Document:

Exhibit 10.5

 

EXHIBIT “A”

 

 

MANAGEMENT AGREEMENT

 

BY AND BETWEEN

 

UNIVERSAL COMPRESSION, INC.,

 

AS MANAGER, AND

 

UCO COMPRESSION 2005 LLC,

 

AS THE ISSUER

 

OCTOBER 28, 2005

 

 

ALL RIGHT,
TITLE AND INTEREST IN AND TO THIS AGREEMENT ON THE PART OF UCO COMPRESSION 2005
LLC HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF
WELLS FARGO BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, UNDER AN
INDENTURE, DATED AS OF OCTOBER 28, 2005, FOR THE BENEFIT OF THE PERSONS
REFERRED TO THEREIN.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  APPOINTMENT OF THE MANAGER

  	
  1

  
	
   

  	
  2.1.

  	
  Appointment

  	
  1

  
	
   

  	
  2.2.

  	
  Standard of
  Performance

  	
  1

  
	
   

  	
  2.3.

  	
  Conflicts of
  Interest

  	
  2

  
	
   

  	
  2.4.

  	
  Similar
  Services

  	
  2

  
	
   

  	
  2.5.

  	
  Use of
  Affiliates

  	
  2

  
	
   

  	
  2.6.

  	
  Relationship
  between the Issuer and the Manager

  	
  2

  
	
   

  	
  2.7.

  	
  Back-up
  Manager

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  MANAGEMENT TERM

  	
  2

  
	
   

  	
  3.1.

  	
  Duration of
  Management Term

  	
  2

  
	
   

  	
  3.2.

  	
  Resignation
  by Manager

  	
  3

  
	
   

  	
  3.3.

  	
  Termination
  with Respect to an Owner Compressor

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  OWNERSHIP OF OWNER COMPRESSORS

  	
  3

  
	
   

  	
  4.1.

  	
  Retention of
  Title

  	
  3

  
	
   

  	
  4.2.

  	
  Liens

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  DUTIES/RIGHTS OF THE MANAGER

  	
  3

  
	
   

  	
  5.1.

  	
  Duties of
  the Manager

  	
  3

  
	
   

  	
  5.2.

  	
  Marketing.

  	
  4

  
	
   

  	
  5.3.

  	
  Contract and
  Administration Obligations

  	
  4

  
	
   

  	
  5.4.

  	
  Billing and
  Other Information

  	
  4

  
	
   

  	
  5.5.

  	
  Defaults by
  Users; Contract Amendments and Waiver.

  	
  5

  
	
   

  	
  5.6.

  	
  Maintenance;
  Manager’s Expenses.

  	
  5

  
	
   

  	
  5.7.

  	
  Insurance.

  	
  6

  
	
   

  	
  5.8.

  	
  Taxes

  	
  7

  
	
   

  	
  5.9.

  	
  Compliance
  with Law

  	
  7

  
	
   

  	
  5.10.

  	
  Records and
  Information

  	
  7

  
	
   

  	
  5.11.

  	
  User
  Contract

  	
  8

  
	
   

  	
  5.12.

  	
  Other
  Services

  	
  8

  
	
   

  	
  5.13.

  	
  Mutual
  Maintenance and Servicing

  	
  8

  
	
   

  	
  5.14.

  	
  Purchase Account

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  AUTHORITY AND CONSENTS.

  	
  9

  
	
   

  	
  6.1.

  	
  Issuer

  	
  9

  
	
   

  	
  6.2.

  	
  Manager
  Default

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  ACCOUNTS AND PAYMENTS

  	
  9

  
	
   

  	
  7.1.

  	
  Lockbox
  Accounts.

  	
  9

  
	
   

  	
  7.2.

  	
  Deposits to
  the Lockbox Account

  	
  9

  
	
   

  	
  7.3.

  	
  Withdrawal
  from Trust Account

  	
  10

  
	
   

  	
  7.4.

  	
  No Set-Off,
  Counterclaim, etc

  	
  10

  

 

i

 

	
   

  	
  7.5.

  	
  Manner of
  Payment

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  MANAGER ADVANCES

  	
  10

  
	
   

  	
  8.1.

  	
  Manager
  Advances.

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  COVENANTS OF THE MANAGER

  	
  11

  
	
   

  	
  9.1.

  	
  Preparation
  and Delivery of Reports

  	
  11

  
	
   

  	
  9.2.

  	
  Maintenance
  of Offices

  	
  13

  
	
   

  	
  9.3.

  	
  Inspection

  	
  13

  
	
   

  	
  9.4.

  	
  Ownership of
  Owner Compressors

  	
  14

  
	
   

  	
  9.5.

  	
  Separate
  Bank Accounts

  	
  14

  
	
   

  	
  9.6.

  	
  Compliance
  with Organizational Documents; Applicable Law

  	
  14

  
	
   

  	
  9.7.

  	
  [Intentionally
  Omitted].

  	
  14

  
	
   

  	
  9.8.

  	
  Substantive
  Consolidation

  	
  14

  
	
   

  	
  9.9.

  	
  Amendment of
  Credit Policy

  	
  14

  
	
   

  	
  9.10.

  	
  Appraisals

  	
  14

  
	
   

  	
  9.11.

  	
  Lockbox
  Account

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  WARRANTY

  	
  15

  
	
   

  	
  10.1.

  	
  ISSUER

  	
  15

  
	
   

  	
  10.2.

  	
  MANAGER

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  COMPENSATION AND REIMBURSEMENT OF THE MANAGER

  	
  15

  
	
   

  	
  11.1.

  	
  Compensation
  of the Manager

  	
  15

  
	
   

  	
  11.2.

  	
  S&A Fee.

  	
  15

  
	
   

  	
  11.3.

  	
  Operations
  Fee.

  	
  16

  
	
   

  	
  11.4.

  	
  Incentive
  Management Fee

  	
  16

  
	
   

  	
  11.5.

  	
  Reimbursable
  Services

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  MANAGER DEFAULT

  	
  17

  
	
   

  	
  12.1.

  	
  Events or
  Conditions

  	
  17

  
	
   

  	
  12.2.

  	
  Unpaid
  Outstanding Obligations

  	
  19

  
	
   

  	
  12.3.

  	
  Appointment
  of Back-up Manager or Replacement Manager

  	
  20

  
	
   

  	
  12.4.

  	
  Rights of
  User

  	
  20

  
	
   

  	
  12.5.

  	
  Termination

  	
  20

  
	
   

  	
  12.6.

  	
  Issuer’s
  Duties

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  NO PARTNERSHIP

  	
  21

  
	
   

  	
   

  	
   

  
	
  14.

  	
  NO FORCE MAJEURE

  	
  21

  
	
   

  	
   

  	
   

  
	
  15.

  	
  CURRENCY/BUSINESS DAY

  	
  21

  
	
   

  	
  15.1.

  	
  US Currency

  	
  21

  
	
   

  	
  15.2.

  	
  Payment Date

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  INDEMNIFICATION

  	
  21

  
	
   

  	
  16.1.

  	
  Issuer

  	
  21

  
	
   

  	
  16.2.

  	
  UCI

  	
  21

  
	
   

  	
  16.3.

  	
  Survival

  	
  22

  

 

ii

 

	
  17.

  	
  NO BANKRUPTCY PETITION AGAINST THE ISSUER

  	
  22

  
	
   

  	
   

  	
   

  
	
  18.

  	
  REPRESENTATIONS AND WARRANTIES OF THE ISSUER

  	
  22

  
	
   

  	
  18.1.

  	
  Organization
  and Good Standing

  	
  22

  
	
   

  	
  18.2.

  	
  Due Qualification

  	
  22

  
	
   

  	
  18.3.

  	
  Power and
  Authority

  	
  22

  
	
   

  	
  18.4.

  	
  Enforceable
  Obligations

  	
  22

  
	
   

  	
  18.5.

  	
  No Violation

  	
  22

  
	
   

  	
  18.6.

  	
  No
  Proceedings or Injunctions

  	
  23

  
	
   

  	
  18.7.

  	
  Compliance
  with Law

  	
  23

  
	
   

  	
  18.8.

  	
  Principal
  Place of Business; Operations in the United States

  	
  23

  
	
   

  	
  18.9.

  	
  Approvals

  	
  23

  
	
   

  	
  18.10.

  	
  Governmental
  Consent

  	
  23

  
	
   

  	
  18.11.

  	
  Ordinary
  Course

  	
  23

  
	
   

  	
  18.12.

  	
  Taxes

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  REPRESENTATIONS AND WARRANTIES OF THE MANAGER

  	
  24

  
	
   

  	
  19.1.

  	
  Organization
  and Good Standing

  	
  24

  
	
   

  	
  19.2.

  	
  Due
  Qualification

  	
  24

  
	
   

  	
  19.3.

  	
  Power and
  Authority

  	
  24

  
	
   

  	
  19.4.

  	
  Enforceable
  Obligations

  	
  24

  
	
   

  	
  19.5.

  	
  No Violation

  	
  24

  
	
   

  	
  19.6.

  	
  No
  Proceedings or Injunctions

  	
  24

  
	
   

  	
  19.7.

  	
  Compliance
  with Law.

  	
  25

  
	
   

  	
  19.8.

  	
  Principal
  Place of Business; Operations in the United States

  	
  25

  
	
   

  	
  19.9.

  	
  Approvals

  	
  25

  
	
   

  	
  19.10.

  	
  Governmental
  Consent

  	
  25

  
	
   

  	
  19.11.

  	
  Ordinary
  Course

  	
  25

  
	
   

  	
  19.12.

  	
  Identification
  Marks

  	
  25

  
	
   

  	
  19.13.

  	
  Taxes

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  GENERAL

  	
  26

  
	
   

  	
  20.1.

  	
  Notices

  	
  26

  
	
   

  	
  20.2.

  	
  Attorney
  Fees

  	
  27

  
	
   

  	
  20.3.

  	
  Further
  Assurances

  	
  28

  
	
   

  	
  20.4.

  	
  Severability

  	
  28

  
	
   

  	
  20.5.

  	
  Assignability
  and Successors

  	
  28

  
	
   

  	
  20.6.

  	
  Waiver

  	
  28

  
	
   

  	
  20.7.

  	
  Headings

  	
  28

  
	
   

  	
  20.8.

  	
  Entire
  Agreement; Amendments

  	
  28

  
	
   

  	
  20.9.

  	
  Counterparts

  	
  28

  
	
   

  	
  20.10.

  	
  Signatures

  	
  29

  
	
   

  	
  20.11.

  	
  GOVERNING
  LAW

  	
  29

  
	
   

  	
  20.12.

  	
  CONSENT TO
  JURISDICTION

  	
  29

  
	
   

  	
  20.13.

  	
  WAIVER OF
  JURY TRIAL

  	
  29

  
	
   

  	
  20.14.

  	
  Waiver of
  Immunity

  	
  29

  
	
   

  	
  20.15.

  	
  Judgment
  Currency

  	
  30

  
	
   

  	
  20.16.

  	
  Limitation
  on Payment

  	
  30

  

 

iii

 

EXHIBITS and SCHEDULES

 

Exhibit A                                Form
of Asset Base Certificate

Exhibit B                                Credit
and Collection Policies

Exhibit C                                Form
of Manager Report

 

Schedule 5.7(a)                     Sublimit
to Perils Schedule

 

iv

 

MANAGEMENT AGREEMENT

 

THIS
MANAGEMENT AGREEMENT, dated as of October 28, 2005 (as amended, modified
or supplemented from time to time in accordance with the terms hereof, this “Agreement”) is entered into by and
between UCO COMPRESSION 2005 LLC, a limited liability company formed under the
laws of the State of Delaware whose principal office is at 4444 Brittmoore
Road, Houston, Texas (together with its successors and permitted assigns, the “Issuer”), and UNIVERSAL
COMPRESSION, INC., a corporation organized under the laws of the State of Texas
whose principal office is at 4444 Brittmoore Road, Houston, Texas (together
with its successors and permitted assigns, “UCI”),
as the initial Manager hereunder (in such capacity, together with any
Replacement Manager appointed hereunder, including, upon the occurrence of the
Management Replacement Date under and as defined in the Back-up Management
Agreement, the Back-up Manager, the “Manager”).

 

RECITALS

 

WHEREAS, the
Issuer is the owner of the Owner Compressors;

 

WHEREAS, the
Manager is in the business of providing contract compression services relating
to the use of Compressors to various Users thereof; and

 

WHEREAS, the
Issuer and the Manager desire to enter into this Agreement pursuant to which
the Manager will operate, maintain, manage and provide contract compression
services for the Owner Compressors to Users on behalf of the Issuer.

 

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

 

1.             DEFINITIONS

 

Capitalized
terms used in this Agreement and not otherwise defined herein shall have the
meanings assigned to such terms in Appendix A to the Indenture, dated as of
October 28, 2005 (as amended, modified or supplemented from time to time
in accordance with its terms, the “Indenture”),
between the Issuer and Wells Fargo Bank, National Association, as indenture
trustee (together with its successors and assigns, the “Indenture
Trustee”), as such Appendix A may be amended, supplemented or
otherwise modified from time to time in accordance with the provisions of the
Indenture, and the rules of usage set forth in such Appendix A shall apply to
this Agreement.

 

2.             APPOINTMENT
OF THE MANAGER

 

2.1           Appointment.  Upon the terms and conditions hereinafter
provided, the Issuer hereby appoints UCI as the initial Manager of the Owner
Compressors.  The Manager shall be
responsible for providing contract compression services, maintaining, operating
and managing the Owner Compressors on behalf of the Issuer. UCI, as initial
Manager, and each other Replacement Manager as may from time to time become
Manager hereunder, hereby accepts such appointment and agrees to so maintain,
operate and manage the Owner Compressors, and provide contract compression
services therefor, in accordance with this Agreement.

 

2.2           Standard
of Performance.  In performing its
obligations hereunder (including UCI’s obligations (x) to identify Collections
that are allocable to the Securitization Collateral and (y) to perform its
obligations under the Intercreditor Agreement), the Manager shall use such
efforts which are in

 

1

 

accordance with the Services
Standard.  The duties of the Manager will
be limited to those expressly set forth in this Agreement and the Related
Documents and the Manager will not have any fiduciary or other implied duties
or obligations to the Issuer or any of its assignees.

 

2.3           Conflicts
of Interest.  The Manager shall
perform its duties and obligations under this Agreement on a fair and equitable
basis.  Without prejudice to the
generality of the foregoing, the Manager will not discriminate between the
Owner Compressors and any Other UCI Compressor (or, in the case of any Manager
other than UCI or a Universal Affiliate, Compressors or any other equipment of
a type similar to the Owner Compressors that is owned, managed or for which
contract compression services are provided by such Manager for its own account)
on any basis which could reasonably be considered discriminatory or adverse.

 

2.4           Similar
Services.  It is expressly understood
and agreed that nothing herein shall be construed to prevent, prohibit or
restrict the Manager or any Affiliate of the Manager from providing the same or
similar services as those provided under this Agreement to any other Person or
from manufacturing, selling, owning, providing contract compression services,
managing, maintaining, operating or otherwise dealing with Compressors on its
or others’ behalf; provided that no such activity shall in any way reduce the
obligations of the Manager hereunder to comply with the Services Standard.

 

2.5           Use
of Affiliates.  The Issuer hereby
consents to and agrees that, in performing its duties hereunder, the Manager
may further contract with its Affiliates to provide any or all services to be
provided by the Manager pursuant to this Agreement; provided that the Manager
shall remain liable for all services to be provided by the Manager which its
Affiliates have contracted to perform; provided, further, that the Manager
shall pay the fees and expenses (which shall be negotiated and determined at an
arms-length basis) of all such Affiliates with which the Manager shall have so
contracted.

 

2.6           Relationship
between the Issuer and the Manager. 
All of the functions, duties and services performed by the Manager under
this Agreement shall be performed by the Manager as an independent contractor and
not as an agent of the Issuer except to the limited extent set forth in the
following sentence.  The Manager does not
have the authority to act as an agent of the Issuer and the Manager, in its
capacity as such, does not, except as to the execution of User Contracts with
respect to the Owner Compressors, have the authority to bind the Issuer or its
assets.  The Issuer shall not have any
liability for the acts of the Manager.  Any
fee or other compensation payable by the Issuer to the Manager is an ordinary
and necessary business expense of the Issuer.

 

2.7           Back-up
Manager.  If the Back-up Manager
or any other Person shall become the Replacement Manager, then the Requisite
Global Majority shall have the right to appoint another Eligible Back-up
Manager as Back-up Manager.

 

3.             MANAGEMENT
TERM

 

3.1           Duration
of Management Term.  The Management
Term shall commence as of the Closing Date and shall continue in force with
respect to an Owner Compressor until the earliest to occur of:  (i) the occurrence of a Compressor
Termination Event with respect to such Owner Compressor, (ii) the date on
which the Indenture is discharged in accordance with its terms and all
Outstanding Obligations (including all amounts owing to any Series Enhancer
pursuant to any Enhancement Agreement) have been paid in full, and
(iii) with respect to any Manager, the removal and replacement of the
Manager in accordance with the provisions of Section
12 hereof.  Except as set
forth in this Section 3 or Section 12 hereof, the rights and
obligations of the Manager hereunder may not be terminated by, or on behalf of,
the Issuer for any reason.

 

2

 

3.2           Resignation
by Manager.  Neither UCI nor any
successor Manager may resign from its obligations and duties as the Manager
hereunder, except (i) with the prior written consent of the Requisite Global
Majority or (ii) upon a determination that the performance by UCI or any
successor Manager, as the case may be, of its duties under this Agreement is no
longer permissible under Applicable Law, which determination shall be evidenced
by an Opinion of Counsel, in form and substance reasonably satisfactory to the
Requisite Global Majority, to such effect addressed and delivered to the
Indenture Trustee (on behalf of the Noteholders, each Series Enhancer and the
other Persons specified in the Indenture), the Issuer and each Series
Enhancer.  No such resignation will
become effective until a Replacement Manager has assumed the obligations and
duties of the Manager under this Agreement in accordance with the terms hereof.

 

3.3           Termination
with Respect to an Owner Compressor. 
Notwithstanding the other provisions of this Section 3
to the contrary (but subject to the provisions of Section
12), the Management Term shall terminate with respect to any
Owner Compressor which is subject to a Casualty Loss, sold, foreclosed upon,
lost, stolen, damaged beyond repair, requisitioned (other than a temporary
requisition for a period of not more than 180 days) by any Governmental Authority,
worn out, unsuitable for use or economically obsolete (any of the foregoing, a “Compressor Termination Event”) as
of the date of such Compressor Termination Event after the deposit into the
Trust Account of all Casualty Proceeds and other amounts received with respect
to such Owner Compressor.  The Issuer and
the Manager shall notify the other party and the Indenture Trustee promptly
after it obtains knowledge of any Compressor Termination Event.

 

4.             OWNERSHIP
OF OWNER COMPRESSORS

 

4.1           Retention
of Title.  The Issuer  shall at all times retain full legal and
equitable title to its Owner Compressors, notwithstanding the management
thereof by the Manager hereunder. The Manager shall not make reference to or
otherwise deal with or treat the Owner Compressors in any manner except in
conformity with this Section 4.1.

 

4.2           Liens.  The Manager will promptly pay or discharge
any and all sums claimed by any party which, if unpaid, might become a Lien,
charge, security interest or other encumbrance upon or with respect to any
Owner Compressor, including any accession thereto, or any part thereof or the
interest of the Issuer therein other than Permitted Encumbrances (each a “Lien Claim”) and will promptly
discharge any Lien Claim which arises; provided, however, that the Manager
shall be under no obligation to pay or discharge any Lien Claim so long as it
is contesting the validity thereof in good faith, in a reasonable manner and by
appropriate legal proceedings, and the nonpayment thereof does not, in the commercially
reasonable opinion of the Manager, adversely affect the title, property or
rights of any Entitled Party thereto. 
Without limiting the generality of this Section
4.2, the Manager shall be required to pay or discharge any Lien
Claim (1) that results from an act or omission by the Manager with respect to
which the Manager would not be entitled to indemnification pursuant to Section 16 hereof (“Manager Malfeasance”) or (2) if
prior to such payment or discharge, the Manager receives from the Issuer the amount
thereof (the “Owner Lien Claim Amount”).  If any Lien Claim shall have resulted from
Manager Malfeasance and shall have been paid by the Issuer, whether directly or
by payment of the Owner Lien Claim Amount to the Manager, then, in either case,
the Manager shall promptly reimburse the Issuer, upon presentation of an
invoice therefor.

 

5.             DUTIES/RIGHTS
OF THE MANAGER

 

5.1           Duties
of the Manager.  Subject to the terms
and provisions hereof, the Manager shall provide the services specified in this
Section 5 to, and on behalf of, the
Issuer during the Management Term with respect to the Owner Compressors. The
parties hereto acknowledge and agree that, if an

 

3

 

Owner Compressor is then
subject to a User Contract, the User under such User Contract may provide
certain of the obligations set forth in Sections 5.6, 5.7, 5.8 and
5.9 hereof; provided, however, that as long as UCI or a
Universal Affiliate is the Manager hereunder, UCI shall remain the primary
obligor of all such obligations and liable for any breaches thereof.

 

5.2           Marketing.

 

(a)           During
the Management Term, Manager shall market, service, maintain, operate and
provide contract compression services for the Owner Compressors consistent with
the Services Standard.  In addition, for
so long as UCI or a Universal Affiliate is the Manager, UCI or such Universal
Affiliate shall keep the Owner Compressors under User Contracts subject to the
same utilization rates and contract rates and in the same manner as Other UCI
Compressors.  In addition, the Manager
shall, consistent with the Services Standard, negotiate the terms and
conditions of all User Contracts; provided that the terms and conditions of
such User Contracts must be consistent with those of User Contracts for Other
UCI Compressors (or, if the Manager is not UCI or a Universal Affiliate, any
Compressors or equipment of a type similar to the Owner Compressors, for which
contract compression services are provided, operated or managed by such Manager
for its own account and third parties other than the Issuer) and, in any event,
must comply with (i) then generally accepted industry standards,
(ii) for so long as the Manager is UCI or a Universal Affiliate, the terms
of the Contribution Agreement and (iii) the requirements of the Related
Documents.  The Manager shall market,
operate, provide contract compression services for and maintain the Owner
Compressors in compliance with the Services Standard and using such efforts
which are at least equal to the efforts used by the Manager (or any appointed
subcontractor) with respect to (x) if the Manager is UCI or any Universal
Affiliate, the Other UCI Compressors, and (y) if the Manager is not UCI or
any Universal Affiliate, any Compressors or equipment of a type similar to the
Compressors owned, managed, operated or for which contract compression services
are provided by the Manager (or any appointed subcontractor) for its own
account and third parties other than the Issuer.

 

(b)           In
performing its marketing duties pursuant to this Section
5.2, UCI shall use its best efforts to comply with the
applicable concentration limits set forth in Appendix A to the Indenture in the
definitions  of Excess 99 hp Amount,
Excess 299 hp Amount, Excess 599 hp Amount, Excess 999 hp Amount and Excess
Customer Concentration Amount.

 

5.3           Contract
and Administration Obligations.  The
Manager shall, consistent with the Services Standard, cause to be performed
when due, on behalf of the Issuer, all of the Issuer’s performance obligations
under the User Contracts and the other Related Documents to which the Issuer is
a party; provided, however, that nothing contained herein shall be construed as
creating credit recourse to the Manager for (i) principal, interest or premium
payments on the Notes or (ii) indemnification payments otherwise the obligation
of the Issuer pursuant to the Related Documents (except to the extent that the
Manager would otherwise be liable for such indemnification payment pursuant to
the provisions of Section 16
hereof).

 

5.4           Billing
and Other Information.  During the
Management Term, the Manager shall bill, on behalf of the Issuer, for all
contract payments and other sums due to the Issuer with respect to those Owner
Compressors then subject to a User Contract and shall also be responsible for
the collection thereof.  Such bills may
be prepared in summary format for all Compressors for which contract
compression services are provided to a User, but shall contain a detailed
listing of each Compressor so contracted.

 

4

 

5.5           Defaults
by Users; Contract Amendments and Waiver.

 

(a)           In
the event of any breach or default by a User under a User Contract, the Manager
shall, consistent with the Services Standard, take appropriate remedial action,
in the name of the Issuer, with respect to such defaulted User Contract
including, without limitation, (i) the termination of such User Contract as to
any or all Owner Compressors subject thereto, (ii) the recovery of possession
of any or all Owner Compressors subject thereto and (iii) the enforcement of
any other rights or remedies of the Issuer under such User Contract, including,
without limitation, the right to payment for any contract compression services
or payment of other amounts owed by such User under such User Contract. In
furtherance of the foregoing, the Manager shall, consistent with the Services
Standard, (i) institute and prosecute such legal proceedings in the name
of the Issuer as is permitted by Applicable Law in order to accomplish the
foregoing, (ii) settle, compromise and/or terminate such proceedings or
(iii) reinstate such User Contract; provided that the Manager shall not be
required to take any such action if, in the exercise of its reasonable
commercial judgment, the Manager would not take such action if such Owner
Compressors were Other UCI Compressors (or, if the Manager is not UCI or a
Universal Affiliate, Compressors or equipment of a type similar to the
Compressors that is owned,  managed,
maintained, operated or for which contract compression services are provided by
such Manager for its own account and third parties other than the Issuer).  All amounts expended by the Manager in
performing its obligations pursuant to the provisions of this Section 5.5, after reduction of
such amounts for enforcement costs actually received by the Manager pursuant to
the terms of the related User Contracts, shall be a Reimbursable Service.  The Issuer reserves the right to take, upon
written notice to the Manager, in its sole discretion, any or all of the
actions described in this Section 5.5
directly in its own name and on its own behalf. 
In such an event the Manager, at the Issuer’s expense, shall cooperate
with the Issuer (or its designee or assignee) and provide the Issuer (or its designee
or assignee) with such assistance as the Issuer may reasonably request.

 

(b)           In
performing its obligations hereunder, the Manager may, acting in the name of
the Issuer and without the necessity of obtaining the prior consent of the
Issuer or any Entitled Party, grant consents or enter into and grant
modifications, waivers and amendments to the terms of any User Contract except
for consents, modifications, waivers or amendments that (x) are inconsistent
with the Services Standard or (y) contravene (or permit the contravention of)
any provision of the Indenture (including without limitation, Sections 636
through 649 thereof).

 

5.6           Maintenance;
Manager’s Expenses.

 

(a)           The
Manager shall, consistent with the Services Standard, cause the Owner
Compressors to be maintained in good operating order and condition. The
standard for such maintenance shall be the highest of the following:  (i) any standard required or set forth for
the Owner Compressors by Applicable Law, (ii) the Services Standard, and (iii)
with respect to the Owner Compressors provided to any User, any standard set
forth in the related User Contract.  All
amounts expended by the Manager for maintenance (other than an overhaul made in
compliance with Section 5.6(b)
hereof) of the Owner Compressors, after reduction of such amounts for
maintenance payments actually received by the Manager pursuant to the terms of
any related User Contract, shall be at the expense of the Manager.

 

(b)           The
Manager shall conduct, or cause to be conducted, overhauls of the Owner
Compressors at such intervals and in such detail as it conducts overhauls of
the Other UCI Compressors (or, if the Manager is not UCI or a Universal
Affiliate, Compressors or equipment of a type similar to the Compressors that
is owned, maintained, operated, managed or for which contract compression
services are provided by such Manager for its own account and third parties
other than the Issuer).

 

5

 

(c)           Maintenance, modifying, repackaging and/or overhauls
of the Owner Compressors may be performed by the Manager or third parties as
reasonably determined by the Manager. For maintenance, modifying, repackaging
and/or overhauls of the Owner Compressor(s), the Issuer will pay for (i)
materials, supplies and parts at the Manager’s actual out-of-pocket cost
therefor and (ii) labor at hourly rates established by the Manager from time to
time; provided that such costs and rates are reasonable and consistent with
industry expenses for such services (the sum of (i) and (ii), an “Overhaul Fee”).  Such hourly rates shall be based upon the
Manager’s direct costs of labor plus amounts for the Manager’s plant or
facility overhead based on the Manager’s job cost system for allocating
overhead.

 

5.7           Insurance.

 

(a)           The
Manager will cause to be carried and maintained, at its sole expense, with
respect to all Owner Compressors at all times during the Management Term
thereof and for the geographic area in which any Owner Compressor is at any
time located (i) physical damage insurance insuring against risks of
physical loss or damage to the Owner Compressors (“Property
Insurance”) with an aggregate annual loss limit of  not less than $20,000,000 per occurrence
except for certain perils which have sub-limits in the amounts set forth on Schedule 5.7(a) attached hereof,
and (ii) liability insurance against liability for bodily injury, death
and property damage resulting from the use and operation of the Owner
Compressors (“Liability Insurance”) with an
aggregate loss limit of not less than $20,000,000 per occurrence except for
certain perils which have sub-limits in the amounts set forth on Schedule 5.7(a) hereof and in each
case shall be on terms consistent with current practices; provided, however,
that if by reason of a force majeure event or other event outside of the
control of the Manager, one or more of the terms of such insurance as required
hereby are not available in the commercial insurance markets on commercially
reasonable terms, the Manager shall nevertheless be deemed to have complied
with this Section 5.7 if the Manager
obtains such insurance on commercially reasonable terms then available to the
Manager with such premiums, deductibles and policy limits that are consistent
with industry standards which are reasonably satisfactory to each Series
Enhancer.  Property Insurance and
Liability Insurance shall be subject to deductibles that are consistent with
industry standards.  The policies of
insurance required under this Section 5.7(a)
shall be valid and enforceable policies issued by insurers having an A.M. Best
Company general policyholder rating of “A-” and a
financial rating of “IX” or in
each case better or otherwise acceptable to each Series Enhancer and shall
provide coverage with respect to incidents occurring anywhere in the United
States.

 

(b)           Such
Property Insurance policy or policies will name the Issuer, each Series
Enhancer and the Indenture Trustee, individually and on behalf of the Entitled
Parties, as the loss payees, as their respective interest may appear.  Such Liability Insurance policy or policies
will name the Issuer, each Series Enhancer and the Indenture Trustee,
individually and on behalf of the Entitled Parties, as additional insureds
(each an “Additional Insured”).  Each such policy shall provide that (i) the
insurers waive any claim for premiums and any right of subrogation or setoff
against Additional Insureds, (ii) it may not be invalidated against any
Additional Insured by reason of any violation of a condition or breach of
warranty of the policies or the application therefor by Manager or the Issuer,
(iii) it may be canceled by the insurer only after no less than ten (10) days’
prior written notice from the Manager’s insurance broker to Indenture Trustee
and each Series Enhancer, and (iv) the insurer will give written notice to
Indenture Trustee and each Series Enhancer in the event of nonpayment of
premium by the Manager when due.

 

(c)           On
the Closing Date, and thereafter not less than five (5) days prior to the
expiration dates of any expiring policies required under this Section 5.7, the Manager shall
furnish the Indenture Trustee and each Series Enhancer with certificates of the
insurance or replacement insurance coverage required by this Section 5.7.

 

6

 

(d)           Any
deductibles or losses that are not covered by either the Property Insurance or
Liability Insurance shall be paid by, and for the account, of the Manager.  The Manager agrees to promptly, but in any
event within three (3) Business Days after receipt of proceeds of such loss,
deposit such amounts into the Trust Account or the Purchase Account, as
applicable, in accordance with Section 302(b) of the Indenture for distribution
in accordance with Section 302 of the Indenture.

 

5.8           Taxes.  The Manager shall cause to be paid when due,
and will indemnify each Entitled Party from and against, all local, state,
federal and foreign personal property, sales or use taxes, license fees,
assessments, charges, fines, interest and penalties (all such taxes, license
fees, assessments, charges, fines, interest and penalties being hereinafter
called “Impositions”) hereafter levied
or imposed upon any Entitled Party, in connection with or measured by the
possession, contract for services, use or operation of any Owner Compressors
but excluding any federal, state or local tax calculated based on the taxable
income of the applicable Entitled Party. 
The Manager (whether such Manager is UCI or a Universal Affiliate or a Replacement
Manager) will promptly remit all Excluded Payments received by it pursuant to
Section 302(c), Section 302(d)(2) or 302(e)(2) of the Indenture to the relevant
taxing authority.  The Manager will also
pay (if the Manager is not UCI or a Universal Affiliate, such payments will be
paid pursuant to a distribution under Section 302 of the Indenture) all
Impositions that might in any way affect the title of the Issuer, or result in
a Lien upon any Owner Compressors or result in a Material Adverse Change, in
each case, before the same shall become delinquent; provided, however, that the
Manager shall not be required to pay any Imposition of any kind so long as it
is contesting such Imposition in good faith and by appropriate legal
proceedings, provided, further, that the nonpayment thereof shall not, in the
reasonable opinion of the Manager, adversely affect the title, property or
rights of the Issuer. In the event any reports or returns with respect to
Impositions are required to be filed, the Manager will prepare and file such
reports or returns, or cause such reports or returns to be prepared and filed,
in such manner as to show the interests of the Issuer in the Owner Compressors.

 

5.9           Compliance
with Law.  The Manager, at the
expense of the Issuer, shall, consistent with the Services Standard, cause the
Owner Compressors to comply, and each User Contract entered into or renewed
after the date hereof shall require the User thereunder to comply, in all
material respects with all Applicable Laws and Section 604 of the Indenture.   In the event that such Applicable Laws
require any alteration of an Owner Compressor, or in the event that any
equipment or appliance of an Owner Compressor shall be required to be changed
or replaced, or in the event that any additional or other equipment or appliance
is required to be installed on an Owner Compressor in order to materially
comply with such Applicable Laws, the Manager, at the expense of the Issuer,
shall make such alteration, change, replacement or addition (a “Mandatory Alteration”); provided,
however, that the Manager, in good faith, shall contest the validity or
application of any such Applicable Law which it would have contested if the
affected Owner Compressor had been an Other UCI Compressor (or, if the Manager
is not UCI or any Universal Affiliate, any Compressors or equipment of a type
similar to the Compressors owned, managed, operated or for which contract
compression services are provided by the Manager (or any appointed
subcontractor) for its own account and third parties other than the Issuer), in
any reasonable manner which does not, in the opinion of the Manager, adversely
affect the title, property or rights of the Issuer.

 

5.10         Records
and Information.  The Manager shall,
consistent with the Services Standard, maintain separate, complete and accurate
records relating to the Owner Compressors and all matters covered by this
Agreement in the same form and to the same extent as the Manager customarily
maintains records in respect of the Other UCI Compressors (or, if the Manager
is not UCI or any Universal Affiliate, any Compressors or equipment of a type
similar to the Compressors owned, managed, operated or for which contract
compression services are provided by the Manager (or any appointed
subcontractor) for its own account and third parties other than the
Issuer).  The Manager shall promptly,
upon request of  the Issuer or any Series
Enhancer, deliver to the Issuer, such Series Enhancer or any designee of any of

 

7

 

the foregoing such records.
Upon request, the Manager shall promptly supply the Issuer with all information
necessary for the Issuer to prepare all reports required of the Issuer under
the Related Documents.

 

5.11         User
Contract.  The Manager shall store at
its offices at 4444 Brittmoore Road, Houston, Texas, all User Contracts and all
compression services documents related thereto, including without limitation,
the related Contract File, in a locked, fire retardant storage facility.  The Manager shall provide the Issuer, the
Indenture Trustee and each Series Enhancer thirty (30) days prior written
notice of a change in the location of Manager’s offices which shall include the
relocation address.  Within ninety (90)
days after the Closing Date (or, in the case of any Owner Compressor acquired
by the Issuer after the Closing Date, within thirty (30) days after the related
Contribution Date or Substitution Date), the Manager shall stamp Schedule A (or
the appropriate counterpart of Schedule A or the appropriate schedule of
equipment attached to each User Contract) of each User Contract relating to an
Owner Compressor acquired by the Issuer on the Closing Date or any subsequent
Contribution Date or Substitution Date to indicate the Indenture Trustee’s
security interest in such User Contract.

 

5.12         Other
Services.  The Manager
shall be responsible for the provision of such other services incidental to the
foregoing as may from time to time be required under the User Contracts and
other Related Documents or may be reasonably necessary in connection with the
ownership, maintenance, and the Domestic Contract Compression Business of the
Owner Compressors.

 

5.13         Mutual
Maintenance and Servicing.  So long as
the Manager is UCI or a Universal Affiliate, the Manager and the Issuer agree
that in order for the Manager to provide mutually beneficial maintenance and
servicing of the Owner Compressors in the same manner as it maintains and
provides for the Other UCI Compressors, the Manager is permitted to use parts,
engines, inventory or supplies from (x) Other UCI Compressors to service and
maintain the Owner Compressors and the Other UCI Compressors, and (y) Owner
Compressors to service and maintain the Owner Compressors and the Other UCI
Compressors, in all instances in accordance with Sections
2.2 and 2.3 hereof
and in the normal and customary business practices of the Manager; provided
however, in the event any Owner Compressor is utilized for parts in accordance
with the foregoing mutual maintenance and servicing provisions, such Owner
Compressor, to the extent not repaired, replaced or rebuilt by the end of the
calendar month in which such parts or engines were utilized, will become an
Ineligible Compressor.  The Manager will
have the option to replace such Ineligible Compressor with another Compressor
of equal or greater value (based on and subject to the criteria set forth in
Section 3.04 of the Contribution Agreement) as the Ineligible Compressor by the
end of the calendar month in which such utilization of parts or engines first
occurred.  To the extent the Compressor
added in replacement of any such Ineligible Compressor exceeds the value of
such Ineligible Compressor, an appropriate adjustment to approximate such
excess value shall be made for the benefit of the Manager to the Operations Fee
and Overhaul Fee.  The Issuer and the
Manager acknowledge and agree that each party derives independent and mutual
benefit from this maintenance and servicing arrangement set forth in this Section 5.13.

 

5.14         Purchase
Account.  Subject to the conditions,
covenants and agreements set forth in Section 315 of the Indenture, the Manager
and the Issuer agree that the Manager shall (a) remit, or shall cause to
be remitted, any and all Compressor Reinvestment Sales Proceeds to the Purchase
Account, (b) use, or shall cause the use of, all or any portion of the
Compressor Reinvestment Sales Proceeds on deposit in the Purchase Account to
purchase Additional Compressors, and (c) direct, or shall cause the
direction of, the Indenture Trustee to liquidate as necessary any and all
Eligible Investments credited to the Purchase Account and to transfer from the
Purchase Account to the Trust Account, (i) in accordance with, and at the
times required by, Section 315(c) of the Indenture, any unused portion of such
Compressor Reinvestment Sales Proceeds and (ii) in accordance with, and at
the times required by, Section 315(d) of the Indenture, all funds in the
Purchase Account.

 

8

 

6.             AUTHORITY
AND CONSENTS.

 

6.1           Issuer.  The Issuer confers on the Manager all such authorities and
grants all such consents as may be necessary for the Manager’s performance of
its duties under this Agreement, and will, at the request of the Manager,
confirm any such authorities and consents to any third parties, execute such
other documents and do such other things as the Manager may reasonably request
for the purpose of giving full effect to this Agreement and enabling the
Manager to carry out its duties hereunder.

 

6.2           Manager
Default.  After the occurrence and
during the continuance of a Manager Default, the Manager irrevocably, and by
way of security to the Issuer for the obligations of the Manager herein,
appoints the Issuer or the Issuer’s designee (which shall be the Indenture
Trustee so long as any Outstanding Obligations remain unpaid) to be its
attorney-in-fact with full power of substitution on behalf of the Manager and
in its name or otherwise to execute any documents contemplated by this
Agreement and any Related Document, and to give any notice and to do any act or
thing which the Manager is obliged to execute or do under this Agreement and
any Related Document.  The Manager hereby
confirms and agrees to ratify and confirm whatever any such attorney shall do
or propose to do in the exercise or purported exercise of all or any of the
powers, authorities and discretion referred to in this paragraph.

 

7.             ACCOUNTS
AND PAYMENTS

 

7.1           Lockbox
Accounts.

 

(a)           On
or prior to the Closing Date, the Lockbox Account shall have been established
and shall be under the exclusive control of the Intercreditor Collateral Agent,
and UCI, as Manager, shall, or shall cause, all Collections related to its
Domestic Contract Compression Business to be deposited in the Lockbox Account,
in each case, in accordance with the terms of the Intercreditor Agreement and
the Letter Agreement.  So long as the
Manager is UCI or a Universal Affiliate, UCI shall comply with its obligations
and duties under the Intercreditor Agreement and the Letter Agreement.  Immediately after the completion of such
daily allocation, all Collections allocable to the Securitization Collateral
will be transferred to the Trust Account.

 

(b)           During
the continuation of a Trigger Event, the Manager shall, on a weekly basis,
provide to the Issuer, each Series Enhancer and the Indenture Trustee a copy of
each daily cash reconciliation prepared during the preceding week.  At any time during the continuation of a
Trigger Event, each of the Issuer, each Series Enhancer and the Indenture
Trustee and their respective accountants and attorneys shall be entitled, at
the expense of the Manager, to visit the Manager’s office and conduct a review
of all backup documentation supporting the daily cash allocation report.

 

(c)           Upon
an Event of Default or a Manager Default and the continuation of such event, as
the case may be, the Back-up Manager and the Requisite Global Majority (or
their designees), are each hereby authorized and empowered, as the Issuer’s
attorney-in-fact, to endorse any contract compression payments relating to an
Owner Compressor deposited in a lockbox or presented for deposit in any lockbox
account requiring the endorsement of the Issuer, which authorization is coupled
with an interest.

 

7.2           Deposits
to the Lockbox Account.  If the
Manager shall receive any Collections with respect to any Owner Compressor
directly, the Manager shall deposit such funds into the Lockbox Account within
three (3) Business Days of the receipt thereof. 
The obligation of the Manager to make such deposit shall constitute a
full recourse obligation of the Manager (for which the Manager shall not be
entitled to receive indemnification from the Issuer).

 

9

 

7.3           Withdrawal
from Trust Account.  The Manager
shall be entitled to request withdrawals (and the Indenture Trustee upon
written notice from the Manager shall make such withdrawals) of estimates of
the Operations Fee and S&A Fee from the Trust Account, and, so long as (x)
the Reserve Account is fully funded in an amount equal to the excess of the
Required Reserve Amount over the Available Drawing Amounts under all Eligible
Letters of Credits and (y) the Scheduled Principal Payment Amount for the
immediately preceding month has been made in full, an estimate of the Overhaul
Fee from the Trust Account, in each case, in accordance with Section 302(c) of
the Indenture.  The Indenture Trustee is
under no obligation to verify that the requirements of clauses (x) and (y) of
this section have been met before funding such withdrawal to the Manager.

 

7.4           No
Set-Off, Counterclaim, etc.  The
Manager’s
obligations under this Agreement and the other Related Documents to make
deposits to the Lockbox Account shall be absolute and unconditional and all
payments thereof shall be made free and clear of and without any deduction for
or on account of any set-off (except to the extent expressly set forth herein)
or counterclaim or any circumstance, recoupment, defense or other right which
the Manager may have against the Issuer or any other Person for any reason whatsoever
(whether in connection with the transactions contemplated hereby or any other
transactions), including without limitation, (i) any defect in title,
condition, design or fitness for use of, or any damage to or loss or
destruction of, any Compressor, (ii) any insolvency, bankruptcy, moratorium,
reorganization or similar proceeding by or against the Manager or any other
Person, or (iii) any other circumstance, happening or event whatsoever, whether
or not unforeseen or similar to any of the foregoing.

 

7.5           Manner
of Payment.  All payments required to
be made by the Manager hereunder shall be made in Dollars by wire transfer of
immediately available funds prior to 3:00 p.m., New York time, on the date of
payment.

 

8.             MANAGER
ADVANCES

 

8.1           Manager
Advances.

 

(a)           On
each Determination Date, the Manager may (in its sole discretion) advance funds
(each, a “Manager Advance”) and remit to
the Trust Account, in such manner as will ensure immediately available funds
will be on account thereof by 11:00 a.m. New York time on the Payment Date, an
amount equal to all or any portion of contract payments (other than
uncollectible amounts) (i) due on User Contracts with respect to the Owner
Compressors during the preceding Collection Period for which the related Users
have not remitted such payment on or prior to such Determination Date and
(ii) for which the Manager in good faith and in its commercially
reasonable judgment expects to collect promptly.  Except for the first three (3) Payment Dates
following the Closing Date,  the
aggregate amount of all such Manager Advances outstanding (i.e. not yet
reimbursed under Section 8.1(b)
below) at any point in time may not exceed an amount equal to the product of
(x) ten percent (10%) and (y) the Aggregate Note Principal Balance on
the immediately preceding Payment Date (after giving effect to payments made on
such date).  The Manager will not make a
Manager Advance with respect to (i) any defaulted User Contract, or
(ii) any User Contract if the Manager, in its reasonable good faith
judgment, believes that such Manager Advance would not be recoverable from a
corresponding remittance from the User on the related User Contract.

 

(b)           The
Manager shall be reimbursed for Manager Advances on each Payment Date pursuant
to Section 302(d) or 302(e), as applicable, of the Indenture.

 

10

 

9.             COVENANTS
OF THE MANAGER

 

9.1           Preparation
and Delivery of Reports.  The Manager
shall deliver to each Series Enhancer and the Indenture Trustee, or as otherwise
specified in any of the clauses below:

 

(a)           Financial
Statements.  (i) So long as UCI or a Universal
Affiliate is the Manager, the Manager shall deliver or shall cause UCH to
deliver to the Indenture Trustee and each Series Enhancer a copy of
(x) each annual report of UCH and (y) each quarterly report of UCH,
in each case, within the time periods, and in the manner required by, Section
9(b) of the Management Guaranty, provided,
however, in the event that
the financial information contained in the foregoing reports for UCH materially
differs from the Manager’s financial information prepared, for such time
periods, on an individual basis, then either (A) if the Manager has prepared
(or has caused to be prepared) its own audited financial statements of income,
stockholders’ equity and cash flows and its consolidating subsidiaries and the
related consolidated balance sheets, then the Manager shall deliver to the
Indenture Trustee and each Series Enhancer a copy of such audited financial
statements for the periods and as, and when, required by Section 9(b) of the
Management Guaranty, or (B) if the Manager has not prepared (or caused to be
prepared) audited financial statements of income, stockholders’ equity and cash
flows and its consolidating subsidiaries and the related consolidated balance
sheets, then the Manager shall deliver or cause UCH to deliver to the Indenture
Trustee and each Series Enhancer a copy of UCH’s audited consolidated financial
statements of income, stockholders’ equity and cash flows and unaudited
consolidating balance sheets, statements of income, stockholder’s equity and
cash flows for it and  its consolidated
subsidiaries for the periods as, and when, required by Section 9(b) of
the Management Guaranty; and (ii) if the Manager is not UCI or a Universal
Affiliate, (1) as soon as available and in any event within 120 days after
the end of fiscal year of the Manager, the audited consolidated and unaudited
consolidating statements of income, stockholders’ equity and cash flows of the
Manager and its consolidated subsidiaries for such fiscal year, and the related
consolidated and consolidating balance sheet of the Manager and its
consolidated subsidiaries as at the end of the fiscal year, and setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, and accompanied by the related opinion of independent public
accountants of recognized national standing acceptable to each Series Enhancer
which opinion shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of operations of
the Manager and its consolidated subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in accordance
with GAAP, except for such changes in such principles with which the
independent public accountants shall have concurred and such opinion shall not
contain a “going concern” or like qualification or exception, and a certificate
of such accountants stating that, in making the examination necessary for their
opinion, they obtained no knowledge, except as specifically stated, of any
Manager Default and (2) as soon as available and in any event within sixty
(60) days after the end of each of the first three fiscal quarterly periods of
each fiscal year of the Manager, consolidated and consolidating statements of
income, stockholders’ equity and cash flows of the Manager and its consolidated
subsidiaries for such period and for the period from the beginning of the respective
fiscal year to the end of such period, and the related consolidated and
consolidating balance sheets as at the end of such period, and setting forth in
each case in comparative form the corresponding figures for the corresponding
period in the preceding fiscal year, accompanied by the certificate of a
Responsible Officer, which certificate shall state that said financial
statements fairly present the consolidated and consolidating financial
condition and result of operations of the Manager and its consolidated
subsidiaries in accordance with GAAP, as at the end of, and for, such period
(subject to normal year-end audit adjustments);

 

(b)           Monthly
Asset Base Certificate.  By not later
than each Determination Date, an Asset Base Certificate, substantially in the
form of Exhibit “A” attached hereto,
calculated as of the last day of the immediately preceding Collection Period;

 

11

 

(c)           SEC
and Other Reports.  Promptly upon their becoming available, one
copy of each report (if any), definitive proxy statement, registration statement (upon it becoming effective) and
definitive prospectus filed by the Guarantor with or delivered to any
securities exchange, the Securities and Exchange Commission (or any successor agency
or any other Governmental Authority), which such delivery and/or availability
may be accomplished in the manner provided by Section 9(b) of the Management
Guaranty for the delivery of annual and quarterly reports (excluding any time
periods required for the delivery of such reports);

 

(d)           Requested Information.  After
a request of Deal Agent, any Series Enhancer or the Indenture Trustee, with
reasonable promptness, any data, information and reports regarding the Owner
Compressors that is reasonably available;

 

(e)           Updated Policies. 
Within sixty (60) days of the Manager’s fiscal year end and only to the
extent such policies have been materially changed or updated, two (2) copies of
its current Credit and Collection Policy, a currently effective copy of which
is attached hereto as Exhibit “B”;

 

(f)            Manager Report.  On each Determination Date, a Manager Report,
substantially in the form of Exhibit “C”
hereto, calculated for the immediately preceding Collection Period, a copy of
which shall also be delivered to the Indenture Trustee, Deal Agent, each Series
Enhancer and each Interest Rate Hedge Provider;

 

(g)           Manager Report on Hedging Calculations.  On each Determination Date, a
monthly report reflecting the hedging policy calculations as of the end of the preceding
calendar month based on all transactions outstanding as of the end of such
month under Interest Rate Swap Agreements then in effect, including
transactions entered into on such date which are scheduled to commence on a
future date;

 

(h)           Monthly Tape.  On
each Determination Date, the
Manager shall deliver the Monthly Tape to the Indenture Trustee and, on
request, to each Series Enhancer;

 

(i)            Insurance Renewals. 
Within five (5) days of the then current expiry date of the Property
Insurance and Liability Insurance, evidence of renewals of such policies;

 

(j)            Material Adverse Change.  With
reasonable promptness, notice of any Material Adverse Change;

 

(k)           Notice of Inaccuracy in Manager Report. 
Within five (5) Business Days of the date on which any Responsible
Officer of the Manager shall have actual knowledge or shall have received, or
been deemed to have received, from any Person, notice that the Manager Report
delivered by the Manager is inaccurate in any material respect, notice of such
inaccuracy indicating the inaccuracy;

 

(l)            Notice of Default. 
Notice of any Trigger Event or any event that with notice or the passage
of time (or both) would constitute any such event, a copy of which shall also
be delivered to the Intercreditor Collateral Agent;

 

(m)          Financial Projections.  At
least annually, and within ten (10) Business Days of delivery (or deemed
delivery, as the case may be) of the audited financial statements under Section 9.1(a) hereof or, if earlier,
concurrently with delivery thereof to any other lenders or creditors, projected
financial information prepared by UCI in its ordinary course of business
and delivered by UCI to its lenders in accordance with the terms of the Senior
Secured Credit Agreement or to any of its other lenders

 

12

 

or creditors, including
revisions of previously delivered information. 
Such projections shall include balance sheets, income statements and
cash flows by business segment;

 

(n)           Public
Debt Ratings.  Promptly, but in any event within five
(5) Business Days after the date of any change in UCH’s public debt ratings,
UCI shall deliver each Series Enhancer a written confirmation of UCH’s public
debt ratings after giving effect to such change; and

 

(o)           Purchase
Option Report.  Effective with the
Determination Date occurring in December 2005, UCI or the Manager shall provide
to each Series Enhancer, simultaneously with delivery of the Manager Report, a
supplement to the monthly Manager Report setting forth a list of the total
number of all Owner Compressors subject to User Contracts that contain purchase
options and the Aggregate Depreciated Value of all such Owner Compressors.

 

9.2           Maintenance
of Offices.  The Manager shall
maintain, at its office complex located at 4444 Brittmoore Road, Houston,
Texas, such books and records (including computer records) with respect to the
Owner Compressors in the same manner as it maintains for the Other UCI
Compressors, including a computer database which includes the Owner Compressors
(containing sufficient information to generate the List of Compressors and the
reports required to be delivered pursuant to this Agreement and the Related
Documents), any User Contracts relating thereto, the Users and location, and
the Appraised Value and Depreciated Value of the Owner Compressors.  The Manager shall notify the Issuer, each
Series Enhancer and the Indenture Trustee of any change in the location of the
Manager’s office complex or its books and records.

 

9.3           Inspection.  Each of (i) the Requisite Global
Majority (acting as one group) and their agents, (ii) if the Manager is
not UCI or a Universal Affiliate and the Issuer has not been furnished with a
copy of the report generated by the Requisite Global Majority (or its agents)
with respect to its rights hereunder, the Issuer (and its agents), and (iii)
any Series Enhancer in connection with any refinancing involving such Series
Enhancer shall have the right to inspect the Owner Compressors, the receivables
aging system and all books, records, reports, User Contracts, insurance
policies, and other documents relating to the Owner Compressors (including
those involving any refinancing of a Series Enhancer), all in the format which
the Manager uses for the Other UCI Compressors (or, if the Manager is not UCI
or a Universal Affiliate, any Compressors or equipment of a type similar to the
Owner Compressors for which contract compression services are provided,
operated or managed by such Manager for its own account and third parties other
than the Issuer).  Such inspections shall
be conducted upon reasonable request and notice to the Manager and shall
(a) be conducted during normal business hours, (b) be subject to the
Manager’s customary security procedures and the execution of reasonable and
customary confidentiality agreements and (c) not unreasonably disrupt the
Manager’s business.  For purposes of any
such inspection, the Manager shall grant the Requisite Global Majority, the
Issuer and their agents (as applicable) access to the Manager’s computer systems
(including the receivables aging system) and data relating solely to the Owner
Compressors contained therein (and with respect to the UCI Compressors to the
extent necessary to evaluate compliance with the Related Documents).  Each of (i) the Requisite Global
Majority (acting as one group) and their agents and (ii) if the Manager is
not UCI or a Universal Affiliate and the Issuer has not been furnished with a
copy of the report generated by the Requisite Global Majority (or its agents)
with respect to its rights hereunder, the Issuer (and its agents) shall have
the right to (i) one such inspection per calendar year (and an additional
inspection by any Series Enhancer in connection with any refinancing involving
such Series Enhancer), at the reasonable cost and expense (including reasonable
legal and accounting fees incurred by the Issuer, the Requisite Global Majority
or, in connection with any refinancing involving any Series Enhancer, the
applicable Series Enhancer) of UCI and (ii) one additional inspection at
the cost and expense of the Requisite Global Majority or Issuer (as the case
may be), unless a Trigger Event shall have occurred and be continuing, in which
case, the Requisite Global Majority and, if applicable, the Issuer (and their
respective agents) shall have the right to

 

13

 

conduct such inspections any
number of times and each time the costs and expenses shall be borne by the
Manager.

 

9.4           Ownership
of Owner Compressors.  The Manager
agrees to promptly indicate to all parties with a valid interest inquiring as
to the true ownership of the Owner Compressors that the Issuer is the owner of
the Owner Compressors and the Manager will not claim any ownership interest in
the Owner Compressors.

 

9.5           Separate
Bank Accounts.  The Manager will
maintain separate bank accounts and books of account from those of the
Issuer.  The Manager shall not conduct
business in the name of the Issuer except when acting in the name of the Issuer
as agent and identifies itself as such.

 

9.6           Compliance
with Organizational Documents; Applicable Law.  The Manager agrees to comply with all of its
company, organizational and managerial procedures required by its formation
documents and Applicable Law.

 

9.7           [Intentionally
Omitted].

 

9.8           Substantive
Consolidation.  The Manager will be
operated so that the Issuer will not be substantively consolidated with the
Manager or any of its Affiliates.  In
connection therewith, the Manager makes herein by this reference each of the
representations and warranties made by it to Gardere Wynne Sewell LLP in
support of its opinions issued and delivered in connection with the issuance of
the Notes, as if specifically made herein and agrees to comply with each of the
factual assumptions contained in such opinions.

 

9.9           Amendment
of Credit Policy.  The Manager will
not make any material modifications to the terms of its Credit and Collection
Policy to the detriment of any Series Enhancer without the prior written
consent of the Series Enhancer so affected. 
The Manager will comply with the material provisions of its Credit and
Collection Policy in accordance with reasonable and prudent business practices.

 

9.10         Appraisals.  By the Closing Date, the Manager shall (at its
expense) furnish (or cause to be furnished) to the Control Party three (3)
Appraisals setting forth the Appraised Value of the Owner Compressors as of the
Closing Date. Upon delivery of such additional Appraisals when required or
permitted pursuant to the terms of the Related Documents, the Appraised Value
of each Compressor shall be adjusted in accordance with the provisions set
forth in the definition of the term “Appraised Value”.

 

9.11         Lockbox
Account.  Until the termination of
the Intercreditor Agreement in accordance with Section 21 thereof, UCI  shall maintain, and shall cause the
Intercreditor Collateral Agent to maintain, the Lockbox Account and shall not
terminate such Lockbox Account, or close such Lockbox Account, without the
prior written consent in each instance of the Indenture Trustee and the
Requisite Global Majority.  UCI shall not
establish any new account that will receive payments or Collections in respect
of the User Contracts, the Securitization Collateral or any funds attributable
to its Domestic Contract Compression Business without the prior written consent
in each instance of the Indenture Trustee and the Requisite Global
Majority.  UCI may establish a separate
account for other funds not attributable to the Domestic Contract Compression
Business, including but not limited to funds attributable to the fabrication,
service, after-service market and international compression business.  UCI shall instruct and cause each User to
remit all contract payments and other payments arising under each User Contract
and all payments attributable to the Domestic Contract Compression Business of
UCI to the Lockbox Account as set forth in the Intercreditor Agreement.  The obligations of UCI under this Section 9.11 shall survive the
resignation or removal of UCI or any Universal Affiliate as Manager and

 

14

 

the termination of this
Agreement until the termination of the Intercreditor Agreement in accordance
with Section 21 thereof.

 

10.           WARRANTY

 

10.1         ISSUER.  THE ISSUER MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION, MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE OWNER COMPRESSORS, THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED.

 

10.2         MANAGER.  THE MANAGER WARRANTS THAT IT WILL CARRY OUT
ITS SERVICES WITH REASONABLE CARE AND SKILL. THIS EXPRESS WARRANTY IS IN LIEU
OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED.  UNDER NO CIRCUMSTANCES SHALL THE MANAGER HAVE
ANY LIABILITY TO THE ISSUER FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES.

 

11.           COMPENSATION
AND REIMBURSEMENT OF THE MANAGER

 

11.1         Compensation
of the Manager.  As compensation to
the Manager for the performance of its services hereunder, the Issuer shall pay
to the Manager an S&A Fee, an Operations Fee, an Overhaul Fee, an Incentive
Management Fee and a charge for Reimbursable Services.  Subject to the terms and conditions of the
Indenture, each of the Incentive Management Fee, the charge for Reimbursable
Services, S&A Fee and the Operations Fee shall be payable to the Manager
from the Trust Account, to the extent monies are available for the payment
thereof, in accordance with Sections 302(d) and (e) of the Indenture, as
follows:

 

(a)           on
each Payment Date, an amount equal to the S&A Fee, the Overhaul Fee and the
Operations Fee for the calendar month preceding the month in which such Payment
Date occurs; and

 

(b)           on
each Payment Date, the amount of Reimbursable Services submitted by the Manager
to the Issuer on or prior to the last day of the calendar month immediately
preceding the month in which such Payment Date occurs.

 

11.2         S&A
Fee.

 

(a)           The
selling and administration fee payable to UCI as initial Manager for each
Collection Period (or any portion thereof) shall be the product of (i) the
Monthly S&A Fee Rate and (ii) Gross Compressor Contract Revenues actually
received by the Manager during such Collection Period (such product, the “UCI S&A Fee”).  The S&A Fee for any Manager other than
UCI or any Universal Affiliate shall be the amount calculated in accordance
with the definition thereof, subject to the adjustments and limitations
contained therein and herein.

 

(b)           The
monthly selling and administration fee rate during the first year following the
Closing Date shall be six percent (6%), which percentage shall be adjusted
annually thereafter in accordance with the provisions of Section
11.2(c) (the “Monthly S&A Fee Rate”).

 

(c)           The
Monthly S&A Fee Rate may be recomputed by the Manager or any Replacement
Manager and automatically adjusted each year, prior to a Trigger Event, on the
last day of the quarter following the Manager’s fiscal year end, to reflect the
actual selling and administrative costs

 

15

 

incurred by the Manager to
manage the UCI Compressors during such fiscal year.  Any such adjustment shall be accompanied by a
certification by the Manager that any increase in the Monthly S&A Fee Rate
reflects increases in selling and administrative costs which are also being
incurred in respect of all of the UCI Compressors. The reasonableness of the
amount of such cost increase will, at the request of any Entitled Party, be
verified by a third party consultant selected by the Requisite Global Majority
and reasonably satisfactory to the Manager. 
Increases in the S&A Fee in excess of the levels permitted in the
definition of S&A Fee shall be payable at a subordinated level in
accordance with Sections 302(d) and (e) of the Indenture.  In addition to the adjustment set forth
above, the Monthly S&A Fee Rate may be adjusted with the prior consent of
the Manager, the Issuer, and the Requisite Global Majority to reflect material
non-recurring costs incurred in any year.

 

(d)           The
S&A Fee, as adjusted from time to time under Section
11.2(c), is intended to include all direct selling and
administration costs and expenses relating to the performance of the Manager’s
services, duties and obligations under this Agreement but shall not include (x)
the costs and expenses of the Manager that are incurred in connection with the
Reimbursable Services or (y) costs and expenses of the Manager in connection
with its indemnification obligations owing to any MA Indemnified Party.

 

11.3         Operations
Fee.

 

(a)           The
operations fee (the “UCI Operations Fee”)
for each calendar month (or any portion thereof) shall be equal to the sum for
each Owner Compressor for which contract compression services are provided for
any portion of such calendar month of the product of (i) the Operations
Fee Rate per horsepower applicable to such Owner Compressors, (ii) the
total horsepower for such Owner Compressor and (iii) a fraction the
numerator of which is the number of days in each month that such Owner
Compressor was under contract and the denominator of which is 30.  The Operations Fee for a successor Manager is
set forth in the definition thereof, subject to the adjustments and limitations
contained therein and herein (the “Monthly Operations Fee
Rate”).

 

(b)           The
Operations Fee Rate may be recomputed by UCI and automatically adjusted each
year, prior to a Trigger Event, on the last day of the quarter following the
Manager’s fiscal year end, to reflect the actual operating costs incurred by
the Manager to manage the UCI Compressors during such fiscal year then
ended.  Any such adjustment shall be
accompanied by a certification by the Manager that any increase in the
Operations Fee Rate reflects increases in costs which are also being incurred
in respect of all of the UCI Compressors. The reasonableness of the amount of
such cost increase will, at the request of any Entitled Party, be verified by a
third party consultant selected by the Requisite Global Majority and reasonably
satisfactory to the Manager.  Increases
in the Operations Fee in excess of the levels permitted in the definition of
Operations Fee shall be payable at a subordinated level in accordance with
Sections 302(d) and (e) of the Indenture. 
In addition to the adjustment set forth above, the Monthly Operations
Fee Rate may be adjusted with the prior consent of the Manager, the Issuer, and
the Requisite Global Majority to reflect material non-recurring costs incurred
in any year.

 

(c)           The
Operations Fee, as adjusted from time to time under Section
11.3(b), is intended to include all direct operating costs and
expenses relating to the performance of the Manager’s services, duties and
obligations under this Agreement but shall not include (x) the costs and expenses
of the Manager that are incurred in connection with the Reimbursable Services
or (y) costs and expenses of the Manager in connection with its reimbursement,
payment or indemnification obligations owing to any MA Indemnified Party.

 

11.4         Incentive
Management Fee.  In addition to the
Operations Fee and the S&A Fee, the Manager (whether the Manager is UCI or
any Universal Affiliate or a Replacement Manager) shall be

 

16

 

entitled to receive on each
Payment Date an additional fee in an amount equal to the Incentive Management
Fee.

 

11.5         Reimbursable
Services.  To the extent not included in another fee
category, the Manager shall be separately compensated for the following
services rendered on behalf of the Issuer under this Agreement (collectively,
the “Reimbursable Services”) in
accordance with the priorities established therefor in Sections 302(d) and (e)
of the Indenture: (i) enforcement costs in accordance with Section
5.5 hereof, and (ii) the cost of any Mandatory Alterations made
after the Closing Date in accordance with Section 5.9
hereof. In addition to such Reimbursable Services, the Manager shall be
entitled to be reimbursed for Manager Advances in accordance with the
provisions of Section 8 hereof.

 

12.           MANAGER
DEFAULT

 

12.1         Events
or Conditions.  Any of the
following events or conditions shall constitute a Manager Default:

 

(a)           The
Manager shall fail to (i) deposit to the Trust Account any deposit
required pursuant to Section 7.2
hereof, or (ii) deliver either or both of the Manager Report or the
monthly Asset Base Certificate on the dates specified in Section
9.1 hereof, or (iii) deliver the Monthly Tape, or (iv)
deposit to the Purchase Account or perform or observe the covenants contained
in Section 5.14 hereof, and in each
case, such failure shall continue for three (3) Business Days after the date
when due;

 

(b)           The
Manager shall fail to pay the Back-up Manager Fee when due;

 

(c)           (i) with
respect to UCI or any Universal Affiliate as the Manager or as the Contributor,
the Manager shall fail to perform or observe in any material respect any other
covenant, condition, or agreement to be performed or observed by it hereunder
or under any Related Document (other than (x) those identified in any other
clause of this Section 12.1
and (y) any such covenant, condition, or agreement that contains a
specified numerical threshold or basket, in which case such covenant, condition
or agreement shall be strictly performed or observed); or (ii) with
respect to any Manager other than UCI or any Universal Affiliate, the Manager
shall fail to perform or observe any other covenant, condition, or agreement to
be performed or observed by it under any Related Document (other than those
identified in any other clause of this Section 12.1),
and such failure shall continue unremedied for a period of thirty (30) days
after the earlier to occur of (i) receipt by Manager of written notice
thereof from the Issuer or the Indenture Trustee (at the direction of the
Requisite Global Majority) and (ii) the date on which any Responsible
Officer of the Manager responsible for the management of  the Owner Compressors shall have actual
knowledge of such failure;

 

(d)           Any
representation or warranty made by the Manager in any of the Related Documents,
or in any certificate delivered pursuant thereto, shall prove to be untrue in
any material respect, and such misrepresentation or untrue warranty, if capable
of cure, shall continue unremedied for a period of fifteen (15) days after the
earlier to occur of (x) receipt by the Manager of written notice thereof
from the Issuer, the Indenture Trustee (acting at the direction of the
Requisite Global Majority) or any Series Enhancer and (y) the date on
which any Responsible Officer of the Manager shall have actual knowledge of
such failure;

 

(e)           The inaccuracies specified in the
notice specified in Section 9.1(k)
remain unremedied or uncured, by the Manager’s failure to provide an accurate
Manager Report, for a period of fifteen (15) days after the date such notice is
required to be delivered;

 

17

 

(f)            The
Manager shall fail to deliver the notice specified in Section
9.1(k) within the time frame prescribed therein;

 

(g)           The
entry of a decree or order for relief by a court having jurisdiction in respect
of the Manager in any involuntary case under any applicable Insolvency Law, or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, or sequestrator (or other similar
official) for the Manager or for any substantial part of its properties, or
ordering the winding up or liquidation of its affairs and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days;

 

(h)           The
commencement by the Manager of a voluntary case under any applicable Insolvency
Law, or other similar law now or hereafter in effect, or the consent by the
Manager to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or other similar official) of the
Manager or any substantial part of its properties, or the making by the Manager
of any general assignment for the benefit of creditors, or the inability or
failure by the Manager to pay its debts generally when due, or the taking of
any action by the Manager  in furtherance
of any such action;

 

(i)            UCI
shall fail to pay any principal
of, premium or interest on or any other amount payable in respect of
(x) any Debt that is outstanding under the Senior Secured Credit Agreement
or any replacement thereof or (y) if the Senior Secured Credit Agreement
has been terminated and not replaced, any Debt in a principal or notional
amount of at least $35,000,000 for the first three (3) fiscal years from the Closing
Date and $75,000,000 thereafter (either individually or in the aggregate), in
each case when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in such
applicable agreement governing such Debt and provided further that such payment
default shall be determined without giving effect to any (i) extensions of
applicable grace periods which in the aggregate exceed ten (10) Business Days
or (ii) waivers, amendments or forbearances which in the aggregate exceed
ten (10) Business Days; or any other event (i.e., not involving a payment
default) shall occur or condition shall exist under such applicable agreement
governing such Debt and shall continue after the applicable grace period, if
any, specified in any applicable agreement governing such Debt and provided
further that any such event or condition shall be determined without giving
effect to any (i) extensions of applicable grace periods which in the
aggregate exceed thirty (30) days or (ii) waivers, amendments or
forbearances which in the aggregate exceed thirty (30) days, if the effect of
such event or condition is to accelerate, or to permit the acceleration of
(regardless of whether such amounts are actually accelerated), the maturity of
such Debt or otherwise to cause, or to permit the holder thereof to cause, such
Debt to become due and payable prior to the stated maturity thereof;

 

(j)            Any
Person or “group”, within the meaning of Section 13(d) of the Exchange Act, not
a Universal Affiliate shall become the “beneficial owner”, as  defined in Rule 13(d)3 under the Exchange
Act, of shares representing more than 50% of the aggregate voting power represented
by the capital stock of UCI.

 

(k)           For
any calendar month the Average Contract Rate for the Other UCI Compressors
exceeds the Average Contract Rate for the Owner Compressors by ten percentage
points (10%) or more;

 

(l)            For
any calendar month the Monthly Utilization Rate for the Other UCI Compressors
exceeds the Monthly Utilization Rate for the Owner Compressors by fifteen
percentage points (15%) or more;

 

18

 

(m)          As
of any Determination Date, the Run-time Credit Ratio exceeds five percent (5%);

 

(n)           UCH
shall repudiate the Management Guaranty or the Management Guaranty shall fail
to be in full force and effect;

 

(o)           For
so long as UCI or any Universal Affiliate is the Manager, an interest coverage
ratio automatically adjusted from time to time to always be 50 basis points
over UCI’s Interest Coverage Ratio (as such term is defined in the Senior
Secured Credit Agreement or any replacement thereof); provided
however, in the event that the definition of Interest Coverage Ratio
no longer exists, or the Senior Secured Credit Agreement or any replacement
thereof no longer exists or such agreement no longer contains a covenant
testing the coverage of UCI’s total interest expense, then the interest
coverage ratio to be adjusted for the purposes of this Section
12.1(o) shall be the Interest Coverage Ratio stated in the
Senior Secured Credit Agreement as in effect one calendar year prior to the
date on which such definition or agreement ceased to exist, plus 50 basis points
(0.50%);

 

(p)           For
so long as UCI or any Universal Affiliate is the Manager, the Manager shall
fail to observe or perform any of the covenants, agreements or obligations set
forth in Section 5.7 hereof (relating
to the maintenance of insurance) and such failure shall continue unremedied for
a period of fifteen (15) days after the earlier to occur of (x) receipt by the
Manager of written notice thereof from the any of the Entitled Parties and (y)
the date on which any of the President, Senior Vice President, any Executive
Vice President or any other Responsible Officer of the Manager shall have
actual knowledge of such failure;

 

(q)           For
so long as UCI or any Universal Affiliate is the Manager, the Owner Compressors
become subject to any Lien except for Permitted Encumbrances and the Manager
fails to remove such Lien within ten (10) days;

 

(r)            For
so long as UCI or any Universal Affiliate is the Manager, (i) UCI shall fail to
observe or perform any of its covenants or agreements set forth in Section
7(a)(i) of the Intercreditor Agreement or Section 2 of the Letter Agreement
and, if UCI is diligently attempting to determine the proper allocation of the
applicable unallocated amounts, such failure shall not be cured within three
(3) Business Days, or (ii) UCI shall be required to make any deposit into the
Lockbox Account pursuant to Section 7(b)(ii) of the Intercreditor Agreement and
shall fail to make such deposit into such account on or prior to the date on
which such deposit is required to be made pursuant to such Section; or

 

12.2         Unpaid
Outstanding Obligations.  If a
Manager Default or UCI Event shall have occurred and be continuing and the
Outstanding Obligations have not been paid in full, the Indenture Trustee
(acting at the written direction of the Requisite Global Majority), in the
Requisite Global Majority’s discretion, shall have the right (and shall
exercise such rights as and when directed to do so by the Requisite Global
Majority), in addition to any other rights or remedies that the Issuer or any of
its respective assignees may have under any Applicable Law or in equity
to:  (i) terminate this Agreement,
(ii) appoint the Back-up Manager or another Replacement Manager selected
by the Requisite Global Majority to manage the Owner Compressors, and/or (iii) exercise
any other remedies available under this Agreement, the Indenture and the other
Related Documents.  In addition, UCI
hereby agrees that if (a) a Manager Default shall have occurred and be
continuing, a Manager Termination Notice shall have been delivered to UCI and
the Outstanding Obligations have not been paid in full, (b) a UCI Event
shall have occurred and be continuing, or (c) an Event of Default shall
have occurred and be continuing, then the Requisite Global Majority (or the Indenture
Trustee, the Manager or the Back-up Manager, as the case may be, at the
direction of the Requisite Global Majority) shall have the right to notify
Users and any other Account Debtors of the Issuer, including, without
limitation, any Person obligated to make

 

19

 

payments pursuant to any User
Contract, parties to the Contracts of the Issuer and obligors in respect of
Instruments of the Issuer, that (x) the User Contracts, Accounts,
Contracts and Instruments, and the right, title and interest of the Issuer or
the Manager on behalf of the Issuer in and under such, User Contracts,
Accounts, Contracts and Instruments, have been assigned to the Indenture
Trustee, and (y) payments in respect of such User Contracts, Accounts,
Contracts and Instruments shall be made directly to the ABS Lockbox Account for
the benefit of the Indenture Trustee, and the Indenture Trustee (at the
direction of the Requisite Global Majority), or such other Person specified
pursuant to the terms hereof, may communicate with such Users and other Account
Debtors, parties to such Contracts and obligors in respect of such Instruments
to verify with such parties, to the Indenture Trustee’s and Requisite Global
Majority’s satisfaction, the existence, amount and terms of such Accounts,
Contracts and Instruments.  The Issuer
shall direct the Indenture Trustee to give notice in writing to the Rating
Agencies and the Back-up Manager of any such Manager Default. Notwithstanding
anything contained herein to the contrary, this Agreement shall continue in
full force and effect with respect to each Owner Compressor, and the Manager
shall continue to manage such Owner Compressors pursuant to the terms and
conditions of this Agreement, until the Management Replacement Date.

 

12.3         Appointment
of Back-up Manager or Replacement Manager. 
Upon the appointment of the Back-Up Manager or another Replacement
Manager, as the Manager, the Manager shall cooperate with the Issuer or their
assignees, the Indenture Trustee and each Series Enhancer in transferring to
the Back-up Manager or another Replacement Manager the management of the Owner
Compressors, including, but not limited to making available all books and
records (including data contained in the Manager’s computer systems that relate
to the Owner Compressors) pertaining to such Owner Compressors, providing
access to, and cooperating in the transfer of, information pertaining to such
Owner Compressors from the Manager’s computer system to the Back-up Manager’s
or its designee’s system, and taking any other action as may be reasonably
requested by the Issuer or its assignee to ensure the orderly assumption of
management of such Owner Compressors by the Back-up Manager or another
Replacement Manager.  Notwithstanding the
foregoing, in no event shall the Manager be required to, and the Deal Agent
shall not, deliver or disclose to any Replacement Manager any information,
data, document or agreement which is proprietary to the Manager.

 

12.4         Rights
of User.  In no event shall the
Manager be required to act in any manner inconsistent with the rights of any
User under any User Contract to which an Owner Compressor is then subject.

 

12.5         Termination.  Termination of this Agreement with respect to
any Manager shall be without prejudice to the rights and obligations of the
parties which have accrued prior to such termination; provided, however, that
any amount then due to the Manager shall be reduced by the reasonable and
necessary out-of-pocket costs incurred by the Issuer (excluding Management Fees
and any other costs incurred within the ordinary scope of management and
operation of the Owner Compressors that are no longer subject to this
Agreement) in connection with the removal and replacement of the Manager as the
manager of the Owner Compressors; provided, further, however, that all
obligations of the parties hereto to pay any fees to the then current Manager
hereunder shall cease upon the occurrence of the Management Replacement Date
with respect to such Manager (other than fees accrued through such Management
Replacement Date).

 

12.6         Issuer’s
Duties.  The Issuer shall give notice
to the Rating Agencies in the event of a removal or replacement of the Manager
or a termination of this Agreement.

 

20

 

13.           NO
PARTNERSHIP

 

The parties
hereto also expressly recognize and acknowledge that this Agreement is not
intended to create a partnership, joint venture or other entity among any of
the Issuer and the Manager, and is intended only to provide a sharing of
specified income and expenses attributable to providing contract compression
services for the Owner Compressors.

 

14.           NO
FORCE MAJEURE

 

The Issuer’s
and Manager’s obligations under this Agreement are unconditional and shall not
be subject to suspension, delay or interruption on account of the occurrence of
any event, whether or not such event is beyond its control.

 

15.           CURRENCY/BUSINESS
DAY

 

15.1         US
Currency.  All sums payable under
this Agreement shall be paid in US Dollars.

 

15.2         Payment
Date.  Notwithstanding anything to the contrary
contained herein, if any date on which a payment becomes due hereunder is not a
Business Day, then such payment may be made on the next succeeding Business Day
with the same force and effect as if made on such scheduled date.

 

16.           INDEMNIFICATION

 

16.1         Issuer.  The Issuer shall defend, indemnify and hold
the Manager (and the Back-up Manager as Manager and any Replacement Manager
after a Management Replacement Date) harmless from and against any and all
claims, actions, damages, losses, liabilities, costs and expenses (including
reasonable legal fees) (each a “Claim”)
incurred by or asserted against the Manager to the extent resulting or arising
from the Issuer’s failure to comply with or perform its obligations under this
Agreement, except for Claims which arise out of the Manager’s willful
misconduct, negligence or failure to comply with or perform its obligations
under this Agreement.  The Manager
subordinates its claims against the Issuer under this Section
16.1 to all claims which have priority in payment under Sections
302(d) and (e) of the Indenture, and further agrees that any such claims shall
(i) be non-recourse to the Issuer, (ii) only be payable at the times and in the
amounts for which funds are available for such purpose pursuant to Sections
302(d) and (e) of the Indenture and (iii) not constitute a “claim” (as defined
in Section 101(5) of the Bankruptcy Code) against the Issuer.

 

16.2         UCI.  UCI agrees to, and hereby does, indemnify and
hold harmless each Entitled Party and their respective officers, directors,
employees and agents (each of the foregoing, an “MA
Indemnified Party”) against any and all “Claims” (as defined in
the Bankruptcy Code) (including costs of defense and legal fees and expenses) which
may be incurred or suffered by such MA Indemnified Party (except to the extent
caused by the gross negligence or willful misconduct of such MA Indemnified
Party) as a result of claims, actions, suits or judgments asserted or imposed
against an MA Indemnified Party and arising out of (i) any action or inaction
by the Manager (including any Replacement Manager) that is contrary to the
terms of this Agreement, (ii) a material breach by the Manager (including any
Replacement Manager) of its representations and covenants set forth in this
Agreement, (iii) any information certified in any schedule or report delivered
by the Manager (including any Replacement Manager), being untrue in any
material respect as of the date of such certification, or (iv) the use or
operation of the Owner Compressors; provided that the foregoing indemnity shall
in no way be deemed to impose on UCI any obligation to reimburse an MA
Indemnified Party for losses arising solely from the financial inability of the
related User with respect to a User Contract to make contract and other
service-related payments.

 

21

 

16.3         Survival.  The obligations of UCI (or any Universal
Affiliate acting as Manager) and the Issuer under this Section
16 shall survive the resignation or removal of the Manager and
the termination of this Agreement.

 

17.           NO
BANKRUPTCY PETITION AGAINST THE ISSUER

 

Neither the
Manager nor the Back-up Manager will, prior to the date that is one (1) year
and one (1) day after the payment in full of all Outstanding Obligations,
institute against the Issuer, or join any other Person in instituting an
Insolvency Proceeding against the Issuer. This Section
17 shall survive the termination of this Agreement.

 

18.           REPRESENTATIONS
AND WARRANTIES OF THE ISSUER

 

The Issuer
hereby makes the following representations and warranties for the benefit of
each Entitled Party, which representations and warranties are made as of the
Closing Date (unless otherwise indicated).

 

18.1         Organization
and Good Standing.  It is duly
organized, validly existing and in good standing, under the laws of the State
of Delaware with the requisite power and authority to own its properties and to
conduct its business as such properties are currently owned and such business
is currently conducted, had at all relevant times, and now has, power,
authority, and legal right to perform its obligations under this Agreement, and
it does not conduct business under any other name.

 

18.2         Due
Qualification.  It is qualified to
transact business in each jurisdiction and has obtained all necessary licenses
and approvals as required under Applicable Law, in each case, where the failure
to be so qualified, licensed or approved, could reasonably be expected to
materially and adversely affect (x) its ability to perform its obligations
under and comply with the terms of this Agreement or (y) the rights and
remedies of the Manager hereunder.

 

18.3         Power
and Authority.  It has the requisite
power and authority to execute and deliver this Agreement and to carry out its
terms.  The execution, delivery, and
performance of this Agreement by it and all of its obligations hereunder have
been duly authorized by all necessary action, and this Agreement has been duly
executed and delivered by it.

 

18.4         Enforceable
Obligations.  This Agreement, when
duly executed and delivered by it, will constitute a legal, valid, and binding
obligation of it, enforceable against it in accordance with its terms subject
as to enforceability to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance or other laws affecting creditors’ rights
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

18.5         No
Violation.  The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and the
Related Documents to which the Issuer is a party will not contravene or
conflict with any of the terms and provisions of, result in any breach of any
of the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, the certificate of incorporation and by-laws
of the Issuer or any material term of any indenture, agreement, mortgage, deed
of trust, or other instrument to which the Issuer is a party or by which it or
its property or any assets is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, or other instrument, other than this
Agreement and the Indenture, or violate any Applicable Law applicable to the
Issuer.

 

22

 

18.6         No
Proceedings or Injunctions.  There
are (i) no litigations, proceedings or investigations pending, or, to its
knowledge, threatened, before any court, regulatory body, administrative
agency, or other tribunal or Governmental Authority (A) asserting the
invalidity of this Agreement, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement, or (C) seeking any
determination or ruling that could reasonably be expected to materially and
adversely affect the performance of its obligations under, or the validity or
enforceability of, this Agreement and (ii) no injunctions, writs, restraining
orders or other orders in effect against it that would adversely affect its
ability to perform under this Agreement.

 

18.7         Compliance
with Law.  The Issuer:

 

(1)           is
not in violation of any Applicable Laws to which it is subject, the violation
of which could reasonably be expected to materially and adversely affect the
ability of the Issuer to perform its obligations under and comply with the
terms of this Agreement and any other Related Document to which it is a party;

 

(2)           has
not failed to obtain any licenses, permits, franchises or other governmental
authorizations which failure could reasonably be expected to materially and
adversely affect the ownership of its property or to the conduct of its
business including, without limitation, with respect to transactions
contemplated by this Agreement and the other Related Documents to which it is a
party; and

 

(3)           is
not in violation in any respect of any term of its Organizational Documents or
any agreement (including any User Contract) or other instrument to which it is
a party or by which it may be bound, which violation, individually or in the
aggregate, could reasonably be expected to materially and adversely affect the
business or condition (financial or otherwise) of the Issuer individually or
the Issuer and its subsidiaries taken as a whole, or the interest of the
Noteholders or any Series Enhancer in any Contributed Asset;

 

18.8         Principal
Place of Business; Operations in the United States.  The principal place of business and chief
executive office of  the Issuer is at
4444 Brittmoore Road, Houston, Texas 77041 and has been maintained at such
address since its formation.

 

18.9         Approvals.  All approvals, authorizations, consents,
orders or other actions of any Person required to be obtained by it in
connection with the execution and delivery of this Agreement have been or will
be taken or obtained on or prior to the Closing Date.

 

18.10       Governmental
Consent.  No consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority is or will be necessary or required on its part in
connection with the execution and delivery of this Agreement, except for any
such consents, approval and authorizations that have been obtained, and all
filings that have been made, on or prior to the Closing Date.

 

18.11       Ordinary
Course.  The transactions
contemplated by this Agreement are being consummated in furtherance of its
ordinary business purposes and constitute a practical and reasonable course of
action by it designed to improve its financial position, with no contemplation
of insolvency and with no intent to hinder, delay or defraud any of its present
or future creditors.

 

18.12       Taxes.  It has filed or caused to be filed all tax
returns which, to its knowledge, are required to be filed by the Issuer.  All Taxes against the Issuer or any of its
property which have become due have been paid (other than any amount of Taxes
the validity of which is currently being contested in

 

23

 

good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have
been provided on the books of the Issuer or other appropriate provisions
therefor as may be required by GAAP have been made), and no tax Lien other than
as would constitute a Permitted Encumbrance has been filed against the Issuer
or its property and, to its knowledge, no Claim is being asserted, with respect
to any such Taxes.

 

19.           REPRESENTATIONS
AND WARRANTIES OF THE MANAGER

 

The Manager
hereby makes the following representations and warranties for the benefit of
each Entitled Party, which representations and warranties are made as of the
Closing Date (unless otherwise indicated).

 

19.1         Organization
and Good Standing.  It is duly
organized, validly existing and in good standing and in compliance under the
laws of its State of organization, with the requisite power and authority to
own its properties and to conduct its business as such properties are currently
owned and such business is currently conducted, had at all relevant times, and
now has, power, authority, and legal right to perform its obligations under
this Agreement, and it does not conduct business under any other name.

 

19.2         Due
Qualification.  It is qualified to
transact business in each jurisdiction and has obtained all necessary licenses
and approvals as required under Applicable Law, in each case, where the failure
to be so qualified, licensed or approved, could reasonably be expected to
materially and adversely affect (x) its ability to perform its obligations
under and comply with the terms of this Agreement or (y) the rights and
remedies of the Issuer hereunder.

 

19.3         Power
and Authority.  It has the requisite
power and authority to execute and deliver this Agreement and to carry out its
terms.  The execution, delivery, and
performance of this Agreement by it and all of its obligations hereunder has
been duly authorized by all necessary action, and this Agreement has been duly
executed and delivered by it.

 

19.4         Enforceable
Obligations.  This Agreement, when
duly executed and delivered by it, will constitute a legal, valid, and binding
obligation of it, enforceable against it in accordance with its terms subject
as to enforceability to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance or other laws affecting creditors’ rights
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

19.5         No
Violation.  The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and the
Related Documents to which the Manager is a party will not contravene or
conflict with any of the terms and provisions of, result in any breach of any
of the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, the certificate of incorporation and by-laws
of the Manager, or any material term of any indenture, agreement, mortgage,
deed of trust, or other instrument to which the Manager is a party or by which
it or its property or assets is bound, or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust, or other instrument, other than
this Agreement and the Indenture, or violate any Applicable Law applicable to
the Manager.

 

19.6         No
Proceedings or Injunctions.  There
are (i) no litigations, proceedings or investigations pending, or, to its
knowledge, threatened, before any court, regulatory body, administrative
agency, or other tribunal or Governmental Authority (A) asserting the
invalidity of this Agreement, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement, or (C) seeking any
determination or ruling that could reasonably be expected to materially and
adversely affect the

 

24

 

performance of its obligations
under, or the validity or enforceability of, this Agreement and (ii) no
injunctions, writs, restraining orders or other orders in effect against it
that would adversely affect its ability to perform under this Agreement.

 

19.7         Compliance
with Law.

 

The Manager:

 

(1)           is
not in violation of any Applicable Laws to which it is subject, the violation
of which could reasonably be expected to materially and adversely affect the
ability of the Manager to perform its obligations under and comply with the
terms of this Agreement and any other Related Document to which it is a party;

 

(2)           has not failed to obtain any licenses,
permits, franchises or other governmental authorizations which failure could
reasonably be expected to materially and adversely affect the ownership of its
property or to the conduct of its business including, without limitation, with
respect to transactions contemplated by this Agreement and the other Related
Documents to which it is a party; and

 

(3)           is
not in violation in any respect of any term of any agreement (including any
User Contract), certificate of incorporation, by-law or other instrument to
which it is a party or by which it may be bound, which violation, individually
or in the aggregate, could reasonably be expected to materially and adversely
affect the business or condition (financial or otherwise) of the Manager
individually, or the Manager and its subsidiaries taken as a whole, or the
interest of the Noteholders or any Series Enhancer in any Contributed Asset;

 

19.8         Principal
Place of Business; Operations in the United States.  Its principal place of business and chief
executive office is at 4444 Brittmoore Road, Houston, Texas 77041 and has been
maintained at such address for the four months immediately preceding the
Closing Date.

 

19.9         Approvals.  All approvals, authorizations, consents,
orders or other actions of any Person required to be obtained by it in
connection with the execution and delivery of this Agreement have been or will
be taken or obtained on or prior to the Closing Date.

 

19.10       Governmental
Consent.  No consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority is or will be necessary or required on its part in
connection with the execution and delivery of this Agreement, except for any
such consents, approval and authorizations that have been obtained, and all
filings that have been made, on or prior to the Closing Date.

 

19.11       Ordinary
Course.  The transactions
contemplated by this Agreement are being consummated in furtherance of its
ordinary business purposes and constitute a practical and reasonable course of
action by it designed to improve its financial position, with no contemplation
of insolvency and with no intent to hinder, delay or defraud any of its present
or future creditors.

 

19.12       Identification
Marks.  The Manager shall use its
best efforts to cause, within ninety (90) days after the Closing Date, the
applicable Contribution Date or the Substitution Date, as the case may be, and
at all times thereafter, to be affixed and shall keep and maintain, prominently
displayed on each Owner Compressor acquired by the Issuer on the Closing Date,
any Contribution Date or Substitution Date, as applicable, a sticker with the
phrase “Owned by UCO Compression 2005 LLC and subject to a security interest in
favor of Wells Fargo Bank, National Association as Indenture Trustee” or other

 

25

appropriate words designated by
the Indenture Trustee, with appropriate changes thereof and additions thereto
as from time to time may be required by law in order to protect the Issuer’s
and the Indenture Trustee’s interests in such Owner Compressors. The Manager
shall not allow the name of any Person to be placed upon any Owner Compressor
as a designation that might be interpreted as indicating a claim of ownership
thereto or a security interest therein by any Person other than the Issuer or
the Indenture Trustee.

 

19.13       Taxes. 
It has filed or caused to be filed all tax returns which, to its knowledge, are
required to be filed by the Manager.  All Taxes against the Manager or any
of its property which have become due have been paid (other than any amount of
Taxes the validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the  Manager or other appropriate
provisions therefor as may be required by GAAP have been made), and no tax Lien
other than as would constitute a Permitted Encumbrance has been filed against
the Manager or its property and, to its knowledge, no Claim is being asserted,
with respect to any such Taxes.

 

20.          
GENERAL

 

20.1        
Notices.  All notices, demands or requests given
pursuant to this Agreement shall be in writing, sent by
internationally-recognized, overnight courier service or by facsimile or hand
delivery to the following addresses and facsimile numbers:

 

	
  To Manager:

  	
   

  	
  Universal
  Compression, Inc.

  
	
   

  	
   

  	
  4444
  Brittmoore Road

  
	
   

  	
   

  	
  Houston,
  Texas 77041

  
	
   

  	
   

  	
  Telephone:

  	
  (713)
  335-7295

  
	
   

  	
   

  	
  Facsimile:

  	
  (713)
  446-6720

  
	
   

  	
   

  	
  Attention:

  	
  J. Michael
  Anderson

  

 

To Issuer:

 

	
   

  	
   

  	
  UCO
  Compression 2005 LLC

  
	
   

  	
   

  	
  4444
  Brittmoore Road

  
	
   

  	
   

  	
  Houston,
  Texas 77041

  
	
   

  	
   

  	
  Telephone:

  	
  (713)
  335-7295

  
	
   

  	
   

  	
  Facsimile:

  	
  (713)
  446-6720

  
	
   

  	
   

  	
  Attention:

  	
  J. Michael
  Anderson

  

 

To the Indenture Trustee:

 

	
   

  	
   

  	
  Wells Fargo
  Bank, National Association

  
	
   

  	
   

  	
  MAC
  N9311-161

  
	
   

  	
   

  	
  Sixth Street
  and Marquette Avenue

  
	
   

  	
   

  	
  Minneapolis,
  MN 55479

  
	
   

  	
   

  	
  Telephone:

  	
  (612)
  667-8058

  
	
   

  	
   

  	
  Facsimile:

  	
  (612)
  667-3464

  
	
   

  	
   

  	
  Attention:

  	
  Corporate
  Trust Services—Asset-Backed Administration

  

 

To the Deal Agent:

 

	
   

  	
   

  	
  Wachovia
  Capital Markets, LLC

  

 

 

26

 

 

	
   

  	
   

  	
  Structured
  Asset Finance

  
	
   

  	
   

  	
  301 S.
  College St., Mailcode: NCO610

  
	
   

  	
   

  	
  Charlotte,
  North Carolina 28288-0610

  
	
   

  	
   

  	
  Telephone:

  	
  (704)
  383-8608

  
	
   

  	
   

  	
  Facsimile:

  	
  (704)
  374-3254

  
	
   

  	
   

  	
  Attention:

  	
  Manoj Kumar

  

 

If there is an Event of Default
under Section 12 hereof,
then to the Intercreditor Collateral Agent:

 

	
   

  	
   

  	
  JP Morgan
  Chase Bank, N.A.

  
	
   

  	
   

  	
  600 Travis
  Street, Floor 20

  
	
   

  	
   

  	
  Houston,
  Texas 77002-3009

  
	
   

  	
   

  	
  Telephone:

  	
  713-216-7794

  
	
   

  	
   

  	
  Facsimile:

  	
  713-216-6603

  
	
   

  	
   

  	
  Attention:

  	
  Dianne L.
  Russell

  

 

	
  To the
  Back-up Manager:

  

 

	
   

  	
   

  	
  Caterpillar
  Inc.

  
	
   

  	
   

  	
  100 NE Adams
  Street

  
	
   

  	
   

  	
  Peoria,
  Illinois 61629

  
	
   

  	
   

  	
  Telephone:

  	
  (309)
  675-1000

  
	
   

  	
   

  	
  Facsimile:

  	
  (309)
  675-6620

  
	
   

  	
   

  	
  Attention:

  	
  General
  Counsel

  

 

To any Series Enhancer:

 

	
   

  	
   

  	
  At the
  address as set forth in the related Enhancement Agreement

  

 

To the Rating Agencies:

 

	
   

  	
   

  	
  Standard
  & Poor’s Ratings Group

  
	
   

  	
   

  	
  55 Water
  Street, 40th Floor

  
	
   

  	
   

  	
  New York,
  New York 10041-0003

  
	
   

  	
   

  	
  Telephone:

  	
  (212)
  425-7025

  
	
   

  	
   

  	
  Facsimile:

  	
  (212)
  208-1393

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Moody’s
  Investors Services

  
	
   

  	
   

  	
  99 Church
  Street, 4th Floor

  
	
   

  	
   

  	
  New York,
  New York 10007

  
	
   

  	
   

  	
  Telephone:

  	
  (212)
  553-0300

  
	
   

  	
   

  	
  Facsimile:

  	
  (212)
  553-0574

  
	
   

  	
   

  	
  Attention:

  	
  Asset Backed
  Monitoring Group

  

 

Notice shall be effective and
deemed received (a) on the day delivered to the courier service, if sent by
courier, (b) upon receipt of confirmation of transmission, if sent by
facsimile, or (c) when delivered, if delivered by hand or by certified first
class mail, return receipt requested. Each party delivering a notice hereunder
shall deliver a copy of such notice to the Deal Agent at the address set forth
above.

 

20.2        
Attorney Fees.  If any proceeding is brought for
enforcement of this Agreement or because of an alleged dispute, breach or
default in connection with any provision of this Agreement, the

 

27

 

prevailing party shall be
entitled to recover, in addition to other relief to which it may be entitled,
reasonable attorney fees and other costs incurred in connection therewith.

 

20.3        Further
Assurances.  The Issuer and the
Manager shall each perform such further acts and execute such further documents
as may be reasonably necessary to implement the intent of, and consummate the
transactions contemplated by, this Agreement.

 

20.4        Severability.  If any term or provision of this Agreement or
the performance thereof shall to any extent be or become invalid or
unenforceable, such invalidity or unenforceability shall not affect or render
invalid or unenforceable any other provision of this Agreement and this
Agreement shall continue to be valid and enforceable to the fullest extent
permitted by law.

 

20.5        Assignability
and Successors.  This Agreement shall
be binding upon and inure to the benefit of, and be enforceable by, the Issuer
and the Manager, and their respective successors in interest or permitted
assigns; provided, however, that: 
(a) this Agreement and the rights and duties of the Manager
hereunder may not be assigned by the Manager to any other Person, without the
prior written consent of the Issuer, the Indenture Trustee and the Requisite
Global Majority; and (b) the Issuer may charge, assign, pledge or
hypothecate its rights (but not its obligations) under this Agreement pursuant
to the Related Documents.  The Manager
hereby acknowledges that the Issuer will assign all of its rights, title and
interest under this Agreement to the Indenture Trustee, and that each Series
Enhancer will be a beneficiary of such assignments, and agrees that each such
assignee and beneficiary shall be express third party beneficiaries of this
Agreement and shall be entitled to enforce the rights and obligations hereunder
as though it were a party hereto.  Each
party hereto agrees that, if the Indenture Trustee shall fail to act hereunder
as directed by the Requisite Global Majority at any time at which it is so
required hereby or by any other Related Document, then the Requisite Global
Majority shall be entitled to directly enforce the provisions of this Agreement
or take any such action directly in its own capacity or on behalf of the
Indenture Trustee in accordance with the terms of this Agreement and, in the
event any party receives instructions from both the Indenture Trustee and the
Requisite Global Majority, such party may act on and rely upon the instructions
from the Requisite Global Majority. The Manager hereby consents to such
assignments.  The Manager shall give the
Rating Agencies prior notice of any assignment of the Manager’s rights or
obligations hereunder effected pursuant to this Section
20.5.

 

20.6        Waiver.  Waiver of any term or condition of this Agreement
(including any extension of time required for performance) shall be effective
only if in writing and shall not be construed as a waiver of any subsequent
breach or waiver of the same term or condition or a waiver of any other term or
condition of this Agreement. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver hereof.

 

20.7        Headings.  The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

20.8        Entire
Agreement; Amendments.  This
Agreement represents the entire agreement between the parties with respect to the
subject matter hereof and may not be amended or modified except by an
instrument in writing signed by the parties hereto and approved by the
Requisite Global Majority. The Manager shall send prior notice of any amendment
or modification to the Rating Agencies.

 

20.9        Counterparts.  This Agreement may be signed in counterparts
each of which shall constitute an original instrument, but all of which
together shall constitute but one and the same instrument.

 

28

 

20.10      Signatures.  Any signature required with respect to this
Agreement may be provided via facsimile; provided that original of such
signatures are supplied by each party to the other party promptly thereafter.

 

20.11      GOVERNING
LAW.  THIS AGREEMENT SHALL BE
CONSTRUED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAWS BUT
OTHERWISE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW, THAT
WOULD RESULT IN APPLICATION OF LAWS OTHER THAN NEW YORK, AND THE RIGHTS,
OBLIGATIONS AND REMEDIES OF THE PARTIES HERETO SHALL BE DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

20.12      CONSENT
TO JURISDICTION.  ANY LEGAL SUIT,
ACTION OR PROCEEDING AGAINST THE MANAGER OR THE ISSUER ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY, MAY BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, STATE OF NEW
YORK AND THE MANAGER AND THE ISSUER EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND, SOLELY FOR THE PURPOSES OF
ENFORCING THIS AGREEMENT, ISSUER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.  ISSUER HEREBY IRREVOCABLY APPOINTS AND
DESIGNATES CT CORPORATION SYSTEM, WITH AN ADDRESS AT 1633 BROADWAY, NEW YORK,
NEW YORK, ITS TRUE AND LAWFUL ATTORNEY-IN-FACT AND DULY AUTHORIZED AGENT FOR
THE LIMITED PURPOSE OF ACCEPTING SERVICE OF LEGAL PROCESS AND EACH OF THE
PARTIES HERETO EACH AGREE THAT SERVICE OF PROCESS UPON SUCH PARTY SHALL
CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS ON SUCH PERSON.  EACH OF THE PARTIES HERETO SHALL EACH
MAINTAIN THE DESIGNATION AND APPOINTMENT OF SUCH AUTHORIZED AGENT UNTIL ALL
AMOUNTS PAYABLE UNDER THIS AGREEMENT AND THE INDENTURE SHALL HAVE BEEN PAID IN
FULL.  IF SUCH AGENT SHALL CEASE TO SO
ACT, EACH OF THE PARTIES HERETO AS THE CASE MAY BE, SHALL IMMEDIATELY DESIGNATE
AND APPOINT ANOTHER SUCH AGENT SATISFACTORY TO THE INDENTURE TRUSTEE AND SHALL
PROMPTLY DELIVER TO THE INDENTURE TRUSTEE EVIDENCE IN WRITING OF SUCH OTHER
AGENT’S ACCEPTANCE OF SUCH APPOINTMENT.

 

20.13      WAIVER
OF JURY TRIAL.  EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, AS AGAINST THE OTHER PARTIES HERETO,
ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION OR
PROCEEDING (WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE), INCLUDING ANY
COUNTERCLAIM, ARISING UNDER OR RELATING TO THIS AGREEMENT OR ANY OTHER RELATED
DOCUMENT, INCLUDING IN RESPECT OF THE NEGOTIATION, ADMINISTRATION OR
ENFORCEMENT HEREOF OR THEREOF.

 

20.14      Waiver
of Immunity.  To the extent that
any party hereto or any of its property is or becomes entitled at any time to
any immunity on the grounds of sovereignty or otherwise from any legal actions,
suits or proceedings, from set-off or counterclaim, from the jurisdiction or
judgment of any competent court, from service of process, from execution of a
judgment, from attachment prior to judgment, from attachment in aid of
execution, or from execution prior to judgment, or other legal process in any
jurisdiction, such party, for itself and its successors and assigns and its
property, does hereby irrevocably and unconditionally waive, and agrees not to
plead or claim, any such immunity with respect to its obligations, liabilities
or any other matter under or arising out of or in connection with this

 

29

 

Agreement, the other Related
Documents or the subject matter hereof or thereof, subject, in each case, to
the provisions of the Related Documents and mandatory requirements of
applicable law.

 

20.15      Judgment
Currency.  The parties hereto (A) acknowledge that
the matters contemplated by this Agreement are part of an international
financing transaction and (B) hereby agree that (i) specification and payment
of US Dollars is of the essence, (ii) US Dollars shall be the currency of
account in the case of all obligations under the Related Documents unless
otherwise expressly provided herein or therein, (iii) the payment obligations
of the parties under the Related Documents shall not be discharged by an amount
paid in a currency or in a place other than that specified with respect to such
obligations, whether pursuant to a judgment or otherwise, except to the extent
actually received by the Person entitled thereto and converted into US Dollars
by such Person (it being understood and agreed that, if any transaction party
shall so receive an amount in a currency other than US Dollars, it shall (A) if
it is not the Person entitled to receive payment, promptly return the same (in
the currency in which received) to the Person from whom it was received or (B)
if it is the Person entitled to receive payment, either, in its sole
discretion, (x) promptly return the same (in the currency in which received) to
the Person from whom it was received or (y) subject to reasonable commercial
practices, promptly cause the conversion of the same into US Dollars), (iv) to
the extent that the amount so paid on prompt conversion to US Dollars under
normal commercial practices does not yield the requisite amount of US Dollars,
the obligee of such payment shall have a separate cause of action against the
party obligated to make the relevant payment for the additional amount
necessary to yield the amount due and owing under the Related Documents, (v)
if, for the purpose of obtaining a judgment in any court with respect to any
obligation under any of the Related Documents, it shall be necessary to convert
to any other currency any amount in US Dollars due thereunder and a change
shall occur between the rate of exchange applied in making such conversion and
the rate of exchange prevailing on the date of payment of such judgment, the
obligor in respect of such obligation will pay such additional amounts (if any)
as may be necessary to insure that the amount paid on the date of payment is
the amount in such other currency which, when converted into US Dollars and
transferred to New York City, New York, in accordance with normal banking
procedures, will result in realization of the amount then due in US Dollars and
(vi) any amount due under this paragraph shall be due as a separate debt and
shall not be affected by or merged into any judgment being obtained for any
other sum due under or in respect of any Related Document.  In no event, however, shall the respective
judgment debtor be required to pay a larger amount in such other currency, at
the rate of exchange in effect on the date of payment than the amount of US
Dollars stated to be due under the respective Related Document, so that in any
event the obligations of the respective judgment debtor under the Related
Document will be effectively maintained as Dollar obligations.

 

20.16      Limitation
on Payment.  Any amounts payable by
the Issuer hereunder are contingent upon the availability of funds to make such
payment in accordance with the provisions of the Indenture, to the extent such
funds are available, and shall not constitute a “Claim” (as defined in Section
101(5) of the Bankruptcy Code) against the Issuer in any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings involving
the Issuer.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK - 

SIGNATURE PAGE FOLLOWS]

 

30

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

 

 

	
   

  	
  UNIVERSAL COMPRESSION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
   

  	
  J. Michael
  Anderson,

  
	
   

  	
   

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UCO COMPRESSION 2005 LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
   

  	
  J. Michael
  Anderson,

  
	
   

  	
   

  	
  Senior Vice
  President and Chief Financial Officer

  

 

Acknowledged and Agreed by:

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION,

not in its individual capacity,
but solely as Indenture Trustee

 

	
  By:

  	
  /s/ Marianna
  C. Stershic

  	
   

  
	
  Name:

  	
  Marianna C.
  Stershic

  
	
  Title:

  	
  Vice
  President

  

 

 

EXHIBIT “A”

 

Form of Asset Base Certificate

 

UCO COMPRESSION 2005 LLC ASSET BASE CERTIFICATE

 

	
  Collection Period Ended

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Determination Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  I.

  	
   

  	
  The Asset Base is equal to
  the lesser of (1) debt limit and (2) interest coverage:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  i)

  	
  Asset Base

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  ii)

  	
  Aggregate Note Principal
  Amount

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  iii)

  	
  Excess / <Shortfall
  In> Asset Base

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1)

  	
  Debt Limit (i plus ii)

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  i)

  	
  All Money and Eligible
  Investments on deposit in the Reserve Account and Purchase Account

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  ii)

  	
  a x (b - c)

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  a)

  	
  Advance Rate

  	
   

  	
   

  	
  72.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
  b) 

  	
  Aggregate Depreciated
  Value

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  c) 

  	
  Excluded Depreciated Value

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2)

  	
  Net Revenue Limit [i *
  [(ii-iii)/(iv))]]

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  i)

  	
  37.5%

  	
   

  	
   

  	
  —

  	
  %

  
	
   

  	
   

  	
   

  	
  ii)

  	
  annualized Net Revenue

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  iii)

  	
  annualized Excluded Net
  Revenues

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  iv)

  	
  Average Hedged Rate

  	
   

  	
   

  	
  —

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Aggregate Outstanding
  Amount

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  i)

  	
  Series -1

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
  ii)

  	
  Series -2 (Warehouse)

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Available

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

The
undersigned Responsible Officer of the Manager hereby certifies that, to the
best of his knowledge and belief, (i) the Manager and the Issuer are in
compliance with all material requirements of the Indenture, the Management
Agreement and all related documents, (ii) there are no on-going Events of
Default, Manager Defaults or Trigger Events, and (iii) the information
contained in this Asset Base Certificate is true and accurate in all material
respects. 

 

	
  UNIVERSAL COMPRESSION,
  INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Lee Sumrall

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Vice President of
  Financial Services

  	
   

  	
   

  

 

 

EXHIBIT “B”

 

Credit and Collection
Policies

 

[Section 9.1(e)]

 

21.          CREDIT/COLLECTION GUIDELINES

 

21.1        CREDIT

 

•      ALL
new customers should complete and sign a standard account application.  No Account Number will be assigned until
completed.

 

•      When
received, if potential sale is over $2,500, pull a credit report according to
location. (If under $2,500, manually check a minimum of four trade
references   Four bureaus are available,
NACM — Houston and Dallas, Experian, and Dun & Bradstreet. For sales over
$2,500, if insufficient information is available from the credit bureaus,
manually check the trade and bank references. 
Again, there should be a minimum of four trade references.

 

•      Evaluate
credit worthiness based on trade payment history, length of time in business,
and overall financial condition and ability to repay.

 

•      Any
customer with a trend towards slow pay, a high debt ratio, and/or start ups may
be approved with A/R Manager Approval 
and may require a down payment. 
Contract deposits are normally the equivalent of two months while parts
deposit vary from 30 – 50% based upon whether it is a special order.

 

•      Credit
representatives have approval authority up to $25,000.  Anything above this must be referred to
manager.  Approval authority is assigned
by the Vice President — Financial Services and is based on level of experience
of employees.  Any Credit Limit over $1
million must be approved by the Vice President — Financial Services.

 

•      Once
account is approved (or declined) an account number will  be assigned in the system and a customer
file  will be made by 
whom ever completes the credit investigation.

 

•      If
customer is tax exempt, enter into system.

 

 

•      Advise
salesperson of decision via telephone or email.

 

•      If
an account has had no activity in over one year, a complete inquiry should be
done by the credit representative responsible for that account to determine
continued ability to repay. This consists of pulling an updated credit bureau
and rechecking references.

 

•      Monthly
a list of “Problem” Accounts will be forwarded to the Sales Departments.
Additional sales should not be approved until the problem is addressed
satisfactorily.

 

•      If
a customer wishes to purchase and/or contract in an amount that would put them
over their credit limit, an inquiry should be done to determine if their credit
limit could be raised. Limits are raised based on previous pay history with UCI
and information obtained from an updated credit report.  This 

 

1

 

is done by the
credit representative responsible for the account or, based on the amount of
the sale, the credit manager or Vice President – Financial Services.

 

•      If
there are any questions regarding these, please contact the Credit Manager for
clarification.

 

21.2        COLLECTIONS – Over $10,000 (Under $10,000 Pending)

 

•      Collections
are done from an aging report that is divided among the collectors.

 

•      Calls
are made according to individual collectors preference.  However, any account with a balance over
$10,000 must be contacted when it reaches 45 days outstanding and BEFORE it reaches 60 days
outstanding.  This
information is included in a report to manager due by the 3rd
working day of each month and is updated monthly.  This report is  reviewed by the A/R Manager and the Vice
President – Financial Services and is forwarded to both sales and the district
managers.

 

•      When
customer is contacted, all pertinent information should be entered into the
customer notes section of the customer master.  
Information such as faxes sent, money promised, as well as follow up
dates need to be entered.   The collectors initials MUST always be
included and the note should include sufficient information to stand on its
own.  This information is
reviewed by the manager and is included in 
the monthly over $10,000/over 60 day report.

 

•      Statements
are to go out by the 4th working day of the month.  Collectors should go through the statements
individually, highlighting past due items, etc. 
Use this as an opportunity to bring these items to the customer’s
attention.

 

•      Calls
received by customers are to be responded to as soon as possible, but no longer
that 24 hours from the time the call is received.  Requests for faxed copies, etc. should be
handled in the same manner.

 

•      Customer
calls regarding invoice problems not collection related need to be directed to
the appropriate person right away.   This
information should be relayed in writing (fax, e-mail, interoffice mail,
etc.).   Notes indicating who is handling
the account need to be made in C3.

 

•      If
a customer has missed two payments or has a balance outstanding more than 60
days, with no response to collection efforts, a Customer Collection Form MUST
be completed by the collector, approved by the A/R Manager and forwarded via
email to the salesman.  A copy of the
form is to be printed and placed in an active file by date.  The salesman will be expected to contact their
customer to try to obtain payment.  Any
resolution should be noted on the Customer Collection Form which would be
removed from the active file and placed in the customer folder.

 

•      For
any Customer Collection form for which remains in the Active File after 10
business days, the following will be sent to the customer:

 

•      For
contract units, a letter warning that the machine(s) will be disabled will be
sent by certified mail.  .

•      For
Parts & Service / Fabrication, a “10 Day” Demand Letter.

 

Any Customer
reaching this point will have their Account placed on hold, preventing further
sales until the account is cleared.

 

•      Contract
Compression - Upon  reaching 90 days
outstanding with no payment or satisfactory resolution, a “Disable Unit” Form
is sent via an email to the district manager and the Regional Sales

 

2

 

manager.  They will then contact the appropriate field
personnel who go the lease site and remove the magneto from the compressor,
rendering it inoperable.  If, after 30
days, payment still has not been received, or appropriate arrangements made,
the unit will be removed from the lease. The District Manager will contact the
Area Supervisor and advise them to schedule the pick up and removal of the
unit.  This can usually be done within a
one week period.

 

•      Parts/Service
– Upon  reaching 90 days outstanding with
no payment or satisfactory resolution, appropriate action will be taken (filing in
small claims, placing for collection with an agency, etc.) A report showing
these items and their status will be maintained by the Credit Manager and
Reviewed by the Vice President — Financial Services at least monthly.

 

•      A
copy of the Disable Unit Form is placed in a Disabled Unit File until resolved
or removed from the lease, and then filed in the customer file.  A report showing all units currently
recommended to be disabled, and their status will be sent to the Vice President
– Financial Services and the CFO on the last day of each month.

 

•      Liens
will also be filed on the contract at 90 days outstanding   The credit manager will  handle this process.  Paperwork is prepared and filed in the
appropriate county and/or parish.  Laws
and forms are provided using the LienWrite software package.  Filing of the lien, in most cases, can be
done within a two week period.  (Most
states allow 6 months from the last date of service to file.)    From here, the account is handled by the
credit manager who will work on getting payment by using the lien process,
pursuing judgment, etc.  If efforts still
fail, the balance will be sent to an outside collection agency or referred to
UCI’s legal department for further action.

 

•      If
a customer requests payment terms or extensions due to cash flow problems, we
will normally try to work with them as they stay in contact and promised
payments are received.  Any payment plan
must be in writing with terms clearly spelled out.  It must be signed by both parties and should
allow for further legal action should the customer default.

 

•      Collector
performance is measured by the total number of accounts of their responsibility
are over 60 days past due, as well as total number of dollars over 60 days past
due.

 

3

 

EXHIBIT “C”

 

Form
of Manager Report

 

[See
attached]

 

 

UCO Compression 2005 LLC

Manager’s Report

As of           

 

	
  Collection Period Ended

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Determination Date

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payment Date

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Conditions Existing

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commitment Termination Date

  	
   

  	
  Yes
  / No

  	
   

  	
   

  	
   

  
	
  Trigger Event

  	
   

  	
  Yes
  / No

  	
   

  	
   

  	
   

  
	
  Manager Default

  	
   

  	
  Yes
  / No

  	
   

  	
   

  	
   

  
	
  Event of Default

  	
   

  	
  Yes
  / No

  	
   

  	
   

  	
   

  
	
  Hedge Requirements Met

  	
   

  	
  Yes
  / No

  	
   

  	
   

  	
   

  
	
  Letter of Credit Drawn

  	
   

  	
  Yes
  / No

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Report on Hedging

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Asset Base

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Aggregate Note Principal Amount

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Hedged Notional

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Amounts on Deposit in the Reserve Account

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Hedged Percentage of Notes

  	
   

  	
  —

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Collections

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gross Compressor Contract Revenues

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Proceeds from Purchase Account > 30 days

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Manager Advances

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Account Earnings (Trust, Purchase, Reserve)

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Indemnity payments made by, or on behalf of, the Manager

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Payments made by the Interest Rate Hedge Provider

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Management & Overhaul
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S&A Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S&A Fee for Collection Period

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  S&A Fee already paid to the Manager

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Net S&A Fee payable

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operations Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operations Fee for Collection Period

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Operations Fee already paid to the Manager

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Net Operations Fee payable

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Overhaul Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Overhaul Fee for Collection Period

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Overhaul Fee already paid to the Manager

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Overhaul Fee payable

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Back-up Manager Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reimbursable Services, if any

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reserve Account

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reserve Amount

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  1. [ (8) (1/12) (Aggregate Note Principal Balance)] plus

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2. [(.80%) (Aggregate Depreciated Value)]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amounts under all Eligible Letters of Credit

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Shortfall, if any

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Letter Of Credit

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Current Available L/C Amount

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Current Maximum L/C Amount

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Aggregate Amount Drawn under L/C prior to current Payment Date

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Aggregate Amount Reimbursed under L/C prior to current Payment Date

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
  Current Period L/C Permitted Draw

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PAYMENT AMT

  	
   

  	
  AVAILABLE AMT

  	
   

  
	
  Trust Account Waterfall

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Available Amounts

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  1

  	
  To the Indenture Trustee, the Indenture Trustee’s Fees and
  Indemnified Amounts (Max $20,000 yr)

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  2

  	
  To the Manager, First any excluded payments, Second reimbursement of
  Manager Advances

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  3

  	
  To the Manager, Any S&A Fee and Operations Fee then due and
  payable, net of previous distributions

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  4

  	
  To the Back-up Manager, or the Manager if previously paid by the
  Manager, the Back-up Manager Fee.

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  5

  	
  Payment of any Casualty or Liability Insurance Premiums not
  previously paid by UCI

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  6

  	
  To the Letter of Credit Bank, the Letter of Credit fees due and
  payable.

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  7

  	
  To each Series Enhancer, the Premium then due and payable

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  8

  	
  To each Interest Rate Hedge Provider, scheduled payments, except
  Termination Payments, and any accrued interest on a pro rata basis

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  

 

1

 

	
   

  	
  9

  	
  To the Series Account for each Series of Notes Outstanding, Interest
  Payments for each Series

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  10

  	
  To the Series Account for each Series of Warehouse Notes then
  Outstanding and Each Series Enhancer, any Commitment Fees then due and
  payable

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  11

  	
  To the Reserve Account, the excess of the Required Reserve Amount,
  over the Aggregate Available Drawing Amount under all Eligible Letters of
  Credit

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  12

  	
  To each Letter of Credit Bank, all outstanding claims under the
  Letter of Credit

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  13

  	
  To the Manager, the Overhaul Fee, net of any amounts previously
  distributed.

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  14

  	
  To the Series Account for each Series the following amounts when due
  and owing

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A.    Minimum Principal Payments for each Series
  of Outstanding Notes

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  B.    All Reimbursement Amounts owing to any
  Series Enhancer

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
  C.    Prorata to each Interest Rate Hedge
  Provider, Note Partial Termination payments

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  15

  	
  To the Manager any Reimbursable Services and if any Universal
  Affiliate is not the Manager, then any charge for Management Related Services

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  16

  	
  To each Series Account any Scheduled Principal Payment Amount then
  due and owing

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  17

  	
  To the Manager, if not a Universal Affiliate, any Excess Operation
  Expenses and Excess S&A Expenses

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  18

  	
  To the Manager, if not a Universal Affiliate, any Incentive Management
  Fee

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  19

  	
  To the Series Account for each Series, the Supplemental Principal
  Payment Amount

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  20
  

  	
  If the Manager is a Universal Affiliate, any Excess Operations
  Expenses and any Excess S&A Expenses

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  21
  

  	
  If the Manager is a Universal Affiliate, the Incentive Management Fee

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  22
  

  	
  Prorata to each Interest Rate Hedge Provider any unpaid Termination
  Payments

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  23
  

  	
  Any Indemnification Payments then due and owing on a pro rata basis

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  24

  	
  To the Series Account for each Series of Warehouse Notes other
  amounts due the holders of the Warehouse Notes

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  25

  	
  If the Manager is a Universal Affiliate, any indemnification amount
  owing to the Manager

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  26

  	
  To the Issuer, any remaining Available Distribution Amount

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  

 

The undersigned Responsible Officer of the Manager hereby certifies
that, to the best of his knowledge, (i) the Manager and the Issuer are in compliance
with all material requirements of the Indenture, the Management Agreement and
all related documents, (ii) there are no on-going Events of Default, Manager
Defaults or Trigger Events, and (iii) the information contained in this
Managers’ Report is true and accurate in all material respects.

 

	
  UNIVERSAL
  COMPRESSION, INC.

  
	
   

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: Lee
  Sumrall

  
	
  Title:   Vice President - Financial Services

  

 

2

 

Schedule 5.7(a)

 

Sublimits to Perils ScheduleExhibit 10.6

 

CONFORMED COPY

 

CATERPILLAR INC.,

as Back-up Manager

 

UCO COMPRESSION 2005 LLC,

as Issuer,

 

and

 

UNIVERSAL COMPRESSION, INC.,

as Manager

 

 

Dated as of October 28, 2005

 

ALL RIGHT, TITLE AND INTEREST IN
AND TO THIS AGREEMENT ON THE PART OF UCO COMPRESSION 2005 LLC HAS BEEN
ASSIGNED TO AND IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF WELLS FARGO BANK,
NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, UNDER AN INDENTURE, DATED AS OF OCTOBER 28,
2005, FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.

 

 

BACK-UP
MANAGEMENT AGREEMENT

 

THIS BACK-UP MANAGEMENT AGREEMENT, dated as
of October 28, 2005 (as amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof, this Agreement”), is entered into by and
among CATERPILLAR INC., a corporation organized under the laws of the state of
Delaware (the “Back-up Manager”
or “Caterpillar”), UCO
COMPRESSION 2005 LLC, a limited liability company formed under the laws of the
state of Delaware (the “Issuer”),
and UNIVERSAL COMPRESSION, INC., a corporation organized under the laws of
the State of Texas (the “Manager”
or “UCI”).

 

RECITALS

 

WHEREAS, the Issuer is the owner of the Owner
Compressors; and 

 

WHEREAS, the Issuer and the Manager have
entered into the Management Agreement, dated as of October 28, 2005 (as
amended, supplemented or otherwise modified from time to time in accordance
with its terms, the “Management Agreement”),
a copy of which is attached hereto as Exhibit ”A”,
pursuant to which the Manager agreed, inter
alia, to operate and contract or sub-contract the Owner Compressors
in a manner consistent with any Other UCI Compressors; and 

 

WHEREAS, the Back-up Manager desires to serve as a back-up
manager with respect to the Owner Compressors; and 

 

WHEREAS, the Issuer desires to engage the
Back-up Manager to act as back-up manager with respect to the Owner
Compressors; and

 

NOW, THEREFORE, in consideration of the
premises and
mutual representations, warranties, covenants and agreements contained herein,
the receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Capitalized terms used in this Agreement not
otherwise defined herein shall have the meaning assigned to such terms in
Appendix A to the Indenture, dated as of October 28, 2005 (as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, the “Indenture”),
between the Issuer and Wells
Fargo Bank, National Association, as indenture trustee (together with its
successors and assigns, the “Indenture
Trustee”), as such Appendix A may be amended, supplemented
or otherwise modified from time to time in accordance with the provisions of
the Indenture, and the rules of usage set forth in such Appendix A shall
apply to this Agreement, provided that
any amendment to the Indenture, Appendix A thereto or any other Related
Document (other than as set forth below) shall not be binding on the Back-up
Manager to the extent such amendment would serve to expand the Back-up Manager’s
obligations or liabilities hereunder or thereunder or modify any of the rights
of the Back-up Manager hereunder or thereunder, including without limitation,
its rights to fees, without the prior written consent of the Back-up Manager; provided, however, notwithstanding anything contained herein
to the contrary, the parties shall not amend the Management Agreement or terms
in Appendix A (to the extent any terms are used in the Management Agreement and
such amendment would result in an adverse effect on the Back-up Manager)
without obtaining the prior written consent of the Back-up Manager; otherwise,
terms defined herein shall have the following meanings, and the definitions of
such terms shall be equally applicable to the singular and plural forms of such
terms:

 

1

 

“Back-up
Manager Fee” means an amount equal to the amount set forth
in that separate fee letter agreement dated as of even date herewith by and
among the Manager, the Back-up Manager and the Issuer, as it may be
amended, modified or supplemented from time to time with the written consent of
the Requisite Global Majority.

 

“Back-up Manager
Indemnified Party” shall have the meaning set forth in Section 6.1 hereof.

 

“Back-up Manager
Termination Notice” shall have the meaning set forth in Section 4.1 hereof.

 

“Claim” shall
have the meaning set forth in Section 6.1
hereof.

 

“Indemnified Party”
shall have the meaning set forth in Section 6.2
hereof.

 

“Management
Replacement Date” shall mean the earlier of (a) ninety (90)
days after delivery and receipt of a Manager Termination Notice specifying a
Manager Default; and (b) the date which the Back-up Manager assumes in
writing all of the duties of the Manager under the Management Agreement except
as modified as set forth in Exhibit ”B”
to this Agreement.

 

“Schedule A”
shall mean, with respect to any Owner Compressor, the respective Schedule A
attached to the form of master equipment agreement relating to providing contract
compression services for such Owner Compressors.

 

“Status Report” shall
have the meaning set forth in Section 3.3(c) hereof.

 

“Systems Data” shall have the meaning set
forth in Section 2.2(b) hereof.

 

“Transition Plan” shall
have the meaning set forth in Section 2.2(a) hereof.

 

ARTICLE II

 

APPOINTMENT OF BACK-UP MANAGER

 

SECTION 2.1                                                                  The Issuer hereby appoints Caterpillar as the
initial Back-up Manager, and the Back-up Manager, in executing this Agreement,
hereby accepts such appointment on the terms and conditions set forth in this
Agreement. Other than the duties specifically set forth in this Agreement, the
Back-up Manager shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Manager or the Issuer. The Back-up Manager shall have no liability for any
actions taken or omitted by the Manager or by the Issuer. The duties and
obligations of the Back-up Manager shall be determined solely by the express
provisions of this Agreement and, on the Management Replacement Date,
except as otherwise set forth on Exhibit ”B”
attached hereto and incorporated herein by reference for all purposes, the
provisions of the Management Agreement are incorporated herein by reference and
shall apply with the same force and effect as if such provisions were set forth
in full herein to the extent provided in this Section 2.1; provided, however, no implied covenants or
obligations shall be read into this Agreement or the Management Agreement
against the Back-up Manager and provided, further, that the parties to the Management
Agreement, and Appendix A, to the extent any terms in Appendix A are
used in the Management Agreement, shall not amend the same without the prior
written consent of the Back-up Manager. On the Management Replacement Date
except as set forth in Exhibit B
attached hereto and incorporated by reference for all purposes, the Back-up
Manager shall be obligated under the Management Agreement as if it were the “Manager”
thereunder. Notwithstanding anything contained in this Agreement or the
Management Agreement to the contrary, including without limitation,
Sections 5.2, 5.5 or 5.6 of the Management

 

2

 

Agreement, the Back-up Manager shall only be required to perform its
obligations under the Management Agreement in accordance with the Services
Standard and Applicable Law. Notwithstanding anything contained in this
Agreement, the Management Agreement or any Related Document to the contrary,
the Back-up Manager’s duties and obligations as Manager shall not arise until
and unless the Back-up Manager has received the Manager Termination Notice
pursuant to Section 405(a) of the Indenture.

 

SECTION 2.2                                                                  The
parties agree as follows:

 

(a)                                 The Back-up Manager has
delivered its transition plan (the “Transition Plan”) to the Issuer, the
Deal Agent, each Series Enhancer, and the Rating Agencies, which
Transition Plan describes, in summary detail, the steps which must be taken to
transfer the management of the Owner Compressors from the Manager to the
Back-up Manager. A copy of the Transition Plan is attached as Exhibit ”C” hereto and
incorporated herein by reference for all purposes; and

 

(b)                                 The Back-up Manager and the Manager have agreed
upon the form and substance of the systems data (including, without
limitation, the maintenance schedule, the overhaul schedule, equipment
location, billing, cash application, tax, UCC, and insurance information) and
other information that the Back-up Manager will require in order to effectively
execute the Transition Plan, including without limitation, any information
regarding Users in respect of Owner Compressors needed to effectuate any remedy
under Section 12.2 of the Management Agreement, and assume and perform the
duties of the Manager under the Management Agreement (the “Systems Data”).

 

SECTION 2.3                                                                  As
compensation for the Back-up Manager’s performance hereunder, the Manager will
pay to the Back-up Manager on each Payment Date the Back-up Manager Fee. If UCI
shall fail to pay such Back-up Manager Fee, the Back-up Manager shall be
entitled to receive such fees from distributions from the Trust Account at the
times, in the amounts and subject to the priorities of distribution set forth
in the Indenture. Effective on the Management Replacement Date, the Back-up
Manager shall be entitled to receive the Management Fee and Incentive
Management Fee as compensation for its services hereunder and thereunder (and
its entitlement to receive the Back-up Manager Fee shall cease at such time) at
the times and in the amounts provided in the Management Agreement.

 

SECTION 2.4                                                                  The
Manager and the Back-up Manager hereby each agree to cooperate with each other
and each Series Enhancer in effecting (a) the termination of the
responsibilities and rights of the Manager under the Management Agreement and (b) the
transfer of the responsibilities and rights from the Manager to the Back-up
Manager (or another Replacement Manager) under the Management Agreement,
including, without limitation, the preparation, execution, and delivery of any
and all documents and other instruments, the execution and delivery of
assignments of financing statements, and the transfer to the Back-up Manager
(or another Replacement Manager) for administration by it of all cash amounts
which shall at the time be held by the Manager or thereafter received by the
Manager with respect to the User Contracts and the Owner Compressors. Effective
upon the delivery of a Manager Termination Notice, the Manager hereby agrees to
transfer all Systems Data to the Indenture Trustee. Upon the Indenture Trustee’s
receipt of direction from the Requisite Global Majority, the Indenture Trustee
will deliver the Systems Data to the Back-up Manager and, if so directed, to
each Series Enhancer. After the delivery of the Manager Termination Notice
and on or prior to the Management Replacement Date, the Back-up Manager agrees
to set up the ABS Lockbox Account. The Back-up Manager agrees to enter into any
lockbox agreement and control agreement in connection with such ABS Lockbox
Account as may be required by the Requisite Global Majority in its sole
but reasonable discretion. Once the ABS Lockbox Account is established, the
Manager and the Back-up Manager will cooperate with each other to contact all
Users of the Owner Compressors and notify them of the change in

 

3

 

payment address from the Lockbox Account to the ABS Lockbox Account. Effective
on the Management Replacement Date, UCI hereby agrees to transfer to Back-up
Manager (or another Replacement Manager) copies of all original master contract
compression services agreements, originals (if available) of the Schedule A’s
thereto or any other functional equivalent, and Contract Files and all Systems
Data and copies of its electronic records and all other records, correspondence
and documents relating to the User Contracts and the Owner Compressors in the
manner and at such times as the Back-up Manager (or another Replacement
Manager) shall reasonably request and do any and all other acts or things
necessary or appropriate to effect the purposes of the termination of UCI as
Manager and the assumption of the duties of the Manager by Caterpillar. The
Manager hereby designates the Back-up Manager (or any other Replacement
Manager) as its agent and attorney-in-fact, on and after the Management
Replacement Date, to execute transfers of any agreements, documents or
instruments which may be necessary or advisable to effect such transfer of
the Manager’s responsibilities and rights hereunder; provided, that all reasonable expenses relating to such
actions shall be paid by the Manager.

 

SECTION 2.5                                                                  [Intentionally
Omitted].

 

SECTION 2.6                                                                  Nothing
in the preceding provisions of this Agreement shall be interpreted as limiting
or restricting any rights or remedies which the Issuer, the Indenture Trustee,
the Deal Agent, any Series Enhancer, the Noteholders or any other Person
would otherwise have at law or in equity on account of the breach or violation
of any provision of this Agreement, or the Management Agreement, by the Manager
or the Back-up Manager, including, without limitation, the right, subject to Sections 9.17 and 9.18 of this Agreement, to recover
full and complete damages on account thereof and, to the extent not inconsistent
with Section 12 of the Management
Agreement, injunctive relief and specific performance.

 

SECTION 2.7                                                                  Upon
termination of its obligations as Manager under the Management Agreement, the
Manager agrees to cooperate with the Back-up Manager in those regions where the
Back-up Manager does not maintain sufficient operations to service the Owner
Compressors and, to the extent reasonably necessary in order to service and
maintain the Owner Compressors as required under the Management Agreement, (a) make
its facilities, equipment and vehicles in those regions available on an as
needed, where needed basis, (b) with the consent of the employees, provide
the Back-up Manager with an employee list which will contain job titles and
contact information and to make such employees available for interviews with
the Back-up Manager, and (c) provide for a right of first refusal to
purchase the items set forth in clause (a) of this Section 2.7
at their appraised values but only to the extent such right of first refusal is
permitted by all material agreements in effect as of the date of this Agreement
to which UCI is a party.

 

ARTICLE III

 

GENERAL PROVISIONS

 

SECTION 3.1                                                                  Subject
to the provisions of Section 2.1,
the Back-up Manager shall fully assume, from and after the Management
Replacement Date, all of the rights (including, without limitation, rights to
any S&A Fee, Operations Fee, Overhaul Fee, and a charge for Reimbursable
Services under the Management Agreement), responsibilities, duties, and
liabilities relating thereto placed on the Manager by the terms and provisions
of the Management Agreement as though it were a party thereto as the Manager, provided,  however,
in no event shall the Back-up Manager be responsible or liable for any Claims
arising out of or in connection with actions taken or not taken by the outgoing
Manager, whether such actions were so taken or not taken prior to or following
the Management Replacement Date.

 

4

 

SECTION 3.2                                                                  Following
the occurrence of a Trigger Event, the Back-up Manager agrees to perform such
additional diligence and verification duties as any Series Enhancer shall
reasonably request that are designed to facilitate the goals of the Transition
Plan. The costs and expenses of such diligence and verification shall be paid
by the Manager following the Back-up Manager’s presentation of an invoice
therefor.

 

SECTION 3.3                                                                  Within
ninety (90) days after the end of each calendar year, prior to delivery of a
Manager Termination Notice, the Back-up Manager and the Manager shall perform the
duties and take the actions set forth below:

 

(a)                                 The Back-up Manager
shall review the Transition Plan and, to the extent there are any material
amendments or modifications necessary, it shall deliver an updated Transition
Plan to the Issuer, the Deal Agent, any Series Enhancer, and the Rating
Agencies;

 

(b)                                 The Back-up Manager and
the Manager shall agree upon material amendments or modifications, if any, to
the Systems Data;

 

(c)                                  The Back-up Manager
shall review the maintenance schedule and the overhaul schedule of a
random sample of twenty-five (25) Owner Compressors to ensure compliance with
the Services Standard. The Back-up Manager shall provide a written report to
the Deal Agent, the Issuer, the Indenture Trustee, each Series Enhancer,
any Interest Rate Hedge Provider and the Manager setting forth any material
discrepancies between the scheduled maintenance and scheduled overhauls and the
actual maintenance and actual overhauls of the Owner Compressors (“Status
Report”);

 

(d)                                 If the Manager
disagrees with the Back-up Manager’s assessments provided in the Status Report
or if the Manager has not resolved any material discrepancies between the
scheduled maintenance and overhauls and the actual maintenance and overhauls of
the Owner Compressors, the Back-up Manager agrees to (i) confer with the
Manager to resolve such disagreements and/or discrepancies on or prior to the
next succeeding Determination Date, and (ii) notify in writing the Deal
Agent, the Indenture Trustee, and each Series Enhancer of the resolution
or non-resolution thereof. The Manager hereby agrees to cooperate, at its own
expense, with the Back-up Manager in reconciling any material discrepancies
identified by the Back-up Manager in the Status Report. If such material
discrepancy is not resolved, the Back-up Manager shall promptly notify the
Indenture Trustee and each Series Enhancer of such non-resolution. Following
such non-resolution, the Manager shall deliver to the Deal Agent, the Rating
Agencies, each Series Enhancer, the Back-up Manager, any Interest Rate
Hedge Provider and the Indenture Trustee no later than the next succeeding
Payment Date a certificate describing the nature and cause of such material
discrepancies; and

 

(e)                                  The Back-up Manager
will make a site visit to the offices of the Manager for the purpose of
reviewing the operations of the Manager. Such inspections shall be made upon
the giving of reasonable advance notice and will be conducted during normal
business hours and the reasonable out-of-pocket expenses of the Back-up Manager
incurred in connection with such visit shall be paid by the Manager.

 

5

 

ARTICLE IV

 

TERM

 

SECTION 4.1                                                                  This
Agreement shall continue in force with respect to all Owner Compressors until
the earliest to occur of (a) the destruction, loss, sale, or other
disposition of all Owner Compressors in accordance with the terms of the
Related Documents, (b) the date on which the Indenture is discharged in
accordance with its terms, or (c) the date on which the Indenture Trustee
(acting at the written direction of the Requisite Global Majority), a Series Enhancer
or the Manager (acting at the written direction of the Requisite Global
Majority), terminates all rights and obligations of the Back-up Manager
hereunder by delivery to the Back-up Manager of a notice of termination (the “Back-up Manager Termination Notice”)
executed by the Indenture Trustee (at the written direction of the Requisite
Global Majority).

 

SECTION 4.2                                                                  If
a Back-up Manager Termination Notice is received by the Back-up Manager while
it is performing its duties hereunder, the Back-up Manager agrees to cooperate
with the Issuer, the Indenture Trustee, each Series Enhancer, and any
Interest Rate Hedge Provider, the Replacement Manager or the successor Back-up
Manager in effecting the termination of the Back-up Manager’s responsibilities
and rights hereunder, including, without limitation, the transfer to the
Replacement Manager or the successor Back-up Manager of all data then in the
possession of the Back-up Manager.

 

SECTION 4.3                                                                  The
Back-up Manager shall not resign from the obligations and duties hereby imposed
on it as Back-up Manager except (a) with the prior written consent of the Requisite
Global Majority, or (b) upon determination that the performance of its
duties hereunder is no longer permissible under Applicable Law. Any such
determination permitting the resignation of the Back-up Manager shall be
evidenced by an opinion of counsel to the Back-up Manager to such effect
delivered to each Series Enhancer and to the Rating Agencies. Upon the
Back-up Manager’s resignation or termination pursuant to Sections 4.1
or 4.3 hereof, the Back-up Manager shall comply with the
provisions of this Agreement until the acceptance of appointment and
commencement of the Back-up Manager’s duties by a successor Back-up Manager. Any
such successor Back-up Manager shall be appointed by the Requisite Global
Majority.

 

ARTICLE V

 

NO FORCE MAJEURE

 

The obligations of each of the Issuer,
Manager, and Back-up Manager under this Agreement are unconditional and shall
not be subject to suspension, delay or interruption on account of the
occurrence of any event, whether or not such event is beyond its control.

 

ARTICLE VI

 

INDEMNIFICATION

 

SECTION 6.1                                                                  The
Issuer and the Manager each agree to, and hereby do, severally (as to Claims
arising as a result of such Person’s action, inaction or breach) defend,
indemnify, and hold harmless the Back-up Manager, its successors and assigns,
and its and their respective officers, directors, employees, and agents (each
of the foregoing, a “Back-up Manager
Indemnified Party”) from and against any and all claims,
actions, damages, losses, liabilities, costs and expenses (including reasonable
legal fees) (each a “Claim”)
incurred by or asserted against such Back-up Manager Indemnified Party to

 

6

 

the extent resulting, arising from or related to this Agreement, the
Management Agreement, any Related Document or the transactions contemplated
thereby, including but not limited to those resulting or arising from (a) an
action or inaction by such Issuer or Manager, as the case may be, that is
contrary to the terms of any Related Document, (b) a breach by the Issuer
or Manager, as the case may be, of its representations and covenants set
forth in any Related Document which results in a Material Adverse Change, or (c) any
information certified in any schedule or report delivered by the Issuer or
Manager, as the case may be, being untrue in any material respect as of
the date of such certification, except for Claims which arise out of a Back-up
Manager Indemnified Party’s willful misconduct, gross negligence, or failure to
comply with or perform its obligations under this Agreement or the
Management Agreement, provided, that
the foregoing indemnity shall in no way be deemed to impose on the Issuer or
the Manager any obligation to reimburse a Back-up Manager Indemnified Party for
losses to the extent arising from the failure of the related obligor on a User
Contract to make contract payments and other service-related payments. The
Back-up Manager subordinates its Claims against the Issuer under this Section 6.1 to all Claims
which have priority in payment under the provisions of the Indenture, and
further agrees that any such Claims shall (a) be nonrecourse to the Issuer,
(b) only be payable at the times and in the amounts for which funds are
available for such purpose pursuant to the provisions of the Indenture, and (c) not
constitute a “claim” (as defined in Section 101(5) of
the Bankruptcy Code) against the Issuer.

 

SECTION 6.2                                                                  The
Back-up Manager agrees to, and hereby does, defend, indemnify, and hold
harmless the Issuer, the initial Manager, each Entitled Party, and its and
their respective officers, directors, employees and agents (each of the
foregoing, an “Indemnified Party”)
from and against any and all Claims incurred by or asserted against such
Indemnified Party to the extent resulting or arising from (a) an action or
inaction by the Back-up Manager that is contrary to the terms of this Agreement
or the Management Agreement, (b) a breach by the Back-up Manager of its
representations and covenants set forth in this Agreement which results in a Material
Adverse Change, or (c) any information certified in any schedule or
report delivered by the Back-up Manager being untrue in any material respect as
of the date of such certification, except for Claims which arise as a result of
an Indemnified Party’s willful misconduct, gross negligence, or failure to
comply with or perform its obligations under any Related Document, provided that the foregoing indemnity shall in no way be
deemed to impose on the Back-up Manager any obligation to reimburse an
Indemnified Party for losses arising solely from the financial inability of the
related User on a User Contract to make contract payments and other
service-related payments.

 

SECTION 6.3                                                                  The
rights and obligations of the Back-up Manager Indemnified Parties and the
Indemnified Parties under this Section 6
shall survive the resignation or removal of the Back-up Manager and the
termination of this Agreement.

 

ARTICLE VII

 

NO BANKRUPTCY PETITION AGAINST ISSUER

 

The Back-up Manager will not, prior to the
date that is one (1) year and one (1) day after the payment in full
of all Outstanding Obligations under the Indenture and all Supplements,
institute against the Issuer, or join any other Person in instituting against
the Issuer, an Insolvency Proceeding. This Section 7
shall survive the resignation of the Back-up Manager and the termination of
this Agreement.

 

7

 

ARTICLE VIII

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 8.1                                                                  The
Back-up Manager represents and warrants to the Manager, each Entitled Party and
the Issuer that:

 

(a)                                 The Back-up Manager is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware;

 

(b)                                 The Back-up Manager has
the requisite power and authority to enter into and perform its obligations
under this Agreement, and all requisite corporate authorizations have been
given for it to enter into this Agreement and to perform all the matters contemplated
hereby. This Agreement has been duly executed and delivered by the Back-up
Manager. Upon due execution and delivery hereof by the other parties hereto
this Agreement will constitute the valid, legally binding, and enforceable
obligation of the Back-up Manager, subject to bankruptcy, insolvency,
moratorium, reorganization, and other laws of general applicability relating to
or affecting creditors’ rights and to general equity principles; and

 

(c)                                  The Back-up Manager has
not breached its certificate of incorporation or by-laws or any other agreement
to which it is a party or by which it is bound in the course of conduct of its
business and corporate affairs or any Applicable Laws in such manner as would
in any such case have a materially adverse effect on its ability to perform its
obligations under this Agreement.

 

SECTION 8.2                                                                  The
Issuer represents and warrants to the Manager, the Indenture Trustee, the Deal
Agent, each Series Enhancer, each Interest Rate Hedge Provider and the
Back-up Manager that:

 

(a)                                 It is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware;

 

(b)                                 It has the requisite
power and authority to enter into and perform its obligations under this
Agreement, and all requisite authorizations have been given for it to enter
into this Agreement and to perform all the matters contemplated hereby. Upon
due execution and delivery hereof, this Agreement will constitute the valid,
legally binding and enforceable obligation of the Issuer, subject to
bankruptcy, insolvency, moratorium, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles;
and

 

(c)                                  It has not breached its
organizational documents or any other agreement to which it is a party or by
which it is bound in the course of conduct of its business and affairs or any
Applicable Laws in such a manner as would in any such case result in a Material
Adverse Change. 

 

SECTION 8.3                                                                  The
Manager represents and warrants to the Indenture Trustee, the Deal Agent, each Series Enhancer,
the Back-up Manager, each Interest Rate Hedge Provider and the Issuer that:

 

(a)                                 The Manager is a
corporation duly organized, validly existing and in good standing under the
laws of Texas;

 

8

 

(b)                                 The Manager has the
requisite power and authority to enter into and perform its obligations
under this Agreement, and all requisite corporate authorizations have been
given for it to enter into this Agreement and to perform all the matters contemplated
hereby. Upon due execution and delivery hereof this Agreement will constitute
the valid, legally binding and enforceable obligation of the Manager, subject
to bankruptcy, insolvency, moratorium, reorganization and other laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles; and

 

(c)                                  The Manager has not
breached its certificate of incorporation or by-laws or any other agreement to
which it is a party or by which it or its property is bound in the course of
conduct of its business and corporate affairs or any Applicable Laws in such
manner as would in any such case (x) result in a Material Adverse Change
or (y) have a material adverse effect on the rights and remedies of the Issuer
hereunder.

 

ARTICLE IX

 

GENERAL

 

SECTION 9.1                                                                  All
demands, notices and communications hereunder shall be in writing and
personally delivered or sent by facsimile (with subsequent telephone
confirmation of receipt thereof) or sent by internationally recognized
overnight courier service, to the following addresses:

 

	
  To Manager:

  	
   

  	
  Universal Compression, Inc

  
	
   

  	
   

  	
  4444 Brittmoore Road

  
	
   

  	
   

  	
  Houston, Texas 77041

  
	
   

  	
   

  	
  Telephone: (713) 335-7295

  
	
   

  	
   

  	
  Facsimile:  (713) 446-6720

  
	
   

  	
   

  	
  Attention:  J. Michael Anderson

  
	
   

  	
   

  	
   

  
	
  To Issuer:

  	
   

  	
  UCO Compression 2005 LLC

  
	
   

  	
   

  	
  4444 Brittmoore Road

  
	
   

  	
   

  	
  Houston, Texas 77041

  
	
   

  	
   

  	
  Telephone: (713) 335-7295

  
	
   

  	
   

  	
  Facsimile:  (713) 446-6720

  
	
   

  	
   

  	
  Attention:  J. Michael Anderson

  
	
   

  	
   

  	
   

  
	
  To Back-up Manager:

  	
   

  	
  Caterpillar Inc.

  
	
   

  	
   

  	
  100 NE Adams Street

  
	
   

  	
   

  	
  Peoria, Illinois 61629

  
	
   

  	
   

  	
  Telephone: (309) 675-1000

  
	
   

  	
   

  	
  Facsimile:  (309) 675-6620

  
	
   

  	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  	
   

  
	
  To the Indenture Trustee:

  	
   

  	
  Wells Fargo Bank, National Association

  
	
   

  	
   

  	
  MAC N9311-161

  
	
   

  	
   

  	
  Sixth Street and Marquette Avenue

  
	
   

  	
   

  	
  Minneapolis, MN 55479

  
	
   

  	
   

  	
  Telephone: (612) 667-7181

  
	
   

  	
   

  	
  Facsimile: (612) 667-3464

  
	
   

  	
   

  	
  Attention: Corporate Trust Services
  -Asset-

  
	
   

  	
   

  	
   Backed
  Administration

  

 

9

 

	
  To the Deal Agent:

  	
   

  	
  Wachovia Capital Markets LLC

  
	
   

  	
   

  	
  Structured Asset Finance

  
	
   

  	
   

  	
  301 S. College St., Mailcode:  NCO610

  
	
   

  	
   

  	
  Charlotte, North Carolina 28288-0610

  
	
   

  	
   

  	
  Telephone: (704) 383-8608

  
	
   

  	
   

  	
  Facsimile:  (704) 374-3254

  
	
   

  	
   

  	
  Attention:  Manoj Kumar

  
	
   

  	
   

  	
   

  
	
  To any Series Enhancer:

  	
   

  	
  At the address as set forth in
  the related Enhancement Agreement

  
	
   

  	
   

  	
   

  
	
  To the Rating Agencies:

  	
   

  	
  Standard & Poor Ratings Group

  
	
   

  	
   

  	
  55 Water Street, 40th Floor

  
	
   

  	
   

  	
  New York, New York 10041-0003

  
	
   

  	
   

  	
  Telephone: (212) 425-7025

  
	
   

  	
   

  	
  Facsimile:  (212) 208-1393

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Moody’s Investors Services

  
	
   

  	
   

  	
  99 Church Street, 4th Floor

  
	
   

  	
   

  	
  New York, New York 10007

  
	
   

  	
   

  	
  Telephone: (212) 553-0300

  
	
   

  	
   

  	
  Facsimile:  (212) 553-0574

  
	
   

  	
   

  	
  Attention:  Asset Backed Monitoring
  Group

  
	
   

  	
   

  	
   

  
	
  To any Interest Rate Hedge

  	
   

  	
   

  
	
  Provider:

  	
   

  	
  At the address as set forth in
  related Interest Rate Swap

  
	
   

  	
   

  	
  Agreement

  

 

Notice shall be effective and deemed received (a) two (2) days
after being delivered to the courier service, if sent by courier, (b) upon
receipt of confirmation of transmission, if sent by telecopy or email, or (c) when
delivered, if delivered by hand or certified first class mail, return
receipt requested. Each party delivering a notice hereunder shall deliver a
copy of such notice to the Deal Agent at the address set forth above.

 

SECTION 9.2                                                                  If
any proceeding is brought for enforcement of this Agreement or because of an
alleged dispute, breach, or default in connection with any provision of this
Agreement, the prevailing party shall be entitled to recover, in addition to
other relief to which it may be entitled, reasonable attorney fees and
other reasonable costs incurred in connection therewith.

 

SECTION 9.3                                                                  The
Back-up Manager, the Issuer, and the Manager shall each perform such
further acts and execute such further documents as may be necessary to
implement the intent of, and consummate the transactions contemplated by, this
Agreement.

 

SECTION 9.4                                                                  If
any term or provision of this Agreement or the performance thereof shall to any
extent be or become invalid or unenforceable, such invalidity or
unenforceability shall not affect or render invalid or unenforceable any other
provision of this Agreement and this Agreement shall continue to be valid and
enforceable to the fullest extent permitted by law.

 

10

 

SECTION 9.5                  

 

(a)                                 This Agreement shall be binding upon and
inure to the benefit of, and be enforceable by, the Issuer, the Manager, and
the Back-up Manager, and their respective successors in interest and permitted
assigns; provided, however, that:  (i) this
Agreement and the rights and duties of the Back-up Manager hereunder may not
be assigned by the Back-up Manager to any other Person, other than to an
Affiliate of the Back-up Manager, without the prior written consent of the Issuer
and the Indenture Trustee (at the written direction of the Requisite Global
Majority), and (ii) the Issuer may charge, assign, pledge, or
hypothecate their rights (but not their obligations) under this Agreement as
provided herein. The Back-up Manager hereby acknowledges that the Issuer will
assign all of its right, title, and interest under this Agreement to the
Indenture Trustee, each Series Enhancer and the beneficiaries under the
Indenture will each be a beneficiary of such assignment. The Back-up Manager
hereby consents to such assignment. The Back-up Manager shall give the Rating
Agencies prior written notice of any assignment of the Back-up Manager’s rights
or obligations hereunder effected pursuant to this Section 9.5.

 

(b)                                 Any Person (i) into
which the Back-up Manager may be merged or consolidated, (ii) which may result
from any merger or consolidation to which the Back-up Manager shall be a party,
or (iii) which may succeed to the properties and assets of the
Back-up Manager substantially as a whole, which Person in any of the foregoing
cases executes an agreement of assumption to perform every obligation of
the Back-up Manager hereunder, shall be the successor to the Back-up Manager
under this Agreement without further act on the part of any of the parties
to this Agreement. In the event that the resulting entity is not acceptable to
any Series Enhancer in its sole discretion, the Back-up Manager, upon
written request of any Series Enhancer, shall resign from its obligations
and duties under this Agreement. Such resignation shall not become effective
until a successor Back-up Manager, appointed by the Requisite Global Majority,
has accepted such appointment.

 

(c)                                  Notwithstanding any
provision of this Section 9, the Back-up Manager may subcontract
its duties under this Agreement or the Management Agreement to any qualified
and recognized industry participant to perform the duties of the Back-up
Manager or the Replacement Manager, with the prior written consent of each Series Enhancer;
provided that the Back-up Manager
shall remain responsible notwithstanding such subcontractor. On the Effective
Date, the Back-up Manager shall engage Compressor Systems, Inc. as a
subcontractor, which such subcontractor is acceptable to the Series Enhancers.

 

SECTION 9.6                                                                  Waiver
of any term or condition of this Agreement (including any extension of time
required for performance) shall be effective only if in writing and shall not
be construed as a waiver of any subsequent breach or waiver of the same term or
condition or a waiver of any other term or condition of this Agreement. No
delay on the part of any party in exercising any right, power, or
privilege hereunder shall operate as a waiver hereof.

 

SECTION 9.7                                                                  The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.

 

SECTION 9.8                                                                  This
Agreement and the appendices attached hereto represent the entire agreement
between the parties with respect to the subject matter hereof and may not
be amended or modified except by an instrument in writing signed by the parties
hereto and approved by the Requisite Global Majority. The Back-up Manager shall
send prior notice of any amendment or modification to the Rating Agencies.

 

11

 

SECTION 9.9                                                                  If
Caterpillar or any successor Back-up Manager becomes the Replacement Manager, a
new Back-up Manager shall be appointed by the Series Enhancers, at their
option, and approved by the Replacement Manager.

 

SECTION 9.10                                                           This
Agreement may be signed in counterparts each of which shall constitute an
original instrument, but all of which together shall constitute but one and the
same instrument.

 

SECTION 9.11                                                           Any
signature required with respect to this Agreement may be provided via
facsimile; provided that the originals of such
signatures are supplied by each party to the other party promptly thereafter.

 

SECTION 9.12                                                           THIS
AGREEMENT SHALL BE CONSTRUED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAWS BUT OTHERWISE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW THAT WOULD RESULT IN APPLICATION OF LAWS OTHER THAN NEW YORK,
AND THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES HERETO SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 9.13                                                           ANY
LEGAL SUIT, ACTION OR PROCEEDING AGAINST THE BACK-UP MANAGER, THE MANAGER OR
THE ISSUER ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY TRANSACTION
CONTEMPLATED HEREBY, MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
NEW YORK COUNTY, STATE OF NEW YORK AND THE MANAGER, THE BACK-UP MANAGER, AND
THE ISSUER EACH HEREBY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND, SOLELY
FOR THE PURPOSES OF ENFORCING THIS AGREEMENT, EACH OF THE PARTIES HERETO EACH
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING EACH OF THE PARTIES HEREBY IRREVOCABLY APPOINTS AND
DESIGNATES CT CORPORATION SYSTEM HAVING AN ADDRESS AT 111 EIGHTH AVENUE, NEW
YORK, NEW YORK 10011, ITS TRUE AND LAWFUL ATTORNEY-IN-FACT AND DULY AUTHORIZED
AGENT FOR THE LIMITED PURPOSE OF ACCEPTING SERVICE OF LEGAL PROCESS AND EACH OF
THE PARTIES HERETO EACH AGREE THAT SERVICE OF PROCESS UPON SUCH PARTY SHALL
CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS ON SUCH PERSON. EACH OF THE PARTIES
HERETO SHALL EACH MAINTAIN THE DESIGNATION AND APPOINTMENT OF SUCH AUTHORIZED
AGENT UNTIL ALL AMOUNTS PAYABLE UNDER THIS AGREEMENT AND THE INDENTURE SHALL
HAVE BEEN PAID IN FULL. IF SUCH AGENT SHALL CEASE TO SO ACT, EACH OF THE PARTIES
HERETO SHALL IMMEDIATELY DESIGNATE AND APPOINT ANOTHER AGENT SATISFACTORY TO
THE INDENTURE TRUSTEE AND SERIES ENHANCERS AND SHALL PROMPTLY DELIVER TO
THE INDENTURE TRUSTEE EVIDENCE IN WRITING OF SUCH OTHER AGENT’S ACCEPTANCE OF
SUCH APPOINTMENT.

 

SECTION 9.14                                                           EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, AS AGAINST THE OTHER PARTIES
HERETO, ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL
ACTION OR PROCEEDING (WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE),
INCLUDING ANY COUNTERCLAIM, ARISING UNDER OR RELATING TO THIS AGREEMENT OR ANY
OTHER OPERATIVE DOCUMENT, INCLUDING IN RESPECT OF THE NEGOTIATION,
ADMINISTRATION OR ENFORCEMENT HEREOF OR THEREOF.

 

12

 

SECTION 9.15                                                           To the
extent that any party hereto or any of its property is or becomes entitled at
any time to any immunity on the grounds of sovereignty or otherwise from any
legal actions, suits or proceedings, from set-off or counterclaim, from the
jurisdiction or judgment of any competent court, from service of process, from
execution of a judgment, from attachment prior to judgment, from attachment in
aid of execution, or from execution prior to judgment, or other legal process
in any jurisdiction, such party, for itself and its successors and assigns and
its property, does hereby irrevocably and unconditionally waive, and agrees not
to plead or claim, any such immunity with respect to its obligations,
liabilities, or any other matter under or arising out of or in connection with
this Agreement, the other Related Documents or the subject matter hereof or
thereof, subject, in each case, to the provisions of the Related Documents and
mandatory requirements of applicable law.

 

SECTION 9.16                                                           The
parties hereto (A) acknowledge that the matters contemplated by this
Agreement are part of a financing transaction and (B) hereby agree
that (i) specification and payment of Dollars is of the essence, (ii) Dollars
shall be the currency of account in the case of all obligations under the Related
Documents unless otherwise expressly provided herein or therein, (iii) the
payment obligations of the parties under the Related Documents shall not be
discharged by an amount paid in a currency or in a place other than that
specified with respect to such obligations, whether pursuant to a judgment or
otherwise, except to the extent actually received by the Person entitled
thereto and converted into Dollars by such Person (it being understood and
agreed that, if any transaction party shall so receive an amount in a currency
other than Dollars, it shall (A) if it is not the Person entitled to
receive payment, promptly return the same (in the currency in which received)
to the Person from whom it was received or (B) if it is the Person
entitled to receive payment, either, in its sole discretion, (x) promptly
return the same (in the currency in which received) to the Person from whom it
was received or (y) subject to reasonable commercial practices, promptly
cause the conversion of the same into Dollars), (iv) to the extent that
the amount so paid on prompt conversion to Dollars under normal commercial
practices does not yield the requisite amount of Dollars, the obligee of such
payment shall have a separate cause of action against the party obligated to
make the relevant payment for the additional amount necessary to yield the
amount due and owing under the Related Documents, (v) if, for the purpose
of obtaining a judgment in any court with respect to any obligation under any
of the Related Documents, it shall be necessary to convert to any other
currency any amount in Dollars due thereunder and a change shall occur between
the rate of exchange applied in making such conversion and the rate of exchange
prevailing on the date of payment of such judgment, the obligor in respect of
such obligation will pay such additional amounts (if any) as may be
necessary to insure that the amount paid on the date of payment is the amount
in such other currency which, when converted into Dollars and transferred to
New York City, New York, in accordance with normal banking procedures, will
result in realization of the amount then due in Dollars and (vi) any
amount due under this paragraph shall be due as a separate debt and shall not
be affected by or merged into any judgment being obtained for any other sum due
under or in respect of any Related Document. In no event, however, shall the
respective judgment debtor be required to pay a larger amount in such other
currency, at the rate of exchange in effect on the date of payment than the
amount of Dollars stated to be due under the respective Related Document, so
that in any event the obligations of the respective judgment debtor under the
Related Document will be effectively maintained as Dollar obligations.

 

SECTION 9.17                                                           The
Back-up Manager and Manager hereby irrevocably and unconditionally waive all
right of set-off that they may have under contract (including this
Agreement), Applicable Law, or otherwise with respect to any funds or monies of
the Issuer, at any time held by or in the possession of the Back-up Manager.

 

SECTION 9.18                                                           THE
BACK-UP MANAGER SHALL NOT UNDER ANY CIRCUMSTANCES BE LIABLE TO THE ISSUER, THE
MANAGER, AND/OR TO ANY OTHER PARTY CLAIMING RIGHTS UNDER THIS AGREEMENT AND/OR
THE MANAGEMENT

 

13

 

AGREEMENT FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES,
OR FOR LOST PROFITS, SAVINGS OR REVENUES OF ANY KIND, WHETHER OR NOT THE
BACK-UP MANAGER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

SECTION 9.19                                                           Each of
the Indenture Trustee, the Deal Agent, and each Series Enhancer shall be
third party beneficiaries of this Agreement and shall be entitled to enforce
the rights and obligations of the Manager and the Back-up Manager hereunder as
though it were a party thereto. Each party hereto agrees that, if the Indenture
Trustee shall fail to act hereunder as directed by the Requisite Global
Majority at any time at which it is so required hereby or by any Related
Document, then the Requisite Global Majority shall be entitled to directly
enforce the provisions of this Agreement or take any such action directly in
its own capacity or on behalf of the Indenture Trustee in accordance with the
terms of this Agreement and, in the event any party receives instructions from
both the Indenture Trustee and the Requisite Global Majority, such party may act
on and rely upon the instructions from the Requisite Global Majority.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -

SIGNATURE PAGE FOLLOWS]

 

14

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year first above
written.

 

 

	
   

  	
  UNIVERSAL COMPRESSION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Michael Anderson

  
	
   

  	
   

  	
  J. Michael Anderson, Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UCO COMPRESSION 2005, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Michael Anderson

  
	
   

  	
   

  	
  J. Michael Anderson, Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CATERPILLAR INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James J. Parker

  
	
   

  	
  Name:

  	
  James J. Parker

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

EXHIBIT “B”

 

Exceptions and/or Modifications to
Provisions of the Management Agreement to be effective on the Management
Replacement Date:

 

1.             Except as set forth
in this Exhibit “B” or where
references are to “Universal”, “UCI” or “Universal as Manager” or similar
language which is intended to only apply to UCI or its Affiliates, all
references in the Management Agreement to Manager shall refer to Caterpillar
(or any appointed subcontractor), and such terms shall be amended mutatis mutandis.

 

2.             All obligations of  UCI, as the initial Manager,
to pay expenses of the Issuer and each Entitled Party during a Trigger Event
shall remain the obligation of UCI.

 

3.             Section 9.10 shall be amended to require the Issuer to
bear all expenses associated with any Appraisals.

 

4.             The following sections will be deleted in
their entirety:  Sections 5.2(b),
5.7(d), 5.13,
5.14,  9.1(g), 9.1(m),  9.1(n),  9.1(o),
and 9.11.

 

5.             Section 4.2
will be amended to only require the Manager to pay and discharge Lien Claims
that result from claims of Persons against the Manager resulting from an act or
omission by the Manager or the Manager’s willful misconduct, negligence or
failure to perform its duties or obligations under the Management Agreement in
accordance therewith.

 

6.             Section 5.7
will be amended to require the Manager to cause to be obtained at the expense
of the Issuer, the insurance required in Sections 5.7(a)
through 5.7(c).

 

7.             Section 5.8
will be amended to only require indemnification from the Manager of the
obligations required therein to the extent the resulting Taxes and Impositions
were caused by the gross negligence or willful misconduct of the  Manager. 
In addition, the following two (2) sentences shall be inserted between
the second (2nd) and third (3rd) sentences of Section
5.8:

 

“The Manager
will calculate the amount of Impositions due that are not Excluded Payments and
submit such calculations to the Issuer and the Indenture Trustee, to be
included as part of the Operations Fee. 
Following the delivery of such calculations and the payment of such
amounts to the Manager pursuant to either a distribution under Section 302(c)
at the Manager’s request or on the next Payment Date pursuant to Section 302(d)
or 302(e) of the Indenture, as applicable, the Manager will promptly pay all
such amounts to the appropriate Governmental Authority.”

 

8.             Sections 5.11, 9.2 and 19.8 will be amended to reflect Caterpillar’s offices in lieu of
UCI’s address.

 

9.             Section 7.1(a) is deleted in its entirety and the following
is inserted in substitution thereof:

 

(a)           After
the delivery of the Manager Termination Notice and on or prior to the
Management Replacement Date, the Manager agrees to set up and maintain the ABS
Lockbox Account.  The Manager agrees to
enter into any lockbox agreement and control agreement in connection with such
ABS Lockbox Account as may be required by the Requisite Global Majority in its
sole but reasonable discretion.  Once the
ABS Lockbox Account is established, UCI and the Manager agree to cooperate to
contact all Users of the Owner Compressors and notify them of the change in
payment address from the Lockbox Account to the ABS Lockbox Account.  The Manager

 

1

 

agrees to
promptly return to UCI all receipts, receivables, proceeds and other
collections it may receive which is not related to Securitization
Collateral.  UCI agrees to promptly
deposit to the ABS Lockbox Account all receipts, receivables, proceeds and
other collections it may receive which is Securitization Collateral.”

 

10.          Section 7.3 is deleted in its
entirety and the following is inserted in substitution thereof:

 

“The Manager
shall be entitled to request withdrawals (and the Indenture Trustee upon
written notice from the Manager shall make such withdrawals) of the Operations
Fee, S&A Fee and Overhaul Fee from the Collection Account in accordance
with Section 302 of the Indenture.

 

11.          Section 9.1(a)
will be deemed satisfied
by Caterpillar if Caterpillar shall have timely made the information
required by Section 9.1(a) available on “EDGAR” and/or on its home page on the
worldwide web (at the date of this Agreement located at http://www.cat.com);
provided, however, that if any Series Enhancer or Indenture Trustee is
unable to access EDGAR or Caterpillar’s home page on the worldwide web or is
unable to access such information from such sources, Caterpillar agrees to
provide such Series Enhancer or Indenture Trustee, as the case may be, with
paper copies of the information required to be furnished pursuant to Section
9.1(a) promptly following notice from such Series Enhancer or Indenture
Trustee, as the case may be.  Information
required to be delivered pursuant to Section 9.1(a) shall be deemed to have
been delivered on the date on which Caterpillar provides notice to the Series
Enhancers and Indenture Trustee that such information has been posted on
“EDGAR” or Caterpillar’s website or another website identified in such notice
and accessible by the Series Enhancers or Indenture Trustee without charge (and
Caterpillar hereby agrees to provide such notice).  In the event that Caterpillar is no longer
required to file quarterly or annual reports with the SEC or any successor
agency pursuant to Section 13 or 15(d) of the Exchange Act, Caterpillar agrees
to provide each Series Enhancer and Indenture Trustee with paper copies of the
information required to be furnished pursuant to Section 9.1(a) when and as if
Caterpillar was required to file such quarterly and annual reports with the SEC
or any successor agency pursuant to Section 13 or 15(d) of the Exchange Act.

 

12.          Section 9.1(l)
will be modified to reflect that such notice shall be required only in
connection with a Manager Default.

 

13.          Sections 9.3
will be modified to reflect that the inspection right described in clause (ii)
of the last sentence of such Section shall be at the expense of the Issuer.

 

2

 

EXHIBIT
“C”

 

Back-Up Manager Transition Plan

 

 

The Fleet Management process
involves three primary activities

 

I. Marketing
and Remarketing of Contract Compression as units become available.

 

II.        Maintenance,
operation and periodic overhauls of compression units

 

III.      Billing
and collection of Contract Compression payments in accordance with contract
terms.

 

I.         MARKETING

•      Utilization rates are relatively
consistent for both Universal and across the industry

 

•      A limited number of people are needed for
marketing duties.

•      Universal currently employs 35-40 sales
people for it’s entire domestic fleet operations. The ABS fleet represents
approximately 25% of the domestic fleet.

•      The marketing force required is more a
function of the customer base and it’s geographic dispersion rather than the
number of units.

•      CSI has substantial geographic and customer
overlap with Universal and would have to add a minimal number of people,
approximately (10-15), to market the ABS fleet units.

•      The sales staff and equipment of the
companies within the industry are well known to each other.  A number of the sales people  have worked for multiple companies within the
industry.

 

•      With a large percentage of the Securitized
Units operating under contract at any given time, any remarketing efforts
required due to a change of the Manager would be gradual and therefore minimize
the impact.

•      A gas producer generally incurs large
costs and production delays to swap out a compressor unit.

•      With a limited number of Contract
Compression providers, all operating at relatively high utilization rates, a
producer would have a high degree of difficulty finding replacement units.

•      Universal would be prohibited from
replacing a Securitization unit for a period of time.

 

•      The Trustee maintains current schedules of
all contracts, customer and billing information.

 

1

 

 

II.            MAINTENANCE

 

•      The Trustee holds the current maintenance
information

 

•      Caterpillar’s dealer network currently
services compressor equipment and the majority of Universal’s compressor
engines are manufactured by Caterpillar.

 

•      There is a high degree of similarity
between the ABS fleet units and the 425,000 horsepower owned, leased and
maintained by CSI.

•      CSI has over 550 employees, including
approximately 240 technicians.

 

2

 

•      CSI would require approximately 300
additional technicians to service the ABS fleet, most of whom could be acquired
from Universal.

 

•

 

III.          BILLING
& COLLECTION

 

•      The Trustee will hold current billing and
customer information.

 

•      Substantial overlap of customers .

 

•     Collections requires minimal
resources

•      A majority of the large customers are
investment grade.

•      Billing process is automated.

 

3

 

•      Ability to interrupt gas flow of producer
for non-payment leads to few collection problems.

•      No additional billing or collection staff
required.

 

 

4

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