewal of such insurance.

     Section 3.13 Environmental Laws. Buyer is in compliance in all material respects with all applicable Environmental Laws in
the country in which it operates, and possesses and is in compliance in all material respects with
all environmental Permits required under such laws for the conduct of its business operations. To
the Knowledge of Buyer, there are no past events or conditions that would give rise to any
liability of Buyer under any Environmental Law and there has been no Release of Hazardous
Substances at any property owned, or operated by Buyer now or in the past that would give rise to
any liability of Buyer under any Environmental Law. No written notice, demand, request for
information, citation or complaint has been received by Buyer from, and no action or proceeding is
pending or, to the Knowledge of Buyer, threatened by, any Governmental Authority against Buyer,
with respect to any Environmental Law.

     Section 3.14 No Brokers. Except for RBC Capital Markets Corporation and its Affiliates, whose fees shall be the sole
responsibility of Buyer (and for which Seller shall have no liability whatsoever), Buyer has not
made any agreement or taken any other action which might cause anyone to become entitled to a
broker’s fee or commission as a result of the transactions contemplated hereunder.

ARTICLE 4. CONDUCT OF BUSINESS PENDING CLOSING.

     Seller covenants and agrees that, except as may otherwise be provided herein, without the
prior written consent of Buyer, which will not be unreasonably withheld or delayed, between the
date hereof and the Closing Date:

     Section 4.1 Business in the Ordinary Course. The Business shall be conducted only in the ordinary and usual course and consistent with
prior practices. Without limiting the generality of the foregoing:

     (a) Seller shall not enter into any contracts or agreements with any third parties except in
the ordinary course of the Business at prices and on terms consistent with the prior operating
practices of Seller.

     (b) Except for sales of inventory and normal disposal of equipment in the ordinary course of
the Business, Seller shall not sell, assign, transfer, convey, or otherwise dispose of, or cause
the sale, assignment, transfer, conveyance, or other disposition of any of the Transferred Assets.

     (c) All contracts or commitments of Seller for the purchase of raw materials, products,
services and supplies shall be entered into only in the ordinary and regular course of business to
enable Seller to conduct its normal business operations and to maintain its normal inventory of raw
materials and finished goods, at prices and on terms consistent with the prior operating practices
of Seller.

     (d) The books, records and accounts of Seller shall be maintained in the usual, regular and
ordinary course of business on a basis consistent with prior practices and in accordance with GAAP.

     (e) Seller shall use its commercially reasonable efforts to preserve the Business as in effect
on the date hereof, to keep available the services of Seller’s present employees employed in such
business, and to

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preserve the goodwill of Seller’s present suppliers to such business, the
customers at such business and others having business relations with the Business as of the date
hereof.

     Section 4.2 Compensation. Except in the ordinary course of business (consistent with past practices), no increase
shall be made in the compensation payable or to become payable to any employee of Seller, and no
bonus or profit-share payment or other arrangement (whether current or deferred) shall be made to
or with any employee. No employee shall be hired by Seller at a salary in excess of $50,000 per
annum without Buyer’s prior consent, which shall not be unreasonably withheld.

ARTICLE 5. CONDITIONS TO OBLIGATIONS OF BUYER.

     All obligations of Buyer under this Agreement are subject to the fulfillment and satisfaction
of each and every of the following conditions on or prior to the Closing, any or all of which may
be waived in whole or in part by Buyer:

     Section 5.1 Representations and Warranties. The representations and warranties of Seller contained in this Agreement (including without
limitation in ARTICLE 2 hereof) shall be true and correct in all material respects as of the date
of this Agreement and on the Closing Date as though made on the Closing Date, except to the extent
such representations and warranties speak only as of an earlier date; provided, however, that with
respect to any such representation or warranty or portion thereof that is qualified by materiality
or similar qualifier, such representation or warranty or portion thereof shall be true and correct
in all respects.

     Section 5.2 Compliance with Agreements and Conditions. Seller shall have performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be performed or complied with by Seller
prior to or on the Closing Date.

     Section 5.3 Closing Deliveries. Seller shall have delivered, or caused to be delivered, to Buyer each of the items
described in Section 1.10(a) of this Agreement.

     Section 5.4 Resolutions. Buyer shall have received copies of duly adopted resolutions of the Board of Directors and
shareholders of Seller, certified in each case as of the Closing Date by the Secretary or Assistant
Secretary of Seller, authorizing and approving the execution of this Agreement and the other
Transaction Documents to which Seller is a party, the consummation of the transactions contemplated
hereby and thereby and all other action necessary to enable Seller to comply with the terms hereof
and thereof.

     Section 5.5 Opinion of Counsel. Buyer shall have received from Phelps Dunbar LLP, special legal counsel for Seller, a legal
opinion letter, dated the Closing Date, addressing the matters set forth in Exhibit E
attached hereto, subject to appropriate assumptions and qualifications.

     Section 5.6 Government Consents. Buyer shall have received from any and all persons, firms, and other legal entities, or any
Governmental Authorities having jurisdiction over the transactions contemplated by this Agreement,
or any part hereof, such consents, authorizations and approvals as are necessary for the
consummation thereof, and all notices or filings required to be given to any Governmental
Authorities shall have been given or filed, and any applicable waiting periods shall have expired
or been terminated, including without limitation any such filings and/or waiting periods (including
any extensions thereof) under the HSR Act.

     Section 5.7 Title Insurance.

     (a) Buyer shall have received: (i) assurances reasonably satisfactory to Buyer that, shortly
after the Closing, a title insurance company reasonably satisfactory to Buyer shall issue to Buyer,
at Buyer’s expense, an Owner Policy of Title Insurance dated as of the Closing Date and insuring
fee simple title in Buyer to the Texas Real Property and the leasehold estates in the Texas Leased
Real Property created pursuant to the applicable Assigned Contracts subject only to the Permitted
Encumbrances and the standard

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printed exceptions, with the exception as to area and boundaries
modified to read “any shortages in area” provided that Buyer provides to both Seller and the title
company issuing such policy an appropriate survey and provided that Buyer pays the applicable
premium for such modification, and (ii) such other usual and customary documentation as may be
reasonably required by the title insurance company from Seller in order to issue the policy of
title insurance as herein contemplated. Any closing fee charged by the title insurance company for
the use of its personnel and facilities shall be paid one-half (1/2) by Seller and one-half (1/2) by
Buyer. As used herein:

     (i) “Texas Real Property” means the Owned Real Property situated in Texas;

     (ii) “Texas Leased Real Property” means the Leased Real Property situated in
Texas; and

     (iii) “Permitted Encumbrances” means any (a) mechanics’, carriers’, workers’
and other similar liens arising in the ordinary course of business and which in the
aggregate are not substantial
in amount, and do not interfere with the present use of the Transferred Assets; (b)
liens for current taxes and assessments, both general and special, and other governmental
charges not yet due and payable as of the Closing; (c) usual and customary non-monetary real
property encumbrances; (d) all land use restrictions (including environmental, endangered
species and wetlands), building and zoning codes and ordinances, and other laws, ordinances,
regulations, rules, orders, licenses or determinations of any Governmental Authority, now or
hereafter enacted, made or issued by any such Governmental Authority affecting the Real
Property; (e) all easements (including conservation easements and public trust easements),
rights-of-way, road use agreements, covenants, conditions, restrictions, reservations,
licenses, agreements and other matters of record; (f) all encroachments, overlaps,
overhangs, unrecorded easements, variations in area or measurement, rights of parties in
possession, lack of access or any other matters not of record which would be disclosed by an
accurate survey or physical inspection of the Real Property; (g) all electric power,
telephone, gas, sanitary sewer, storm sewer, water and other utility lines, pipelines
service lines and facilities of any nature on, over or under the Real Property, and all
related licenses, easements, rights-of-way and other agreements; (h) all existing public and
private roads and streets (whether dedicated or undedicated) including all rights of the
public to use such roads and streets, and all railroad lines and rights-of-way affecting the
Real Property; (i) prior reservations or conveyances of mineral rights or mineral leases of
every kind and character; (j) water rights (whether asserted by any Governmental Authority
or private party); (k) other imperfections of title, easements and encumbrances, if any,
which do not currently interfere materially with operations as currently conducted by Seller
on such property; and (l) with respect to any asset of Seller that consists of a leasehold
or other possessory interest in real property, all encumbrances, covenants, imperfections in
title, easements, restrictions and other title matters (whether or not they are recorded) to
which the underlying fee estate in such real property is subject which were not created or
incurred by Seller and which do not currently materially interfere with Seller’s operations
as conducted on such property.

     (b) Buyer shall have received: (i) assurances reasonably satisfactory to Buyer that, shortly
after the Closing, a title insurance company reasonably satisfactory to Buyer shall issue to Buyer,
at Buyer’s expense, an Owner Policy of Title Insurance dated as of the Closing Date and insuring in
Buyer ownership of the Louisiana Real Property and the leasehold estates in Louisiana Leased Real
Property created pursuant to the applicable Assigned Contracts subject only to the Permitted
Encumbrances and the standard printed exceptions, with the exception as to area and boundaries
modified to read “any shortages in area” provided that Buyer provides to both Seller and the title
company issuing such policy an appropriate survey and provided that Buyer pays the applicable
premium for such modification, and (ii) such other usual and customary documentation as may be
reasonably required by the title insurance company from Seller in order to issue the policy of
title insurance as herein contemplated. Any closing fee charged by the title insurance company for
the use of its personnel and facilities shall be paid one-half (1/2) by Seller and one-half (1/2) buy
Buyer. As used herein:

     (i) “Louisiana Real Property” means the Owned Real Property situated in
Louisiana; and

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     (ii) “Louisiana Leased Real Property” means the Leased Real Property located in
Louisiana.

     (c) Buyer may, at Buyer’s sole expense, obtain a survey and a commitment for owner’s title
insurance. If on or before the Disclosure Delivery Deadline Buyer notifies Seller in writing that
said survey or commitment disclose encumbrances on the Real Property unsatisfactory to Buyer other
than Permitted Encumbrances and Liens which will be discharged or bonded off from Closing proceeds
(the “Buyer’s Property Objections”), then Seller, upon Buyer’s notification of the Buyer’s
Property Objections, shall diligently use its reasonable best efforts to cure same. If, after the
exercise of reasonable diligence, Seller is unable to remove the Buyer’s Property Objections prior
to the Closing, then Buyer at Buyer’s election (and in its sole discretion) shall have the right to
change such subject Real Property to be an Excluded Asset, and the Closing Cash Consideration shall
be reduced by an amount equal to the fair market value of such subject Real Property (provided that
as used herein “fair market value” means the value that would be paid by a willing
buyer to an unaffiliated willing seller in a transaction not involving distress or necessity
of either party). If Seller’s corrections to the Buyer’s Property Objections cannot be completed
before the date for the Closing, then the date of the Closing shall be extended by not more than
thirty (30) days so that Seller may, at Seller’s expense, complete such corrections. After the
Disclosure Delivery Deadline, Buyer shall be deemed to have accepted the title of the Real Property
(except for Buyer’s Property Objections which are timely delivered to Seller).

     Section 5.8 Permits. All Permits shall have been transferred or reissued to Buyer (or Buyer’s designee) and all
consents required for such transfer or reissuance shall have been obtained by Seller to the extent
permitted under applicable Law or, for Permits which are not transferable, Buyer shall have
obtained reissuance of all Permits required to enable Buyer to conduct the Business from and after
Closing subject to no more onerous requirements and in the same manner as theretofore conducted by
Seller; provided, however, that this condition shall be deemed satisfied to the extent that
applicable Law (including without limitation applicable Environmental Law) would allow Buyer to
obtain such Permits after Closing without being deemed to be in violation of applicable Laws.

     Section 5.9 Required Consents. Seller shall have delivered to Buyer all of the consents required on Schedule 2.4
(the “Required Consents”).

     Section 5.10 Release of Certain Liens. Seller shall have provided evidence satisfactory to Buyer that the Liens listed on
Schedule 5.10 have been released as of the Closing.

     Section 5.11 No Inconsistent Requirements. No legal action shall have been commenced by any public authority or private party and no
judicial or administrative order shall have been issued seeking to enjoin or prohibit the
transactions contemplated hereby.

     Section 5.12 Appraisal and Other Due Diligence.

     (a) Buyer shall have determined to its reasonable satisfaction based on information from the
original manufacturers or a process mutually acceptable to Seller and Buyer that the sum of (i) the
replacement cost (brand new) for those Transferred Assets constituting Seller’s rental equipment
inventory and repair parts and supplies inventory and (ii) the fair market value based on current
appraisals of the other Transferred Assets, is at least $200,000,000.

     (b) Buyer shall have completed its due diligence review of the assets and business of Seller
(including without limitation the Business) satisfactory to Buyer, which due diligence reviews
shall not have revealed any facts or circumstances that, in Buyer’s sole judgment, render the
acquisition of the Transferred Assets not advantageous to Buyer. The due diligence review should
be conducted by and/or on behalf of Buyer, and shall include without limitation a review of the
following:

     (i) State and federal tax filings;

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     (ii) Audited financial statements and unaudited interim period financial statements;

     (iii) Environmental Law compliance, including without limitation one or more Phase I
studies and, at Buyer’s sole discretion, one or more Phase II studies (in each case, to be
obtained at Buyer’s expense);

     (iv) All pending or threatened legal proceedings; and

     (v) All material contracts.

     Section 5.13 Minimum 2006 Adjusted EBITDA. Seller shall have produced Adjusted EBITDA
for the fiscal year ended October 31, 2006 of not less than $46,000,000. For purposes of this
Agreement, “Adjusted EBITDA” shall be calculated from the Fiscal 2006 Financial Statements
and shall mean Seller’s net income as reported in the Fiscal 2006 Financial Statements before (a)
interest expense or interest and dividend income, (b) income taxes, (c) depreciation, (d)
amortization, (e) depletion and (f) all cash and non-cash expenses incurred by Seller in connection
with the issuance of 150 shares of Seller’s common stock and the payment of cash bonuses to Byron
A. “Red” Adams, Sr. in such fiscal year. Net income and each of the items mentioned in the
preceding sentence, other than the cash and non-cash expenses in clause (f), shall be calculated in
accordance with GAAP. Furthermore, Adjusted EBITDA shall be calculated from the Fiscal 2006
Financial Statements without any other adjustment not set forth in the preceding definition of
Adjusted EBITDA. Annex D attached hereto sets forth the calculation of Adjusted EBITDA for
Seller’s fiscal years ended October 31, 2005 and 2004. Adjusted EBITDA for the fiscal year ended
October 31, 2006 shall be calculated in the same manner as Adjusted EBITDA was calculated for the
fiscal years ended October 31, 2005 and 2004 on Annex D.

     Section 5.14 No Material Adverse Effect. There shall not have occurred since the date
hereof a Material Adverse Effect with respect to the Business or the Transferred Assets.

     Section 5.15 Delivery of Disclosure Items.

     (a) As soon as practicable, and in any event within fifteen (15) Business Days after the date
of this Agreement (the “Disclosure Delivery Deadline”), Seller shall have delivered to
Buyer true, correct and complete copies of:

     (i) each of the Schedules for which Seller is responsible referenced in this Agreement;

     (ii) each of the written Assigned Contracts;

     (iii) each of the Owned Real Property Title Documents;

     (iv) each of the Realty Use Rights; and

     (v) each of the Plans.

     (b) Seller shall have delivered to Buyer true, correct and complete copies of the Fiscal 2006
Financial Statements at least seven (7) days prior to the Closing Date.

ARTICLE 6. CONDITIONS TO OBLIGATIONS OF SELLER.

     All of the obligations of Seller under this Agreement are subject to the fulfillment and
satisfaction of each and every of the following conditions on or prior to the Closing, any or all
of which may be waived in whole or in part by Seller:

     Section 6.1 Representations and Warranties. The representations and warranties of
Buyer contained in this Agreement (including without limitation in ARTICLE 3 hereof) shall be true
and correct in

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all material respects as of the date of this Agreement and on the Closing Date as
though made on the Closing Date, except to the extent such representations and warranties speak
only as of an earlier date; provided, however, that with respect to any such representation or
warranty or portion thereof that is qualified by materiality or similar qualifier, such
representation or warranty or portion thereof shall be true and correct in all respects.

     Section 6.2 Compliance with Agreements and Conditions. Buyer shall have performed and
complied with all agreements, covenants and conditions required by this Agreement to be performed
or complied with by Buyer prior to or on the Closing Date.

     Section 6.3 Closing Deliveries. Buyer shall have delivered, or caused to be
delivered, to Seller each of the items described in Section 1.10(b) of this Agreement.

     Section 6.4 Resolutions. Seller shall have received copies of duly adopted
resolutions of the Board of Directors of Buyer, certified as of the Closing Date by the Secretary
or Assistant Secretary of Buyer, authorizing and approving the execution of this Agreement and the
other Transaction Documents, the consummation of the transactions contemplated hereby and thereby
and all other action necessary to enable Buyer to comply with the terms hereof and thereof.

     Section 6.5 No Inconsistent Requirements. No legal action shall have been commenced
by any public authority or private party and no judicial or administrative order shall have been
issued seeking to enjoin or prohibit the transactions contemplated hereby.

     Section 6.6 Board Representation. At the Closing, one designee of Seller shall have
been appointed or elected to Buyer’s Board of Directors.

     Section 6.7 Shareholder Approval. The shareholders of Seller shall have authorized
and approved the execution and delivery of this Agreement and the other Transaction Documents to
which Seller is a party, the consummation of the transactions contemplated hereby and thereby and
all other action necessary to enable Seller to comply with the terms hereof and thereof.

     Section 6.8 No Material Adverse Effect. There shall not have occurred since the date
hereof a Material Adverse Effect with respect to Buyer.

     Section 6.9 Delivery of Disclosure Items. On or before the Disclosure Delivery Deadline, Buyer shall have delivered to Seller true,
correct and complete copies of each of the Schedules for which Buyer is responsible referenced in
this Agreement.

     Section 6.10 Opinion of Counsel. Seller shall have received from Andrews Kurth LLP,
special legal counsel to Buyer, a legal opinion letter, dated the Closing Date, addressing the
matters set forth in Exhibit F attached hereto, subject to appropriate assumptions and
qualifications.

ARTICLE 7. INDEMNITIES.

     Section 7.1 Indemnification of Buyer. Subject to the limitations set forth in Section
7.4 and Section 8.1, Seller shall indemnify, defend and hold harmless Buyer, its directors,
shareholders, officers, employees, subsidiaries, Affiliates and their respective directors,
shareholders, members, managers, partners, officers and employees (collectively, “Buyer
Indemnitees”) from and against and in respect of any and all loss, damage, liability, cost and
expense, including deductibles paid under insurance policies and reasonable attorneys’ and
accountants’ fees and amounts paid in settlement pursuant to Section 7.3(b) below (collectively,
“Losses”), suffered or incurred by any Buyer Indemnitee by reason of, or arising out of:

     (a) any breach of any representation or warranty made by Seller in this Agreement (other than
Section 2.14);

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     (b) the failure by Seller to perform any unwaived covenant or agreement in this Agreement on
its part to be performed;

     (c) all obligations and liabilities of Seller or the Business to the extent relating to
periods prior to the Closing, whether direct or indirect, fixed or contingent, known or unknown,
that are not part of the Assumed Liabilities;

     (d) any liability under the Worker Adjustment and Retraining Act of 1988, as amended (the
“WARN Act”), or any similar state or local legal requirement that may result from an
“Employment Loss,” as described in 29 U.S.C. § 2101(a)(6), caused by action or inaction of Seller
prior to the Closing; or

     (e) any claims, liabilities, obligations, damages, costs and expenses, known or unknown, fixed
or contingent, claimed or demanded by third parties against any Buyer Indemnitee arising out of or
resulting from (i) the operation of the Business prior to the Closing, (ii) ownership or operation
of the Transferred Assets and arising out of any fact or occurrence prior to the Closing or (iii)
the Excluded Assets or Retained Employees.

     Section 7.2 Indemnification of Seller. Subject to the limitations set forth in
Section 7.4 and Section 8.1, Buyer shall indemnify, defend and hold harmless Seller, its directors,
shareholders, officers, employees, subsidiaries, Affiliates and their respective directors,
shareholders, members, managers, partners, officers and employees (collectively, “Seller
Indemnitees”) from and against and in respect of any and all Losses suffered or incurred by any
Seller Indemnitee by reason of, or arising out of:

     (a) any breach of any representation or warranty made by Buyer in this Agreement;

     (b) the failure by Buyer to perform any unwaived covenant or agreement in this Agreement on
its part to be performed;

     (c) the failure by Buyer to timely discharge and pay the Assumed Liabilities;

     (d) all obligations and liabilities of Buyer or the Business to the extent relating to periods
from and after the Closing, whether direct or indirect, fixed or contingent, known or unknown;

     (e) any liability under the WARN Act or any similar state or local legal requirement that may
result from an “Employment Loss,” as described in 29 U.S.C. § 2101(a)(6), caused by action or
inaction of Buyer after the Closing; or

     (f) any claims, liabilities, obligations, damages, costs and expenses, known or unknown, fixed
or contingent, claimed or demanded by third parties against any Seller Indemnitee arising out of or
resulting from (i) the operation of the Business from and after the Closing, (ii) ownership or
operation of the Transferred Assets and arising out of any fact or occurrence from and after the
Closing or (iii) the Transferred Employees from and after the Closing.

     Section 7.3 Defense of Claims.

     (a) If any third-party claim or action arises after the Closing Date and during the Survival
Period (as defined in Section 8.1 below) for which (i) Seller may be liable to any Buyer Indemnitee
or (ii) Buyer may be liable to any Seller Indemnitee (for purposes of this ARTICLE 7, Buyer
Indemnitees and Seller Indemnitees are sometimes referred to as “Indemnitee(s)” and, Seller
and Buyer are sometimes referred to as “Indemnitor(s)”, in each case, as the context
requires), such Indemnitee will, if a claim is to be made against an Indemnitor pursuant to this
ARTICLE 7 or if the Indemnitee intends to take such claim into account in calculating the Threshold
(as defined below), give prompt notice to the Indemnitor of the commencement of such claim, but the
failure to notify the Indemnitor will not relieve the Indemnitor of any liabilities that the
Indemnitor may have to the Indemnitee, except to the extent that the Indemnitor demonstrates that
the defense of such action is prejudiced by the Indemnitees failure to give such notice. The
expenses of all proceedings,

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contests or lawsuits with respect to such claims or actions shall be
borne by Indemnitor(s). If Indemnitor wishes to assume the defense of such claim or action, then
Indemnitor shall give written notice to Indemnitees within twenty (20) days after notice from
Indemnitees of such claim or action (unless the claim or action reasonably requires a response in
less than twenty (20) days after the notice is given to Indemnitor, in which event Indemnitor shall
notify Indemnitees at least five (5) days prior to such reasonably required response date), and
Indemnitor shall thereafter assume the defense of any such claim or liability; provided that
Indemnitees may participate in such defense at their own expense; provided further that in the
event Indemnitees retain counsel as provided above, counsel retained by the Indemnitor shall be
lead counsel.

     (b) If Indemnitor does not assume the defense of, or if after so assuming Indemnitor fails to
defend, any such claim or action, then Indemnitees may defend against such claim or action in such
manner as they may deem appropriate (provided that Indemnitor may participate in such defense at
its own expense) and Indemnitees may settle such claim or litigation with the consent of Indemnitor
(which shall not be unreasonably withheld or delayed so long as any such settlement is solely for
money damages), and Indemnitor shall promptly reimburse Indemnitees for the amount of all expenses,
legal and otherwise consented to by Indemnitor. If no settlement of such claim or litigation is
made, Indemnitor shall satisfy any judgment rendered with respect to such claim or in such action,
before Indemnitees are required to do so, and pay all expenses, legal or otherwise, reasonably and
necessarily incurred by Indemnitees in the defense of such claim or litigation.

     (c) If a judgment is rendered against any of the Indemnitees in any action covered by the
indemnification hereunder, or any lien in respect of such judgment attaches to any of the assets of
any of the Indemnitees, Indemnitor shall immediately upon such entry or attachment pay such
judgment in full or discharge such lien unless, at the expense and direction of Indemnitor, an
appeal is taken under which the execution of the judgment or satisfaction of the lien is stayed.
If and when a final judgment is rendered in any
such action, Indemnitor shall promptly pay such judgment or discharge such lien before any of
Indemnitees is compelled to do so.

     Section 7.4 Limits on Indemnification.

     (a) No party shall have any right to seek indemnification under this Agreement with respect to
Losses contemplated by Section 7.1 or Section 7.2 that would otherwise be indemnifiable hereunder
(including Losses incurred by all other Indemnitees affiliated with or related to such party) until
such Losses exceed $3,350,000 in the aggregate (the “Threshold”); provided, however, that
any Loss (or series of related Losses) contemplated by Section 7.1 or Section 7.2 must equal or
exceed $50,000 to count towards the Threshold and to be indemnifiable pursuant to such sections, it
being understood by the parties that once the Threshold has been exceeded then the Indemnitor shall
be liable for all Losses in excess of $500,000 (other than any Loss or series of related Losses
that is less than $50,000); provided, further, that the provisions of this Section 7.4(a) shall not
apply to (i) any breach by Seller of the representations and warranties contained in Section 2.1,
Section 2.2, Section 2.3, Section 2.5 and Section 2.8(a), (ii) any breach by Buyer of the
representations and warranties contained in Section 3.1, Section 3.2, Section 3.3 and Section
3.4(b), (iii) the failure by any party to this Agreement to perform any unwaived covenant or
agreement in this Agreement on its part to be performed or (iv) indemnification with respect to any
and all Losses as contemplated by Section 7.1(c), Section 7.2(c) or Section 7.2(d).

     (b) Notwithstanding any provision of this Agreement, the aggregate liability of Seller under
this ARTICLE 7 shall be limited to an amount equal to $35,000,000; provided, however, that the
limitation set forth in this Section 7.4(b) shall not apply to (i) any breach by Seller of the
representations, warranties and covenants contained in Section 2.1, Section 2.2, Section 2.3,
Section 2.5 and Section 2.8(a), (ii) the failure by Seller to perform any unwaived covenant or
agreement in this Agreement on its part to be performed or (iii) indemnification with respect to
any and all Losses as contemplated by Section 7.1(c). Furthermore, subject to the preceding
provisions of this Section 7.4(b), Seller’s indemnification obligations hereunder shall be
satisfied solely out of the Stock Consideration and the cash and cash equivalents described in
Section 9.10.

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     (c) Notwithstanding any provision of this Agreement, the liability of Buyer under this ARTICLE
7 shall be limited to an amount equal to $35,000,000; provided, however, that the limitation set
forth in this Section 7.4(c) shall not apply to (i) any breach by Buyer of the representations and
warranties contained in Section 3.1, Section 3.2, Section 3.3 and Section 3.4(b), (ii) the failure
by Buyer to perform any unwaived covenant or agreement in this Agreement on its part to be
performed or (iii) indemnification with respect to any and all Losses as contemplated by Section
7.2(c) or Section 7.2(d).

     Section 7.5 Exclusive Remedies. After the Closing, the remedies provided by this
ARTICLE 7 shall be the sole and exclusive remedy for the parties to this Agreement with respect to
any dispute arising from, or related to, this Agreement except in the case of fraud and except that
injunctive relief (including specific performance) shall continue to be available to the extent
such remedy is in respect of a then surviving representation, warranty, covenant or agreement.

     Section 7.6 Allocation. Any payment of indemnifications by Seller pursuant to Section
7.1 shall be treated by the parties for tax purposes as an adjustment to the Purchase Price.

ARTICLE 8. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS.

     Section 8.1  Survival.

     (a) The representations, warranties, covenants, agreements and indemnities of the parties
contained in this Agreement shall survive the consummation of the transactions contemplated herein
and shall continue in full force and effect for the period (the “Survival Period”)
beginning on the Closing Date and continuing for a period of eighteen (18) months (other than the
representations and warranties set forth in Section 2.14, which shall terminate upon the Closing);
provided, however, that obligations under Section 7.1(c), obligations under Section 7.2(c),
obligations under Section 7.2(d) and the obligation to indemnify and hold harmless an indemnified
party in respect of breaches of the representations and warranties in Section 2.11 (Taxes) and
Section 2.12 (ERISA), shall, in each such case, survive the Closing Date until the expiration of
the applicable statute of limitations period; and provided, further, that the Survival Period shall
be extended automatically to include any time period necessary to resolve a specific claim for
indemnification which was made before expiration of the Survival Period but not resolved prior to
its expiration; and provided, further, that any such extension shall apply only as to claims
asserted and not so resolved within the Survival Period.

     (b) The covenants and agreements made by the parties in this Agreement shall survive the
Closing Date in accordance with their respective terms but, if Closing occurs, any covenant and
agreement to be performed fully on or prior to the Closing Date shall be of no further force and
effect after the Closing Date.

     (c) No party hereto (or its Affiliates) shall, under any circumstance, be liable to any other
party (or its Affiliates) for any consequential, exemplary, special, incidental or punitive damages
claimed by such other party under the terms of or due to any breach of this Agreement, including
but not limited to, loss of revenue of income, cost of capital, or loss of business reputation or
opportunity.

ARTICLE 9. ADDITIONAL AGREEMENTS.

     Section 9.1 Cooperation. The parties shall reasonably cooperate with each other in
connection with any steps required to be taken as part of their respective obligations under this
Agreement, and the parties shall use their commercially reasonable efforts to consummate the
transactions contemplated herein and to fulfill their obligations hereunder, including without
limitation causing to be fulfilled at the earliest practical date the conditions precedent to the
obligations of the parties to consummate the transactions contemplated hereby. Without limiting
the generality of the foregoing, Seller hereby covenants and agrees that, prior to the Closing, it
will use its commercially reasonable efforts to cause the shareholders of Seller to authorize and
approve the execution and delivery of this Agreement and the other Transaction Documents to which
Seller is a party, the consummation of the transactions contemplated hereby and thereby and all
other

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action necessary to enable Seller to comply with the terms hereof and thereof. Without the
prior written consent of the other party, no party hereto may take any intentional action that
would cause the conditions precedent to the obligations of the parties hereto to effect the
transactions contemplated hereby not to be fulfilled, including without limitation taking or
causing to be taken any action which would cause the representations and warranties made by such
party herein not to be true, correct and complete as of the Closing.

     Section 9.2 Access.

     (a) Following the date of this Agreement, for the purpose of permitting Buyer to conduct a due
diligence review of the assets and business of Seller (including without limitation the Business),
Seller will permit Buyer and its agents and representatives to have reasonable access during normal
business hours to
premises in which Seller conducts its business (including without limitation the Business) and
to all of its assets, books, records, personnel, customers and suppliers and will furnish Buyer
such financial data, operating data and other information as Buyer may reasonably request. Contact
with customers and suppliers shall be coordinated between the parties and shall be done on a
mutually agreeable basis. Assuming compliance with the requirements of this Section 9.2, Buyer
will complete its due diligence by November 30, 2006.

     (b) Following the date of this Agreement, for the purpose of permitting Seller to conduct a
due diligence review of the assets and business of Buyer, Buyer will permit Seller and its agents
and representatives to have reasonable access during normal business hours to premises in which
Buyer conducts its business and to all of its assets, books, records, personnel, customers and
suppliers and will furnish Seller such financial data, operating data and other information as
Seller may reasonably request. Seller will complete its due diligence by November 30, 2006.

     Section 9.3 Non-Compete.

     (a) Non-Compete. Seller shall not, for a period of two (2) years following the
Closing Date, directly or indirectly, for itself or on behalf of or in conjunction with any Person:

     (i) engage, as an officer, partner, director, shareholder, owner, partner, joint
venturer, member, manager, employee, contractor, lender or in a managerial or advisory
capacity, or otherwise, nor shall it cause or permit any Affiliate, whether as an employee,
independent contractor, consultant, advisor, or sales representative, or in any other
capacity whatsoever, to engage in any business offering any services or products in
competition with the Business, in the Territory serviced by Buyer or any of its Affiliates.
For purposes hereof, the “Territory” shall mean the areas identified on Annex
E;

     (ii) call upon or employ any Person who is, at that time, or has been, within two (2)
years prior to that date, within the Territory, an employee or agent of Buyer or any of its
Affiliates for the purpose or with the intent of enticing such employee away from or out of
the employ of Buyer or any of its Affiliates, or

     (iii) call upon any Person who is, at that time, or has been, within two (2) years
prior to that time, a customer or supplier of Buyer or any of its Affiliates within the
Territory for the purpose of soliciting or selling services or products in competition with
Buyer or any of its Affiliates within the Territory.

For purposes of this Agreement, the term “Affiliate” means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under common control with, such Person;
and “control” means the possession, directly or indirectly of the power to direct or cause
the direction of management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

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     (b) Equitable Relief. Because of the difficulty of measuring economic losses as a
result of a breach of the foregoing covenants, and because of the immediate and irreparable damage
that could be caused for which Buyer would have no other adequate remedy, the parties agree that
the foregoing covenant may be enforced by Buyer or its Affiliates by injunctions, restraining
orders and other equitable actions in addition to any other relief to which Buyer may be entitled,
without the necessity of posting a bond.

     (c) Reasonable Restraint. The parties hereto acknowledge and agree that the
provisions contained in this Section 9.3 are ancillary or part of an otherwise enforceable
agreement and contain limitations as to time and scope of activity to be restrained that are
reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other
business interest of Buyer.

     (d) Material and Independent Covenant. Seller acknowledges that its agreement with
the covenants set forth in this Section 9.3 are material conditions to Buyer’s agreement to execute
and deliver this Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Section 9.3 shall be construed as an agreement independent of any other provision
in this Agreement or any other Transaction Document, and the existence of any claim or cause of
action of Seller or any of its Affiliates, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement of such covenants. It is specifically agreed that the
two (2) year period during which the agreements and covenants made in this Section 9.3 shall be
computed by excluding from such computation any time during which Seller is in violation of any
provision of this Section 9.3. The covenants contained in this Section 9.3 shall not be affected
by any breach of any other provision hereof by any party hereto.

     Section 9.4 Transferred Employees; Severance.

     (a) Upon the Closing, Seller shall terminate all employees of the Business. Buyer shall
invite all employees of the Business to apply for consideration for employment with Buyer upon
Closing at terms and conditions of employment set by Buyer, in its sole discretion. Seller shall
provide Buyer with all information reasonably requested by Buyer pertaining to such employees. Any
such employees to whom Buyer offers employment and who elect to become employees of Buyer are
hereinafter referred to collectively as “Transferred Employees” (and individually as a
“Transferred Employee”) and all other employees are hereafter referred to as “Retained
Employees”). Nothing in this Agreement shall be construed as giving any person any right to
become an employee of Buyer or to any terms and conditions of employment, including without
limitation any type or level of compensation or benefits, with Buyer. Nothing in this Agreement is
intended to, nor does it confer any rights or privileges upon, any person not a party to this
Agreement.

     (b) Seller shall be responsible for all pre-Closing obligations for Transferred Employees as
of the Closing Date (except for those liabilities that are accrued on the Fiscal 2006 Financial
Statements), and such pre-Closing obligations shall be vested and paid by Seller on the Closing
Date. Seller shall be responsible for all liabilities and costs arising from or relating to any
claims by or on behalf of persons who at or prior to the Closing are or were employees of Seller in
the Business, in respect of severance pay, paid time off and accrued vacation for employees,
accrued sick leave, personal days, shutdown benefits, and any other similar obligations or
liabilities (the “Termination Costs”) relating to the termination of such employees’
employment with Seller, or any break in service or any other event entitling someone to payments
for such benefits (a “Termination”), which occurs on or prior to the Closing.

     (c) Buyer shall be responsible for all Termination Costs accruing from and after the Closing
Date relating to a Termination by Buyer which occurs after the Closing, in respect of any
Transferred Employee.

     Section 9.5 Employee Benefits and Welfare Plans.

     (a) Buyer shall not assume any liabilities and obligations of Seller relating to employees or
employee benefits. Without limiting the foregoing, Seller shall retain, and Buyer shall not
assume, obligations and liabilities with respect to (i) any Plans or arrangements maintained,
sponsored, contributed to, or required to be contributed to by Seller relating to Transferred
Employees, Retained Employees or any other

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present, former or retired employees of Seller,
including without limitation liabilities and obligations for retiree benefits and (ii) except as
provided in this Section 9.5, any other employee-related liabilities arising at or before, or by
reason of, the Closing, or otherwise in respect of any period at or before the Closing.

     (b) Buyer shall provide or offer to provide “continuation coverage” (as defined in Section
4980B(f) of the Code) under Buyer’s group medical plan to Seller’s covered employees, including
Retained
Employees or former employees, and their qualified beneficiaries (as defined in Section
4980B(g) of the Code.

     (c) No assets or liabilities with respect to Transferred Employees shall be transferred, as a
result of this Agreement, from any pension plans maintained, sponsored, contributed to, or required
to be contributed to by Seller applicable to its employees to any plan maintained or established by
Buyer, and Seller shall retain all assets related thereto and all obligations to fund or otherwise
provide benefits accrued by Transferred Employees under such pension plans before the Closing.

     (d) Buyer shall provide credit for periods of service with Seller under Buyer’s plans,
programs, and similar agreements, commitments or arrangements that provide benefits or compensation
to or for the benefit of Buyer’s employees, including without limitation eligibility and vesting
under any qualified employee benefit plan maintained by Buyer and credit under any seniority based
benefit or compensation arrangement. Buyer shall further provide credit under Buyer’s group
medical plan for any deductible or co-payment made by Seller’s employee’s prior to the Closing Date
under Seller’s group medical plan.

     (e) Without limitation as to the provisions of Section 9.5(a) above, Seller will retain
liability for all workers’ compensation liabilities of the Transferred Employees due to or based
upon events occurring on or before the Closing, whether or not filed on or before the Closing.
Buyer shall be liable for workers’ compensation liabilities of the Transferred Employees due to or
based upon events occurring after the Closing.

     Section 9.6 Consents; Assignments; Additional Post-Closing Covenants. The parties
will use their respective commercially reasonable efforts to obtain any consent, approval or
amendment required to assign or transfer the Transferred Assets. With respect to the Required
Consents, Seller shall use its commercially reasonable efforts to obtain the consents as soon as
practicable after the Closing. Seller shall execute any such further documents or other
instruments reasonably requested to complete the conveyance, or to fully vest in Buyer, good and
marketable title to the Transferred Assets. In addition, from and after Closing, Seller agrees to
promptly forward to Buyer all inquiries, notices, calls and other requests relating to the Business
or the Transferred Assets.

     Section 9.7 Expenses. Buyer shall pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and carrying out the transactions
contemplated hereby. Seller shall pay all costs and expenses incurred or to be incurred by it in
negotiating and preparing this Agreement and carrying out the transactions contemplated hereby.

     Section 9.8 Exclusivity. Until the termination of this Agreement, (a) neither Seller
nor its representatives or agents will solicit offers from, negotiate with or provide financial or
operating information to, any third party for the purpose of determining any interest in acquiring
Seller or any of its securities or material assets, (b) Seller and its representatives will cease
any current discussions with any third parties concerning an acquisition transaction and shall
negotiate exclusively with Buyer in connection therewith and (c) Seller will promptly notify Buyer
in the event that it or any of its representatives receives any proposal concerning an acquisition
of all or any part of Seller’s equity interests or all or any significant part of Seller’s assets,
which notice shall include a copy of such proposal, if in writing or a summary of such proposal, if
oral.

     Section 9.9 Public Disclosure. The parties shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any press release or
other public statements with respect to the transactions contemplated by this Agreement, and shall
not issue any such press release or

-29-

 

make any such public statement
prior to such consultation and without the prior written consent of the other party, except as
may be required by applicable Law or court process or by obligations pursuant to any listing
agreement with any national securities exchange; provided, however, that any such required
disclosure shall be in a form approved by each of Buyer and Seller (which such approval shall not
be unreasonably withheld or delayed).

     Section 9.10 Lock-Ups. Seller hereby covenants and agrees that:

     (a) for a period commencing on the Closing Date and continuing through the date that is one
(1) year after the Closing Date, Seller will not directly or indirectly sell, offer, contract or
grant any option to sell (including without limitation any short sale), pledge, distribute
(including without limitation by means of a stock dividend or other distribution to shareholders)
or otherwise dispose of or transfer (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition of) any shares of Common Stock constituting
all or any portion of the Stock Consideration; and

     (b) for a period commencing on the Closing Date and continuing through the date that is
eighteen (18) months after the Closing Date, Seller will maintain in the Transaction Account cash
and cash equivalents in an aggregate amount not less than $10,000,000.

     Section 9.11 Delivery of Disclosure Items.

     (a) On or before the Disclosure Delivery Deadline, Seller shall deliver to Buyer true, correct
and complete copies of:

     (i) each of the Schedules for which Seller is responsible referenced in this Agreement;

     (ii) each of the written Assigned Contracts;

     (iii) each of the Owned Real Property Title Documents;

     (iv) each of the Realty Use Rights; and

     (v) each of the Plans.

     (b) Seller shall use its commercially reasonable efforts to deliver to Buyer true, correct and
complete copies of the Fiscal 2006 Financial Statements on or prior to November 27, 2006, and in
any event as soon as practicable after the date hereof.

     (c) On or before the Disclosure Delivery Deadline, Buyer shall:

     (i) deliver to Seller true, correct and complete copies of each of the Schedules for
which Buyer is responsible referenced in this Agreement; and

     (ii) apply for the Owner Policies of Title Insurance, as more fully described in
Section 5.7.

     Section 9.12 Environmental Matters. The parties hereby acknowledge and agree that, on
and after the date of this Agreement and prior to the Closing, Buyer may, at its election and
expense, conduct one or more Phase I environmental assessments (each a “Phase I”) on any of
the Real Property otherwise constituting part of the Transferred Assets (the “Subject Real
Property”). In the event that any such Phase I shall identify any Reportable Conditions on any
Subject Real Property, then Buyer may, at its election and expense, conduct one or more Phase
II environmental assessments (each a “Phase II”) on such Subject Real Property. In the
event that any such Phase II shall identify any Reportable Conditions on such Subject Real
Property, then at Buyer’s election (and in its sole discretion), notwithstanding anything to the
contrary set forth in this Agreement, either:

-30-

 

     (a) such Subject Real Property shall be deemed to be an Excluded Asset, and the Closing Cash
Consideration shall be reduced by an amount equal to the fair market value of such Subject Real
Property (provided that as used herein “fair market value” means the value that would be paid by a
willing buyer to an unaffiliated willing seller in a transaction not involving distress or
necessity of either party); or

     (b) after the Closing, Seller shall (at its expense and under its direction and control) use
its commercially reasonable best efforts to diligently and promptly remediate all such Reportable
Conditions in accordance with applicable Environmental Laws.

Notwithstanding anything to the contrary set forth in this Agreement, any and all expenses of
Seller or other costs to Seller in connection with any remediation pursuant to clause (b) above
(including any such expenses or costs arising from third party claims) shall not constitute
“Losses” for which indemnification might otherwise be available to any Buyer Indemnitee pursuant to
Section 7.1 of this Agreement or to any Seller Indemnitee pursuant to Section 7.2 of this
Agreement. Accordingly, all such costs and expenses shall be disregarded for all purposes under
Section 7.4 of this Agreement.

     Section 9.13 Post-Closing Title Insurance Matters. After the Closing, Seller shall
use its commercially reasonable efforts to assist Buyer in obtaining the Owner Policies of Title
Insurance, as more fully described in Section 5.7.

     Section 9.14 Post-Closing Auditor Matters. If the Closing occurs, then for so long as
Buyer would be required under the rules and regulations of the SEC (including without limitation
Regulation S-X), to include any financial statements of Seller (or financial statements relating to
the Transferred Assets) in a registration statement of Buyer filed under the Securities Act, (a)
Seller, at Buyer’s sole cost and expense, shall allow Buyer to include the financial statements of
Seller for the three year period ended October 31, 2006 in any filing by Buyer with the SEC and/or
in any offering memorandum or circular prepared by Buyer in connection with a securities offering
conducted pursuant to Rule 144A under the Securities Act and (b) Seller, at Buyer’s request, will
request its auditors to provide to Buyer access to all work papers and accounting records in its
possession relating to Seller in connection with such SEC filings or securities offerings, and
Buyer shall pay all costs and expenses of such auditors in connection with such matters.

     Section 9.15 Post-Closing Accounting Matters. If the Closing occurs, then for a
period of three (3) months after the Closing Date, Buyer will use its commercially reasonable
efforts to cooperate with Seller such that Seller can obtain copies of its accounting records from
the computer equipment, hardware and software transferred to Buyer as part of the Transferred
Assets.

     Section 9.16 Tax Cooperation. Buyer and Seller shall reasonably cooperate in good
faith to minimize, to the fullest extent possible under provisions of all applicable laws, the
amount of any taxes payable in connection with the transfer of the Transferred Assets pursuant to
this Agreement with the understanding that such cooperation shall not affect the Parties’
respective responsibilities for reporting, remitting and paying taxes or their obligations set
forth in Section 1.8.

ARTICLE 10. TERMINATION.

     Section 10.1 Termination.

     (a) This Agreement may be terminated on or prior to the Closing Date as follows:

     (i) by mutual written consent of Buyer and Seller;

     (ii) by Seller, if (i) there has been a breach by Buyer of any representation,
warranty, covenant or agreement set forth in this Agreement or if any representation or
warranty of Buyer shall have become untrue, in either case such that the conditions set
forth in ARTICLE 6 would not be

-31-

 

satisfied and (ii) such breach is not curable, or, if
curable, is not cured within 30 days after written notice of such breach is given by Seller
to Buyer; provided, however, that the right to terminate this Agreement pursuant to this
section shall not be available to Seller if Seller, at such time, is in material breach of
any representation, warranty, covenant or agreement set forth in this Agreement such that
the conditions set forth in ARTICLE 5 shall not be satisfied;

     (iii) by Buyer, if (i) there has been a breach by Seller of any representation,
warranty, covenant or agreement set forth in this Agreement or if any representation or
warranty of Seller shall have become untrue, in either case such that the conditions set
forth in ARTICLE 5 would not be satisfied and (ii) such breach is not curable, or, if
curable, is not cured within 30 days after written notice of such breach is given by Buyer
to Seller; provided, however, that the right to terminate this Agreement pursuant to this
section shall not be available to Buyer if Buyer, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement such that the
conditions set forth in ARTICLE 6 shall not be satisfied;

     (iv) by either Buyer or Seller upon written notice to the other if the Closing shall
not have occurred by December 31, 2006 (or January 31, 2007, if applicable); provided,
however, that the right to terminate this Agreement pursuant to this clause shall not be
available to any party whose breach of any provision of this Agreement resulted in the
Closing not occurring by such date;

     (v) by Seller, if holders of 10% or more of the outstanding shares of the common stock,
par value $100.00 per share, of Seller exercise their rights to dissent from the sale of the
Transferred Assets pursuant to this Agreement and seek the fair cash value of their shares
of such common stock in accordance with applicable provisions of the Louisiana Business
Corporation Law;

     (vi) by Seller, if Buyer fails to notify Seller on or before November 30, 2006 that
Buyer is reasonably satisfied with its due diligence review of the Transferred Assets and
Business; or

     (vii) by Buyer, if Seller fails to notify Buyer on or before November 30, 2006 that
Seller is reasonably satisfied with its review of the assets and business of Buyer.

     (b) The termination of this Agreement shall be effectuated by the delivery of a written notice
of such termination from the party terminating this Agreement to the other party.

     Section 10.2 Obligations upon Termination. In the event that this Agreement shall be
terminated pursuant to Section 10.1, all obligations of the parties hereto under this Agreement
shall terminate, there shall be no liability of either party hereto to the other party hereto and
this Agreement shall be void and of no effect, other than Section 1.4 and Section 9.7 and ARTICLE
11 below which shall survive the termination of this Agreement.

ARTICLE 11. MISCELLANEOUS.

     Section 11.1 Notices.

     (a) All notices, demands or other communications required or permitted to be given or made
hereunder shall be in writing and delivered personally or sent by nationally recognized overnight
courier or by facsimile transmission to the intended recipient thereof (provided that a copy is
sent on the same day to the recipient by nationally recognized overnight courier) at its address,
or facsimile number set out below. Any such notice, demand or communication shall be deemed to
have been duly given immediately (if delivered personally or given or made by confirmed facsimile),
or the next Business Day if given by courier, and in providing same it shall be sufficient to show
that delivery personally or by courier was confirmed in writing or that receipt of a facsimile was
confirmed in writing or by return facsimile by the recipient. The addresses and facsimile numbers
of the parties for purposes of this Agreement are:

-32-

 

	 	 	 	 	 
	 

	 	If to Buyer:
	 	Allis-Chalmers Energy Inc.
	 

	 	 	 	5075 Westheimer, Suite 890
	 

	 	 	 	Houston, Texas 77056
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	Facsimile No.: (713) 369-0555
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Andrews Kurth LLP
	 

	 	 	 	600 Travis Street, Suite 4200
	 

	 	 	 	Houston, Texas 77002
	 

	 	 	 	Attn: Robert V. Jewell
	 

	 	 	 	Facsimile No.: (713) 238-4285
	 
	 	 	 	 
	 

	 	If to Seller:
	 	Oil & Gas Rental Services, Inc.
	 

	 	 	 	948 DeGravelle Road
	 

	 	 	 	Amelia, Louisiana 70340
	 

	 	 	 	Attn: Burt A. Adams, President and Chief Executive Officer
	 

	 	 	 	Facsimile No.: (985) 631-3427
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	Oil & Gas Rental Services, Inc.
	 

	 	 	 	228 St. Charles Avenue, Suite 814
	 

	 	 	 	New Orleans, Louisiana 70130
	 

	 	 	 	Attn: Brad A. Adams, Vice President and General Counsel
	 

	 	 	 	Facsimile No.: (504) 522-0748
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Phelps Dunbar LLP
	 

	 	 	 	365 Canal Street, Suite 2000
	 

	 	 	 	New Orleans, Louisiana 70130
	 

	 	 	 	Attn: Mark A. Fullmer
	 

	 	 	 	Facsimile No.: (504) 568-9130

     (b) Any party may change the address to which notices, requests, demands or other
communications to such party shall be delivered or mailed by giving notice thereof to the other
party hereto in the manner provided herein.

     (c) For the purposes of this Agreement, “Business Day” means any day, other than a
Saturday or Sunday, on which banks in Houston, Texas or New Orleans, Louisiana are required to be
open for regular banking business.

     Section 11.2 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall constitute one and
the same instrument. Delivery of a copy of this Agreement bearing an original signature by
facsimile transmission or by electronic mail in “portable document format” form shall have the same
effect as physical delivery of the paper document bearing the original signature.

     Section 11.3 Entire Agreement. This Agreement and the Confidentiality Agreement dated
as of October 4, 2006, by and between Seller and Buyer (the “Confidentiality Agreement”),
together constitute the entire agreement between the parties with respect to the subject matter
hereof and thereof, and this Agreement, the Confidentiality Agreement and the other Transaction
Documents contain the sole and entire agreement among the parties with respect to the matters
covered hereby and thereby. There are no representations, warranties, covenants, agreements or
commitments by the parties with respect to the subject matter of this Agreement except as set forth
in this Agreement, the Confidentiality Agreement and the other Transaction Documents.

-33-

 

     Section 11.4 Assignment; Binding Effect. This Agreement shall inure to the benefit of
and be binding on the parties hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by any party hereto without the express prior written consent of the
other party (which such consent shall be granted or withheld in the sole discretion of such other
party) and any attempted assignment, without such consent, shall be null and void. Notwithstanding
the foregoing, (a) Buyer may (without such consent) assign and transfer any of its rights to
acquire the Transferred Assets hereunder to Rental Tools; provided, however, that any such
assignment shall not relieve Buyer of its obligations hereunder, and (b) Seller may ( without such
consent) assign and transfer all of its rights and obligations hereunder to one or more entities
organized by Seller in connection with a reorganization of Seller after the date hereof; provided,
however, that any such assignment shall not relieve Seller of its obligations hereunder and the
percentage ownership of such entities by the owners thereof will be substantially identical to
their ownership of the common stock of Seller.

     Section 11.5 Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State of Texas.

     Section 11.6 Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to the extent that they
do not violate any applicable laws and are intended to be limited to the extent necessary to render
this Agreement legal, valid and enforceable. If any term of this Agreement, or part thereof, not
essential to the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the parties that the
remaining terms hereof, or part thereof, shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms, or parts thereof, shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of
this Agreement shall be replaced by a valid provision which will implement the commercial purpose
of the illegal, invalid or unenforceable provision.

     Section 11.7 Amendment; Waiver. This Agreement may be amended, supplemented or otherwise modified only by a written
instrument executed by the parties hereto. Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, but only if such waiver is
evidenced by a writing signed by such party. No failure on the part of any party hereto to
exercise, and no delay in exercising any right, power or remedy created hereunder, shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power or remedy by any
such party preclude any other or further exercise thereof or the exercise of any other right, power
or remedy. No waiver by any party hereto to any breach of or default in any term or condition of
this Agreement shall constitute a waiver of or assent to any succeeding breach of or default in the
same or any other term or condition hereof.

     Section 11.8 No Third-Party Beneficiaries. Except as specifically set forth in
Section 7.1 and Section 7.2 above, this Agreement does not create any rights, claims or benefits
inuring to any Person that is not a party hereto nor create or establish any third-party
beneficiary hereto.

     Section 11.9 Headings; Construction. The headings of particular provisions of this
Agreement are inserted for convenience only and shall not be construed as a part of this Agreement
or serve as a limitation or expansion on the scope of any term or provision of this Agreement.
This Agreement shall be construed as a whole and in accordance with its fair meaning and without
regard to any presumption or other rule requiring construction against the party preparing this
Agreement or any part hereof.

     Section 11.10 Time of Performance. Time is of the essence.

     Section 11.11 Exhibits, Schedules, Etc. All exhibits, schedules, appendices or
annexes hereto are hereby incorporated by reference and made a part of this Agreement. All
statements contained in certificates delivered or furnished on behalf of any party pursuant hereto
shall be deemed representations and warranties by the party delivering such certificate.

-34-

 

     Section 11.12 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement or any other Transaction Document shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration Association
(“AAA”) as then in effect by three (3) arbitrators, one of which shall be designated by
Seller, one of which shall be designated by Buyer and one of which shall be designated jointly by
the designees of Seller and Buyer in accordance with such rules. Buyer or Seller shall designate
an arbitrator within five (5) days of the day on which Seller or Buyer receives written notice of
the designation of an arbitrator pursuant to this Section 11.12. If Seller or Buyer fails to
timely designate an arbitrator, then the arbitrator designated by Seller or Buyer, as applicable,
shall designate one (1) arbitrator in accordance with such rules and those arbitrators shall
designate the third arbitrator in accordance with such rules. A condition precedent to the
appointment of each arbitrator is that he or she agree that the arbitrators shall render a decision
within thirty (30) days after conclusion of the last testimony presented at the hearings and that
once begun, the hearings will if practicable continue more or less on a daily basis through the
conclusion of the testimony. The arbitrators shall determine the dates and times when hearings
shall be held taking into account the convenience of the parties, the witnesses and the location of
the evidence to be presented at the particular hearing. The arbitrators shall base their decision
upon any evidence which is admissible in accordance with Federal Rules of Evidence. In rendering
their decision, the arbitrators shall make specific findings of fact taking into account applicable
judicial precedence and industry practice, and the decision shall be signed by at least a majority
of the arbitrators. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §
1-16 to the exclusion of state laws inconsistent therewith. The fees and expenses of the
arbitrators shall be
borne equally by Seller and Buyer. The place of arbitration shall be New Orleans, Louisiana.
The arbitrators’ decisions shall be final and binding on all parties to the dispute and may be
entered in any court having jurisdiction. The arbitrators shall have the power to award costs and
expenses of the prevailing party in the dispute.

     Section 11.13 Knowledge. “Knowledge” means (a) with respect to Seller, the
actual knowledge of any of Burt A. Adams, Bruce A. Adams, Brad A. Adams or Byron A. “Red” Adams,
Sr. and (b) with respect to Buyer, the actual knowledge of any of Munawar H. Hidayatallah, David
Wilde, Victor M. Perez or Theodore F. Pound III.

     Section 11.14 Disclosure Schedules. The disclosures in the disclosure schedule of
each party shall expressly refer to a Section of this Agreement; provided, however, that
disclosures in the disclosure schedule of each party and expressly referring to a Section of this
Agreement may incorporate by reference the disclosures in the disclosure schedule of such party
with respect to any other Section of this Agreement; and provided further, that any fact or
circumstance disclosed with respect to a particular Section shall likewise be deemed to be a
disclosure with respect to another Section if the fact or circumstances disclosed may reasonably be
deemed pertinent to such other Section.

(Remainder of Page Intentionally Left Blank)

-35-

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written, to be effective as of the Effective Time.

	 	 	 	 	 
	 	BUYER:

ALLIS-CHALMERS ENERGY INC.

 	 
	 	By:  	/s/ Munawar H. Hidayatallah
 	 
	 	Name:  	Munawar H. Hidayatallah 	 
	 	Title:  	Chief Executive Officer 	 

	 	 	 	 	 
	 	SELLER:

OIL & GAS RENTAL SERVICES, INC.

 	 
	 	By:  	/s/ Burt A. Adams
 	 
	 	Name:  	Burt A. Adams 	 
	 	Title:  	President and Chief Executive Officer 	 
	 

 

 

LIST OF ATTACHMENTS

	 	 	 
	ANNEX	 	DESCRIPTION
	A

	 	Working Capital Calculation
	B

	 	Persons to Execute Non-Compete Agreements and Employment
Agreements
	C

	 	Initial Financial Statements
	D

	 	Adjusted EBITDA Calculations
	E

	 	Non-Competition and Non-Solicitation

	 	 	 
	EXHIBIT	 	DESCRIPTION
	A

	 	Form of Bill of Sale and Assumption Agreement
	B

	 	Form of Non-Compete Agreement
	C-1, C-2, C-3 and C-4

	 	Forms of Employment Agreement
	D

	 	Form of Investor Rights Agreement
	E

	 	Matters to be Addressed in Opinion Letter of Phelps Dunbar LLP
	F

	 	Matters to be Addressed in Opinion Letter of Andrews Kurth LLP

	 	 	 
	SCHEDULES	 	DESCRIPTION
	Schedule 1.1(a)

	 	Equipment and Inventory
	Schedule 1.1(b)

	 	Permits
	Schedule 1.1(c)

	 	Intangible Assets
	Schedule 1.1(f)

	 	Assigned Contracts
	Schedule 1.1(k)

	 	Real Property
	Schedule 1.1(l)

	 	Receivables
	Schedule 1.1(m)

	 	Interests in Oil and Gas Properties
	Schedule 2.3

	 	Due Authorization; Valid Execution; No Inconsistent Obligations
	Schedule 2.4

	 	Required Consents
	Schedule 2.5

	 	Title to Assets; Sufficiency
	Schedule 2.6

	 	Employees
	Schedule 2.7

	 	Franchises, Licenses, Personal Property, Assigned Contracts
	Schedule 2.8(b)

	 	Realty Use Rights and Owned Real Property Title Documents
	Schedule 2.14

	 	Environmental Matters
	Schedule 2.15

	 	Insurance
	Schedule 2.16

	 	Intellectual Property
	Schedule 3.3

	 	Due Authorization; Valid Execution; No Inconsistent Obligations
	Schedule 3.5

	 	Consents
	Schedule 5.10

	 	Release of Certain Liens

 

 

ANNEX A

Working Capital Calculation

Oil & Gas Rental Services, Inc. Working Capital Calculation1

	 	 	 	 	 	 	 	 	 
	 	 	Fiscal Year 2004	 	 	Fiscal Year 2005	 
	Accounts Receivable, Trade
	 	$	7,709,563	 	 	$	13,182,407	 
	Accounts Receivable, Other
	 	 	47,096	 	 	 	108,857	 
	Prepaid Expenses
	 	 	282,733	 	 	 	298,689	 
	 
	 	 	 	 	 	 
	Current Assets
	 	 	8,039,392	 	 	 	13,589,953	 
	 
	 	 	 	 	 	 	 	 
	Trade Accounts Payable
	 	 	823,179	 	 	 	1,011,818	 
	Accrued Expenses
	 	 	1,371,672	 	 	 	1,898,890	 
	 
	 	 	 	 	 	 
	Current Liabilities
	 	 	2,194,851	 	 	 	2,910,708	 
	 
	 	 	 	 	 	 	 	 
	Working Capital
	 	$	5,844,541	 	 	$	10,679,245	 
	 
	 	 	 	 	 	 

 

			
	1	 	Source: Oil & Gas Rental Services, Inc. Fiscal Year ended October 31, 2005 Audited Financial
Report (Balance Sheet, Exhibit A).

 

 

ANNEX B

Persons to Execute Non-Compete Agreements and Employment Agreements

Brad A. Adams

Bruce A. Adams

Burt A. Adams

Byron A. “Red” Adams, Sr.

 

 

ANNEX D

Adjusted EBITDA Calculations

Oil & Gas Rental Services, Inc. Adjusted EBITDA Calculation1

	 	 	 	 	 	 	 	 	 
	 	 	Fiscal Year 2004	 	 	Fiscal Year 2005	 
	Net Income2
	 	$	18,484,395	 	 	$	28,226,466	 
	Plus: Fixed Asset Depreciation2
	 	 	5,121,059	 	 	 	4,830,722	 
	Plus: G&A Depreciation and Amortization3
	 	 	993,881	 	 	 	928,723	 
	Plus: Depletion of Intangible Drilling Costs4
	 	 	72,260	 	 	 	318,651	 
	Plus: Interest & Dividends (Income)2
	 	 	(371,286	)	 	 	(613,884	)
	 
	 	 	 	 	 	 
	Adjusted EBITDA
	 	$	24,300,309	 	 	$	33,690,678	 
	 
	 	 	 	 	 	 

 

			
	1	 	Source: Oil & Gas Rental Services, Inc. Fiscal Year ended October 31, 2005 Audited Financial
Report.
	 
	2	 	From Statements of Income, Exhibit B.
	 
	3	 	From Schedule of General and Administrative Expenses, Schedule 1.
	 
	4	 	Depletion amounts included in calculation of the line item entitled Income (Loss) of Oil and Gas
Drilling Ventures, Net, in Statements of Income, Exhibit B.

 

 

ANNEX E

Non-Competition and Non-Solicitation

     In accordance with Section 9.3 of this Agreement, Seller is restricted from non-competition
and non-solicitation within the locations where Rental Tools conducts business and/or where Rental
Tools contemplates conducting business within the next two (2) years, as listed below:

	 	1.	 	Morgan City, Louisiana;
	 
	 	2.	 	Victoria, Texas;
	 
	 	3.	 	State of Texas;
	 
	 	4.	 	State of Mississippi;
	 
	 	5.	 	State of Alabama;
	 
	 	6.	 	State of Arkansas;
	 
	 	7.	 	Offshore in Gulf of Mexico; and
	 
	 	8.	 	The Parishes of Louisiana listed below:

	 	 	 	 	 
	ACADIA PARISH

	 	SABINE PARISH
	 	PLAQUEMINES PARISH
	ALLEN PARISH

	 	ST. BERNARD PARISH
	 	POINTE COUPEE PARISH
	ASCENSION PARISH

	 	ST. CHARLES PARISH
	 	WEST FELICIANA PARISH
	ASSUMPTION PARISH

	 	ST. HELEN PARISH
	 	EAST FELICIANA PARISH
	AYOYELLES PARISH

	 	FRANKLIN PARISH
	 	WINN PARISH
	BEAUREGARD PARISH

	 	GRANT PARISH
	 	ST. JAMES PARISH
	BIENVILLE PARISH

	 	IBERIA PARISH
	 	ST. JOHN THE BAPTIST PARISH
	BOSSIER PARISH

	 	IBERVILLE PARISH
	 	ST. LANDRY PARISH
	CADDO PARISH

	 	JACKSON PARISH
	 	ST. MARTIN PARISH
	CALCASIEU PARISH

	 	JEFFERSON PARISH
	 	ST. MARY PARISH
	CALDWELL PARISH

	 	JEFF DAVIS PARISH
	 	ST. TAMMANY PARISH
	CAMERON PARISH

	 	LAFAYETTE PARISH
	 	TANGIPAHOA PARISH
	CATAHOULA PARISH

	 	LAFOURCHE PARISH
	 	TENSAS PARISH
	CLAIBORNE PARISH

	 	LASALLE PARISH
	 	TERREBONNE PARISH
	CONCORDIA PARISH

	 	LINCOLN PARISH
	 	UNION PARISH
	DESOTO PARISH

	 	LIVINGSTON PARISH
	 	VERMILION PARISH
	EAST BATON ROUGE PARISH

	 	MADISON PARISH
	 	VERNON PARISH
	EAST CARROLL PARISH

	 	MOREHOUSE PARISH
	 	WASHINGTON PARISH
	EVANGELINE PARISH

	 	NATCHITOCHES PARISH
	 	WEBSTER PARISH
	RAPIDES PARISH

	 	ORLEANS PARISH
	 	WEST BATON ROUGE PARISH
	RED RIVER PARISH

	 	OUACHITA PARISH
	 	WEST CARROLL PARISH
	RICHLAND PARISH
	 	 	 	 

 

 

EXHIBIT A

BILL OF SALE AND ASSUMPTION AGREEMENT

     This Bill of Sale and Assumption Agreement (this “Agreement”) is made and entered into
as of                     , 20___, by and between Oil & Gas Rental Services, Inc., a Louisiana corporation
(“Seller”), and Allis-Chalmers Energy Inc., a Delaware corporation (“Buyer”).

     WHEREAS, Seller and Buyer are parties to that certain Asset Purchase Agreement dated as of
October ___, 2006 (the “Purchase Agreement”), pursuant to which Seller has agreed to sell
and transfer to Buyer, and Buyer has agreed to purchase and acquire from Seller, the Transferred
Assets (as defined in the Purchase Agreement); and

     WHEREAS, pursuant to the Purchase Agreement, Seller shall transfer to Buyer, and Buyer shall
assume, the Assumed Liabilities (as defined in the Purchase Agreement) as contemplated by Section
1.7 of the Purchase Agreement;

     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt, adequacy and legal sufficiency
of which are hereby acknowledged, the parties do hereby agree as follows:

     1. Capitalized Terms. Capitalized terms used but not defined herein shall have the
respective meanings set forth in the Purchase Agreement.

     2. Sale and Transfer of Transferred Assets. Seller hereby sells, transfers, assigns,
conveys, grants and delivers to Buyer, effective as of 12:01 a.m. (Central Time) on ______,
20___ (the “Effective Time”), all of Seller’s right, title and interest in and to all of the
Transferred Assets.

     3. Assignment and Assumption. Effective as of the Effective Time, Seller hereby
assigns, sells, transfers and sets over (collectively, the “Assignment”) to Buyer all of
Seller’s right, title, benefit, privileges and interest in and to, and all of Seller’s burdens,
obligations and liabilities in connection with, each of the Assumed Liabilities. Buyer hereby
accepts the Assignment and assumes and agrees to observe and perform on a timely basis all of the
duties, obligations, terms, provisions and covenants, and to pay and discharge on a timely basis
all of the liabilities of Seller to be observed, performed, paid or discharged from and after the
Closing, in connection with the Assumed Liabilities.

     4. Further Actions. Seller covenants and agrees to take all steps reasonably
necessary to establish the record of Buyer’s title to the Transferred Assets. Each of the parties
hereto covenants and agrees, at its own expense, to execute and deliver, at the request of the
other party hereto, such further instruments of transfer and assignment and to take such other
action as such other party may reasonably request to more effectively consummate the transfers,
assignments and assumptions contemplated by this Agreement.

     5. Power of Attorney. Without limiting the generality of Section 4 hereof, Seller
hereby constitutes and appoints Buyer the true and lawful agent and attorney in fact of Seller,
with full power of substitution and resubstitution, in whole or in part, in the name and stead of

1

 

Seller but on behalf and for the benefit of Buyer and its successors and assigns, from time to
time, upon prior written notice to Seller:

     (a) to demand, receive and collect any and all of the Transferred Assets and to give
receipts and releases for and with respect to the same, or any part thereof;

     (b) to institute and prosecute, in the name of Seller or otherwise, any and all
proceedings at law, in equity or otherwise, that Buyer or its successors and assigns may
deem proper in order to collect or reduce to possession any of the Transferred Assets and in
order to collect or enforce any claim or right of any kind hereby assigned or transferred,
or intended so to be; and

     (c) to do all things legally permissible, required or reasonably deemed by Buyer to be
required to recover and collect the Transferred Assets and to use Seller’s name in such
manner as Buyer may reasonably deem necessary for the collection and recovery of same,

Seller hereby declaring that the foregoing powers are coupled with an interest and are and shall be
irrevocable by Seller.

     6. Terms of the Purchase Agreement. The terms of the Purchase Agreement, including
but not limited to the parties’ representations, warranties, covenants, agreements and indemnities
relating to the Transferred Assets and/or Assumed Liabilities, are incorporated herein by this
reference. The parties acknowledge and agree that their respective representations, warranties,
covenants, agreements and indemnities contained in the Purchase Agreement shall not be superseded
hereby but shall remain in full force and effect to the full extent provided therein. In the event
of any conflict or inconsistency between the terms of the Purchase Agreement and the terms hereof,
the terms of the Purchase Agreement shall govern.

     7. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, and all of which shall constitute one and the same
instrument. Delivery of a copy of this Agreement bearing an original signature by facsimile
transmission or by electronic mail in “portable document format” form shall have the same effect as
physical delivery of the paper document bearing the original signature.

     8. Governing Law. The validity and effect of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas.

(Signature Page Follows)

2

 

     IN WITNESS WHEREOF, the parties have executed this Bill of Sale and Assumption Agreement as of
the date first set forth above.

	 	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	OIL & GAS RENTAL SERVICES, INC.,

a Louisiana corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

EXHIBIT B

Noncompetition, Nondisclosure, and Nonsolicitation Agreement

     This
Noncompetition, Nondisclosure, and Nonsolicitation Agreement (“Agreement”) is made and
entered effective as of _____ ___, 2006, by and between [Insert one of the following:
Allis-Chalmers Energy Inc., a Delaware corporation / Allis-Chalmers Rental Tools, Inc., a Texas
corporation] (“Company”) and                                         , an individual (“Employee”).

     The Company and Employee desire to enter into an agreement (i) defining the relative rights of
the Company and Employee with respect to Trade Secrets and Confidential Information (as defined
below) which Employee receives and to which Employee has access as a result of Employee’s
employment with the Company, (ii) setting forth Employee’s obligation to refrain from competing
with the Company during Employee’s employment with the Company and for a reasonable period of time
thereafter as provided herein, and (iii) setting forth Employee’s obligation not to solicit or
recruit the Company’s employees for employment elsewhere and not to solicit customers of the
Company for a reasonable period of time as provided herein. Employee’s acknowledgments,
agreements, promises, and representations in the Agreement inure to the benefit of not only the
Company, but also of its subsidiaries, affiliates, successors, and assigns. In consideration of
the promises and mutual covenants herein contained, the parties agree as follows:

	1.	 	Trade Secrets/Confidential Information. Employee acknowledges that during the course
of Employee’s employment, Employee will be provided, be exposed to, have access to, and gain
knowledge of Trade Secrets and Confidential Information of the Company and/or its subsidiaries
and affiliates. “Trade Secrets” means all information and compilations of information of any
kind, type, or nature (tangible and intangible, written or oral, and including information
contained, stored, or transmitted through any electronic medium). Trade Secrets consist of,
but are not limited to, computer software, specifications and code, customer lists,
confidential customer information, source code, executable code, pricing data, sources of
supply, products or services, fees, costs and pricing structures, designs, analysis, drawings,
technology, manuals and documentation, databases, accounting and business methods and plans,
inventions, devices, new ideas and developments, methods and processes, sales information,
marketing information, production procedures, merchandising systems or plans of the Company
and/or its subsidiaries or affiliates, the Company’s and/or its subsidiaries’ and affiliates’
customers, and inventions made, developed or conceived by the Company and/or its subsidiaries
and affiliates. “Confidential Information” means all information and compilations of
information of any kind, type or nature (tangible and intangible, written or oral, and
including information contained, stored, or transmitted through any electronic medium),
whether owned by the Company or licensed from third parties, which, at any time during the
employment of Employee, is devised, developed, designed or discovered or otherwise acquired or
learned by Employee to the extent it relates to the Company or its subsidiaries, affiliates,
partners, business, services, products, processes, properties or assets, customers, good-will,
customers, markets, source code, executable code, marketing strategies, product plans,
formulae, management, employees, technology and technical data, research, know-how, trade
secrets, financial conditions or prospects,
including, but not limited to, employee compensation, customers, customer lists, 

 

 

	 	 	customer
fee information, business development plans and strategies, marketing plans and strategies,
fees, costs, pricing structures and inventions. Employee acknowledges and agrees that the
Trade Secrets and Confidential Information are valuable and unique assets that provide the
Company an advantage over competitors, are developed or acquired by the Company and/or its
subsidiaries and affiliates at considerable time and expense, and are proprietary to the
Company and are intended to be used solely for the benefit of the Company and/or its
subsidiaries and affiliates. Employee acknowledges and agrees that, but for the Employee’s
agreement to the terms and conditions of this Agreement, the Company and/or its subsidiaries
and affiliates would not impart or provide access to such Trade Secrets and Confidential
Information.

	2.	 	Nondisclosure. Employee acknowledges and agrees that the Company and/or its
subsidiaries and affiliates have put in place certain policies and practices to safeguard such
Trade Secrets and Confidential Information, including requiring employees, customers and
vendors to execute confidentiality agreements. Employee further acknowledges and agrees that
such Trade Secrets and Confidential Information are valuable and unique assets that provide
the Company and/or its subsidiaries and affiliates an advantage over competitors who do not
know such Trade Secrets and Confidential Information. Employee also acknowledges and agrees
that such Trade Secrets and Confidential Information are developed or acquired by the Company
at considerable time and expense and are intended to be used solely for the benefit of the
Company and/or its subsidiaries and affiliates. Accordingly, Employee agrees that both during
the term of Employee’s employment with the Company and during the Non-Compete Period, Employee
will (i) hold all information of any kind, nature or description relating to the Company’s and
its subsidiaries’ and affiliates’ Trade Secrets and Confidential Information in strict
confidence and will not disclose, make available, discuss, transmit, lecture upon, publish or
use such Trade Secrets and Confidential Information other than for the Company’s benefit, and
(ii) not disclose (directly or indirectly), use, cause, facilitate or allow any third party to
use Confidential Information or Trade Secrets in any way, except as authorized by the
Company’s Chief Executive Officer, or someone designated by the Company’s Chief Executive
Officer, in writing or as required by law. Employee further acknowledges and agrees that the
Company’s conduct in providing Employee with Trade Secrets and Confidential Information in
exchange for Employee’s nondisclosure agreement gives rise to the Company’s interest in
restraining Employee from competing against the Company as set forth in Sections 6 and
8, and that Employee’s agreement to those provisions is designed to enforce Employee’s
nondisclosure agreement.
	 
	3.	 	Former Employer and Third Party Information. Employee agrees that Employee will not,
at any time during Employee’s employment with the Company, improperly use or disclose any
Confidential Information or Trade Secrets of any former or concurrent employer or other person
or entity and that Employee will not bring into the Company any unpublished document or
confidential information belonging to any such other employer, person or entity unless
consented to in writing by such employer, person or entity. Employee agrees that the Company
has received and in the future will receive from third parties certain trade secret and
confidential information, subject to a duty on the Company’s part to maintain the
confidentiality of such information and to use it only for certain limited purposes within the
course and scope of the Company’s relationship with such third parties and of Employee’s

2

 

	 	 	employment with the Company. Employee agrees to hold all such third party confidential
information in the strictest of confidence, not to disclose it to any person, firm, or
corporation or to use it except as necessary in carrying out Employee’s work for the Company
consistent with the Company’s agreement with such third party, and to use the same standard
of care in safeguarding such confidential information as Employee is required to use in
safeguarding the Company’s Trade Secrets and Confidential Information.

	4.	 	Return of Company Property. Upon termination of employment, Employee agrees to
return to the Company (and will not keep in Employee’s possession, recreate, or deliver to any
one else) all property and documents of and/or relating to the Company, and its customers and
clients, including but not limited to the following: Confidential Information, Trade Secrets,
all disks and copies of software applications utilized by the Company or the Company’s
clients, customers, or business, hard and soft copies of data, drawings, notes, proposals,
specifications, blueprints, sketches, equipment, records, reports, analyses, manuals,
correspondence, customer lists, computer programs, intellectual property, and all other
materials or property and all copies or reproductions thereof relating in any way to the
Company’s business, or in any way obtained or developed by Employee during Employee’s
employment with the Company. Employee also agrees not to retain any copies of the foregoing.
	 
	5.	 	Inventions. Employee acknowledges and agrees that all works or authorship and/or
inventions of any kind (including, without limitation, processes and methodologies) which are
made by Employee (solely or jointly with others) within the scope of and during the period of
Employee’s employment with the Company (collectively “Work”) shall be owned solely by the
Company, unless Employee identifies such Works as Independent Inventions (as defined in
Exhibit B). As such, Employee agrees to all the terms set forth in Exhibits B &
C which relate to Works.
	 
	6.	 	Noncompetition Agreement.

     (a) Employee acknowledges and agrees that Employee’s training, work, and experience
with the Company enhances Employee’s value to competitors, and that the nature of the
Confidential Information and Trade Secrets to which Employee has access makes it difficult,
if not impossible for Employee to work for any person or entity carrying on or engaging in a
business similar to that of the Company without disclosing or utilizing the Trade Secrets
and Confidential Information to which Employee has access during the course of Employee’s
employment. Employee further acknowledges and agrees that the Company’s agreement to
impart to and to provide Employee with access to its Trade Secrets and Confidential
Information is ancillary to and contingent upon Employee’s agreement that Employee will not,
for a period of two (2) years immediately following the Employee’s last day of employment
with the Company or two (2) years from the date of any court order enforcing all or part of
this Agreement, whichever is later (the “Non-Compete Period”), do any of the following:

     (i) carry on, engage, or have any ownership or equity interest (directly or
indirectly) in a business similar to that of the Company or its subsidiaries,
affiliates, successors or assigns or that otherwise competes with the Company within
the areas

3

 

identified in Exhibit A, provided that this Section
6(a)(i) shall not apply to the ownership by Employee of less than 5% of a class
of publicly traded equity securities;

     (ii) become employed by, derive benefit from or otherwise provide services for
compensation or divert the Company’s business to any person or entity carrying on
or engaging in a business similar to that of the Company or its subsidiaries,
affiliates, successors or assigns or that otherwise competes with the Company within
the areas identified in Exhibit A; or

     (iii) contact, solicit, or divert (directly or indirectly) any customer with
whom the Company has had a contractual relationship during the two year (2) period
prior to Employee’s last day of employment with the Company for the purpose of
attempting to enter into a business relationship related to the rental, sale,
manufacture, distribution, or servicing of products or services rented, sold,
manufactured, distributed, or serviced by the Company or its subsidiaries,
affiliates, successors or assigns.

     (b) The Company’s business, both actual and intended, includes, without limitation,
providing oil and gas rental equipment for onshore and offshore well drilling, completion,
and workover operations, including without limitation, premium drill pipe, heavy weight
spiral drill pipe, tubing work strings, blow out preventors, choke manifolds, and various
valves and handling tools. Employee acknowledges that this description of the business,
both actual and intended, is not intended to be limiting and that the business will
continue to grow and evolve and the range of services and the ways of providing services
will continue to be enhanced and supplemented.

     (c) Employee understands and agrees that the scope of each of the agreements and
promises contained in this Section 6 is reasonable as to time, area, and scope of
activity restrained and is necessary to protect the Company’s legitimate business interests.
Specifically, Employee has considered the agreements and promises in light of the benefits
that Employee will obtain by means of this Agreement and has concluded that the promises and
agreements leave Employee with a reasonable number and variety of permitted avenues for
engaging in employment in a number of locations and a number of occupations during the
period of restriction.

	7.	 	Performance. Employee acknowledges and agrees that Employee’s position with the
Company is a position of trust and confidence. Employee shall devote Employee’s full time to
the performance of Employee’s responsibilities faithfully, industriously, and to the best of
Employee’s abilities, and will not take any action at any time while employed by the Company,
which would conflict or jeopardize in any way the Company’s interests or objectives. Employee
also understands and acknowledges that the nature of the Company’s
business is such that the relationship of the customers to the Company is maintained through
close personal contact with the Company and the Company’s employees.

	8.	 	Employee Non-Solicitation. For two (2) years after Employee’s last day of employment
with the Company, or for two (2) years from the date of any court order enforcing all or part
of 

4

 

	 	 	this Agreement, whichever is later, Employee will not directly or indirectly (i) induce or
attempt to induce any employee of the Company or its subsidiaries or affiliates to terminate
that employee’s employment with the Company; (ii) induce or attempt to induce any consultant
or independent contractor doing business with or retained by the Company or its subsidiaries
or affiliates to terminate their consultancy or contractual relationship with the Company or
its subsidiaries or affiliates; (iii) induce or attempt to induce any client, customer,
supplier, vendor or any person to cease doing business with the Company or its subsidiaries or
affiliates; and/or (iv) either on the Employee’s behalf or on behalf of any person or entity
carrying on or engaging in a business similar to that of the Company or its subsidiaries or
affiliates within the areas identified in Exhibit A, employ or retain, or attempt to
employ or retain, any employee, consultant, or independent contractor of the Company or its
subsidiaries or affiliates, either for Employee or for any other person or entity.

	9.	 	Nondisparagement. Employee further agrees that for a period of two (2) years
following the termination of Employee’s employment with the Company for any reason, Employee
shall not say, publish or do anything that casts the Company or its subsidiaries or affiliates
in an unfavorable light, or disparage or injure the Company’s or its subsidiaries’ or
affiliates’ goodwill; business reputation or relationship with existing or potential
suppliers, vendors, customers, employees, contractors, investors or the financial community in
general; or the goodwill or business reputation of the Company’s employees, officers,
directors and/or contractors or the employees, officers, directors and/or contractors of any
subsidiary or affiliate of the Company.
	 
	10.	 	Notices. Any notice provided for in the Agreement must be in writing and must be
either personally delivered, mailed by certified class mail (postage prepaid and return
receipt requested) or sent by reputable overnight courier service (return receipt requested)
(charges prepaid) to the recipient at the address below indicated:

	 	 	 	 	 
	 	 	If to the Company:
	 
	 	 	 	 
	 	 	[Insert one of
the following: Allis-Chalmers Energy Inc. / Allis-Chalmers Rental Tools, Inc.]
	 	 	5075 Westheimer, Suite 890
	 	 	Houston, Texas 77056
	 	 	Attn: Theodore F. Pound III, General Counsel and Secretary
	 
	 	 	 	 
	 	 	If to Employee:
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 
	 	 	Phelps Dunbar, LLP
	 	 	365 Canal Street

5

 

	 	 	 	 	 
	 	 	Suite 2000
	 	 	New Orleans, Louisiana 70130
	 	 	Attn: Mark A. Fullmer, Esq.

or such other address or to the attention of such other persons as the recipient party will
have specified by prior written notice to the sending party. Any notice under this
Agreement will be deemed to have been given when so delivered or sent or, if mailed, five
(5) days after deposit in the U.S. mail.

	11.	 	General Provisions.

     (a) Not an Employment Agreement. Employee and the Company acknowledge and
agree that this Agreement is not intended and should not be construed to grant Employee any
right to continued employment with the Company. Therefore, nothing in this Agreement or the
execution of this Agreement shall in any way be deemed to establish an employment
relationship on a basis other than terminable at will.

     (b) Absence of Conflicting Agreements. Employee hereby warrants and covenants
that Employee’s employment by the Company and Employee’s execution, delivery and performance
of this Agreement do not and will not result in a breach of the terms, conditions or
provisions of any agreement, order, judgment or decree to which Employee is subject.

     (c) Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable if any respect
under any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein. The parties
agree that a court of competent jurisdiction making a determination of the invalidity or
unenforceability of any term or provision of this Agreement will have the power to reduce
the scope, duration or area of any such term or provision, to delete specific words or
phrases or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement will be enforceable as
so modified.

     (d) Complete Agreement. This Agreement, those documents expressly referred to
herein and other documents of even date herewith embody the complete agreement and
understanding among the parties and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.

     (e) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together constitute one and
the same agreement.

6

 

     (f) Subsidiaries, Affiliates, Successors, and Assigns. Except as otherwise
provided herein, this Agreement will inure to the benefit of and be enforceable by the
Company, its subsidiaries, affiliates, successors and assigns, and may be assigned by them.
The rights and obligations of Employee under this Agreement will not be assignable by
Employee without the prior written consent of the Company.

     (g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. THE TRADE SECRETS AND CONFIDENTIAL
INFORMATION PROTECTED BY THIS AGREEMENT SHALL BE SUBJECT TO PROTECTION AND SEAL TO THE FULL
EXTENT CONTEMPLATED BY THE LAWS OF THE STATE OF TEXAS.

     (h) Jurisdiction. WITH RESPECT TO ANY SUIT, ACTION, OR OTHER PROCEEDING
ARISING FROM (OR RELATING TO) THIS AGREEMENT, THE COMPANY AND EXECUTIVE HEREBY IRREVOCABLY
AGREE TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS (AND ANY TEXAS STATE COURT WITHIN HARRIS COUNTY, TEXAS).

     (i) Reaffirmation. Immediately at the time Employee’s employment with the
Company ends, Employee will ratify Sections 11(g) and 11(h) of this Agreement.

     (j) Remedies. Employee acknowledges and agrees that any breach or violation
of any term or provision of this Agreement will result in immediate and irreparable harm to
the Company and will cause damage to the Company in amounts difficult to ascertain.
Accordingly, in the event of a breach or threatened breach by Employee of this Agreement,
the Employee agrees that the Company, in addition to and without limitation of any other
rights, remedies or damages available to the Company, at law or in equity, shall be
entitled, without posting bond or proving actual damages, to a temporary restraining order
and to a preliminary and/or permanent injunction in order to prevent or restrain any such
breach by the Employee or the Employee’s partners, agents, representatives, employers,
employees, and/or any and all persons directly or indirectly acting for or with or for the
benefit of Employee. The parties acknowledge that the remedies contained in this Section
are reasonably related to the injuries the Company may sustain as a result of the Employee’s
breach of Employee’s obligations under the Agreement and are not a penalty. No delay or
omission by the Company in exercising any right under this Agreement will operate as a
waiver of that or any other right. The foregoing shall not otherwise limit the Company’s
rights and remedies hereunder. A waiver or consent given by the Company on any one occasion
is effective only in that instance and will not be construed as a bar to or waiver of any
right on any other occasion. The validity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement.

     (k) Amendment and Waiver. The provisions of this Agreement may be amended and
waived only with the prior written consent of the Company and Employee.

7

 

     EMPLOYEE acknowledges that Employee has carefully read this Agreement and understands and
agrees to all of the provisions in this Agreement.

8

 

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

	 	 	 	 	 	 	 
	 	 	[Insert one of the following: Allis-Chalmers Energy Inc.	 	 
	 	 	/ Allis-Chalmers Rental Tools, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

[Corporate Representative]
	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	 	 	Employee’s Signature:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 

9

 

EXHIBIT A 

NON-COMPETITION AND NON-SOLICITATION

     In accordance with Section 6 of this Agreement, Employee is restricted from
non-competition and non-solicitation within the locations where the Company conducts business
and/or where the Company contemplates conducting business within the next two (2) years, as listed
below:

	 	1.	 	Morgan City, Louisiana;
	 
	 	2.	 	Victoria, Texas;
	 
	 	3.	 	State of Texas;
	 
	 	4.	 	State of Mississippi;
	 
	 	5.	 	State of Alabama;
	 
	 	6.	 	State of Arkansas;
	 
	 	7.	 	Offshore in Gulf of Mexico; and
	 
	 	8.	 	The Parishes of Louisiana listed below:

ACADIA PARISH

ALLEN PARISH

ASCENSION PARISH

ASSUMPTION PARISH

AYOYELLES PARISH

BEAUREGARD PARISH

BIENVILLE PARISH

BOSSIER PARISH

CADDO PARISH

CALCASIEU PARISH

CALDWELL PARISH

CAMERON PARISH

CATAHOULA PARISH

CLAIBORNE PARISH

CONCORDIA PARISH

DESOTO PARISH

EAST BATON ROUGE PARISH

EAST CARROLL PARISH

EVANGELINE PARISH

RAPIDES PARISH

RED RIVER PARISH

RICHLAND PARISH

SABINE PARISH

ST. BERNARD PARISH

ST. CHARLES PARISH

ST. HELEN PARISH

FRANKLIN PARISH

GRANT PARISH

IBERIA PARISH

IBERVILLE PARISH

JACKSON PARISH

JEFFERSON PARISH

JEFF DAVIS PARISH

LAFAYETTE PARISH

LAFOURCHE PARISH

LASALLE PARISH

LINCOLN PARISH

LIVINGSTON PARISH

MADISON PARISH

MOREHOUSE PARISH

NATCHITOCHES PARISH

ORLEANS PARISH

OUACHITA PARISH

PLAQUEMINES PARISH

POINTE COUPEE PARISH

WEST FELICIANA PARISH

EAST FELICIANA PARISH

WINN PARISH

ST. JAMES PARISH

ST. JOHN THE BAPTIST PARISH

ST. LANDRY PARISH

ST. MARTIN PARISH

ST. MARY PARISH

ST. TAMMANY PARISH

TANGIPAHOA PARISH

TENSAS PARISH

TERREBONNE PARISH

UNION PARISH

VERMILION PARISH

VERNON PARISH

WASHINGTON PARISH

WEBSTER PARISH

WEST BATON ROUGE PARISH

WEST CARROLL PARISH

Exhibit A
- 1

 

 

EXHIBIT B

INVENTIONS

	a.	 	Inventions Retained and Licensed. To preclude any possible uncertainty over the
ownership of any invention, I have attached hereto, as Exhibit C, a complete list of
all inventions, original works of authorship, developments, improvements, and trade secrets
which (i) were made by me, either alone or jointly with others, prior to commencement of my
employment with the Company, independently and not as a part of or relation to the work I have
or will perform for the Company; (ii) belong to me only; (iii) relate to or could relate to
the Company’s proposed business, products or research and development; and (iv) I do not
intend to assign to the Company hereunder (collectively referred to as “Independent
Inventions”); or, if no such list is attached, I represent that there are no such Independent
Inventions. If disclosure of any such invention on Exhibit C would cause me to
violate any prior confidentiality agreement, I understand that I am not to list such
inventions in Exhibit C but am to inform the Company that all inventions have not been
listed for that reason. If in the course of my employment with the Company, I incorporate
into any invention, improvement, development, product, copyrightable material or trade secret
any invention, improvement, development, concept, discovery or other proprietary information
owned by me or in which I have an interest, the Company is hereby granted and shall have a
nonexclusive, assignable, royalty-free, irrevocable, perpetual, sublicenseable (through one or
multiple tiers), worldwide license to make, have made, modify, reproduce, distribute, create
derivative works of, use, offer to sell, and sell such item as part of or in connection with
such product, process or machine.
	 
	b.	 	Assignment of Inventions. I agree that I (i) will promptly make full written
disclosure to the Company, (ii) will hold in trust for the sole right and benefit of the
Company, and (iii) hereby assign to the Company, or its designee, all my right, title, and
interest in and to any and all inventions, original works of authorship, developments,
concepts, improvements or trade secrets, whether or not patentable or registrable under
copyright or similar laws, which I may solely or jointly conceive or develop or reduce to
practice, or cause to be conceived or developed or reduced to practice, during the period of
time during which I perform work for the Company (collectively referred to as “Company
Inventions”). I further acknowledge that all original works of authorship which are made by
me (solely or jointly with others) within the scope of and during the period in which I
perform work for the Company and which can be protected by copyright are “works made for
hire,” as that term is defined in the United States Copyright Act, and shall be the sole and
complete property of the Company. To the extent that any such work of authorship may not be
deemed a work made for hire, I hereby irrevocably assign all my ownership rights in and to
such work in the Company. If any such work cannot be assigned, I hereby grant to the Company
an exclusive, assignable, irrevocable, perpetual, worldwide, sublicenseable (through one or
multiple tiers), royalty-free, unlimited license to make, have made, modify, use, reproduce,
distribute, create derivative works of, display, offer to sell, and sell such work in any
media now known, or hereafter known. Outside the scope of my employment, I agree not to (i)
modify, adapt, alter, translate, or create derivative works from any such work of authorship,
or (ii) merge any such work of authorship with other inventions.

Exhibit B - 1

 

 

	c.	 	Inventions Assigned to the United States. I agree to assign to the United States
government all my right, title, and interest in and to any and all Company Inventions whenever
such full title is required to be in the United States by a contract between the Company and
the United States or any of its agencies.
	 
	d.	 	Maintenance of Records. I agree to keep and maintain adequate and current written
records of all Company Inventions made by me (solely or jointly with others) during the period
in which I perform work for the Company. The records will be in the form of notes, sketches,
drawings, and any other format that may be specified by the Company. The records will be
available to and remain the sole property of the Company at all times.
	 
	e.	 	Patent and Copyright Registrations. I agree to assist the Company, or its designee,
at the Company’s expense, in every proper way to secure the Company’s rights in the Company
Inventions and any copyrights, patents, mask work rights or other intellectual property rights
relating thereto in any and all countries, including the disclosure to the Company of all
pertinent information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company shall deem
necessary in order to apply for and obtain such rights and in order to assign and convey to
the Company, its successors, assigns and nominees, the sole and exclusive rights, title and
interest in and to such Company Inventions, and any copyrights, patents, mask work rights or
other intellectual property rights relating thereto. I further agree that my obligation to
execute or cause to be executed, when it is in my power to do so, any such instrument or
papers shall continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my signature to
apply for or to pursue any application for any United States or foreign patents or copyright
registrations covering Company Inventions or original works of authorship assigned to the
Company as above, then I hereby irrevocably designate and appoint the Company and its duly
authorized officers and agents as my agent and attorney in fact, to act for and in my behalf
and stead to execute and file any such applications and to do all other lawfully permitted
acts to further the prosecution and issuance of letters patent or copyright registrations
thereon with the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claims, of any nature whatsoever, that I now or may
hereafter have for infringement of any ownership rights assigned hereunder to the Company.
	 
	f.	 	Obligation to Keep the Company Informed. During the first year after termination of
my employment, I will provide the Company with a complete copy of each patent application and
copyright registration application (including any mask work registration application) filed by
me or that names me as an inventor, co-inventor, author, co-author, creator, co-creator,
developer, or co-developer.
	 
	g.	 	No Reciprocal License. I acknowledge and agree that nothing in this Agreement shall be
deemed to grant, by implication, estoppel, or otherwise, (i) a license from the Company to me to
make, use, license, or transfer in any way a Company Invention; or (ii) a license from the Company
to me regarding any of the Company’s existing or future ownership rights.

Exhibit B - 2

 

 

EXHIBIT C

LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP

     Pursuant to the Noncompetition, Nondisclosure, and Nonsolicitation Agreement by and between
me and the Company, the following is a complete list of all inventions that I desire to remove from
the operation of the Agreement.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Identifying Number or	 
	Title	 	Date	 	 	Co-Inventors	 	 	Brief Description	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

_____ No inventions or improvements

___ No Additional Sheets Attached

	 	 	 	 	 	 	 	 	 
	Signature of Employee:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 	 	 	 	 

Exhibit C - 1

 

 

EXHIBIT C-1

BURT ADAMS EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into effective as of                      ___, 2006,
by and between Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), and
Burt A. Adams, an individual (the “Executive”).

RECITALS

     WHEREAS, the Company desires to employ Executive as its Vice Chairman-Corporate Strategies,
and the Company and Executive desire to specify the terms and conditions with respect to
Executive’s employment; and

     WHEREAS, the Company and Executive have determined that it is in their respective best
interest to enter into this Agreement on the terms and conditions as set forth below.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the respective covenants and promises
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

     1. DEFINITIONS. In addition to the capitalized terms defined elsewhere herein, the
following definitions shall be in effect under this Agreement:

          1.1 “Board” means the Company’s Board of Directors or its Compensation Committee thereof (or
any other committee subsequently granted authority by the Board), subject to Section 5.5
below.

          1.2 “Cause” means (i) Executive’s conviction of, or plea of nolo contendere or guilty to (a) a
felony or (b) any other crime which involves moral turpitude; or (ii) that Executive commits a
material breach of any of the terms and provisions hereof or fails to obey written directions
delivered to Executive by the Company’s Board or Chief Executive Officer that are not inconsistent
with Executive’s rights under this Agreement.

     2. EMPLOYMENT TERM AND DUTIES.

          2.1 Term. The Company hereby agrees to employ Executive, and Executive hereby accepts
such employment for a term commencing as of                      ___, 2006 (the “Hire Date”) and ending on the
third anniversary of such date, and thereafter may automatically be extended for one year periods
subject to Board approval unless sooner terminated in accordance with the provisions of Section
2.5 below (the “Employment Term”). Except as otherwise provided herein, this Agreement
supersedes and terminates any and all prior agreements, discussions and writings between Executive
and any employee or representative of the Company concerning and/or relating to Executive’s
employment.

          2.2 Position. Executive shall serve as Vice Chairman-Corporate Strategies and shall
report directly to the Chief Executive Officer and/or the Board (the “Service”). At the Company’s
request, Executive shall serve the Company’s subsidiaries and affiliates in other offices and
capacities in addition to the foregoing and is intended to be a director of the Board pursuant to
the Company’s Investor

 

 

Rights Agreement dated as of the date hereof. If Executive serves any one or more of such
additional capacities, Executive’s compensation and benefits shall not be increased beyond that
provided in Section 2.4 below. Further, if Executive’s service in one or more of such
additional capacities is terminated, such termination shall not constitute a termination without
Cause as defined in Section 2.5.3.  

          2.3 Duties. Executive shall have the authority and perform the duties customarily
associated with his title and office, together with such additional duties of a Company officer
nature and commensurate with Executive’s title as may from time to time be assigned by the Chief
Executive Officer and the Board. During the term of Executive’s employment under this Agreement,
Executive shall devote his full working time and best efforts to the performance of his duties and
the furtherance of the interests of the Company. Executive may not serve as an officer or director
of, make investments in, or otherwise be employed by, or participate in, any other entity without
the prior written consent of the Company; provided that, so long as it does not interfere with
Executive’s employment, Executive may (a) with the prior written consent of the Company, serve as a
director in a non-competing company, (b) serve as an officer, director or otherwise participate in
a purely educational, welfare, social, religious and civic organization, and (c) manage personal
and family investments.

          2.4 Compensation and Benefits.

               2.4.1 Base Salary. In consideration of the Services rendered to the Company hereunder
by Executive, the Company shall pay Executive a base salary per annum of Three Hundred Fifty
Thousand Dollars ($350,000), less applicable statutory deductions and withholdings (the “Base
Salary”), payable in accordance with the Company’s regular payroll procedures as presently in
effect and amended from time to time. The Company, by action of its Board or the Compensation
Committee, may increase Executive’s Base Salary at any time and from time to time during the
Employment Term.

               2.4.2 Benefits. In addition to the Base Salary, Executive shall be eligible to
receive the following:

                    (i) Vacation, Sick Leave and Holidays. Executive shall be entitled to paid vacation
of four weeks, sick leave and holidays in accordance with applicable Company policies, as presently
in effect and amended from time to time.

                    (ii) Employee Benefits. Executive and his spouse and eligible dependents, if any, and
their respective designated beneficiaries where applicable, shall be eligible for and entitled to
participate in other benefits maintained by the Company for its senior executive officers in
accordance with applicable Company policies and the terms of the applicable benefit plans as
presently in effect and amended from time to time, such as, without limitation, any medical,
dental, pension, 401(k), accident, disability, stock options and life insurance benefits.

                    (iii) Expenses. The Company shall pay or reimburse Executive for all reasonable
out-of-pocket expenses actually incurred by Executive in the performance of Executive’s Services
under this Agreement, provided he properly accounts for such expenses in accordance with Company
policy as presently in effect and amended from time to time.

                    (iv) Continuation. Executive’s compensation and benefits provided herein shall not be
reduced for so long as Executive otherwise remains employed by the Company under the terms of this
Agreement.

               2.4.3 Incentive Compensation. In addition to the Base Salary, Executive shall be
eligible for incentive compensation in a maximum amount equal to fifty percent (50%) of Base

2

 

Salary upon achieving the goals and objectives set for Executive by the Board. Such goals
shall first be provided to Executive not later than sixty (60) days after the Hire Date and shall
be amended each year thereafter in the discretion of the Company. Such bonus shall be paid
annually within thirty (30) days after the completion of the Company’s audited financial statements
for each year. In the sole discretion of the Board or the Compensation Committee, Executive may be
granted additional incentive compensation. No incentive compensation shall be paid for partial
years of service under this Agreement.

          2.5 Termination.

               2.5.1 Termination Upon Death or Disability. If Executive dies during the Employment
Term, Executive’s employment shall terminate as of the date of Executive’s death. If Executive is
Disabled, the Company shall have the right to terminate this Agreement upon thirty (30) days notice
in writing to Executive. If Executive’s employment is terminated because of death or Disability,
then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii) Executive
or, in the case of the death of Executive, Executive’s estate, heirs, next of kin, distributes,
executors or administrators (the “Executor’s Estate”) shall be entitled to receive payment of the
aggregate amount of (A) Executive’s Base Salary then earned but unpaid, (B) incentive compensation
earned but unpaid, (C) vested benefits under any employee benefit plan applicable to Executive, (D)
any other benefits earned and accrued prior to the date of termination, and (E) reimbursement for
approved expenses incurred prior to the date of termination. Such aggregate payment shall be made
thirty (30) days after the occurrence of Executive’s death or Disability. No provision of this
Agreement shall limit any of Executive’s rights under any insurance, pension or other benefit
programs of the Company for which Executive shall be eligible at the time of such death or
Disability. For this purpose, “Disabled” or “Disability” shall mean that Executive meets the
definition of disability under the Company’s then current long-term disability policy or, if no
such policy is in force, that Executive by virtue of a physical or mental disability is unable to
perform substantially and continuously the essential functions of his usual duties, even with
reasonable accommodation, for a period in excess of one hundred eighty (180) consecutive or
non-consecutive days during any consecutive twelve (12) month period.

               2.5.2 Termination For Cause. The Company may terminate Executive’s employment for
Cause. Such termination shall be communicated by the delivery of a notice of termination to
Executive in accordance with Section 5.1 and shall be effective as of the date of delivery
of the notice of termination. Executive shall have no right to receive any compensation on and
after the effective date of such termination other than (A) Executive’s Base Salary then earned but
unpaid, (B) vested benefits under any employee benefit plan applicable to Executive, and (C)
reimbursement for approved expenses incurred prior to the date of termination. Such aggregate
payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.3 Termination Without Cause. The Company may terminate Executive’s employment
without Cause upon thirty (30) days prior written notice thereof given to Executive in
accordance with Section 5.1. If Executive’s employment is involuntarily terminated without
Cause, then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii)
Executive shall be entitled to receive payment of the aggregate amount of (A) Executive’s Base
Salary then earned but unpaid, (B) Executive’s Base Salary as it becomes due for a period equal to
the greater of six (6) months or the then remaining Employment Term, (C) vested benefits under any
employee benefit plan applicable to Executive, (D) any other benefit or compensation earned and
accrued prior to the date of termination, and (E) reimbursement for approved expenses incurred
prior to the date of termination. Such aggregate payment shall be made thirty (30) days after the
occurrence of Executive’s termination.

               2.5.4 Termination By Executive. Beginning one (1) year after the Hire Date, Executive
may terminate his employment for any reason upon thirty (30) days prior written notice thereof

3

 

given to the Company in accordance with Section 5.1. If Executive’s employment is
terminated hereunder, then (i) the Company’s obligations under this Agreement shall immediately
cease, and (ii) Executive shall be entitled to receive payment of the aggregate amount of (A)
Executive’s Base Salary then earned but unpaid, (B) vested benefits under any employee benefit plan
applicable to Executive, (C) any other benefit earned and accrued prior to the date of termination,
and (D) reimbursement for approved expenses incurred prior to the date of termination. Such
aggregate payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.5 No Limit on Rights Under Benefit Programs. No provision of this Agreement shall
limit any of Executive’s rights under any insurance, pension or other benefit programs of the
Company for which Executive shall otherwise be eligible at the time of such termination.

     3. PROTECTION OF COMPANY’S PROPRIETARY INFORMATION. Executive acknowledges that he
will not disclose, use or make available to a third party unless expressly authorized by the
Company, any of the Company’s trade secrets or confidential information.

     4. REPRESENTATIONS AND WARRANTIES BY EXECUTIVE. Executive represents and warrants to
the Company that (i) this Agreement is valid and binding upon and enforceable against him in
accordance with its terms, (ii) Executive is not bound by or subject to any contractual or other
obligation that would be violated by his execution or performance of this Agreement, including, but
not limited to, any non-competition agreement presently in effect, and (iii) Executive is not
subject to any pending or, to Executive’s knowledge, threatened claim, action, judgment, order, or
investigation that could adversely affect his ability to perform his obligations under this
Agreement or the business reputation of the Company. Executive has not entered into, and agrees
that he will not enter into, any agreement either written or oral in conflict with this Agreement.

     5. MISCELLANEOUS.

          5.1 Notices. All notices, requests, and other communications hereunder must be in
writing and will be deemed to have been duly given only if (i) delivered personally against written
receipt, (ii) delivered by facsimile transmission with answer back confirmation, (iii) mailed
(postage prepaid by certified or registered mail, return receipt requested), (iv) delivered by
overnight courier to the parties, or (v) delivered by electronic communication (as set forth below)
at the following addresses, facsimile numbers, or electronic mail addresses:

          If to Executive, to:

Burt A. Adams

                                                                   

Electronic Mail Address:                       

          If to the Company, to:

Allis-Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, Texas 77056

Facsimile: (713) 369-0555

Attn: Theodore F. Pound III, General Counsel and Secretary

All such notices, requests and other communications will (i) if delivered personally or by
overnight carrier to the address as provided in this Section 5.1, be deemed given upon
delivery, (ii) if delivered by

4

 

facsimile transmission to the facsimile number as provided in this Section 5.1, be deemed
given five (5) days after the date of deposit in the United States mail, and (iii) if delivered by
mail in the manner described above to the address as provided in this Section 5.1, be
deemed given upon receipt (in each case regardless of whether such notice, request, or other
communication is received by any other person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section). An electronic communication
(“Electronic Notice”) shall be deemed written notice for purposes of this Section 5.1 if
sent with return receipt requested to the electronic mail address specified by the receiving party,
in a signed writing in a nonelectronic form. Electronic Notice shall be deemed received at the
time the party sending Electronic Notice receives verification of receipt by the receiving party.
Any party from time to time may change its address, facsimile number, electronic mail address, or
other information for the purpose of notices to that party by giving written notice specifying such
change to the other parties hereto.

          5.2 Entire Agreement. This Agreement supersedes all prior discussions and agreements
among the parties with respect to the subject matter hereof and contain the sole and entire
agreement between the parties hereto with respect to Executive’s employment.

          5.3 Survival. The respective rights and obligations of the parties set forth in (i)
Sections 3 and this Section 5 shall survive the termination of this Agreement, the
Employment Term and/or Executive’s employment with the Company, and (ii) Section 2.5 shall
survive the termination of this Agreement, the Employment Term and/or Executive’s employment with
the Company to the extent of any unfulfilled obligations thereunder.

          5.4 Waiver. Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not alternative.

          5.5 Amendment; Committee Authority. This Agreement may be amended, supplemented, or
modified only by a written instrument duly executed by or on behalf of each party hereto. All
determinations and other actions required or permitted hereunder to be made by or on behalf of the
Company or the Board may be made by either the Board (excluding Executive therefrom) or the
Compensation Committee of the Board (or any other committee subsequently granted authority by the
Board); provided that the actions of the Compensation Committee (or any other committee
subsequently granted authority by the Board) shall be subject to the authority then vested in such
committee by the Board; and provided further that a decision or action by the Compensation
Committee (or any other committee subsequently granted authority by the Board) hereunder shall be
subject to review or modification by the Board if the Board so chooses.

          5.6 Tax and Legal Advice. Executive has had an opportunity to consult with his legal
counsel and tax and other advisors regarding the preparation of this Agreement.

          5.7 No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and the Company’s successors or assigns, and
it is not the intention of the parties to confer third-party beneficiary rights upon any other
person, except as provided in Section 2.5.1 as to the Executor’s Estate.

5

 

          5.8 No Assignment; Binding Effect. This Agreement shall inure to the benefit of any
successors or assigns of the Company. Executive shall not be entitled to assign his obligations
under this Agreement.

          5.9 Headings. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.

          5.10 Severability. The Company and Executive intend all provisions of this Agreement
to be enforced to the fullest extent permitted by law. Accordingly, if a court of competent
jurisdiction determines that the scope and/or operation of any provision of this Agreement is too
broad to be enforced as written, the Company and Executive intend that the court should reform such
provision to such narrower scope and/or operation as it determines to be enforceable. If, however,
any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or
future law, and not subject to reformation, then (i) such provision shall be fully severable, (ii)
this Agreement shall be construed and enforced as if such provision was never a part of this
Agreement, and (iii) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by illegal, invalid, or unenforceable provisions or by their
severance.

          5.11 General Creditor Status. All cash payments to which Executive may become
entitled hereunder will be paid, when due, from the general assets of the Company, and no trust
fund, escrow arrangement or other segregated account will be established as a funding vehicle for
such payment. Accordingly, Executive’s right (or the right of the personal representatives or
beneficiaries of Executive’s estate) to receive such cash payments hereunder will at all times be
that of a general creditor of the Company and will have no priority over the claims of other
general creditors.

          5.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.

          5.13 Jurisdiction. WITH RESPECT TO ANY SUIT, ACTION, OR OTHER PROCEEDING ARISING FROM
(OR RELATING TO) THIS AGREEMENT, THE COMPANY AND EXECUTIVE HEREBY IRREVOCABLY AGREE TO THE
EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS (AND ANY TEXAS STATE COURT WITHIN HARRIS COUNTY, TEXAS).

          5.14 Reaffirmation. Immediately at the time Executive’s employment with the Company
ends, Executive will ratify Sections 5.12 and 5.13 of this Agreement.

          5.15 Counterparts. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.

[Signature Page to Employment Agreement Follows]

6

 

     IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed on
the date first written above.

	 	 	 	 	 	 	 
	COMPANY:	 	ALLIS-CHALMERS ENERGY INC.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE:
	 	 	 	 	 	 
	 	 	 
	 	 	Burt A. Adams

7

 

EXHIBIT C-2

BRUCE ADAMS EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into effective as of
                                                             , 2006, by and between Allis-Chalmers Rental Tools, Inc., a Texas corporation (the “Company”),
and Bruce A. Adams, an individual (the “Executive”).

RECITALS

     WHEREAS, the Company desires to employ Executive as its Vice President and General Manager
Morgan City, and the Company and Executive desire to specify the terms and conditions with respect
to Executive’s employment; and

     WHEREAS, the Company and Executive have determined that it is in their respective best
interest to enter into this Agreement on the terms and conditions as set forth below.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the respective covenants and promises
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

     1. DEFINITIONS. In addition to the capitalized terms defined elsewhere herein, the
following definitions shall be in effect under this Agreement:

          1.1 “Board” means the Company’s Board of Directors or its Compensation Committee thereof (or
any other committee subsequently granted authority by the Board), subject to Section 5.5
below.

          1.2 “Cause” means (i) Executive’s conviction of, or plea of nolo contendere or guilty to (a) a
felony or (b) any other crime which involves moral turpitude; or (ii) that Executive commits a
material breach of any of the terms and provisions hereof or fails to obey written directions
delivered to Executive by the Company’s Board or President that are not inconsistent with
Executive’s rights under this Agreement.

     2. EMPLOYMENT TERM AND DUTIES.

          2.1 Term. The Company hereby agrees to employ Executive, and Executive hereby accepts
such employment for a term commencing as of                                                              , 2006 (the “Hire Date”) and ending on the
second anniversary of such date, and thereafter may automatically be extended for one year periods
subject to Board approval unless sooner terminated in accordance with the provisions of Section
2.5 below (the “Employment Term”). Except as otherwise provided herein, this Agreement
supersedes and terminates any and all prior agreements, discussions and writings between Executive
and any employee or representative of the Company concerning and/or relating to Executive’s
employment.

          2.2 Position. Executive shall serve as Vice President and General Manager Morgan City
and shall report directly to the President and/or the Board (the “Service”). At the Company’s
request, Executive shall serve the Company’s subsidiaries and affiliates in other offices and
capacities in addition to the foregoing and is intended to be a director of the Board pursuant to
the Company’s Investor Rights

 

 

Agreement dated as of the date hereof. If Executive serves any one or more of such additional
capacities, Executive’s compensation and benefits shall not be increased beyond that provided in
Section 2.4 below. Further, if Executive’s service in one or more of such additional
capacities is terminated, such termination shall not constitute a termination without Cause as
defined in Section 2.5.3.  

          2.3 Duties. Executive shall have the authority and perform the duties customarily
associated with his title and office, together with such additional duties of a Company officer
nature and commensurate with Executive’s title as may from time to time be assigned by the
President and the Board. During the term of Executive’s employment under this Agreement, Executive
shall devote his full working time and best efforts to the performance of his duties and the
furtherance of the interests of the Company. Executive may not serve as an officer or director of,
make investments in, or otherwise be employed by, or participate in, any other entity without the
prior written consent of the Company; provided that, so long as it does not interfere with
Executive’s employment, Executive may (a) with the prior written consent of the Company, serve as a
director in a non-competing company, (b) serve as an officer, director or otherwise participate in
a purely educational, welfare, social, religious and civic organization, and (c) manage personal
and family investments.

          2.4 Compensation and Benefits.

                  2.4.1 Base Salary. In consideration of the Services rendered to the Company hereunder
by Executive, the Company shall pay Executive a base salary per annum of One Hundred Ninety
Thousand Dollars ($190,000), less applicable statutory deductions and withholdings (the “Base
Salary”), payable in accordance with the Company’s regular payroll procedures as presently in
effect and amended from time to time. The Company, by action of its Board or the Compensation
Committee, may increase Executive’s Base Salary at any time and from time to time during the
Employment Term.

                  2.4.2 Benefits. In addition to the Base Salary, Executive shall be eligible to
receive the following:

                         (i) Vacation, Sick Leave and Holidays. Executive shall be entitled to paid vacation
of four weeks, sick leave and holidays in accordance with applicable Company policies, as presently
in effect and amended from time to time.

                         (ii) Employee Benefits. Executive and his spouse and eligible dependents, if any, and
their respective designated beneficiaries where applicable, shall be eligible for and entitled to
participate in other benefits maintained by the Company for its senior executive officers in
accordance with applicable Company policies and the terms of the applicable benefit plans as
presently in effect and amended from time to time, such as, without limitation, any medical,
dental, pension, 401(k), accident, disability, stock options and life insurance benefits.

                         (iii) Expenses. The Company shall pay or reimburse Executive for all reasonable
out-of-pocket expenses actually incurred by Executive in the performance of Executive’s Services
under this Agreement, provided he properly accounts for such expenses in accordance with Company
policy as presently in effect and amended from time to time.

                         (iv) Continuation. Executive’s compensation and benefits provided herein shall not be
reduced for so long as Executive otherwise remains employed by the Company under the terms of this
Agreement.

                  2.4.3 Incentive Compensation. In addition to the Base Salary, Executive shall be
eligible for incentive compensation in a maximum amount equal to fifty percent (50%) of Base

2

 

Salary upon achieving the goals and objectives set for Executive by the Board. Such goals
shall first be provided to Executive not later than sixty (60) days after the Hire Date and shall
be amended each year thereafter in the discretion of the Company. Such bonus shall be paid
annually within thirty (30) days after the completion of the Company’s audited financial statements
for each year. In the sole discretion of the Board or the Compensation Committee, Executive may be
granted additional incentive compensation. No incentive compensation shall be paid for partial
years of service under this Agreement.

          2.5 Termination.

                  2.5.1 Termination Upon Death or Disability. If Executive dies during the Employment
Term, Executive’s employment shall terminate as of the date of Executive’s death. If Executive is
Disabled, the Company shall have the right to terminate this Agreement upon thirty (30) days notice
in writing to Executive. If Executive’s employment is terminated because of death or Disability,
then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii) Executive
or, in the case of the death of Executive, Executive’s estate, heirs, next of kin, distributes,
executors or administrators (the “Executor’s Estate”) shall be entitled to receive payment of the
aggregate amount of (A) Executive’s Base Salary then earned but unpaid, (B) incentive compensation
earned but unpaid, (C) vested benefits under any employee benefit plan applicable to Executive, (D)
any other benefits earned and accrued prior to the date of termination, and (E) reimbursement for
approved expenses incurred prior to the date of termination. Such aggregate payment shall be made
thirty (30) days after the occurrence of Executive’s death or Disability. No provision of this
Agreement shall limit any of Executive’s rights under any insurance, pension or other benefit
programs of the Company for which Executive shall be eligible at the time of such death or
Disability. For this purpose, “Disabled” or “Disability” shall mean that Executive meets the
definition of disability under the Company’s then current long-term disability policy or, if no
such policy is in force, that Executive by virtue of a physical or mental disability is unable to
perform substantially and continuously the essential functions of his usual duties, even with
reasonable accommodation, for a period in excess of one hundred eighty (180) consecutive or
non-consecutive days during any consecutive twelve (12) month period.

                  2.5.2 Termination For Cause. The Company may terminate Executive’s employment for
Cause. Such termination shall be communicated by the delivery of a notice of termination to
Executive in accordance with Section 5.1 and shall be effective as of the date of delivery
of the notice of termination. Executive shall have no right to receive any compensation on and
after the effective date of such termination other than (A) Executive’s Base Salary then earned but
unpaid, (B) vested benefits under any employee benefit plan applicable to Executive, and (C)
reimbursement for approved expenses incurred prior to the date of termination. Such aggregate
payment shall be made thirty (30) days after the occurrence of Executive’s termination.

                  2.5.3 Termination Without Cause. The Company may terminate Executive’s employment
without Cause upon thirty (30) days prior written notice thereof given to Executive in
accordance with Section 5.1. If Executive’s employment is involuntarily terminated without
Cause, then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii)
Executive shall be entitled to receive payment of the aggregate amount of (A) Executive’s Base
Salary then earned but unpaid, (B) Executive’s Base Salary as it becomes due for a period equal to
the greater of six (6) months or the then remaining Employment Term, (C) vested benefits under any
employee benefit plan applicable to Executive, (D) any other benefit or compensation earned and
accrued prior to the date of termination, and (E) reimbursement for approved expenses incurred
prior to the date of termination. Such aggregate payment shall be made thirty (30) days after the
occurrence of Executive’s termination.

                  2.5.4 Termination By Executive. Beginning one (1) year after the Hire Date, Executive
may terminate his employment for any reason upon thirty (30) days prior written notice thereof

3

 

given to the Company in accordance with Section 5.1. If Executive’s employment is
terminated hereunder, then (i) the Company’s obligations under this Agreement shall immediately
cease, and (ii) Executive shall be entitled to receive payment of the aggregate amount of (A)
Executive’s Base Salary then earned but unpaid, (B) vested benefits under any employee benefit plan
applicable to Executive, (C) any other benefit earned and accrued prior to the date of termination,
and (D) reimbursement for approved expenses incurred prior to the date of termination. Such
aggregate payment shall be made thirty (30) days after the occurrence of Executive’s termination.

                  2.5.5 No Limit on Rights Under Benefit Programs. No provision of this Agreement shall
limit any of Executive’s rights under any insurance, pension or other benefit programs of the
Company for which Executive shall otherwise be eligible at the time of such termination.

     3. PROTECTION OF COMPANY’S PROPRIETARY INFORMATION. Executive acknowledges that he
will not disclose, use or make available to a third party unless expressly authorized by the
Company, any of the Company’s trade secrets or confidential information.

     4. REPRESENTATIONS AND WARRANTIES BY EXECUTIVE. Executive represents and warrants to
the Company that (i) this Agreement is valid and binding upon and enforceable against him in
accordance with its terms, (ii) Executive is not bound by or subject to any contractual or other
obligation that would be violated by his execution or performance of this Agreement, including, but
not limited to, any non-competition agreement presently in effect, and (iii) Executive is not
subject to any pending or, to Executive’s knowledge, threatened claim, action, judgment, order, or
investigation that could adversely affect his ability to perform his obligations under this
Agreement or the business reputation of the Company. Executive has not entered into, and agrees
that he will not enter into, any agreement either written or oral in conflict with this Agreement.

     5. MISCELLANEOUS.

          5.1 Notices. All notices, requests, and other communications hereunder must be in
writing and will be deemed to have been duly given only if (i) delivered personally against written
receipt, (ii) delivered by facsimile transmission with answer back confirmation, (iii) mailed
(postage prepaid by certified or registered mail, return receipt requested), (iv) delivered by
overnight courier to the parties, or (v) delivered by electronic communication (as set forth below)
at the following addresses, facsimile numbers, or electronic mail addresses:

          If to Executive, to:

Bruce A. Adams

                                                            

Electronic Mail Address:                
  

          If to the Company, to:

Allis-Chalmers Rental Tools, Inc.

5075 Westheimer, Suite 890

Houston, Texas 77056

Facsimile: (713) 369-0555

Attn: Theodore F. Pound III, Vice President and Secretary

All such notices, requests and other communications will (i) if delivered personally or by
overnight carrier to the address as provided in this Section 5.1, be deemed given upon
delivery, (ii) if delivered by

4

 

facsimile transmission to the facsimile number as provided in this Section 5.1, be deemed
given five (5) days after the date of deposit in the United States mail, and (iii) if delivered by
mail in the manner described above to the address as provided in this Section 5.1, be
deemed given upon receipt (in each case regardless of whether such notice, request, or other
communication is received by any other person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section). An electronic communication
(“Electronic Notice”) shall be deemed written notice for purposes of this Section 5.1 if
sent with return receipt requested to the electronic mail address specified by the receiving party,
in a signed writing in a nonelectronic form. Electronic Notice shall be deemed received at the
time the party sending Electronic Notice receives verification of receipt by the receiving party.
Any party from time to time may change its address, facsimile number, electronic mail address, or
other information for the purpose of notices to that party by giving written notice specifying such
change to the other parties hereto.

          5.2 Entire Agreement. This Agreement supersedes all prior discussions and agreements
among the parties with respect to the subject matter hereof and contain the sole and entire
agreement between the parties hereto with respect to Executive’s employment.

          5.3 Survival. The respective rights and obligations of the parties set forth in (i)
Sections 3 and this Section 5 shall survive the termination of this Agreement, the
Employment Term and/or Executive’s employment with the Company, and (ii) Section 2.5 shall
survive the termination of this Agreement, the Employment Term and/or Executive’s employment with
the Company to the extent of any unfulfilled obligations thereunder.

          5.4 Waiver. Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not alternative.

          5.5 Amendment; Committee Authority. This Agreement may be amended, supplemented, or
modified only by a written instrument duly executed by or on behalf of each party hereto. All
determinations and other actions required or permitted hereunder to be made by or on behalf of the
Company or the Board may be made by either the Board (excluding Executive therefrom) or the
Compensation Committee of the Board (or any other committee subsequently granted authority by the
Board); provided that the actions of the Compensation Committee (or any other committee
subsequently granted authority by the Board) shall be subject to the authority then vested in such
committee by the Board; and provided further that a decision or action by the Compensation
Committee (or any other committee subsequently granted authority by the Board) hereunder shall be
subject to review or modification by the Board if the Board so chooses.

          5.6 Tax and Legal Advice. Executive has had an opportunity to consult with his legal
counsel and tax and other advisors regarding the preparation of this Agreement.

          5.7 No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and the Company’s successors or assigns, and
it is not the intention of the parties to confer third-party beneficiary rights upon any other
person, except as provided in Section 2.5.1 as to the Executor’s Estate.

5

 

          5.8 No Assignment; Binding Effect. This Agreement shall inure to the benefit of any
successors or assigns of the Company. Executive shall not be entitled to assign his obligations
under this Agreement.

          5.9 Headings. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.

          5.10 Severability. The Company and Executive intend all provisions of this Agreement
to be enforced to the fullest extent permitted by law. Accordingly, if a court of competent
jurisdiction determines that the scope and/or operation of any provision of this Agreement is too
broad to be enforced as written, the Company and Executive intend that the court should reform such
provision to such narrower scope and/or operation as it determines to be enforceable. If, however,
any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or
future law, and not subject to reformation, then (i) such provision shall be fully severable, (ii)
this Agreement shall be construed and enforced as if such provision was never a part of this
Agreement, and (iii) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by illegal, invalid, or unenforceable provisions or by their
severance.

          5.11 General Creditor Status. All cash payments to which Executive may become
entitled hereunder will be paid, when due, from the general assets of the Company, and no trust
fund, escrow arrangement or other segregated account will be established as a funding vehicle for
such payment. Accordingly, Executive’s right (or the right of the personal representatives or
beneficiaries of Executive’s estate) to receive such cash payments hereunder will at all times be
that of a general creditor of the Company and will have no priority over the claims of other
general creditors.

          5.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.

          5.13 Jurisdiction. WITH RESPECT TO ANY SUIT, ACTION, OR OTHER PROCEEDING ARISING FROM
(OR RELATING TO) THIS AGREEMENT, THE COMPANY AND EXECUTIVE HEREBY IRREVOCABLY AGREE TO THE
EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS (AND ANY TEXAS STATE COURT WITHIN HARRIS COUNTY, TEXAS).

          5.14 Reaffirmation. Immediately at the time Executive’s employment with the Company
ends, Executive will ratify Sections 5.12 and 5.13 of this Agreement.

          5.15 Counterparts. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.

[Signature Page to Employment Agreement Follows]

6

 

     IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed on
the date first written above.

	 	 	 	 	 	 	 
	COMPANY:	 	ALLIS-CHALMERS RENTAL TOOLS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE:	 	 	 	 
	 	 	Bruce A. Adams	 	 

7

 

EXHIBIT C-3

BRAD ADAMS EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into effective as of                     
___, 2006, by and between Allis-Chalmers Rental Tools, Inc., a Texas corporation (the “Company”),
and Brad A. Adams, an individual (the “Executive”).

RECITALS

     WHEREAS, the Company desires to employ Executive as its Vice President-Customer Relations, and
the Company and Executive desire to specify the terms and conditions with respect to Executive’s
employment; and

     WHEREAS, the Company and Executive have determined that it is in their respective best
interest to enter into this Agreement on the terms and conditions as set forth below.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the respective covenants and promises
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

     1. DEFINITIONS. In addition to the capitalized terms defined elsewhere herein, the
following definitions shall be in effect under this Agreement:

          1.1 “Board” means the Company’s Board of Directors or its Compensation Committee thereof (or
any other committee subsequently granted authority by the Board), subject to Section 5.5
below.

          1.2 “Cause” means (i) Executive’s conviction of, or plea of nolo contendere or guilty to (a) a
felony or (b) any other crime which involves moral turpitude; or (ii) that Executive commits a
material breach of any of the terms and provisions hereof or fails to obey written directions
delivered to Executive by the Company’s Board or President that are not inconsistent with
Executive’s rights under this Agreement.

     2. EMPLOYMENT TERM AND DUTIES.

          2.1 Term. The Company hereby agrees to employ Executive, and Executive hereby accepts
such employment for a term commencing as of                      ___, 2006 (the “Hire Date”) and ending on the
second anniversary of such date, and thereafter may automatically be extended for one year periods
subject to Board approval unless sooner terminated in accordance with the provisions of Section
2.5 below (the “Employment Term”). Except as otherwise provided herein, this Agreement
supersedes and terminates any and all prior agreements, discussions and writings between Executive
and any employee or representative of the Company concerning and/or relating to Executive’s
employment.

          2.2 Position. Executive shall serve as Vice President-Customer Relations and shall
report directly to the President and/or the Board (the “Service”). At the Company’s request,
Executive shall serve the Company’s subsidiaries and affiliates in other offices and capacities in
addition to the foregoing and is intended to be a director of the Board pursuant to the Company’s
Investor Rights

 

 

Agreement dated as of the date hereof. If Executive serves any one or more of such additional
capacities, Executive’s compensation and benefits shall not be increased beyond that provided in
Section 2.4 below. Further, if Executive’s service in one or more of such additional
capacities is terminated, such termination shall not constitute a termination without Cause as
defined in Section 2.5.3.  

          2.3 Duties. Executive shall have the authority and perform the duties customarily
associated with his title and office, together with such additional duties of a Company officer
nature and commensurate with Executive’s title as may from time to time be assigned by the
President and the Board. During the term of Executive’s employment under this Agreement, Executive
shall devote his full working time and best efforts to the performance of his duties and the
furtherance of the interests of the Company. Executive may not serve as an officer or director of,
make investments in, or otherwise be employed by, or participate in, any other entity without the
prior written consent of the Company; provided that, so long as it does not interfere with
Executive’s employment, Executive may (a) with the prior written consent of the Company, serve as a
director in a non-competing company, (b) serve as an officer, director or otherwise participate in
a purely educational, welfare, social, religious and civic organization, and (c) manage personal
and family investments.

          2.4 Compensation and Benefits.

               2.4.1 Base Salary. In consideration of the Services rendered to the Company hereunder
by Executive, the Company shall pay Executive a base salary per annum of One Hundred Eighty-Seven
Thousand Dollars ($187,000), less applicable statutory deductions and withholdings (the “Base
Salary”), payable in accordance with the Company’s regular payroll procedures as presently in
effect and amended from time to time. The Company, by action of its Board or the Compensation
Committee, may increase Executive’s Base Salary at any time and from time to time during the
Employment Term.

               2.4.2 Benefits. In addition to the Base Salary, Executive shall be eligible to
receive the following:

                    (i) Vacation, Sick Leave and Holidays. Executive shall be entitled to paid vacation
of four weeks, sick leave and holidays in accordance with applicable Company policies, as presently
in effect and amended from time to time.

                    (ii) Employee Benefits. Executive and his spouse and eligible dependents, if any, and
their respective designated beneficiaries where applicable, shall be eligible for and entitled to
participate in other benefits maintained by the Company for its senior executive officers in
accordance with applicable Company policies and the terms of the applicable benefit plans as
presently in effect and amended from time to time, such as, without limitation, any medical,
dental, pension, 401(k), accident, disability, stock options and life insurance benefits.

                    (iii) Expenses. The Company shall pay or reimburse Executive for all reasonable
out-of-pocket expenses actually incurred by Executive in the performance of Executive’s Services
under this Agreement, provided he properly accounts for such expenses in accordance with Company
policy as presently in effect and amended from time to time.

                    (iv) Continuation. Executive’s compensation and benefits provided herein shall not be
reduced for so long as Executive otherwise remains employed by the Company under the terms of this
Agreement.

2

 

               2.4.3 Incentive Compensation. In addition to the Base Salary, Executive shall be
eligible for incentive compensation in a maximum amount equal to fifty percent (50%) of Base Salary
upon achieving the goals and objectives set for Executive by the Board. Such goals shall first be
provided to Executive not later than sixty (60) days after the Hire Date and shall be amended each
year thereafter in the discretion of the Company. Such bonus shall be paid annually within thirty
(30) days after the completion of the Company’s audited financial statements for each year. In the
sole discretion of the Board or the Compensation Committee, Executive may be granted additional
incentive compensation. No incentive compensation shall be paid for partial years of service under
this Agreement.

          2.5 Termination.

               2.5.1 Termination Upon Death or Disability. If Executive dies during the Employment
Term, Executive’s employment shall terminate as of the date of Executive’s death. If Executive is
Disabled, the Company shall have the right to terminate this Agreement upon thirty (30) days notice
in writing to Executive. If Executive’s employment is terminated because of death or Disability,
then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii) Executive
or, in the case of the death of Executive, Executive’s estate, heirs, next of kin, distributes,
executors or administrators (the “Executor’s Estate”) shall be entitled to receive payment of the
aggregate amount of (A) Executive’s Base Salary then earned but unpaid, (B) incentive compensation
earned but unpaid, (C) vested benefits under any employee benefit plan applicable to Executive, (D)
any other benefits earned and accrued prior to the date of termination, and (E) reimbursement for
approved expenses incurred prior to the date of termination. Such aggregate payment shall be made
thirty (30) days after the occurrence of Executive’s death or Disability. No provision of this
Agreement shall limit any of Executive’s rights under any insurance, pension or other benefit
programs of the Company for which Executive shall be eligible at the time of such death or
Disability. For this purpose, “Disabled” or “Disability” shall mean that Executive meets the
definition of disability under the Company’s then current long-term disability policy or, if no
such policy is in force, that Executive by virtue of a physical or mental disability is unable to
perform substantially and continuously the essential functions of his usual duties, even with
reasonable accommodation, for a period in excess of one hundred eighty (180) consecutive or
non-consecutive days during any consecutive twelve (12) month period.

               2.5.2 Termination For Cause. The Company may terminate Executive’s employment for
Cause. Such termination shall be communicated by the delivery of a notice of termination to
Executive in accordance with Section 5.1 and shall be effective as of the date of delivery
of the notice of termination. Executive shall have no right to receive any compensation on and
after the effective date of such termination other than (A) Executive’s Base Salary then earned but
unpaid, (B) vested benefits under any employee benefit plan applicable to Executive, and (C)
reimbursement for approved expenses incurred prior to the date of termination. Such aggregate
payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.3 Termination Without Cause. The Company may terminate Executive’s employment
without Cause upon thirty (30) days prior written notice thereof given to Executive in
accordance with Section 5.1. If Executive’s employment is involuntarily terminated without
Cause, then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii)
Executive shall be entitled to receive payment of the aggregate amount of (A) Executive’s Base
Salary then earned but unpaid, (B) Executive’s Base Salary as it becomes due for a period equal to
the greater of six (6) months or the then remaining Employment Term, (C) vested benefits under any
employee benefit plan applicable to Executive, (D) any other benefit or compensation earned and
accrued prior to the date of termination, and (E) reimbursement for approved expenses incurred
prior to the date of termination. Such aggregate payment shall be made thirty (30) days after the
occurrence of Executive’s termination.

3

 

               2.5.4 Termination By Executive. Beginning one (1) year after the Hire Date, Executive
may terminate his employment for any reason upon thirty (30) days prior written notice thereof
given to the Company in accordance with Section 5.1. If Executive’s employment is
terminated hereunder, then (i) the Company’s obligations under this Agreement shall immediately
cease, and (ii) Executive shall be entitled to receive payment of the aggregate amount of (A)
Executive’s Base Salary then earned but unpaid, (B) vested benefits under any employee benefit plan
applicable to Executive, (C) any other benefit earned and accrued prior to the date of termination,
and (D) reimbursement for approved expenses incurred prior to the date of termination. Such
aggregate payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.5 No Limit on Rights Under Benefit Programs. No provision of this Agreement shall
limit any of Executive’s rights under any insurance, pension or other benefit programs of the
Company for which Executive shall otherwise be eligible at the time of such termination.

     3. PROTECTION OF COMPANY’S PROPRIETARY INFORMATION. Executive acknowledges that he
will not disclose, use or make available to a third party unless expressly authorized by the
Company, any of the Company’s trade secrets or confidential information.

     4. REPRESENTATIONS AND WARRANTIES BY EXECUTIVE. Executive represents and warrants to
the Company that (i) this Agreement is valid and binding upon and enforceable against him in
accordance with its terms, (ii) Executive is not bound by or subject to any contractual or other
obligation that would be violated by his execution or performance of this Agreement, including, but
not limited to, any non-competition agreement presently in effect, and (iii) Executive is not
subject to any pending or, to Executive’s knowledge, threatened claim, action, judgment, order, or
investigation that could adversely affect his ability to perform his obligations under this
Agreement or the business reputation of the Company. Executive has not entered into, and agrees
that he will not enter into, any agreement either written or oral in conflict with this Agreement.

     5. MISCELLANEOUS.

          5.1 Notices. All notices, requests, and other communications hereunder must be in
writing and will be deemed to have been duly given only if (i) delivered personally against written
receipt, (ii) delivered by facsimile transmission with answer back confirmation, (iii) mailed
(postage prepaid by certified or registered mail, return receipt requested), (iv) delivered by
overnight courier to the parties, or (v) delivered by electronic communication (as set forth below)
at the following addresses, facsimile numbers, or electronic mail addresses:

	 	 	 	 	 
	 	 	If to Executive, to:
	 
	 	 	 	 
	 

	 	 	 	Brad A. Adams
	 

	 	 	 	                                                            
	 

	 	 	 	Electronic Mail Address:                     
	 
	 	 	 	 
	 	 	If to the Company, to:
	 
	 	 	 	 
	 

	 	 	 	Allis-Chalmers Rental Tools, Inc.
	 

	 	 	 	5075 Westheimer, Suite 890
	 

	 	 	 	Houston, Texas 77056
	 

	 	 	 	Facsimile: (713) 369-0555
	 

	 	 	 	Attn: Theodore F. Pound III, Vice President and Secretary

4

 

All such notices, requests and other communications will (i) if delivered personally or by
overnight carrier to the address as provided in this Section 5.1, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this
Section 5.1, be deemed given five (5) days after the date of deposit in the United States
mail, and (iii) if delivered by mail in the manner described above to the address as provided in
this Section 5.1, be deemed given upon receipt (in each case regardless of whether such
notice, request, or other communication is received by any other person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this Section). An electronic
communication (“Electronic Notice”) shall be deemed written notice for purposes of this Section
5.1 if sent with return receipt requested to the electronic mail address specified by the
receiving party, in a signed writing in a nonelectronic form. Electronic Notice shall be deemed
received at the time the party sending Electronic Notice receives verification of receipt by the
receiving party. Any party from time to time may change its address, facsimile number, electronic
mail address, or other information for the purpose of notices to that party by giving written
notice specifying such change to the other parties hereto.

          5.2 Entire Agreement. This Agreement supersedes all prior discussions and agreements
among the parties with respect to the subject matter hereof and contain the sole and entire
agreement between the parties hereto with respect to Executive’s employment.

          5.3 Survival. The respective rights and obligations of the parties set forth in (i)
Sections 3 and this Section 5 shall survive the termination of this Agreement, the
Employment Term and/or Executive’s employment with the Company, and (ii) Section 2.5 shall
survive the termination of this Agreement, the Employment Term and/or Executive’s employment with
the Company to the extent of any unfulfilled obligations thereunder.

          5.4 Waiver. Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not alternative.

          5.5 Amendment; Committee Authority. This Agreement may be amended, supplemented, or
modified only by a written instrument duly executed by or on behalf of each party hereto. All
determinations and other actions required or permitted hereunder to be made by or on behalf of the
Company or the Board may be made by either the Board (excluding Executive therefrom) or the
Compensation Committee of the Board (or any other committee subsequently granted authority by the
Board); provided that the actions of the Compensation Committee (or any other committee
subsequently granted authority by the Board) shall be subject to the authority then vested in such
committee by the Board; and provided further that a decision or action by the Compensation
Committee (or any other committee subsequently granted authority by the Board) hereunder shall be
subject to review or modification by the Board if the Board so chooses.

          5.6 Tax and Legal Advice. Executive has had an opportunity to consult with his legal
counsel and tax and other advisors regarding the preparation of this Agreement.

          5.7 No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and the Company’s successors or assigns, and
it is not the intention of the parties to confer third-party beneficiary rights upon any other
person, except as provided in Section 2.5.1 as to the Executor’s Estate.

5

 

          5.8 No Assignment; Binding Effect. This Agreement shall inure to the benefit of any
successors or assigns of the Company. Executive shall not be entitled to assign his obligations
under this Agreement.

          5.9 Headings. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.

          5.10 Severability. The Company and Executive intend all provisions of this Agreement
to be enforced to the fullest extent permitted by law. Accordingly, if a court of competent
jurisdiction determines that the scope and/or operation of any provision of this Agreement is too
broad to be enforced as written, the Company and Executive intend that the court should reform such
provision to such narrower scope and/or operation as it determines to be enforceable. If, however,
any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or
future law, and not subject to reformation, then (i) such provision shall be fully severable, (ii)
this Agreement shall be construed and enforced as if such provision was never a part of this
Agreement, and (iii) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by illegal, invalid, or unenforceable provisions or by their
severance.

          5.11 General Creditor Status. All cash payments to which Executive may become
entitled hereunder will be paid, when due, from the general assets of the Company, and no trust
fund, escrow arrangement or other segregated account will be established as a funding vehicle for
such payment. Accordingly, Executive’s right (or the right of the personal representatives or
beneficiaries of Executive’s estate) to receive such cash payments hereunder will at all times be
that of a general creditor of the Company and will have no priority over the claims of other
general creditors.

          5.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.

          5.13 Jurisdiction. WITH RESPECT TO ANY SUIT, ACTION, OR OTHER PROCEEDING ARISING FROM
(OR RELATING TO) THIS AGREEMENT, THE COMPANY AND EXECUTIVE HEREBY IRREVOCABLY AGREE TO THE
EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS (AND ANY TEXAS STATE COURT WITHIN HARRIS COUNTY, TEXAS).

          5.14 Reaffirmation. Immediately at the time Executive’s employment with the Company
ends, Executive will ratify Sections 5.12 and 5.13 of this Agreement.

          5.15 Counterparts. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.

[Signature Page to Employment Agreement Follows]

6

 

     IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed on
the date first written above.

	 	 	 	 	 	 	 
	COMPANY:	 	ALLIS-CHALMERS RENTAL TOOLS, INC.	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE:
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Brad A. Adams	 	 

7

 

EXHIBIT C-4

CHAIRMAN EMERITUS AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into effective as of                     
___, 2006, by and between Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), and
Byron A. Adams, Sr., an individual (the “Executive”).

RECITALS

     WHEREAS, the Company desires to employ Executive as its Chairman Emeritus, and the Company and
Executive desire to specify the terms and conditions with respect to Executive’s employment; and

     WHEREAS, the Company and Executive have determined that it is in their respective best
interest to enter into this Agreement on the terms and conditions as set forth below.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the respective covenants and promises
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

     1. DEFINITIONS. In addition to the capitalized terms defined elsewhere herein, the
following definitions shall be in effect under this Agreement:

          1.1 “Board” means the Company’s Board of Directors, the Board of Directors of the Company’s
parent, Allis-Chalmers Energy Inc. or its Compensation Committee thereof (or any other committee
subsequently granted authority by the Board), subject to Section 5.5 below.

          1.2 “Cause” means (i) Executive’s conviction of, or plea of nolo contendere or guilty to (a) a
felony or (b) any other crime which involves moral turpitude; or (ii) that Executive commits a
material breach of any of the terms and provisions hereof or fails to obey written directions
delivered to Executive by the Company’s Board or Chief Executive Officer that are not inconsistent
with Executive’s rights under this Agreement.

     2. EMPLOYMENT TERM AND DUTIES.

          2.1 Term. The Company hereby agrees to employ Executive, and Executive hereby accepts
such employment for a term commencing as of                      ___, 2006 (the “Hire Date”) and ending on the
second anniversary of such date, and thereafter may automatically be extended for one year periods
subject to Board approval unless sooner terminated in accordance with the provisions of Section
2.5 below (the “Employment Term”). Except as otherwise provided herein, this Agreement
supersedes and terminates any and all prior agreements, discussions and writings between Executive
and any employee or representative of the Company concerning and/or relating to Executive’s
employment.

          2.2 Position. Executive shall serve as Chairman Emeritus of the Company (the
“Service”).

1

 

          2.3 Duties. Executive shall perform the duties as requested by Chairman or Vice
Chairman of the Board and agreed to by Executive. During the term of Executive’s employment under
this Agreement, Executive shall further the best interests of the Company.

          2.4 Compensation and Benefits.

               2.4.1 Base Salary. In consideration of the Services rendered to the Company hereunder
by Executive, the Company shall pay Executive a base salary per annum of Two Hundred Forty Thousand
Dollars ($240,000.00), less applicable statutory deductions and withholdings (the “Base Salary”),
payable in accordance with the Company’s regular payroll procedures as presently in effect and
amended from time to time. The Company, by action of its Board or the Compensation Committee, may
increase Executive’s Base Salary at any time and from time to time during the Employment Term.

               2.4.2 Benefits. In addition to the Base Salary, Executive shall be eligible to
receive the following:

                    (i) Vacation and Leave. Executive shall be entitled to such vacation and time off as
Executive may require without notice to the Company.

                    (ii) Employee Benefits. Executive and his spouse and eligible dependents, if any, and
their respective designated beneficiaries where applicable, shall be eligible for and entitled to
participate in other benefits maintained by the Company for its senior executive officers in
accordance with applicable Company policies and the terms of the applicable benefit plans as
presently in effect and amended from time to time, such as, without limitation, any medical,
dental, pension, 401(k), accident, disability, stock options and life insurance benefits.

                    (iii) Expenses. The Company shall pay or reimburse Executive for all reasonable
out-of-pocket expenses actually incurred by Executive in the performance of Executive’s Services
under this Agreement, provided he properly accounts for such expenses in accordance with Company
policy as presently in effect and amended from time to time.

                    (iv) Continuation. Executive’s compensation and benefits provided herein shall not be
reduced for so long as Executive otherwise remains employed by the Company under the terms of this
Agreement.

          2.5 Termination.

               2.5.1 Termination Upon Death or Disability. If Executive dies during the Employment
Term, Executive’s employment shall terminate as of the date of Executive’s death. If Executive is
Disabled, the Company shall have the right to terminate this Agreement upon thirty (30) days notice
in writing to Executive. If Executive’s employment is terminated because of death or Disability,
then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii) Executive
or, in the case of the death of Executive, Executive’s estate, heirs, next of kin, distributes,
executors or administrators (the “Executor’s Estate”) shall be entitled to receive payment of the
aggregate amount of (A) Executive’s Base Salary then earned but unpaid, (B) incentive compensation
earned but unpaid, (C) vested benefits under any employee benefit plan applicable to Executive, (D)
any other benefits earned and accrued prior to the date of termination, and (E) reimbursement for
approved expenses incurred prior to the date of termination. Such aggregate payment shall be made
thirty (30) days after the occurrence of Executive’s death or Disability. No provision of this
Agreement shall limit any of Executive’s rights under any insurance, pension or other benefit
programs of the Company for which Executive shall be eligible at the time of such death or
Disability. For this purpose, “Disabled” or

2

 

“Disability” shall mean that Executive meets the definition of disability under the Company’s
then current long-term disability policy or, if no such policy is in force, that Executive by
virtue of a physical or mental disability is unable to perform substantially and continuously the
essential functions of his usual duties, even with reasonable accommodation, for a period in excess
of one hundred eighty (180) consecutive or non-consecutive days during any consecutive twelve (12)
month period.

               2.5.2 Termination For Cause. The Company may terminate Executive’s employment for
Cause. Such termination shall be communicated by the delivery of a notice of termination to
Executive in accordance with Section 5.1 and shall be effective as of the date of delivery
of the notice of termination. Executive shall have no right to receive any compensation on and
after the effective date of such termination other than (A) Executive’s Base Salary then earned but
unpaid, (B) vested benefits under any employee benefit plan applicable to Executive, and (C)
reimbursement for approved expenses incurred prior to the date of termination. Such aggregate
payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.3 Termination Without Cause. The Company may terminate Executive’s employment
without Cause upon thirty (30) days prior written notice thereof given to Executive in
accordance with Section 5.1. If Executive’s employment is involuntarily terminated without
Cause, then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii)
Executive shall be entitled to receive payment of the aggregate amount of (A) Executive’s Base
Salary then earned but unpaid, (B) Executive’s Base Salary as it becomes due for a period equal to
the greater of six (6) months or the then remaining Employment Term, (C) vested benefits under any
employee benefit plan applicable to Executive, (D) any other benefit or compensation earned and
accrued prior to the date of termination, and (E) reimbursement for approved expenses incurred
prior to the date of termination. Such aggregate payment shall be made thirty (30) days after the
occurrence of Executive’s termination.

               2.5.4 Termination By Executive. Beginning one (1) year after the Hire Date, Executive
may terminate his employment for any reason upon thirty (30) days prior written notice thereof
given to the Company in accordance with Section 5.1. If Executive’s employment is
terminated hereunder, then (i) the Company’s obligations under this Agreement shall immediately
cease, and (ii) Executive shall be entitled to receive payment of the aggregate amount of (A)
Executive’s Base Salary then earned but unpaid, (B) vested benefits under any employee benefit plan
applicable to Executive, (C) any other benefit earned and accrued prior to the date of termination,
and (D) reimbursement for approved expenses incurred prior to the date of termination. Such
aggregate payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.5 No Limit on Rights Under Benefit Programs. No provision of this Agreement shall
limit any of Executive’s rights under any insurance, pension or other benefit programs of the
Company for which Executive shall otherwise be eligible at the time of such termination.

     3. PROTECTION OF COMPANY’S PROPRIETARY INFORMATION AND INVENTIONS. Executive
acknowledges that he will not disclose, use or make available to a third party unless expressly
authorized by the Company, any of the Company’s trade secrets or confidential information.

     4. REPRESENTATIONS AND WARRANTIES BY EXECUTIVE. Executive represents and warrants to
the Company that (i) this Agreement is valid and binding upon and enforceable against him in
accordance with its terms, (ii) Executive is not bound by or subject to any contractual or other
obligation that would be violated by his execution or performance of this Agreement, including, but
not limited to, any non-competition agreement presently in effect, and (iii) Executive is not
subject to any pending or, to Executive’s knowledge, threatened claim, action, judgment, order, or
investigation that

3

 

could adversely affect his ability to perform his obligations under this Agreement or the
business reputation of the Company. Executive has not entered into, and agrees that he will not
enter into, any agreement either written or oral in conflict with this Agreement.

     5. MISCELLANEOUS.

          5.1 Notices. All notices, requests, and other communications hereunder must be in
writing and will be deemed to have been duly given only if (i) delivered personally against written
receipt, (ii) delivered by facsimile transmission with answer back confirmation, (iii) mailed
(postage prepaid by certified or registered mail, return receipt requested), (iv) delivered by
overnight courier to the parties, or (v) delivered by electronic communication (as set forth below)
at the following addresses, facsimile numbers, or electronic mail addresses:

	 	 	 	 	 
	 	 	If to Executive, to:
	 
	 	 	 	 
	 

	 	 	 	                                                            
	 

	 	 	 	                                                            
	 

	 	 	 	Electronic Mail Address:                     
	 
	 	 	 	 
	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	With a copy to: Phelps Dunbar LLP
	 

	 	 	 	365 Canal Street, Suite 2000
	 

	 	 	 	New Orleans, Louisiana 70130
	 

	 	 	 	Attn: Mark A. Fullmer
	 

	 	 	 	Facsimile No.: (504) 568-9130
	 
	 	 	 	 
	 	 	If to the Company, to:
	 
	 	 	 	 
	 

	 	 	 	Allis-Chalmers Energy Inc.
	 

	 	 	 	5075 Westheimer, Suite 890
	 

	 	 	 	Houston, Texas 77056
	 

	 	 	 	Facsimile: (713) 369-0555
	 

	 	 	 	Attn: Theodore F. Pound III, Vice President and Secretary

All such notices, requests and other communications will (i) if delivered personally or by
overnight carrier to the address as provided in this Section 5.1, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this
Section 5.1, be deemed given five (5) days after the date of deposit in the United States
mail, and (iii) if delivered by mail in the manner described above to the address as provided in
this Section 5.1, be deemed given upon receipt (in each case regardless of whether such
notice, request, or other communication is received by any other person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this Section). An electronic
communication (“Electronic Notice”) shall be deemed written notice for purposes of this Section
5.1 if sent with return receipt requested to the electronic mail address specified by the
receiving party, in a signed writing in a nonelectronic form. Electronic Notice shall be deemed
received at the time the party sending Electronic Notice receives verification of receipt by the
receiving party. Any party from time to time may change its address, facsimile number, electronic
mail address, or other information for the purpose of notices to that party by giving written
notice specifying such change to the other parties hereto.

4

 

          5.2 Entire Agreement. This Agreement supersedes all prior discussions and agreements
among the parties with respect to the subject matter hereof and contain the sole and entire
agreement between the parties hereto with respect to Executive’s employment.

          5.3 Survival. The respective rights and obligations of the parties set forth in (i)
Sections 3 and this Section 5 shall survive the termination of this Agreement, the
Employment Term and/or Executive’s employment with the Company, and (ii) Section 2.5 shall
survive the termination of this Agreement, the Employment Term and/or Executive’s employment with
the Company to the extent of any unfulfilled obligations thereunder.

          5.4 Waiver. Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not alternative.

          5.5 Amendment; Committee Authority. This Agreement may be amended, supplemented, or
modified only by a written instrument duly executed by or on behalf of each party hereto. All
determinations and other actions required or permitted hereunder to be made by or on behalf of the
Company or the Board may be made by either the Board (excluding Executive therefrom) or the
Compensation Committee of the Board (or any other committee subsequently granted authority by the
Board); provided that the actions of the Compensation Committee (or any other committee
subsequently granted authority by the Board) shall be subject to the authority then vested in such
committee by the Board; and provided further that a decision or action by the Compensation
Committee (or any other committee subsequently granted authority by the Board) hereunder shall be
subject to review or modification by the Board if the Board so chooses.

          5.6 Tax and Legal Advice. Executive has had an opportunity to consult with his legal
counsel and tax and other advisors regarding the preparation of this Agreement.

          5.7 No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and the Company’s successors or assigns, and
it is not the intention of the parties to confer third-party beneficiary rights upon any other
person, except as provided in Section 2.5.1 as to the Executor’s Estate.

          5.8 No Assignment; Binding Effect. This Agreement shall inure to the benefit of any
successors or assigns of the Company. Executive shall not be entitled to assign his obligations
under this Agreement.

          5.9 Headings. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.

          5.10 Severability. The Company and Executive intend all provisions of this Agreement
to be enforced to the fullest extent permitted by law. Accordingly, if a court of competent
jurisdiction determines that the scope and/or operation of any provision of this Agreement is too
broad to be enforced as written, the Company and Executive intend that the court should reform such
provision to such narrower scope and/or operation as it determines to be enforceable. If, however,
any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or
future law, and not subject to reformation, then (i) such provision shall be fully severable, (ii)
this Agreement shall be construed and

5

 

enforced as if such provision was never a part of this Agreement, and (iii) the remaining
provisions of this Agreement shall remain in full force and effect and shall not be affected by
illegal, invalid, or unenforceable provisions or by their severance.

          5.11 General Creditor Status. All cash payments to which Executive may become
entitled hereunder will be paid, when due, from the general assets of the Company, and no trust
fund, escrow arrangement or other segregated account will be established as a funding vehicle for
such payment. Accordingly, Executive’s right (or the right of the personal representatives or
beneficiaries of Executive’s estate) to receive such cash payments hereunder will at all times be
that of a general creditor of the Company and will have no priority over the claims of other
general creditors.

          5.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.

          5.13 Jurisdiction. WITH RESPECT TO ANY SUIT, ACTION, OR OTHER PROCEEDING ARISING FROM
(OR RELATING TO) THIS AGREEMENT, THE COMPANY AND EXECUTIVE HEREBY IRREVOCABLY AGREE TO THE
EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS (AND ANY TEXAS STATE COURT WITHIN HARRIS COUNTY, TEXAS).

          5.14 Reaffirmation. Immediately at the time Employee’s employment with the Company
ends, Employee will ratify Sections 5.12 and 5.13 of this Agreement.

          5.15 Counterparts. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.

[Signature Page to Employment Agreement Follows]

6

 

     IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed on
the date first written above.

	 	 	 	 	 	 	 
	COMPANY:	 	ALLIS-CHALMERS ENERGY INC.	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE:
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Byron A. Adams, Sr.	 	 

7

 

EXHIBIT D

INVESTOR RIGHTS AGREEMENT

     This Investor Rights Agreement dated as of                     , 2006 (this “Agreement”) is entered
into by and among Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), and Oil & Gas
Rental Services, Inc., a Louisiana corporation (the “Investor”).

     WHEREAS, the Company and the Investor have entered into an Asset Purchase Agreement dated as
of October 25, 2006 (the “Asset Purchase Agreement”) pursuant to which the Investor shall receive a
number of shares of the common stock, par value $0.01 per share, of the Company (the “Common
Stock”), as set forth therein;

     WHEREAS, in order to induce the Investor to enter into the Asset Purchase Agreement, the
Company has agreed to grant certain registration rights to the Investor with respect to such shares
and certain Board designation rights, in each case, subject to the terms and conditions set forth
herein;

     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

     Section 1. Definitions. As used herein, the following terms have the indicated
meanings, unless the context otherwise requires:

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

     “Asset Purchase Agreement” has the meaning given to such term in the recitals hereto.

     “Beneficially Own,” “Beneficially Owned,” “Beneficial Ownership” and “Beneficial Owner” with
respect to any securities means a Holder’s having such ownership, control or power to direct the
voting with respect to, or which otherwise enables a Holder to legally act with respect to, such
securities as contemplated hereby, including without limitation pursuant to any agreement,
arrangement or understanding, regardless of whether in writing. Securities “Beneficially Owned”
shall include securities Beneficially Owned by all other persons with whom a Holder would
constitute a “group” as within the meaning of Section 13(d) of the Exchange Act.

     “Blackout Period” means, with respect to a Registration Statement, a period in each case
commencing on the day immediately after the Company notifies the Holders that they are required,
pursuant to Section 4(c)(vi), to suspend offers and sales of Registrable Securities during which
the Company, in the good faith judgment of the Board, determines (because of the existence of, or
in anticipation of, any acquisition, financing activity, or other transaction involving the
Company, or the unavailability for reasons beyond the Company’s control of any required financial
statements, disclosure of information which is in its best interest not to publicly disclose, or
any other event or condition of similar significance to the Company) that the registration and
distribution of (and/or the registration of the offer and sale of) the Registrable Securities
covered or to be covered by such Registration Statement would be seriously detrimental to the
Company and its stockholders and ending on the earlier of (a) the date upon

 

 

which the material non-public information commencing the Blackout Period is disclosed to the
public or ceases to be material and (b) such time as the Company notifies the selling Holders that
the Company will no longer delay such filing of such Registration Statement, recommence taking
steps to make such Registration Statement effective, or allow sales pursuant to such Registration
Statement to resume; provided that no Blackout Period may last for more than 60 consecutive days;
provided, further, that during any period of 365 consecutive days, Blackout Periods may not, in the
aggregate, last for more than the greater of (a) zero days and (b) the result of 90 days minus the
number of days that Holders are required pursuant to Section 4(d) to discontinue and suspend
disposition of Registrable Securities because of the happening of any event described in Section
4(c)(vi).

     “Board” means the board of directors of the Company.

     “Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which
the SEC is required or authorized to close.

     “Closing Date” has the meaning given to such term in the Asset Purchase Agreement.

     “Common Stock” has the meaning given to such term in the recitals hereto.

     “Company” has the meaning given to such term in the preamble hereto.

     “Designation Rights Termination Date” has the meaning given to such term in Section 2(b)
hereto.

     “Effectiveness Period” has the meaning given to such term in Section 4(c)(i).

     “Equity Securities Offering” means any underwritten registered offering of Relevant
Securities, and any offering or placement of any Relevant Securities pursuant to Rule 144A under
the Securities Act.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.

     “Family Member” means (a) with respect to any individual, such individual’s spouse, any
descendants (whether natural or adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals together with any organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership, limited liability company or other
entity all of the equity interests of which are owned by those above described individuals, trusts
or organizations and (b) with respect to any trust, the owners of the beneficial interests of such
trust.

     “Form S-1” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.

2

 

     “Form S-3” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.

     “Form S-4” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.

     “Form S-8” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.

     “Holder” means the Investor or any of such Investor’s successors and Permitted Assignees who
acquire rights in accordance with this Agreement with respect to the Registrable Securities
directly or indirectly from the Investor or another Holder (including from any Permitted Assignee)
and “Holders” means all of the foregoing individuals or entities.

     “Inspector” means any attorney, accountant or other agent retained by a Holder for the
purposes provided in Section 4(c)(x).

     “Investor” has the meaning given to such term in the preamble hereto.

     “Investor Director” means any member of the Board that was nominated for election to the Board
by the Holders pursuant to and in accordance with Section 2(a).

     “Market Standoff Period” means, with respect to each Equity Securities Offering, the period
beginning on the date of first sale of securities pursuant to such Equity Securities Offering and
ending on the date that shall be requested by the Company or the underwriters or initial purchasers
retained by the Company to facilitate such Equity Securities Offering; provided, however, that each
such period shall not be more than 90 days; provided further that (i) such period shall be no
longer than the shortest period imposed by the Company or the underwriters upon any other person or
entity and (ii) if any other person or entity receives a waiver with respect to any such matters,
the Holders shall be given a waiver with respect to their Shares as well.

     “NASD” means the National Association of Securities Dealers.

     “Permitted Assignee” means (a) with respect to a partnership or limited partnership, its
partners or former partners in accordance with their partnership interests, (b) with respect to a
corporation, its stockholders or former stockholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company, its members or former members in
accordance with their interest in the limited liability company, (d) with respect to an individual,
any Family Member or (e) an entity that is controlled by, controls, or is under common control with
a transferor.

     “Piggyback Registration” has the meaning given to such term in Section 4(b)(i).

     “Piggyback Registration Statement” has the meaning given to such term in Section 4(b)(i).

3

 

     “register,” “registered,” and “registration” refer to a registration effected by preparing and
filing a registration statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such registration statement.

     “Registrable Securities” means the Shares, excluding any such Shares (a) that have been
publicly sold or may be sold immediately without registration or the requirement to make filings
with the SEC under the Securities Act either pursuant to Rule 144 of the Securities Act or
otherwise, (b) sold by a person in a transaction pursuant to a registration statement filed under
the Securities Act or (c) that are at the time subject to an effective registration statement under
the Securities Act (other than the Registration Statements contemplated hereby).

     “Registration Expenses” has the meaning given to such term in Section 4(e).

     “Registration Statement” means either of the Piggyback Registration Statements or the Shelf
Registration Statement; and “Registration Statements” means, collectively, the Piggyback
Registration Statements and the Shelf Registration Statement.

     “Relevant Security” means the Shares, any other equity security of the Company or any of its
subsidiaries and any security convertible into, or exercisable or exchangeable for, any Shares or
other such equity security.

     “SEC” means the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

     “SEC Effective Date” means, with respect to a Registration Statement, the date as of which
such Registration Statement is originally declared effective by the SEC.

     “Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect from time to time.

     “Selling Expenses” has the meaning given to such term in Section 4(e).

     “Shares” means the shares of Common Stock issued to the Investor pursuant to the Asset
Purchase Agreement and (a) any and all shares of capital stock or other equity securities of the
Company which are added to or exchanged or substituted for such shares of Common Stock by reason of
the declaration of any stock dividend or stock split, the issuance of any distribution or the
reclassification, readjustment, recapitalization or other such modification of the capital
structure of the Company; and (b) any and all shares of capital stock or other equity securities of
any other corporation (now or hereafter organized under the laws of any state or other governmental
authority) with which the Company is merged, which results from any consolidation or reorganization
to which the Company is a party, or to which is sold all or substantially all of the shares or
assets of the Company, for which such shares of Common Stock are exchanged or substituted in
connection with such merger, consolidation, reorganization or sale, if immediately after such
merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting power of such other
corporation.

     “Shelf Registration Statement” has the meaning given to such term in Section 4(a).

4

 

     “Transfer” has the meaning given to such term in Section 3(a).

     Section 2. Board Designation Rights.

     (a) Designation. Until the Designation Rights Termination Date, the Holders of a
majority of the Shares shall have the right to designate one nominee for election to the Board.

     (b) Termination of Designation Rights. The Holders of a majority of the Shares shall
not be entitled to designate any nominees for election to the Board pursuant to this Agreement from
and after the date (the “Designation Rights Termination Date”) that is the first date on which the
Shares Beneficially Owned by the Holders collectively represent less than thirty-one and
one-quarter percent (31.25%) of the Shares initially acquired by the Investor pursuant to the Asset
Purchase Agreement.

     (c) Company Support. At all times prior to the Designation Rights Termination Date,
the Company shall support the nominations of the persons designated by the Holders of a majority of
the Shares pursuant to Section 2(a), and the Company shall use its best efforts to cause the Board
(and the Company’s nominating committee, if any) to recommend the inclusion of such persons in the
slate of nominees recommended to stockholders for election as directors at each annual meeting of
stockholders of the Company.

     (d) Vacancies. If at any time prior to the Designation Rights Termination Date, a
vacancy is created on the Board by reason of the incapacity, death, removal or resignation of any
Investor Director, then the Company shall use its best efforts to cause the Board to appoint an
individual designated by the Holders of a majority of the Shares to fill such vacancy until the
next meeting of the Company’s stockholders at which directors are elected.

     Section 3. Market Standoff. Notwithstanding anything to the contrary set forth in
this Agreement, with respect to each Equity Securities Offering conducted after the Closing Date,
the following provisions of this Section 3 shall apply, if and only if (x) the underwriters or
initial purchasers retained by the Company to facilitate such offering request, in connection with
such offering, that the officers or directors or significant stockholders of the Company refrain
from selling any Relevant Security during any period, and (y) either (1) any nominee designated by
the Holders pursuant to Section 2(a) is a member of the Board, or (2) the Holders Beneficially Own
shares of Common Stock representing at least 10% of the fully diluted equity interests in the
Company (calculated giving effect to the exercise of all outstanding options, warrants and other
rights to purchase to acquire any Common Stock of the Company):

     (a) Without the prior written consent of the Company, during the Market Standoff Period
applicable to such Equity Securities Offering, each Holder will not (i), directly or indirectly,
offer, sell, agree to offer or sell, solicit offers to purchase, grant any call option or purchase
any put option with respect to, pledge, borrow or otherwise dispose of any Relevant Security, or
(ii) establish or increase any “put equivalent position” or liquidate or decrease any “call
equivalent position” (in each case within the meaning of Section 16 of the Exchange Act) with
respect to any Relevant Security, or otherwise enter into any swap, derivative or other transaction
or arrangement that transfers to another, in whole or in part, any economic consequence of
ownership of a Relevant Security (each of the transactions described in the immediately preceding
clauses (i) and (ii), being referred to as a “Transfer”), regardless of

5

 

whether such transaction is to be settled by delivery of Relevant Securities, other
securities, cash or other consideration; provided, however, that a Transfer to a Permitted Assignee
will not be subject to this Section 3 as long as (x) such Transfer is effected in accordance with
applicable securities laws; (y) such transferee agrees in writing to become subject to the terms of
this Agreement as a Holder; and (z) the Company is given written notice by such Holder of such
Transfer, stating the name and address of the transferee and identifying the Shares being
Transferred.

     (b) Furthermore, each Holder hereby authorizes the Company during the Market Standoff Period
to cause any transfer agent for the Relevant Securities to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating to, any Relevant Securities
for which such Holder is the record holder and, in the case of Relevant Securities for which such
Holder is the Beneficial Owner but not the record holder, agrees during the Market Standoff Period
to cause the record holder thereof to cause the relevant transfer agent to decline to transfer, and
to note stop transfer restrictions on the stock register and other records relating to, such
Relevant Securities.

     (c) Subject to the provisions of Section 4(b), without the prior written consent of the
Company, during the Market Standoff Period such Holder (x) will not participate in the filing with
the SEC of any registration statement, or circulate or participate in the circulation of any
preliminary or final prospectus or other disclosure document with respect to any proposed offering
or sale of a Relevant Security and (y) will not exercise any rights the undersigned may have to
require registration with the SEC of any proposed offering or sale of a Relevant Security
(including without limitation pursuant to this Agreement).

     Section 4. Registration Rights.

     (a) Shelf Registration Statement. The Company shall (i) file with the SEC a shelf
registration statement on Form S-1 (or, if the Company is eligible to use such form, Form S-3)
relating to the registration of the offer and resale by the Holders of all of the Registrable
Securities (the “Shelf Registration Statement”) and (ii) use its commercially reasonable efforts to
cause the Shelf Registration Statement to be declared effective by the SEC no later than the date
that is one (1) year after the Closing Date; provided, however, that the Company shall not be
obligated to effect any such registration pursuant to this Section 4(a), or keep such registration
or the Shelf Registration Statement effective pursuant to Section 4(c)(i), during any Blackout
Period.

     (b) Piggyback Registration Rights.

     (i) Piggyback Registration. If after the date that is one (1) year after the
Closing Date, the Company shall determine to register the offer and sale for cash of any of
its Common Stock for its own account, other than (i) a registration relating solely to
employee benefit plans or securities issued or issuable to employees, consultants (to the
extent the securities owned or to be owned by such consultants could be registered on Form
S-8) or any of their Family Members (including a registration on Form S-8), (ii) a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, exchange offer or similar event, or (iii) a registration in which the only
Common Stock being registered is Common Stock issuable upon conversion of debt

6

 

securities that are also being registered, then (subject to Section 4(b)(iii)) the
Company shall promptly give to the Holders written notice thereof, and in no event shall
such notice be given less than 20 calendar days prior to the filing of a registration
statement (each a “Piggyback Registration Statement” and collectively the “Piggyback
Registration Statements”) with respect to such registration (each a “Piggyback
Registration”), and shall, subject to Section 4(b)(ii) and Section 4(b)(iii), include in
such Piggyback Registration, all of the Registrable Securities specified in a written
request or requests, made within 10 calendar days after receipt of such written notice from
the Company, by any Holder or Holders. However, the Company may, without the consent of the
Holders, withdraw such Piggyback Registration Statement prior to its becoming effective if
the Company has elected to abandon the proposal to register the securities proposed to be
registered thereby.

     (ii) Underwriting. If a Piggyback Registration is for a registered public
offering involving an underwriting, the Company shall so advise the Holders in writing or as
a part of the written notice given pursuant to Section 4(b)(i). In such event the right of
any Holder to registration pursuant to Section 4(b)(i) shall be conditioned upon such
Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable
Securities in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the Company)
enter into an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other provision of this
Section 4(b)(ii), if the underwriter or the Company determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter may exclude
some or all Registrable Securities from such registration and underwriting. The Company
shall so advise all Holders (except those Holders who failed to timely elect to distribute
their Registrable Securities through such underwriting or have indicated to the Company
their decision not to do so), and the number of shares that may be included in the
registration and underwriting shall be allocated:

     (A) first to the Company; and

     (B) then, subject to written obligations and commitments existing as of October
25, 2006, to all selling stockholders, including the Holders, who have requested to
sell in the registration on a pro rata basis according to the number of shares
requested to be included.

No Registrable Securities excluded from the underwriting by reason of the underwriter’s
marketing limitation shall be included in such registration. If any Holder disapproves of
the terms of any such underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by the withdrawal of such Registrable Securities a
greater number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters), then the
Company shall offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities pursuant to the terms
and

7

 

limitations set forth herein in the same proportion used above in determining the
underwriter limitation.

     (iii) Notwithstanding anything to the contrary set forth in this Agreement, the Company
shall not be obligated to effect, or take any action to effect, any registration pursuant to
Section 4(b) after the Company has initiated two (2) such registrations (counting for this
purpose only registrations which have been declared or ordered effective and pursuant to
which securities have been sold).

     (c) Registration Procedures. In the case of each registration, qualification, or
compliance effected by the Company pursuant to Section 4(a) and Section 4(b), the Company will keep
each Holder including securities therein reasonably advised in writing (which may include e-mail)
as to the initiation of each registration, qualification, and compliance and as to the completion
thereof. In addition, the Company hereby agrees as follows with respect to each Registration
Statement:

     (i) The Company will use its commercially reasonable efforts to cause such Registration
Statement to become and remain effective at least for a period ending with the first to
occur of (A) the sale by the Holders of all Registrable Securities covered by such
Registration Statement, (B) the availability under Rule 144 for the Holders to immediately,
freely resell without restriction under United States federal securities laws all
Registrable Securities covered by such Registration Statement, or (C) the date that is two
years after the SEC Effective Date of such Registration Statement (provided, however, that
if the Company files a Registration Statement on Form S-1 and subsequently becomes eligible
to use Form S-3, it may file a post-effective amendment to such Form S-1 on Form S-3 prior
to the end of such period and use its commercially reasonable efforts to cause such
Registration Statement as amended to become effective until the end of such period) (in any
such case, the “Effectiveness Period”). At any time after the end of the Effectiveness
Period with respect to the Shelf Registration Statement, if (a) the Holders Beneficially Own
Registrable Securities representing more than 10% of the fully diluted equity interests in
the Company (calculated giving effect to the exercise of all outstanding options, warrants
and other rights to purchase to acquire any Common Stock of the Company) or (b) any nominee
designated by the Holders pursuant to Section 2(a) is a member of the Board, then (x) as
promptly as reasonably practicable after the written request of Holders of a majority of the
Registrable Securities, the Company shall file with the SEC another shelf registration
statement on Form S-1 (or, if the Company is eligible to use such form, Form S-3) relating
to the registration of the offer and resale by the Holders of all of the Registrable
Securities, (y) the provisions of this Agreement (including without limitation the
provisions of Section 4(a) and Section 4(c)) shall apply to such registration statement and
(z) such registration statement shall be deemed to be the Shelf Registration Statement (as
defined in Section 4(a)) for purposes of this Agreement.

     (ii) If any Registration Statement becomes subject to review by the SEC, the Company
will promptly respond to all comments and diligently pursue resolution of any comments to
the satisfaction of the SEC.

8

 

     (iii) The Company will prepare and file with the SEC such amendments and supplements to
each Registration Statement and any prospectus used in connection therewith as may be
reasonably necessary to keep such Registration Statement effective during the applicable
Effectiveness Period, and will comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement during such
period in accordance with the intended method(s) of disposition by the sellers thereof set
forth in such Registration Statement.

     (iv) The Company will furnish, without charge, to each Holder (A) a reasonable number
of copies of each Registration Statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as such Holder may
request, (B) such number of copies of the prospectus included in such Registration Statement
(including each preliminary prospectus and any other prospectus filed under Rule 424 under
the Securities Act) as each Holder may request, in conformity with the requirements of the
Securities Act, and (C) such other documents as each Holder may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by such Holder, but only
during the applicable Effectiveness Period.

     (v) The Company will use its commercially reasonable efforts to register or qualify the
Registrable Securities under such other applicable securities or blue sky laws of such
jurisdictions as the Holders of a majority of the Registrable Securities reasonably requests
as may be necessary for the marketability of the Registrable Securities (such request to be
made by the time the relevant Registration Statement is deemed effective by the SEC) and do
any and all other acts and things which may be reasonably necessary or advisable to enable
the Holders to consummate the disposition in such jurisdictions of the Registrable
Securities owned by the Holders; provided, however, that the Company shall not be required
to (A) qualify generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (v), (B) subject itself to taxation in any such
jurisdiction, or (C) consent to general service of process in any such jurisdiction.

     (vi) As promptly as practicable after becoming aware of such event, the Company will
notify each Holder of Registrable Securities being offered or sold pursuant to each
Registration Statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event which comes to the
Company’s attention if as a result of such event the prospectus included in such
Registration Statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not
misleading, and the Company shall promptly prepare and furnish to such Holder a supplement
or amendment to such prospectus (or prepare and file appropriate reports under the Exchange
Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein not
misleading, unless suspension of the use of such prospectus otherwise is authorized herein
or in the event of a Blackout Period, in which case no supplement or amendment need be
furnished (or Exchange Act filing made) until the termination of such suspension or Blackout
Period.

9

 

     (vii) The Company will comply, and continue to comply during the period that each
Registration Statement is effective under the Securities Act, in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and regulations of the
SEC with respect to the disposition of all securities covered by such Registration
Statement.

     (viii) As promptly as practicable after becoming aware of such event, the Company will
notify each Holder of Registrable Securities being offered or sold pursuant to each
Registration Statement of the issuance by the SEC of any stop order or other suspension of
effectiveness of such Registration Statement.

     (ix) The Company will permit the Holders of Registrable Securities being offered or
sold pursuant to each Registration Statement and their legal counsel, at such Holders’ sole
cost and expense to review and have a reasonable opportunity to comment on such Registration
Statement and all amendments and supplements thereto at least two Business Days prior to
their filing with the SEC.

     (x) The Company will make available for inspection by the Holders and any Inspector
retained by the Holders, at the Holders’ sole expense, all records as shall be reasonably
necessary to enable the Holders to exercise their due diligence responsibility, and cause
the Company’s officers, directors, and employees to supply all information which the Holders
or any Inspector may reasonably request for purposes of such due diligence; provided,
however, that the Holders shall hold in confidence and shall not make any disclosure of any
record or other information which the Company determines in good faith to be confidential,
and of which determination the Holders are so notified at the time the Holders receive such
information, unless (w) the Holders have, or obtained, knowledge of such information without
violation of or protection under any agreements with the Company or, to its knowledge any
third party, (x) the disclosure of such record is reasonably necessary to avoid or correct a
misstatement or omission in each Registration Statement and a reasonable time prior to such
disclosure the Holders shall have informed the Company of the need to so correct such
misstatement or omission and the Company shall have failed to correct such misstatement of
omission, (y) the release of such record is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (z) the information in such
record has been made generally available to the public other than by disclosure in violation
of this Agreement or any other agreement. The Company shall not be required to disclose any
confidential information in such records to any Inspector until and unless such Inspector
shall have entered into a confidentiality agreement with the Company with respect thereto,
containing terms substantially similar to those set forth in this Section 4(c)(x), which
agreement shall permit such Inspector to disclose records to the Holders. Each Holder
agrees that it shall, upon learning that disclosure of such records is sought in or by a
court or governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at the Company’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order for, the
records deemed confidential. The Company shall hold in confidence and shall not make any
disclosure of information concerning the Holders provided to the Company pursuant to this
Agreement unless (A) disclosure of such information is reasonably necessary to comply with
federal or state securities laws, (B) disclosure of such

10

 

information to the SEC’s Staff of the Division of Corporation Finance is reasonably
necessary to respond to comments raised by such staff in its review of such Registration
Statement, (C) disclosure of such information is reasonably necessary to avoid or correct a
misstatement or omission in such Registration Statement, (D) release of such information is
ordered pursuant to a subpoena or other order from a court or governmental body of competent
jurisdiction, or (E) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such information concerning the Holders is sought in
or by a court or governmental body of competent jurisdiction or through other means, give
prompt notice to the Holders and allow the Holders, at the Holders’ expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order for, such
information.

     (xi) The Company will use its commercially reasonable efforts to cause all the
Registrable Securities covered by each Registration Statement to be listed or quoted on the
principal securities market on which securities of the same class or series issued by the
Company are then listed or traded.

     (xii) The Company will provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times.

     (xiii) The Company will cooperate with the Holders of Registrable Securities being
offered pursuant to each Registration Statement to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to such Registration Statement and enable such
certificates to be in such denominations or amounts as the Investor may reasonably request.

     (xiv) The Company will take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to each
Registration Statement, including without limitation making its chief executive officer,
president, chief financial officer and other appropriate officers and personnel available to
participate in marketing efforts with respect to any registered underwritten public
offering.

     (d) Suspension of Offers and Sales. Each Holder of Registrable Securities agrees
that, upon receipt of any notice from the Company of the happening of any event of the kind
described in Section 4(c)(vi) or of the commencement of a Blackout Period, such Holder shall
discontinue and suspend disposition of Registrable Securities pursuant to any Registration
Statement until the Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4(c)(vi) or notice of the end of the Blackout Period, and, if so directed
by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file copies, then in such
Holder’s possession, of the prospectus covering such Registrable Securities current at the time of
receipt of such notice.

     (e) Registration Expenses. All expenses incident to the Company’s performance of or
compliance with this Agreement, including without limitation all registration and filing fees,

11

 

messenger and delivery expenses, printing expenses, internal expenses (including without
limitation all salaries and expenses of its officers and employees performing legal or accounting
duties), all fees and expenses associated with filings required to be made with the NASD, as may be
required by the rules and regulations of the NASD, fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), rating agency fees, the fees and expenses
incurred in connection with the listing of the securities to be registered on all securities
exchanges on which similar securities issued by the Company are then quoted or listed, fees and
disbursements of counsel for the Company and its independent certified public accountants, and the
fees and expenses of any other persons retained by the Company, in connection with the registration
hereunder (collectively, the “Registration Expenses”) will be borne by the Company, but not
including any roadshow expenses, fees and expenses of counsel for the Holders and any underwriting,
broker or dealer discounts or commissions attributable to the sale of Registrable Securities (which
are hereinafter referred to as “Selling Expenses”). All Selling Expenses shall be borne solely by
the Holders.

     (f) Information by the Holder. The Holder or Holders of Registrable Securities
included in any Registration Statement shall furnish to the Company such information required under
Regulation S-K under the Securities Act regarding such Holder or Holders and the distribution
proposed by such Holder or Holders as the Company may request in writing. No Holder of Registrable
Securities will be entitled to have such Registrable Securities included in a Registration
Statement if such Holder does not furnish such information requested by the Company.

     (g) Indemnification.

     (i) In the event of the offer and sale of Registrable Securities under the Securities
Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent
permitted by law, each Holder, its directors, officers, partners, each other person who
participates as an underwriter in the offering or sale of such securities, and each other
person, if any, who controls or is under common control with such Holder or any such
underwriter within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, and expenses to which such Holder or any
such director, officer, partner or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in (A) any Registration Statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or supplement thereto,
or (B) in any materials or information provided to investors by, or with the written
approval of, the Company in connection with the marketing of the offering of the Shares
(“Marketing Materials”), including any road show or investor presentations made to
investors by the Company (whether in person or electronically), or any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make
the statements therein in light of the circumstances in which they were made not misleading,
and the Company shall reimburse the Holder, and each such director, officer, partner,
underwriter and controlling person for any legal or any other expenses reasonably incurred
by them in connection

12

 

with investigating, defending or settling any such loss, claim, damage, liability,
action or proceeding; provided that the foregoing shall not apply, and the Company shall not
be liable, in any such case (A) to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged omission from such
Registration Statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by or on behalf of
such Holder specifically stating that it is for use in the preparation thereof, or (B) to
the extent that such Holder failed to comply with the terms of the plan of distribution
mechanics described in the applicable prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Holders, or any such
director, officer, partner, underwriter or controlling person and shall survive the transfer
of such shares by the Holders.

     (ii) As a condition to including any Registrable Securities to be offered by a Holder
in any Registration Statement, such Holder agrees to be bound by the terms of this Section
4(g) and to indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, legal counsel and accountants for
the Company, any underwriter, any other Holder selling securities in such Registration
Statement and any controlling person within the meaning of the Securities Act of any such
underwriter or other Holder, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or controlling person may
become subject under the Securities Act or otherwise, (A) insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from such Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf of such Holder
specifically stating that it is for use in the preparation thereof, or (B) to the extent
that such Holder failed to comply with the terms of the plan of distribution mechanics
described in the applicable prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company, or any such director,
officer, partner, underwriter or controlling person and shall survive the transfer of such
shares by the Holder, and such Holder shall reimburse the Company, and each such director,
officer, legal counsel and accountants, underwriter, other stockholder, and controlling
person for any legal or other expenses reasonably incurred by them in connection with
investigating, defending, or settling and such loss, claim, damage, liability, action, or
proceeding; provided, however, that such indemnity agreement found in this Section 4(g)(ii)
shall in no event exceed the gross proceeds from the offering received by the Investor.

     (iii) Promptly after receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in Section 4(g)(i) or Section
4(g)(ii) (including any governmental action), such indemnified party

13

 

shall, if a claim in respect thereof is to be made against an indemnifying party, give
written notice to the indemnifying party of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under Section 4(g)(i) or Section
4(g)(ii), except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against an indemnified party,
unless in the reasonable judgment of counsel to such indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist or the indemnified
party may have defenses not available to the indemnifying party in respect of such claim,
the indemnifying party shall be entitled to participate in and to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party’s reasonable judgment a conflict of
interest between such indemnified and indemnifying parties arises in respect of such claim
after the assumption of the defenses thereof or the indemnifying party fails to defend such
claim in a diligent manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any action or
proceeding effected without its consent. No indemnifying party shall, without the consent
of the indemnified party, consent to entry of any judgment or enter into any settlement,
which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect of such claim
or litigation. Notwithstanding anything to the contrary set forth herein, and without
limiting any of the rights set forth above, in any event any party shall have the right to
retain, at its own expense, counsel with respect to the defense of a claim.

     (iv) In the event that an indemnifying party does or is not permitted to assume the
defense of an action pursuant to Section 4(g)(iii) or in the case of the expense
reimbursement obligation set forth in Section 4(g)(i) and Section 4(g)(ii), the
indemnification required by Section 4(g)(i) and Section 4(g)(ii) shall be made by periodic
payments of the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are incurred.

     (v) If the indemnification provided for in this Section 4(g) is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall (A) contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability, claim, damage or
expense as is appropriate to reflect the proportionate relative fault of the indemnifying
party on the one hand and the indemnified party on the other (determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or
omission relates to information supplied by the indemnifying party or the indemnified party
and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission), or (B) if the allocation provided by
clause (A) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the proportionate
relative fault of the indemnifying party and the indemnified party, but also

14

 

the relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.

     (vi) Indemnification similar to that specified in the preceding subsections of this
Section 4(g) (with appropriate modifications) shall be given by the Company and each Holder
of Registrable Securities with respect to any required registration or other qualification
of securities under any federal or state law or regulation or governmental authority other
than the Securities Act.

     Section 5. Miscellaneous.

     (a) Assignment of Rights; Successors and Permitted Assignees. No Holder may assign
its rights under this Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement without such
restrictions to a Permitted Assignee as long as (i) such transfer or assignment is effected in
accordance with applicable securities laws; (ii) such transferee or assignee agrees in writing to
become subject to the terms of this Agreement as a Holder; and (iii) the Company is given written
notice by such Holder of such transfer or assignment, stating the name and address of the
transferee or assignee and identifying the Shares with respect to which such rights are being
transferred or assigned. Except as otherwise provided herein, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the successors, Permitted Assignees, heirs,
legatees, executors and administrators of the parties hereto.

     (b) Notices. All notices or other communications which are required or permitted
under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at such other address as
may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:

	 	 	 	 	 
	 

	 	If to the Company:
	 	Allis Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, Texas 77056

Attention: Theodore F. Pound, General Counsel

Facsimile: (713) 369-0555
	 
	 	 	 	 
	 

	 	with a copy (which

shall not constitute

notice) to:
	 	Andrews Kurth LLP

600 Travis, Suite 4200

Houston, Texas 77002

Attention: Robert V. Jewell

Facsimile: (713) 238-7135

15

 

	 	 	 	 	 
	 

	 	If to the Investor:
	 	Oil & Gas Rental Services, Inc.
	 

	 	 	 	948 DeGravelle Road
	 

	 	 	 	Amelia, Louisiana 70340
	 

	 	 	 	Attn: Burt A. Adams, President and Chief
	 

	 	 	 	Executive Officer
	 

	 	 	 	Facsimile: (985) 631-3427
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	Oil & Gas Rental Services, Inc.
	 

	 	 	 	Whitney Bank Building
	 

	 	 	 	228 St. Charles Avenue
	 

	 	 	 	Suite 814
	 

	 	 	 	New Orleans, Louisiana 70130
	 

	 	 	 	Attn: Brad A. Adams, Vice President and General
	 

	 	 	 	Counsel
	 

	 	 	 	Facsimile: (504) 522-0748
	 
	 	 	 	 
	 

	 	with a copy (which

shall not constitute

notice) to:
	 	Phelps Dunbar LLP

365 Canal Street, Suite 2000

New Orleans, Louisiana 70130

Attn: Mark A. Fullmer

Facsimile: (504) 568-9130

or at such other address as any party shall have furnished to the other party in writing.

     (c) Specific Performance. Each party to this Agreement agrees that any breach by it
of any provision of this Agreement would irreparably injure the other party and that money damages
would be an inadequate remedy therefor. Accordingly, each party agrees that the other party shall
be entitled to one or more injunctions enjoining any such breach and requiring specific performance
of this Agreement and consents to the entry thereof, in addition to any other remedy to which such
other party is entitled at law or in equity.

     (d) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.

     (e) Amendments. The provisions of this Agreement may be amended at any time and from
time to time, and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the Holders of a majority of the
Registrable Securities outstanding as of the date of such amendment or waiver. The Investor
acknowledges that by the operation of this Section 5(e), the Holders of a majority of the
outstanding Registrable Securities may have the right and power to diminish or eliminate all rights
of the Holders under this Agreement.

     (f) Headings and Cross References. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in any way affect

16

 

the meaning or construction of any provision of this Agreement. Unless the context requires
otherwise, all cross references in this Agreement refer to sections and subsections of this
Agreement.

     (g) Severability. In the case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

     (h) Entire Agreement. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject matter of this Agreement.

     (i) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.

(SIGNATURE PAGES FOLLOW)

17

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 	 	 
	 	 	THE COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	ALLIS-CHALMERS ENERGY INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	INVESTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	OIL & GAS RENTAL SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Burt A. Adams, President and Chief	 	 
	 

	 	 	 	Executive Officer	 	 

 

EXHIBIT E

Matters to be Addressed in Opinion of Phelps Dunbar LLP

     1. Seller is validly existing as a corporation and in good standing under the laws of the
State of Louisiana.

     2. Seller has the corporate power and corporate authority under the laws of the State of
Louisiana to execute and deliver, and incur and perform all of its obligations under, each of the
Transaction Documents to which it is a party.

     3. Each of the Asset Purchase Agreement, the Bill of Sale and Assumption Agreement, the
Special Warranty Deed, the Act of Sale and the Investor Rights Agreement to which Seller is a party
(collectively, the “Transaction Documents”) has been duly authorized, executed and delivered by
Seller under, to the extent applicable, the laws of the States of Texas and Louisiana. All
approvals by the shareholders of Seller necessary for consummation of the transactions contemplated
by the Asset Purchase Agreement have been obtained. Each of the Non-Compete Agreements and
Employment Agreements has been duly authorized, executed and delivered by each of the parties
thereto (other than Buyer) under, to the extent applicable, the laws of the States of Texas and
Louisiana.

     4. Each of the Transaction Documents constitutes a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, under laws stated therein to be applicable
thereto. The opinion expressed in this paragraph is subject to bankruptcy, reorganization,
insolvency and other similar laws affecting the enforcement of creditors’ rights in general and to
general principles of equity (regardless of whether considered in a proceeding in equity or an
action of law). Such counsel need not express any opinion with respect to Section 9.3 of the Asset
Purchase Agreement.

     5. None of (i) the execution and delivery of, or the incurrence or performance by Seller of
its obligations under each of the Transaction Documents to which it is a party, each in accordance
with its terms, or (ii) the sale, transfer, conveyance and/or assignment of any of the Transferred
Assets to Buyer or its designated subsidiary, (A) constituted, constitutes or will constitute a
violation of Seller’s Articles of Incorporation or (B) resulted, results or will result in any
violation of (i) applicable laws of the State of Louisiana, (ii) applicable laws of the State of
Texas or (iii) applicable laws of the United States of America which in each instance are
customarily applicable to the transactions contemplated by the Transaction Documents and are
applicable to Seller.

     6. No Governmental Approval, which has not been obtained by Seller or taken and is not in full
force and effect, is required to authorize, or is required to be obtained by Seller for the
execution and delivery of the Transaction Documents or the incurrence or performance of its
obligations thereunder, or the enforceability of any of such Transaction Documents against Seller.
As used in this paragraph, “Governmental Approval” means any consent, approval, license,
authorization or validation of, or filing, recording or registration with, any executive,
legislative, judicial, administrative or regulatory body of the State of Texas, the State of
Louisiana or the United States of America, pursuant to (i) applicable laws of the State of Texas,

 

(ii) applicable laws of the State of Louisiana or (iii) applicable laws of the United States
of America.

Above references to “applicable laws” mean those laws, rules and regulations that, in the
experience of such counsel, are normally applicable to transactions of the type contemplated by the
Transaction Documents, without having made any special investigation as to the applicability of any
specific law, rule or regulation, and that are not the subject of a specific opinion referring
expressly to a particular law or laws; provided however, that such references do not include any
municipal or other local laws, rules or regulations, or any antifraud, environmental, labor,
securities, tax, insurance or antitrust, laws, rules or regulations.

 

EXHIBIT F

Matters to be Addressed in Opinion of Andrews Kurth LLP

     1. Buyer is validly existing as a corporation and in good standing under the laws of the State
of Delaware.

     2. Buyer has the corporate power and corporate authority under the laws of the State of
Delaware to execute and deliver, and incur and perform all of its obligations under the Asset
Purchase Agreement and the Investors Rights Agreement (collectively, the “Transaction Documents”).

     3. Each of the Transaction Documents has been duly authorized, executed and delivered by Buyer
and constitutes a valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, under applicable laws of the State of Texas. The opinion expressed in this
paragraph is subject to bankruptcy, reorganization, insolvency and other similar laws affecting the
enforcement of creditors’ rights in general and to general principles of equity (regardless of
whether considered in a proceeding in equity or an action of law).

     4. The shares of Common Stock to be issued as the Stock Consideration under the Asset Purchase
Agreement have been duly authorized and, upon issuance and payment therefor, shall be validly
issued, fully paid and non-assessable.

     5. None of (i) the execution and delivery of, or the incurrence or performance by Buyer of its
obligations under each of the Transaction Documents to which it is a party, each in accordance with
its terms, or (ii) the purchase by Buyer or its designated subsidiary of the Transferred Assets,
(A) constituted, constitutes or will constitute a violation of the Certificate of Incorporation or
Bylaws of Buyer and such subsidiary or (B) resulted, results or will result in any violation of (i)
applicable laws of the State of Texas or (ii) applicable laws of the United States of America.

     6. No Governmental Approval, which has not been obtained by Buyer or taken and is not in full
force and effect, is required to authorize, or is required to be obtained by Buyer for the
execution and delivery of the Transaction Documents or the incurrence or performance of its
obligations thereunder, or the enforceability of any such Transaction Documents against Buyer. As
used in this paragraph, “Governmental Approval” means any consent, approval, license,
authorization or validation of, or filing, recording or registration with, any executive,
legislative, judicial, administrative or regulatory body of the State of Texas, the State of
Louisiana or the United States of America, pursuant to (i) applicable laws of the State of Texas or
(ii) applicable laws of the United States of America.

Above references to “applicable laws” mean those laws, rules and regulations that, in the
experience of such counsel, are normally applicable to transactions of the type contemplated by the
Transaction Documents, without having made any special investigation as to the applicability of any
specific law, rule or regulation, and that are not the subject of a specific opinion referring
expressly to a particular law or laws; provided however, that such references do not include any
municipal or other local laws, rules or regulations, or any antifraud, environmental, labor,
securities, tax, insurance or antitrust, laws, rules or regulations.exv10w1

 

Exhibit 10.1

SENIOR SECURED CREDIT AGREEMENT

Dated as of October 20, 2006

Among

UNIVERSAL COMPRESSION, INC.,

as Co-US Borrower and Guarantor,

UNIVERSAL COMPRESSION HOLDINGS, INC.,

as Co-US Borrower and Guarantor,

UNIVERSAL COMPRESSION CANADA, LIMITED PARTNERSHIP,

as Co-Canadian Borrower,

UC CANADIAN PARTNERSHIP HOLDINGS COMPANY,

as Co-Canadian Borrower,

WACHOVIA BANK, NATIONAL ASSOCIATION,

as US Administrative Agent,

WACHOVIA CAPITAL FINANCE CORPORATION (CANADA),

as Canadian Administrative Agent,

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Syndication Agent,

JPMORGAN CHASE BANK, N.A. AND THE BANK OF NOVA SCOTIA,

as Co-Documentation Agents,

AND

THE LENDERS SIGNATORY HERETO

Arranged by:

WACHOVIA CAPITAL MARKETS, LLC AND DEUTSCHE BANK SECURITIES INC.

as Joint Lead Arrangers and Joint Book Runners

$500,000,000 Senior Secured Credit Facilities

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I Definitions and Accounting Matters	 	 	2	 
	   Section 1.01	 	Terms Defined Above
	 	 	2	 
	   Section 1.02	 	Certain Defined Terms
	 	 	2	 
	   Section 1.03	 	Accounting Terms and Determinations
	 	 	30	 
	   Section 1.04	 	References and Titles
	 	 	30	 
	 	 	 
	 	 	 	 
	ARTICLE II Commitments	 	 	31	 
	   Section 2.01	 	Loans and Letters of Credit
	 	 	31	 
	   Section 2.02	 	Borrowings, Continuations and Conversions, Letters of Credit
	 	 	34	 
	   Section 2.03	 	Changes of Commitments
	 	 	36	 
	   Section 2.04	 	Fees
	 	 	38	 
	   Section 2.05	 	Several Obligations
	 	 	39	 
	   Section 2.06	 	Notes
	 	 	39	 
	   Section 2.07	 	Prepayments
	 	 	40	 
	   Section 2.08	 	Reserved
	 	 	41	 
	   Section 2.09	 	Assumption of Risks
	 	 	41	 
	   Section 2.10	 	Obligation to Reimburse and to Prepay
	 	 	42	 
	   Section 2.11	 	Lending Offices
	 	 	44	 
	   Section 2.12	 	Bankers’ Acceptances and BA Equivalent Loans
	 	 	44	 
	   Section 2.13	 	Joint and Several Liability of the Borrowers
	 	 	49	 
	   Section 2.14	 	Conditions for Holdings to Become Sole US Borrower
	 	 	51	 
	   Section 2.15	 	Commitment Increase
	 	 	52	 
	 	 	 
	 	 	 	 
	ARTICLE III Payments of Principal and Interest	 	 	54	 
	   Section 3.01	 	Repayment of Loans
	 	 	54	 
	   Section 3.02	 	Interest
	 	 	54	 
	 	 	 
	 	 	 	 
	ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc.	 	 	56	 
	   Section 4.01	 	Payments
	 	 	56	 
	   Section 4.02	 	Pro Rata Treatment
	 	 	57	 
	   Section 4.03	 	Computations
	 	 	57	 
	   Section 4.04	 	Agent Reliance
	 	 	57	 
	   Section 4.05	 	Set-off, Sharing of Payments, Etc.
	 	 	58	 
	   Section 4.06	 	Taxes
	 	 	59	 
	 	 	 
	 	 	 	 
	ARTICLE V Capital Adequacy	 	 	62	 
	   Section 5.01	 	Additional Costs
	 	 	62	 
	   Section 5.02	 	Limitation on US Dollar LIBOR Loans
	 	 	64	 
	   Section 5.03	 	Illegality
	 	 	64	 
	   Section 5.04	 	US Dollar Base Rate Loans Pursuant to   Sections 5.01,
5.02 and 5.03
	 	 	64	 
	   Section 5.05	 	Compensation
	 	 	65	 
	   Section 5.06	 	Replacement Lenders
	 	 	66	 

-i-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE VI Conditions Precedent	 	 	67	 
	   Section 6.01	 	Effectiveness
	 	 	67	 
	   Section 6.02	 	Loans and Letters of Credit
	 	 	70	 
	   Section 6.03	 	Conditions Precedent for the Benefit of Lenders
	 	 	71	 
	   Section 6.04	 	Conditions Precedent to the Term Loans and Commitment Increases
	 	 	71	 
	   Section 6.05	 	No Waiver
	 	 	72	 
	   Section 6.06	 	Canadian Tranche Borrowings
	 	 	72	 
	 	 	 
	 	 	 	 
	ARTICLE VII Representations and Warranties of US Borrowers	 	 	72	 
	   Section 7.01	 	Legal Existence
	 	 	72	 
	   Section 7.02	 	Financial Condition
	 	 	72	 
	   Section 7.03	 	Litigation
	 	 	73	 
	   Section 7.04	 	No Breach
	 	 	73	 
	   Section 7.05	 	Authority
	 	 	73	 
	   Section 7.06	 	Approvals
	 	 	73	 
	   Section 7.07	 	Use of Loans
	 	 	73	 
	   Section 7.08	 	ERISA
	 	 	74	 
	   Section 7.09	 	Taxes
	 	 	74	 
	   Section 7.10	 	Titles, Etc.
	 	 	74	 
	   Section 7.11	 	No Material Misstatements
	 	 	74	 
	   Section 7.12	 	Investment Company Act
	 	 	75	 
	   Section 7.13	 	Reserved
	 	 	75	 
	   Section 7.14	 	Subsidiaries
	 	 	75	 
	   Section 7.15	 	Location of Business and Offices
	 	 	75	 
	   Section 7.16	 	Defaults
	 	 	75	 
	   Section 7.17	 	Environmental Matters
	 	 	75	 
	   Section 7.18	 	Compliance with the Law
	 	 	76	 
	   Section 7.19	 	Insurance
	 	 	76	 
	   Section 7.20	 	Hedging Agreements
	 	 	77	 
	   Section 7.21	 	Restriction on Liens
	 	 	77	 
	 	 	 
	 	 	 	 
	ARTICLE VIII Representations and Warranties of Canadian Borrowers	 	 	77	 
	   Section 8.01	 	Legal Existence
	 	 	77	 
	   Section 8.02	 	No Breach
	 	 	77	 
	   Section 8.03	 	Authority
	 	 	78	 
	   Section 8.04	 	Approvals
	 	 	78	 
	   Section 8.05	 	Defaults
	 	 	78	 
	   Section 8.06	 	Income Tax Act (Canada)
	 	 	78	 
	   Section 8.07	 	Use of Loans
	 	 	78	 
	 	 	 
	 	 	 	 
	ARTICLE IX Affirmative Covenants	 	 	78	 
	   Section 9.01	 	Reporting Requirements
	 	 	78	 
	   Section 9.02	 	Litigation
	 	 	80	 
	   Section 9.03	 	Maintenance, Etc.
	 	 	80	 
	   Section 9.04	 	Environmental Matters
	 	 	81	 
	   Section 9.05	 	Further Assurances
	 	 	81	 

-ii-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	   Section 9.06	 	Performance of Obligations
	 	 	82	 
	   Section 9.07	 	Reserved
	 	 	82	 
	   Section 9.08	 	Reserved
	 	 	82	 
	   Section 9.09	 	Collateral
	 	 	82	 
	   Section 9.10	 	Notice of an ERISA Event
	 	 	83	 
	   Section 9.11	 	Ownership of the General Partner
	 	 	83	 
	 	 	 
	 	 	 	 
	ARTICLE X Negative Covenants	 	 	83	 
	   Section 10.01	 	Debt
	 	 	83	 
	   Section 10.02	 	Liens
	 	 	84	 
	   Section 10.03	 	Investments
	 	 	85	 
	   Section 10.04	 	Dividends, Distributions and Redemptions
	 	 	86	 
	   Section 10.05	 	Reserved
	 	 	86	 
	   Section 10.06	 	Nature of Business
	 	 	86	 
	   Section 10.07	 	Reserved
	 	 	86	 
	   Section 10.08	 	Mergers, Etc.
	 	 	86	 
	   Section 10.09	 	Proceeds of Notes; Letters of Credit
	 	 	87	 
	   Section 10.10	 	Reserved
	 	 	87	 
	   Section 10.11	 	Sale or Discount of Receivables
	 	 	87	 
	   Section 10.12	 	Fiscal Year Change
	 	 	87	 
	   Section 10.13	 	Certain Financial Covenants
	 	 	87	 
	   Section 10.14	 	Sale of Properties
	 	 	87	 
	   Section 10.15	 	Environmental Matters
	 	 	89	 
	   Section 10.16	 	Transactions with Affiliates
	 	 	89	 
	   Section 10.17	 	Subsidiaries
	 	 	89	 
	   Section 10.18	 	Negative Pledge Agreements
	 	 	89	 
	   Section 10.19	 	The General Partner
	 	 	90	 
	 	 	 
	 	 	 	 
	ARTICLE XI Events of Default; Remedies	 	 	90	 
	   Section 11.01	 	Events of Default
	 	 	90	 
	   Section 11.02	 	Remedies
	 	 	92	 
	   Section 11.03	 	Letters of Credit
	 	 	94	 
	 	 	 
	 	 	 	 
	ARTICLE XII The Administrative Agent	 	 	95	 
	   Section 12.01	 	Appointment, Powers and Immunities of the Administrative Agents
	 	 	95	 
	   Section 12.02	 	Reliance by the Administrative Agents
	 	 	96	 
	   Section 12.03	 	Defaults
	 	 	96	 
	   Section 12.04	 	Rights as a Lender
	 	 	96	 
	   Section 12.05	 	Indemnification
	 	 	96	 
	   Section 12.06	 	Non-Reliance on the Administrative Agents and other Lenders
	 	 	97	 
	   Section 12.07	 	Action by the Administrative Agents
	 	 	97	 
	   Section 12.08	 	Resignation or Removal of the Administrative Agents
	 	 	98	 
	   Section 12.09	 	Notification by US Administrative Agent
	 	 	98	 
	   Section 12.10	 	Joint Lead Arrangers, Joint Book Runners, Co-Documentation Agents
	 	 	98	 

-iii-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE XIII Miscellaneous	 	 	99	 
	   Section 13.01	 	Waiver
	 	 	99	 
	   Section 13.02	 	Notices
	 	 	99	 
	   Section 13.03	 	Payment of Expenses, Indemnities, etc.
	 	 	99	 
	   Section 13.04	 	Amendments, Etc.
	 	 	102	 
	   Section 13.05	 	Successors and Assigns
	 	 	102	 
	   Section 13.06	 	Assignments and Participations
	 	 	102	 
	   Section 13.07	 	Invalidity
	 	 	104	 
	   Section 13.08	 	Counterparts
	 	 	104	 
	   Section 13.09	 	Reserved
	 	 	104	 
	   Section 13.10	 	Survival
	 	 	105	 
	   Section 13.11	 	Reserved
	 	 	105	 
	   Section 13.12	 	No Oral Agreements
	 	 	105	 
	   Section 13.13	 	Governing Law; Submission to Jurisdiction
	 	 	105	 
	   Section 13.14	 	Interest
	 	 	106	 
	   Section 13.15	 	Confidentiality
	 	 	107	 
	   Section 13.16	 	Effectiveness
	 	 	108	 
	   Section 13.17	 	Exculpation Provisions
	 	 	108	 
	   Section 13.18	 	Hedging Agreements
	 	 	109	 
	   Section 13.19	 	USA Patriot Act Notice
	 	 	109	 
	   Section 13.20	 	Restatement
	 	 	109	 
	 	 	 
	 	 	 	 
	ARTICLE XIV GUARANTY	 	 	109	 
	   Section 14.01	 	The Guaranty
	 	 	109	 
	   Section 14.02	 	Subrogation
	 	 	110	 

EXHIBITS AND SCHEDULES

	 	 	 	 	 
	Exhibit A-1

	 	-
	 	Form of US Revolving Note
	Exhibit A-2

	 	-
	 	Form of Canadian Revolving Note
	Exhibit A-3

	 	-
	 	Form of Term Note
	Exhibit A-4

	 	-
	 	Form of BA Equivalent Note
	Exhibit B-1

	 	-
	 	Form of US Borrowing, Continuation and Conversion Request
	Exhibit B-2

	 	-
	 	Form of Canadian Borrowing, Continuation and Conversion Request
	Exhibit C-1

	 	-
	 	Form of Compliance Certificate (Condition to Close)
	Exhibit C-2

	 	-
	 	Form of Compliance Certificate (Ongoing)
	Exhibit D

	 	-
	 	List of Security Instruments
	Exhibit E

	 	-
	 	Form of Assignment Agreement
	Exhibit F

	 	-
	 	Form of Letter of Credit Application
	Exhibit G

	 	-
	 	Form of Election Certificate
	Exhibit H-1

	 	-
	 	Form of Commitment Increase Certificate
	Exhibit H-2

	 	-
	 	Form of Additional Lender Certificate

	 	 	 	 	 
	Schedule 2.01(b)

	 	-
	 	Existing Letters of Credit
	Schedule 6.01(q)

	 	-
	 	Excepted Property

-iv-

 

	 	 	 	 	 
	Schedule 7.02

	 	-
	 	Liabilities
	Schedule 7.03

	 	-
	 	Litigation
	Schedule 7.09

	 	-
	 	Taxes
	Schedule 7.10

	 	-
	 	Titles, Etc.
	Schedule 7.14

	 	-
	 	Subsidiaries
	Schedule 7.20

	 	-
	 	Hedging Agreements
	Schedule 7.21

	 	-
	 	Restriction on Liens
	Schedule 9.09

	 	-
	 	Excluded Collateral
	Schedule 10.01

	 	-
	 	Debt
	Schedule 10.02

	 	-
	 	Liens
	Schedule 10.03

	 	-
	 	Investments, Loans and Advances
	Schedule 10.16

	 	-
	 	Transactions with Affiliates

-v-

 

     THIS SENIOR SECURED CREDIT AGREEMENT dated as of October 20, 2006, is among: UNIVERSAL
COMPRESSION, INC., a corporation formed under the laws of the State of Texas (a “US
Borrower” and sometimes referred to herein as “UCI”, and in its capacity as guarantor
of the Canadian Tranche Loans, a “Guarantor”); UNIVERSAL COMPRESSION HOLDINGS, INC., a
corporation formed under the laws of the State of Delaware (a “US Borrower” and sometimes
referred to herein as “Holdings”, and in its capacity as guarantor of the Canadian Tranche
Loans, a “Guarantor”, together with UCI, the “US Borrowers”); UNIVERSAL COMPRESSION
CANADA, LIMITED PARTNERSHIP, a Nova Scotia limited partnership (a “Canadian Borrower” and
sometimes referred to herein as “Universal Canada”) and UC CANADIAN PARTNERSHIP HOLDINGS
COMPANY, a Nova Scotia unlimited liability company, in its individual capacity and not in its
capacity as the general partner of Universal Canada (a “Canadian Borrower” and sometimes
referred to herein as “UC Canadian Holdings”, together with Universal Canada, the
“Canadian Borrowers”); WACHOVIA BANK, NATIONAL ASSOCIATION, individually and as US
administrative agent for the Lenders (herein, together with its successors in such capacity, the
“US Administrative Agent”); WACHOVIA CAPITAL FINANCE CORPORATION (CANADA), individually and
as Canadian administrative agent for the Lenders (herein, together with its successors in such
capacity, the “Canadian Administrative Agent”); DEUTSCHE BANK TRUST COMPANY AMERICAS,
individually and as syndication agent (herein, together with its successors in such capacity, the
“Syndication Agent”); WACHOVIA CAPITAL MARKETS, LLC (“Wachovia Securities”) and
DEUTSCHE BANK SECURITIES INC. (“DBSI” and together with Wachovia Securities and their
successors in such capacity, the “Joint Lead Arrangers” and “Joint Book Runners”);
JPMORGAN CHASE BANK, N.A. (“JPMorgan”) and THE BANK OF NOVA SCOTIA (“Scotia” and
together with JPMorgan and their successors in such capacity, the “Co-Documentation
Agents”); and each of the lenders that is a signatory hereto or which becomes a signatory
hereto pursuant to Section 13.06 (individually, together with its successors and assigns, a
“Lender” and, collectively, the “Lenders”).

R E C I T A L S

     A. On January 14, 2005, the US Borrowers, UC Canadian Holdings, certain lenders, the US
Administrative Agent and the Canadian Administrative Agent entered into that certain Senior Secured
Credit Agreement, as amended on September 22, 2005 by that First Amendment (as amended, modified or
restated from time to time, the “Existing Credit Agreement”).

     B. The Borrowers, the Lenders and the Administrative Agents mutually desire to replace the
Existing Credit Agreement in its entirety to, among other things, add Universal Canada as a
Canadian Borrower.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
of the loans, extensions of credit and commitments hereinafter referred to, the parties hereto
agree to replace the Existing Credit Agreement and carry forward the outstanding indebtedness
thereunder as follows:

 

 

ARTICLE I

Definitions and Accounting Matters

     Section 1.01 Terms Defined Above. As used in this Senior Secured Credit Agreement, the terms “Canadian Administrative Agent,”
“Canadian Borrower,” “DBSI,” “Existing Credit Agreement,” “Guarantor,” “Holdings,” “Joint Book
Runners,” “Joint Lead Arrangers,” “Lender,” “Lenders,” “Syndication Agent,” “UC Canadian Holdings,”
“UCI,” “Universal Canada,” “US Administrative Agent,” “US Borrower” and “Wachovia Securities” shall
have the meanings indicated above. The following terms which are defined in the Uniform Commercial
Code in effect in the State of Texas on the date hereof are used herein as so defined: Accounts,
Chattel Paper, Documents, Equipment, General Intangibles, Instruments and Inventory.

     Section 1.02 Certain Defined Terms. As used herein, the following terms shall have the
following meanings (all terms defined in this ARTICLE I or in other provisions of this
Senior Secured Credit Agreement in the singular to have equivalent meanings when used in the plural
and vice versa):

     “ABS Facility” shall mean that certain $225,000,000 asset backed securitization
facility under that certain Indenture dated October 28, 2005, between UCO Compression 2005 LLC, as
Issuer, and Wells Fargo Bank, National Association, as Indenture Trustee, as amended, modified,
supplemented, restated, refinanced, or replaced by another non-recourse facility or increased by
another non-recourse facility as permitted under Section 10.01(b) with terms no more
restrictive than those existing in the ABS Facility as of the Closing Date.

     “ABS Subsidiary” shall mean UCO Compression 2005 LLC and any other Subsidiary
certified by the Borrowers to be involved in or created in connection with or as a requirement of
the ABS Facility.

     “Acceptance Date” shall mean any date, which must be a Business Day, on which a
Bankers’ Acceptance is or is to be issued or a BA Equivalent Loan is or is to be made.

     “Acceptance Fees” shall mean an amount for each Bankers’ Acceptance and BA Equivalent
Loan equal to the product of the Applicable Margin for Acceptance Fees times the Principal Amount
of such Bankers’ Acceptance or BA Equivalent Loan times the Term/365.

     “Accepting Lender” shall mean any Canadian Tranche Revolving Lender that has accepted
a Bankers’ Acceptance issued by (or advanced a BA Equivalent Loan to) the Canadian Borrowers under
this Agreement.

     “Additional Lender” shall have the meaning assigned such term in Section
2.15(a).

     “Additional Lender Certificate” shall have the meaning assigned such term in
Section 2.15(b)(iii).

     “Adjusted EBITDA” shall mean for any Testing Period the sum of (i) EBITDA of Holdings
and its Consolidated Subsidiaries (excluding all Subsidiary EBITDA) for such Testing Period and
(ii) cash from distributions attributable to the ownership of GP Interests, LP Units and

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IDRs received by Holdings or its Restricted Subsidiaries during such Testing Period, on an Annualized
Basis and (iii) cash from distributions attributable to the ownership of Subordinated Units
received by Holdings and its Restricted Subsidiaries during such Testing Period, on an
Annualized Basis; provided that for so long as quarterly distributions on each
Subordinated Unit is less than $0.4025 (or such other amount as adjusted pursuant to the UCLP
Partnership Agreement), cash from distributions attributable to the ownership of Subordinated Units
will be limited to actual cash distributions received by Holding and its Restricted Subsidiaries
from the Subordinated Units during such Testing Period. In each case, with respect to (ii) and
(iii) above, adjusted for any dividend restrictions imposed on UCLP under its or any of its
Subsidiaries’ credit facilities as if such dividend restriction was in effect for the entire
Testing Period.

     “Administrative Agents” shall mean collectively, the US Administrative Agent and the
Canadian Administrative Agent.

     “Affected Loans” shall have the meaning assigned such term in Section 5.04.

     “Affiliate” of any Person shall mean (a) any Person directly or indirectly controlled
by, controlling or under common control with such first Person, (b) any director or officer of such
first Person or of any Person referred to in clause (a) above and (c) if any Person in clause (a)
above is an individual, any member of the immediate family (including parents, spouse and children)
of such individual and any trust whose principal beneficiary is such individual or one or more
members of such immediate family and any Person who is controlled by any such member or trust. For
purposes of this definition, any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to “control” (including, with
its correlative meanings, “controlled by” and “under common control with”) such corporation or
other Person.

     “Aggregate Commitments” shall mean, collectively the Aggregate Revolving Commitments
and the Aggregate Term Commitments.

     “Aggregate Credit Exposure” shall mean the aggregate Principal Amount of all Loans and
LC Exposure outstanding at such time.

     “Aggregate Revolving Commitments” at any time shall equal the sum of (a) the Aggregate
US Tranche Commitments and (b) the Canadian Allocated Total Commitments. The initial Aggregate
Revolving Commitments are $500,000,000.

     “Aggregate Term Commitments” at any time shall equal the sum of the Term Commitments
of all Term Loan Lenders, as the same may be reduced pursuant to Section 2.03(a) or
increased pursuant to Section 2.15(a). The initial Aggregate Term Commitments are $0.00.

     “Aggregate US Tranche Commitments” at any time shall equal the sum of the US Tranche
Commitments of all US Tranche Revolving Lenders, as the same may be reduced pursuant to
Sections 2.03(b) and (c) or increased pursuant to Section 2.15(a). The
initial Aggregate US Tranche Commitments are $475,000,000.

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     “Agreement” shall mean this Senior Secured Credit Agreement, as the same may from time
to time be amended or supplemented.

     “Alternate Currency” shall mean such foreign currencies which are readily convertible
into US Dollars and are acceptable to the US Administrative Agent.

     “Annualized Basis” shall mean the process of multiplying the amount of the cash
distributions received during Holdings’ most recent fiscal quarter by four.

     “Applicable Administrative Agent” shall mean (a) with respect to a Loan or Borrowing
made or a Letter of Credit issued under the US Tranche or the Term Loan Facility, the US
Administrative Agent and (b) with respect to a Loan or Borrowing made under the Canadian Tranche,
the Canadian Administrative Agent.

     “Applicable Borrower” shall mean (a) with respect to a Loan or Borrowing made or a
Letter of Credit issued under the US Tranche or the Term Loan Facility, the US Borrowers and (b)
with respect to a Loan or Borrowing made under the Canadian Tranche, the Canadian Borrowers.

     “Applicable Lenders” shall mean (a) with respect to a Loan or Borrowing made or a
Letter of Credit issued under the US Tranche, the US Tranche Revolving Lenders, (b) with respect to
a Loan or Borrowing made under the Canadian Tranche, the Canadian Tranche Revolving Lenders and (c)
with respect to a Loan or Borrowing made under the Term Loan Facility, the Term Loan Lenders.

     “Applicable Lending Office” shall mean, for each Lender and for each Type of Loan, the
lending office of such Lender (or a Lender Affiliate) designated for such Type of Loan on the
signature pages hereof or such other offices of such Lender (or of a Lender Affiliate) as such
Lender may from time to time specify to the Applicable Administrative Agent and the Applicable
Borrower as the office by which its Loans of such Type are to be made and maintained.

     “Applicable Margin” shall mean:

          (a) In respect of the Term Loan Facility, a percentage per annum as set forth in the Term Loan
Assumption Agreement.

          (b) In respect of the Revolving Credit Facility and Commitment Fees, a percentage per annum
determined by reference to the Index Debt Ratings by Moody’s and S&P, respectively, applicable on
such date, as set forth below:

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	Applicable Margin
	 	 	 	 	 	 	US Dollar Base Rate	 	 
	 	 	US Dollar LIBOR Loans	 	Loans and Canadian Prime	 	 
	Index Debt Rating	 	and Acceptance Fees (bps)	 	Rate Loans (bps)	 	Commitment Fees
	Category 1
	 	 	87.5	 	 	 	0	 	 	 	.15	%
	BBB-/Baa3 or better
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Category 2
	 	 	100	 	 	 	0	 	 	 	.20	%
	BB+/Ba1
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Category 3
	 	 	125	 	 	 	25	 	 	 	.25	%
	BB/Ba2
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Category 4
	 	 	150	 	 	 	50	 	 	 	.30	%
	BB-/Ba3
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Category 5
	 	 	175	 	 	 	75	 	 	 	.375	%
	B+/B1
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Category 6
	 	 	200	 	 	 	100	 	 	 	.375	%
	B/B2 or worse
	 	 	 	 	 	 	 	 	 	 	 	 

     For purposes of determining the Applicable Margin, the US Borrowers’ initial Index Debt
Rating will be Category 3. If the Index Debt Ratings established or deemed to have been
established by Moody’s and S&P shall fall within different Categories, the Applicable Margin shall
be based (i) if the differential is one level, the lower number of the Categories, or (ii) if the
differential is more than one level, the Category number immediately higher than the lowest. If
the Index Debt Ratings established or deemed to have been established by Moody’s and S&P shall be
changed (other than as a result of a change in the rating system of Moody’s or S&P), such change
shall be effective as of the date on which it is first announced by the applicable rating agency,
irrespective of when notice of such change shall have been furnished by Holdings to the US
Administrative Agent pursuant to Section 9.01 or otherwise. Each change in the Applicable
Margin shall apply during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change. If the rating system of
Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, Holdings and the US Tranche Revolving Lenders shall negotiate in
good faith to amend this definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin shall be determined by reference to the rating of such agency most recently in
effect prior to such change or cessation. For purposes of the foregoing, if both Moody’s and S&P
shall not have in effect an Index Debt Rating (other than by reason of the circumstances referred
to in the immediately preceding sentence of this definition), then such agencies shall be deemed to
have established an Index Debt Rating in Category 6.

     “Assignment” shall have the meaning assigned such term in Section 13.06(b).

     “BA Equivalent Loan” shall mean an advance in Canadian Dollars made by a Canadian
Tranche Revolving Lender to the Canadian Borrowers evidenced by a BA Equivalent Note.

     “BA Equivalent Note” shall mean a promissory note executed and delivered by the
Canadian Borrowers to a Canadian Tranche Revolving Lender in substantially the form of Exhibit
A-4 or by each Canadian Tranche Revolving Lender pursuant to the power of attorney in
Section 2.12(b).

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     “BA Exposure” shall mean at any time, with respect to any Accepting Lender, the
aggregate Principal Amount of Bankers’ Acceptances and BA Equivalent Loans to be paid by the
Canadian Borrowers to the Canadian Administrative Agent at the Canadian Principal Office for which
the Canadian Borrowers have not reimbursed such Accepting Lender.

     “BA Maturity Date” shall mean the date on which a Bankers’ Acceptance is payable or a
BA Equivalent Note matures in accordance with Section 2.12(a)(ii).

     “BA Net Proceeds” shall mean in respect of any Bankers’ Acceptance or BA Equivalent
Loan, the amount (rounded to the nearest whole cent with one-half of one cent being rounded up)
determined in accordance with the formula set forth below, less the Acceptance Fee applicable to
such Bankers’ Acceptance or BA Equivalent Loan. The BA Net Proceeds of any Bankers’ Acceptance or
BA Equivalent Loan shall be equal to the Principal Amount of such Bankers’ Acceptance or BA
Equivalent Loan times the Price. For purposes of this definition, the “Price” of any
Bankers’ Acceptance or BA Equivalent Loan shall equal {1 / [1 + (Bankers’ Acceptance Rate X
Term/365)]} and shall be expressed as a decimal and be rounded to the nearest 1/10000 of 1%, with
0.0000005 being rounded up.

     “Bankers’ Acceptance Rate” shall mean in respect of a Bankers’ Acceptance accepted by
an Accepting Lender on any date or a BA Equivalent Loan being advanced by such Accepting Lender on
any date, (a) for a Canadian Tranche Revolving Lender which is a Major Schedule I Lender, the CDOR
Rate, and (b) for a Canadian Tranche Revolving Lender which is not a Major Schedule I Lender, the
CDOR Rate plus 10 basis points.

     “Bankers’ Acceptances” shall mean bankers’ acceptances denominated in Canadian Dollars
in the form of either a depository bill, as defined in the DBNA, or a blank non-interest bearing
bill of exchange, as defined in the Bills of Exchange Act (Canada), in either case issued by the
Canadian Borrowers and accepted by a Canadian Tranche Revolving Lender (and, if applicable,
purchased by such Canadian Tranche Revolving Lender) at the request of the Canadian Borrowers, such
depository bill or bill of exchange to be substantially in the standard form of such Canadian
Tranche Revolving Lender.

     “Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.

     “Borrowers” shall mean collectively the US Borrowers and the Canadian Borrowers.

     “Borrowing” shall mean Loans of the same Type, made, converted or continued on the
same date and, in the case of US Dollar LIBOR Loans and in the case of Bankers’ Acceptances or BA
Equivalent Loans, as to which a single Interest Period is in effect.

     “Business Day” shall mean, other than for Letters of Credit, any day other than a day
on which commercial banks are authorized or required to close in North Carolina for purposes of the
US Tranche and the Term Loan Facility, and in North Carolina and in Calgary or Toronto, Canada for
purposes of the Canadian Tranche, and, where such term is used in the definition of “Quarterly
Date” or if such day relates to a Borrowing or

-6-

 

continuation of, a payment or prepayment of
principal of or interest on, or a conversion of or into, or the Interest Period for, a US Dollar
LIBOR Loan or a notice by a Borrower with respect to any such Borrowing or continuation, payment,
prepayment, conversion or Interest Period, any day which is also a day on which dealings in US
Dollar deposits are carried out in the London interbank market. With respect to Letters of Credit,
“Business Day” shall mean any day other than a day on which commercial banks are authorized
or required to close in the domicility of the respective Issuing Bank and confirming bank.

     “CAM Exchange” means the exchange of the Lender’s interests provided for in
Section 11.02(c).

     “CAM Exchange Date” means the date on which there shall occur an acceleration of Loans
pursuant to Section 11.02(a) or Section 11.02(b).

     “CAM Percentage” means, as to each Lender, a fraction, expressed as a decimal, of
which (a) the numerator shall be the aggregate Credit Exposure of such Lender for all Tranches
(determined by the US Dollar Equivalent Amount for its Canadian Tranche Credit Exposure prevailing
on the CAM Exchange Date and determined by the US Dollar Equivalent for its LC Exposure in Offshore
Currency Letters of Credit prevailing on the CAM Exchange Date) and (b) the denominator shall be
the Aggregate Credit Exposure (determined by the US Dollar Equivalent Amount for the Canadian
Tranche Credit Exposure of all Canadian Tranche Revolving Lenders as of the CAM Exchange Date and
determined by the US Dollar Equivalent for the LC Exposure in Offshore Currency Letters of Credit
of all Lenders as of the CAM Exchange Date).

     “Canadian Allocated Commitment” shall mean as to each Canadian Tranche Revolving
Lender, the percentage set forth in the column titled “Canadian Tranche Percentage” as set forth
opposite such Canadian Tranche Revolving Lender’s name on such documentation on file with the US
Administrative Agent or in the Assignment pursuant to which such Canadian Tranche Revolving Lender
becomes a party hereto, as applicable, of the Canadian Allocated Total Commitments.

     “Canadian Allocated Maximum Total Commitments” shall mean the aggregate maximum
Canadian Allocated Commitments of all Canadian Tranche Revolving Lenders as set forth opposite such
Canadian Tranche Revolving Lender’s name on such documentation on file with the US Administrative
Agent or in the Assignment pursuant to which such Canadian Tranche Revolving Lender becomes party
hereto, as applicable. The Canadian Allocated Maximum Total Commitments are $75,000,000.

     “Canadian Allocated Total Commitments” shall mean the aggregate amount of the US
Tranche Commitments allocated by the US Borrowers from time to time as the Canadian Allocated Total
Commitments pursuant to Section 2.03(c), not to exceed the Canadian Allocated Maximum Total
Commitments. The Canadian Allocated Total Commitments may be terminated pursuant to Section
2.03(d), Section 5.06 or ARTICLE XI. The initial Canadian Allocated Total
Commitments are $25,000,000.

     “Canadian Allocation Period” shall mean any time during which either (a) the US
Borrowers have allocated any portion of the US Tranche Commitments as the Canadian Allocated Total
Commitments pursuant to Section 2.03(c) or (b) the Canadian Tranche Credit Exposure exceeds
zero.

-7-

 

     “Canadian Commitment Fee” shall have the meaning assigned such term in Section
2.04(a)(ii).

     “Canadian Dollars” or “C$” shall mean lawful money of Canada.

     “Canadian Prime Rate” shall mean, at any time, the greater of (a) the rate from time
to time publicly announced by the Canadian Reference Bank as its prime rate in effect for
determining interest rates on Canadian Dollar denominated commercial loans in Canada, and (b) the
annual rate of interest equal to the sum of (i) the 30-day CDOR Rate at such time and (ii) one
percent (1%) per annum.

     “Canadian Prime Rate Loans” shall mean Loans denominated in Canadian Dollars that bear
interest at a rate based upon the Canadian Prime Rate.

     “Canadian Principal Office” shall mean the principal office of the Canadian
Administrative Agent, which, on the date of this Agreement is located at 141 Adelaide St., W.,
Suite 1500, Toronto, Ontario, Canada M5H 3L9, Attention: Sophie Ronan (Telecopy No. (416)
364-8165).

     “Canadian Reference Bank” shall mean the Bank of Montreal, or its successors and
assigns, or one of the Major Schedule I Lenders as the US Administrative Agent may from time to
time designate.

     “Canadian Tranche” shall mean the Canadian Allocated Commitments and the Canadian
Tranche Loans.

     “Canadian Tranche Borrowing” shall mean a Borrowing comprised of Canadian Tranche
Loans.

     “Canadian Tranche Credit Exposure” shall mean at any time, the US Dollar Equivalent
Amount of the aggregate Principal Amount of the Canadian Tranche Loans at such time. The Canadian
Tranche Credit Exposure of any Canadian Tranche Revolving Lender at any time shall be the US Dollar
Equivalent Amount of the aggregate Principal Amount of the Canadian Tranche Loans owed to such
Lender at such time.

     “Canadian Tranche Loan” shall mean any Revolving Loan (including Canadian Prime Rate
Loans, Bankers’ Acceptances, BA Equivalent Loans, US Dollar LIBOR Loans and US Dollar Base Rate
Loans) made by the Canadian Tranche Revolving Lenders pursuant to Section 2.01(a)(iii) or
Section 2.12, as applicable.

     “Canadian Tranche Percentage” shall mean:

     (a) at any time during which the US Tranche Commitments remain outstanding, with respect to
each Canadian Tranche Revolving Lender, the percentage set forth in the column titled “Canadian
Tranche Percentage” of such Canadian Tranche Revolving Lender as set forth opposite such Canadian
Tranche Revolving Lender’s name on such documentation on file with the US Administrative Agent or
in the Assignment pursuant to which such Canadian Tranche Revolving Lender becomes a party hereto;
and

-8-

 

     (b) upon the termination of the Aggregate Revolving Commitments pursuant to Section
11.02, with respect to each Canadian Tranche Revolving Lender, a fraction (expressed as a
percentage, carried out to the sixth decimal place), the numerator of which is the Canadian
Tranche Credit Exposure of such Canadian Tranche Revolving Lender, and the denominator
of which is the Canadian Tranche Credit Exposure of all Canadian Tranche Revolving Lenders.

     As of the Closing Date, the Canadian Tranche Percentage of each Canadian Tranche Revolving Lender
is set forth opposite the name of such Canadian Tranche Revolving Lender on such documentation on
file with the US Administrative Agent or in the Assignment pursuant to which such Canadian Tranche
Revolving Lender becomes a party hereto, as applicable.

     “Canadian Tranche Revolving Lender” shall mean a Lender with a Canadian Allocated
Commitment or with outstanding Canadian Tranche Loans that is, for the purposes of the Income Tax
Act (Canada) in force as of the date that such Lender acquires a Canadian Allocated Commitment,
either (a) not a non-resident of Canada for purposes of the Income Tax Act (Canada), or (b) a
deemed resident of Canada for purposes of Part XIII of the Income Tax Act (Canada) and that has, as
part of its business carried on in Canada, a Canadian Allocated Commitment, and, in the case of
clauses (a) and (b), is an Affiliate of a US Tranche Revolving Lender.

     “Capital Lease” shall mean a lease of (or other arrangement conveying the right to
use) real and/or personal Property, or a combination thereof, with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the incurrence of a Debt in
accordance with GAAP.

     “Capital Lease Obligations” shall mean, as to any Person, all obligations of such
Person as lessee under any Capital Lease, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

     “Capital Stock” shall mean, (a) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however designated and whether or
not voting) of corporate stock and (b) with respect to any Person that is not a corporation, any
and all partnerships or other equity interests of such Person.

     “CDOR Rate” shall mean, on any day, the annual rate of interest which is the rate
applicable to Canadian Dollar bankers’ acceptances appearing on the “Reuters Screen CDOR Page” (as
defined in the International Swap Dealer Association, Inc, definitions, as modified and amended
from time to time) as of 10:00 a.m. Eastern time on such day for bankers’ acceptances having for
purposes of calculating the Canadian Prime Rate a maturity of 30 days and for purposes of Bankers’
Acceptances and BA Equivalent Notes a comparable maturity date to the maturity date of such issue
of Bankers’ Acceptances and BA Equivalent Notes; provided that if such rate does not appear
on the Reuters Screen CDOR Page as contemplated, then the CDOR Rate on any day shall be the rate
applicable to such Canadian Dollar bankers’ acceptances of comparable maturity date quoted by one
of the Major Schedule I Lenders selected by the US Administrative Agent as of 10:00 a.m. Eastern
time on such day.

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     “CERCLA” shall have the meaning assigned such term in the definition of Environmental
Laws.

     “Change of Control” means the occurrence of one or more of the following events: (a)
the approval by the holders of Capital Stock of Holdings of any plan or proposal for the
liquidation or dissolution of Holdings (whether or not otherwise in compliance with the provisions
of this Agreement); (b) any Person or “group” within the meaning of Section 13(d) of the Exchange
Act shall become the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of shares
representing more than 50% of the aggregate voting power represented by the Capital Stock of
Holdings; (c) the replacement of a majority of the Board of Directors of Holdings over a two-year
period from the directors who constituted the Board of Directors of Holdings at the beginning of
such period, and such replacement shall not have been approved by a vote of at least a majority of
the Board of Directors of Holdings then still in office who either were members of such Board of
Directors at the beginning of such period or whose election as a member of such Board of Directors
was previously so approved; (d) Holdings shall cease to own, directly or indirectly, 100% of the
issued and outstanding shares of Capital Stock of the Canadian Borrowers while any Canadian Tranche
Loans are outstanding or any Canadian Allocated Commitments remain in effect; or (e) Holdings shall
cease to own, directly or indirectly, 100% of the issued and outstanding shares of Capital Stock of
UCI.

     “Closing Date” shall mean October 20, 2006.

     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time and
any successor statute.

     “Collateral” shall mean all Property of the US Borrowers and the Subsidiary Guarantors
which is secured by a Lien under the Security Instruments.

     “Combined Revolving Credit Exposure” shall mean at any time, the sum of (a) the US
Tranche Credit Exposure at such time, and (b) the Canadian Tranche Credit Exposure at such time.

     “Commitment Fees” shall mean collectively, the Canadian Commitment Fee and the US
Commitment Fee.

     “Commitment Increase” shall have the meaning assigned such term in Section
2.15(a).

     “Commitment Increase Certificate” shall have the meaning assigned such term in
Section 2.15(b)(ii).

     “Compression Assets” shall mean all or any portion of any Person’s compression
services or rental contracts, compression services customer relationships and compression
equipment.

     “Confidential Information” shall have the meaning assigned such term in Section
13.15.

     “Consolidated Net Income” shall mean for any period, the aggregate of the net income
(or loss) of any Person and its Consolidated Subsidiaries after allowances for taxes for such
period, determined on a consolidated basis in accordance with GAAP; provided that there
shall

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be excluded from such net income (to the extent otherwise included therein) the following:
(a) the net income of any Person in which it or any of its Consolidated Subsidiary has an interest
(which interest does not cause the net income of such other Person to be consolidated with the
net income of it and its Consolidated Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in such period by such other
Person to it or to a Consolidated Subsidiary, as the case may be; (b) the net income (but not loss)
of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or
similar distributions or transfers or loans by that Consolidated Subsidiary is not at the time
permitted by operation of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise restricted or prohibited in
each case determined in accordance with GAAP; provided that upon the removal of such
restriction, the aggregate net income previously excluded within the last four (4) fiscal quarters
shall be added to the net income for the same quarters; (c) any extraordinary gains or losses,
including gains or losses attributable to Property sales not in the ordinary course of business;
(d) the cumulative effect of a change in accounting principles and any gains or losses attributable
to writeups or write downs of assets; (e) gains, losses or other charges as a result of the early
retirement of Debt; and (f) non-cash gains or losses as a result of foreign currency adjustments.

     “Consolidated Net Tangible Assets” shall mean, with respect to Holdings as of any
date, the sum of the amounts that would appear on a consolidated balance sheet of Holdings and its
Consolidated Subsidiaries as the total assets of Holdings and its Consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP and after deducting therefrom, to the
extent otherwise included, unamortized debt discount and expenses and other unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses,
organization or development expenses and other intangible items.

     “Consolidated Subsidiaries” shall mean each Subsidiary of a Person (whether now
existing or hereafter created or acquired) the financial statements of which shall be (or should
have been) consolidated with the financial statements of such Person in accordance with GAAP.

     “Credit Exposure” shall mean at any time for any Lender (a) for the Canadian Tranche
such Lender’s Canadian Tranche Credit Exposure, (b) for the US Tranche such Lender’s US Tranche
Credit Exposure and (c) for the Term Tranche such Lender’s Term Credit Exposure.

     “DB” shall mean Deutsche Bank Trust Company Americas and its successors.

     “DBNA” shall mean the Depository Bills and Notes Act (Canada).

     “Debt” shall mean, for any Person the sum of the following (without duplication): (a)
all obligations of such Person (whether created or assumed) for borrowed money or evidenced by
bonds, debentures, notes or other similar instruments; (b) all obligations of such Person (whether
contingent or otherwise) in respect of bankers’ acceptances, letters of credit, surety or other
bonds and similar instruments; (c) all obligations of such Person to pay the deferred purchase
price of Property or services (other than for borrowed money); (d) all Capital Lease Obligations in
respect of which such Person is liable (whether contingent or otherwise); (e) all Debt (as
described in the other clauses of this definition) and other obligations of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed by such Person; (f) all Debt
(as described in the other clauses of this definition) and other obligations of others guaranteed
by

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such Person or in which such Person otherwise assures a creditor against loss of the debtor or
obligations of others; (g) all obligations or undertakings of such Person to maintain or cause to
be maintained the financial position or covenants of others or to purchase the Debt or Property of
others; (h) obligations to deliver goods or services in consideration of payments made more
than 60 days in advance of the date such goods and services are due and in excess of the sum of (A)
$25,000,000 outstanding at any time and (B) up to an additional $25,000,000 outstanding at any time
if such amount is approved in writing by the US Administrative Agent from time to time;
provided, however, all progress payments paid in connection with a fabrication
project shall be excluded; (i) obligations to pay for goods or services in the form of take-or-pay
agreements or similar arrangements whether or not such goods or services are actually received or
utilized by such Person; (j) any Capital Stock of such Person in which such Person has a mandatory
obligation to redeem such Capital Stock; (k) any Debt (as described in the other clauses of this
definition) of a Special Entity for which such Person is liable either by agreement or because of a
Governmental Requirement; and (l) all net mark-to-market obligations of such Person under Hedging
Agreements.

     “Default” shall mean an Event of Default or an event which with notice or lapse of
time or both would become an Event of Default.

     “Disclosing Parties” shall have the meaning assigned such term in Section
13.15.

     “Disposition” shall mean the sale, exchange or conveyance (including any sale and
leaseback transaction) of any Property by Holdings or any of its Domestic Subsidiaries, including
any sale, exchange or conveyance, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith.

     “Domestic Compression Assets” shall mean all or any portion of a Person’s Compression
Assets located in the continental United States.

     “Domestic Compression EBITDA” shall mean the sum of (i) EBITDA of Holdings and its
Consolidated Subsidiaries attributable to Domestic Compression Assets (excluding all Subsidiary
EBITDA) for such Testing Period and (ii) cash from distributions attributable to the ownership of
GP Interests, LP Units and IDRs received by Holdings or its Restricted Subsidiaries during such
Testing Period, on an Annualized Basis and (iii) cash from distributions attributable to the
ownership of Subordinated Units received by Holdings and its Restricted Subsidiaries during such
Testing Period, on an Annualized Basis; provided that for so long as quarterly
distributions on each Subordinated Unit is less than $0.4025 (or such other amount as adjusted
pursuant to the UCLP Partnership Agreement), cash from distributions attributable to the ownership
of Subordinated Units will be limited to actual cash distributions received by Holdings and its
Restricted Subsidiaries from the Subordinated Units during such Testing Period. In each case, with
respect to (ii) and (iii) above, adjusted for any dividend restrictions imposed on UCLP under its
or any of its Subsidiaries’ credit facilities as if such dividend restriction was in effect for the
entire Testing Period.

     “Domestic Subsidiary” shall mean each Restricted Subsidiary of Holdings which is not a
Foreign Subsidiary.

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     “Drafts” shall mean, at any time, either a depository bill within the meaning of the
DBNA or a bill of exchange within the meaning of the Bills of Exchange Act (Canada) drawn by the
Canadian Borrowers on a Canadian Tranche Revolving Lender but which at such time has not been
completed as to the payee or accepted by such Lender or any other Person.

     “EBITDA” shall mean, for any period, the sum of Consolidated Net Income for such
period plus the following consolidated expenses or charges to the extent deducted from Consolidated
Net Income in such period: Total Interest Expense (or interest expense when determining EBITDA of
an Unrestricted Subsidiary), taxes, depreciation, amortization and non-cash charges,
provided that any cash actually paid with respect to such non-cash charges shall be
deducted from EBITDA when paid. EBITDA will be adjusted on a pro forma basis (reasonably
acceptable to the US Administrative Agent) for individual acquisitions and divestitures (including
without limitation, transfer of assets described in the S-1) in excess of $50,000,000, including
projected synergies.

     “Environmental Laws” shall mean any and all Governmental Requirements pertaining to
health or the environment in effect in any and all jurisdictions in which Holdings or any
Subsidiary is conducting or at any time has conducted business, or where any Property of Holdings
or any Subsidiary is located, including without limitation, the Canadian Environmental Assessment
Act, the Canadian Environmental Protection Act, 1999, the Environmental and Enhancement Protection
Act (Alberta), the Oil Pollution Act of 1990 (“OPA”), the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 (“CERCLA”),
as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health
Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation or protection laws. The term
“oil” shall have the meaning specified in OPA, the terms “hazardous substance” and “release” (or
“threatened release”) have the meanings specified in CERCLA, and the terms “solid waste” and
“disposal” (or “disposed”) have the meanings specified in RCRA; provided, however,
that (a) in the event either OPA, CERCLA or RCRA is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the effective date of such
amendment and (b) to the extent the laws of the state in which any Property of Holdings or any
Subsidiary is located establish a meaning for “oil,” “hazardous substance,” “release,” “solid
waste” or “disposal” which is broader than that specified in either OPA, CERCLA or RCRA, such
broader meaning shall apply.

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time.

     “ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that,
together with Holdings or any Subsidiary, is treated as a single employer under Section 414(b) or
(c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.

     “ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which

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the 30 day notice period is waived); (b) the existence with respect to any Plan of an “accumulated
funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by Holdings, any Subsidiary or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt
by Holdings, any Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by Holdings, any Subsidiary or any of its ERISA Affiliates
of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by Holdings, any Subsidiary or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from Holdings, any Subsidiary or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that
a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning
of Title IV of ERISA.

     “Event of Default” shall have the meaning assigned such term in Section 11.01.

     “Excepted Liens” shall mean: (a) Liens for taxes, assessments or other governmental
charges or levies not yet due or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained; (b) Liens in connection with workmen’s
compensation, unemployment insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by appropriate action and for
which adequate reserves have been maintained in accordance with GAAP; (c) operators’, vendors’,
carriers’, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other
like Liens arising by operation of law in the ordinary course of business or statutory landlord’s
liens, each of which is in respect of obligations that have not been outstanding more than 90 days
or which are being contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (d) any Liens reserved in leases for rent or
royalties and for compliance with the terms of the leases in the case of leasehold estates, to the
extent that any such Lien referred to in this clause does not materially impair the use of the
Property covered by such Lien for the purposes for which such Property is held by Holdings or any
Subsidiary or materially impair the value of such Property subject thereto; (e) encumbrances (other
than to secure the payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any rights of way or other Property of Holdings or any Subsidiary for the purpose
of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal
of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, and defects, irregularities, zoning
restrictions and deficiencies in title of any rights of way or other Property which in the
aggregate do not materially impair the use of such rights of way or other Property for the purposes
of which such rights of way and other Property are held by Holdings or any Subsidiary or materially
impair the value of such Property subject thereto; (f) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, performance bonds, surety and appeal bonds, statutory
obligations and other obligations of a like nature incurred in the ordinary course of business; (g)
Liens permitted by the Security Instruments; (h) Liens arising out of fully bonded or insured
judgments; and (i) Liens

-14-

 

for Holdings’ or any Subsidiary’s title to Property leased under Capital
Leases; provided that no intention to subordinate the first priority Lien granted in favor
of the US Administrative Agent and the Lenders is to be hereby implied or expressed by the
permitted existence of such Excepted Liens.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.

     “Existing Letters of Credit” shall mean those letters of credit listed on attached
Schedule 2.01(b) and all reimbursement obligations pertaining to any such letter of credit.

     “Extraordinary Receipts” shall mean any cash received by Holdings or any of its
Subsidiaries from (a) proceeds of any property or casualty insurance and (b) condemnation awards
(and payments in lieu thereof); provided, however, that, so long as no Event of
Default has occurred and is continuing, an Extraordinary Receipt shall not include any cash
receipts that do not exceed, individually or in the aggregate in any fiscal year, $10,000,000.

     “Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight
federal funds transactions with a member of the Federal Reserve System arranged by federal funds
brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if the date for which such rate is to be determined
is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if
such rate is not so published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the US Administrative Agent on such day on such transactions as determined by the
US Administrative Agent.

     “Fee Letter” shall mean that certain letter agreement from Wachovia and DB to the
Borrowers dated August 22, 2006, concerning certain fees in connection with this Agreement and any
agreements or instruments executed in connection therewith, as the same may be amended or replaced
from time to time.

     “Financial Statements” shall mean the financial statement or statements of Holdings
and its Consolidated Subsidiaries described or referred to in Section 7.02 or delivered
annually pursuant to Section 9.01(a)(i).

     “First Rate” shall have the meaning assigned such term in Section 3.02(b)(i).

     “Foreign Credit Facility” shall mean any credit facility of a Foreign Subsidiary that
derives substantially all of its income from jurisdictions other than the United States of America.

     “Foreign Subsidiary” shall mean each Restricted Subsidiary of Holdings that is
incorporated under the laws of any jurisdiction other than the United States of America, any State
thereof, or any territory thereof.

     “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time.

-15-

 

     “General Partner” shall mean UCO General Partner, LP, a Delaware limited partnership,
the general partner of UCLP.

     “Governmental Authority” shall include the country, state, province, county, city and
political subdivisions in which any Person or such Person’s Property is located or which exercises
valid jurisdiction over any such Person or such Person’s Property, and any court, agency,
department, commission, board, bureau or instrumentality of any of them including monetary
authorities which exercises valid jurisdiction over any such Person or such Person’s Property.
Unless otherwise specified, all references to Governmental Authority herein shall mean a
Governmental Authority having jurisdiction over, where applicable, Holdings, its Subsidiaries or
any of their Property or any Administrative Agent, any Lender or any Applicable Lending Office.

     “Governmental Requirement” shall mean any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or requirement (whether or not having the force of law),
including, without limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.

     “GP Interests” shall mean the ownership interests of the General Partner of UCLP in
its capacity as general partner of UCLP, which is evidenced by general partner units.

     “Guaranteed Obligations” shall have the meaning assigned such term in Section
14.01(a).

     “Guaranty” shall mean the guaranty by the US Borrowers contained in ARTICLE
XIV.

     “Guaranty Agreement” shall mean that certain Guaranty Agreement that may be executed
by Significant Domestic Subsidiaries in favor of the US Administrative Agent as required by
Section 9.09(a) in a form to be agreed upon by the US Borrowers and the US Administrative
Agent, as amended, modified or restated from time to time.

     “Hedging Agreements” shall mean any commodity, interest rate or currency swap, cap,
floor, collar, forward agreement or other exchange or protection agreements or any option with
respect to any such transaction entered into from time to time.

     “Highest Lawful Rate” shall mean, with respect to each Lender, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Loans or on other Indebtedness under the Loan Documents under
laws applicable to such Lender which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.

     “IDR” shall mean an Incentive Distribution Right as defined in the UCLP Partnership
Agreement.

     “Indebtedness” shall mean (without duplication), unless the context indicates
otherwise, any and all amounts owing or to be owing by the Borrowers to any of the Administrative
Agents, the Issuing Banks, the Lenders and/or any Lender Affiliate in connection with the Loan

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Documents and the Letter of Credit Applications and Bankers’ Acceptances, and any Hedging
Agreements now or hereafter arising between any Borrower or any Restricted Subsidiary of a Borrower
and any Lender or any Lender Affiliate and permitted by the terms of this Agreement,
excluding any Hedging Agreements now or hereafter arising in connection with the ABS Facility,
and all renewals, extensions and/or rearrangements of any of the foregoing.

     “Indemnified Parties” shall have the meaning assigned such term in Section
13.03(a)(ii).

     “Indemnity Matters” shall mean any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), claims, demands and causes of action made or threatened
against a Person and, in connection therewith, all losses, liabilities, damages (including, without
limitation, consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent negligence of such
Person seeking indemnification.

     “Index Debt Rating” shall mean the higher of the rating of the senior secured
indebtedness for borrowed money of either Holdings or UCI that is not guaranteed by any other
Person except for Holdings, UCI or a Subsidiary Guarantor or subject to any other credit
enhancement; provided, that if Holdings or UCI does not have any such rating, Index Debt
Rating shall be the higher of the two corporate debt ratings of Holdings or UCI, provided that both
Holdings and UCI are both US Borrowers; provided however, upon Holdings electing to
become the sole US Borrower pursuant to Section 2.14, the Index Debt Rating shall be the
corporate debt rating of Holdings.

     “Intercreditor Agreement” shall mean that certain Intercreditor and Collateral Agency
Agreement, dated October 28, 2005 among UCI, UCO Compression 2005 LLC and JPMorgan Chase Bank, N.A.
and the lenders named therein, as the same may be amended, supplemented, restated or replaced from
time to time.

     “Interest Coverage Ratio” shall mean the ratio of (a) Adjusted EBITDA for the
applicable Testing Period to (b) Total Interest Expense for the applicable Testing Period.

     “Interest Period” shall mean with respect to any US Dollar LIBOR Loan, the period
commencing on the date such US Dollar LIBOR Loan is made and ending on the numerically
corresponding day in the first, second, third or sixth calendar month thereafter, as the Applicable
Borrower may select as provided in Section 2.02 (or nine or twelve calendar months, as may
be requested by the Applicable Borrower and agreed to by all Lenders), except that each Interest
Period which commences on the last Business Day of a calendar month (or on any day for which there
is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the
last Business Day of the appropriate subsequent calendar month.

     Notwithstanding the foregoing: (a) no Interest Period for a Revolving Borrowing may end after
the Revolving Credit Maturity Date; (b) no Interest Period for a Term Loan Borrowing may end after
the Term Loan Maturity Date; (c) no Interest Period for a Term Loan Borrowing shall be selected
which extends beyond any date upon which an installment of the Term Loan will be due if such Term
Loan Borrowing must be used to make such installment; (d) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day
(or, if such next succeeding Business Day falls in the next

-17-

 

succeeding calendar month, on the next
preceding Business Day); (e) no Interest Period shall have a duration of less than one month and,
if the Interest Period for any US Dollar LIBOR Loans would otherwise be for a shorter period, such
Loans shall not be available hereunder; (f)
the first Interest Period commencing on the Term Loan Funding Date shall be for a period from
the Term Loan Funding Date until the last day of that month; and (g) the last Interest Period may
be such shorter period as to end on the Term Loan Maturity Date. “Interest Period” shall
mean with respect to any Bankers’ Acceptance or BA Equivalent Loan, the period selected by the
Canadian Borrowers as provided in Section 2.12(a) commencing on the day on which such
Borrowing is made and ending on the applicable BA Maturity Date.

     “Investment” shall mean, as applied to any Person, any direct or indirect (a) purchase
or other acquisition by such Person of any Capital Stock, Debt or other securities (including any
option, warrant or other right to acquire any of the foregoing) of any other Person, (b) loan or
advance made by such Person to any other Person, (c) guarantee, assumption or other incurrence of
liability by such Person of or for any Debt or other obligation of any other Person, (d) creation
of any Debt owed to such Person by any other Person, (e) capital contribution or other investment
by such Person in any other Person or (f) purchase or other acquisition (in one transaction or a
series of transactions) of any assets of any other Person constituting a business unit. The amount
of any Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment or interest earned on such Investment.
“Investment” shall exclude extensions of trade credit by the US Borrowers and their
Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the US
Borrowers or such Subsidiary, as the case may be.

     “Issuing Banks” shall mean, for any Letters of Credit issued on or after the Closing
Date, Wachovia, DB, Wells Fargo Bank, National Association or any other Lender agreed to among the
US Borrowers, the US Administrative Agent and such US Tranche Revolving Lender to issue Letters of
Credit. As to the Existing Letters of Credit, the Issuing Bank for each Existing Letter of Credit
shall be as set forth on Schedule 2.01(b).

     “LC Exposure” shall mean at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit issued for the account of the US Borrowers at such time, plus (b)
the aggregate amount of all disbursements that the US Borrowers are obligated to reimburse (other
than pursuant to the Guaranty) but which have not yet been reimbursed by or on behalf of the US
Borrowers at such time. The LC Exposure of any US Tranche Revolving Lender at any time shall be
equal to its applicable US Tranche Percentage of the total LC Exposure at such time.

     “Lender Affiliate” shall mean (a) with respect to any Lender (i) an Affiliate of such
Lender or (ii) any entity (whether a corporate, partnership, trust or otherwise) that is engaged in
making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit
in the ordinary course of its business and is administered or managed by a Lender or an Affiliate
of such Lender and (b) with respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.

     “Lender Termination Date” shall have the meaning assigned such term in Section
5.06(c).

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     “Letter of Credit Application” shall mean a letter of credit application, in the form
of Exhibit F, delivered to the US Administrative Agent requesting the issuance, reissuance,
extension or renewal of any Letter of Credit and containing the information set forth in
Section 2.02.

     “Letters of Credit” shall mean the Existing Letters of Credit, and the letters of
credit issued pursuant to Section 2.01(b) and all reimbursement obligations pertaining to
any such letters of credit, and “Letter of Credit” shall mean any one of the Letters of
Credit and the reimbursement obligations pertaining thereto, and shall include Offshore Currency
Letters of Credit.

     “Lien” shall mean any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is based on the common
law, statute or contract, and whether such obligation or claim is fixed or contingent, and
including but not limited to the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property. For the purposes of this Agreement, Holdings
or any Subsidiary shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a financing lease or other arrangement
pursuant to which title to the Property has been retained by or vested in some other Person in a
transaction intended to create a financing.

     “Loan Documents” shall mean this Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, Bankers’ Acceptances and the Security Instruments.

     “Loans” shall mean the loans as provided for by Section 2.01 and Section
2.12.

     “LP Units” shall mean any ownership unit representing a limited partnership interest
in UCLP.

     “Major Schedule I Lenders” shall mean collectively, The Bank of Montreal, The Bank of
Nova Scotia, Canadian Imperial Bank of Commerce and Royal Bank of Canada.

     “Majority Lenders” shall mean, at any time, Lenders having more than 50% of the
Aggregate Credit Exposure plus the unused Aggregate Commitments.

     “Material Adverse Effect” shall mean any material and adverse effect on (a) the
assets, liabilities, financial condition, business, operations or prospects of Holdings and its
Restricted Subsidiaries taken as a whole as reflected in the Financial Statements after eliminating
the financial condition and results of the Unrestricted Subsidiaries or (b) the ability of Holdings
and its Restricted Subsidiaries taken as a whole to perform their obligations under the Loan
Documents on a timely basis.

     “Material Foreign Subsidiary” shall mean any Foreign Subsidiary with gross assets,
excluding the value of the Capital Stock of all of its Subsidiaries, exceeding $20,000,000.

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     “Material Subsidiary” shall mean any Domestic Subsidiary with gross assets, excluding
the value of the Capital Stock of all of its Subsidiaries, exceeding $25,000,000.

     “Moody’s” shall mean Moody’s Investors Services, Inc.

     “Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

     “Net Proceeds” shall mean, with respect to any Disposition, issuance of Debt or
Extraordinary Receipts, the gross amount of cash received by Holdings or any of its Subsidiaries
from such Disposition, issuance of Debt or Extraordinary Receipts, minus the sum of (a) the
amount, if any, of all taxes paid or payable by Holdings or any of its Subsidiaries directly
resulting from such Disposition, issuance of Debt or Extraordinary Receipts (including the amount,
if any, estimated by Holdings in good faith at the time of such Disposition, issuance of Debt or
Extraordinary Receipts for taxes payable by Holdings or any of its Subsidiaries on or measured by
net income or gain resulting from such Disposition, issuance of Debt or Extraordinary Receipts),
(b) the reasonable out-of-pocket costs and expenses incurred by Holdings or such Subsidiary in
connection with such Disposition, issuance of Debt or Extraordinary Receipts (including, without
limitation, reasonable brokerage fees paid to a Person other than an Affiliate of Holdings, but
excluding any fees or expenses paid to an Affiliate of Holdings), (c) appropriate amounts required
to be reserved (in accordance with GAAP) for post-closing adjustments by Holdings or any of its
Subsidiaries in connection with such Disposition, against any liabilities retained by Holdings or
any of its Subsidiaries after such Disposition, which liabilities are associated with the Property
being disposed, including, without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any indemnification
obligations associated with such Disposition and (d) deduction for Debt secured by the
Property being disposed, which Debt is repaid as a result of such Disposition. Any proceeds
received in a currency other than US Dollars shall, for purposes of the calculation of the amount
of Net Proceeds, be in an amount equal to the US Dollar Equivalent thereof as of the date of
receipt thereof by Holdings or any of its Subsidiaries.

     “Non-Recourse Foreign Debt” means Debt of any Foreign Subsidiary as to which neither
Holdings nor any Domestic Subsidiary (a) provides credit support of any kind (including any
guaranty, undertaking, agreement or instrument that would constitute Debt), (b) is directly or
indirectly liable as a guarantor or otherwise or (c) is the lender.

     “Notes” shall mean the promissory notes provided for by Section 2.06, together
with any and all renewals, extensions for any period, increases, rearrangements, substitutions or
modifications thereof.

     “Notice of Termination” shall have the meaning assigned such term in Section
5.06(a).

     “Offering Memorandum” shall mean that certain Offering Memorandum dated August 2006
and pertaining to the $500,000,000 senior secured facilities, consisting of the Revolving Credit
Facility and the Term Loan Facility.

     “Offshore Currency” shall mean any lawful currency (other than US Dollars) that the
relevant Issuing Bank with respect to any Offshore Currency Letter of Credit, in its sole

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reasonable opinion, at any time determines to be (a) freely traded in the offshore interbank
foreign exchange markets, (b) freely transferable and (c) freely convertible into US Dollars.

     “Offshore Currency Letter of Credit” shall mean any Letter of Credit denominated in an
Offshore Currency.

     “Omnibus Agreement” shall mean that certain Omnibus Agreement, dated October 20, 2006
among Holdings, UCI and members of the UCLP Group, as amended, modified, supplemented or restated
from time to time and all exhibits and schedules thereto.

     “OPA” shall have the meaning assigned such term in the definition of Environmental
Laws.

     “Organization Documents” shall mean, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive
documents with respect to any non US jurisdiction); (b) with respect to any limited liability
company, the certificate or articles of formation or organization and operating agreement; and (c)
with respect to any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or organization and any
agreement, instrument, filing or notice with respect thereto filed in connection with its formation
or organization with the applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or organization of such
entity.

     “Other Taxes” shall have the meaning assigned such term in Section 4.06(b).

     “PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

     “Percentage Share” shall mean for each US Tranche Revolving Lender, its US Tranche
Percentage, for each Canadian Tranche Revolving Lender, its Canadian Tranche Percentage and for
each Term Loan Lender, its Term Loan Percentage.

     “Permitted Liens” shall have the meaning assigned such term in Section 10.02.

     “Person” shall mean any individual, corporation, company, voluntary association,
partnership, joint venture, trust, unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of entity.

     “Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which Holdings, any Subsidiary or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section
3(5) of ERISA.

     “Post-Default Rate” shall mean, in respect of any principal of any Loan or any other
amount payable by a Borrower under this Agreement or any other Loan Document, a rate per annum
during the period equal to 2% per annum above the US Dollar Base Rate for US Tranche

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Loans and the
Canadian Prime Rate for Canadian Tranche Loans as in effect from time to time plus the Applicable
Margin (if any), but in no event to exceed the Highest Lawful Rate; provided
however, for US Dollar LIBOR Loans, the “Post-Default Rate” for such principal
shall be, for
the period commencing on the date of occurrence of an Event of Default and ending on the
earlier to occur of the last day of the Interest Period therefor or the date all Events of Default
are cured or waived, 2% per annum above the interest rate for such Loan as provided in Section
3.02(a), but in no event to exceed the Highest Lawful Rate.

     “Price” shall have the meaning assigned such term in the definition of BA Net
Proceeds.

     “Principal Amount” shall mean for a Bankers’ Acceptance, the face amount thereof, for
a BA Equivalent Loan, the principal amount thereof determined in accordance with Section
2.12(g) and for any other Loans and the LC Exposure, the outstanding principal amount thereof.

     “Principal Offices” shall mean collectively, the Canadian Principal Office and the US
Principal Office.

     “Property” shall mean any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

     “Purchase Money Indebtedness” shall mean debt, the proceeds of which are used to
finance the acquisition, construction or improvement of inventory, equipment or other property in
the ordinary course of business.

     “Quarterly Date” shall mean the last day of each March, June, September and December,
in each year, the first of which shall be December 31, 2006; provided, however,
that if any such day is not a Business Day, such Quarterly Date shall be the immediately preceding
Business Day.

     “RCRA” shall have the meaning assigned such term in the definition of Environmental
Laws.

     “Recipient” shall have the meaning assigned such term in Section 4.06(a).

     “Register” shall have the meaning assigned such term in Section 13.06(b).

     “Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be amended or supplemented from time to time.

     “Regulatory Change” shall mean, with respect to any Lender, any change after the
Closing Date in any Governmental Requirement (including Regulation D) or the adoption or making
after such date of any interpretations, directives or requests applying to a class of lenders
(including such Lender or its Applicable Lending Office) of or under any Governmental Requirement
(whether or not having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.

     “Related Fund” shall mean, with respect to any Term Loan Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised or managed by the

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same investment advisor as such Term Loan Lender or by an Affiliate (as defined in clause (a) only
of the definition of “Affiliate”) of such investment advisor.

     “Replacement Lenders” shall have the meaning assigned such term in Section
5.06(b).

     “Requesting Borrower” shall mean either the US Borrowers or the Canadian Borrowers, as
applicable, requesting a Loan.

     “Reserve Account” shall have the meaning assigned such term in Section
11.03(a).

     “Reserve Requirement” shall mean, for any Interest Period for any US Dollar LIBOR
Loan, the average maximum rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under Regulation D by member
banks of the Federal Reserve System in New York City with deposits exceeding one billion US Dollars
against “Eurocurrency liabilities” (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks by reason of any Regulatory Change against (a) any category of
liabilities which includes deposits by reference to which US LIBOR is to be determined as provided
in the definition of “US LIBOR” or (b) any category of extensions of credit or other assets
which include a US Dollar LIBOR Loan.

     “Responsible Officer” shall mean, as to any Person, the Chief Executive Officer, the
President or any Vice President of such Person and, with respect to financial matters, the term
“Responsible Officer” shall include the Chief Financial Officer and Vice President of
Financial Services of such Person. Unless otherwise specified, all references to a Responsible
Officer herein shall mean a Responsible Officer of any Borrower.

     “Restricted Person” shall have the meaning assigned such term in Section
13.15.

     “Restricted Subsidiaries” shall mean all Subsidiaries that are not Unrestricted
Subsidiaries.

     “Revolving Borrowing” shall mean a Borrowing comprised of Revolving Loans.

     “Revolving Credit Facility” shall mean collectively, the US Tranche and the Canadian
Tranche.

     “Revolving Credit Maturity Date” shall mean the earlier to occur of (a) October 20,
2011 or (b) the date that the Aggregate Revolving Commitments are sooner terminated pursuant to
Sections 2.03(b) or 11.02.

     “Revolving Lenders” shall mean collectively, the US Tranche Revolving Lenders and the
Canadian Tranche Revolving Lenders.

     “Revolving Loans” shall mean Loans made under the Revolving Credit Facility.

     “Revolving Notes” shall mean Notes issued pursuant to Section 2.06 evidencing
Loans under the Revolving Credit Facility.

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     “S-1” shall mean that certain Amendment No. 2 to Form S-1 of UCLP as filed with the
SEC on September 20, 2006, as amended.

     “S&P” shall mean Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc.

     “SEC” shall mean the Securities and Exchange Commission or any successor Governmental
Authority.

     “Security Instruments” shall mean the Letters of Credit, the Fee Letter, the
agreements or instruments described or referred to in Exhibit D, and any and all other
agreements or instruments now or hereafter executed and delivered by a Borrower or any other Person
(other than participation or similar agreements between any Lender and any other lender or creditor
with respect to any Indebtedness pursuant to this Agreement) in connection with, or as security for
the payment or performance of the Notes, or this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, supplemented or restated from time to time.

     “Senior Secured Debt” shall mean all Total Debt that is secured (including, without
limitation, the Indebtedness) and that is not expressly subordinated by its terms to the
Indebtedness.

     “Senior Secured Leverage Ratio” shall mean the ratio of Senior Secured Debt to
Adjusted EBITDA.

     “7 1/4% Notes” shall mean those certain unsecured 7 1/4% senior notes due 2010 issued
pursuant to that certain Indenture dated as of May 27, 2003 between UCI and The Bank of New York,
as amended, modified, supplemented or restated from time to time.

     “Significant Domestic Subsidiary” shall mean each wholly-owned Domestic Subsidiary
with gross assets, excluding the value of the stock of all of its Subsidiaries, exceeding
$50,000,000. If the gross asset value of the Domestic Subsidiaries that are not Subsidiary
Guarantors exceeds $75,000,000 in the aggregate, those Domestic Subsidiaries holding a majority of
those assets shall each be a Significant Domestic Subsidiary; provided that any
wholly-owned Domestic Subsidiary that guarantees any Debt shall be deemed a Significant Domestic
Subsidiary. Notwithstanding the foregoing to the contrary, the General Partner and any Subsidiary
involved in or created in connection with or as a requirement of and still used in connection with
the ABS Facility shall be excluded from the application of this definition of a Significant
Domestic Subsidiary.

     “Special Entity” shall mean any joint venture, limited liability company or
partnership, general or limited partnership or any other type of partnership or company other than
a corporation in which Holdings or one or more of its other Subsidiaries is a member, owner,
partner or joint venturer and owns, directly or indirectly, at least a majority of the equity of
such entity or controls such entity, but excluding any tax partnerships that are not classified as
partnerships under state law. For purposes of this definition, any Person which owns directly or
indirectly an equity investment in another Person which allows the first Person to manage or

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elect
managers who manage the normal activities of such second Person will be deemed to “control” such
second Person (e.g. a sole general partner controls a limited partnership).

     “Subordinated Units” shall have the meaning assigned such term in the UCLP Partnership
Agreement.

     “Subsidiary” shall mean (a) any Person of which at least a majority of the outstanding
Capital Stock having by the terms thereof ordinary voting power to elect a majority of the board of
directors of such Person (irrespective of whether or not at the time Capital Stock of any other
class or classes of such Person shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by Holdings or one or
more of its Subsidiaries and (b) any Special Entity.

     “Subsidiary EBITDA” means, for (a) UCI MLP LP LLC, UCI GP LP LLC, the General Partner
and UCO GP, LLC for any period, the aggregate EBITDA of such Restricted Subsidiaries, or (b) any
Unrestricted Subsidiary for any period, (i) EBITDA of such Unrestricted Subsidiary or (ii) to the
extent that Consolidated Net Income for such Unrestricted Subsidiary is not available, the gross
revenues of such Unrestricted Subsidiary for such period less the cost of sales (excluding
depreciation expenses to the extent such expenses were deducted) associated with such gross
revenues.

     “Subsidiary Guarantors” shall mean each Significant Domestic Subsidiary required to
execute a Guaranty Agreement pursuant to Section 9.09, excluding any ABS Subsidiary.

     “Taxes” shall have the meaning assigned such term in Section 4.06(a).

     “Term” shall mean with respect to Bankers’ Acceptances and BA Equivalent Loans, the
number of days from the Acceptance Date up to but not including the BA Maturity Date.

     “Term Commitment” shall mean with respect to each Term Loan Lender, the commitment of
such Term Loan Lender to make Term Loans. Each Term Loan Lender’s Term Commitment shall terminate
immediately after the Term Loan Funding Date, applicable thereto.

     “Term Credit Exposure” shall mean with respect to any Term Loan Lender at any time,
the Principal Amount of such Term Loan Lender’s Term Loans.

     “Term Loan” shall mean each senior secured amortizing term loan made pursuant to
Section 2.01(a)(v).

     “Term Loan Assumption Agreement” shall mean a Term Loan Assumption Agreement in form
and substance reasonably satisfactory to the US Administrative Agent, among the US Borrowers, the
Subsidiary Guarantors, the US Administrative Agent and one or more Term Loan Lenders.

     “Term Loan Borrowing” shall mean a Borrowing comprised of Term Loans.

     “Term Loan Facility” shall mean the Term Commitments and the Term Loans.

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     “Term Loan Funding Date” means the date on which the Term Loan Lenders make a senior
secured term loan pursuant to Section 2.01(a)(v).

     “Term Loan Lender” shall mean a Lender with an outstanding Term Loan.

     “Term Loan Maturity Date” shall mean the date as defined in the Term Loan Assumption
Agreement; provided such date is no sooner than the Revolving Credit Maturity Date.

     “Term Loan Percentages” shall mean with respect to any Term Loan Lender, the
percentage set forth in the column titled “Term Loan Percentage” as set forth opposite such Term
Loan Lender’s name on such documentation on file with the US Administrative Agent or in the
Assignment pursuant to which such Term Loan Lender becomes a party hereto, as applicable.

     “Term Notes” shall mean Notes issued pursuant to Section 2.06 evidencing Loans
under the Term Loan Facility.

     “Term Tranche” shall mean the Term Commitments and the Term Loans.

     “Terminated Lender” shall have the meaning assigned such term in Section
5.06(a).

     “Testing Period” shall mean a single period consisting of the four consecutive fiscal
quarters of Holdings then last ended (whether or not such quarters are all within the same fiscal
year); provided, however, that if a particular provision of this Agreement
indicates that a Testing Period shall be a different specified duration, such Testing Period shall
consist of the particular fiscal quarter or quarters then last ended which are so indicated in such
provision.

     “Total Debt” shall mean, at any time (without duplication), the sum of (a) 100% of the
long-term debt of Holdings and its Restricted Subsidiaries reflected on the consolidated balance
sheet of Holdings in accordance with GAAP, plus (b) any Debt that is not reflected on the
consolidated balance sheet of Holdings and its Restricted Subsidiaries which has been used to
finance assets that generate income included in EBITDA of Holdings and its Consolidated
Subsidiaries, plus (c) the current portion of the debt set forth in (a) above, plus or minus (d)
the mark-to-market obligations of Holdings and its Restricted Subsidiaries under the Hedging
Agreements.

     “Total Interest Expense” shall mean, for any period, the total consolidated interest
expense net of cash interest income of Holdings and its Restricted Subsidiaries for such period
(including, without limitation, the cash equivalent of the interest expense associated with Capital
Lease Obligations, but excluding (a) upfront fees paid in connection with this Agreement, the ABS
Facility or the 7 1/4% Notes, (b) Debt or lease issuance costs, debt discounts or premiums, and other
financing fees which have to be amortized, (c) lease payments on any office equipment or real
property, (d) any principal components paid on all lease payments and (e) gains, losses or other
charges as a result of the early retirement of Debt). Total Interest Expense will be adjusted on a
pro forma basis (reasonably acceptable to the US Administrative Agent) for individual acquisitions
and divestitures (occurring after the closing of the public offering described in the S-1) in
excess of $50,000,000, including projected synergies; provided, that Total Interest Expense
will be deemed to be $10,700,000 for each of the fiscal quarters ending December 31, 2005, March
30, 2006, June 30, 2006 and September 30, 2006. Total Interest Expense

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attributable to Debt of
Holdings and its Restricted Subsidiaries for the fiscal quarter ending December 31, 2006 shall be
determined pro forma as if such Debt of Holdings and its Restricted Subsidiaries would have been
outstanding the entire quarter.

     “Total Leverage Ratio” shall mean the ratio of Total Debt to Adjusted EBITDA.

     “Tranches” shall mean collectively, the Canadian Tranche, the US Tranche and the Term
Tranche.

     “Type” as to any Loan or Borrowing, its nature as a US Dollar Base Rate Loan or a US
Dollar Base Rate Borrowing, a US Dollar LIBOR Loan or a US Dollar LIBO Rate Borrowing, a Canadian
Prime Rate Loan or a Canadian Prime Rate Borrowing, a Bankers’ Acceptance or a BA Equivalent Loan,
a Revolving Loan or Revolving Borrowing or a Term Loan or Term Loan Borrowing.

     “UCLP” shall mean Universal Compression Partners, L.P., a Delaware limited
partnership.

     “UCLP Group” shall mean UCLP and its Subsidiaries.

     “UCLP Partnership Agreement” shall mean that certain First Amended and Restated
Agreement of Limited Partnership of Universal Compression Partners, LP, dated as of October 20,
2006, as amended, modified, supplemented or restated.

     “UCOP” shall mean UC Operating Partnership, L.P., a Delaware limited partnership.

     “Unrestricted Subsidiary” shall mean UCLP and all of its Subsidiaries and any
Subsidiary designated as an Unrestricted Subsidiary in accordance with Section 10.17, and
any of its Subsidiaries.

     “US” or “United States” shall mean the United States of America, its fifty
states, and the District of Columbia.

     “US Commitment Fee” shall have the meaning assigned such term in Section
2.04(a)(i).

     “US Dollar Base Rate” shall mean, with respect to any US Dollar Base Rate Borrowing,
for any day, the higher of (a) the Federal Funds Rate for any such day plus 1/2 of 1% or (b) the US
Prime Rate for such day. Each change in any interest rate provided for herein based upon the US
Dollar Base Rate resulting from a change in the US Dollar Base Rate shall take effect at the time
of such change in the US Dollar Base Rate.

     “US Dollar Base Rate Loans” shall mean Loans that bear interest at rates based upon
the US Dollar Base Rate.

     “US Dollar Equivalent” shall mean, at any time of determination thereof, the amount of
US Dollars involved which could be purchased with the applicable amount of the Alternate Currency
involved computed at the spot rate of exchange as quoted or utilized by the US Administrative Agent
on the date of determination thereof.

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     “US Dollar Equivalent Amount” shall mean at any Borrowing, conversion or continuation
date for any Canadian Tranche Loan, the amount of US Dollars into which such Canadian Tranche Loan
may be converted at the Bank of Canada noon spot rate of exchange for such date in Toronto, Canada
at approximately 12:00 noon, Eastern time on such date. In addition, the “US Dollar Equivalent
Amount” of all outstanding Canadian Tranche Loans may be calculated at any time in the sole
discretion of the US Administrative Agent and shall equal the
amount of US Dollars into which all outstanding Canadian Tranche Loans may be converted at the
Bank of Canada noon spot rate of exchange for such date in Toronto, Canada at approximately 12:00
noon, Eastern time on such date.

     “US Dollar LIBOR Loans” shall mean Loans denominated in US Dollars that bear interest
at a rate based upon the US Dollar LIBO Rate.

     “US Dollar LIBO Rate” shall mean, with respect to any US Dollar LIBO Rate Borrowing, a
rate per annum (rounded upwards, if necessary, to nearest 1/100 of 1%) determined by the US
Administrative Agent to be equal to the quotient of (a) US LIBOR for such Loan for the Interest
Period for such Loan divided by (b) 1 minus the Reserve Requirement for such Loan for such Interest
Period.

     “US Dollars” and “$” shall mean lawful money of the United States of America.

     “US Lender” shall mean a Lender who is either a US Tranche Revolving Lender or a Term
Loan Lender.

     “US LIBOR” shall mean the rate of interest determined on the basis of the rate for
deposits in US Dollars for a period equal to the applicable Interest Period commencing on the first
day of such Interest Period appearing on Bridge Telerate Service (formerly Dow Jones Market
Service) Page 3750 as of 11:00 a.m. (London time) two (2) Business Days prior to the first day of
the applicable Interest Period. In the event that such rate does not appear on Bridge Telerate
Service (formerly Dow Jones Market Service) Page 3750, “US LIBOR” shall be determined by
the US Administrative Agent to be the rate per annum at which deposits in US Dollars are offered by
leading reference banks in the London interbank market to the US Administrative Agent at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period for a period equal to such Interest Period and in an amount
substantially equal to the amount of the applicable Loan.

     “US Prime Rate” shall mean the rate of interest per annum publicly announced from time
to time by Wachovia as its prime rate at its US Principal Office. Each change in the US Prime Rate
shall be effective from and including the date such change is publicly announced as being
effective.

     “US Principal Office” shall mean the principal office of the US Administrative Agent,
which on the date of this Agreement is located at 301 South College Street, Charlotte, North
Carolina 28288.

     “US Tranche” shall mean the US Tranche Commitments, the US Tranche Loans and the LC
Exposure.

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     “US Tranche Commitment” shall mean with respect to each US Tranche Revolving Lender,
the commitment of such US Tranche Revolving Lender to make US Tranche Loans pursuant to
Sections 2.01(a)(i) and to acquire participations in Letters of Credit pursuant to
Section 2.01(b), as such commitment may be (a) reduced or terminated from time to time
pursuant to Section 2.03(b), (b) terminated pursuant to Section 5.06 or ARTICLE
XI, or (c) modified from time to time to reflect any Assignments permitted by Section
13.06(b);
provided, during a Canadian Allocation Period, the US Tranche Commitment of any US
Tranche Revolving Lender that is or has a branch or Affiliate that is a Canadian Tranche Revolving
Lender shall be reduced by the Canadian Allocated Commitment of such Canadian Tranche Revolving
Lender. The initial amount of each US Tranche Revolving Lender’s US Tranche Commitment shall be
the amount set forth on such documentation on file with the US Administrative Agent.

     “US Tranche Credit Exposure” shall mean at any time, the sum of the aggregate
Principal Amount of the US Tranche Loans and LC Exposure outstanding at such time. The US Tranche
Credit Exposure of any US Tranche Revolving Lender at any time shall be such US Tranche Revolving
Lender’s US Tranche Percentage of the total US Tranche Credit Exposure at such time.

     “US Tranche Loans” shall mean the Revolving Loans pursuant to Section
2.01(a)(i). Each US Tranche Loan shall be either a US Dollar LIBOR Loan or a US Dollar Base
Rate Loan.

     “US Tranche Percentage” shall mean:

     (a) at any time the US Tranche Commitments remain outstanding, a fraction (expressed as a
percentage, carried out to the sixth decimal place), the numerator of which is the amount
of the US Tranche Commitment of such US Tranche Revolving Lender at such time and the
denominator of which is the amount of the Aggregate US Tranche Commitments at such time;
and

     (b) upon the termination or expiration of the Aggregate Revolving Commitments, a fraction
(expressed as a percentage, carried out to the sixth decimal place), the numerator of which
is:

     the sum of

     (i) the outstanding amount of US Tranche Loans of such US Tranche Revolving Lender plus

     (ii) an amount equal to (A) the outstanding amount of US Tranche Loans of such US Tranche
Revolving Lender, divided by (B) the outstanding amount of US Tranche Loans of all US Tranche
Revolving Lenders, times (C) the LC Exposure, and

     the denominator of which is the US Tranche Credit Exposure; provided that if
such calculation results in a number that is zero, then the US Tranche Percentage shall be deemed
to be the most recent US Tranche Percentage immediately prior to the termination or expiration of
the Aggregate Revolving Commitments.

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The initial US Tranche Percentage of each US Tranche Revolving Lender is the percentage set forth
in the column titled “US Tranche Percentage” opposite the name of such US Tranche Revolving Lender
on such documentation on file with the US Administrative Agent or in the Assignment pursuant to
which such US Tranche Revolving Lender becomes a party hereto, as applicable.

     “US Tranche Revolving Lender” shall mean a Lender with a US Tranche Commitment or with
outstanding US Tranche Credit Exposure.

     “USA Patriot Act” shall have the meaning assigned such in Section 13.19.

     “Wachovia” shall mean Wachovia Bank, National Associate and its successors.

     “Wachovia Canada” shall mean Wachovia Capital Finance Corporation (Canada) and its
successors.

     “Weighted Average Life to Maturity” shall mean, when applied to any Debt at any date,
the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i)
the amount of each then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect thereof, by (ii) the number
of years (calculated to the nearest one-twelfth) that will elapse between such date and the making
of such payment, by (b) the then outstanding principal amount of such Debt.

     “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.

     Section 1.03 Accounting Terms and Determinations. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial statements and certificates and
reports as to financial matters required to be furnished to the Administrative Agents or the
Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with
the audited financial statements of Holdings and its Consolidated Subsidiaries referred to in
Section 7.02 (except for changes concurred with by Holdings and its Consolidated
Subsidiaries’ independent public accountants); provided that, if Holdings notifies the US
Administrative Agent that it requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP (including but not limited to any Statement
of Financial Accounting Standards) affecting the calculation of any financial covenant (or if the
US Administrative Agent notifies Holdings that the Majority Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is given before or after
such change in GAAP affecting the calculation of any financial covenant, then such provision shall
be interpreted on the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such provision amended in
accordance herewith.

     Section 1.04 References and Titles. All references in this Agreement to Exhibits,
Schedules, articles, sections, subsections and other subdivisions refer to the Exhibits, Schedules,
articles, sections, subsections and other subdivisions of this Agreement unless expressly

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provided
otherwise. Titles appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in construing the language
contained in such subdivision. The words “this Agreement,” “this instrument,” “herein,” “hereof,”
“hereby,” “hereunder” and
words of similar import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The phrases “this section” and “this subsection” and similar phrases
refer only to the sections or subsections hereof in which such phrases occur. The word “or” is not
exclusive, and the word “including” (in its various forms) means “including without limitation.”
Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender,
and words in the singular form shall be construed to include the plural and vice versa, unless the
context otherwise requires.

ARTICLE II

Commitments

     Section 2.01 Loans and Letters of Credit.

          (a) Loans.

     (i) US Tranche Loans. Each US Tranche Revolving Lender severally agrees, on
the terms and conditions of this Agreement, to make Revolving Loans to the US Borrowers
during the period from and including (A) the Closing Date or (B) such later date that such
Lender becomes a party to this Agreement as provided in Section 13.06(b), to and up
to, but excluding, the Revolving Credit Maturity Date in an aggregate Principal Amount at
any one time outstanding up to, but not exceeding, the amount of such Lender’s US Tranche
Commitment as then in effect, minus the LC Exposure of such Lender. Subject to the
terms of this Agreement, during the period from the Closing Date to and up to, but
excluding, the Revolving Credit Maturity Date, the US Borrowers may borrow, repay and
reborrow the amount described in this Section 2.01(a)(i).

     (ii) Reserved.

     (iii) Canadian Tranche Loans. Subject to Section 2.12, during the
period from and including (A) the Closing Date or (B) such later date that such Lender
becomes a party to this Agreement as provided in Section 13.06(b), to and up to, but
excluding, the Revolving Credit Maturity Date, each Canadian Tranche Revolving Lender
severally agrees, on the terms and conditions of this Agreement, (1) to make Canadian
Tranche Loans to the Canadian Borrowers in Canadian Dollars or US Dollars at the election of
the Canadian Borrowers and (2) to accept and purchase Bankers’ Acceptances from (or, at the
option of any Canadian Tranche Revolving Lender in accordance with Section 2.12(g)
hereof, make BA Equivalent Loans in lieu of purchasing a Bankers’ Acceptance to) the
Canadian Borrowers. The Canadian Tranche Loans, if in US Dollars, will be either US Dollar
LIBOR Loans or US Dollar Base Rate Loans and, if in Canadian Dollars, will be either
Canadian Prime Rate Loans, Bankers’ Acceptances or BA Equivalent Loans. Each Canadian
Tranche Revolving Lender’s Canadian Tranche Credit Exposure shall not exceed the amount of
such Lender’s Canadian Allocated Commitment as then in effect; provided,
however, that the aggregate Principal Amount of all such Canadian Tranche Loans by
all Canadian Tranche Revolving Lenders hereunder at any one time outstanding shall not
exceed the Canadian Allocated Total Commitments as

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then in effect. Within the foregoing
limits, the Canadian Borrowers may use the
Canadian Allocated Total Commitments by borrowing, repaying and (except for Bankers’
Acceptances and BA Equivalent Loans) prepaying the Canadian Tranche Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.

     (iv) Maximum Amount of Loans. The Combined Revolving Credit Exposure shall not
exceed the Aggregate Revolving Commitments at any time.

     (v) Term Loans. Subject to the terms and conditions hereof and in the
applicable Term Loan Assumption Agreement, each Term Loan Lender severally agrees, subject
to the terms and conditions set forth herein and therein, to make a senior secured
amortizing term loan (collectively, the “Term Loans”) to the US Borrowers on the
Term Loan Funding Date in the Principal Amount of such Term Loan Lender’s Term Commitment.
Once repaid or prepaid, Term Loans may not be reborrowed.

          (b) Letters of Credit. During the period from and including the Closing Date to, but
excluding, the 30th day prior to the Revolving Credit Maturity Date, the Issuing Banks, as issuing
bank for the US Tranche Revolving Lenders, agree to extend credit for the account of the US
Borrowers at any time and from time to time by issuing, renewing, extending or reissuing Letters of
Credit; provided however, the LC Exposure at any one time outstanding shall not
exceed $75,000,000. The US Tranche Revolving Lenders shall participate in such Letters of Credit
according to their respective US Tranche Percentages. Each of the Letters of Credit shall (1) be
issued by the Issuing Banks on a sight basis only, (2) contain such terms and provisions as are
reasonably required by the Issuing Banks, (3) be for the account of such US Borrower and (4) expire
not later than (A) 30 days before the Revolving Credit Maturity Date, with respect to commercial
letters of credit, and (B) 10 days before the Revolving Credit Maturity Date, with respect to
standby letters of credit. The US Borrowers may request that one or more Letters of Credit be
issued in an Offshore Currency denomination as part of the LC Exposure. The aggregate US Dollar
Equivalent of all Offshore Currency Letters of Credit, as of the issuance date of any such Offshore
Currency Letter of Credit, shall not exceed $75,000,000. No Issuing Bank shall be obligated to
issue an Offshore Currency Letter of Credit if such Issuing Bank has determined, in its sole
discretion, that it is unable to fund obligations in the requested Offshore Currency;
provided, however, the US Administrative Agent shall use its best efforts to locate
suitable issuers if no Issuing Banks are able to fund obligations in the requested Offshore
Currency. From and after the Closing Date, the Existing Letters of Credit shall be deemed to be
Letters of Credit issued pursuant to this Section 2.01(b). The Existing Letters of Credit
are described on Schedule 2.01(b).

Notwithstanding anything to the contrary contained in this Agreement, including, without
limitation, this Section 2.01(b), the expiration date of one or more Letters of Credit may
extend beyond the Revolving Credit Maturity Date; provided, however, it is hereby
expressly agreed and understood that:

     (i) the aggregate face amount of all such Letters of Credit shall not at any time
exceed $25,000,000;

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     (ii) the expiration dates of such Letters of Credit shall not extend more than three
(3) years beyond the Revolving Credit Maturity Date;

     (iii) the US Borrowers shall, not later than five (5) Business Days prior to the
Revolving Credit Maturity Date, deposit in an account with the US Administrative Agent, in
the name of the US Administrative Agent for the benefit of the US Administrative Agent and
the Issuing Banks, an amount in cash equal to the aggregate face amount of all such Letters
of Credit as of such date; provided that for all Offshore Currency Letters of
Credit, the US Borrowers shall deposit an amount in cash equal to 110% of the aggregate face
amount of all such Offshore Currency Letters of Credit and will have a continuing obligation
to maintain in such account at least an amount in cash equal to 110% of the aggregate face
amount of all such Offshore Currency Letters of Credit based on the then US Dollar
Equivalent, and the US Administrative Agent shall have exclusive dominion and control
(including the exclusive right of withdrawal) over such account;

     (iv) if the Issuing Banks make any disbursement in connection with a Letter of Credit
after the Revolving Credit Maturity Date, such disbursement shall be an advance on behalf of
the US Borrowers under this Agreement and shall be reimbursed to the Issuing Banks either
(A) by the US Administrative Agent applying amounts in the cash collateral account referred
to in clause (iii) above until reimbursed in full, or (B) by the US Borrowers pursuant to
Section 2.10 (except that the US Borrowers shall not have the right to request that
the US Tranche Revolving Lenders make, and the US Tranche Revolving Lenders shall not have
any obligation to make, a Loan under this Agreement after the Revolving Credit Maturity Date
to fund any such disbursement); and

     (v) all such disbursements referred to in clause (iv) of this paragraph shall be
secured only by the cash collateral referred to in clause (iii) of this paragraph and the US
Borrowers hereby grant, and by each deposit of such cash collateral with the US
Administrative Agent grant, to the US Administrative Agent a first-priority security
interest in all such cash collateral, without any further action on the part of the Issuing
Banks, the US Borrowers, the US Administrative Agent, any US Tranche Revolving Lender or any
other Person now or hereafter party hereto (other than any action the US Administrative
Agent reasonably deems necessary to perfect such security interest, which action the US
Borrowers hereby authorize the US Administrative Agent to take), until same are reimbursed
in full.

If, on the later of the Revolving Credit Maturity Date or the Term Loan Maturity Date (A) the US
Tranche Commitments have been terminated, (B) the Loans, all interest thereon and all other amounts
payable by the Borrowers hereunder or in connection herewith (other than the LC Exposure in
connection with any Letter of Credit having an expiration date extending beyond the Revolving
Credit Maturity Date as permitted by Section 2.01(b)) have been paid in full, and (C) the
conditions set forth in clause (iii) above have been fully satisfied, then from and after such date
the following provisions of this Agreement shall not be operative: Sections 9.01 (other
than Section 9.01(a), which shall remain operative), 9.02 (except as the same may
affect a Letter of Credit), 9.03(b), 9.04, 9.09, 9.10,
9.11, 10.01, 10.02 (except for cash collateral securing Letters of Credit),
10.03, 10.04, 10.06, 10.08, 10.11, 10.12,
10.13, 10.14, 10.15, 10.16, 10.17, 10.18 and
10.19.

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If, after payment in full of all Indebtedness of the Borrowers under the Loan Documents (including
without limitation, reimbursement obligations with respect to Letters of Credit) and the expiration
or cancellation of all outstanding Letters of Credit, there remains any amount on
deposit in the cash collateral account referred to in clause (iii) above, the US Administrative
Agent shall, within three (3) Business Days after all such Indebtedness is paid in full and all
outstanding Letters of Credit have expired or been cancelled, return such amount to the US
Borrowers.

          (c) Limitation on Types of Loans. Subject to the other terms and provisions of this
Agreement, at the option of the US Borrowers, the US Tranche Loans may be US Dollar Base Rate Loans
or US Dollar LIBOR Loans, and at the option of the Canadian Borrowers, the Canadian Tranche Loans
may be Canadian Prime Rate Loans, Bankers’ Acceptances, BA Equivalent Loans, US Dollar Base Rate
Loans or US Dollar LIBOR Loans; provided that, without the prior written consent of the
Majority Lenders, no more than ten (10) US Dollar LIBO Rate Borrowings and five (5) Bankers’
Acceptances or BA Equivalent Loans may be outstanding at any time with respect to the Revolving
Credit Facility. Subject to the other terms and provisions of this Agreement, at the option of the
US Borrowers, the Term Loans may be US Dollar Base Rate Loans or US Dollar LIBOR Loans;
provided that, without the prior written consent of the Majority Lenders, no more than ten
(10) US Dollar LIBO Rate Borrowings may be outstanding at any time with respect to the Term Loan
Facility.

     Section 2.02 Borrowings, Continuations and Conversions, Letters of Credit.

          (a) Borrowings. The Borrowers shall give the US Administrative Agent (which shall
promptly notify the Lenders including the Canadian Administrative Agent) advance notice as
hereinafter provided of each Borrowing hereunder, which shall specify (i) the aggregate amount of
such Borrowing, (ii) the Type (in each case stating the amounts and currency requested), (iii) the
date (which shall be a Business Day) of the Loans to be borrowed, (iv) (in the case of US Dollar
LIBOR Loans) the duration of the Interest Period therefore and (v) the location and number of the
Requesting Borrower’s account. Notwithstanding the foregoing, all Borrowings by way of Bankers’
Acceptances and BA Equivalent Loans shall be made pursuant to Section 2.12.

          (b) Minimum Amounts. All US Dollar Base Rate Borrowings and Canadian Prime Rate
Borrowings shall be in amounts of at least $250,000 or with respect to any Revolving Borrowing, the
remaining balance of the Aggregate US Tranche Commitments or the Canadian Allocated Total
Commitments, as applicable, if less, or the amount of a Borrowing to fund a Letter of Credit
pursuant to Section 2.10(a), if less, or any whole multiple of $250,000 in excess thereof,
and all US Dollar LIBO Rate Borrowings shall be in amounts of at least $1,000,000 or the amount of
a Borrowing to fund a Letter of Credit pursuant to Section 2.10(a), if less, or any whole
multiple of $500,000 in excess thereof.

          (c) Notices. The initial Borrowing and all subsequent Borrowings, continuations and
conversions shall require advance written notice to the US Administrative Agent (which shall
promptly notify the Lenders including the Canadian Administrative Agent) in the form of
Exhibits B-1 and B-2, as applicable (or telephonic notice promptly confirmed by
such a written notice), which in each case shall be irrevocable, from the Requesting Borrower to be
received by the US Administrative Agent not later than (i) 12:00 p.m. Eastern time on the date

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of
each US Dollar Base Rate Borrowing, (ii) 12:00 p.m. Eastern time one (1) Business Day prior
to the date of each Canadian Prime Rate Borrowing and (iii) three (3) Business Days prior to
the date of each US Dollar LIBO Rate Borrowing, continuation or conversion. Without in any way
limiting the Requesting Borrower’s obligation to confirm in writing any telephonic notice, the US
Administrative Agent may act without liability upon the basis of telephonic notice believed by the
US Administrative Agent in good faith to be from the Requesting Borrower prior to receipt of
written confirmation. In each such case, the Requesting Borrower hereby waives the right to
dispute the US Administrative Agent’s record of the terms of such telephonic notice except in the
case of gross negligence or willful misconduct by the US Administrative Agent, its officers,
employees, agents or representatives. Either US Borrower may give notice for both US Borrowers.

          (d) Continuation Options. Subject to the provisions made in this Section
2.02(d), the Borrowers may elect to continue all or any part of any US Dollar LIBO Rate
Borrowing beyond the expiration of the then current Interest Period relating thereto by giving
advance notice as provided in Section 2.02(c) to the US Administrative Agent (which shall
promptly notify the Lenders including the Canadian Administrative Agent) of such election,
specifying the amount of such Borrowing to be continued and the Interest Period therefor. In the
absence of such a timely and proper election, the Borrowers shall be deemed to have elected to
convert such US Dollar LIBO Rate Borrowing to a US Dollar Base Rate Borrowing, pursuant to
Section 2.02(e). All or any part of any US Dollar LIBO Rate Borrowing may be continued as
provided herein, provided that (i) any continuation of any such Borrowing shall be (as to
each Borrowing as continued for an applicable Interest Period) in amounts of at least $1,000,000 or
any whole multiple of $500,000 in excess thereof and (ii) no Default shall have occurred and be
continuing. If a Default shall have occurred and be continuing, each US Dollar LIBO Rate Borrowing
shall be converted to a US Dollar Base Rate Borrowing on the last day of the Interest Period
applicable thereto.

          (e) Conversion Options. The Borrowers may elect to convert all or any part of any US
Dollar LIBO Rate Borrowing on the last day of the then current Interest Period relating thereto to
(i) for the US Tranche, a US Dollar Base Rate Borrowing and (ii) for the Canadian Tranche, a US
Dollar Base Rate Borrowing, a Canadian Prime Rate Borrowing or (subject to Section 2.12) a
Bankers’ Acceptance or BA Equivalent Loan Borrowing by giving advance notice to the US
Administrative Agent (which shall promptly notify the Lenders including the Canadian Administrative
Agent) of such election. Subject to the provisions made in this Section 2.02(e), the
Borrowers may elect to convert all or any part of any US Dollar Base Rate Borrowing at any time and
from time to time to (A) for the US Tranche, a US Dollar LIBO Rate Borrowing and (B) for the
Canadian Tranche, a US Dollar LIBO Rate Borrowing, a Canadian Prime Rate Borrowing or (subject to
Section 2.12) a Bankers’ Acceptance or BA Equivalent Loan Borrowing by giving advance
notice as provided in Section 2.02(c) to the US Administrative Agent (which shall promptly
notify the Lenders including the Canadian Administrative Agent) of

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such
election. All or any part of any outstanding Borrowing may
be converted as provided
herein, provided that (x) any conversion of any US Dollar Base Rate Borrowing into a
US Dollar LIBO Rate Borrowing shall be (as to each such Borrowing into which there is a conversion
for an applicable Interest Period) in amounts of at least $1,000,000 or any whole multiple of
$500,000 in excess thereof and (y) no Default shall have occurred and be continuing. If a Default
shall have occurred and be continuing, no US Dollar Base Rate Borrowing may be converted into a US
Dollar LIBO Rate Borrowing.

          (f) Advances. Not later than 1:00 p.m. Eastern time on the date specified for each
Borrowing hereunder, each Applicable Lender shall make available the amount of the Loan to be made
by it on such date to the Applicable Administrative Agent, to an account which such Administrative
Agent shall specify, in immediately available funds, for the account of the Requesting Borrower.
The amounts so received by the Applicable Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Requesting Borrower by depositing the same,
in immediately available funds, in an account of the Requesting Borrower, designated by such
Borrower and maintained at its principal office.

          (g) Letters of Credit. Any US Borrower shall submit to the US Administrative Agent
and the Issuing Bank a Letter of Credit Application not later than 11:00 a.m. Eastern time, not
less than three (3) Business Days prior to the proposed date of issuance (or such shorter period as
may be agreed to by the US Administrative Agent and the Issuing Bank) and at least thirty (30)
Business Days prior to the date of amendment, renewal or extension (or such shorter period as may
be agreed to by the US Administrative Agent and the Issuing Bank) of a Letter of Credit hereunder.
Each Letter of Credit Application shall specify (i) the amount of such Letter of Credit, (ii) the
date (which shall be a Business Day) such Letter of Credit is to be issued, amended, renewed or
extended, (iii) the duration thereof, (iv) the name and address of the beneficiary thereof, (v) the
form of the Letter of Credit, (vi) the name of the elected Issuing Bank and (vii) such other
information as the US Administrative Agent and the Issuing Bank may reasonably request, all of
which shall be reasonably satisfactory to the US Administrative Agent and such Issuing Bank.
Subject to the terms and conditions of this Agreement, on the date specified for the issuance,
amendment, renewal or extension of a Letter of Credit, the Issuing Bank shall issue, amend, renew
or extend such Letter of Credit to the beneficiary thereof. Promptly thereafter, the Issuing Bank
shall notify the US Administrative Agent and the applicable US Borrower, in writing, of such
issuance, amendment, renewal or extension, and such notice shall be accompanied by a copy of such
issuance, amendment, renewal or extension. Promptly after receipt of such notice, the US
Administrative Agent shall notify each US Tranche Revolving Lender, in writing, of such issuance,
amendment, renewal or extension and if any US Tranche Revolving Lender so requests, the US
Administrative Agent shall provide such Lender with copies of such issuance, amendment, renewal or
extension.

     Section 2.03 Changes of Commitments.

          (a) Upon (i) any sale of LP Units, Subordinated Units, IDRs or GP Interests pursuant to
Section 10.14(f), or (ii) any sale, exchange or conveyance of Compression Assets to the
UCLP Group resulting in cumulative Net Proceeds exceeding $100,000,000 pursuant to Section
10.14(b), the Aggregate US Tranche Commitments shall automatically reduce by an amount equal to
50% of the Net Proceeds from such sale, exchange or conveyance, such amount
to be set forth in reasonable detail in an officer’s certificate of Holdings delivered
promptly or

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within five (5) Business Days after the effectiveness of such sale, exchange or
conveyance; provided, however that any sale of LP Units as a result of an
over-allotment option pursuant to a public offering will not be considered a sale that would result
in a reduction to the Aggregate US Tranche Commitments.

          (b) The US Borrowers shall have the right to terminate or to reduce the amount of the
Aggregate US Tranche Commitments at any time, or from time to time, upon not less than three (3)
Business Days’ prior notice to the US Administrative Agent (which shall promptly notify the Lenders
including the Canadian Administrative Agent) of each such termination or reduction, which notice
shall specify the effective date thereof and the amount of any such reduction (which shall not be
less than $1,000,000 or any whole multiple of $500,000 in excess thereof) and shall be irrevocable
and effective only upon receipt by the US Administrative Agent; provided that, any
termination in full of the Aggregate US Tranche Commitments pursuant to Section 2.03(b)
shall automatically terminate in full the Canadian Allocated Maximum Total Commitments.

          (c) The US Borrowers shall have the right to allocate (or reallocate, if previously allocated)
a portion of the Aggregate US Tranche Commitments as the Canadian Allocated Total Commitments by
notice to the US Administrative Agent; provided that (i) any such notice shall be received
by the US Administrative Agent not later than 11:00 a.m. Eastern time ten (10) Business Days prior
to the date such allocation or reallocation shall become effective which effective date may only
occur six (6) times per calendar year, (ii) any such allocation or reallocation shall be in an
aggregate amount of $5,000,000 or any whole multiple in excess thereof and after giving effect
thereto, the Canadian Allocated Total Commitments shall not exceed the Canadian Allocated Maximum
Total Commitments, or shall be a reallocation to zero, (iii) outstanding US Tranche Loans will be
reallocated according to the new US Tranche Percentages and if outstanding US Dollar LIBOR Loans
are required to be terminated, the Borrowers shall pay any required amounts pursuant to Section
5.01 and Section 2.04(a), and (iv) the US Borrowers shall not allocate or reallocate
any portion of the Aggregate US Tranche Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder (A) the US Tranche Credit Exposure would exceed the Aggregate US
Tranche Commitments, (B) the Canadian Tranche Credit Exposure would exceed the Canadian Allocated
Total Commitments and (C) any US Tranche Revolving Lender’s US Tranche Commitment would not equal
or exceed its US Tranche Credit Exposure or any Canadian Tranche Revolving Lender’s Canadian
Allocated Commitment would not equal or exceed its Canadian Tranche Credit Exposure. The
allocation will be effected by reducing the US Tranche Commitment of each US Tranche Revolving
Lender that is or has a branch or an Affiliate that is a Canadian Tranche Revolving Lender by the
amount that its or its branch’s or Affiliate’s Canadian Allocated Commitment is increased. For any
reallocation, its or its branch’s or Affiliate’s Canadian Allocated Commitment will be reduced by
the amount that its US Tranche Commitment is increased. Any US Tranche Revolving Lender that is
not or has no branch or Affiliate that is a Canadian Tranche Revolving Lender will not have its US
Tranche Commitment affected. The US Administrative Agent will (x) promptly notify the Canadian
Administrative Agent and the US Tranche Revolving Lenders and the Canadian Tranche Revolving
Lenders of any such notice of allocation or reallocation of the Aggregate US Tranche Commitments
and the amount of their respective Canadian Allocated Commitments, (y) prepare and provide to the
Borrowers, the Canadian Administrative Agent and the other Lenders such documentation reflecting the new US

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Tranche Commitments and Canadian Allocated Commitments giving effect to such allocation or
reallocation and (z) notify all Lenders of the Aggregate US Tranche Commitments and Canadian
Allocated Total Commitments upon the effectiveness of such allocation or reallocation, which
effectiveness shall require no vote or consent of any Lender.

          (d) At any time during which no Canadian Allocation Period exists, the US Borrowers may at
such time permanently terminate their right to allocate a portion of the Aggregate US Tranche
Commitments as the Canadian Allocated Total Commitments, at which time the obligations of the
Canadian Borrowers hereunder and each Guaranty pursuant to ARTICLE XIV shall automatically
terminate, and thereafter no US Tranche Revolving Lender nor any Canadian Tranche Revolving Lender
shall have any Canadian Allocated Commitment.

          (e) The Aggregate US Tranche Commitments once terminated or reduced pursuant to Sections
2.03(a) and (b), respectively may not be reinstated except pursuant to Section
2.15.

     Section 2.04 Fees.

          (a) Commitment Fees.

     (i) The US Borrowers shall pay to the US Administrative Agent for the account of each
US Tranche Revolving Lender a commitment fee, which shall accrue at the Applicable Margin (a
“US Commitment Fee”), on the daily average unused amount (after deducting any LC
Exposure) of each US Tranche Revolving Lender’s US Tranche Commitment for the period from
and including the Closing Date up to, but excluding, the Revolving Credit Maturity Date.

     (ii) During a Canadian Allocation Period, in consideration of each Canadian Tranche
Revolving Lender’s Canadian Allocated Commitment, the Canadian Borrowers shall pay to the US
Administrative Agent in US Dollars for the account of each Canadian Tranche Revolving Lender
a commitment fee, which shall accrue at the Applicable Margin (a “Canadian Commitment
Fee”), on the daily average unused amount of each Canadian Tranche Revolving Lender’s
Canadian Allocated Commitment for the Canadian Allocation Period.

     (iii) Accrued Commitment Fees shall be payable quarterly in arrears on each Quarterly
Date, on the date of any reallocation of the Aggregate US Tranche Commitments under
Section 2.03(c) and on the earlier of the date the Aggregate Revolving Commitments
are terminated or the Revolving Credit Maturity Date.

          (b) Letter of Credit Fees.

     (i) The US Borrowers shall pay to the US Administrative Agent, for the account of each
US Tranche Revolving Lender and the Issuing Banks, commissions for issuing the Letters of
Credit on the daily outstanding amount of the maximum liability of
the Issuing Banks existing from time under such Letter of Credit (including the US
Dollar Equivalent of the face amount of the outstanding Offshore Currency Letter of Credit)
(calculated separately for each Letter of Credit) at a rate equal to the Applicable Margin

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for US Dollar LIBOR Loans under the Revolving Credit Facility, in effect from time to time
during the term of each Letter of Credit. Each Letter of Credit shall be deemed outstanding
up to the available face amount of the Letter of Credit (including the US Dollar Equivalent
of the face amount of the outstanding Offshore Currency Letter of Credit) until the Issuing
Banks have received from the beneficiary a written cancellation authorization, in form and
substance reasonably acceptable to the Issuing Banks or until the date the Letter of Credit
expires by its terms. Such commissions are payable quarterly in arrears on each Quarterly
Date and upon cancellation or expiration of each such Letter of Credit.

     (ii) In addition to the fees described in Section 2.04(b)(i), the US Borrowers
shall pay to the Issuing Bank, for such Issuing Bank’s account, 0.125% per annum of each
such fee as an issuing fee.

     (iii) The US Borrowers shall pay to the Issuing Bank for its own account, upon each
drawing or payment under, issuance of, or amendment to, any Letter of Credit, such amount as
shall at the time of such event be the administrative charge and reasonable out-of-pocket
expenses which the Issuing Bank or its Affiliate is generally imposing in connection with
such occurrence with respect to letters of credit.

          (c) Other Fees. The US Borrowers shall pay to the US Administrative Agent for its own
account such other fees as are set forth in the Fee Letter on the dates specified therein to the
extent not paid prior to the Closing Date.

     Section 2.05 Several Obligations. The failure of any Lender to make any Loan to be made by
it or to provide funds for disbursements or reimbursements under Letters of Credit on the date
specified therefor shall not relieve any other Lender of its obligation to make its Loan or provide
funds on such date, but no Lender shall be responsible for the failure of any other Lender to make
a Loan to be made by such other Lender or to provide funds to be provided by such other Lender.

     Section 2.06 Notes. Any Lender may request that the Loans made by it be evidenced by a
promissory note. In such event, the Applicable Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender, substantially in the form of
Exhibit A-1, with respect to Revolving Loans made to the US Borrowers, Exhibit A-2
with respect to Revolving Loans made to the Canadian Borrowers and Exhibit A-3 with respect
to Term Loans, as applicable, dated (a) the Closing Date or (b) the effective date of an Assignment
pursuant to Section 13.06(b), in a Principal Amount equal to its Percentage Share of the
Aggregate US Tranche Commitments, Canadian Allocated Maximum Total Commitments or Aggregate Term
Commitments as the case may be, as originally in effect and otherwise duly completed and such
substitute Notes as required by Section 13.06(b); provided that promissory notes
requested in amounts less than $1,000,000 shall require the consent of the Applicable Borrower,
such consent not to be
unreasonably withheld or delayed. The date, amount, Type, interest rate and Interest Period of
each Loan made by each Lender, and all payments made on account of the principal thereof, shall be
recorded by such Lender on its books and maintained in accordance with its usual practice. Failure
to make such recordation shall not affect any Lender’s or any Borrower’s rights or obligations in
respect of such Loans.

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     Section 2.07 Prepayments.

          (a) Voluntary Prepayments. The Borrowers may prepay the US Dollar Base Rate Loans and
the Canadian Borrowers may prepay the Canadian Prime Rate Loans, as applicable, upon the same
Business Day’s prior notice to the US Administrative Agent (which shall promptly notify the
Lenders, including the Canadian Administrative Agent), which notice shall specify the prepayment
date (which shall be a Business Day) and the amount of the prepayment (which shall be at least
$1,000,000 or the remaining aggregate principal balance outstanding on the applicable Notes) and
shall be irrevocable and effective only upon receipt by the US Administrative Agent,
provided that interest on the principal prepaid, accrued to the prepayment date, shall be
paid on the prepayment date. The Borrowers may prepay US Dollar LIBOR Loans on the same conditions
as for US Dollar Base Rate Loans (except that prior notice to the US Administrative Agent shall not
be less than three (3) Business Days for US Dollar LIBOR Loans) and in addition such prepayments of
US Dollar LIBOR Loans shall be subject to the terms of Section 5.05 and shall be in an
amount equal to all of the US Dollar LIBOR Loans for the Interest Period prepaid. Any prepayments
made to the Term Loans shall be applied inversely to the remaining installments owed.
Notwithstanding the foregoing, the Canadian Borrowers shall not be permitted to prepay any Bankers’
Acceptances or BA Equivalent Loans at any time.

          (b) Mandatory Prepayments.

     (i) If, after giving effect to any termination, reduction or allocation of the
Aggregate US Tranche Commitments pursuant to Sections 2.03(a), (b) and (c),
(A) the US Tranche Credit Exposure exceeds the Aggregate US Tranche Commitments or (B) any
US Tranche Revolving Lender’s US Tranche Credit Exposure exceeds its US Tranche Commitment,
(1) the US Borrowers shall prepay the US Tranche Loans on the date of such termination,
reduction or allocation in an aggregate Principal Amount, together with interest on the
Principal Amount paid accrued to the date of such prepayment, equal to the excess to be
applied first to clause (A) above and then any remaining to clause (B) above for the
applicable US Tranche Revolving Lender and (2) if any excess remains after prepaying all of
the US Tranche Loans because of the LC Exposure, the US Borrowers shall pay to the US
Administrative Agent on behalf of the Issuing Bank and the US Tranche Revolving Lenders an
amount equal to the excess to be held as cash collateral as provided in Section
2.10(b) hereof.

     (ii) If, after giving effect to any reallocation of the Canadian Allocated Commitment
pursuant to Section 2.03(c) or any termination or reduction pursuant to Section
2.03(b), (A) the outstanding aggregate Principal Amount of the Canadian Tranche Credit
Exposure exceeds the Canadian Allocated Total Commitments or (B) any
Canadian Tranche Revolving Lender’s Canadian Tranche Credit Exposure exceeds its
Canadian Allocated Commitment, the Canadian Borrowers shall prepay the Canadian Tranche
Loans (other than Bankers’ Acceptances and BA Equivalent Loans) on the date of such
reallocation in an aggregate Principal Amount, together with interest on the Principal
Amount paid accrued to the date of such prepayment equal to the excess to be applied first
to clause (A) above and then any remaining to clause (B) above for the applicable Canadian
Tranche Revolving Lender.

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          (c) Generally. Prepayments permitted or required under this Section 2.07
shall be without premium or penalty, except as required under Section 5.05 for prepayment
of US Dollar LIBOR Loans. Any prepayments on the Revolving Loans may be reborrowed subject to the
then effective Aggregate US Tranche Commitments and the Canadian Allocated Total Commitments, as
applicable. Any prepayments on the Term Loans may not be reborrowed. Notwithstanding Section
2.07(b), any prepayments made if an Event of Default exists and is continuing shall be applied
pari passu to the Aggregate Credit Exposure. In the event of a mandatory prepayment pursuant to
this Section 2.07 which would cause Bankers’ Acceptances and BA Equivalent Notes to be
prepaid but for the prohibition on prepayment contained herein, the US Administrative Agent shall
deposit with the Canadian Administrative Agent an amount equal to the Principal Amount that would
have been prepaid for such Bankers’ Acceptances and BA Equivalent Notes on behalf of the Canadian
Tranche Revolving Lenders holding such Bankers’ Acceptances and BA Equivalent Notes to be held
pursuant to the terms in Section 2.12(i) except that on the BA Maturity Date for such
Bankers’ Acceptances and BA Equivalent Notes, the Canadian Administrative Agent shall apply such
amounts against such Bankers’ Acceptances and BA Equivalent Notes.

     Section 2.08 Reserved.

     Section 2.09 Assumption of Risks. Each US Borrower assumes all risks of the acts or
omissions of any beneficiary of any Letter of Credit or any transferee thereof with respect to its
use of such Letter of Credit. Neither the Issuing Bank (except in the case of gross negligence or
willful misconduct on the part of the Issuing Bank or any of its officers, employees, agents or
representatives as determined by final and non appealable judgment of a court of competent
jurisdiction), its correspondents nor any Lender shall be responsible for the validity, sufficiency
or genuineness of certificates or other documents or any endorsements thereon, even if such
certificates or other documents should in fact prove to be invalid, insufficient, fraudulent or
forged; for errors, omissions, interruptions or delays in transmissions or delivery of any messages
by mail, telex, or otherwise, whether or not they be in code; for errors in translation or for
errors in interpretation of technical terms; the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; the failure of any beneficiary or any transferee of any Letter of
Credit to comply fully with conditions required in order to draw upon any Letter of Credit; or for
any other consequences arising from causes beyond the Issuing Bank’s control or the control of the
Issuing Bank’s correspondents. In addition, neither the Issuing Bank, the US Administrative Agent
nor any Lender shall be responsible for any error,
neglect, or default of any of the Issuing Bank’s correspondents; and none of the above shall
affect, impair or prevent the vesting of any of the Issuing Bank’s, the US Administrative Agent’s
or any Lender’s rights or powers hereunder, all of which rights shall be cumulative. The Issuing
Bank and its correspondents may accept certificates or other documents that appear on their face to
be in order, without responsibility for further investigation of any matter contained therein
regardless of any notice or information to the contrary. In furtherance and not in limitation of
the foregoing provisions, each US Borrower agrees that any action, inaction or omission taken or
not taken by the Issuing Bank or by any correspondent for the Issuing Bank in good faith in
connection with any Letter of Credit, or any related drafts, certificates, documents or
instruments, shall be binding on the

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Borrowers and shall not put the Issuing Bank or its
correspondents under any resulting liability to the Borrowers.

     Section 2.10 Obligation to Reimburse and to Prepay.

          (a) In connection with any Letter of Credit, the US Borrowers may make funds available for
disbursement by the Issuing Bank in connection with such Letter of Credit. In such cases, the
Issuing Bank shall use such funds which the US Borrowers have made available to fund such Letter of
Credit. In addition, the US Borrowers may give written instructions to the Issuing Bank and the US
Administrative Agent to make a Loan under this Agreement to fund any Letters of Credit which may be
drawn. In all such cases, the US Borrowers shall give the appropriate notices required under this
Agreement for a US Dollar Base Rate Loan or a US Dollar LIBOR Loan. If a disbursement by the
Issuing Bank is made under any Letter of Credit, in cases in which the US Borrowers have not either
provided their own funds to fund a draw on a Letter of Credit or given the US Administrative Agent
prior notice for a Loan under this Agreement, then the US Borrowers shall pay to the US
Administrative Agent within two (2) Business Days after notice of any such disbursement is received
by the US Borrowers, the amount and, in the case of any Offshore Currency Letters of Credit, the US
Dollar Equivalent determined on the date of such disbursement, of each such disbursement made by
the Issuing Bank under the Letter of Credit (if such payment is not sooner effected as may be
required under this Section 2.10 or under other provisions of the Letter of Credit),
together with interest on the amount disbursed from and including the date of disbursement until
payment in full of such disbursed amount at a varying rate per annum equal to (i) the then
applicable interest rate for US Dollar Base Rate Loans through the second Business Day after notice
of such disbursement is received by such US Borrower and (ii) thereafter, the Post-Default Rate for
US Dollar Base Rate Loans (but in no event to exceed the Highest Lawful Rate) for the period from
and including the third Business Day following the date of such disbursement to and including the
date of repayment in full of such disbursed amount. The obligations of each US Borrower under this
Agreement with respect to each Letter of Credit shall be absolute, unconditional and irrevocable
and shall be paid or performed strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, but only to the fullest extent permitted
by applicable law, the following circumstances: (A) any lack of validity or enforceability of this
Agreement, any Letter of Credit or any of the Security Instruments; (B) any amendment or waiver of
(including any default), or any consent to departure from this Agreement (except to the extent
permitted by any amendment or waiver), any Letter of Credit or any of the Security Instruments; (C)
the existence of any claim, set-off, defense or other rights
which either US Borrower may have at any time against the beneficiary of any Letter of Credit
or any transferee of any Letter of Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank, the US Administrative Agent, any US Tranche Revolving
Lender or any other Person, whether in connection with this Agreement, any Letter of Credit, the
Security Instruments, the transactions contemplated hereby or any unrelated transaction; (D) any
statement, certificate, draft, notice or any other document presented under any Letter of Credit
proves to have been forged, fraudulent, insufficient or invalid in any respect or any statement
therein proves to have been untrue or inaccurate in any respect whatsoever; (E) payment by the
Issuing Bank under any Letter of Credit against presentation of a draft or certificate which
appears on its face to comply, but does not comply, with the terms of such

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Letter of Credit; and
(F) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

Notwithstanding anything in this Agreement to the contrary, the US Borrowers will not be liable for
payment or performance that results from the gross negligence or willful misconduct of the Issuing
Bank or its officers, employees, agents or representatives, except where the US Borrowers or any
Restricted Subsidiary actually recovers the proceeds for itself or the Issuing Bank of any payment
made by the Issuing Bank in connection with such gross negligence or willful misconduct, except for
reasonable costs and expenses associated with such recovery.

          (b) In the event of the occurrence of any Event of Default, a payment or prepayment pursuant
to Section 2.07(b) or the maturity of the Notes, whether by acceleration or otherwise, an
amount equal to the LC Exposure, except for all Offshore Currency Letters of Credit which shall
equal an amount equal to 110% of the aggregate face amount of all such Offshore Currency Letters of
Credit based on the then US Dollar Equivalent, shall be deemed to be forthwith due and owing by the
US Borrowers to the Issuing Bank, the US Administrative Agent and the US Tranche Revolving Lenders
as of the date of any such occurrence; and each US Borrower’s obligation to pay such amount shall
be absolute and unconditional, without regard to whether any beneficiary of any such Letter of
Credit has attempted to draw down all or a portion of such amount under the terms of a Letter of
Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense
or be affected by a right of set-off, counterclaim or recoupment which the US Borrowers may now or
hereafter have against any such beneficiary, the Issuing Bank, the US Administrative Agent, the US
Tranche Revolving Lenders or any other Person for any reason whatsoever. The US Borrowers will
have a continuing obligation to maintain in such account at least an amount in cash equal to 110%
of the aggregate face amount of all such Offshore Currency Letters of Credit based on the then US
Dollar Equivalent. Such payments shall be held by the Issuing Bank on behalf of the US Tranche
Revolving Lenders as cash collateral securing the LC Exposure in an account or accounts at the
Principal Office; and the US Borrowers hereby grant to, and by their deposit with the US
Administrative Agent grants to, the US Administrative Agent a security interest in such cash
collateral. In the event of any such payment by the US Borrowers of amounts contingently owing
under outstanding Letters of Credit and in the event that thereafter drafts or other demands for
payment complying with the terms of such Letters of Credit are not made prior to the respective
expiration dates thereof, the US Administrative Agent agrees, if no Event of Default has occurred
and is continuing or if no other amounts are outstanding under this Agreement, the Notes or the
Security Instruments, to remit to the US Borrowers (i) amounts for which the
contingent obligations evidenced by the Letters of Credit have ceased and (ii) amounts on
deposit as cash collateral for Letters of Credit.

          (c) Each US Tranche Revolving Lender severally and unconditionally agrees that it shall
promptly reimburse the Issuing Bank in US Dollars an amount equal to such Lender’s participation in
any Letter of Credit as provided in Section 2.01(b) of any disbursement made by the Issuing
Bank under any Letter of Credit that is not reimbursed according to this Section 2.10
(other than with respect to disbursements described in the second paragraph of Section
2.10(a)), and such obligation to reimburse is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the

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Aggregate Revolving Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. If the US Borrowers fail to make such payment when
due, the US Administrative Agent shall notify each US Tranche Revolving Lender of the applicable
disbursement, the payment then due from the US Borrowers in respect thereof and such Lender’s
applicable percentage thereof. Promptly following receipt of such notice, each US Tranche
Revolving Lender shall pay to the US Administrative Agent its applicable percentage of the payment
then due from the US Borrowers, in the same manner as provided in Section 2.02(f) with
respect to Loans made by such Lender (and Section 2.02(f) shall apply, mutatis mutandis, to
the payment obligations of the US Tranche Revolving Lenders), and the US Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the US Tranche Revolving
Lenders. Promptly following receipt by the US Administrative Agent of any payment from the US
Borrowers pursuant to this paragraph, the US Administrative Agent shall distribute such payment to
the Issuing Bank or, to the extent that US Tranche Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such US Tranche Revolving Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this
paragraph to reimburse the Issuing Bank for any disbursement shall constitute a Loan and shall not
relieve the US Borrowers of their obligation to reimburse such disbursement.

          (d) If no Event of Default has occurred and is continuing, and subject to availability under
the Aggregate Revolving Commitments (after reduction for the LC Exposure), to the extent the US
Borrowers have not reimbursed the Issuing Bank for any drawn upon Letter of Credit within one (1)
Business Day after notice of such disbursement has been received by the US Borrowers, the amount of
such Letter of Credit reimbursement obligation shall automatically be funded by the US Tranche
Revolving Lenders as a Loan hereunder and used to pay such Letter of Credit reimbursement
obligation in the percentages referenced in clause (c) above. If an Event of Default has occurred
and is continuing, or if the funding of such Letter of Credit reimbursement obligation as a Loan
would cause the aggregate amount of all Loans outstanding to exceed the Aggregate Revolving
Commitments (after reduction for the LC Exposure), such Letter of Credit reimbursement obligation
shall not be funded as a Loan, but instead shall accrue interest as provided in Section
2.10(a) and be subject to reimbursement under Section 2.10(c).

     Section 2.11 Lending Offices. The Loans of each Type made by each Lender shall be made and
maintained at such Lender’s Applicable Lending Office for Loans of such Type.

     Section 2.12 Bankers’ Acceptances and BA Equivalent Loans.

          (a) Subject to the terms and conditions of this Agreement, the Canadian Allocated Commitments
may be utilized, upon the request of the Canadian Borrowers, in addition to Canadian Prime Rate
Loans, US Dollar Base Rate Loans and US Dollar LIBOR Loans provided for by Section
2.01(a)(iii), for the acceptance and purchase by the Canadian Tranche Revolving Lenders of
Bankers’ Acceptances issued by the Canadian Borrowers or the making of BA Equivalent Loans,
provided that (i) in no event shall the US Dollar Equivalent Amount of the aggregate amount
of the Canadian Prime Rate Loans, Bankers’ Acceptances and BA Equivalent Loans and the aggregate
amount of the US Dollar Base Rate Loans and the US Dollar LIBOR Loans owing to the Canadian Tranche
Revolving Lenders exceed the Canadian Allocated Total Commitments, (ii) all Bankers’ Acceptances
and BA Equivalent Notes shall have maturities which fall on a Business Day and are an integral
multiple of thirty (30) days, and

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are not less than thirty (30) days or more than 180 days, from
the Acceptance Date (and shall in no event mature on a date after the Revolving Credit Maturity
Date) and (iii) in no event shall the face amount of any Borrowing by way of Bankers’ Acceptance or
BA Equivalent Loan be less than C$1,000,000 and other than in multiples of C$100,000 for any
amounts in excess thereof. Whenever the Canadian Borrowers are required to furnish a notice to the
Canadian Administrative Agent pursuant to the following additional provisions of this Section
2.12, it shall give a copy of such notice to the US Administrative Agent.

          (b) To facilitate the acceptance of Bankers’ Acceptances and the issuance of BA Equivalent
Notes under this Agreement, the Canadian Borrowers shall, from time to time as required, provide to
the Canadian Administrative Agent Drafts and BA Equivalent Notes duly executed and endorsed in
blank by the Canadian Borrowers in quantities sufficient for each Canadian Tranche Revolving Lender
to fulfill its obligations hereunder. In addition, the Canadian Borrowers hereby appoint each
Canadian Tranche Revolving Lender as its attorney, with respect to Drafts and BA Equivalent Notes
for which the Canadian Borrowers have provided a Bankers’ Acceptance or BA Equivalent Loan notice:

     (i) to complete and sign on behalf of the Canadian Borrowers, either manually or by
facsimile or mechanical signature, the Drafts to create the Bankers’ Acceptances (with, in
each Canadian Tranche Revolving Lender’s discretion, the inscription “This is a depository
bill subject to the Depository Bills and Notes Act (Canada)”) or the BA Equivalent Notes, as
applicable;

     (ii) after the acceptance thereof by any Canadian Tranche Revolving Lender, to endorse
on behalf of the Canadian Borrowers, either manually or by facsimile or mechanical
signature, such Bankers’ Acceptance in favor of the applicable purchaser or endorsee thereof
including, in such Canadian Tranche Revolving Lender’s discretion, such Canadian Tranche
Revolving Lender or a clearing house (as defined by the DBNA);

     (iii) to deliver such Bankers’ Acceptances to such purchaser or to deposit such
Bankers’ Acceptances with such clearing house; and

     (iv) to comply with the procedures and requirements established from time to time by
such Canadian Tranche Revolving Lender or such clearing house in respect of the delivery,
transfer and collection of Drafts and Bankers’ Acceptances.

The Canadian Borrowers recognize and agree that all Drafts, Bankers’ Acceptances and BA Equivalent
Notes signed, endorsed, delivered or deposited on their behalf by a Canadian Tranche Revolving
Lender shall bind the Canadian Borrowers as fully and effectually as if signed in the handwriting
of and duly issued, delivered or deposited by the proper signing officer of such Canadian Borrower.
Each Canadian Tranche Revolving Lender is hereby authorized to accept such Drafts or issue such
Bankers’ Acceptances endorsed in blank or issue BA Equivalent Notes in such face amounts as may be
determined by such Canadian Tranche Revolving Lender in accordance with the terms of this
Agreement, provided that the aggregate amount thereof is less than or equal to the
aggregate amount of Bankers’ Acceptances required to be accepted by or BA Equivalent Loans made by
such Canadian Tranche Revolving Lender. No Canadian Tranche Revolving Lender shall be responsible
or liable for its failure to accept a Bankers’ Acceptance or make a BA Equivalent Loan if the cause
of such failure is, in whole or in part, due to the failure

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of the Canadian Borrowers to provide
duly executed and endorsed Drafts or BA Equivalent Notes to the Canadian Administrative Agent on a
timely basis, nor shall any Canadian Tranche Revolving Lender be liable for any damage, loss or
other claim arising by reason of any loss or improper use of any such instrument except loss or
improper use arising by reason of the gross negligence or willful misconduct of such Canadian
Tranche Revolving Lender, its officers, employees, agents or representatives. The Canadian
Administrative Agent and each Canadian Tranche Revolving Lender shall exercise such care in the
custody and safekeeping of Drafts and BA Equivalent Notes as it would exercise in the custody and
safekeeping of similar property owned by it. Each Canadian Tranche Revolving Lender will, upon the
request of the Canadian Borrowers, promptly advise the Canadian Borrowers of the number and
designation, if any, of Drafts and BA Equivalent Notes then held by it for the Canadian Borrowers.
Each Canadian Tranche Revolving Lender shall maintain a record with respect to Drafts and Bankers’
Acceptances (A) received by it from the Canadian Administrative Agent in blank hereunder, (B)
voided by it for any reason, (C) accepted by it hereunder, (D) purchased by it hereunder and (E)
canceled at their respective maturities and of BA Equivalent Notes (1) received by it from the
Canadian Administrative Agent in blank hereunder, (2) voided by it for any reason and (3) canceled
at their respective maturities. Each Canadian Tranche Revolving Lender further agrees to retain
such records in the manner and for the statutory periods provided in the various Canadian
provincial or federal statutes and regulations which apply to such Canadian Tranche Revolving
Lender.

          (c) When the Canadian Borrowers wish to make a Borrowing by way of Bankers’ Acceptances or BA
Equivalent Loans, such Canadian Borrower shall give the Administrative Agents a borrowing notice in
the form of Exhibit B-2 with respect to the issuance of the Bankers’ Acceptances or BA
Equivalent Notes by not later than 1:00 p.m. Eastern time, three (3) Business Days’ prior to the
Acceptance Date. Each borrowing notice shall be irrevocable and binding on the Canadian Borrowers.
The Canadian Borrowers shall indemnify each Canadian Tranche Revolving Lender against any loss or
expense incurred by such Lender as a result of any failure by the Canadian Borrowers to fulfill or
honor before the date specified as the Acceptance Date, the applicable conditions set forth in
ARTICLE VI, if, as a result of such failure the requested Bankers’ Acceptance or a BA
Equivalent Loan is not made on such date.
Unless otherwise agreed among the Administrative Agents and the Canadian Tranche Revolving
Lenders, the aggregate amount of all Bankers’ Acceptances or BA Equivalent Notes issued on any
Acceptance Date hereunder shall be accepted pro rata, subject to Section 2.12(g), by all
Canadian Tranche Revolving Lenders relative to their respective Canadian Tranche Percentage. Upon
receipt of a borrowing notice, the Canadian Administrative Agent shall advise each Canadian Tranche
Revolving Lender of the contents thereof. Upon the acceptance of a Bankers’ Acceptance or a BA
Equivalent Note by a Canadian Tranche Revolving Lender, such Lender shall purchase such Bankers’
Acceptance from or make such BA Equivalent Loan to such Canadian Borrower and pay to the Canadian
Administrative Agent not later than 12:00 p.m. Eastern time, on the day of such Borrowing, for the
account of such Canadian Borrower, the amount of the BA Net Proceeds in respect of such Bankers’
Acceptance or BA Equivalent Loan.

          (d) On each day during the period commencing with the issuance by the Canadian Borrowers of
any Bankers’ Acceptance and until such BA Exposure shall have been paid by the Canadian Borrowers,
the Canadian Allocated Commitment of each Accepting Lender that is able to extend credit by way of
Bankers’ Acceptances shall be deemed to be utilized for

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all purposes of this Agreement in an amount
equal to the Principal Amount of such Bankers’ Acceptance. The Canadian Allocated Commitment of
any Canadian Tranche Revolving Lender providing a BA Equivalent Loan rather than Bankers’
Acceptances shall be deemed utilized during this period in an amount equal to its Canadian Tranche
Percentage of the total amount of Bankers’ Acceptances and BA Equivalent Loans in each borrowing
notice.

          (e) The Canadian Borrowers agree to pay on the BA Maturity Date for each Bankers’ Acceptance
and BA Equivalent Note, to the Canadian Administrative Agent for account of each Accepting Lender,
an amount equal to the Principal Amount of such Bankers’ Acceptance or BA Equivalent Note. The
Canadian Borrowers hereby waive presentment for payment of Bankers’ Acceptances or BA Equivalent
Note by each Accepting Lender and any defense to payment of amounts due to an Accepting Lender in
respect of a Bankers’ Acceptance or BA Equivalent Note which might exist by reason of such Bankers’
Acceptance or BA Equivalent Note being held at maturity by the Accepting Lender which accepted it
and agree not to claim from such Lender any days of grace for the payment at maturity of Bankers’
Acceptances or BA Equivalent Notes.

          (f) If the Canadian Borrowers fail to notify the Canadian Administrative Agent in writing not
later than 1:00 p.m. Eastern time, on the Business Day prior to any BA Maturity Date that the
Canadian Borrowers intend to pay the Bankers’ Acceptances and BA Equivalent Loans due on such BA
Maturity Date, or fails to make such payment, the Canadian Borrowers shall be deemed, for all
purposes to have given the Canadian Administrative Agent notice of a borrowing of a Canadian Prime
Rate Loan pursuant to Section 2.02(a) for an amount equal to the Principal Amount of such
Bankers’ Acceptance and BA Equivalent Loan; provided that:

     (i) the BA Maturity Date for such Bankers’ Acceptances shall be considered to be the
date of such Borrowing;

     (ii) the proceeds of such Canadian Prime Rate Loan shall be used to pay the Principal
Amount of the Bankers’ Acceptance due on such BA Maturity Date;

     (iii) each Canadian Tranche Revolving Lender which has made a maturing BA Equivalent
Loan (in accordance with Section 2.12(g) hereof) shall continue to extend credit to
such Canadian Borrower (without further advance of funds to such Canadian Borrower) by way
of a Canadian Prime Rate Loan in the Principal Amount equal to its maturing BA Equivalent
Loan; and

     (iv) the Canadian Administrative Agent shall promptly and in any event within three (3)
Business Days following the BA Maturity Date of such Bankers’ Acceptances and such BA
Equivalent Loans, notify the Canadian Borrowers in writing of the making of or converting to
such Canadian Prime Rate Loan pursuant to this Section 2.12(f).

          (g) If, in the sole judgment of a Canadian Tranche Revolving Lender, such Lender is unable, as
a result of applicable law, customary market practice, or otherwise, to extend credit by way of
Bankers’ Acceptances in accordance with this Agreement, such Lender shall give notice to such
effect to the Canadian Administrative Agent and the Canadian Borrowers prior to 11:00 a.m. Eastern
time, on the date of the requested credit extension (which

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notice may, if so stated therein, remain
in effect with respect to subsequent requests for extension of credit by way of Bankers’
Acceptances until revoked by notice to the Administrative Agents and the Canadian Borrowers) and
shall make available to the Canadian Administrative Agent, in accordance with this Section
2.12 hereof prior to 2:00 p.m. Eastern time, on the date of such requested credit extension, a
BA Equivalent Loan in an amount equal to the BA Net Proceeds equivalent to such Lender’s Canadian
Tranche Percentage of the total amount of credit requested to be extended by way of Bankers’
Acceptances.

          (h) It is the intention of the Canadian Administrative Agent, the Canadian Tranche Revolving
Lenders, and the Canadian Borrowers that, except to the extent a Canadian Tranche Revolving Lender
advises otherwise, pursuant to the DBNA, all Bankers’ Acceptances accepted by the Canadian Tranche
Revolving Lenders under this Agreement shall be issued in the form of a “depository bill” (as
defined in the DBNA), deposited with the Canadian Depository for Securities Limited and made
payable to CDS & Co.

          (i) If any Event of Default shall have occurred and be continuing, on the Business Day that
the Canadian Borrowers receive notice from the Canadian Tranche Revolving Lenders with BA Exposure
representing greater than
662/3% of the total BA Exposure or, if the maturity of the Loans has been
accelerated, from the Canadian Administrative Agent, the US Administrative Agent, or the Majority
Lenders, demanding the deposit of cash collateral pursuant to this paragraph, the Canadian
Borrowers shall deposit in an account with the Canadian Administrative Agent, in the name of the
Canadian Administrative Agent and for the benefit of the Canadian Tranche Revolving Lenders, an
amount in cash equal to the BA Exposure of the Canadian Borrowers as of such date plus any accrued
and unpaid interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately due and payable,
without demand or other notice of any kind, upon the occurrence of any Event of Default described
in Section 11.01(f) or Section 11.01(g). Any such deposit shall be held by the
Canadian Administrative Agent as collateral for the payment and performance of the obligations of
the Canadian Borrowers under this Agreement. The Canadian Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits, which investments shall be made
at the option and sole discretion of the Canadian Administrative Agent and at the Canadian
Borrowers’ risk and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account shall be applied by
the Canadian Administrative Agent for the satisfaction of the obligations of the Canadian Borrowers
with respect to the BA Exposure at such time or, if the maturity of the Loans has been accelerated,
be applied to satisfy other obligations of the Canadian Borrowers under this Agreement (but subject
to the consent of Canadian Tranche Revolving Lenders with BA Exposure representing greater than 50%
of the total BA Exposure). If the Canadian Borrowers are required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the
extent not applied as aforesaid) shall be returned to the Canadian Borrowers within three (3)
Business Days after all Events of Default have been cured or waived.

          (j) Drafts of the Canadian Borrowers to be accepted as Bankers’ Acceptances and BA Equivalent
Notes hereunder shall be duly executed on behalf of the Canadian Borrowers.

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Notwithstanding that
any person whose signature appears on any Bankers’ Acceptance or BA Equivalent Note as a signatory
for the Canadian Borrowers may no longer be an authorized signatory for the Canadian Borrowers at
the date of issuance of a Bankers’ Acceptance or advance of a BA Equivalent Loan, such signature
shall nevertheless be valid and sufficient for all purposes as if such authority had remained in
force at the time of such issuance or advance, and any such Bankers’ Acceptance or BA Equivalent
Note so signed shall be binding on the Canadian Borrowers.

          (k) Each Canadian Tranche Revolving Lender may at any time and from time to time hold, sell,
rediscount or otherwise dispose of any or all Bankers’ Acceptances accepted and purchased by it.

     Section 2.13 Joint and Several Liability of the Borrowers.

     (a) With respect to the US Borrowers, subject to Section 2.14:

     (i) Each of the US Borrowers is accepting joint and several liability hereunder in
consideration of the financial accommodation to be provided by the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each of the US Borrowers and
in consideration of the undertakings of each of the US Borrowers to accept joint and several
liability for the obligations of each of them.

     (ii) Each of the US Borrowers jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other US Borrower with respect to the payment and performance of all of
the obligations arising under this Agreement and the other Loan Documents, it being the
intention of the parties hereto that all of the obligations hereunder and under the other
Loan Documents shall be the joint and several obligations of each of the US Borrowers
without preferences or distinction between them.

     (iii) If and to the extent that either of the US Borrowers shall fail to make any
payment with respect to any of the obligations hereunder as and when due or to perform any
of such obligations in accordance with the terms thereof, then in each such event, the other
US Borrower will make such payment with respect to, or perform, such obligation.

     (iv) The provisions of this Section 2.13(a) are made for the benefit of the
Lenders and their successors and assigns and may be enforced by them from time to time
against either of the US Borrowers as often as occasion therefor may arise and without
requirement on the part of the Lenders first to marshall any of its claims or to exercise
any of its rights against the other US Borrower or to exhaust any remedies available to it
against the other US Borrower or to resort to any other source or means of obtaining payment
of any to the obligations hereunder or to elect any other remedy. The provisions of this
Section 2.13(a) shall remain in effect until all the obligations hereunder shall
have been paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the obligations, is rescinded or must otherwise be
restored or returned by the Lenders upon the insolvency, bankruptcy or reorganization of any
of the US Borrowers, or otherwise, the provisions of this Section 2.13(a) will
forthwith be reinstated an in effect as though such payment had not been made.

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     (v) Notwithstanding any provision to the contrary contained herein or in any of the
other Loan Documents, to the extent the obligations of either US Borrower shall be
adjudicated to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent conveyances or
transfers) then the obligations of such US Borrower hereunder shall be limited to the
maximum amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).

     (vi) Each US Borrower hereby appoints the other US Borrower to act as its agent for all
purposes under this Agreement (including, without limitation, with respect to all matters
relating to the borrowing, conversion, continuance and repayment of Loans and the
applications for the issuance, renewal, extensions or reissuance of a Letter of Credit) and
agrees that (i) any notice or communication delivered by the US Administrative Agent or a
Lender to a US Borrower shall be deemed delivered to both US Borrowers and (ii) the US
Administrative Agent and the Lenders may accept, and be permitted to rely on, any notice,
document, instrument or agreement executed by one US Borrower on behalf of the other US
Borrower.

          (b) With respect to the Canadian Borrowers:

     (i) Each of the Canadian Borrowers is accepting joint and several liability hereunder
in consideration of the financial accommodation to be provided by the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each of the Canadian
Borrowers and in consideration of the undertakings of each of the Canadian Borrowers to
accept joint and several liability for the obligations of each of them.

     (ii) Each of the Canadian Borrowers jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Canadian Borrower with respect to the payment and
performance of all of the obligations of the Canadian Borrowers arising under this
Agreement and the other Loan Documents, it being the intention of the parties hereto that
all of the obligations of the Canadian Borrowers hereunder and under the other Loan
Documents shall be the joint and several obligations of each of the Canadian Borrowers
without preferences or distinction between them.

     (iii) If and to the extent that either of the Canadian Borrowers shall fail to make any
payment with respect to any of the obligations of the Canadian Borrowers hereunder as and
when due or to perform any of such obligations in accordance with the terms thereof, then in
each such event, the other Canadian Borrower will make such payment with respect to, or
perform, such obligation.

     (iv) The provisions of this Section 2.13(b) are made for the benefit of the
Lenders and their successors and assigns and may be enforced by them from time to time
against either of the Canadian Borrowers as often as occasion therefor may arise and without
requirement on the part of the Lenders first to marshall any of its claims or to exercise
any of its rights against the other Canadian Borrower or to exhaust any remedies available
to it against the other Canadian Borrower or to resort to any other source or means of
obtaining payment of any to the obligations of the Canadian Borrowers

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hereunder or to elect
any other remedy. The provisions of this Section 2.13(b) shall remain in effect
until all the obligations of the Canadian Borrowers hereunder shall have been paid in full
or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the obligations, is rescinded or must otherwise be restored or returned by
the Lenders upon the insolvency, bankruptcy or reorganization of either of the Canadian
Borrowers, or otherwise, the provisions of this Section 2.13(b) will forthwith be
reinstated and in effect as though such payment had not been made.

     (v) Notwithstanding any provision to the contrary contained herein or in any of the
other Loan Documents, to the extent the obligations of either Canadian Borrower shall be
adjudicated to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable provincial or federal law relating to fraudulent conveyances or
transfers) then the obligations of such Canadian Borrower hereunder shall be limited to the
maximum amount that is permissible under applicable law (whether federal or provincial and
including, without limitation, the Bankruptcy and Insolvency Act (Canada)).

     (vi) Each Canadian Borrower hereby appoints the other Canadian Borrower to act as its
agent for all purposes under this Agreement (including, without limitation, with respect to
all matters relating to the borrowing, conversion, continuance and repayment of Loans and
the applications for the issuance, renewal, extensions or reissuance of a Letter of Credit)
and agrees that (i) any notice or communication delivered by the Administrative Agents or a
Lender to a Canadian Borrower shall be deemed delivered to both Canadian Borrowers and (ii)
the Administrative Agents and the Lenders may accept, and be permitted to rely on, any
notice, document, instrument or agreement executed by one Canadian Borrower on behalf of the
other Canadian Borrower.

     Section 2.14 Conditions for Holdings to Become Sole US Borrower. Notwithstanding anything
in this Agreement or in the other Loan Documents to the contrary, including without limitation,
Section 2.13(a):

          (a) Holdings shall have the right to elect to become the sole US Borrower after (i) the Debt
described in Sections 10.01(b), (d), (e) and (k) (excluding
performance guaranties and bonds) are refinanced, paid off or assumed by Holdings and UCI is
released from such Debt except for unsecured guaranties by UCI of such Debt and except that UCI may
remain the primary obligor on up to $10,000,000 of such Debt and (ii) UCI shall have executed the
Guarantee and Collateral Agreement guaranteeing the performance and payment obligations of Holdings
under the Loan Documents.

          (b) Holdings shall submit a certificate to the US Administrative Agent substantially in the
form of Exhibit G of its election described in subsection (a) above and upon the delivery
of such certificate Holdings shall irrevocably have all of the rights and obligations of the sole
US Borrower under the Loan Documents (including, without limitation, any Loans made prior to such
notification) and UCI shall be automatically released as a Borrower under this Agreement and the
other Loan Documents, including, without limitation, any Letter of Credit Application.

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     (i) Notwithstanding the use of the term “US Borrowers” as set forth in the Loan
Documents: (i) prior to Holdings having sole rights or obligations as a US Borrower, as set
forth in clause (a) above, the terms “US Borrowers” or “a US Borrower” as used in the Loan
Documents shall mean a reference to Holdings and UCI and (ii) on and after the date that
Holdings becomes the sole US Borrower, in accordance with clause (b) above, the terms “US
Borrowers” or “a US Borrower” as used in the Loan Documents, including without limitation,
any Letter of Credit Application shall only mean a reference to Holdings.

     Section 2.15 Commitment Increase.

     (a) Subject to the conditions set forth in Section 2.15(b)(ii), Section 6.02
and Section 6.04, the US Borrowers may increase the Aggregate US Tranche Commitments and/or
the Aggregate Term Commitments then in effect without the prior written consent of the Lenders (a
“Commitment Increase”) by increasing the applicable commitment of an Applicable Lender or
by causing a Person that at such time is not a Lender to become a Lender (an “Additional
Lender”).

     (b) The increase in the Aggregate US Tranche Commitments and/or the Aggregate Term Commitments
shall be subject to the following additional conditions:

     (i) all such increases shall not exceed $250,000,000 or such lesser amount as reduced
pursuant to Section 2.15(e) for both the Aggregate US Tranche Commitments and the
Aggregate Term Commitments combined;

     (ii) if the US Borrowers elect to increase the Aggregate US Tranche Commitments by
increasing the applicable commitment of a Lender, the US Borrowers and such Lender shall
execute and deliver to the Administrative Agent a certificate substantially in the form of
Exhibit H-1 (a “Commitment Increase Certificate”);

     (iii) if the US Borrowers elect to increase the Aggregate US Tranche Commitments by
causing an Additional Lender to become a party to this Agreement, then the US Borrowers and
such Additional Lender shall execute and deliver to the Administrative Agent a certificate
substantially in the form of the Commitment Increase Certificate and Exhibit H-2 (an
“Additional Lender Certificate”), together with an Administrative Questionnaire, and
the Borrower shall, if requested by the Additional Lender, deliver a Note payable to the
order of such Additional Lender in a Principal Amount equal to its US Tranche Commitment or
Term Commitment, and otherwise duly completed; provided that such Additional Lender must be
reasonably acceptable to the Administrative Agent and the Issuing Bank;

     (iv) if the US Borrowers elect to increase the Aggregate Term Commitments, the US
Borrowers and each Term Loan Lender shall execute and deliver to the US Administrative Agent
a Term Loan Assumption Agreement and such other documentation as the US Administrative Agent
shall reasonably specify to evidence the Term Commitment of such Term Loan Lender. Each
Term Loan Assumption Agreement shall specify the Term Commitments, the Applicable Margins,
the Term Loan Funding Date, and the Term Loan Maturity Date and other terms of the Term
Loans to be made

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thereunder; provided, that no Term Loans shall be made unless (y)
the conditions set forth in Section 6.04 shall be satisfied and (z) the other
closing certificates and documentation as required by the relevant Term Loan Assumption
Agreement shall be delivered. The US Administrative Agent shall promptly notify each Term
Loan Lender as to the effectiveness of each Term Loan Assumption Agreement.

     (v) no Default or Event of Default shall have occurred and be continuing at the
effective date of such increase;

     (vi) on the effective date of such increase, no US Dollar LIBO Rate Borrowings shall be
outstanding or if any US Dollar LIBO Rate Borrowings are outstanding, then the effective
date of such increase shall be the last day of the Interest Period in respect of such US
Dollar LIBO Rate Borrowings unless the Borrower pays compensation required by Section
5.02;

     (vii) no Lender’s US Tranche Commitment or Term Commitment may be increased without the
consent of such Lender; and

     (viii) any increase shall be not less than $50,000,000 and shall be in a whole multiple
of $10,000,000 in excess thereof.

          (c) Subject to acceptance and recording thereof pursuant to Section 2.15(d), from and
after the effective date specified in the Commitment Increase Certificate or the Additional Lender
Certificate (or if any US Dollar LIBO Rate Borrowings are outstanding, then the last day of the
Interest Period in respect of such US Dollar LIBO Rate Borrowings, unless the US
Borrowers have paid compensation required by Section 5.05): (i) the amount of the
Aggregate US Tranche Commitments and/or Aggregate Term Commitments shall be increased as set forth
therein, and (ii) in the case of an Additional Lender Certificate, any Additional Lender party
thereto shall become a party to this Agreement and have the rights and obligations of a Lender
under this Agreement and the other Loan Documents. In addition in connection with an increase of
the Aggregate US Tranche Commitments, the Lender or the Additional Lender, as applicable, shall
purchase a pro rata portion of the outstanding Revolving Loans (and participation interests in
Letters of Credit) of each of the other US Tranche Revolving Lenders (and such Lenders hereby agree
to sell and to take all such further action to effectuate such sale) such that each Lender
(including any Additional Lender, if applicable) shall hold its US Tranche Percentage of the
outstanding Revolving Loans (and participation interests) after giving effect to the increase in
the Aggregate US Tranche Commitments.

          (d) Upon its receipt of a duly completed Commitment Increase Certificate or an Additional
Lender Certificate, executed by the US Borrowers and the Lender or the US Borrowers and the
Additional Lender party thereto, as applicable, the processing and recording fee referred to in
Section 2.15(b)(iii), the Administrative Questionnaire referred to in Section
2.15(b)(iii), if applicable, the other closing certificates and documentation as required by
the Administrative Agent, and the written consent which will not be unreasonably withheld of the
Administrative Agent, and the Issuing Bank to such increase required by Section
2.15(b)(iii), the Administrative Agent shall accept such Commitment Increase Certificate or
Additional Lender Certificate and record the information contained therein in the Register required
to be maintained by the Administrative Agent pursuant to Section 12.05(b)(iv). No increase
in the Aggregate US

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Tranche Commitments and/or the Aggregate Term Commitments shall be effective
for purposes of this Agreement unless it has been recorded in the Register as provided in this
Section 2.15(d).

          (e) Upon the sale of any LP Units, Subordinated Units, IDRs or GP Interests by the US
Borrowers or any Restricted Subsidiaries or upon any sale, exchange or conveyance of Compression
Assets to the UCLP Group resulting in cumulative Net Proceeds exceeding $100,000,000 pursuant to
Section 10.14(b), any unused Commitment Increases will be reduced by an amount equal to 50%
of the Net Proceeds from such sale, exchange or conveyance, such amount to be set forth in
reasonable detail in an officer’s certificate of Holdings delivered promptly or within five (5)
Business Day after the effectiveness of such sale, exchange or conveyance, provided,
however that any sale of LP Units as a result of an over-allotment option pursuant to a
public offering will not be considered a sale that would result in a reduction in the unused
Commitment Increases.

ARTICLE III

Payments of Principal and Interest

     Section 3.01 Repayment of Loans.

          (a) Revolving Loans. On the Revolving Credit Maturity Date the Borrowers shall pay to
the Applicable Administrative Agent, for the account of each Applicable Lender, the outstanding
aggregate principal and accrued and unpaid interest under the Revolving Loans.

          (b) Term Loans. On the Term Loan Maturity Date the US Borrowers shall pay to the US
Administrative Agent, for the account of each Term Loan Lender, the outstanding aggregate principal
and accrued and unpaid interest under the Term Loan.

     Section 3.02 Interest.

          (a) Interest Rates. The Borrowers will pay to the Applicable Administrative Agent,
for the account of each Applicable Lender, interest on the unpaid Principal Amount of each Loan
made by such Lender for the period commencing on the date such Loan is made to, but excluding, the
date such Loan shall be paid in full, at the following rates per annum:

     (i) with respect to the Revolving Credit Facility, if such a Loan is a US Dollar Base
Rate Loan, the US Dollar Base Rate (as in effect from time to time) plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate;

     (ii) with respect to the Revolving Credit Facility, if such a Loan is a US Dollar LIBOR
Loan, for each Interest Period relating thereto, the US Dollar LIBO Rate for such Loan plus
the Applicable Margin (as in effect from time to time), but in no event to exceed the
Highest Lawful Rate;

     (iii) with respect to the Revolving Credit Facility, if such a Loan is a Canadian Prime
Rate Loan, the Canadian Prime Rate (as in effect from time to time) plus the Applicable
Margin, but in no event to exceed the Highest Lawful Rate;

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     (iv) with respect to the Term Loan Facility, if such Loan is a US Dollar Base Rate
Loan, the US Dollar Base Rate (as in effect from time to time) plus the Applicable Margin,
but in no event to exceed the Highest Lawful Rate; and

     (v) with respect to the Term Loan Facility, if such Loan is a US Dollar LIBOR Loan, for
each Interest Period relating thereto, the US Dollar LIBO Rate for such Loan plus the
Applicable Margin, but in no event to exceed the Highest Lawful Rate.

          (b) Canadian Interest.

     (i) For purposes of disclosure under the Interest Act (Canada), where interest is
calculated pursuant Section 3.02(a)(iii) at a rate based upon a 360, 365 or 366 day
year, as the case may be, (the “First Rate”), it is hereby agreed that the rate or
percentage of interest on a yearly basis is equivalent to such First Rate multiplied by the
actual number of days in the year divided by 360, 365 or 366, as applicable.

     (ii) Notwithstanding the provisions of this Section 3.02 or any other provision
of this Agreement, in no event shall the aggregate “interest” (as that term is defined in
Section 347 of the Criminal Code (Canada)) exceed the effective annual rate of interest on
the “credit advanced” (as defined therein) lawfully permitted under Section 347 of the
Criminal Code (Canada). The effective annual rate of interest shall be determined in
accordance with generally accepted actuarial practices and principles over the term of the
applicable Canadian Tranche Loan, and in the event of a dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries qualified for a period of ten (10) years
appointed by the Canadian Administrative Agent and approved by the Canadian Borrowers, such
approval shall not be unreasonably withheld or delayed, will be conclusive for the purposes
of such determination absent manifest error.

     (iii) A certificate of an authorized signing officer of the US Administrative Agent as
to each amount and/or each rate of interest payable hereunder from time to time shall be
conclusive evidence of such amount and of such rate, absent manifest error.

     (iv) Wherever in this Agreement reference is made to a rate of interest “per annum” or
a similar expression is used, such interest shall be calculated using the nominal rate
method of calculation and shall not be calculated using the effective rate method of
calculation or any other basis that gives effect to the principal of deemed reinvestment of
interest.

          (c) Post-Default Rate. Notwithstanding the foregoing, each Borrower will pay to the
Applicable Administrative Agent, for the account of each Applicable Lender interest at the
applicable Post-Default Rate on any principal of any Loan (excluding Bankers’ Acceptances and BA
Equivalent Loans) made by such Lender, and (to the fullest extent permitted by law) on any other
amount payable by each Borrower hereunder, under any Loan Document or under any Note held by such
Lender to or for account of such Lender, for the period commencing on the date of an Event of
Default until the same is paid in full or all Events of Default are cured or waived.

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          (d) Due Dates. Accrued interest on US Dollar Base Rate Loans and Canadian Prime Rate
Loans shall be payable on each Quarterly Date, and accrued interest on each US Dollar LIBOR Loan
shall be payable on the last day of the Interest Period therefor and, if such Interest Period is
longer than three months, at three-month intervals following the first day of such Interest Period,
except that interest payable at the Post-Default Rate shall be payable from time to time on demand
and interest on any US Dollar LIBOR Loan that is converted into a US Dollar Base Rate Loan
(pursuant to Section 5.04) shall be payable on the date of conversion (but only to the
extent so converted). Any accrued and unpaid interest on the Revolving Loans shall be paid on the
Revolving Credit Maturity Date. Any accrued and unpaid interest on the Term Loans shall be paid on
the Term Loan Maturity Date.

          (e) Determination of Rates. Promptly after the determination of any interest rate
provided for herein or any change therein, the US Administrative Agent shall notify the Lenders
(including the Canadian Administrative Agent) to which such interest is payable and the Applicable
Borrower thereof. Each determination by the US Administrative Agent of an interest rate or fee
hereunder shall, except in cases of manifest error, be final, conclusive and binding on the
parties.

ARTICLE IV

Payments; Pro Rata Treatment; Computations; Etc.

     Section 4.01 Payments. Except to the extent otherwise provided herein, all payments of principal, interest and other
amounts to be made by each Borrower under this Agreement and the Notes shall be made in US Dollars
in the case of US Tranche Loans, and in Canadian Dollars or US Dollars, as the case may be, in the
case of Canadian Tranche Loans, in immediately available funds, to the Applicable Administrative
Agent at such account as such Applicable Administrative Agent shall specify by notice to the
Applicable Borrower from time to time, not later than 1:00 p.m. Eastern time on the date on which
such payments shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). Such payments shall be made without
(to the fullest extent permitted by applicable law) defense, set-off or counterclaim. Each such
payment so received by the Applicable Administrative Agent under this Agreement or any Note for
account of a Lender shall be paid promptly to such Lender in immediately available funds. Except
as otherwise provided in the definition of “Interest Period”, if the due date of any payment under
this Agreement or any Note would otherwise fall on a day which is not a Business Day such date
shall be extended to the next succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension. At the time of each payment to the
Applicable Administrative Agent of any principal of or interest on any Borrowing, the Applicable
Borrower shall notify the Applicable Administrative Agent of the Loans to which such payment shall
apply. In the absence of such notice, the Administrative Agents may specify the Loans to which
such payment shall apply, but to the extent possible such payment or prepayment will be applied
first to the Loans comprised of US Dollar Base Rate Loans or Canadian Prime Rate Loans.

     Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided herein, each
Lender agrees that: (a) each Borrowing from the Lenders under Section 2.01 and each
continuation and conversion under Section 2.02 shall be made from the Applicable Lenders
pro rata in accordance with their US Tranche Percentages, Canadian Tranche Percentages or Term

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Loan
Percentages, as the case may be, each payment of fees under Section 2.04 shall be made for
account of the Applicable Lenders pro rata in accordance with such same percentages; (b) each
termination or reduction of the amount of the Aggregate US Tranche Commitments under Section
2.03(b) shall be applied to the US Tranche Commitment of each Applicable Lender, pro rata in
accordance with its US Tranche Percentage; (c) each allocation and reallocation of the Aggregate US
Tranche Commitments and the Canadian Allocated Commitments under Section 2.03(c) shall be
made for the account of each US Tranche Revolving Lender and each Canadian Tranche Revolving Lender
according to its respective Percentage Share; (d) each payment of Commitment Fees under Section
2.04(a) shall be made to each US Tranche Revolving Lender and Canadian Tranche Revolving Lender
in accordance with their respective Percentage Shares; (e) each payment or prepayment of principal
of Loans by each Borrower shall be made for account of the Applicable Lenders pro rata in
accordance with the respective unpaid Principal Amount of the Loans held by the Applicable Lenders;
(f) each payment of interest on Loans by each Borrower shall be made for account of the Applicable
Lenders pro rata in accordance with the amounts of interest due and payable to the respective
Lenders; and (g) each reimbursement by the US Borrowers of disbursements under Letters of Credit
shall be made for account of the Issuing Bank or, if funded by the US Tranche Revolving Lenders,
pro rata for the account of the US Tranche Revolving Lenders, in accordance with the amounts of
reimbursement obligations due and payable to each respective US Tranche Revolving Lender.

     Section 4.03 Computations. Interest on US Dollar LIBOR Loans and fees shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which such interest is payable, unless such calculation would
exceed the Highest Lawful Rate, in which case interest shall be calculated on the per annum basis
of a year of 365 or 366 days, as the case may be. Interest on US Dollar Base Rate Loans shall be
computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in the period for which such
interest is payable. Interest on Canadian Prime Rate Loans shall be computed as provided in
Section 3.02(b).

     Section 4.04 Agent Reliance. Unless the US Administrative Agent shall have received notice
from a Lender before the date of any Borrowing of the proceeds of the Loan that such Lender will
not make available to the Applicable Administrative Agent such Lender’s Percentage Share of such
advance, such Applicable Administrative Agent may assume that such Lender has made its Percentage
Share of such Borrowing available to such Applicable Administrative Agent on the date of such
Borrowing in accordance with Section 2.02(c) and such Applicable Administrative Agent may,
in reliance upon such assumption, make available to the Applicable Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so made its Percentage
Share of such Borrowing available to such Applicable Administrative Agent, such Lender agrees to
immediately pay to such Applicable Administrative Agent on demand such corresponding amount,
together with interest on such amount, for each day from the date such amount is made available to
the Applicable Borrower until the date such amount is paid to the Applicable Administrative Agent,
at the overnight Federal Funds Rate. If such Lender shall pay to the Applicable Administrative
Agent such corresponding amount and interest as provided above, such corresponding amount so paid
shall constitute such Lender’s advance as part of such Borrowing for purposes of this Agreement
even though not made on the same day as the other advances comprising such Borrowing.

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     Section 4.05 Set-off, Sharing of Payments, Etc.

          (a) Each Borrower agrees that, in addition to (and without limitation of) any right of
set-off, bankers’ lien or counterclaim a Lender may otherwise have, each Lender shall have the
right and be entitled (after consultation with the US Administrative Agent), at its option, to
offset balances held by it or by any of its Affiliates for account of the Applicable Borrower at
any of its offices, in US Dollars or in any other currency, against any principal of or interest on
any of such Lender’s Loans, or any other amount payable to such Lender hereunder, which is not paid
when due (including applicable grace periods) (regardless of whether such balances are then due to
such Borrower), in which case it shall promptly notify the Applicable Borrower and the US
Administrative Agent thereof, provided that such Lender’s failure to give such notice shall
not affect the validity thereof.

          (b) If any Lender shall obtain payment of any principal of or interest on any Loan made by it
to a Borrower under this Agreement (or reimbursement as to any Letter of
Credit) through the exercise of any right of set-off, banker’s lien or counterclaim or similar
right or otherwise, and, as a result of such payment, such Lender shall have received a greater
percentage of the principal or interest (or reimbursement) then due hereunder by the Applicable
Borrower to such Lender than the percentage received by any other Applicable Lenders, it shall
promptly (i) notify the US Administrative Agent and each other Lender (including the Canadian
Administrative Agent) thereof and (ii) purchase from such other Applicable Lenders participations
in (or, if and to the extent specified by such Applicable Lender, direct interests in) the Loans
(or participations in Letters of Credit) made by such other Applicable Lenders (or in interest due
thereon, as the case may be) in such amounts, and make such other adjustments from time to time as
shall be equitable, to the end that all the Applicable Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in obtaining or preserving
such excess payment) pro rata in accordance with the unpaid principal and/or interest on the Loans
held by each of the Applicable Lenders (or reimbursements of Letters of Credit). To such end all
the Applicable Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise be restored. Each
Borrower agrees that any Lender so purchasing a participation (or direct interest) in the Loans
made by other Lenders (or in interest due thereon, as the case may be) may exercise all rights of
set-off, banker’s lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans (or Letters of Credit) in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of each Borrower. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu
of a set-off to which this Section 4.05 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner consistent with the
rights of the Applicable Lenders entitled under this Section 4.05 to share the benefits of
any recovery on such secured claim.

          (c) Notwithstanding anything to the contrary contained in this Agreement, the Lenders hereby
agree that they shall not set off any funds in any lock boxes whatsoever in connection with this
Agreement, except for such lock boxes which may be established in connection with this Agreement.

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     Section 4.06 Taxes.

          (a) Payments Free and Clear. Any and all payments by each Borrower hereunder shall be
made, in accordance with Section 4.01, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender, the Issuing Bank and the
Administrative Agents (each a “Recipient”), taxes imposed on (or measured by) its net
income and franchise, margin or similar taxes imposed on it, by (i) any jurisdiction (or political
subdivision thereof) of which such Recipient is a citizen or resident or in which such Lender has
an Applicable Lending Office, (ii) the jurisdiction (or any political subdivision thereof) in which
such Recipient is organized, or (iii) any jurisdiction (or political subdivision thereof) in which
such Recipient is presently doing business which taxes are imposed solely as a result of doing
business in such jurisdiction (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred
to as “Taxes”). For the avoidance of doubt, any withholding taxes imposed by the United
States of America on payments made by any Borrower hereunder shall be included within the
definition of “Taxes.” If any Borrower shall be required by law to deduct any Taxes or Other Taxes
from or in respect of any sum payable hereunder to a Recipient, (A) except as provided in
Section 13.06(b), the sum payable shall be increased by the amount necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section 4.06) such Recipient shall receive an amount equal to the sum it would have
received had no such deductions been made, (B) such Borrower shall make such deductions and (C)
such Borrower shall pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law.

          (b) Other Taxes. In addition, to the fullest extent permitted by applicable law, each
Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this Agreement, any
Assignment or any Security Instrument (hereinafter referred to as “Other Taxes”).

          (c) Indemnification. To the fullest extent permitted by applicable law, the Borrowers
will indemnify each Lender and the Issuing Bank and the Administrative Agents for the full amount
of Taxes and Other Taxes (including, but not limited to, any Taxes or Other Taxes imposed by any
Governmental Authority on amounts payable under this Section 4.06) paid by such Lender, the
Issuing Bank or the Administrative Agents (on their behalf or on behalf of any Lender), as the case
may be, and any liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted unless
the payment of such Taxes was not correctly or legally asserted and such Lender’s payment of such
Taxes or Other Taxes was the result of its or its officers’, employees’, agents’ or
representatives’ gross negligence or willful misconduct. Any payment pursuant to such
indemnification shall be made within thirty (30) days after the date any Lender, the Issuing Bank
or the Administrative Agents, as the case may be, make written demand therefor. If any Lender,
Issuing Bank, the US Administrative Agent or the Canadian Administrative Agent receives a refund or
credit in respect of any Taxes or Other Taxes for which such Lender, Issuing Bank, the US
Administrative Agent or the Canadian Administrative Agent has received payment from the Applicable
Borrower it shall promptly notify the

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Applicable Borrower of such refund or credit and shall, if no
default has occurred and is continuing, within thirty (30) days after receipt of a request by the
Applicable Borrower (or promptly upon receipt, if the Applicable Borrower has requested application
for such refund or credit pursuant hereto), pay an amount equal to such refund or credit to the
Applicable Borrower without interest (but with any interest so refunded or credited),
provided that the Applicable Borrower, upon the request of such Lender, Issuing Bank, the
US Administrative Agent or the Canadian Administrative Agent, agrees to return such refund or
credit (plus penalties, interest or other charges) to such Lender, Issuing Bank, the US
Administrative Agent or the Canadian Administrative Agent in the event such Lender, Issuing Bank or
Administrative Agent is required to repay such refund or credit.

          (d) Lender Representations.

     (i) Each US Lender represents that it is either (A) a “United States person” (as such
term is defined in Code Section 7701(a)(30)) or (B) is entitled to complete exemption from
United States withholding tax imposed on or with respect to any payments, including fees, to
be made to it pursuant to this Agreement (1) under an applicable provision of a tax
convention to which the United States of America is a party, (2) because such US Lender is
not described in Code Sections 871(h)(3) or 881(c)(3), or (3) because it is acting through a
branch, agency or office in the United States of America and any payment to be received by
it hereunder is effectively connected with a trade or business in the United States of
America. Each US Lender that is not a “United States person” (as such term is defined in
Code Section 7701(a)(30)) agrees to provide to the US Borrowers and the US Administrative
Agent on the Closing Date, or on the date of its delivery of the Assignment pursuant to
which it becomes a US Tranche Revolving Lender or Term Loan Lender, and at such other times
as required by United States law or as a US Borrower or the US Administrative Agent shall
reasonably request, two accurate and complete original signed copies of IRS Form W-8BEN,
W-8ECI or W-8IMY (or successor or other applicable forms prescribed by the IRS) certifying
to such US Lender’s entitlement to a complete exemption from United States withholding Tax
on interest payments to be made under this Agreement; provided, however,
that no such US Lender shall be required to deliver an IRS Form W-8BEN, W-8ECI, or W-8IMY to
the extent that the delivery of such form is not authorized by law due to a change in a
Governmental Requirement occurring subsequent to the date on which a form was originally
required to be provided; provided further, however, that in the
event that a US Lender provides the US Borrowers or the US Administrative Agent with an IRS
Form W-8-IMY (or substitute form) indicating that it is a “flow through” entity, as defined
in Treasury Regulations promulgated under Code Section 1441, or otherwise, not a beneficial
owner of interest payments under this Agreement, such US Lender agrees, on or prior to the
Closing Date, or the date of Assignment to such US Lender, as applicable, to take any
actions necessary, and to deliver to the US Borrowers and the US Administrative Agent all
forms necessary, to establish such US Lender’s entitlement to a complete exemption from
United States withholding Tax on payments of interest to be made under this Agreement,
including causing its partners, members, beneficiaries, beneficial owners, and their
beneficial owners, if any, to take any actions and deliver any forms necessary to establish
such exemption. Notwithstanding the foregoing, a withholding foreign partnership,
withholding foreign trust, and qualified intermediary

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shall only provide such information as
is required by Treasury Regulations promulgated under Code Section 1441. For purposes of
this Agreement, the term “forms” shall include any attachments to IRS Forms W-8IMY required
to be filed by the US Lender.

     (ii) Each US Lender that is a “United States person” (as such term is defined in Code
Section 7701(a)(30)) shall provide two properly completed and duly executed copies of IRS
Form W-9, or any successor or other applicable form. Each such US Lender shall deliver to
the US Borrower and the US Administrative Agent (provided that such US Lender
remains lawfully able to do so), two further duly executed copies of such form or statement,
properly completed in all material respects, at or before the time any such form or
statement expires or becomes obsolete, or otherwise as reasonably requested
by the US Borrowers. Each such US Lender shall promptly notify the US Borrowers at any
time it determines that it is no longer in a position to provide any previously delivered
form or statement to the US Borrowers and the US Administrative Agent (or any other form or
statement adopted by U.S. taxing authorities for such purpose).

     (iii) Each US Lender also agrees to deliver to the US Borrowers and the US
Administrative Agent such other or supplemental forms as may at any time be required as a
result of changes in applicable law or regulation in order to confirm or maintain in effect
its entitlement to exemption from United States withholding Tax on any payments hereunder,
provided that the circumstances of such US Lender at the relevant time and
applicable laws permit it to do so. If a US Lender determines, as a result of any change in
either (i) a Governmental Requirement or (ii) its circumstances, that it is unable to submit
any form or certificate that it is obligated to submit pursuant to this Section
4.06, or that it is required to withdraw or cancel any such form or certificate
previously submitted, it shall promptly notify the US Borrowers and the US Administrative
Agent of such fact. Except as provided in Section 4.06(d)(iv), each US Lender
agrees to indemnify and hold harmless the US Borrowers or the US Administrative Agent, as
applicable, from any United States Taxes, penalties, interest and other expenses, costs and
losses incurred or payable by (A) the US Borrowers or the US Administrative Agent as a
result of such US Lender’s failure to submit any form or certificate that it is required to
provide pursuant to this Section 4.06 or (B) the US Borrowers or the US
Administrative Agent as a result of their reliance on any such form or certificate which
such US Lender has provided to them pursuant to this Section 4.06.

     (iv) For any period with respect to which a US Lender has failed to provide the US
Borrowers with the form required pursuant to this Section 4.06, if any (other than
if such failure is due to a change in a Governmental Requirement occurring subsequent to the
date on which a form originally was required to be provided, in which case, such US Lender
shall be entitled to indemnification under this Section 4.06 (including, without
limitation, the right to receive additional amounts pursuant to Section 4.06(a)(A))
and shall not be required to indemnify the US Borrowers or the US Administrative Agent
pursuant to Section 4.06(d)(iii)(A)), such US Lender shall not be entitled to
indemnification under Section 4.06 with respect to Taxes imposed by the United
States which Taxes would not have been imposed but for such failure to provide such forms;
provided, however, that if a US Lender, which is otherwise exempt from or
subject to a reduced rate of withholding Tax, becomes subject to Taxes because of its
failure to

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deliver a form required hereunder, the US Borrowers shall take such steps as such
US Lender shall reasonably request to assist such US Lender to recover such Taxes.

     (v) Any US Lender claiming any additional amounts payable pursuant to this Section
4.06 shall use reasonable efforts (consistent with legal and regulatory restrictions) to
file any certificate or document requested by the US Borrowers or the US Administrative
Agent or to change the jurisdiction of its Applicable Lending Office or to contest any Tax
imposed if the making of such a filing or change or contesting such Tax would avoid the need
for or reduce the amount of any such additional amounts that may thereafter accrue and would
not, in the sole determination of such US Lender, be otherwise disadvantageous to such US
Lender.

     (vi) Each Canadian Tranche Revolving Lender represents that it is (A) either (x) not a
non-resident of Canada for purposes of the Income Tax Act (Canada) or (y) a deemed resident
of Canada for purposes of Part XIII of the Income Tax Act (Canada) and (B) an Affiliate of a
US Tranche Revolving Lender. Each Canadian Tranche Revolving Lender agrees to indemnify and
hold harmless the Canadian Borrowers or the Canadian Administrative Agent, as applicable,
from any Canadian taxes, penalties, interest and other expenses, costs and losses incurred
or payable by the Canadian Borrowers or the Canadian Administrative Agent as a result of its
reliance on any representation in this Section 4.06(d)(vi) (other than if such
misrepresentation is due to a change in a Governmental Requirement occurring subsequent to
the date on which such representation was made, in which case, such Canadian Tranche
Revolving Lender shall be entitled to indemnification under this Section 4.06
(including, without limitation, the right to receive additional amounts pursuant to
Section 4.06(a)(A)) and shall not be required to indemnify the Canadian Borrowers or
the Canadian Administrative Agent pursuant to Section 4.06(d)(vi)).

ARTICLE V

Capital Adequacy

     Section 5.01 Additional Costs.

          (a) Regulations, etc. The Borrowers shall pay directly to each Applicable Lender from
time to time such amounts as such Lender may determine to be necessary to compensate such Lender
for any costs which it determines are attributable to its making or maintaining of any US Dollar
LIBOR Loans, accepting and purchasing Bankers’ Acceptances, making or maintaining BA Equivalent
Loans or issuing or participating in Letters of Credit hereunder or its obligation to make any US
Dollar LIBOR Loans, purchase any Bankers’ Acceptances, make any BA Equivalent Loans or issue or
participate in any Letters of Credit hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any of such US Dollar LIBOR Loans, Bankers’ Acceptances, BA
Equivalent Loans, Letters of Credit or such obligation, resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or
any Note or BA Equivalent Note in respect of any of such US Dollar LIBOR Loans, Bankers’
Acceptances, BA Equivalent Loans or Letters of Credit (other than taxes imposed on the overall net
income of such Lender or of its Applicable Lending Office for any of such US Dollar LIBOR Loans by
the jurisdiction in which such Lender has its principal office or Applicable Lending Office); or

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(ii) imposes or modifies any reserve, special deposit, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or any deposits with or other
liabilities of such Lender, or the US Tranche Commitment, Canadian Allocated Commitment, Term
Commitment or Loans of such Lender or the London interbank market; or (iii) imposes any other
condition affecting this Agreement or any Note or BA Equivalent Note (or any of such extensions of
credit or liabilities) or such Lender’s US Tranche Commitment, Canadian Allocated Commitment, Term
Commitment or Loans. Each Lender will notify the US Administrative Agent and the Applicable
Borrower of any event occurring after the Closing Date which will entitle such Lender to
compensation pursuant to this Section 5.01(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation, and
will designate a different Applicable Lending Office for the Loans of such Lender affected by
such event if such designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Lender, be disadvantageous to such Lender,
provided that such Lender shall have no obligation to so designate an Applicable Lending
Office located in the United States. If any Lender requests compensation from any Borrower under
this Section 5.01(a), such Borrower may, by notice to such Lender, suspend the obligation
of such Lender to make additional Loans of the Type with respect to which such compensation is
requested until the Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.04 shall be applicable).

          (b) Regulatory Change. Without limiting the effect of the provisions of Section
5.01(a), in the event that at any time (by reason of any Regulatory Change or any other
circumstances arising after the Closing Date affecting (i) any Lender, (ii) the London interbank
market or (iii) such Lender’s position in such market), the US Dollar LIBO Rate, as determined in
good faith by such Lender, will not adequately and fairly reflect the cost to such Lender of
funding its US Dollar LIBOR Loans, then, if such Lender so elects, by notice to the US Borrowers
and the US Administrative Agent, the obligation of such Lender to make additional US Dollar LIBOR
Loans shall be suspended until such Regulatory Change or other circumstances ceases to be in effect
(in which case the provisions of Section 5.04 shall be applicable).

          (c) Capital Adequacy. Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Borrowers shall pay directly to any Applicable
Lender from time to time on request such amounts as such Lender may reasonably determine to be
necessary to compensate such Lender or its parent or holding company for any costs which it
determines are attributable to the maintenance by such Lender or its parent or holding company (or
any Applicable Lending Office), pursuant to any Governmental Requirement following any Regulatory
Change, of capital in respect of its US Tranche Commitments, its Canadian Allocated Commitments,
its Term Commitments, its Note, its Loans or any interest held by it in any Letter of Credit, such
compensation to include, without limitation, an amount equal to any reduction of the rate of return
on assets or equity of such Lender or its parent or holding company (or any Applicable Lending
Office) to a level below that which such Lender or its parent or holding company (or any Applicable
Lending Office) could have achieved but for such Governmental Requirement. Such Lender will notify
the Applicable Borrower that it is entitled to compensation pursuant to this Section
5.01(c) as promptly as practicable after it determines to request such compensation.

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          (d) Compensation Procedure. Any Lender notifying the Applicable Borrower of the
incurrence of additional costs under this Section 5.01 shall in such notice to such
Borrower and the US Administrative Agent set forth in reasonable detail the basis and amount of its
request for compensation. Determinations and allocations by each Lender for purposes of this
Section 5.01 of the effect of any Regulatory Change pursuant to Section 5.01(a) or
(b), or of the effect of capital maintained pursuant to Section 5.01(c), on its
costs or rate of return of maintaining Loans or its obligation to make Loans or issue Letters of
Credit, or on amounts receivable by it in respect of Loans or Letters of Credit, and of the amounts
required to compensate such Lender under this Section 5.01, shall be conclusive and binding
for all purposes, provided that such determinations and allocations are made on a
reasonable basis. Any
request for additional compensation under this Section 5.01 shall be paid by the
Applicable Borrower within thirty (30) days of the receipt by such Borrower of the notice described
in this Section 5.01(d).

     Section 5.02 Limitation on US Dollar LIBOR Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any US Dollar LIBO Rate for any Interest
Period:

          (a) the US Administrative Agent determines (which determination shall be conclusive, absent
manifest error) that quotations of interest rates for the relevant deposits referred to in the
applicable definition of “US Dollar LIBO Rate” in Section 1.02 are not being
provided in the relevant amounts or for the relevant maturities for purposes of determining rates
of interest for US Dollar LIBOR Loans as provided herein; or

          (b) the US Administrative Agent determines (which determination shall be conclusive, absent
manifest error) that the relevant rates of interest referred to in the applicable definition of
“US Dollar LIBO Rate” in Section 1.02 upon the basis of which the rate of interest
for US Dollar LIBOR Loans for such Interest Period is to be determined are not sufficient to
adequately cover the cost to the Lenders of making or maintaining US Dollar LIBOR Loans;

then the US Administrative Agent shall give the US Borrowers prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to make additional US
Dollar LIBOR Loans.

     Section 5.03 Illegality. Notwithstanding any other provision of this Agreement, in the
event that it becomes unlawful for any Lender or its Applicable Lending Office to honor its
obligation to make or maintain US Dollar LIBOR Loans hereunder, then such Lender shall promptly
notify the US Borrowers thereof and such Lender’s obligation to make US Dollar LIBOR Loans shall be
suspended until such time as such Lender may again make and maintain US Dollar LIBOR Loans (in
which case the provisions of Section 5.04 shall be applicable).

     Section 5.04 US Dollar Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03. If the
obligation of any Lender to make US Dollar LIBOR Loans shall be suspended pursuant to Sections
5.01, 5.02 or 5.03 (“Affected Loans”), all Affected Loans which would
otherwise be made by such Lender shall be made instead as US Dollar Base Rate Loans (and, if an
event referred to in Section 5.01(b) or Section 5.03 has occurred and such Lender
so requests by notice to the US Borrowers, all Affected Loans of such Lender then outstanding shall
be automatically converted into US Dollar Base Rate Loans on the date specified by the Lender in
such notice)

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and, to the extent that Affected Loans are so made as (or converted into) US Dollar
Base Rate Loans, all payments of principal which would otherwise be applied to such Lender’s
Affected Loans shall be applied instead to its respective US Dollar Base Rate Loans.

     Section 5.05 Compensation.

          (a) The Borrowers shall pay to each Applicable Lender within thirty (30) days of receipt of
written request of such Lender (which request shall set forth, in reasonable detail, the basis for
requesting such amounts and which shall be conclusive and binding for all purposes provided
that such determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender determines are
attributable to:

     (i) any payment, prepayment or conversion of a US Dollar LIBOR Loan properly made by
such Lender or any Borrower for any reason (including, without limitation, the acceleration
of the Loans pursuant to Section 11.02) on a date other than the last day of the
Interest Period for such Loan; or

     (ii) any failure by a Borrower for any reason (including but not limited to, the
failure of any of the conditions precedent specified in ARTICLE VI to be satisfied)
to borrow, continue or convert a US Dollar LIBOR Loan from such Lender on the date for such
Borrowing, continuation or conversion specified in the relevant notice given pursuant to
Section 2.02(c).

Without limiting the effect of the preceding sentence, such compensation shall include an amount
equal to the excess, if any, of (A) the amount of interest which would have accrued on the
Principal Amount so paid, prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date specified for such Borrowing) at the applicable rate of interest for
such Loan provided for herein over (B) the interest component of the amount such Lender would have
bid in the London interbank market for US Dollar deposits of leading banks in amounts comparable to
such Principal Amount and with maturities comparable to such period (as reasonably determined by
such Lender).

          (b) In the event of (i) the payment of any Principal Amount of any BA Equivalent Loan or
Bankers’ Acceptance other than on the applicable BA Maturity Date (including as a result of an
Event of Default), (ii) the continuation of any BA Equivalent Loan other than on the applicable BA
Maturity Date, (iii) the failure to borrow any such Bankers’ Acceptance or borrow or continue BA
Equivalent Loan on the date specified in any notice delivered pursuant hereto, (iv) the assignment
of any BA Equivalent Loan or Bankers’ Acceptance other than on the applicable BA Maturity Date as a
result of a request by the Canadian Borrowers, then, in any such event, the Canadian Borrowers
shall compensate each Applicable Lender for the loss, cost and expense attributable to such event.
A certificate of any such Lender setting forth any amount or amounts that such Lender is entitled
to receive pursuant to this Section 5.05(b) shall be delivered to the Canadian Borrowers
and the Administrative Agents and shall be conclusive absent manifest error. The Canadian
Borrowers shall pay such Lender the amount shown as due on any such certificate within thirty (30)
days after receipt

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thereof. Notwithstanding anything to the contrary contained herein, nothing in
this Section  5.05(b) shall be construed as giving rise to any right of the Canadian Borrowers to
prepay any Bankers’ Acceptance or BA Equivalent Loan.

     Section 5.06 Replacement Lenders.

          (a) If any Lender has notified the Borrowers and the US Administrative Agent of its incurring
additional costs under Section 5.01 or has required the Borrowers to make payments for
Taxes under Section 4.06, then the Borrowers may, unless such Lender has notified the
Borrowers and the US Administrative Agent that the circumstances giving rise to such notice no
longer apply, terminate, in whole but not in part, the US Tranche Commitment, Canadian Allocated
Commitment and Term Loans, if any, of any Lender (other than the Administrative Agents) (the
“Terminated Lender”) at any time upon five (5) Business Days’ prior written notice to the
Terminated Lender and the US Administrative Agent (such notice referred to herein as a “Notice
of Termination”).

          (b) In order to effect the termination of the US Tranche Commitment, the Canadian Allocated
Commitment and the Term Loans, as applicable, of the Terminated Lender, the Borrowers shall: (i)
obtain an agreement with one or more Lenders to increase their US Tranche Commitment or US Tranche
Commitments, their Canadian Allocated Commitment or Canadian Allocated Commitments and their Term
Loans, as applicable and/or (ii) request any one or more other banking institutions to become
parties to this Agreement in place and instead of such Terminated Lender and agree to accept such
commitment or commitments; provided, however, that such one or more other banking
institutions are reasonably acceptable to the Administrative Agents and become parties by executing
an Assignment and that any replacement of a terminated Canadian Tranche Revolving Lender shall
satisfy the Canadian residency requirements of a Canadian Tranche Revolving Lender (the Lenders or
other banking institutions that agree to accept in whole or in part the US Tranche Commitment,
Canadian Allocated Commitment and Term Loans, if any, of the Terminated Lender being referred to
herein as the “Replacement Lenders”), such that the aggregate increased and/or accepted
commitments and the Term Loans of the Replacement Lenders under clauses (i) and (ii) above equal
the US Tranche Commitment, the Canadian Allocated Commitment and the Term Loans, if any, of the
Terminated Lender.

          (c) The Notice of Termination shall include the name of the Terminated Lender, the date the
termination will occur (the “Lender Termination Date”), and the Replacement Lender or
Replacement Lenders to which the Terminated Lender will assign its US Tranche Commitment, Canadian
Allocated Commitment and Term Loans, if any, and, if there will be more than one Replacement
Lender, the portion of the Terminated Lender’s US Tranche Commitment, Canadian Allocated Commitment
and Term Loans, if any, to be assigned to each Replacement Lender.

          (d) On the Lender Termination Date (i) the Terminated Lender shall by execution and delivery
of an Assignment assign its US Tranche Commitment, Canadian Allocated Commitment and Term Loans, if
any, to the Replacement Lender or Replacement Lenders (pro rata, if there is more than one
Replacement Lender, in proportion to the portion of the Terminated Lender’s US Tranche Commitment,
Canadian Allocated Commitment and Term
Loans, if any, to be assigned to each Replacement Lender) indicated in the Notice of

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Termination and shall assign to the Replacement Lender or Replacement Lenders each of its Loans (if
any) then outstanding and participation interests in Letters of Credit (if any) then outstanding
pro rata as aforesaid, (ii) the Terminated Lender shall endorse its Note(s), Bankers’ Acceptances
and BA Equivalent Notes, payable without recourse, representation or warranty to the order of the
Replacement Lender or Replacement Lenders (pro rata as aforesaid), (iii) the Replacement Lender or
Replacement Lenders shall purchase the Note(s), Bankers’ Acceptances and BA Equivalent Notes held
by the Terminated Lender (pro rata as aforesaid) at a price equal to the unpaid Principal Amount
thereof plus interest and facility and other fees accrued and unpaid to the Lender Termination
Date, and (iv) the Replacement Lender or Replacement Lenders will thereupon (pro rata as aforesaid)
succeed to and be substituted in all respects for the Terminated Lender with like effect as if
becoming a Lender pursuant to the terms of Section 13.06(b), and the Terminated Lender will
have the rights and benefits of an assignor under Section 13.06(b). To the extent not in
conflict, the terms of Section 13.06(b) shall supplement the provisions of this Section
5.06(d). For each Assignment made under this Section 5.06, the Replacement Lender
shall pay to the Applicable Administrative Agent the processing fee provided for in Section
13.06(b). The Borrowers will be responsible for the payment of any breakage costs incurred in
connection with the sale of Loans by Terminated Lenders to Replacement Lenders, as if such Loans
had been prepaid and breakage costs had accrued thereto in accordance with Section 5.05.

ARTICLE VI

Conditions Precedent

     Section 6.01 Effectiveness.

     The effectiveness of this Agreement and the obligation of the Lenders to make Revolving Loans
and of the Issuing Banks to issue Letters of Credit are subject to the receipt by the US
Administrative Agent and the Lenders of all fees payable pursuant to Section 2.04 on or
before the Closing Date and the receipt by the US Administrative Agent of the following documents
and satisfaction of the other conditions provided in this Section 6.01, each of which shall
be satisfactory to the US Administrative Agent in form and substance:

          (a) A certificate of the Secretary or an Assistant Secretary of UCI setting forth (i)
resolutions of its board of directors with respect to the authorization of UCI to execute and
deliver the Loan Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of UCI (A) who are authorized to sign the Loan Documents to
which UCI is a party and (B) who will, until replaced by another officer or officers duly
authorized for that purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and (iv) the articles or
certificate of incorporation and bylaws, certified as being true and complete. The Administrative
Agents and the Lenders may conclusively rely on such certificate until the Administrative Agents
receive notice in writing from UCI to the contrary.

          (b) A certificate of the Secretary or an Assistant Secretary of UC Canadian Holdings setting
forth (i) resolutions of its board of directors with respect to the authorization of UC Canadian
Holdings to execute and deliver the Loan Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of UC Canadian

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Holdings (A) who are
authorized to sign the Loan Documents to which UC Canadian Holdings is a party and (B) who will,
until replaced by another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and other communications in
connection with this Agreement and the transactions contemplated hereby, (iii) specimen signatures
of the authorized officers, and (iv) the articles or certificate of amalgamation or its equivalent
and bylaws or its equivalent, certified as being true and complete. The Administrative Agents and
the Lenders may conclusively rely on such certificate until the Administrative Agents receive
notice in writing from UC Canadian Holdings to the contrary.

          (c) A certificate of the Secretary or an Assistant Secretary of UC Canadian Holdings, on
behalf of Universal Canada setting forth (i) resolutions of the partners of Universal Canada with
respect to the authorization of Universal Canada to execute and deliver the Loan Documents to which
it is a party and to enter into the transactions contemplated in those documents, (ii) the officers
of UC Canadian Holdings who, on behalf of Universal Canada, (A) are authorized to sign the Loan
Documents to which Universal Canada is a party and (B) will, until replaced by another officer or
officers duly authorized for that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection with this Agreement and the
transactions contemplated hereby, (iii) specimen signatures of the authorized officers, and (iv)
the limited partnership agreement and bylaws or its equivalent, certified as being true and
complete. The Administrative Agents and the Lenders may conclusively rely on such certificate
until the Administrative Agents receive notice in writing from Universal Canada to the contrary.

          (d) A certificate of the Secretary or an Assistant Secretary of Holdings setting forth (i)
resolutions of its board of directors with respect to the authorization of Holdings to execute and
deliver the Loan Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of Holdings (A) who are authorized to sign the Loan Documents
to which Holdings is a party and (B) who will, until replaced by another officer or officers duly
authorized for that purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and (iv) the articles or
certificate of incorporation and bylaws, certified as being true and complete. The Administrative
Agents and the Lenders may conclusively rely on such certificate until the Administrative Agents
receive notice in writing from Holdings to the contrary.

          (e) A certificate of the Secretary or an Assistant Secretary (or its equivalent) of each
Subsidiary party to a Loan Document, setting forth (i) resolutions of its board of directors (or
its equivalent) with respect to the authorization of such Subsidiary to execute and deliver the
Loan Documents to which it is a party and to enter into the transactions contemplated in those
documents, (ii) the officers (or its equivalent) of such Subsidiary (A) who are authorized to sign
the Loan Documents to which such Subsidiary is a party and (B) who will, until replaced by another
officer or officers (or its equivalent) duly authorized for that purpose, act as its representative
for the purposes of signing documents and giving notices and other
communications in connection with this Agreement and the transactions contemplated hereby,
(iii) specimen signatures of the authorized officers (or its equivalent), and (iv) the Organization
Documents, certified as being true and complete. The Administrative Agents and the Lenders

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may
conclusively rely on such certificate until they receive notice in writing from any Borrower or
such Subsidiary to the contrary.

          (f) Certificates of the appropriate state agencies with respect to the existence,
qualification and good standing of UCI, Holdings and each Subsidiary party to a Loan Document.

          (g) A compliance certificate which shall be substantially in the form of Exhibit C-1,
duly and properly executed by a Responsible Officer of each US Borrower and dated as of the Closing
Date.

          (h) (i) A counterpart of this Agreement signed on behalf of each party hereto or (ii) written
evidence satisfactory to the US Administrative Agent (which may include telecopy or electronic
transmission of a signed signature page of this Agreement) that such party has signed a counterpart
of this Agreement.

          (i) The Revolving Notes duly completed and executed for each Lender that has requested a
Revolving Note.

          (j) The Security Instruments, including those described on Exhibit D, duly completed
and executed in sufficient number of counterparts for recording, if necessary.

          (k) An opinion of Gardere Wynne Sewell LLP, counsel to the US Borrowers and the Subsidiaries
party to a Loan Document, in form and substance satisfactory to the US Administrative Agent, as to
such matters incident to the transactions herein contemplated and as the US Administrative Agent
may reasonably request.

          (l) A summary of insurance coverage of the US Borrowers evidencing that each US Borrower is
carrying insurance in accordance with Section 7.19.

          (m) Copies of Requests for Information or Copies (Form UCC-11) or equivalent commercially
obtained reports, listing all effective financing statements which name any of Holdings or any
Subsidiary party to a Loan Document (under their present names and any previous names) as debtor
and which are filed in all jurisdictions in which such Persons are organized, together with copies
of such financing statements.

          (n) A borrowing notice in the form of Exhibit B-1, or Exhibit B-2, as
applicable duly completed and executed by the Applicable Borrower.

          (o) A Letter of Credit Application pertaining to each new Letter of Credit to be issued on the
Closing Date, if any, duly completed and executed by the US Borrowers.

          (p) All costs, fees, expenses (including, without limitation, reasonable legal fees and
expenses and recording taxes and fees) and other compensation contemplated by this Agreement and
the other Loan Documents, and for which statements or invoices have been
submitted to the US Borrowers, payable to the Lenders through the Closing Date shall have been
paid.

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          (q) Except as set forth on Schedule 6.01(q), all Property in which the US
Administrative Agent shall, at such time, be entitled to have a Lien pursuant to this Agreement or
any other Security Instrument shall have been physically delivered to the possession of the US
Administrative Agent or any bailee accepted by the US Administrative Agent to the extent that such
possession is necessary for the purpose of perfecting the US Administrative Agent’s Lien in such
Collateral.

          (r) Each document (including any Uniform Commercial Code financing statement) required by this
Agreement or under law or reasonably requested by the US Administrative Agent to be filed,
registered or recorded in order to create in favor of the US Administrative Agent, for the benefit
of the Lenders, a perfected Lien on the Collateral described therein prior and superior in right to
any other Person (other than Permitted Liens), shall be in proper form for filing, registration or
recordation.

          (s) Concurrently with the initial funding of the Revolving Loans, the US Borrowers shall have
repaid the Existing Credit Agreement and all of the agreements evidencing and securing such Debt
shall have been terminated and the related financing statements released, amended or assigned as
required by the US Administrative Agent.

          (t) The public offering of UCLP described in the S-1 shall have occurred.

          (u) Such other documents as the US Administrative Agent or any Lender or special counsel to
the US Administrative Agent may reasonably request.

     Section 6.02 Loans and Letters of Credit. The obligation of the Lenders to make Revolving
Loans to each of the Borrowers upon the occasion of each Revolving Borrowing hereunder and to
issue, renew, extend, increase or reissue Letters of Credit and to accept and purchase Bankers’
Acceptances for the account of the US Borrowers is subject to the further conditions precedent
that:

          (a) no Default shall have occurred and be continuing;

          (b) no Material Adverse Effect shall have occurred and be continuing; and

          (c) the representations and warranties made by each Borrower in ARTICLE VII and
ARTICLE VIII and in the Security Instruments shall be true on and as of the date of the
making of such Revolving Loans or issuance, renewal, extension, increase or reissuance of a Letter
of Credit with the same force and effect as if made on and as of such date and following such new
Revolving Borrowing, except to the extent any such representations and warranties are expressly
limited to an earlier date, in which case, on and as of the date of such Revolving Borrowing or the
date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct as of such specified earlier
date or the Majority Lenders may expressly consent in writing to the contrary.

Each request for a Revolving Borrowing by the Borrowers or issuance, renewal, extension, increase
or reissuance of a Letter of Credit by the US Borrowers or for the acceptance and purchase of a
Bankers’ Acceptance hereunder shall constitute a certification by such Borrower to

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the effect set
forth in Section 6.02(c) (both as of the date of such notice and, unless such Borrower
otherwise notifies the US Administrative Agent prior to the date of and immediately following such
Revolving Borrowing or issuance, renewal, extension or reissuance of a Letter of Credit as of the
date thereof).

     Section 6.03 Conditions Precedent for the Benefit of Lenders. All conditions precedent to
the obligations of the Lenders to make any Loan are imposed hereby solely for the benefit of the
Lenders, and no other Person may require satisfaction of any such condition precedent or be
entitled to assume that the Lenders will refuse to make any Loan in the absence of strict
compliance with such conditions precedent.

     Section 6.04 Conditions Precedent to the Term Loans and Commitment Increases. The
obligation of the Term Loan Lenders to make Term Loans and the US Tranche Lenders to make
Commitment Increases under this Agreement is subject to the receipt by the US Administrative Agent,
the Term Loan Lenders and the US Tranche Lenders of all fees payable by written agreement among the
US Borrowers and the Administrative Agent on or before the applicable Term Loan Funding Date or the
date on which any Commitment Increase shall be effective, as applicable, and the receipt by the US
Administrative Agent of the following documents and satisfaction of the other conditions provided
in this Section 6.04, each of which shall be reasonably satisfactory to the US
Administrative Agent in form and substance:

          (a) All reasonable costs, fees, expenses (including, without limitation, legal fees and
expenses and recording taxes and fees) and other compensation contemplated by this Agreement and
the other Loan Documents payable to the Term Loan Lenders through the Term Loan Funding Date and to
the US Tranche Lenders through the effective date of any Commitment Increase, as applicable, to the
extent invoices and statements have been received, shall have been paid.

          (b) The Notes duly completed and executed for each Lender that has requested a Term Note or a
Revolving Note.

          (c) Each document (including any Uniform Commercial Code financing statement) required by the
Security Instruments then in effect or under law or reasonably requested by the US Administrative
Agent to be filed, registered or recorded in order to create in favor of the US Administrative
Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior
and superior in right to any other Person (other than Permitted Liens), all of which shall be in
proper form for filing, registration or recordation.

          (d) All conditions required by Section 6.01(a), (d), (e), (f),
(g), (k), (n) and (p) as they relate to the new Term Loan and
Commitment Increases shall be repeated as if set forth herein.

          (e) Such other documents as the US Administrative Agent or any Lender or special counsel to
the US Administrative Agent may reasonably request.

     Section 6.05 No Waiver. No waiver of any condition precedent shall preclude the US
Administrative Agent or the Lenders from requiring such condition to be met prior to making

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any subsequent Revolving Loan or preclude the Lenders from thereafter declaring that the failure of
such Borrower to satisfy such condition precedent constitutes a Default.

     Section 6.06 Canadian Tranche Borrowings. The obligation of the Lenders to make the
initial Canadian Tranche Loan to the Canadian Borrowers under this Agreement is subject to the
receipt by the Applicable Administrative Agent of the following documents:

          (a) An opinion of Cox Hanson O’Reilly Matheson, Nova Scotia, counsel to the Canadian
Borrowers, in form and substance reasonably satisfactory to the US Administrative Agent, as to such
matters incident to the transactions herein contemplated and as the US Administrative Agent may
reasonably request.

ARTICLE VII

Representations and Warranties of US Borrowers

     Each US Borrower represents and warrants with respect to itself, as applicable, to each of the
Administrative Agents and the Lenders (each representation and warranty herein is given as of the
Closing Date and shall be deemed repeated and reaffirmed on the dates of each Borrowing and
issuance, renewal, extension or reissuance of a Letter of Credit as provided in Section
6.02):

     Section 7.01 Legal Existence. With respect to itself and each of its Material
Subsidiaries: (a) is a legal entity duly organized, legally existing and in good standing (if
applicable) under the laws of the jurisdiction of its current organization, except as permitted by
Section 10.08; (b) has all requisite power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification necessary and where
failure so to qualify would result in a Material Adverse Effect.

     Section 7.02 Financial Condition. With respect to Holdings, the audited consolidated
balance sheet of Holdings and its Consolidated Subsidiaries as at December 31, 2005 and the related
consolidated statement of income, stockholders’ equity and cash flow of Holdings and its
Consolidated Subsidiaries for the fiscal year ended on said date, with the opinion thereon of
Deloitte Touche heretofore furnished to each of the Lenders and the unaudited consolidated balance
sheet of Holdings and its Consolidated Subsidiaries as at June 30, 2006 and their related
consolidated statements of income, stockholders’ equity and cash flow of Holdings and its
Consolidated Subsidiaries for the
six (6) month period ended on such date heretofore furnished to the US Administrative Agent, are
complete and correct and fairly present the consolidated financial condition of Holdings and its
Consolidated Subsidiaries as at said dates and the results of its operations for the fiscal year
and the six (6) month period on said dates in all material respects, all in accordance with GAAP,
as applied on a consistent basis (subject, in the case of the interim financial statements, to
normal year-end adjustments). Neither Holdings nor any of its Subsidiaries has on the Closing Date
any material Debt, contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in the Financial Statements or in Schedule 7.02.
Since December 31, 2005, there has been no change or event having a Material Adverse Effect.

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     Section 7.03 Litigation. Except as disclosed to the Lenders in Schedule 7.03
hereto, at the Closing Date there is no litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to its knowledge threatened against or
affecting it or any of its Subsidiaries which involves the possibility of any judgment or liability
against it or any of its Subsidiaries which would reasonably be expected to have a Material Adverse
Effect.

     Section 7.04 No Breach. Neither the execution and delivery of the Loan Documents, nor
compliance with the terms and provisions hereof will conflict with or result in a breach of, or
require any consent which has not been obtained as of the Closing Date under, the respective
charter or by-laws of it or any of its Restricted Subsidiaries, or any Governmental Requirement or
any agreement or instrument to which it or any of its Restricted Subsidiaries is a party or by
which it is bound or to which it or its Properties are subject, or constitute a default under any
such agreement or instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of it or any of its Restricted Subsidiaries pursuant to the terms of any such
agreement or instrument other than the Liens created by the Loan Documents.

     Section 7.05 Authority. It and each of its Restricted Subsidiaries have all necessary
power and authority to execute, deliver and perform its obligations under the Loan Documents to
which it is a party; and the execution, delivery and performance by it and each Restricted
Subsidiary of the Loan Documents to which it is a party, have been duly authorized by all necessary
action on its part; and the Loan Documents constitute the legal, valid and binding obligations of
it and each of its Restricted Subsidiaries, enforceable in accordance with their terms, except to
the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors’ rights and by
equitable principles (regardless of whether enforcement is sought in equity or at law).

     Section 7.06 Approvals. No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority are necessary for the execution, delivery or
performance by it or any of
its Restricted Subsidiaries of the Loan Documents or for the validity or enforceability thereof,
except for the recording and filing of the Security Instruments as required by this Agreement.

     Section 7.07 Use of Loans.

          (a) Revolving Loans. The US Borrowers will use the proceeds of the Revolving Loans
and Letters of Credit for refinancing of debt, working capital, letters of credit and other general
corporate purposes not in contravention of any Governmental Requirement or of any Loan Document.

          (b) Term Loans. The US Borrowers will use the proceeds of the Term Loans for
repayment of Debt and general corporate purposes not in contravention of any Governmental
Requirement or of any Loan Document.

          (c) Margin Stock. No US Borrower is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of Regulation T,

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U or X of the
Board of Governors of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to buy or carry any margin stock.

     Section 7.08 ERISA. No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events for which liability is reasonably expected to
occur, could reasonably be expected to result in a Material Adverse Effect. The present value of
all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $100,000 the fair market value of
the assets of such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $100,000 the fair market value of the assets of all such underfunded
Plans.

     Section 7.09 Taxes. Except as set out in Schedule 7.09, it and its Domestic
Subsidiaries have filed all United States Federal income tax returns and all other tax returns
which are required to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by it or any of its Domestic Subsidiaries, except where the
failure to file such tax returns and pay such taxes would not result in a liability in excess of
$5,000,000 in the aggregate. The charges, accruals and reserves on the books of it and its
Domestic Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the
US Borrowers, adequate. No tax lien has been filed and, to the knowledge of the US Borrowers, no
claim is being asserted with respect to any such tax, fee or other charge which would result in a
liability in excess of $5,000,000 in the aggregate.

     Section 7.10 Titles, Etc.

          (a) Except as set out in Schedule 7.10, it and its Restricted Subsidiaries have good
and marketable title to their material Properties, (i) except in cases where the failure to have
said good and marketable title would not result in a Material Adverse Effect and (ii) free and
clear of all Liens, except Liens permitted by Section 10.02.

          (b) All leases and agreements necessary for the conduct of the business of it and its
Restricted Subsidiaries are valid and subsisting, in full force and effect and there exists no
default or event or circumstance which with the giving of notice or the passage of time or both
would give rise to a default under any such lease or agreement and which default, event or
circumstance would result in a Material Adverse Effect.

     Section 7.11 No Material Misstatements. No written information, statement, exhibit,
certificate, document or report furnished to the Administrative Agents and the Lenders (or any of
them) by it or any of its Restricted Subsidiaries in connection with the negotiation of this
Agreement, including the Offering Memorandum, or delivered hereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or omits to state a
material fact necessary to make the statements contained therein not materially misleading in the
light of the circumstances in which made and with respect to it and its Restricted Subsidiaries
taken as a whole. To each US Borrower’s knowledge, there is no fact peculiar to it or any of its
Restricted Subsidiaries which has a Material Adverse Effect and which

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has not been set forth in
this Agreement or the other documents, certificates and statements furnished to the Administrative
Agents by or on behalf of it or any of its Restricted Subsidiaries or otherwise prior to, or on,
the Closing Date in connection with the transactions contemplated hereby.

     Section 7.12 Investment Company Act. Neither it nor any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company,” within the meaning of
the Investment Company Act of 1940, as amended.

     Section 7.13 Reserved.

     Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14, as of the Closing
Date, it has no Subsidiaries.

     Section 7.15 Location of Business and Offices. Each US Borrower’s principal place of
business and chief executive office is located at the addresses stated on the signature page of
this Agreement.

     Section 7.16 Defaults. Neither it nor any of its Restricted Subsidiaries is in material
default nor has any event or circumstance occurred which, but for the expiration of any applicable
grace period or the giving of notice, or both, would constitute a material default under any
material agreement or instrument to which it or any of its Restricted Subsidiaries is a party or by
which it or any of its Restricted Subsidiaries is bound, which default would result in a Material
Adverse Effect. No Default hereunder has occurred and is continuing.

     Section 7.17 Environmental Matters. Except (a) as provided in a notice to all Lenders or
(b) as would not have a Material Adverse Effect:

     (i) Neither any Property of it or any of its Subsidiaries nor the operations conducted
thereon violate any order or requirement of any court or Governmental Authority or any
Environmental Laws;

     (ii) Without limitation of clause (i) above, no Property of it or any of its
Subsidiaries nor the operations currently conducted thereon or, to the best knowledge of it,
by any prior owner or operator of such Property or operation, are in violation of or subject
to any existing, pending or threatened action, suit, investigation, inquiry or proceeding by
or before any court or Governmental Authority or to any remedial obligations under
Environmental Laws;

     (iii) All notices, permits, licenses or similar authorizations, if any, required to be
obtained or filed in connection with the operation or use of any and all Property of it and
each of its Subsidiaries, including without limitation past or present treatment, storage,
disposal or release of a hazardous substance or solid waste into the environment, have been
duly obtained or filed, and it and each of its Subsidiaries are in compliance with the terms
and conditions of all such notices, permits, licenses and similar authorizations;

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     (iv) All hazardous substances, solid waste, and oil and gas exploration and production
wastes, if any, generated at any and all Property of it or any of its Subsidiaries have in
the past been transported, treated and disposed of in accordance with Environmental Laws and
so as not to pose an imminent and substantial endangerment to public health or welfare or
the environment, and, to the best knowledge of it, all such transport carriers and treatment
and disposal facilities have been and are operating in compliance with Environmental Laws
and so as not to pose an imminent and substantial endangerment to public health or welfare
or the environment, and are not the subject of any existing, pending or threatened action,
investigation or inquiry by any Governmental Authority in connection with any Environmental
Laws;

     (v) It has taken all steps reasonably necessary to determine and has determined that no
hazardous substances, solid waste, or oil and gas exploration and production wastes, have
been disposed of or otherwise released and there has been no threatened release of any
hazardous substances on or to any Property of it or any of its
Subsidiaries except in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the environment;

     (vi) To the extent applicable, all Property of it and each of its Subsidiaries
currently satisfies all design, operation, and equipment requirements imposed by the OPA or
scheduled as of the Closing Date to be imposed by OPA during the term of this Agreement, and
it does not have any reason to believe that such Property, to the extent subject to OPA,
will not be able to maintain compliance with the OPA requirements during the term of this
Agreement; and

     (vii) Neither it nor any of its Subsidiaries has any known contingent liability in
connection with any release or threatened release of any oil, hazardous substance or solid
waste into the environment.

     Section 7.18 Compliance with the Law. Neither it nor any of its Subsidiaries has violated
any Governmental Requirement or failed to obtain any license, permit, franchise or other
governmental authorization necessary for the ownership of any of its Properties or the conduct of
its business, which violation or failure would (in the event such violation or failure were
asserted by any Person through appropriate action) result in a Material Adverse Effect.

     Section 7.19 Insurance. The notice provided to all Lenders contains an accurate
description of all material policies of fire, liability, workmen’s compensation and other forms of
insurance owned or held by it and each Material Subsidiary and Material Foreign Subsidiary. All
such policies are in full force and effect, all premiums with respect thereto covering all periods
up to and including the Closing Date have been paid, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which it or any Material Subsidiary is a
party; are valid, outstanding and enforceable policies; provide adequate insurance coverage in at
least such amounts and against at least such risks (but including in any event public liability) as
are usually insured against in the same general area by companies engaged in the same or a similar
business for the assets and operations of it and each Restricted Subsidiary; will remain in full
force and effect through the respective dates set forth in the binders for said insurance without
the payment of additional premiums; and will not in any way be affected by,

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or terminate or lapse
by reason of, the transactions contemplated by this Agreement. Neither it nor any Material
Subsidiary has been refused any insurance with respect to its assets or operations, nor has its
coverage been limited below usual and customary policy limits, by an insurance carrier to which it
has applied for any such insurance or with which it has carried insurance during the last three
years.

     Section 7.20 Hedging Agreements. Schedule 7.20 sets forth, as of the Closing Date,
a true and complete list of all Hedging Agreements (including commodity price swap agreements,
forward agreements or contracts of sale which provide for prepayment for deferred shipment or
delivery of oil, gas or other commodities) of it and each of its Restricted Subsidiaries or issued
pursuant to the ABS Facility,
the material terms thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value thereof, all credit support agreements relating
thereto (including any margin required or supplied), and the counter party to each such agreement.

     Section 7.21 Restriction on Liens. Except as set forth on Schedule 7.21, neither
it nor any of its Restricted Subsidiaries is a party to any agreement or arrangement (other than
this Agreement and the Security Instruments), or subject to any order, judgment, writ or decree,
which either restricts or purports to restrict its ability to grant Liens pursuant to this
Agreement and the Security Instruments to other Persons on or in respect of its material
Properties.

ARTICLE VIII

Representations and Warranties of Canadian Borrowers

     The Canadian Borrowers represent and warrant to each of the Administrative Agents and the
Lenders (each representation and warranty herein is given as of the Closing Date and shall be
deemed repeated and reaffirmed on the dates of each Borrowing as provided in Section 6.02)
with respect to the Canadian Tranche:

     Section 8.01 Legal Existence. The Canadian Borrowers: (a) (i) in the case of Universal
Canada, it is a legally existing limited partnership and in good standing under the laws of the
jurisdiction of its current organization, and (ii) in the case of UC Canadian Holdings, it is a
legal entity duly organized, legally existing and in good standing (if applicable) under the laws
of the jurisdiction where it is currently organized; (b) have all requisite power, and have all
material governmental licenses, authorizations, consents and approvals necessary to own their
assets and carry on their business as now being or as proposed to be conducted; and (c) are
qualified to do business in all jurisdictions in which the nature of the business conducted by them
makes such qualification necessary and where failure so to qualify would result in a Material
Adverse Effect.

     Section 8.02 No Breach. Neither the execution and delivery of the Loan Documents nor
compliance with the terms and provisions hereof will conflict with or result in a breach of, or
require any consent which has not been obtained as of the Closing Date under, the constituting
documents of the Canadian Borrowers, or any Governmental Requirement or any agreement or instrument
to which the Canadian Borrowers are a party or by which they are bound or to which they or their
Properties are subject, or constitute a default under any such agreement or instrument, or result
in the creation or imposition of any Lien upon any of the revenues or assets of the Canadian
Borrowers pursuant to the terms of any such agreement or instrument other than the Liens created by
the Loan Documents.

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     Section 8.03 Authority. The Canadian Borrowers have all necessary power and authority to execute, deliver and perform
their obligations under the Loan Documents to which they are a party; and the execution, delivery
and performance by the Canadian Borrowers of the Loan Documents to which they are a party, have
been duly authorized by all necessary action on their part; and the Loan Documents constitute the
legal, valid and binding obligations of the Canadian Borrowers, enforceable in accordance with
their terms, except to the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether enforcement is sought in
equity or at law).

     Section 8.04 Approvals. No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority are necessary for the execution, delivery or
performance by the Canadian Borrowers of the Loan Documents or for the validity or enforceability
thereof.

     Section 8.05 Defaults. The Canadian Borrowers are not in material default nor has any
event or circumstance occurred which, but for the expiration of any applicable grace period or the
giving of notice, or both, would constitute a material default under any material agreement or
instrument to which the Canadian Borrowers are a party or by which the Canadian Borrowers are
bound, which default would result in a Material Adverse Effect.

     Section 8.06 Income Tax Act (Canada). Each Canadian Borrower is either not a non-resident
of Canada for purposes of the Income Tax Act (Canada) or is deemed a resident of Canada for
purposes of Part XIII of the Income Tax Act (Canada).

     Section 8.07 Use of Loans. The Canadian Borrowers will use the proceeds of the Revolving
Loans for working capital, letters of credit and other general corporate purposes not in
contravention of any Governmental Requirement or of any Loan Document.

ARTICLE IX

Affirmative Covenants

     Holdings and, to the extent applicable, UCI covenants and agrees that, so long as any of the
Aggregate Commitments are in effect and until payment in full of all Loans hereunder, all interest
thereon and all other amounts payable by the Borrowers hereunder:

     Section 9.01 Reporting Requirements. It shall deliver, or shall cause to be delivered, to
the US Administrative Agent:

          (a) Financial Statements. (i) Within 30 days after the same is required to be filed
with the SEC or any successor agency (but in any event within 90 days of the end of each
fiscal year of Holdings), a copy of each annual report and any amendment to a report filed
with the SEC or any successor agency pursuant to Section 13 or 15(d) of the Exchange Act (currently
Form 10-K), as the same may be amended from time to time, (ii) within 30 days after the same is
required to be filed with the SEC or any successor agency (but in any event within 60 days after
the end of each of the first three fiscal quarters of Holdings), a copy of each quarterly report
and any amendment to any quarterly report filed with the SEC or any successor agency pursuant to
Section 13 or 15(d) of the Exchange Act (currently Form 10-Q), as the same may be amended,

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from time to time and (iii) promptly after the same become available, but in any event within 15 days
following the date the same are required to be filed with the SEC, all other reports, notices,
proxy statements or other documents that are distributed by Holdings to its shareholders and all
regular and periodic final reports (including, without limitation, reports on Form 8-K) filed by
Holdings with the SEC, which are publicly available; provided, however, that the US
Borrowers shall be deemed to have furnished the information required by this Section
9.01(a) if Holdings shall have timely made the same available on “EDGAR” and/or on its home
page on the worldwide web (at the date of this Agreement located at
http://www.universalcompression.com); provided, further, however, that if the US
Administrative Agent is unable to access EDGAR or Holdings’ home page on the worldwide web, the US
Borrowers agree to provide the US Administrative Agent with paper copies of the information
required to be furnished pursuant to this Section 9.01(a) promptly following notice from
the US Administrative Agent.

          (b) Budget, Projections. Within 90 days following the end of each fiscal year of
Holdings, a copy of the projections of the operating budget and cash flow budget of Holdings and
its Subsidiaries prepared on a consolidated basis for the succeeding fiscal year, such projections
to be accompanied by a certificate of a Responsible Officer to the effect that such projections
have been prepared on the basis of reasonable assumptions and that such Responsible Officer has no
reason to believe they are incorrect or misleading in any material respect.

          (c) Notice of Default, Etc. Promptly after any Borrower knows that any Default or
Material Adverse Effect has occurred, a notice of such Default or Material Adverse Effect,
describing the same in reasonable detail and the action such Borrower proposes to take with respect
thereto, and at the US Administrative Agent’s option, a copy of the notice of such Default or
Material Adverse Effect.

          (d) Management Letters. Promptly after it or any Material Subsidiary’s receipt
thereof, a copy of any “management letter” addressed to the board of directors of it or such
Material Subsidiary from its certified public accountants and any internal control memoranda
relating thereto.

          (e) Other Matters. From time to time such other information regarding the business,
affairs or financial condition of it or any Material Subsidiary (including, without limitation, any
Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA)
as the US Administrative Agent may reasonably request.

          (f) Rating Change. Promptly after Moody’s or S&P shall have announced a change in the
Index Debt Rating, a notice of such change describing the same in detail.

          (g) Labor Disputes. Promptly upon becoming aware of any labor dispute which would
result in a Material Adverse Effect, a notice of such dispute describing same in detail and the
action such US Borrower proposes to take with respect thereto.

          (h) Compliance Certificate. The US Borrowers, within ten (10) Business Days of any
deemed delivery of any annual report or quarterly report pursuant to paragraph (a) above, will
furnish to the US Administrative Agent (i) a certificate substantially in the form of Exhibit C-2
executed by a Responsible Officer of one of the US Borrowers (A) certifying as to the matters set
forth therein and stating that no Default has occurred and is continuing (or, if any

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Default has
occurred and is continuing, describing the same in reasonable detail) and (B) setting forth in
reasonable detail the computations necessary to determine whether the US Borrowers are in
compliance with Section 10.13(a), (b) and (c) as of the end of the
respective fiscal quarter or fiscal year; and (ii) a report, in form and substance satisfactory to
the US Administrative Agent, setting forth as of such Quarterly Date a true and complete list of
all Hedging Agreements (including commodity price swap agreements, forward agreements or contracts
of sale which provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of it, each of its Restricted Subsidiaries or pursuant to the ABS Facility, the
material terms thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value therefor, any new credit support agreements
relating thereto not listed on Schedule 7.20, any margin required or supplied under any
credit support document, and the counter party to each such agreement.

          (i) Consolidating Financials. With the delivery or deemed delivery of the financial
statements required by Section 9.01(a), the US Borrowers shall deliver consolidating
information with respect to the Unrestricted Subsidiaries.

     Section 9.02 Litigation. It shall promptly give to the US Administrative Agent notice of
any litigation or governmental investigation or proceeding pending against it or any of its
Subsidiaries which would result in a Material Adverse Effect.

     Section 9.03 Maintenance, Etc.

          (a) Generally. Except as otherwise permitted by Section 10.08, it shall and
shall cause each Material Subsidiary to: preserve and maintain its legal entity existence and all
of its material rights, privileges, franchises, patents, trademarks, copyrights and licenses; keep
books of record and account in which full, true and correct entries will be made of all dealings or
transactions in relation to its business and activities; comply with all Governmental Requirements
if failure to comply with such requirements will have a Material Adverse Effect; pay and discharge
all taxes, assessments and governmental charges or levies imposed on it or on its income or profits
or on any of its Property prior to the date on which penalties attach thereto, except for any such
tax, assessment, charge or levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained in accordance with GAAP; upon
reasonable notice, permit representatives of the Administrative Agents, during normal business
hours, to examine, copy and make extracts from its books and
records, to inspect its Properties, and to discuss its business and affairs with its officers,
all to the extent reasonably requested by such Administrative Agent.

          (b) Proof of Insurance. It shall and shall cause each Material Subsidiary to
maintain, with financially sound and reputable insurance companies, insurance policies which (i)
are sufficient for compliance with all requirements of law and of all agreements to which it or any
Material Subsidiary is a party; (ii) are valid, outstanding and enforceable policies; and (iii)
provide adequate insurance coverage in at least such amounts and against at least such risks (but
including in any event public liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business for the assets and operations of it and each
Material Subsidiary. Within 30 days after the renewal thereof, the US Borrower will furnish or
cause to be furnished to the US Administrative Agent a certificate of insurance coverage from

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the
insurer in form and substance satisfactory to the US Administrative Agent and, if requested, will
furnish the US Administrative Agent copies of the applicable policies.

          (c) Operation of Properties. It will and will cause each of its Restricted
Subsidiaries to operate its Properties or cause such Properties to be operated in a careful and
efficient manner (i) in compliance with the practices of the industry, (ii) in compliance with all
applicable contracts and agreements and (iii) in compliance in all material respects with all
Governmental Requirements, except where the noncompliance therewith would not result in a Material
Adverse Effect.

     Section 9.04 Environmental Matters.

          (a) Establishment of Procedures. It will and will cause each of its Subsidiaries to
establish and implement such procedures as may be reasonably necessary to continuously determine
and assure that any failure of the following does not have a Material Adverse Effect: (i) all
Property of it and its Subsidiaries and the operations conducted thereon and other activities of it
and its Subsidiaries are in compliance with and do not violate the requirements of any
Environmental Laws, (ii) no oil, hazardous substances or solid wastes are disposed of or otherwise
released on or to any Property owned by any such party except in compliance with Environmental
Laws, (iii) no hazardous substance will be released on or to any such Property in a quantity equal
to or exceeding that quantity which requires reporting pursuant to Section 103 of CERCLA, and (iv)
no oil, oil and gas exploration and production wastes or hazardous substance is released on or to
any such Property so as to pose an imminent and substantial endangerment to public health or
welfare or the environment.

          (b) Notice of Action. The US Borrowers will promptly notify the US Administrative
Agent in writing of any threatened action, investigation or inquiry by any Governmental Authority
of which such US Borrower has knowledge in connection with any Environmental Laws, which would
result in a Material Adverse Effect.

     Section 9.05 Further Assurances. It will and will cause each of its Restricted
Subsidiaries to cure promptly any defects in the creation and issuance of the Notes and the
execution and delivery of the Security Instruments
and this Agreement. It at its expense will and will cause each of its Restricted Subsidiaries to
promptly execute and deliver to the Applicable Administrative Agent upon request all such other
documents, agreements and instruments to comply with or accomplish the covenants and agreements of
it or any of its Restricted Subsidiaries, as the case may be, in the Security Instruments and this
Agreement, or to further evidence and more fully describe the collateral intended as security for
the Notes, or to correct any omissions in the Security Instruments, or to state more fully the
security obligations set out herein or in any of the Security Instruments, or to perfect, protect
or preserve any Liens created pursuant to any of the Security Instruments, or to make any
recordings, to file any notices or obtain any consents, all as may be reasonably necessary or
appropriate in connection therewith.

     Section 9.06 Performance of Obligations. The Borrowers will pay their Notes according to
the reading, tenor and effect thereof; and it will and will cause each of its Subsidiaries to do
and perform every act and discharge all of the obligations to be performed and discharged by them
under the Security Instruments and this Agreement, at the time or times and in the manner
specified.

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     Section 9.07
Reserved.

     Section 9.08
Reserved.

     Section 9.09
Collateral.

          (a) Guarantees and Collateral. It shall and it shall cause each Subsidiary Guarantor
to grant a Lien pursuant to the Security Instruments on substantially all of its Properties located
in the United States now owned or at any time hereafter acquired by it or a Subsidiary Guarantor,
including, without limitation, all Equipment, Accounts, Chattel Paper, Documents, General
Intangibles, Instruments, Inventory, the real property related to the US Borrowers’ chief executive
offices located at 4444 Brittmoore Road, Houston, Texas 77041; provided that the foregoing
shall not require the creation or perfection of pledges of, security interests in or mortgages on,
with respect to (A) any real property that has a value of less than $7,500,000, (B) the GP
Interests and IDRs, (C) any Property as provided on Schedule 9.09 or (D) any Property that
in the judgment of the Administrative Agent, the cost of creating or perfecting such pledges,
security interests or mortgages on such Property would be excessive in view of the benefits to be
obtained by the Lenders therefrom, provided further that it and any Subsidiary
Guarantor will have ninety (90) days to perfect Liens on real Property acquired in an acquisition
(subject to the limitations set forth above). It shall promptly cause each Significant Domestic
Subsidiary now existing or hereafter formed or acquired to, guarantee the Indebtedness pursuant to
the execution and delivery of the Guaranty Agreement or a supplement thereto. UCI will guarantee
the Indebtedness pursuant to the execution and delivery of the Guaranty Agreement or a supplement
thereto on or before the date that Holdings becomes the sole
Borrower pursuant to Section 2.14. Holdings shall cause to be pledged by the
appropriate Person (i) all of the certificated Capital Stock of each Domestic Subsidiary (excluding
any ABS Subsidiary involved in the ABS Facility), (ii) all LP Units and Subordinated Units in UCLP,
the Capital Stock in the General Partner and the Capital Stock in the owners of the General Partner
and (iii) 65% of the certificated Capital Stock of each first tier Foreign Subsidiary (including,
without limitation, to the extent certificated, delivery of original stock certificates or other
certificates evidencing the Capital Stock of such Domestic Subsidiary or 65% of the Capital Stock
of such Foreign Subsidiary, together with an appropriate undated stock power for each certificate
duly executed in blank by the registered owner thereof) and execute and deliver such other
additional documents and certificates as shall reasonably be requested by the US Administrative
Agent.

          (b) Releases. The US Borrowers and the Subsidiary Guarantors 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; provided
that so long as the lien in favor of the US Administrative Agent continues in the proceeds of such
sale, lease, assignment, conveyance, transfer or other disposal of such Collateral, or to the
extent such Collateral is sold, leased, assigned, conveyed, transferred or otherwise disposed of to
any Borrower or any Subsidiary Guarantor, such lien continues in such Collateral. All Collateral
shall be released upon either Holding’s or UCI’s long-term unsecured non-enhanced debt receiving
(i) an investment grade rating from Moody’s or S&P and a rating no lower than one notch below
investment grade from the other agency and (ii) a stable outlook or better from both Moody’s and
S&P.

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     Section 9.10 Notice of an ERISA Event. It will promptly furnish to the US Administrative
Agent written notice of the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in liability of it and its
Subsidiaries in an aggregate amount exceeding $100,000.

     Section 9.11 Ownership of the General Partner. It shall maintain at all times, directly or
indirectly, a majority of the legal and beneficial ownership and majority voting control of the
General Partner.

ARTICLE X

Negative Covenants

     Holdings and, to the extent applicable, UCI covenants and agrees that, so long as any of the
Aggregate Revolving Commitments and Aggregate Term Commitments are in effect and until payment in
full of Loans hereunder, all interest thereon and all other amounts payable by the Borrowers
hereunder, without the prior written consent of the Majority Lenders:

     Section 10.01 Debt. Neither it nor any of its Restricted Subsidiaries will incur, create,
assume or permit to exist any Debt, except:

          (a) the Notes, the BA Equivalent Notes, the Bankers’ Acceptances or other Indebtedness or any
guaranty of or suretyship arrangement for the Notes, the BA Equivalent Notes, the Bankers’
Acceptances or other Indebtedness;

          (b) Debt (including unfunded commitments) of it or its Subsidiaries existing on the Closing
Date which is reflected on the Financial Statements or is disclosed in Schedule 10.01, and
any renewals, extensions, refinancings and modifications (but not increases) thereof with financial
covenants no more restrictive than those existing on the Closing Date, including Debt with respect
to the ABS Facility subject to the Intercreditor Agreement, not to exceed $225,000,000 in the
aggregate; provided that no US Borrower or any Domestic Subsidiary other than the ABS
Subsidiaries is liable for such Debt;

          (c) accounts payable (for the deferred purchase price of Property or services) from time to
time incurred in the ordinary course of business which, if greater than 60 days past due, are being
contested in good faith by appropriate proceedings if reserves adequate under GAAP shall have been
established therefor;

          (d) Debt of it and its Restricted Subsidiaries under Hedging Agreements which are for bona
fide business purposes and are not speculative;

          (e) other Debt of it and its Domestic Subsidiaries; provided that (A) no Default or
Event of Default (both before and after giving pro forma effect to the incurrence of such Debt)
exists and is continuing, (B) the maturity of such Debt is at least six (6) months after the
Revolving Credit Maturity Date and the Term Loan Maturity Date, (C) the Weighted Average Life to
Maturity of such Debt is greater than the number of years (calculated to the nearest one-twelfth)
to the Revolving Credit Maturity Date and the Term Loan Maturity Date and (D) such Debt has terms
substantially similar to those customary in high-yield facilities;

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          (f) Debt for borrowed money meeting the qualifications set forth in Section 10.01(e)
assumed by Holdings or one of its Restricted Subsidiaries, or of a Restricted Subsidiary of
Holdings acquired, pursuant to an acquisition or merger permitted pursuant to the terms of this
Agreement; provided that up to $100,000,000 of such Debt outstanding at any time does not
need to meet the qualifications of Section 10.01(e)(B), (C) and (D);

          (g) Debt evidenced by Capital Lease Obligations and Purchase Money Indebtedness;
provided that in no event shall the aggregate principal amount of Capital Lease Obligations
and Purchase Money Indebtedness permitted by this clause (g) exceed $30,000,000 at any time
outstanding;

          (h) Debt with respect to surety bonds, appeal bonds or customs bonds required in the ordinary
course of business or in connection with the enforcement of rights or claims of Holdings or any of
its Restricted Subsidiaries or in connection with judgments that do not result in a Default or an
Event of Default, provided that the aggregate outstanding amount of all cash surety bonds,
appeal bonds and custom bonds permitted by this clause (h) shall not at any time exceed
$25,000,000;

          (i) Debt of any Foreign Subsidiary used for such Foreign Subsidiary’s and/or its Foreign
Subsidiaries’ working capital and general business purposes not to exceed
$100,000,000; provided that no more than $50,000,000 in the aggregate of such Debt
shall be Debt which is other than Non-Recourse Foreign Debt;

          (j) Debt of any US Borrower owed to any Restricted Subsidiary and any Debt owed by any
Restricted Subsidiary owed to any US Borrower or to any other Restricted Subsidiary; and

          (k) other Debt not to exceed $25,000,000 in the aggregate.

     Section 10.02 Liens. Neither it nor any of its Restricted Subsidiaries will create, incur,
assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired),
except (herein referred to as “Permitted Liens”):

          (a) Liens arising under the Security Instruments securing the payment of any Indebtedness;

          (b) Liens disclosed on Schedule 10.02;

          (c) Excepted Liens;

          (d) Liens on Property held or pledged in connection with the ABS Facility, provided
that such Liens do not extend to or cover any Property of Holdings or any of its Restricted
Subsidiaries other than the Property of ABS Subsidiaries involved in the ABS Facility;

          (e) Liens relating to Debt permitted under Sections 10.01(e), (f) or
(k) provided that the aggregate amount of Debt secured by such Liens shall not
exceed $100,000,000 in the aggregate; provided further that such Liens permitted
under Section 10.01(f) do not extend

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to or cover any Property other than the Property that
secured such Debt prior to the time it was acquired or assumed; provided further
that the Liens securing the Capital Lease Obligations and Purchase Money Indebtedness must only
encumber the Property under lease or purchased;

          (f) Liens on assets of Foreign Subsidiaries under Foreign Credit Facilities; and

          (g) Liens securing Capital Lease Obligations and Purchase Money Indebtedness allowed under
Section 10.01(g), but only on the Property under lease or purchased.

     Section 10.03 Investments. Neither it nor any of its Restricted Subsidiaries will make any
Investments in any Person, except that, so long as no Event of Default has occurred and is
continuing, the foregoing restriction shall not apply to:

          (a) Investments reflected in the financial statements described in Section 7.02 or
which are disclosed to the Lenders in Schedule 10.03;

          (b) accounts receivable arising in the ordinary course of business;

          (c) direct obligations of the United States or Canada or any agency thereof, or obligations
guaranteed by the United States or Canada or any agency thereof, in each case maturing within one
year from the date of creation thereof;

          (d) commercial paper maturing within one year from the date of creation thereof rated no lower
than A2 or P2 as such rating is set forth by S&P or Moody’s, respectively;

          (e) deposits maturing within one year from the date of creation thereof with, including
certificates of deposit issued by, any Lender or any office located in the United States or Canada
of any other bank or trust company which is organized under the laws of the United States or any
state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000.00 (as
of the date of such Lender’s or bank or trust company’s most recent financial reports) and has a
short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to time,
by S&P or Moody’s, respectively;

          (f) deposits in money market funds which invest 95% or more of its funds in Investments
described in Section 10.03(c), 10.03(d) or 10.03(e);

          (g) payroll advances and employee loans up to $5,000,000;

          (h) Investments by it or by any of its Restricted Subsidiaries in any other Restricted
Subsidiary or in it;

          (i) Investments otherwise permitted by Sections 10.01 or 10.14;

          (j) other Investments not to exceed $25,000,000 in the aggregate;

          (k) except for Investments in the General Partner permitted under Section 10.03(m),
Investments in Unrestricted Subsidiaries so long as after giving effect to such Investment, the
Senior Secured Leverage Ratio is less than 3.5 to 1.0 for the most recent Testing

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Period at such
time. For purposes of this Section 10.03(k), the Senior Secured Leverage Ratio shall
include any Senior Secured Debt incurred to make such Investment;

          (l) Investments in connection with any acquisition of wholly-owned assets, business units or
companies; provided, however, that (A) such wholly-owned assets, business units or
companies shall not be materially different than the lines of business of the US Borrowers’ and
their Restricted Subsidiaries, (B) such acquisition shall not be a hostile take over of a company
and (C) both before and after giving pro forma effect to such acquisition and the Debt incurred to
make such acquisition, no Default or Event of Default shall exist and be continuing; and

          (m) Investments in GP Interests to maintain its two percent (2%) investment in UCLP.

     Section 10.04 Dividends, Distributions and Redemptions. Holdings will not declare or pay any dividend, purchase, redeem or otherwise acquire for value
any of its Capital Stock now or hereafter outstanding, return any capital to its stockholders or
make any distribution of their assets to its stockholders; except that so long as there shall exist
no Default or Event of Default (both before and after giving effect to the payment thereof),
Holdings may declare or pay any dividend, purchase, redeem or otherwise acquire for value any of
its stock now or hereafter outstanding, return any capital to its stockholders or make any
distribution of their assets to its stockholders so long as the Senior Secured Leverage Ratio is
less than 3.5 to 1.0 for the most recent Testing Period at such time. For purposes of this
Section 10.04, the Senior Secured Leverage Ratio shall include any Senior Secured Debt
incurred to make such dividend, purchase, redemption or acquisition.

     Section 10.05 Reserved

     Section 10.06 Nature of Business. Neither it nor any Material Subsidiary will allow any
material change to be made in the character of its business.

     Section 10.07 Reserved.

     Section 10.08 Mergers, Etc. Neither it nor any of its Restricted Subsidiaries will merge
into or with or consolidate with any other Person, or sell, lease, assign, exchange, convey or
transfer except as permitted under Section 10.14 (whether in one transaction or in a series
of transactions) all or substantially all of its Property or Capital Stock of any of its Restricted
Subsidiaries to any other Person except that (a) any Restricted Subsidiary of it may be merged into
or consolidated with or sell, lease, assign, exchange, convey or transfer of all or substantially
all of its Property to (i) a US Borrower, so long as a US Borrower is the surviving business
entity, or (ii) another Restricted Subsidiary of Holdings, (b) it or UCI, as applicable may merge
into or consolidate with any Person provided, in each case (i) immediately thereafter and giving
effect thereto, no event shall occur and be continuing which constitutes a Default or Event of
Default and (ii) it or UCI, as applicable is the surviving business entity and (c) any Restricted
Subsidiary of it may liquidate, dissolve or sell so long as it determines in good faith that such
liquidation, dissolution or sale is in the best interest of it.

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     Section 10.09 Proceeds of Notes; Letters of Credit. The Borrowers will not permit the
proceeds of the Notes, the Bankers’ Acceptances, the BA Equivalent Notes or Letters of Credit to be
used for any purpose other than those permitted by Sections 7.07 or 8.07. Neither
US Borrower nor any Person acting on behalf of either US Borrower has taken or will take any action
which might cause any of the Loan Documents to violate Regulation T, U or X or any other regulation
of the Board of Governors of the Federal
Reserve System or to violate Section 7 of the Exchange Act or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.

     Section 10.10 Reserved.

     Section 10.11 Sale or Discount of Receivables. Neither it nor any of its Restricted
Subsidiaries will discount or sell (with or without recourse) any of its notes receivable or
accounts receivable, except in the ordinary course of business.

     Section 10.12
Fiscal Year Change. It will not permit any change in its fiscal year.

Section 10.13 Certain Financial Covenants.

          (a) Interest Coverage Ratio. It will not permit Interest Coverage Ratio as of the end
of any Testing Period to be less than 2.50 to 1.00.

          (b) Total Leverage Ratio. It will not permit its Total Leverage Ratio to be greater
than 5.00 to 1.00; provided that during any Testing Period in which the ratio of Domestic
Compression EBITDA to Adjusted EBITDA is less than 55%, it will not permit such ratio to exceed
4.50 to 1.00.

          (c) Senior Secured Leverage Ratio. It will not permit its Senior Secured Leverage
Ratio to be greater than 5.00 to 1.00; provided that during any Testing Period in which the
ratio of Domestic Compression EBITDA to Adjusted EBITDA is less than 55%, it will not permit such
ratio to be greater than 4.00 to 1.00; provided further that during any Testing
Period in which the ratio of Domestic Compression EBITDA to Adjusted EBITDA is less than 45%, it
will not permit such ratio to be greater than 3.50 to 1.00.

     Section 10.14 Sale of Properties. It will not, and will not permit any of its Restricted
Subsidiaries to, sell, lease, assign, exchange, convey or transfer (excluding the granting of a
Lien) any Property to any Person other than to it or to any of its Restricted Subsidiaries, except
it and any of its Restricted Subsidiaries:

          (a) may sell or otherwise dispose of any Property which, in the reasonable judgment of such
Person, is obsolete, worn out or otherwise no longer useful in the conduct of such Person’s
business;

          (b) may sell, lease, assign, exchange, convey or transfer inventory or equipment in the
ordinary course of business (including any sale, lease, assignment, exchange, conveyance or
transfer of Compression Assets to the UCLP Group pursuant to the Omnibus Agreement);
provided, however, that when any sales, exchanges or conveyances result in the US
Borrowers and the Restricted Subsidiaries receiving more than
$100,000,000 in Net Proceeds on

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a cumulative basis, fifty percent (50%) of Net Proceeds received in excess of $100,000,000 shall be
applied to reduce the Aggregate Revolving Commitments as provided in Section 2.03(a) and
the unused Commitment Increase as provided in Section 2.15(e). Notwithstanding the
foregoing to the contrary, sales in accordance with Section 10.14(e) shall not apply to
this Section 10.14(b).

          (c) may sell, lease, assign, exchange, convey or otherwise transfer Compression Assets to an
ABS Subsidiary so that it may become collateral for the ABS Facility;

          (d) so long as no Event of Default has occurred and is continuing, may sell or otherwise
dispose of Property having a value of up to 5% of the Consolidated Net Tangible Assets of it in any
fiscal year;

          (e) may sell Compression Assets to one or more members of the UCLP Group; provided
that for any sale of more than $100,000,000 of Compression Assets not otherwise permitted by
Section 10.14(b) (i) if the sales price for the Compression Assets is less than 7 times the
EBITDA of Holdings and its Consolidated Subsidiaries for the last 4 quarters attributable to such
assets, the US Borrowers will deliver to the Lenders a fairness opinion from a Person reasonably
acceptable to the US Administrative Agent with respect to the value of the consideration of such
sale, (ii) in the event any fairness opinion is delivered to its board of directors in connection
with such sale, a copy of which will be delivered to the Lenders, (iii) at least 30% of the value
for such sale will be in LP Units conveyed to the US Borrowers or their Restricted Subsidiaries
which units will be pledged as Collateral and (iv) no Default or Event of Default will occur after
giving effect to such sale on a pro forma basis;

          (f) may sell LP Units, IDRs, Subordinated Units and GP Interests, subject to the provisions of
Section 2.03(a) and Section 2.15(e);

          (g) may sell all or substantially all of the Property or Capital Stock of any ABS Subsidiary
to any Person comprising the UCLP Group; provided, however, (i) if the sales price
for the Capital Stock is less than 7 times the EBITDA of Holdings and its Consolidated Subsidiaries
for the last 4 quarters attributable to such ABS Subsidiary, the US Borrowers will deliver to the
Lenders a fairness opinion from a Person reasonably acceptable to the US Administrative Agent with
respect to the value of the consideration of such sale, (ii) in the event any fairness opinion is
delivered to its board of directors in connection with such sale, a copy of which will be delivered
to the Lenders, (iii) at least 30% of the value for such sale will be in LP Units conveyed to the
US Borrowers or their Restricted Subsidiaries which units will be pledged as Collateral and (iv) no
Default or Event of Default will occur after giving effect to such sale on a pro forma basis; and

provided that (i) with respect to (d) and (f) above, (y) fair market value is received and
(z) no Default or Event of Default will occur after giving effect to such sale on a pro forma basis
and (ii) with respect to (f) above, Holdings maintains, directly or indirectly, majority legal and
beneficial ownership and voting control of the General Partner, including the GP Interests and the
IDRs.

     Section 10.15 Environmental Matters. Neither it nor any of its Subsidiaries will cause or permit any of its Property to be in
violation of, or do anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental

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Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and circumstances, if any, pertaining to
such Property where such violations or remedial obligations would have a Material Adverse Effect.

     Section 10.16 Transactions with Affiliates. Except as set forth on Schedule 10.16,
neither it nor any of its Restricted Subsidiaries will enter into any transaction, including,
without limitation, any purchase, sale, lease, assignment, exchange, conveyance or transfer of
Property or the rendering of any service, with any Affiliate unless such transactions are otherwise
permitted under this Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable arm’s length
transaction with a Person not an Affiliate.

     Section 10.17 Subsidiaries.

          (a) It shall not, and shall not permit any of its Restricted Subsidiaries to, create any
additional Subsidiaries except for (a) Restricted Subsidiaries resulting from future mergers or
acquisitions permitted hereunder, (b) new Restricted Subsidiaries created by it in compliance with
Section 10.03 and (c) Restricted Subsidiaries created in connection with the reorganization
of it or any Subsidiary. Upon the creation of any new Restricted Subsidiaries, the Capital Stock
(to the extent certificated) shall be pledged as Collateral for this Agreement (subject to the 65%
limitation for first-tier Foreign Subsidiaries).

          (b) It shall not designate any Subsidiary as an Unrestricted Subsidiary, unless:

               (i) such designation of an “Unrestricted Subsidiary” is made by a Responsible Officer at the
time of its creation or acquisition; provided that no Debt or other obligation of such
Unrestricted Subsidiary may be assumed or guaranteed by any Borrower or any Restricted Subsidiary
except to the extent otherwise permitted under Section 10.01, nor may any asset of any
Borrower or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, become
encumbered or otherwise subject to the satisfaction thereof except to the extent otherwise
permitted under Section 10.02.at the time of such designation and immediately after giving
effect thereto, no Default shall have occurred and be continuing; and

               (ii) it would have been in compliance with Section 10.13 on the last day of the most
recently ended fiscal quarter of it had such Subsidiary been an Unrestricted Subsidiary on such
day.

     Section 10.18 Negative Pledge Agreements. Except as permitted by this Agreement, neither
it nor any of its Restricted Subsidiaries will create, incur, assume or permit to exist any
contract or agreement (other than this Agreement and the Security Instruments) which in any way
prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property as may be required in connection with
this Agreement or restricts any of its Restricted Subsidiaries from paying dividends to the US
Borrowers, or which requires the consent of or notice to other Persons in connection therewith,
except for any such contract or agreement existing as of the Closing Date and any extensions,
renewals or replacements of any contracts or agreements permitted hereunder; provided that
such prohibitive terms of such contract or agreement are no more restrictive than the terms
reflected in such contract or agreement existing as of the Closing Date.

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     Section 10.19 The General Partner. It will not permit the General Partner to (i)
create, incur, assume or permit to exist any Debt or Liens except for Debt of UCOP and a Lien on
the Capital Stock of the General Partner or (ii) conduct any business other than serving as the
general partner of UCLP.

ARTICLE XI

Events of Default; Remedies

     Section 11.01 Events of Default. One or more of the following events which continue beyond
any applicable cure period shall constitute an “Event of Default”:

          (a) any Borrower shall default in the payment or prepayment when due of any principal of or
interest on any Loan, or any reimbursement obligation for a disbursement made under any Letter of
Credit, or any fees or other amount payable by it hereunder or under any Security Instrument and
such default, other than a default of a payment or prepayment of principal (which shall have no
cure period), shall continue unremedied for a period of five (5) Business Days; or

          (b) any Borrower or any Restricted Subsidiary shall default in the payment when due of any
principal of or interest on any of its other Debt aggregating $35,000,000 or more, or any event or
condition occurs that results in such Debt becoming due prior to its scheduled maturity or that
enables or permits (with the giving of any notice, the lapse of time or both) the holder or holders
of such Debt or any trustee or agent on its or their behalf to cause such Debt to become due prior
to its scheduled maturity; or

          (c) any representation, warranty or certification made or deemed made herein or in any
Security Instrument by any Borrower or any Subsidiary, or any certificate furnished to any Lender
or the Administrative Agents pursuant to the provisions hereof or any Security Instrument, shall
prove to have been false or misleading as of the time made or furnished in any material respect; or

          (d) any Borrower shall default in the performance of any of its obligations under this
Agreement other than under Sections 10.13(c), 10.15 or 10.17 or ARTICLE
IX; or any Borrower or any Restricted Subsidiary shall default in the performance of any of its
obligations under Sections 10.13(c), 10.15 or 10.17 or ARTICLE IX
or any Security Instrument (other than the payment of amounts due which shall be governed by
Section 11.01(a)) and such default shall continue unremedied for a period of thirty (30)
days after the earlier to occur of (i) notice thereof
to such Borrower by the Applicable Administrative Agent or any Lender (through the Applicable
Administrative Agent), or (ii) such Borrower otherwise becoming aware of such default; or

          (e) any Borrower, any Material Subsidiary or any Material Foreign Subsidiary shall admit in
writing its inability to, or be generally unable to, pay its debts as such debts become due; or

          (f) any Borrower, any Material Subsidiary or any Material Foreign Subsidiary shall (i) apply
for or consent to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a voluntary case under the

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Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada) or the Companies’ Creditors Arrangement
Act (Canada), as applicable, (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, the
Bankruptcy and Insolvency Act (Canada) or the Companies’ Creditors Arrangement Act (Canada), as
applicable, or (vi) take any corporate action for the purpose of effecting any of the foregoing; or

          (g) a proceeding or case shall be commenced, without the application or consent of a Borrower,
any Material Subsidiary or any Material Foreign Subsidiary, in any court of competent jurisdiction,
seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like of a Borrower, any Material Subsidiary or any Material Foreign Subsidiary of all or any
substantial part of its assets, or (iii) similar relief in respect of a Borrower, any Material
Subsidiary or any Material Foreign Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of 60 days; or (iv) an
order for relief against a Borrower, any Material Subsidiary or any Material Foreign Subsidiary
shall be entered in an involuntary case under the Bankruptcy Code, the Bankruptcy and Insolvency
Act (Canada) or the Companies’ Creditors Arrangement Act (Canada), as applicable; or

          (h) a judgment or judgments for the payment of money in excess of insurance coverage
aggregating $15,000,000 or more at any one time outstanding shall be rendered by a court against
any Borrower or any Restricted Subsidiary and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not be procured, within
thirty (30) days from the date of entry thereof and a Borrower or such Restricted Subsidiary shall
not, within said period of 30 days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal;
or

          (i) the Loan Documents after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid, binding and
enforceable in accordance with their terms, or, with respect to the Security Instruments, shall
cease to create a valid and perfected Lien of the priority required thereby on any of the
Collateral
purported to be covered thereby, except to the extent permitted by the terms of this
Agreement, or any Borrower or any Restricted Subsidiary shall so state in writing; or

          (j) a Change of Control shall occur; or

          (k) an ERISA Event shall have occurred that, in the opinion of the Majority Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of a Borrower and any of its Restricted Subsidiaries in an aggregate amount
exceeding $5,000,000 for all periods.

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     Section 11.02 Remedies.

          (a) In the case of an Event of Default other than one referred to in clauses (f) or (g) of
Section 11.01, the Applicable Administrative Agent, upon request of the Majority Lenders,
shall, by notice to the Borrowers, cancel the Aggregate Revolving Commitments and/or declare the
Principal Amount then outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Borrowers hereunder and under the Notes (including without limitation the payment of
cash collateral to secure the LC Exposure as provided in Section 2.10(b) and the BA
Exposure as provided in Section 2.12(i)) to be forthwith due and payable, whereupon such
amounts shall be immediately due and payable without presentment, demand, protest, notice of intent
to accelerate, notice of acceleration or other formalities of any kind, all of which are hereby
expressly waived by the Applicable Borrower.

          (b) In the case of the occurrence of an Event of Default referred to in clauses (f) or (g) of
Section 11.01, the Aggregate Revolving Commitments and the Aggregate Term Commitments shall
be automatically canceled and the Principal Amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrowers hereunder and under the Notes
(including without limitation the payment of cash collateral to secure the LC Exposure as provided
in Section 2.10(b) and the BA Exposure as provided in Section 2.12(i)) shall become
automatically immediately due and payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of any kind, all of which are hereby
expressly waived by the Borrowers.

          (c) Notwithstanding anything to the contrary in the Loan Documents, on the CAM Exchange Date,
the Lenders shall automatically and without further act be deemed to have exchanged interests in
the Aggregate Credit Exposure under the Tranches (including participations in the undrawn amounts
of Letters of Credit) such that, in lieu of the interest of each Lender in the Credit Exposure
under each Tranche in which it shall participate as of such date (including the principal,
reimbursement, interest and fee obligations of each Borrower in respect of each such Tranche and
such Lender’s participation in undrawn Letters of Credit), such Lender shall own an interest equal
to such Lender’s CAM Percentage in the Aggregate Credit Exposure under the Tranches (including the
principal, reimbursement, interest and fee obligations of each Borrower in respect of each such
Tranche and hold a participation in the undrawn amount of each outstanding Letter of Credit equal
to its CAM Percentage thereof). Each Lender, each person acquiring a participation from any Lender
as contemplated by Section 13.06(c) and each Borrower hereby consents and agrees to the CAM
Exchange. Each Borrower
and each Lender agrees from time to time to execute and deliver to the US Administrative Agent
all such promissory notes and other instruments and documents as the US Administrative Agent shall
reasonably request to evidence and confirm the respective interests and obligations of the Lenders
after giving effect to the CAM Exchange, and each Lender agrees to surrender any promissory notes
originally received by it in connection with its Loans hereunder to the US Administrative Agent
against delivery of any promissory notes so executed and delivered; provided,
however, that the failure of any Borrower to execute or deliver or of any Lender to accept
any such promissory note, instrument or document shall not affect the validity or effectiveness of
the CAM Exchange. In the event the CAM Exchange Date shall occur, Indebtedness owed by the
Borrowers under the Loan Documents denominated in Canadian Dollars (other than, for the avoidance
of doubt, obligations in respect of undrawn Offshore

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Currency Letters of Credit) shall,
automatically and with no further act required, be converted to obligations of the same Borrower
denominated in US Dollars. Such conversion shall be effected based upon the exchange rate
described in the definition of “US Dollar Equivalent Amount” on the CAM Exchange Date. On and
after any such conversion, all amounts accruing and owed to any Lender in respect of the
Indebtedness owed to it under the Loan Documents shall accrue and be payable in US Dollars at the
rates otherwise applicable hereunder. Subject to Section 11.02(d), as a result of the CAM
Exchange, upon and after the CAM Exchange Date, each payment or proceeds received by the Applicable
Administrative Agent pursuant to or as a result of the execution of any remedy under any Loan
Document in respect of the Indebtedness of the Borrowers under the Loan Documents shall be
distributed to the Lenders pro rata in accordance with their respective CAM Percentages. Any
direct payment received by a Lender upon or after the CAM Exchange Date, including by way of
set-off, in respect of the Indebtedness under the Loan Documents shall be paid over to the US
Administrative Agent for distribution to the Lenders in accordance herewith.

          (d) Hedging Agreements between any US Borrower and any of their Subsidiaries and the
Administrative Agents or a Lender and/or any Lender Affiliate are secured by the Security
Instruments pari passu with all other Indebtedness. As such, proceeds from the Security
Instruments shall be shared pro rata on all Indebtedness. All proceeds received after the later to
occur of the Term Loan Maturity Date or the Revolving Maturity Date, whether by acceleration or
otherwise, shall be applied first to reimbursement of expenses provided for in the Security
Instruments; next to be shared pro rata between the Hedging Agreements (which form part of the
Indebtedness) on the one hand and all other Indebtedness pursuant to this Agreement and the other
Loan Documents on the other hand. Thereafter, all such proceeds applicable to the Loans and other
obligations under this Agreement and the other Loan Documents shall be applied, first to
reimbursement of expenses and indemnities provided for in this Agreement and the other Loan
Documents; second to accrued interest on the Loans; third to fees; fourth pro rata to principal
outstanding on the Loans and other Indebtedness and to serve as cash collateral to be held by the
US Administrative Agent to secure the LC Exposure and by the Canadian Administrative Agent to
secure outstanding BA Exposure; and any excess shall be paid to the US Borrowers or as otherwise
required by any Governmental Requirement.

          (e) Acceleration and termination of all Hedging Agreements involving the Administrative Agents
or Lenders or the Lender Affiliates shall be governed by the terms of the Hedging Agreements.

     Section 11.03 Letters of Credit.

          (a) In the event that on the CAM Exchange Date any LC Exposure shall be outstanding, each US
Tranche Revolving Lender shall promptly pay over to the US Administrative Agent, in immediately
available funds, an amount in US Dollars equal to such US Tranche Revolving Lender’s US Tranche
Percentage of such LC Exposure (or, in the case of any Offshore Currency Letter of Credit, the US
Dollar Equivalent of such LC Exposure) together with interest thereon from the CAM Exchange Date to
the date on which such amount shall be paid to the US Administrative Agent at the rate that would
be applicable at the time to a US Dollar Base Rate Loan in a Principal Amount equal to such US
Lender’s US Tranche Percentage of the LC Exposure. The US Administrative Agent shall establish a
separate account (each, a “Reserve Account”) or accounts for each Lender for the amounts
received with respect to each

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such Letter of Credit pursuant to the preceding sentence. The US
Administrative Agent shall have sole dominion and control over each Reserve Account, and the
amounts deposited in each Reserve Account shall be held in such Reserve Account until withdrawn as
provided in paragraph (b), (c), (d) or (e) below. The US Administrative Agent shall maintain
records enabling it to determine the amounts paid over to it and deposited in the Reserve Accounts
in respect of each Letter of Credit and the amounts on deposit in respect of each letter of Credit
attributable to each Lender’s CAM Percentage. The amounts held in each Lender’s Reserve Account
shall be held as a reserve against the LC Exposure, shall be the property of such Lender, shall not
constitute Loans to or give rise to any claim of or against any Borrower and shall not give rise to
any obligation on the part of the Borrowers to pay interest to such Lender, it being agreed that
the reimbursement obligations in respect of Letters of Credit shall arise only at such times as
drawings are made thereunder, as provided in Section 2.10.

          (b) In the event that after the CAM Exchange Date any drawing shall be made in respect of a
Letter of Credit, the US Administrative Agent shall, at the request of the applicable Issuing Bank,
withdraw from the Reserve Account of each Lender any amounts, up to the amount of such Lender’s CAM
Percentage of such drawing or payment, deposited in respect of such Letter of Credit and remaining
on deposit and deliver such amounts to such Issuing Bank in satisfaction of the reimbursement
obligations of the US Tranche Revolving Lenders under Section 2.10(c). In the event that
any US Tranche Revolving Lender shall default on its obligation to pay over any amount to the US
Administrative Agent as provided in this Section 11.03, the applicable Issuing Bank shall
have a claim against such US Tranche Revolving Lender to the same extent as if such US Tranche
Revolving Lender had defaulted on its obligations under Section 2.10(c), but shall have no
claim against any other Lender in respect of such defaulted amount, notwithstanding the exchange of
interests in the US Borrowers’ reimbursement obligations pursuant to Section 11.02(c).
Each other Lender shall have a claim against such defaulting US Tranche Revolving Lender for any
damages sustained by it as a result of such default, including, in the event that such Letter of
Credit shall expire undrawn, its CAM Percentage of the defaulted amount.

          (c) In the event that after the CAM Exchange Date any Letter of Credit shall expire undrawn,
the US Administrative Agent shall withdraw from the Reserve Account of each Lender the amount
remaining on deposit therein in respect of such Letter of Credit, and distribute such amount to
such Lender.

          (d) With the prior written approval of the US Administrative Agent (not to be unreasonably
withheld), any Lender may withdraw the amount held in its Reserve Account in respect of the undrawn
amount of any Letter of Credit. Any Lender making such a withdrawal shall be unconditionally
obligated, in the event there shall subsequently be a drawing under such Letter of Credit, to pay
to the US Administrative Agent, for the account of the Issuing Bank, on demand, its CAM Percentage
of such drawing or payment.

          (e) Pending the withdrawal by any Lender of any amounts from its Reserve Account as
contemplated by the above paragraphs, the US Administrative Agent will, at the direction of such
Lender and subject to such rules as the US Administrative Agent may prescribe for the avoidance of
inconvenience, invest such amounts in Investments described in Sections 10.03(c),
(d), (e) or (f). Each Lender that has not withdrawn its amounts in its
Reserve Account as provided in paragraph (d) above shall have the right, at intervals reasonably
specified by the US

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Administrative Agent, to withdraw the earnings on investments so made by the US
Administrative Agent with amounts in its Reserve Account and to retain such earnings for its own
account.

ARTICLE XII

The Administrative Agent

     Section 12.01 Appointment, Powers and Immunities of the Administrative Agents. Each
Applicable Lender hereby irrevocably appoints and authorizes the Applicable Administrative Agent to
act as its administrative agent hereunder and under the Security Instruments with such powers as
are specifically delegated to such Applicable Administrative Agent by the terms of this Agreement
and the Security Instruments, together with such other powers as are reasonably incidental thereto.
The Applicable Administrative Agent (which term as used in this sentence and in Section
12.05 and the first sentence of Section 12.06 shall include reference to its Affiliates
and its and its Affiliates’ officers, directors, employees, attorneys, accountants, experts and
administrative agents): (a) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of the Loan Documents be a trustee or
fiduciary for any Lender; (b) makes no representation or warranty to any Lender and shall not be
responsible to the Lenders for any recitals, statements, representations or warranties contained in
this Agreement, or in any certificate or other document referred to or provided for in, or received
by any of them under, this Agreement, or for the value, validity, effectiveness, genuineness,
execution, effectiveness, legality, enforceability or sufficiency of this Agreement, any Note or
any other document referred to or provided for herein or for any failure by the Borrowers or any
other Person (other than the Applicable Administrative Agent) to perform any of its obligations
hereunder or thereunder or for the existence, value, perfection or priority of any collateral
security or the financial or other condition of the Applicable Borrower, its Subsidiaries or any
other obligor or guarantor; (c) except pursuant to Section 12.07 shall not be required to
initiate or conduct any litigation or collection proceedings hereunder; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or under any other document
or instrument referred to or provided for herein or in connection herewith including its own
ordinary negligence, except for its and its officers’, employees’, agents’ and representatives’
gross negligence or willful misconduct; provided, however, the Administrative
Agents may employ administrative agents, accountants, attorneys and experts and shall not be
responsible for the negligence or misconduct of any such
dministrative agents, accountants, attorneys or experts selected by it in good faith or any action
taken or omitted to be taken in good faith by it in accordance with the advice of such
administrative agents, accountants, attorneys or experts. The Administrative Agents may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof permitted hereunder shall have been filed with
such Administrative Agents. The Administrative Agents are authorized to release any collateral
that is permitted to be sold or released pursuant to the terms of the Loan Documents.

     Section 12.02 Reliance by the Administrative Agents. The Administrative Agents shall be
entitled to rely upon any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and upon advice

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and statements of legal counsel, independent accountants and other experts selected by the
Administrative Agents.

     Section 12.03 Defaults. The Administrative Agents shall not be deemed to have knowledge of
the occurrence of a Default (other than the non-payment of principal of or interest on Loans or of
fees or failure to reimburse for Letter of Credit drawings or Bankers’ Acceptances) unless the
Administrative Agents have received notice from a Lender or a Borrower specifying such Default and
stating that such notice is a “Notice of Default.” In the event that the Administrative Agents
receive such a notice of the occurrence of a Default, the Administrative Agents shall give prompt
notice thereof to the Applicable Lenders. In the event of a payment Default, the Administrative
Agents shall give each Applicable Lender prompt notice of each such payment Default.

     Section 12.04 Rights as a Lender. With respect to its US Tranche Commitments or Canadian
Allocated Commitments and the Loans made by it and its participation in the issuance of Letters of
Credit, each Applicable Administrative Agent (and any successor acting as such Applicable
Administrative Agent) in its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not acting as the
Applicable Administrative Agent, and the term “Lender” or “Lenders” shall, unless the context
otherwise indicates, include the Applicable Administrative Agent in its individual capacity. Each
Applicable Administrative Agent (and any successor acting as such Applicable Administrative Agent)
and its Affiliates may (without having to account therefor to any Lender) accept deposits from,
lend money to and generally engage in any kind of banking, trust or other business with the
Applicable Borrower (and any of its Affiliates) as if it were not acting as the Applicable
Administrative Agent, and each Applicable Administrative Agent and its Affiliates may accept fees
and other consideration from the Borrowers for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.

     Section 12.05 Indemnification. The Lenders agree to indemnify the
Administrative Agents and the Issuing Bank ratably in accordance with their Percentage Shares prior
to the CAM Exchange 
Date and with their CAM Percentage on or after the CAM Exchange Date for the Indemnity Matters
as described in Section 13.03 to the extent not indemnified or reimbursed by the Borrowers
under Section 13.03, but without limiting the obligations of the Borrowers under said
Section 13.03 and for any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Administrative Agents or
the Issuing Bank in any way relating to or arising out of: (a) this Agreement, the
Security Instruments or any other documents contemplated by or referred to herein or the
transactions contemplated hereby, but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of their agency duties
hereunder or (b) the enforcement of any of the terms of this Agreement, any Security
Instrument or of any such other documents; whether or not any of the foregoing specified in this
Section 12.05 arises from the sole or concurrent negligence of the Administrative Agents or

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 the Issuing Bank, provided that no Lender shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the Administrative Agents or
the Issuing Bank, as the case may be; provided further that the obligation to indemnify the
Issuing Bank hereunder will be the obligations of the US Tranche Revolving Lenders prior to the CAM
Exchange Date and all of the Lenders on or after the CAM Exchange Date.

     Section 12.06 Non-Reliance on the Administrative Agents and other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the Administrative
Agents or any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of each US Borrower and its decision to enter into this
Agreement, and that it will, independently and without reliance upon the Administrative Agents or
any other Lender, and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking action under this
Agreement. The Administrative Agents shall not be required to keep itself informed as to the
performance or observance by the Borrowers of this Agreement, the Notes, the Security Instruments
or any other document referred to or provided for herein or to inspect the properties or books of
the Borrowers. Except for notices, reports and other documents and information expressly required
to be furnished to the Lenders by the Applicable Administrative Agent hereunder, such Applicable
Administrative Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or business of the
Borrowers (or any of its Affiliates) which may come into the possession of such Applicable
Administrative Agent or any of its Affiliates. In this regard, each Lender acknowledges that
Vinson & Elkins L.L.P. is acting in this transaction as special US counsel to the US Administrative
Agent only and Goodmans LLP is acting in this transaction as special Canadian counsel to the
Canadian Administrative Agent only, except to the extent otherwise expressly stated in any legal
opinion or any Loan Document. Each Lender will consult with its own legal counsel to the extent
that it deems necessary in connection with the Loan Documents and the matters contemplated therein.

     Section 12.07 Action by the Administrative Agents. Except for action or other matters
expressly required of each Applicable Administrative Agent hereunder, each Applicable
Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall (a) receive written instructions from the Majority Lenders (or all of the Lenders
as expressly required by Section 13.04) specifying the action to be taken, and (b) be
indemnified to its satisfaction by the Lenders against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action. The instructions of
the Majority Lenders (or all of the Lenders as expressly required by Section 13.04) and any
action taken or failure to act pursuant thereto by the Applicable Administrative Agent shall be
binding on all of the Lenders. If a Default has occurred and is continuing, each Applicable
Administrative Agent shall take such action with respect to such Default as shall be directed by
the Majority Lenders (or all of the Lenders as required by Section 13.04) in the written
instructions (with indemnities) described in this Section 12.07, provided that,
unless and until the Applicable Administrative Agent shall have received such directions, such
Applicable Administrative Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default as it shall deem advisable in the best
interests of the Lenders. In no event, however, shall the Applicable Administrative Agent be
required to take any action which exposes such

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Applicable Administrative Agent to personal
liability or which is contrary to this Agreement and the Security Instruments or applicable law.

     Section 12.08 Resignation or Removal of the Administrative Agents. Subject to the
appointment and acceptance of a successor Applicable Administrative Agent as provided below, each
Applicable Administrative Agent may resign at any time by giving notice thereof to the Lenders and
the Borrowers, and each Applicable Administrative Agent may be removed at any time with or without
cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall
have the right to appoint a successor Applicable Administrative Agent. If no successor Applicable
Administrative Agent shall have been so appointed by the Majority Lenders and shall have accepted
such appointment within thirty (30) days after the retiring Applicable Administrative Agent’s
giving of notice of resignation or the Majority Lenders’ removal of the retiring Applicable
Administrative Agent, then the retiring Applicable Administrative Agent may, on behalf of the
Lenders, appoint a successor Applicable Administrative Agent. Upon the acceptance of such
appointment hereunder by a successor Applicable Administrative Agent, such successor Applicable
Administrative Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Applicable Administrative Agent, and the retiring Applicable
Administrative Agent shall be discharged from its duties and obligations hereunder. After any
retiring Applicable Administrative Agent’s resignation or removal hereunder as Applicable
Administrative Agent, the provisions of this ARTICLE XII and Section 13.03 shall
continue in effect for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as an Administrative Agent.

     Section 12.09 Notification by US Administrative Agent. Subject to the provisions herein to
the contrary, the US Administrative Agent shall be required to notify only the US Tranche Revolving
Lenders of any Borrowings, continuations or
conversions or of any other act requiring notice to be provided by the US Administrative Agent
hereunder. Upon each US Tranche Revolving Lender’s receipt of such notice from the US
Administrative Agent pursuant to this Section 12.09, such Lender shall notify its
respective Canadian counterpart of such notice.

     Section 12.10 Joint Lead Arrangers, Joint Book Runners, Co-Documentation Agents. The Joint
Lead Arrangers, the Joint Book Runners, and the Co-Documentation Agents shall have no duties,
responsibilities or liabilities under this Agreement and the other Loan Documents other than their
duties, responsibilities and liabilities in their capacity as Lenders hereunder.

ARTICLE XIII

Miscellaneous

     Section 13.01 Waiver. No failure on the part of the Administrative Agents or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to, any right, power or
privilege under any of the Loan Documents shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege under any of the Loan Documents preclude any
other or further exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies provided by law.

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     Section 13.02 Notices. All notices and other communications provided for herein and in the
other Loan Documents (including, without limitation, any modifications of, or waivers or consents
under, this Agreement or the other Loan Documents) shall be given or made by telex, telecopy,
courier, U.S. Mail or Canadian Mail or in writing and telexed, telecopied, mailed or delivered to
the intended recipient at the “Address for Notices” specified below its name on the signature pages
hereof or in the Loan Documents, except that for notices and other communications to the
Administrative Agents other than payment of money, the Borrowers need only send such notices and
communications to the US Administrative Agent care of the Houston address of Wachovia and to the
Canadian Administrative Agent care of the Toronto, Canada address of Wachovia Canada; or, as to any
party, at such other address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if transmitted before 1:00
p.m. local time on a Business Day (otherwise on the next succeeding Business Day) by telex or
telecopier and evidence or confirmation of receipt is obtained, or personally delivered or, in the
case of a mailed notice, three (3) Business Days after the date deposited in the mails, postage
prepaid, in each case given or addressed as aforesaid.

     Section 13.03 Payment of Expenses, Indemnities, etc.

          (a) The Borrowers agree:

     (i) whether or not the transactions hereby contemplated are consummated, to pay all
reasonable expenses of each Administrative Agent in the administration (both before and
after the execution hereof and including advice of counsel as to the rights and duties of
each Administrative Agent and the Lenders with respect thereto) of, and in connection with
the negotiation, syndication, investigation, preparation, execution and delivery of,
recording or filing of, preservation of rights under, enforcement of, and refinancing,
renegotiation or restructuring of, the Loan Documents and any amendment, waiver or consent,
whether or not effective, relating thereto (including, without limitation, travel,
photocopy, mailing, courier, telephone and other similar expenses of each Administrative
Agent, ongoing Collateral monitoring and protection, Collateral releases and workout
matters, the cost of environmental audits, surveys and appraisals, the reasonable fees and
disbursements of counsel and other outside consultants for the Administrative Agents limited
to one US counsel and one Canadian counsel and, in the case of enforcement, the reasonable
fees and disbursements of counsel for the Administrative Agents and any of the Lenders); and
promptly reimburse the Administrative Agents for all amounts expended, advanced or incurred
by the Administrative Agents or the Lenders to satisfy any obligation of the Borrowers under
this Agreement or any Security Instrument, including without limitation, all costs and
expenses of foreclosure;

     (ii) to indemnify each Administrative Agent and each Lender and each
Lender Affiliate and each of their officers, directors, employees, representatives,
Administrative Agents, attorneys, accountants, investment advisors, agents, trustees and
experts (“Indemnified Parties”) from, hold each of them harmless against and
promptly upon demand pay or reimburse each of them for, the Indemnity Matters which may be
incurred by or asserted against or involve any of them (whether or not

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any of them is
designated a party thereto) as a result of, arising out of or in any way related to (a) any
actual or proposed use by the Borrowers of the proceeds of any of the Loans or Letters of
Credit, (b) the execution, delivery and performance of the Loan Documents, (c) the
operations of the business of each Borrower and its Subsidiaries, (d) the failure of each
Borrower or any Subsidiary to comply with the terms of any Security Instrument or this
Agreement, or with any Governmental Requirement, (e) any inaccuracy of any representation or
any breach of any warranty of a Borrower set forth in any of the Loan Documents, (f) the
issuance, execution and delivery or transfer of or payment or failure to pay under any
Letter of Credit, (vii) the payment of a drawing under any Letter of Credit notwithstanding
the non-compliance, non-delivery or other improper presentation of the manually executed
draft(s) and certification(s), (g) any assertion that the Lenders were not entitled to
receive the proceeds received pursuant to the Security Instruments or 
(h) any other aspect of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of counsel and all other expenses incurred in connection
with investigating, defending or preparing to defend any such action, suit, proceeding
(including any investigations, litigation or inquiries) or claim and including all Indemnity
Matters arising by reason of the ordinary negligence of any Indemnified Party, but excluding
all Indemnity Matters arising solely by reason of claims between the Lenders or any Lender
and an Administrative Agent or a Lender’s shareholders against an Administrative Agent or
Lender or by reason of the gross negligence or willful misconduct on the part of such
Indemnified Party; and

     (iii) to indemnify and hold harmless from time to time the Indemnified
Parties from and against any and all losses, claims, cost recovery actions, administrative
orders or proceedings, damages and liabilities to which any such Person may become subject
(a) under any Environmental Law applicable to a Borrower or any Subsidiary or any of their
Properties, including without limitation, the treatment or disposal of hazardous substances
on any of their Properties, (b) as a result of the breach or non-compliance by a Borrower or
any Subsidiary with any Environmental Law applicable to a Borrower or any Subsidiary, (c)
due to past ownership by a Borrower or any Subsidiary of any of their Properties or past
activity on any of their Properties which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use, release, storage, treatment or
disposal of hazardous substances on or at any of the Properties owned or operated by a
Borrower or any Subsidiary, or (d) any other environmental, health or safety condition in
connection with the Loan Documents; provided, however, no indemnity shall be
afforded under this Section 13.03(a)
(iii) in respect of any
Property for any occurrence arising from the acts or omissions of any Indemnified Party
after the date which the applicable Borrower or Subsidiary is

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divested of ownership of such
Property (whether by foreclosure or deed in lieu of foreclosure, as mortgagee-in-possession
or otherwise).

          (b) No Indemnified Party may settle any claim to be indemnified without the consent of the
indemnitor, such consent not to be unreasonably withheld; provided, that the indemnitor may
not reasonably withhold consent to any settlement that an Indemnified Party proposes, if the
indemnitor does not have the financial ability to pay all its obligations outstanding and asserted
against the indemnitor at that time, including the maximum potential claims against the Indemnified
Party to be indemnified pursuant to this Section 13.03.

          (c) In the case of any indemnification hereunder, an Applicable Administrative Agent or
Lender, as appropriate shall give notice to the Borrowers of any such claim or demand being made
against the Indemnified Party and the Borrowers shall have the non-exclusive right to join in the
defense against any such claim or demand provided that if the Borrowers provides a defense,
the Indemnified Party shall bear its own cost of defense unless there is a conflict between the
Borrowers and such Indemnified Party.

          (d) The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or character whatsoever, whether
active or passive, whether an affirmative act or an omission, including without limitation, all
types of negligent conduct identified in the restatement (second) of torts of one or more of the
Indemnified Parties or by reason of strict liability imposed without fault on any one or more of
the Indemnified Parties. To the extent that an Indemnified Party is found to have committed an act
of gross negligence or willful misconduct, this contractual obligation of indemnification shall
continue but shall only extend to the portion of the claim that is deemed to have occurred by
reason of events other than the gross negligence or willful misconduct of the Indemnified
Party.

          (e) Each Borrower’s obligations under this Section 13.03 shall be its joint and
several obligations and shall survive any termination of this Agreement and the payment of the
Notes and shall continue thereafter in full force and effect.

          (f) Each Borrower shall pay any amounts due under this Section 13.03 within thirty
(30) days of the receipt by such Borrower of notice of the amount due.

     Section 13.04 Amendments, Etc. Any provision of this Agreement or any Security Instrument
may be amended, modified or waived with the Borrowers’ and the Majority Lenders’ prior written
consent; provided that (a) no amendment, modification or waiver which increases the
Aggregate Commitments, forgives or reduces the Principal Amount of any Indebtedness outstanding
under this Agreement, releases all or substantially all of the Collateral (excluding sales of
Compression Assets permitted under the ABS Facility to the UCLP Group and hereunder) or the
Subsidiary Guarantors, affects Sections 4.02, 4.05, 11.02(d), 13.04
or 13.06(a) or permits an Interest Period with a duration in excess of six months or
modifies the definition of “Majority Lenders” shall be effective without consent of all
Lenders; (b) no amendment, modification or waiver which extends any scheduled payment date or the
final maturity of the Term Loans or reduces the interest rate applicable to the Term Loans or the
fees payable to the Term Loan Lenders or extends the time for payment of such interest or fees
shall be effective

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without the consent of all the Term Loan Lenders (in lieu of the consent of the
Majority Lenders); (c) no amendment, modification or waiver which extends any scheduled payment
date or the final maturity of the Revolving Loans, reduces the interest rate applicable to the
Revolving Loans or the fees payable to the US Tranche Revolving Lenders or the Canadian Tranche
Revolving Lenders or extends the time for payment of such interest or fees shall be effective
without the consent of all the US Tranche Revolving Lenders or the Canadian Tranche Revolving
Lenders, as applicable (in lieu of the consent of the Majority Lenders); (d) no amendment,
modification or waiver which increases the US Tranche Commitment, Canadian Allocated Commitment or
Term Commitment of any Lender shall be effective without the consent of such Lender; and (e) no
amendment, modification or waiver which modifies the rights, duties or obligations of an Applicable
Administrative Agent shall be effective without the consent of such Applicable Administrative
Agent.

     Section 13.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

     Section 13.06 Assignments and Participations.

          (a) No Borrower nor Guarantor may assign its rights or obligations hereunder or under the
Notes, Bankers’ Acceptances, the BA Equivalent Notes or any Letters of Credit without the prior
consent of all of the Lenders and the Administrative Agents.

          (b) Any Lender may assign to one or more assignees, all or a portion of its rights and
obligations under this Agreement pursuant to an Assignment Agreement substantially in the form of
Exhibit E (an “Assignment”) upon the written consent (which consent shall not be
unreasonably withheld) of (A) with respect to the Revolving Credit Facility only, the US
Administrative Agent, provided that no such consent shall be required for an assignment to
an assignee that is an Affiliate (as defined in clause (a) of the definition of “Affiliate”) of
such Revolving Lender or a Revolving Lender immediately prior to giving effect to
such assignment, (B) with respect to the Term Loan Credit Facility only, the US Administrative
Agent, provided that no such consent shall be required for an assignment to an assignee
that is an Affiliate (as defined in clause (a) of the definition
of “Affiliate”) of such Revolving Lender or a Revolving Lender immediately prior to giving effect to such assignment,
(C) the Issuing Banks (with respect to the Revolving Credit Facility only), (D) with respect to the
Revolving Credit Facility only, the US Borrowers, provided that no such consent shall be
required for an assignment to an assignee that is an Affiliate (as defined in clause (a) of the
definition of “Affiliate”) of such Term Loan Lender, a Related Fund or a Term Loan Lender
immediately prior to giving effect to such assignment, or if an Event of Default has occurred and
is continuing, any other assignee and (E) with respect to the Term Loan Credit Facility only, the
US Borrowers, provided that no such consent shall be required for an assignment to an
assignee that is an Affiliate (as defined in clause (a) of the definition of “Affiliate”) of such
Term Loan Lender, a Related Fund or a Term Loan Lender immediately prior to giving effect to such
assignment; provided, however, that (i) any such assignment shall be in the amount
of at least $5,000,000 of a Tranche with respect to the Revolving Credit Facility and at least
$1,000,000 with respect to the Term Loan Facility or such lesser amount to which such Borrower has
consented, with Related Funds treated as one assignee for purposes of determining compliance with
such minimum assignment amount; (ii) the assignee or assignor shall pay to the Applicable
Administrative Agent a processing and recordation fee of $3,500 for each assignment;
provided

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that only $3,500 shall be paid for pro rata assignments by a Lender and its
Canadian Lender Affiliate and only one such fee shall be payable in connection with simultaneous
assignments to or by two or more Related Funds; (iii) if such assignment is made at a time when no
Event of Default has occurred and is continuing, any assignee of the Canadian Tranche Revolving
Lender shall satisfy the Canadian residency requirements of a Canadian Tranche Revolving Lender;
(iv) any assignee shall not be a competitor of Holdings or any of its Subsidiaries; and (v)
notwithstanding anything to the contrary contained in this Agreement, if such assignment is made at
a time when an Event of Default has occurred and is continuing, (y) the Borrowers shall have the
right to withhold all Taxes required by law to be withheld from payments made hereunder, and shall
pay such Taxes to the relevant taxing authority or other Governmental Authority in accordance with
applicable law and (z) any assignee of a Lender shall not be subject
to the provisions of Section 4.06(d) (other than subparagraph (ii) thereof, if
applicable), and shall not be entitled to receive any additional amounts payable pursuant to
Section 4.06(a)(A) or indemnification payments for Taxes pursuant to Section
4.06(c). Any such assignment will become effective upon the execution and delivery to the US
Administrative Agent of the Assignment and the consent, if required above, of the US Administrative
Agent, the Issuing Banks and, unless an Event of Default has occurred and is continuing, the US
Borrowers. Promptly after receipt of an executed Assignment, the US Administrative Agent shall
send to the Applicable Borrower a copy of such executed Assignment. Upon receipt of such executed
Assignment, such Borrower, will, at its own expense, execute and deliver new Notes, Bankers’
Acceptances or BA Equivalent Notes to the assignor and/or assignee, as appropriate, in accordance
with their respective interests as they appear. Upon the effectiveness of any assignment pursuant
to this Section 13.06(b), the assignee will become a “Lender,” if not already a “Lender,”
for all purposes of this Agreement and the Security Instruments. The assignor shall be relieved of
its obligations hereunder to the extent of such assignment (and if the assigning Lender no longer
holds any rights or obligations under this Agreement, such assigning Lender shall cease to be a
“Lender” hereunder except that its rights under Sections 4.06, 5.01, 5.05
and 13.03 shall not be affected). The US Administrative Agent, acting as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment Agreement delivered to it
and a register for the recordation of the names and addresses of the Lenders, and the Principal
Amount of the Loans and LC Exposure owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register.

          (c) Each Lender may transfer, grant or assign participations in all or any part of such
Lender’s interests hereunder pursuant to this Section 13.06(c) to any Person that satisfies
the requirements of Section 13.06(b)(iv) and either Section 13.06(b)(iii) or
(v)(z) as applicable, provided that: (i) such Lender shall remain a “Lender” for all
purposes of this Agreement and the transferee of such participation shall not constitute a “Lender”
hereunder; and (ii) no participant under any such participation shall have rights to approve any
amendment to or waiver of any of the Loan Documents; provided that such participation
agreement may provide that such Lender will not, without the consent of the participant, agree to
any amendment, modification or waiver described in clauses (a), (b) or (c) of the proviso to
Section 13.04 that affects such participant, and all amounts payable by the Applicable
Borrower hereunder shall be determined as if such Lender had not sold such participation,
provided that such participant shall be entitled to receive additional amounts under
ARTICLE V on the same basis as if it were a Lender and be indemnified under Section
13.03 as if it were a Lender. In addition, each agreement creating any

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participation must
include an agreement by the participant to be bound by the provisions of Section 13.15.

          (d) The Lenders may furnish any information concerning a Borrower in the possession of the
Lenders from time to time to assignees and participants (including prospective assignees and
participants); provided that, such Persons agree to be bound by the provisions of
Section 13.15.

          (e) Notwithstanding anything in this Section 13.06 to the contrary, any Lender may at
any time pledge or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including, without limitation, any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no such
pledge or assignment of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

          (f) Notwithstanding any other provisions of this Section 13.06, no transfer or
assignment of the interests or obligations of any Lender or any grant of participations therein
shall be permitted if such transfer, assignment or grant would require any Borrower to file a
registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.

     Section 13.07 Invalidity. In the event that any one or more of the provisions contained in
any of the Loan Documents or the Letters of Credit, shall, for any reason, be held invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of the Notes, this Agreement or any Security Instrument.

     Section 13.08 Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such counterpart.

     Section 13.09 Reserved.

     Section 13.10 Survival. The obligations of the parties under Section 4.06,
ARTICLE V, and Sections 12.05 and 13.03 shall survive the repayment of the
Loans and the termination of the US Tranche Commitments, Canadian Allocated Commitments and Term
Commitments. To the extent that any payments on the Indebtedness under the Loan Documents 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 Indebtedness
under the Loan Documents so satisfied shall be revived and continue as if such payment or proceeds
had not been received and each Applicable Administrative Agent’s and Lenders’ Liens, security
interests, rights, powers and remedies under this Agreement and each Security Instrument shall
continue in full force and effect. In such event, each Security Instrument shall be automatically
reinstated and the Applicable Borrower shall take such action as may be reasonably requested by the
Applicable Administrative Agent and the Lenders to effect such reinstatement.

     Section 13.11
Reserved.

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     Section 13.12 No Oral Agreements. The Loan Documents embody the entire agreement and understanding between the parties and
supersede all other agreements and understandings between such parties relating to the subject
matter hereof and thereof. The Loan Documents represent the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of
the parties. There are no unwritten oral agreements between the parties.

     Section 13.13 Governing Law; Submission to Jurisdiction.

          (a) This Agreement and the Notes shall be governed by, and construed in
accordance with, the laws of the State of Texas except to the extent that United States federal law
permits any US Lender to charge interest at the rate allowed by the laws of the state where such
Lender is located or applicable Canadian Law permits any Canadian Tranche Revolving Lender to
charge interest at the rate allowed by the laws of the jurisdiction where such Lender is located.
Ch. 346 of the Texas Finance Code (which regulates certain revolving credit loan accounts and
revolving tri-party accounts) shall not apply to this Agreement or the Notes.

          (b) Any legal action or proceeding with respect to the Loan Documents 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 Borrower 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 Borrower and Guarantor 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 the Administrative Agents or any Lender from
obtaining jurisdiction over each Borrower and Guarantor in any court otherwise having
jurisdiction.

          (c) Each Borrower and Guarantor 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 Borrower and Guarantor at its address
located on the signature page hereto or as updated from time to time, such service to become
effective thirty (30) days after such mailing. 

          (d) Nothing herein shall affect the right of the Administrative Agents 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 Borrowers or Guarantors in any other
jurisdiction.

          (e) Each Borrower, each Guarantor and each Lender hereby (i) irrevocably
and unconditionally waive, to the fullest extent permitted by

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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 waive, 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)
certify that no party hereto nor any representative of the Administrative Agents 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) acknowledge 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 13.13.

     Section 13.14 Interest. It is the intention of the parties hereto that each Lender shall
conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated
hereby would be usurious as to any Lender under laws applicable to it (including the laws of the
United States of America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement),
then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any
agreement entered into in connection with or as security for the Notes, the Bankers’ Acceptances
and the BA Equivalent Notes, it is agreed as follows: (a) the aggregate of all consideration which
constitutes interest under law applicable to any Lender that is contracted for, taken, reserved,
charged or received by such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if theretofore paid shall be
credited by such Lender on the Principal Amount of the Indebtedness under the Loan Documents (or,
to the extent that the Principal Amount of the Indebtedness under the Loan Documents shall have
been or would thereby be paid in full, refunded by such Lender to the Applicable Borrower); and (b)
in the event that the maturity of the Notes is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of
any required or permitted prepayment, then such consideration that constitutes interest under law
applicable to any Lender may never include more than the maximum amount allowed by such applicable
law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by such Lender as of the date of such acceleration or prepayment and, if theretofore
paid, shall be credited by such Lender on the Principal Amount of the Indebtedness under the Loan
Documents (or, to the extent that the Principal Amount of the Indebtedness under the Loan Documents
shall have been or would thereby be paid in full, refunded by such Lender to the Applicable
Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention
of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be
amortized, prorated, allocated and spread throughout the full term of the Loans evidenced by the
Notes until payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and
from time to time (i)
the amount of interest payable to any Lender on any date shall be computed at the Highest Lawful
Rate applicable to such Lender pursuant to this Section 13.14 and (ii) in respect of any
subsequent interest computation period the amount of interest otherwise payable to such Lender
would be less than the amount of interest payable to such Lender

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computed at the Highest Lawful
Rate applicable to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the Highest Lawful
Rate applicable to such Lender until the total amount of interest payable to such Lender shall
equal the total amount of interest which would have been payable to such Lender if the total amount
of interest had been computed without giving effect to this Section 13.14. To the extent
that Chapter 303 of the Texas Finance Code is relevant for the purpose of determining the Highest
Lawful Rate, such Lender elects to determine the applicable rate ceiling under such Chapter by the
indicated weekly rate ceiling from time to time in effect.

     Section 13.15 Confidentiality. For the purposes of this Section 13.15,
“Confidential Information” means information about any Borrower furnished by any Borrower
or its Affiliates (collectively, the “Disclosing Parties”) to the Administrative Agents or
any of the Lenders, including, but not limited to, any actual or pending agreement, business plans,
budgets, projections, ecological data and accounting records, financial statements, or other
financial data of any kind, any title documents, reports or other information relating to matters
of title, any projects or plans, whether actual or prospective, and any other documents or items
embodying any such Confidential Information; provided that such term does not include
information that (a) was publicly known or otherwise known prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by the Administrative Agents or
the Lenders or any Person acting on behalf thereof, (c) otherwise becomes known to the
Administrative Agents or Lenders other than through disclosure by the Disclosing Parties or a party
known to be subject to a confidentiality agreement or (d) constitutes financial statements
delivered to the Administrative Agents and the Lenders under Section 9.01(a) that are
otherwise publicly available. The Administrative Agents and the Lenders will maintain the
confidentiality of such Confidential Information delivered to (i) such Person, provided
that each such Person (a “Restricted Person”) may deliver or disclose Confidential
Information to such Restricted Person’s directors, officers, employees, agents, attorneys
investment advisors, trustees and Affiliates, who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 13.15, (ii) such
Restricted Person’s financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the terms of this
Section 13.15, (iii) any other Lender, (iv) any pledgee referred to in Section
13.06(e) or any assignee to which such Restricted Person sells or offers to sell its Note or
any part thereof or any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this Section
13.15), (v) any Person from which such Restricted Person offers to purchase any security of the
Borrowers (if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 13.15), (vi) any Governmental
Authority having jurisdiction or any self-regulatory body claiming to have authority over such
Restricted Person, (vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to information about
such Restricted Person’s investment portfolio, or (viii) any other Person to which such delivery or
disclosure may be
necessary or appropriate (A) to effect compliance with any Governmental Requirement applicable to
such Restricted Person, (B) in response to any subpoena or other legal process, (C) in connection
with any litigation to which such Restricted Person is a party or (D) if an Event of Default has
occurred and is continuing, to the extent such Restricted Person may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of
its rights and remedies under the Notes

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and this Agreement. Each Lender, by its acceptance of a
Note or a participation agreement, will be deemed to have agreed to be bound by and to be entitled
to the benefits of this Section 13.15 as though it were a party to this Agreement. On
reasonable request by any Borrower in connection with the delivery to any Lender of information
required to be delivered to such Lender under this Agreement or requested by such Lender (other
than a Lender that is a party to this Agreement or its nominee), such Lender will enter into an
agreement with any Borrower embodying the provisions of this Section 13.15. Each Borrower
waives (on its own behalf and on behalf of its Subsidiaries) any and all other rights it (or its
Subsidiaries) may have to confidentiality as against the Administrative Agents and the Lenders
arising by or under any contract, agreement, statute or law except as expressly stated in this
Section 13.15.

     Section 13.16 Effectiveness. This Agreement shall be effective on the Closing Date.

     Section 13.17 Exculpation Provisions. Each of the parties hereto specifically
agrees that it has a duty to read this Agreement and the Security Instruments and agrees that it is
charged with notice and knowledge of the terms of this Agreement and the Security Instruments; that
it has in fact read this Agreement and is fully informed and has full notice and knowledge of the
terms, conditions and effects of this Agreement; 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 13.18 Hedging Agreements. Notwithstanding anything to the contrary contained
herein, the terms and provisions of this Agreement shall not apply to any Hedging Agreements,
except to the extent necessary for all Hedging Agreements with Lenders and/or their Lender
Affiliate to be secured by the Security Instruments on a pari passu basis with other Indebtedness
and for the proceeds from the Security Instruments to be applied as set forth in Section
11.02(d) hereof.

     Section 13.19 USA Patriot Act Notice. Each US Lender hereby notifies the Borrowers that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “USA Patriot Act”), it is required to obtain, verify and record
information that identifies each US Borrower and their Subsidiaries, which information includes the
name and address of each US Borrower and such Subsidiaries and other information that will allow
such US Lender to identify each US Borrower and such Subsidiaries in accordance with the USA
Patriot Act.

     Section 13.20 Restatement. This Agreement amends, restates and supercedes the Existing
Credit Agreement. It is the intention of the parties that all Liens and security interests
securing the Existing Credit Agreement continue to exist, remain valid and shall not be impaired

-108-

 

or released hereby and shall remain in full force and effect as provided in the Security Instruments.

ARTICLE XIV

GUARANTY

     Section 14.01 The Guaranty.

          (a) The Guarantors irrevocably and unconditionally, jointly and severally, guarantee to each
Canadian Tranche Revolving Lender and the Administrative Agents and their respective successors and
permitted assigns the full and punctual payment of principal and interest on each Canadian Tranche
Loan when due, whether at maturity, by acceleration, by redemption or otherwise (the
“Guaranteed Obligations”).

          (b) The Guarantors further agree that this Guaranty constitutes an absolute, irrevocable,
complete and continuing guarantee of payment, performance and compliance and not merely of
collection.

          (c) The obligations of the Guarantors to make any payment hereunder may be satisfied by
causing the Canadian Borrowers to make such payment.

          (d) The Guarantors also agree to pay any and all costs and expenses (including reasonable
attorneys’ fees incurred by any Applicable Administrative Agent or any Canadian Tranche Revolving
Lender in enforcing any of their respective rights under this Guaranty, laws or otherwise) of each
Applicable Administrative Agent or any Canadian Tranche Revolving Lender against the Canadian
Borrowers or any other Person or against such Applicable Administrative Agent or any Canadian
Tranche Revolving Lender for their payments in respect of any amounts to any Canadian Tranche
Revolving Lender pursuant to the provisions of this Guaranty.

          (e) The Guarantors waive presentment to, demand of payment from and protest to the Canadian
Borrowers of any of the Guaranteed Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment. The obligations of the
Guarantors hereunder shall not be affected by the failure of either of the Administrative
Agents or any Canadian Tranche Revolving Lender to assert any claim or demand or to enforce or
exercise any right or remedy against the Canadian Borrowers or any other Person under the
provisions of this Agreement, any other Loan Document or otherwise.

          (f) To the fullest extent permitted by applicable law, the obligations of the Guarantors
hereunder are absolute and unconditional and shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the payment in full in cash of all the
Guaranteed Obligations), including any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, and shall not be subject to any defense (other
than a defense of payment or performance), set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or any Note, other Loan Document or otherwise.

-109-

 

     (g) The Guarantors waive any defense based on or arising out of any defense of the Canadian
Borrowers or the unenforceability of the Guaranteed Obligations or any part thereof from any cause,
or the cessation from any cause of the liability of the Canadian Borrowers, other than the final
payment in full in cash of all the Guaranteed Obligations.

     (h) To the fullest extent permitted by applicable law, this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of the Guaranteed
Obligations is rescinded or must otherwise be returned by any of the Canadian Tranche Revolving
Lenders upon the insolvency, bankruptcy or reorganization or the Canadian Borrowers or otherwise,
all as though such payment had not been made.

     Section 14.02 Subrogation. The Guarantors shall be subrogated to any of the rights
(whether contractual, under applicable laws or otherwise) of either of the Administrative Agents or
any Canadian Tranche Revolving Lender against the Canadian Borrowers or any other Person for the
payments in respect of any amounts to any Canadian Tranche Revolving Lender pursuant to the
provisions of this Guaranty; provided, however, that the Guarantor shall not be
entitled to enforce, or to receive any payments arising out of or based upon, such right of
subrogation until all other Guaranteed Obligations shall have been paid in full and the Canadian
Allocated Total Commitments terminated.

-110-

 

The parties hereto have caused this Agreement to be duly executed as of the day and year first
above written.

	 	 	 	 	 	 	 
	US BORROWER AND GUARANTOR:	 	UNIVERSAL COMPRESSION, INC.	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	J. Michael Anderson	 	 
	 

	 	Title:
	 	Senior Vice President and	 	 
	Address for Notices:

	 	 	 	Chief Financial Officer	 	 
	 

	 	 	 	 	 	 
	 	 	4444 Brittmoore Road	 	 
	 	 	Houston, Texas 77041	 	 
	 

	 	 	 	 	 	 
	 	 	Telecopier No.: (713) 466-6720	 	 
	 	 	Telephone No.: (713) 335-7295	 	 
	 	 	Attention: President	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to: General Counsel	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Carol M. Burke	 	 
	 	 	Gardere Wynne Sewell LLP	 	 
	 	 	1000 Louisiana, Suite 3400	 	 
	 	 	Houston, Texas 77002	 	 
	 	 	Telecopier No.: (713) 276-6561	 	 
	 	 	Telephone No.: (713) 276-5561	 	 

 

 

	 	 	 	 	 	 	 
	US BORROWER AND GUARANTOR:	 	UNIVERSAL COMPRESSION
HOLDINGS, INC.	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	J. Michael Anderson	 	 
	 

	 	Title:
	 	Senior Vice President and	 	 
	Address for Notices:

	 	 	 	Chief Financial Officer	 	 
	 

	 	 	 	 	 	 
	 	 	4444 Brittmoore Road	 	 
	 	 	Houston, Texas 77041	 	 
	 

	 	 	 	 	 	 
	 	 	Telecopier No.: (713) 466-6720	 	 
	 	 	Telephone No.: (713) 335-7295	 	 
	 	 	Attention: President	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to: General Counsel	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Carol M. Burke	 	 
	 	 	Gardere Wynne Sewell LLP	 	 
	 	 	1000 Louisiana, Suite 3400	 	 
	 	 	Houston, Texas 77002	 	 
	 	 	Telecopier No.: (713) 276-6561	 	 
	 	 	Telephone No.: (713) 276-5561	 	 

 

 

	 	 	 	 	 	 	 
	CANADIAN BORROWER:	 	UC CANADIAN PARTNERSHIP HOLDINGS COMPANY	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	J. Michael Anderson	 	 
	 

	 	Title:
	 	Senior Vice President and	 	 
	 

	 	 	 	Chief Financial Officer	 	 
	 

	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	4444 Brittmoore Road	 	 
	 	 	Houston, Texas 77041	 	 
	 

	 	 	 	 	 	 
	 	 	Telecopier No.: (713) 466-6720	 	 
	 	 	Telephone No.: (713) 335-7295	 	 
	 	 	Attention: Chief Financial Officer	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to: General Counsel	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Carol M. Burke	 	 
	 	 	Gardere Wynne Sewell LLP	 	 
	 	 	1000 Louisiana, Suite 3400	 	 
	 	 	Houston, Texas 77002	 	 
	 	 	Telecopier No.: (713) 276-6561	 	 
	 	 	Telephone No.: (713) 276-5561	 	 

 

 

	 	 	 	 	 	 	 
	CANADIAN BORROWER:	 	UNIVERSAL COMPRESSION CANADA, LIMITED PARTNERSHIP	 	 
	 

	 	 	 	 	 	 
	 

	 	By:
	 	UC CANADIAN PARTNERSHIP	 	 
	 

	 	 	 	HOLDINGS COMPANY,	 	 
	 

	 	 	 	its general partner	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	J. Michael Anderson	 	 
	 

	 	 	 	Title:
	 	Senior Vice President and	 	 
	 

	 	 	 	 	 	Chief Financial Officer	 	 

	 	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	4444 Brittmoore Road	 	 
	 	 	Houston, Texas 77041	 	 
	 

	 	 	 	 	 	 
	 	 	Telecopier No.: (713) 466-6720	 	 
	 	 	Telephone No.: (713) 335-7295	 	 
	 	 	Attention: Chief Financial Officer	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to: General Counsel	 	 
	 

	 	 	 	 	 	 
	 	 	Copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Carol M. Burke	 	 
	 	 	Gardere Wynne Sewell LLP	 	 
	 	 	1000 Louisiana, Suite 3400	 	 
	 	 	Houston, Texas 77002	 	 
	 	 	Telecopier No.: (713) 276-6561	 	 
	 	 	Telephone No.: (713) 276-5561	 	 

 

 

	 	 	 	 	 	 	 
	US ADMINISTRATIVE AGENT	 	WACHOVIA BANK, NATIONAL	 	 
	AND LENDER:	 	ASSOCIATION, Individually and as US
Administrative Agent	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Todd Schanzlin	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	 	 	 	 	 
	 	 	Lending Office for US Dollar Base Rate 
Loans
and LIBOR Loans:	 	 
	 

	 	 	 	 	 	 
	 	 	301 South College Street	 	 
	 	 	23rd Floor NC 0680	 	 
	 	 	Charlotte, North Carolina 28288	 	 
	 	 	Telecopier No.: (704) 383-0288	 	 
	 

	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	301 South College Street	 	 
	 	 	23rd Floor NC 0680	 	 
	 	 	Charlotte, North Carolina 28288	 	 
	 	 	Attention: Syndication Agency Services	 	 
	 	 	Telecopier No.: (704) 383-0288	 	 
	 

	 	 	 	 	 	 
	 	 	With copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Wachovia Capital Markets, LLC	 	 
	 	 	1001 Fannin, Suite 2255	 	 
	 	 	Houston, Texas 77002	 	 
	 	 	Attention: David Humphreys	 	 
	 	 	Telecopier No.: 713-605-6354	 	 

 

 

	 	 	 	 	 	 	 
	CANADIAN ADMINISTRATIVE AGENT 

AND LENDER:	 	WACHOVIA CAPITAL FINANCE

CORPORATION (CANADA),	 	 
	 	 	Individually and as Canadian Administrative Agent	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Enza Agosta	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	 	 	 	 	 
	 	 	Lending Office for Canadian Tranche Loans:	 	 
	 

	 	 	 	 	 	 
	 	 	141 Adelaide St W., Suite 1500	 	 
	 	 	Toronto, Ontario, Canada	 	 
	 	 	M5H 3L9	 	 
	 

	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	141 Adelaide St W., Suite 1500	 	 
	 	 	Toronto, Ontario, Canada	 	 
	 	 	M5H 3L9	 	 
	 

	 	 	 	 	 	 
	 	 	Attention: Sophie Ronan	 	 
	 	 	Telecopier No.: (416) 364-8165	 	 

 

 

	 	 	 	 	 	 	 
	SYNDICATION AGENT AND LENDER:	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,	 	 
	 	 	Individually and as Syndication Agent	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Lending Office for US Dollar Base Rate Loans
and LIBOR Loans:	 	 
	 

	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 
	 

	 	 	 	 	 	 
	 	 	With copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 

 

 

	 	 	 	 	 	 	 
	LENDER:	 	DEUTSCHE BANK AG, CANADA BRANCH	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Lending Office for Canadian Tranche Loans:	 	 
	 

	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 
	 

	 	 	 	 	 	 
	 	 	With copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 

 

 

	 	 	 	 	 	 	 
	CO-DOCUMENTATION AGENT	 	FORTIS CAPITAL, CORP.,	 	 
	AND LENDER:	 	as Co-Documentation Agent and Lender	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Lending Office for US Dollar Base Rate Loans
and LIBOR Loans:	 	 
	 

	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 
	 

	 	 	 	 	 	 
	 	 	With copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 

 

 

	 	 	 	 	 	 	 
	CO-DOCUMENTATION AGENT AND LENDER:	 	WELLS FARGO BANK, NATIONAL ASSOCIATION,	 	 
	 	 	as Co-Documentation Agent and Lender	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Lending Office for US Dollar Base Rate Loans
and LIBOR Loans:	 	 
	 

	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 
	 

	 	 	 	 	 	 
	 	 	With copy to:	 	 
	 

	 	 	 	 	 	 
	 	 	Attention:	 	 
	 	 	Telecopier No.:	 	 

 

 

EXHIBIT A-1

FORM OF US REVOLVING NOTE

			
	$                                        
	 	                                        , 2006

     FOR VALUE RECEIVED, UNIVERSAL COMPRESSION, INC., a Texas corporation and UNIVERSAL COMPRESSION
HOLDINGS, INC., a Delaware corporation (collectively, the “US Borrowers”), jointly and
severally hereby promise to                                                              (the “Lender”) or registered
assigns, at the principal office of WACHOVIA BANK, NATIONAL ASSOCIATION, as the US Administrative
Agent (the “US Administrative Agent”), at 301 South College Street, Charlotte, North
Carolina 28288-0608, the principal sum of                                                              US Dollars ($            
                            )
(or such lesser amount as shall equal the aggregate unpaid principal amount of the US Tranche Loans
made by the Lender to the US Borrowers under the Credit Agreement, as hereinafter defined), in
lawful money of the United States of America and in immediately available funds, on the dates and
in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such US Tranche Loan, at such office, in like money and funds, for the
period commencing on the date of such US Tranche Loan until such US Tranche Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.

     The date, amount, Type, interest rate, Interest Period and maturity of each US Tranche Loan
made by the Lender to the US Borrowers, and each payment made on account of the principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by
the Lender on the schedules attached hereto or any continuation thereof.

     This Note is one of the Notes referred to in the Senior Secured Credit Agreement dated as of
October 20, 2006, among the US Borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia
unlimited liability company and Universal Compression Canada, Limited Partnership, a Nova Scotia
limited partnership, collectively, as the Canadian Borrowers, the US Administrative Agent, Wachovia
Capital Finance Corporation (Canada), as the Canadian Administrative Agent and the other Agents and
Lenders which are or become parties thereto (including the Lender) (as the same may be amended or
supplemented from time to time, the “Credit Agreement”), and evidences US Tranche Loans
made by the Lender thereunder. Capitalized terms used in this Note and not defined herein have the
respective meanings assigned to them in the Credit Agreement.

     This Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided
for in the Credit Agreement and the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments
of US Tranche Loans upon the terms and conditions specified therein and other provisions relevant
to this Note.

Exhibit A-1 – 1

 

 

     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.

	 	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION HOLDINGS, INC.	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit A-1 – 2

 

 

EXHIBIT A-2

FORM OF CANADIAN REVOLVING NOTE

			
	$                                        
	 	                                        , 2006

     FOR VALUE RECEIVED, UC CANADIAN PARTNERSHIP HOLDINGS COMPANY, a Nova Scotia unlimited
liability company and UNIVERSAL COMPRESSION CANADA, LIMITED PARTNERSHIP, a Nova Scotia limited
partnership (collectively, the “Canadian Borrowers”), hereby promises to pay to
                                                             (the “Lender”) or registered assigns, at the principal
office of WACHOVIA CAPITAL FINANCE CORPORATION (CANADA), as the Canadian Administrative Agent (the
“Canadian Administrative Agent”), at 141 Adelaide Street W., Suite 1500, Toronto, Ontario,
Canada M5G 3L9, the principal sum of
                    
                    
                                         US Dollars($                                        )
(or such lesser amount as shall equal the aggregate unpaid principal amount of the
Canadian Tranche Loans made by the Lender to the Canadian Borrowers under the Credit Agreement, as
hereinafter defined), in lawful money of Canada or the United States, as the case may be, and in
immediately available funds, on the dates and in the principal amounts and currency provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each such Canadian Tranche
Loan, at such office, in like money and funds, for the period commencing on the date of such
Canadian Tranche Loan until such Canadian Tranche Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.

     The date, amount, Type, interest rate, Interest Period, currency and maturity of each Canadian
Tranche Loan made by the Lender to the Canadian Borrowers, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this
Note, endorsed by the Lender on the schedules attached hereto or any continuation thereof.

     This Note is one of the Notes referred to in the Senior Secured Credit Agreement dated as of
October 20, 2006, among Universal Compression, Inc., a Texas corporation and Universal Compression
Holdings, Inc., a Delaware corporation, collectively, as the US Borrowers, the Canadian Borrowers,
the US Administrative Agent, the Canadian Administrative Agent and the other Agents and Lenders
which are or become parties thereto (including the Lender) (as the same may be amended or
supplemented from time to time, the “Credit Agreement”), and evidences Canadian Tranche
Loans made by the Lender thereunder. Capitalized terms used in this Note and not defined herein
shall have the respective meanings assigned to them in the Credit Agreement.

     This Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided
for in the Credit Agreement and the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments
of Canadian Tranche Loans upon the terms and conditions specified therein and other provisions
relevant to this Note.

Exhibit A-2 – 1

 

 

     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF TEXAS.

	 	 	 	 	 	 	 
	 	 	UC CANADIAN PARTNERSHIP HOLDINGS COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION CANADA, LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	By: UC CANADIAN PARTNERSHIP	 	 
	 

	 	 	 	HOLDINGS COMPANY, its General Partner	 	 
	 

	 	     By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	     Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	     Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit A-2 – 2

 

 

EXHIBIT A-3

FORM OF TERM NOTE

	 	 	 
	$                    

	 	                    , 2006

     FOR VALUE RECEIVED, UNIVERSAL COMPRESSION, INC., a Texas corporation and UNIVERSAL COMPRESSION
HOLDINGS, INC., a Delaware corporation (collectively, the “US Borrowers”), jointly and
severally hereby promise to                      (the “Lender”) or registered
assigns, at the principal office of WACHOVIA BANK, NATIONAL ASSOCIATION, as the US Administrative
Agent (the “US Administrative Agent”), at 301 South College Street, Charlotte, North
Carolina 28288-0608, the principal sum of                      US Dollars ($                    )
(or such lesser amount as shall equal the aggregate unpaid principal amount of the Term Loans made
by the Lender to the US Borrowers under the Credit Agreement, as hereinafter defined), in lawful
money of the United States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal
amount of such Term Loan, at such office, in like money and funds, for the period commencing on the
date of such Term Loan until such Term Loan shall be paid in full, at the rates per annum and on
the dates provided in the Credit Agreement.

     The date, amount, Type, interest rate, Interest Period and maturity of each Term Loan made by
the Lender to the US Borrowers, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender
on the schedules attached hereto or any continuation thereof.

     This Note is one of the Notes referred to in the Senior Secured Credit Agreement dated as of
October 20, 2006, among the US Borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia
unlimited liability company and Universal Compression Canada, Limited Partnership, a Nova Scotia
limited partnership, collectively, as the Canadian Borrowers, the US Administrative Agent, Wachovia
Capital Finance Corporation (Canada), as the Canadian Administrative Agent and the other Agents and
Lenders which are or become parties thereto (including the Lender) (as the same may be amended or
supplemented from time to time, the “Credit Agreement”), and evidences the Term Loan made
by the Lender thereunder. Capitalized terms used in this Note and not defined herein shall have
the respective meanings assigned to them in the Credit Agreement.

     This Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided
for in the Credit Agreement and the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments
of the Term Loan upon the terms and conditions specified therein and other provisions relevant to
this Note.

Exhibit -3 – 1

 

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

	 	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit A-3 – 2

 

 

EXHIBIT A-4

FORM OF BA EQUIVALENT NOTE

	 	 	 
	$                    

	 	                    , 2006

     FOR VALUE RECEIVED, UC CANADIAN PARTNERSHIP HOLDINGS COMPANY, a Nova Scotia unlimited
liability company and UNIVERSAL COMPRESSION CANADA, LIMITED PARTNERSHIP, a Nova Scotia limited
partnership (collectively, the “Canadian Borrowers”), hereby promise to pay to
                     (the “Lender”) or registered assigns, at the principal
office of WACHOVIA CAPITAL FINANCE CORPORATION (CANADA), as the Canadian Administrative Agent (the
“Canadian Administrative Agent”), at 141 Adelaide Street W., Suite 1500, Toronto, Ontario,
Canada M3H 3L9, the principal sum of                                          Canadian Dollars
(C$                    ), in lawful money of Canada and in immediately available funds, on
                    , ___.

     This BA Equivalent Note is one of the BA Equivalent Notes referred to in the Senior Secured
Credit Agreement dated as of October 20, 2006, among Universal Compression, Inc., a Texas
corporation and Universal Compression Holdings, Inc., a Delaware corporation, collectively, as the
US Borrowers, the Canadian Borrowers, the US Administrative Agent, Wachovia Capital Finance
Corporation (Canada), as the Canadian Administrative Agent and the other Agents and Lenders which
are or become parties thereto (including the Lender) (as the same may be amended or supplemented
from time to time, the “Credit Agreement”), and evidences BA Equivalent Loans made by the
Lender thereunder. Capitalized terms used in this BA Equivalent Note and not defined herein shall
have the respective meanings assigned to them in the Credit Agreement.

     This BA Equivalent Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement and the Security Instruments. The Credit Agreement
provides for the acceleration of the maturity of this BA Equivalent Note upon the occurrence of
certain events and for prepayments of BA Equivalent Loans upon the terms and conditions specified
therein.

Exhibit A-4 – 2

 

 

THIS BA EQUIVALENT NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS.

	 	 	 	 	 
	 	 	UC CANADIAN PARTNERSHIP HOLDINGS COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION CANADA, LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	By:	 	UC CANADIAN PARTNERSHIP

HOLDINGS COMPANY, its General Partner
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

Exhibit A-4 – 2

 

EXHIBIT
B - 1

FORM OF US BORROWING, CONTINUATION AND CONVERSION REQUEST

             
       , 20___

     UNIVERSAL COMPRESSION, INC., a Texas corporation, and UNIVERSAL COMPRESSION HOLDINGS, INC., a
Delaware corporation (collectively, the “US Borrowers”), pursuant to the Senior Secured
Credit Agreement dated as of October 20, 2006, among the US Borrowers, UC CANADIAN PARTNERSHIP
HOLDINGS COMPANY, a Nova Scotia unlimited liability company and UNIVERSAL COMPRESSION CANADA,
LIMITED PARTNERSHIP, a Nova Scotia limited partnership, collectively, as the Canadian Borrowers,
WACHOVIA BANK, NATIONAL ASSOCIATION, as US Administrative Agent, WACHOVIA CAPITAL FINANCE
CORPORATION (CANADA), as Canadian Administrative Agent, and such other Agents and Lenders party
thereto (as the same may be amended or supplemented from time to time, the “Credit
Agreement”), hereby make the requests indicated below (unless otherwise defined herein,
capitalized terms are defined in the Credit Agreement):

1. US Tranche Loans:

(a) Aggregate amount of new US Tranche Loans to be borrowed is
$             
                    
       ;

(b) Requested funding date is              
       , ___;

(c) $             
                    
        of such US Tranche Borrowings are to be US Dollar Base
Rate Loans;

(d) $             
                    
        of such US Tranche Borrowings are to be US Dollar LIBOR
Loans; and

(i) Length of Interest Period for US Dollar LIBOR Loans is:
             
                    
       .

(e) The location and number of the account is:

             
                    
                    
                    
       .

2. US Dollar LIBOR Loan Continuation/Conversion for US Dollar LIBOR Loans maturing on
             
                    
       :

(a) Aggregate amount to be continued as US Dollar LIBOR Loans is
$             
                    
       ; and

(i) Length of Interest Period for continued US Dollar LIBOR Loans is
             
                    
       .

(b) Aggregate amount to be converted to US Dollar Base Rate Loans is
$             
                    
       .

Exhibit B-1 – 1

 

3. Conversion of outstanding US Dollar Base Rate Loans to US Dollar LIBOR Loans:

(a) Convert $             
                    
        of the outstanding US Dollar Base Rate Loans to US
Dollar LIBOR Loans on              
                    
        with an Interest Period of
             
                    
       .

     The undersigned certifies that he is the              
                      
      of         
            , and that
as such he is authorized to execute this certificate on behalf of            
         . The
undersigned further certifies, represents and warrants on behalf of            
          that
             
        is entitled to receive the requested
Borrowing, continuation or conversion under
the terms and conditions of the Credit Agreement.

	 	 	 	 	 
	 	 	[UNIVERSAL COMPRESSION, INC./ UNIVERSAL COMPRESSION
HOLDINGS, INC.]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

Exhibit B-1 – 2

 

EXHIBIT B - 2

FORM OF CANADIAN BORROWING, CONTINUATION AND CONVERSION REQUEST

             
       , 20___

     UC CANADIAN PARTNERSHIP HOLDINGS COMPANY, a Nova Scotia unlimited liability company and
UNIVERSAL COMPRESSION CANADA, LIMITED PARTNERSHIP, a Nova Scotia limited partnership (collectively,
the “Canadian Borrowers”), pursuant to the Senior Secured Credit Agreement dated as of
October 20, 2006, among the Canadian Borrowers, UNIVERSAL COMPRESSION, INC., a Texas corporation
and UNIVERSAL COMPRESSION HOLDINGS, INC. a Delaware corporation, collectively as the US Borrowers,
WACHOVIA BANK, NATIONAL ASSOCIATION, as US Administrative Agent, WACHOVIA CAPITAL FINANCE
CORPORATION (CANADA), as Canadian Administrative Agent, and such other Agents and Lenders party
thereto (as the same may be amended or supplemented from time to time, the “Credit
Agreement”), hereby makes the requests indicated below (unless otherwise defined herein,
capitalized terms are defined in the Credit Agreement):

1. New Canadian Tranche Loans:

(a) Aggregate amount of new Canadian Tranche Loans to be borrowed is
$             
                    
       ;

(b) Requested funding date is              
                    
       , ___;

(c) $             
                    
        of such Canadian Tranche Borrowings are to be US Dollar
Base Rate Loans;

(d) $             
                    
        of such Canadian Tranche Borrowings are to be US Dollar
LIBOR Loans;

(i) Length of Interest Period for US Dollar LIBOR Loans is:
             
                    
       .

(e) $             
                    
        of such Canadian Tranche Borrowings are to be Canadian
Prime Rate Loans;

(f) $             
                    
        of such Canadian Tranche Borrowings are to be Bankers’
Acceptances or BA Equivalent Loans; and

(i) The Acceptance Date with respect to Bankers’ Acceptances and BA
Equivalent Loans is:              
                    
       ; and

(ii) The maturity date with respect to Bankers’ Acceptances and BA
Equivalent Loans is (integral multiples of 30 days up to 180 days from the
Acceptance Date):              
                    
       .

Exhibit B-2 – 1

 

(g) The location and number of the account is:

             
                    
                    
                    
       .

2. US Dollar LIBOR Loan Continuation/Conversion for US Dollar LIBOR Loans maturing on
             
                    
       :

(a) Aggregate amount to be continued as US Dollar LIBOR Loans is
$             
                    
       ;

(i) Length of Interest Period for continued US Dollar LIBOR Loans is
             
                    
       .

(b) Aggregate amount to be converted to US Dollar Base Rate Loans is
$             
                    
       ;

(c) Aggregate amount to be converted to Canadian Prime Rate Loans is
$             
                    
       ; and

(d) Aggregate amount to be converted to Bankers’ Acceptances or BA Equivalent Loans
is $             
                    
       .

(i) The Acceptance Date with respect to Bankers’ Acceptances and BA
Equivalent Loans is:              
                    
       ; and

(ii) The maturity date with respect to Bankers’ Acceptances and BA
Equivalent Loans is (integral multiples of 30 days up to 180 days from the
Acceptance Date):              
                    
       .

3. US Dollar Base Rate Loan Conversion for US Dollar Base Rate Loans:

(a) Aggregate amount to be converted to US Dollar LIBOR Loans is:

$             
                    
       ;

(i) Length of Interest Period for continued US Dollar LIBOR Loans is
             
                    
       .

(b) Aggregate amount to be converted to Canadian Prime Rate Loans is
$             
                    
       ; and

(c) Aggregate amount to be converted to Bankers’ Acceptances or BA Equivalent Loans
is $             
                    
       .

(i) The Acceptance Date with respect to Bankers’ Acceptances and BA
Equivalent Loans is:              
                    
       ; and

Exhibit B-2 – 2

 

(ii) The maturity date with respect to Bankers’ Acceptances and BA
Equivalent Loans is (integral multiples of 30 days up to 180 days from the
Acceptance Date):              
                    
       .

4. Canadian Prime Rate Loan Conversion for Canadian Prime Rate Loans:

(a) Aggregate amount to be converted to Bankers’ Acceptances or BA Equivalent Loans
is $             
                    
       .

(i) The Acceptance Date with respect to Bankers’ Acceptances and BA
Equivalent Loans is:              
                    
       ; and

(ii) The maturity date with respect to Bankers’ Acceptances and BA
Equivalent Loans is (integral multiples of 30 days up to 180 days from the
Acceptance Date):              
                    
       .

(b) Aggregate amount to be converted to US Dollar LIBOR Loans is
$             
                    
       ; and

(i) Length of Interest Period for converted US Dollar LIBOR Loans is
             
                    
       .

(c) Aggregate amount to be converted to US Dollar Base Rate Loans is
$             
                    
       ;

5. Bankers’ Acceptances and BA Equivalent Loan Conversion for Bankers’ Acceptances and BA
Equivalent Loans with a maturity date of              
                    
       :

(a) Aggregate amount to be converted to Canadian Prime Rate Loans is
$             
                    
       .

Exhibit B-2 – 3

 

     The undersigned certifies that he is the                      of                     , and that
as such he is authorized to execute this certificate on behalf of                     . The
undersigned further certifies, represents and warrants on behalf of                      that
                     is entitled to receive the requested Borrowing, continuation or conversion under
the terms and conditions of the Credit Agreement.

	 	 	 	 	 	 	 
	 	 	UC CANADIAN PARTNERSHIP HOLDINGS

COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION CANADA,

LIMTED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

Exhibit B - 2 - 4

 

EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

     The undersigned hereby certifies that he is the                      of [UNIVERSAL COMPRESSION,
INC., a Texas corporation (“UCI”)] [UNIVERSAL COMPRESSION HOLDINGS, INC., a Delaware
corporation (“Holdings”)] and that as such he is authorized to execute this certificate on
behalf of [UCI] [Holdings]. With reference to the Senior Secured Credit Agreement dated as of
October 20, 2006, among Universal Compression, Inc., a Texas corporation and Universal Compression
Holdings, Inc., a Delaware corporation (collectively, the “US Borrowers”), UC Canadian
Partnership Holdings Company, a Nova Scotia unlimited liability company and Universal Compression
Canada, Limited Partnership, a Nova Scotia limited partnership (collectively, the “Canadian
Borrowers”), Wachovia Bank, National Association, as US Administrative Agent (the “US
Administrative Agent”), Wachovia Capital Finance Corporation (Canada), as the Canadian
Administrative Agent (the “Canadian Administrative Agent”), and such other Agents and
Lenders party thereto (as the same may be amended or supplemented from time to time, the
“Credit Agreement”), the undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the Credit Agreement unless otherwise
specified):

(a) The representations and warranties of each US Borrower and each Canadian Borrower
contained in ARTICLES VII and VIII of the Credit Agreement and in the Security Instruments
were true and correct when made, and are repeated at and as of the time of delivery hereof
and are true and correct at and as of the time of delivery hereof, except as such
representations and warranties are expressly limited to an earlier date or are modified to
give effect to the transactions expressly permitted by the Credit Agreement.

(b) Each US Borrower and each Canadian Borrower has performed and complied with all
agreements and conditions contained in the Credit Agreement and in the Security Instruments
required to be performed or complied with by it prior to or at the time of delivery hereof.

(c) Since December 31, 2005, there has been no change or event having a Material Adverse
Effect.

(d) No Default has occurred and is continuing under the Credit Agreement.

Exhibit C - 1 - 1

 

EXECUTED AND DELIVERED this ___day of                     .

	 	 	 	 	 	 	 
	 	 	[UNIVERSAL COMPRESSION, INC./

UNIVERSAL COMPRESSION HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

Exhibit C - 1 - 2

 

EXHIBIT C-2

FORM OF COMPLIANCE CERTIFICATE

     The undersigned hereby certifies that he is the                      of UNIVERSAL COMPRESSION,
INC., a Texas corporation (“UCI”) and that as such he is authorized as a Responsible
Officer to execute this certificate on behalf of UCI. With reference to the Senior Secured Credit
Agreement dated as of October 20, 2006, among UCI and Universal Compression Holdings, Inc., a
Delaware corporation (“Holdings”, and together with UCI, the “US Borrowers”), UC
Canadian Partnership Holdings Company, a Nova Scotia unlimited liability company and Universal
Compression Canada, Limited Partnership, a Nova Scotia limited partnership (collectively, the
“Canadian Borrowers”), Wachovia Bank, National Association, as US Administrative Agent (the
“US Administrative Agent”), Wachovia Capital Finance Corporation (Canada), as the Canadian
Administrative Agent (the “Canadian Administrative Agent”), and such other Agents and
Lenders party thereto (as the same may be amended or supplemented from time to time, the
“Credit Agreement”), the undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the Credit Agreement unless otherwise
specified):

(a) No Default has occurred and is continuing under the Credit Agreement.

(b) The financial statements furnished to the US Administrative Agent with this certificate
fairly present the consolidated financial condition and results of operations of Holdings
and its Consolidated Subsidiaries as at the end of, and for, the [fiscal quarter] [fiscal
year] ending                                          and such financial statements have been approved in
accordance with the accounting procedures specified in the Credit Agreement.

(c) Attached hereto are the detailed computations necessary to determine whether Holdings
and its Consolidated Subsidiaries are in compliance with Section 10.13 of the Credit
Agreement as of the end of the [fiscal quarter] [fiscal year] ending
                                        .

EXECUTED AND DELIVERED this ___day of                     .

	 	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

Exhibit C - 2 - 1

 

EXHIBIT D

Senior Security Instruments

1. Collateral Agreement dated as of October 20, 2006 among the US Borrowers, UCI MLP LP LLC, UCI
Compressor Holding, L.P. and the US Administrative Agent, as amended, modified or restated from
time to time (the “Collateral Agreement”), covering:

	 	a.	 	UCI’s pledge of 100% of the stock of the following direct Domestic Subsidiaries:

	 	(i)	 	Universal Compression International, Inc.
	 
	 	(ii)	 	Compressor Systems International, Inc.
	 
	 	(iii)	 	UCI Leasing Holding GP LLC
	 
	 	(iv)	 	UCI Leasing Holding LP LLC
	 
	 	(v)	 	UCI GP LP LLC
	 
	 	(vi)	 	UCO GP, LLC
	 
	 	(vii)	 	UCI MLP LP LLC

	 	b.	 	UCI’s pledge of 65% of the stock of first tier Foreign Subsidiaries:

	 	(i)	 	Columbus Insurance Ltd.

	 	c.	 	Holdings’ pledge of 100% of the stock of the following direct Domestic Subsidiaries:

	 	(i)	 	Universal Compression, Inc.

	 	d.	 	Holdings’ pledge of 65% of the stock of first tier Foreign Subsidiaries:

	 	(i)	 	None

e. Holdings’ and each Subsidiaries’ accounts, chattel paper, documents, equipment, general
intangibles, instruments and inventory, all books and records pertaining to the foregoing
and proceeds.

f. UCI MLP LP LLC’s pledge of 100% of its ownership of the limited partnership interests of
UCLP.

	2.	 	UCC Financing Statements for Holdings, UCI and UCI MLP LP LLC relating to Item 1.
	 
	3.	 	Stock Powers, if applicable, relating to stock pledged in Item 1.
	 
	4.	 	Original certificates representing stock pledged in Item 1, if applicable:

a. Stock Certificate No. 1 for 100 shares in the name of Universal Compression
International, Inc. issued to Universal Compression, Inc.

Exhibit D - 1

 

b. Stock Certificate No. 2 for 1,500 shares of Compressor Systems International, Inc. issued
to Universal Compression, Inc.

c. Stock Certificate No. 1 for 1 share of UCI Leasing Holding GP LLC issued to Universal
Compression, Inc.

d. Stock Certificate No. 1 for 1 share of UCI Leasing Holding LP LLC issued to Universal
Compression, Inc.

e. Stock Certificate No. 1 for 1 share of UCI GP LP LLC issued to Universal Compression,
Inc.

f. Stock Certificate No. 1 for 1 share of UCO GP, LLC issued to Universal Compression, Inc.

g. Stock Certificate No. 1 for 1 share of UCI MLP LP LLC issued to Universal Compression,
Inc.

5. Pledge and Security Agreement (Pledge and Assignment), dated October 20, 2006 among Universal
Compression International, Inc., Enterra Compression Investment Company, Universal Compression
Services, LLC, Universal Compression Canadian Holdings, Inc., UCI GP LP LLC, UCO GP, LLC covering:

	 	a.	 	100% of the stock of the following domestic subsidiaries:

	 	(i)	 	Enterra Compression Investment Company
	 
	 	(ii)	 	UCO Compression Holding, L.L.C.
	 
	 	(iii)	 	Universal Compression Services, LLC
	 
	 	(iv)	 	Universal Compression Canadian Holdings, Inc.
	 
	 	(v)	 	UCO General Partner, LP

	 	b.	 	65% (except where noted) of the stock of the following foreign subsidiaries:

	 	(i)	 	Universal Compression International Ltd.
	 
	 	(ii)	 	Universal Compression (Thailand) Ltd.
	 
	 	(iii)	 	Universal Compression Services de Venezuela, C.A.
	 
	 	(iv)	 	Universal Compression (Australia) Pty Ltd.
	 
	 	(v)	 	PT Universal Compression Indonesia

	 
	 	(vi)	 	Universal Compression Trade Holdings ULC

6. Stock Powers

7. UCC Financing Statements relating to capital stock or membership interests pledged in Item 5.

Exhibit D - 2

 

	8.	 	Original certificates representing capital stock pledged in Item 5:

	 	 	 	a.

(i) Stock Certificate No. 4 for 1,002 shares of Enterra Compression Investment
Company issued to Universal Compression International, Inc.

(ii) Stock Certificates No. 3 and 4 for 640 shares and 360 shares, respectively, of
UCO Compression Holding, L.L.C. issued to Enterra Compression Investment Company

(iii) Stock Certificates No. 6 and 7 for 3,600 shares and 6,400 shares,
respectively, of Universal Compression Services, LLC issued to Enterra Compression
Investment Company

(iv) Stock Certificate No. 2 for 100 shares of Universal Compression Canadian
Holdings, Inc. issued to Enterra Compression Investment Company

(v) Stock
Certificate No.1 for a .001% general partnership interest of UCO
General Partner, LP issued to UCO GP, LLC

(vi) Stock
Certificate No.1 for a 99.999% limited partnership interest of UCO
General Partner, LP issued to UCI GP LP LLC

	 	 	 	b.

(i) Stock Certificate No. 4 for 65 shares of Universal Compression International
Ltd. issued to Universal Compression International, Inc.

(ii) Stock Certificate No. 1 for 2,317,657 shares of Universal Compression Services
de Venezuela, C.A. issued to Universal Compression Services, LLC (formerly Universal
Compression Services, L.P.)

(iii) Stock Certificate No. 2 for 65 shares of Universal Compression (Australia) Pty
Ltd issued to Universal Compression Services, LLC (formerly Universal Compression
Services, L.P.)

(iv) Stock Certificate No. 36 for 390,000 shares of Universal Compression (Thailand)
Ltd. Issued to Universal Compression Services, LLC.

(v) Stock Certificate No. 1 for 162 shares of PT Universal Indonesia issued to
Universal Compression International, Inc.

(vi) Stock Certificate No.2 for 51,696,522 shares of Universal Compression Trade
Holdings ULC issued to Universal Compression Canadian Holdings, Inc.

Exhibit D - 3

 

9. Deed of Trust, Security Agreement, Assignment of Rents and Leases, Fixture Filing and Financing
Statement, dated October 20, 2006 executed by Universal Compression, Inc., covering that certain
real property located at 4444 Brittmoore Road, Houston, Texas 77041

10. Guaranty Agreement dated as of October 20, 2006 among UCI MLP LP LLC, UCI Compressor Holding,
L.P. and the US Administrative Agent, as amended, modified or restated from time to time

Exhibit D - 4

 

EXHIBIT E

FORM OF ASSIGNMENT AGREEMENT

NOTE: IF ASSIGNOR OR A BRANCH OR AN AFFILIATE OF ASSIGNOR IS A LENDER UNDER A US TRANCHE COMMITMENT
OR A CANADIAN TRANCHE COMMITMENT, SUCH AFFILIATE MUST ASSIGN AN EQUAL PRO RATA AMOUNT OF ITS
RESPECTIVE COMMITMENT PURSUANT TO THIS FORM.

     ASSIGNMENT AGREEMENT (“Agreement”) dated as of                     ,
                                        between:
                                         (the “Assignor”) and
                                         (the “Assignee”).

RECITALS

	A.	 	The Assignor is a party to the Senior Secured Credit Agreement dated as of October 20, 2006
(as the same may be amended or supplemented from time to time, the “Credit Agreement”)
among Universal Compression, Inc., a Texas corporation and Universal Compression Holdings,
Inc, a Delaware corporation (collectively, the “US Borrowers”, and in their capacity
as guarantor of the Canadian Borrowers, the “Guarantor”); UC Canadian Partnership
Holdings Company, a Nova Scotia unlimited liability company and Universal Compression Canada,
Limited Partnership, a Nova Scotia limited partnership (collectively, the “Canadian
Borrowers”); Wachovia Bank, National Association, individually and as US Administrative
Agent (herein, together with its successors in such capacity, the “US Administrative
Agent”); Wachovia Capital Finance Corporation (Canada), individually ad as Canadian
Administrative Agent (herein, together with its successors in such capacity, the “Canadian
Administrative Agent”); Deutsche Bank Trust Company Americas, individually and as
Syndication Agent (herein, together with its successors in such capacity, the “Syndication
Agent”); and each of the other agents and lenders that are a signatory hereto or which
become a signatory hereto pursuant to Section 13.06 (individually, together with their
successors and assigns, a “Lender” and, collectively, the “Lenders”).
	 
	B.	 	The Assignor proposes to sell, assign and transfer to the Assignee, and the Assignee proposes
to purchase and assume from the Assignor, the Assigned Interests, all on the terms and
conditions of this Agreement.
	 
	C.	 	In consideration of the foregoing and the mutual agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

ARTICLE I

Definitions

     Section 1.01. Definitions. All capitalized terms used but not defined herein have the
respective meanings given to such terms in the Credit Agreement.

     Section 1.02. Other Definitions. As used herein, the following terms have the
following respective meanings:

Exhibit E - 1

 

     “Assigned Interest” shall mean:

	 	 	 	 	 	 	 	 	 
	US Tranche Commitment

	 	 	$	 	 	 	 	 
	Canadian Allocated Maximum Total Commitment

	 	 	$	 	 	 

	 	 
	Canadian Allocated Commitment

	 	 	$	 	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	US Tranche Credit Exposure:
	 	 	 	 	 	 	 	 
	US Dollar LIBOR Loans

	 	 	$	 	 	 	 	outstanding
	US Base Rate Loans

	 	 	$	 	 	 

	 	 outstanding
	LC Exposure

	 	 	$	 	 	 

	 	 outstanding
	 

	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	Canadian Tranche Credit Exposure:
	 	 	 	 	 	 	 	 
	Canadian Prime Rate Loans

	 	 	C$	 	 	 	 	outstanding
	US Dollar Base Rate Loans

	 	 	$	 	 	 

	 	 outstanding
	US Dollar LIBOR Loans

	 	 	$	 	 	 

	 	 outstanding
	Bankers’ Acceptances or BA Equivalent Loans

	 	 	C$	 	 	 

	 	 outstanding
	 

	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	Term Credit Exposure:
	 	 	 	 	 	 	 	 
	US Dollar Base Rate Loans

	 	 	$	 	 	 	 	outstanding
	US Dollar LIBOR Loans

	 	 	$	 	 	 

	 	 outstanding
	 

	 	 	 	 	 	 

	 	 

     “Assignment Date” shall mean     
                   
                
 ,               
      .

ARTICLE II

Sale and Assignment

     Section 2.01. Sale and Assignment. On the terms and conditions set forth herein,
effective on and as of the Assignment Date, the Assignor hereby sells, assigns and transfers to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, all of the right, title
and interest of the Assignor in and to, and all of the obligations of the Assignor in respect of,
the Assigned Interest. Such sale, assignment and transfer is without recourse and, except as
expressly provided in this Agreement, without representation or warranty.

     Section 2.02. Assumption of Obligations. The Assignee agrees with the Assignor (for
the express benefit of the Assignor and the Applicable Borrower) that the Assignee will, from and
after the Assignment Date, perform all of the obligations of the Assignor in respect of the
Assigned Interest. From and after the Assignment Date: (a) the Assignor shall be released from
the Assignor’s obligations in respect of the Assigned Interest, and (b) the Assignee shall be
entitled to all of the Assignor’s rights, powers and privileges under the Credit Agreement and the
other Security Instruments in respect of the Assigned Interest.

     Section 2.03. Consent Required. By executing this Agreement as provided below, in
accordance with Section 13.06(b) of the Credit Agreement, to the extent required, the US
Administrative Agent, the Issuing Banks and (unless an Event of Default has occurred or is
continuing) the US Borrowers hereby acknowledge notice of the transactions contemplated by
this Agreement and consents to such transactions.

Exhibit
E – 2

 

 

ARTICLE III

Payments

     Section 3.01. Payments. As consideration for the sale, assignment and transfer
contemplated by Section 2.01 hereof, the Assignee shall, on the Assignment Date, assume
Assignor’s obligations in respect of the Assigned Interest and pay to the Assignor an amount equal
to the outstanding Loans, if any[; provided that any outstanding Bankers’ Acceptances or BA
Equivalent Notes shall either be held to maturity by the Assignor or Assignee shall pay a
discounted amount as determined by Assignor and Assignee]. An amount equal to all accrued and
unpaid interest and fees shall be paid to the Assignor as provided in Section 3.02(iii)
below. Except as otherwise provided in this Agreement, all payments hereunder shall be made in the
applicable currency set forth in Section 1.02 and in immediately available funds, without
setoff, deduction or counterclaim.

     Section 3.02. Allocation of Payments. The Assignor and the Assignee agree that (i)
the Assignor shall be entitled to any payments of principal with respect to the Assigned Interest
made prior to the Assignment Date, together with any interest and fees with respect to the Assigned
Interest accrued prior to the Assignment Date, (ii) the Assignee shall be entitled to any payments
of principal with respect to the Assigned Interest made from and after the Assignment Date,
together with any and all interest and fees with respect to the Assigned Interest accruing from and
after the Assignment Date, and (iii) the Applicable Administrative Agent is authorized and
instructed to allocate payments received by it for account of the Assignor and the Assignee as
provided in the foregoing clauses. Each party hereto agrees that it will hold any interest, fees
or other amounts that it may receive to which the other party hereto shall be entitled pursuant to
the preceding sentence for account of such other party and pay, in like money and funds, any such
amounts that it may receive to such other party promptly upon receipt.

     Section 3.03. Delivery of Notes. Promptly following the receipt by the Assignor of
the consideration required to be paid under Section 3.01 hereof, the Assignor shall, in the
manner contemplated by Section 13.06(b) of the Credit Agreement, (i) deliver to the Applicable
Administrative Agent (or its counsel) the Note(s) and any Bankers’ Acceptances and BA Equivalent
Note(s) (if applicable with any necessary indemnity to be agreed among the Assignor and the
Assignee) held by the Assignor and (ii) notify the Applicable Administrative Agent to request that
the Applicable Borrower execute and deliver new Notes to the Assignor, if Assignor continues to be
a Lender, and the Assignee, dated the date of this Agreement in respective principal amounts equal
to the respective [US Tranche/Canadian Allocated Maximum Total] Commitment [and outstanding Term
Loan] of the Assignor (if appropriate) and the Assignee after giving effect to the sale, assignment
and transfer contemplated hereby.

     Section 3.04. Further Assurances. The Assignor and the Assignee hereby agree to
execute and deliver such other instruments, and take such other actions, as either party may
reasonably request in connection with the transactions contemplated by this Agreement.

Exhibit
E – 3

 

 

ARTICLE IV

Conditions Precedent.

     Section 4.01. Conditions Precedent. The effectiveness of the sale, assignment and
transfer contemplated hereby is subject to the satisfaction of each of the following conditions
precedent:

     (a) the execution and delivery of this Agreement by the Assignor and the Assignee;

     (b) the receipt by the Assignor of the payment required to be made by the Assignee under
Section 3.01 hereof; and

     (c) to the extent required, the acknowledgment and consent by the Applicable Administrative
Agent, the Issuing Banks and the US Borrowers contemplated by Section 2.03 hereof.

ARTICLE V

Representations and Warranties

     Section 5.01. Representations and Warranties of the Assignor. The Assignor represents
and warrants to the Assignee as follows:

     (a) it has all requisite power and authority, and has taken all action necessary to execute
and deliver this Agreement and to fulfill its obligations under, and consummate the transactions
contemplated by, this Agreement;

     (b) the execution, delivery and compliance with the terms hereof by Assignor and the delivery
of all instruments required to be delivered by it hereunder do not and will not violate any
Governmental Requirement applicable to it;

     (c) this Agreement has been duly executed and delivered by it and constitutes the legal, valid
and binding obligation of the Assignor, enforceable against it in accordance with its terms;

     (d) all approvals and authorizations of, all filings with and all actions by any Governmental
Authority necessary for the validity or enforceability of its obligations under this Agreement have
been obtained; and

     (e) the Assignor has good title to, and is the sole legal and beneficial owner of, the
Assigned Interest, free and clear of all Liens, claims, participations or other charges of any
nature whatsoever.

     Section 5.02. Disclaimer. Except as expressly provided in Section 5.01
hereof, the Assignor does not make any representation or warranty, nor shall it have any
responsibility to the Assignee, with respect to the accuracy of any recitals, statements,
representations or warranties contained in the Credit Agreement or in any certificate or other
document referred to or provided for in, or received by any Lender under, the Credit Agreement, or
for the value, validity, effectiveness, genuineness, execution, effectiveness, legality,
enforceability or sufficiency of the

Exhibit
E – 4

 

 

Credit Agreement, the Notes or any other document referred to or provided for therein or for
any failure by the Borrowers or any other Person (other than Assignor) to perform any of its
obligations thereunder prior or for the existence, value, perfection or priority of any collateral
security or the financial or other condition of the Borrowers or the Subsidiaries or any other
obligor or guarantor, or any other matter relating to the Credit Agreement or any other Security
Instrument or any extension of credit thereunder.

     Section 5.03. Representations and Warranties of the Assignee. The Assignee represents
and warrants to the Assignor as follows:

     (a) it has all requisite power and authority, and has taken all action necessary to execute
and deliver this Agreement and to fulfill its obligations under, and consummate the transactions
contemplated by, this Agreement;

     (b) the execution, delivery and compliance with the terms hereof by Assignee and the delivery
of all instruments required to be delivered by it hereunder do not and will not violate any
Governmental Requirement applicable to it;

     (c) this Agreement has been duly executed and delivered by it and constitutes the legal, valid
and binding obligation of the Assignee, enforceable against it in accordance with its terms;

     (d) all approvals and authorizations of, all filings with and all actions by any Governmental
Authority necessary for the validity or enforceability of its obligations under this Agreement have
been obtained;

     (e) the Assignee is not a competitor of Holdings or any of its Subsidiaries;

     (f) the Assignee has fully reviewed the terms of the Credit Agreement and the other Security
Instruments and has independently and without reliance upon the Assignor, and based on such
information as the Assignee has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement; and

     (g) the Assignee hereby affirms that the representations contained in Section 4.06(d)[(i)]
[(vi)] of the Credit Agreement are true and accurate as to it [IF (i) IS SELECTED ADD: and, the
Assignee has contemporaneously herewith delivered to the US Administrative Agent and the US
Borrowers such certifications as are required thereby to avoid the withholding taxes referred to in
Section 4.06 of the Credit Agreement].

ARTICLE VI

Miscellaneous

     Section 6.01. Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including, without limitation, by telex or telecopy)
to the intended recipient at its “Address for Notices” specified below its name on the signature
pages hereof or, as to either party, at such other address as shall be designated by such party in
a notice to the other party.

Exhibit
E – 5

 

 

     Section 6.02. Amendment, Modification or Waiver. No provision of this Agreement may
be amended, modified or waived except by an instrument in writing signed by the Assignor and the
Assignee, and consented to by the US Administrative Agent and (unless an Event of Default has
occurred or is continuing) the US Borrowers.

     Section 6.03. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and permitted assigns. The
representations and warranties made herein by the Assignee are also made for the benefit of the
Applicable Administrative Agent and the [US/Canadian] Borrowers, and the Assignee agrees that the
Applicable Administrative Agent and the [US/Canadian] Borrowers are entitled to rely upon such
representations and warranties.

     Section 6.04. Assignments. Neither party hereto may assign any of its rights or
obligations hereunder except in accordance with the terms of the Credit Agreement.

     Section 6.05. Captions. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the interpretation of
any provision of this Agreement.

     Section 6.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be identical and all of which, taken together, shall constitute
one and the same instrument, and each of the parties hereto may execute this Agreement by signing
any such counterpart.

     Section 6.07. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of Texas.

     Section 6.08. Expenses. To the extent not paid by the [US/Canadian] Borrowers
pursuant to the terms of the Credit Agreement, each party hereto shall bear its own expenses in
connection with the execution, delivery and performance of this Agreement.

     Section 6.09. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

[Signatures begin on next page]

Exhibit
E – 6

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed
and delivered as of the date first above written.

	 	 	 	 	 
	 	 	ASSIGNOR:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

	 	 	 	 	 
	 	 	Address for Notices:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Telecopier No.:	 	 
	 

	 	 	 	 
	 

	 	Telephone No.:	 	 
	 

	 	 	 	 
	 

	 	Attention:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 	 	ASSIGNEE:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

	 	 	 	 	 
	 	 	Address for Notices:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Telecopier No.:
	 	 
	 

	 	 	 	 
	 

	 	Telephone No.:	 	 
	 

	 	 	 	 
	 

	 	Attention:	 	 
	 

	 	 	 	 

Exhibit
E – 7

 

 

	 	 	 	 	 
	ACKNOWLEDGED AND CONSENTED TO:
	 
	 	 	 	 
	WACHOVIA BANK, NATIONAL ASSOCIATION,

as US Administrative Agent and Issuing Bank
	 
	 	 	 	 
	By:
	 	 	 	 
	 	 	 
	Name:
	 	 	 	 
	 	 	 
	Title:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Issuing Bank
	 
	 	 	 	 
	By:
	 	 	 	 
	 	 	 
	Name:
	 	 	 	 
	 	 	 
	Title:

	 	 	 	]
	 

	 	 	 	 
	 
	 	 	 	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Issuing Bank
	 
	 	 	 	 
	By:
	 	 	 	 
	 	 	 
	Name:
	 	 	 	 
	 	 	 
	Title:

	 	 	 	]
	 

	 	 	 	 
	 
	 	 	 	 
	CONSENTED TO:
	 
	 	 	 	 
	UNIVERSAL COMPRESSION, INC.
	 
	 	 	 	 
	By:
	 	 	 	 
	 	 	 
	Name:
	 	 	 	 
	 	 	 
	Title:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	UNIVERSAL COMPRESSION HOLDINGS, INC.
	 
	 	 	 	 
	By:
	 	 	 	 
	 	 	 
	Name:
	 	 	 	 
	 	 	 
	Title:
	 	 	 	 
	 	 	 

 Exhibit
E – 8

 

 

EXHIBIT F

FORM OF LETTER OF CREDIT APPLICATIONS

WACHOVIA FORM

Application and Agreement for Irrevocable Standby Letter of Credit

TO: Wachovia Bank, National Association (“Bank”)

Please TYPE information in the fields below. We reserve the right to return illegible applications for clarification.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	Date:

	 	 	 	 	 	The undersigned Applicant hereby requests Bank to issue and transmit by:

     o Overnight Carrier      o Teletransmission      o Mail      o Other:	 
	 	 
	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	Explain	 
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	L/C No.

	 	 	

(Bank Use Only)
	 	 	an Irrevocable Standby Letter of Credit (the “Credit”) substantially as set forth below.
In issuing the Credit, Bank is expressly authorized to make such changes from the terms
hereinbelow set forth as it , in its sole discretion, may deem advisable.	 
	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	Applicant (Full Name & Address)
	 	 	Advising Bank (Designate name & address only if desired)	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	Beneficiary (Full Name & Address)
	 	 	Currency and Amount in Figures:	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	Currency and Amount in Words:	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	Expiration Date:	 	 	 	 	 
	 	 	 	 	 	 
	 	Charges: Wachovia’s charges are for our account; all other banking charges are to be paid by beneficiary.	 
	 	 	 	 	 	 

Credit to be available for payment against Beneficiary’s draft(s) at sight drawn on Bank or its correspondent at Bank’s option accompanied by the
following documents:

			
	   o	 	Statement, purportedly signed by the Beneficiary, reading as follows (please state below exact wording to appear on the statement):

			
	   o	 	Other Documents

			
	   o	 	Special Conditions (including, if Applicant has a preference, selection of UCP as herein defined or ISP98 as herein defined.)

			
		 	

 Exhibit
F – 1

 

 

			
		 	

			
	o	 	Issue substantially in form of attached specimen. (Specimen must also be signed by applicant.)

			
		 	

Complete only when the Beneficiary (Foreign Bank, or other Financial
Institution) is to issue its undertaking based on this Credit.

			
	o	 	Request Beneficiary to issue and deliver their (specify type of
undertaking)                     in favor of                     for an
amount not exceeding the amount specified above, effective
immediately relative to (specify contract number or other
pertinent reference)                    to expire on                    . (This
date must be at least 15 days prior to expiry date indicated
above.) It is understood that if the Credit is issued in favor
of any bank or other financial or commercial entity which has
issued or is to issue an undertaking on behalf of the Applicant
of the Credit in connection with the Credit, the Applicant
hereby agrees to remain liable under this Application and
Agreement in respect of the Credit (even after its stated
expiry date) until Bank is released by such bank or entity.

			
		 	

Each Applicant signing below affirms that it has fully read and agrees to this Application and
the attached Continuing Letter of Credit Agreement. In consideration of the Bank’s issuance of the
Credit, the Applicant agrees to be bound by the agreement set forth in this and in the following
pages (even if the following pages are not attached to the Application) delivered to the Bank.
(Note: If a bank, trust company, or other financial institution signs as Applicant or joint and
several co-Applicant for its customer, or if two Applicants jointly and severally apply, both
parties sign below). Documents may be forwarded to the Bank by the beneficiary, or the
negotiating bank, in one mail. Bank may forward documents to Applicant’s customhouse broker, or
Applicant if specified above, in one mail. Applicant understands and agrees that this Credit will
be subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber
of Commerce currently in effect, and in use by Bank (“UCP”) or to the International Standby
Practices of the International Chamber of Commerce, Publication 590 or any subsequent version
currently in effect and in use by Bank (“ISP98”).

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	(Print or type name of Applicant)

	 	 	 	 	 	 	 	 	 	 	(Print or type name of Co-Applicant)	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	(Address)

	 	 	 	 	 	 	 	 	 	 	(Address)	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Authorized Signature (Title)

	 	 	 	 	 	 	 	 	 	 	Authorized Signature (Title)	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Authorized Signature (Title)

	 	 	 	 	 	 	 	 	 	 	Authorized Signature (Title)	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Customer Contact:

	 	 	 	 	 	 	 	 	 	 	Phone No.:	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	BANK USE ONLY
	 
	 	NOTE : Application will NOT be processed if this section is not complete
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Approved (Authorized Signature)

	 	 	 	 	 	 	 	 	 	 	Date:	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 

EXHIBIT F – 2

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	          Approved (Print name and title)

	 	 	 
	 	 	 
	 	 	 	 	 	City:	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Customer SIC Code:

	 	 	 	 	 	Borrower Default
 Grade:
	 	 	 	 	 	Telephone:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Charge DDA #

	 	 	 	 	 	Fee:
	 	 	RC #:
	 	 	CLAS Bank #
	 	 	CLAS Obligor #:	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Other (please explain):
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

EXHIBIT F – 3

 

DEUTSCHE FORM

Dated 1

Deutsche Bank Trust Company Americas

as Administrative Agent for the Lenders party

to the Credit Agreement referred to below

    [complete address ]

Attention:                     

Fronting Bank: 2

Dear Ladies and Gentlemen:

          We hereby request that the Fronting Bank, in its individual capacity, issue a [standby]
[trade] Letter of Credit for the account of the undersigned on 3
(the “Date of Issuance”), which Letter of Credit shall be denominated in United States
Dollars and shall be in the aggregate amount of 4 .

          For the purposes of this Letter of Credit Request, unless otherwise defined herein, all
capitalized terms used herein and defined in the Credit Agreement shall have the respective meaning
provided such terms in the Credit Agreement.

          The beneficiary of the requested Letter of Credit will be 5 ,
and such Letter of Credit will be in support of 6 and will have a
stated expiration date of 7 .

We hereby certify that:

          (1) the representations and warranties contained in the Credit Agreement and in the other
Credit Documents are and will be true and correct in all material respects, both

 

			
	1	 	Date of Letter of Credit Request. On or after
the Initial Borrowing Date and prior to the 30th day prior to the
Revolving Loan Maturity Date.
	 
	2	 	If standby Letter of Credit is to be issued by
Deutsche Bank Trust Company Americas insert: Deutsche Bank Trust Company
Americas, Global Loan Operations, Standby Letter of Credit Unit, 60 Wall
Street, New York, New York 10005, MS NYC 60-3812. For standby Letters of Credit
to be issued by other Fronting Bank insert name and address of applicable
Fronting Bank.
	 
	3	 	Date of Issuance, which shall be at least two
(2) Business Days from the date hereof (or such shorter period as is reasonably
acceptable to the Fronting Bank).
	 
	4	 	Aggregate initial amount of the Letter of
Credit.
	 
	5	 	Insert name and address of beneficiary.
	 
	6	 	Insert brief description of supportable
obligations.
	 
	7	 	Insert the last date upon which drafts may be
presented which may not be later than the dates referred to in Section                     
of the Credit Agreement.

Exhibit F — 4

 

 

before and after giving effect to the issuance of the Letter of Credit requested hereby, on
the Date of Issuance (it being understood and agreed that any representation or warranty which by
its terms is made as of a specified date shall be required to be true and correct in all material
respects only as of such specified date); and

          (2) no Default or Event of Default has occurred and is continuing nor, after giving effect to
the issuance of the Letter of Credit requested hereby, would such a Default or an Event of Default
occur.

	 	 	 	 	 	 	 
	 

	 	By
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

Exhibit F — 5

 

 

WELLS FARGO FORM

APPLICATION FOR STANDBY LETTER OF CREDIT

TO:
WELLS FARGO BANK, NATIONAL ASSOCIATION

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	DATE
	 	 	 	 	 	 	 	FOR WELLS FARGO’S

USE ONLY
	 	 	LETTER OF CREDIT NO.
	 	 	DOCUMENT TRACK NO.	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

APPLICANT SIGNING BELOW HEREBY REQUESTS THAT WELLS FARGO BANK, NATIONAL ASSOCIATION (“WELLS
FARGO”) ISSUE IN WELLS FARGO’S NAME AN IRREVOCABLE STANDBY LETTER OF CREDIT (THE “CREDIT”) ON
SUBSTANTIALLY THE TERMS BELOW AND, UNLESS OTHERWISE SPECIFIED BELOW IN SPECIAL INSTRUCTIONS,
FORWARD THE CREDIT BY THE FOLLOWING MEANS TO THE BENEFICIARY DIRECTLY OR THROUGH A BANK SELECTED BY
WELLS FARGO:

o
FULL CABLE/TELEX o COURIER
o MAIL WITH BRIEF ADVICE BY CABLE/TELEX o MAIL o OTHER:                     

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	ADVISING BANK: (If left blank, 

Wells Fargo may select)	 	 	BENEFICIARY: (Name and Address)	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	PARTY TO BE NAMED AS REQUESTING THE
CREDIT: (Name and Address)	 	 	AMOUNT: (In words)	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	(In figures)	   (Currency)	 	 	 
	 	 	 	 	 	 
	 	AVAILABILITY: Unless otherwise
specified herein, the Credit is to
be available with Wells Fargo’s
issuing office by payment of
draft(s) drawn at sight on Wells
Fargo or, at Wells Fargo’s option,
with any bank(s) or with a bank
nominated by Wells Fargo by
negotiation of draft(s) drawn at
sight on Wells Fargo.	 	 	EXPIRATION DATE:                      
                   

PLACE OF EXPIRATION: Unless otherwise
specified herein, the Credit is to
expire at Wells Fargo’s issuing
office or, if the Credit is available
with any bank(s) or with a specific
bank other than Wells Fargo’s issuing
office, at such place as Wells Fargo
shall elect.	 
	 	 	 	 	 	 
	 	DOCUMENT(S):
Draft(s) are to be accompanied by: (Attached additional signed
sheet(s), if necessary, and lable as attachments to this application.)

	 
	 	 	 	 	 	 
	 	DRAWING(S):	 	o
Partial drawings are permitted. (More than one draft may be drawn
and presented under the Credit.)	 
	 	 	 	o Only one draft may be drawn and presented under the Credit, and:	 
	 	 	 	o
the draft must be for the full amount of the Credit.
     o the draft may be for less than the full amount of the Credit.	 
	 	 	 	 	 	 
	 	SPECIAL
INSTRUCTIONS: (Attach additional signed sheet(s), if necessary, and label as attachments to this Application.)

	 
	 	 	 	 	 	 
	 	TRANSFERABILITY: (If not checked, the Credit will not be transferable.)	 
	 	 	 	o
The Credit is to be transferable, with transfer charges for:
     o
Applicant’s account
     o Beneficiary’s account	 
	 	 	 	 	 	 
	 	INQUIRIES: Direct to:	 	 	Telephone Number:	 
	 	 	 	 	 	 
	 	APPLICANT’S
AGREEMENT AND SIGNATURE: Applicant’s signature here indicates agreement to all the
terms and conditions on this Application and Applicant’s agreement that the Credit and its issuance
will be governed by (1) the terms and conditions of the Standby Letter of Credit Agreement between
Applicant and Wells Fargo and/or (2) any other agreement signed by Applicant pursuant to which the
Credit is to be issued. This Application is signed by Applicant’s duly authorized representative(s)
on the date specified above.	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	    APPLICANT	 	 	 	 	 	 	ADDRESS	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	    AUTHORIZED SIGNATURE	 	 	 	 	TITLE	 	ADDRESS	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	    AUTHORIZED SIGNATURE	 	 	 	 	TITLE	 	ADDRESS	 
	 	 	 	 	 	 

 

(TO
BE COMPLETED BY WELLS FARGO BANK, NATIONAL ASSOCIATION)

CREDIT
ISSUANCE HAS BEEN APPROVED IN ACCORDANCE WITH WELLS FARGO’S CREDIT POLICIES AND PROCEDURES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	APPROVING OFFICER’S 

SIGNATURE	 	 	APPROVING
OFFICER’S NAME
(Print)	 	 	APPROVING OFFICER’S OFFICE
(Print)	 	AU	 	 	MAC	 	COMMITMENT NO.	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	PHONE	 	AFS INTERFACE REQUIRED

YES o NO o	 	 	STANDALONE TRANSACTION:

YES o NO o 	 	 	COLLATERAL CODE	 	PURPOSE CODE	 	DATE	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	SPECIAL INSTRUCTIONS: (Indicate any provisions applicable to the Credit different from those on Applicant’s Relationship Management Instructions Form)	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

EXHIBIT G

FORM OF ELECTION CERTIFICATE

     The undersigned hereby certifies that he is the ___of UNIVERSAL COMPRESSION
HOLDINGS, INC., a Delaware corporation (“Holdings”) and that as such he is authorized to
execute this certificate on behalf of Holdings. With reference to the Senior Secured Credit
Agreement dated as of October 20, 2006, among Universal Compression, Inc., a Texas corporation
(“UCI”) and Holdings, UC Canadian Partnership Holdings Company, a Nova Scotia unlimited
liability company and Universal Compression Canada, Limited Partnership, a Nova Scotia limited
partnership (collectively, the “Canadian Borrowers”), Wachovia Bank, National Association,
as US Administrative Agent (the “US Administrative Agent”), Wachovia Capital Finance
Corporation (Canada), as the Canadian Administrative Agent (the “Canadian Administrative
Agent”), and such other Agents and Lenders party thereto (as the same may be amended or
supplemented from time to time, the “Credit Agreement”), the undersigned hereby certifies
in accordance with Section 2.14 of the Credit Agreement as follows (each capitalized term used
herein having the same meaning given to it in the Credit Agreement unless otherwise specified):

     1. The Debt of UCI described in Sections 10.01(b), (d), (e) and (k) of the Credit Agreement
(excluding performance guaranties and bonds) has been refinanced, paid off or assumed by Holdings
and UCI is released from such Debt except for unsecured guaranties of such Debt and except
$___(up to $10M) of such Debt to which UCI remains the primary obligor.

     2. UCI has executed the Guaranty Agreement guaranteeing the performance and payment
obligations of Holdings under the Loan Documents.

     3. Holdings hereby elects to become the sole US Borrower and assume all of the rights and
obligations of the sole US Borrower under the Loan Documents (including, without limitation, any
Loans made prior to the date hereof).

EXECUTED AND DELIVERED this ___day of ___.

	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

Exhibit
G – 1

 

 

EXHIBIT H-1

FORM OF COMMITMENT INCREASE CERTIFICATE

[      ], 200[      ]

	 	 	 
	To:

	 	Wachovia Bank, National Association,
	 

	 	as Administrative Agent

     Universal Compression, Inc., a Texas corporation and Universal Compression Holdings, Inc., a
Delaware corporation, collectively as US Borrowers, UC Canadian Partnership Holdings Company, a
Nova Scotia unlimited liability company and Universal Compression Canada, Limited Partnership, a
Nova Scotia limited partnership, collectively as Canadian Borrowers, Wachovia Bank, National
Association, as US Administrative Agent, Wachovia Capital Finance Corporation (Canada), as Canadian
Administrative Agent and such other Agents and Lenders party thereto have heretofore entered into a
Senior Secured Credit Agreement dated as of October 20, 2006, among (as the same may be amended or
supplemented from time to time, the “Credit Agreement”). Capitalized terms not otherwise
defined herein shall have the meaning given to such terms in the Credit Agreement.

     This Maximum Credit Amount Increase Certificate is being delivered pursuant to Section 2.15(b)
of the Credit Agreement.

     Please be advised that the undersigned has agreed to increase its US Tranche Commitment under
the Credit Agreement effective [      ], 200[      ] from $[      ] to $[      ] and (b)
that it shall continue to be a party in all respect to the Credit Agreement and the other Loan
Documents.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION, INC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit
H-1–1

 

 

Accepted and Agreed:

Wachovia Bank, National Association,
  as
Administrative Agent

	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Accepted and Agreed:

[LENDER]

	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit H-1–2

 

 

EXHIBIT H-2

FORM OF ADDITIONAL LENDER CERTIFICATE

[      ], 200[      ]

	 	 	 
	To:

	 	Wachovia Bank, National Association,
	 

	 	as Administrative Agent

     Universal Compression, Inc., a Texas corporation and Universal Compression Holdings, Inc., a
Delaware corporation, collectively as US Borrowers, UC Canadian Partnership Holdings Company, a
Nova Scotia unlimited liability company and Universal Compression Canada, Limited Partnership, a
Nova Scotia limited partnership, collectively as Canadian Borrowers, Wachovia Bank, National
Association, as US Administrative Agent, Wachovia Capital Finance Corporation (Canada), as Canadian
Administrative Agent and such other Agents and Lenders party thereto have heretofore entered into a
Senior Secured Credit Agreement dated as of October 20, 2006, among (as the same may be amended or
supplemented from time to time, the “Credit Agreement”). Capitalized terms not otherwise
defined herein shall have the meaning given to such terms in the Credit Agreement.

     This Additional Lender Certificate is being delivered pursuant to Section 2.15(b) of the
Credit Agreement.

     Please be advised that the undersigned has agreed (a) to become a Lender under the Credit
Agreement effective [ ], 200[ ] with a US Tranche Commitment of $[ ] and (b)
that it shall be a party in all respect to the Credit Agreement and the other Loan Documents.

     This Additional Lender Certificate is being delivered to the Administrative Agent together
with an Administrative Questionnaire in the form supplied by the Administrative Agent, duly
completed by the Additional Lender.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION, INC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	UNIVERSAL COMPRESSION HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit H-2–1

 

 

Accepted and Agreed:

Wachovia Bank, National Association,
  as
Administrative Agent

	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Accepted and Agreed:

[ADDITIONAL LENDER]

	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit H-2–2

 

 

Schedule 10.03 — Investments, Loans and Advances

	1.	 	Investments in Subsidiaries or related entities in connection with the ABS Facility and in
connection with the IPO, including without limitation, investments in UCI GP LP LLC, UCO GP,
LLC, UCI MLP LP LLC, UCI Leasing Holding GP LLC, UCI Leasing Holding LP LLC, UCI Compressor
Holding, L.P., the General Partner, or any member of the UCLP Group.
	 
	2.	 	Investments in Foreign Subsidiaries.

Schedule
10.03 – 1

 

 

Schedule 10.16 — Transactions with Affiliates

	1.	 	Contribution, Conveyance and Assumption Agreement dated October 20, 2006, pursuant to which
Holdings and its Subsidiaries will convey a portion of their domestic contract compression
business to the UCLP Group.
	 
	2.	 	Omnibus Agreement.
	 
	3.	 	Transactions with Affiliates in connection with the Investments set forth on Schedule 10.03.
	 
	4.	 	In connection with our acquisition of Tidewater Compression in 1998, we entered into a
registration rights agreement with Castle Harlan Partners III, L.P. and some of our other
stockholders (including certain of our directors and officers). Under the registration rights
agreement, these stockholders generally have the right to require us to register any or all of
their shares of our common stock under the Securities Act of 1933, at our expense, subject to
certain minimum dollar values. In addition, these stockholders are generally entitled to
include, at our expense, their shares of our common stock covered by the registration rights
agreement in any registration statement that we propose to file with respect to registration
of our common stock under the Securities Act of 1933. We also agreed in this registration
rights agreement to indemnify the stockholders against specified liabilities, including
liabilities under the Securities Act of 1933.

Schedule
10.16 – 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]