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EXHIBIT 10.7    
  

HEAD LESSEE SECURITY AGREEMENT  

 between  

 UCO COMPRESSION 2002 LLC

as Grantor  

 and  

 BRL UNIVERSAL COMPRESSION FUNDING I 2002, L.P.

as Secured Party  

 Dated as of December 31, 2002  

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	1.	 	Defined Terms	 	1
	

2.	
 	

Head Lessee Collateral	
 	

1
	

3.	
 	

Collateral Management	
 	

4
	

4.	
 	

Representations and Warranties of the Grantor	
 	

5
	

 	
 	

  4.1.	
 	

Existence	
 	

5
	

 	
 	

  4.2.	
 	

Authorization	
 	

5
	

 	
 	

  4.3.	
 	

Due Qualification	
 	

5
	

 	
 	

  4.4.	
 	

No Conflict; Legal Compliance	
 	

6
	

 	
 	

  4.5.	
 	

Validity and Binding Effect	
 	

6
	

 	
 	

  4.6.	
 	

Financial Statements	
 	

6
	

 	
 	

  4.7.	
 	

Executive Offices	
 	

6
	

 	
 	

  4.8.	
 	

No Agreements or Contracts	
 	

6
	

 	
 	

  4.9.	
 	

Consents and Approvals	
 	

6
	

 	
 	

  4.10.	
 	

Taxes	
 	

6
	

 	
 	

  4.11.	
 	

Other Regulations	
 	

7
	

 	
 	

  4.12.	
 	

Solvency and Separateness	
 	

7
	

 	
 	

  4.13.	
 	

Insolvency; Fraudulent Conveyance	
 	

7
	

 	
 	

  4.14.	
 	

No Default	
 	

8
	

 	
 	

  4.15.	
 	

No Proceedings or Injunctions	
 	

8
	

 	
 	

  4.16.	
 	

Compliance with Law	
 	

8
	

 	
 	

  4.17.	
 	

Title; Liens	
 	

8
	

 	
 	

  4.18.	
 	

Subsidiaries	
 	

8
	

 	
 	

  4.19.	
 	

No Partnership	
 	

8
	

 	
 	

  4.20.	
 	

UCC Information	
 	

8
	

 	
 	

  4.21.	
 	

Security Interest Representations	
 	

8
	

 	
 	

  4.22.	
 	

Ordinary Course	
 	

9
	

 	
 	

  4.23.	
 	

Stamping and Storage of User Leases	
 	

10
	

 	
 	

  4.24.	
 	

Identification Marks	
 	

10
	

 	
 	

  4.25.	
 	

Intellectual Property	
 	

10
	

5.	
 	

Covenants	
 	

10
	

 	
 	

  5.1.	
 	

Payment of Head Lessee Secured Obligations; Payment of Taxes	
 	

10
	

 	
 	

  5.2.	
 	

Preservation of Name; Maintenance of Office; Jurisdiction of Formation	
 	

11
	
 	
 	

 	
 	

 	
 	

 

i

 

	

 	
 	

  5.3.	
 	

Limited Liability Company Existence	
 	

11
	

 	
 	

  5.4.	
 	

Compliance with Law	
 	

11
	

 	
 	

  5.5.	
 	

Protection of Head Lessee Collateral	
 	

11
	

 	
 	

  5.6.	
 	

Defend Title to Head Lessee Collateral	
 	

12
	

 	
 	

  5.7.	
 	

Enforce User Lease Rights	
 	

12
	

 	
 	

  5.8.	
 	

Negative Covenants Regarding Head Lessee Collateral (including Related Documents)	
 	

12
	

 	
 	

  5.9.	
 	

Non-Consolidation of the Grantor	
 	

13
	

 	
 	

  5.10.	
 	

No Bankruptcy Petition	
 	

13
	

 	
 	

  5.11.	
 	

Liens; Fixtures	
 	

13
	

 	
 	

  5.12.	
 	

Other Debt	
 	

14
	

 	
 	

  5.13.	
 	

Guarantees, Loans, Advances and Other Liabilities	
 	

14
	

 	
 	

  5.14.	
 	

Consolidation, Merger and Sale of Assets	
 	

14
	

 	
 	

  5.15.	
 	

Other Agreements	
 	

14
	

 	
 	

  5.16.	
 	

Organizational Documents	
 	

14
	

 	
 	

  5.17.	
 	

Capital Expenditures	
 	

14
	

 	
 	

  5.18.	
 	

Permitted Activities; Compliance with Organizational Documents	
 	

14
	

 	
 	

  5.19.	
 	

Investment Company Act	
 	

15
	

 	
 	

  5.20.	
 	

Payments of Head Lessee Collateral	
 	

15
	

 	
 	

  5.21.	
 	

Notices	
 	

15
	

 	
 	

  5.22.	
 	

Books and Records	
 	

15
	

 	
 	

  5.23.	
 	

Taxes	
 	

15
	

 	
 	

  5.24.	
 	

Subsidiaries	
 	

15
	

 	
 	

  5.25.	
 	

Investments	
 	

15
	

 	
 	

  5.26.	
 	

Intentionally Omitted	
 	

16
	

 	
 	

  5.27.	
 	

Financial Statements	
 	

16
	

 	
 	

  5.28.	
 	

Independent Directors of Universal Compression Member 2002 Corp	
 	

16
	

 	
 	

  5.29.	
 	

Separate Identity	
 	

16
	

 	
 	

  5.30.	
 	

Annual Perfection Opinion	
 	

16
	

 	
 	

  5.31.	
 	

Identification Marks	
 	

16
	

 	
 	

  5.32.	
 	

Inspection	
 	

16
	

 	
 	

  5.33.	
 	

Storage of Lease Files	
 	

17
	

 	
 	

  5.34.	
 	

Intellectual Property Filings	
 	

17
	

6.	
 	

Secured Party's Appointment as Attorney-in-Fact	
 	

17
	
 	
 	

 	
 	

 	
 	

 

ii

 

	

7.	
 	

Head Lessee Collection Account, Collateral Account, Rent Reserve Account and Letter of Credit	
 	

19
	

 	
 	

  7.1.	
 	

Establishment of Accounts	
 	

19
	

 	
 	

  7.2.	
 	

Head Lessee Collection Account	
 	

21
	

 	
 	

  7.3.	
 	

Collateral Account	
 	

23
	

 	
 	

  7.4.	
 	

Rent Reserve Account	
 	

24
	

 	
 	

  7.5.	
 	

Letters of Credit	
 	

25
	

 	
 	

  7.6.	
 	

ABS Lockbox Account	
 	

25
	

8.	
 	

Remedies	
 	

25
	

 	
 	

  8.1.	
 	

Remedies on Default	
 	

25
	

 	
 	

  8.2.	
 	

Waivers	
 	

27
	

 	
 	

  8.3.	
 	

Remedies Cumulative	
 	

27
	

9.	
 	

Limitation on Secured Party's Duty in Respect of Head Lessee Collateral	
 	

28
	

10.	
 	

Reinstatement	
 	

28
	

11.	
 	

Miscellaneous	
 	

28
	

 	
 	

11.1.	
 	

Severability	
 	

28
	

 	
 	

11.2.	
 	

Notices	
 	

28
	

 	
 	

11.3.	
 	

Consent to Jurisdiction	
 	

28
	

 	
 	

11.4.	
 	

Captions	
 	

29
	

 	
 	

11.5.	
 	

Governing Law	
 	

29
	

 	
 	

11.6.	
 	

WAIVER OF JURY TRIAL	
 	

29
	

 	
 	

11.7.	
 	

Waiver of Immunity	
 	

29
	

 	
 	

11.8.	
 	

Statutory References	
 	

29
	

 	
 	

11.9.	
 	

Termination of this Security Agreement	
 	

29
	

 	
 	

11.10.	
 	

Successor and Assigns	
 	

30
	

 	
 	

11.11.	
 	

Counterparts	
 	

30
	

 	
 	

11.12.	
 	

Amendments and Waivers	
 	

30
	

 	
 	

11.13.	
 	

Assignment of Rights of Series Enhancer	
 	

30

iii

        THIS HEAD LESSEE SECURITY AGREEMENT, dated as of December 31, 2002 (as amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof, this "Agreement"), is between UCO COMPRESSION 2002 LLC, a limited liability company organized and existing under the laws of the State of Delaware
(together with its successors and permitted assigns, the "Grantor"), and BRL UNIVERSAL COMPRESSION FUNDING I 2002, L.P., a limited partnership organized and existing under the laws of the State
of Delaware (together with its successors and permitted assigns, the "Secured Party"). 

RECITALS  

        WHEREAS, pursuant to the Master Equipment Lease Agreement, dated as of December 31, 2002 (as such agreement may be amended, modified or supplemented from
time to time in accordance with its terms, the "Head Lease"), between the Secured Party, as head lessor, and Grantor, as head lessee (the "Head Lessee") the Secured Party will, from time to time,
lease to the Grantor various Compressors and other related equipment; 

        WHEREAS,
Secured Party is willing to enter into the Head Lease, but only upon the condition, among others, that Grantor shall have executed and delivered this Agreement to the Secured
Party. 

AGREEMENT  

        NOW, THEREFORE, in order to induce Secured Party to enter into the Head Lease and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the parties hereto agrees as follows: 

        1.    Defined Terms.    Terms used in this Agreement but not defined
herein shall have the meanings given to such terms in the Appendix A to the Indenture dated as of December 31, 2002 between the Secured Party, as Issuer, and Wells Fargo Bank Minnesota,
National Association, as Indenture Trustee (as amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Indenture"), 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.    Head Lessee
Collateral.    (a)    Grant of Security Interest.    As collateral security for the Head Lessee
Secured Obligations, and in order to induce (v) the Head Lessor to enter into the Head Lease, (w) the Series Enhancer to issue the Policies, (x) the Letter of Credit Bank to issue
the Letter of Credit, (y) the Noteholders and Certificateholders to purchase the Notes and the Certificates, respectively, and (z) the Interest Rate Hedge Providers to enter into the
Interest Rate Swap Agreements, Grantor hereby assigns, conveys, mortgages, pledges, hypothecates and grants to the Secured Party, a security interest in, to and under and a continuing Lien on all of
the Grantor's right, title and interest, whether now owned or existing or hereafter created or acquired and wherever located, in, to and under: 

	 	 	(i)	the Head Lessee Compressors (including all substitute Head Lessee Compressors acquired by the Grantor from time to time);
	

 	
 	

(ii)	

the Head Lessor Compressors (including all substitutions and replacements thereof);
	
 	
 	

 	

 

 

	

 	
 	

(iii)	

User Leases and all Available Head Lessee Collections, including without limitation, all schedules, supplements, amendments, modifications, renewals, extensions, and guarantees thereof in every case whether now owned or hereafter acquired and all
amounts, rentals, proceeds and other sums of money due or to become due under the User Leases, including, without limitation, (i) all rentals, payments and other moneys, including all insurance proceeds and claims for losses due or to become due to
the Grantor under, and all claims for damages arising out of the breach of, any User Lease; (ii) the right of the Grantor to terminate, perform under, or compel performance of the terms of each User Lease (including without limitation all rights of
the Grantor to exercise remedies thereunder); and (iii) any guarantee of any User Lease and any rights of the Grantor in respect of any subleases or assignments permitted under any User Lease (including without limitation all rights of the Grantor to
exercise remedies thereunder);
	

 	
 	

(iv)	

the Head Lease, the Intercreditor Agreement, all Letters of Credit, the Management Agreement and all other Related Documents to which the Grantor is a party or in which it has an interest and all rights of the Grantor in respect thereof (including
without limitation all rights of the Grantor to exercise remedies thereunder);
	

 	
 	

(v)	

Securities Accounts and Deposit Accounts, including without limitation, all cash and cash equivalents, Eligible Investments, Financial Assets, Investment Property, Securities Entitlements and other instruments or amounts credited or deposited from
time to time in the Head Lessee Collection Account, the Collateral Account, the Lockbox Account (to the extent of its interest therein and subject to the terms of the Intercreditor Agreement), the ABS Lockbox Account, the Rent Reserve Account, the
Reserve Account and the Trust Account;
	

 	
 	

(vi)	

all Accounts;
	

 	
 	

(vii)	

all Chattel Paper;
	

 	
 	

(viii)	

all Commercial Tort Claims;
	

 	
 	

(ix)	

all Contracts;
	

 	
 	

(x)	

all Documents;
	

 	
 	

(xi)	

all Equipment;
	

 	
 	

(xii)	

all General Intangibles and Payment Intangibles;
	

 	
 	

(xiii)	

all Goods;
	

 	
 	

(xiv)	

all Instruments;
	

 	
 	

(xv)	

all Intellectual Property;
	

 	
 	

(xvi)	

all Inventory;
	

 	
 	

(xvii)	

all Letter-of-Credit Rights;
	

 	
 	

(xviii)	

all Money;
	

 	
 	

(xix)	

all Supporting Obligations;
	

 	
 	

(xx)	

all property of Grantor held by the Secured Party including, without limitation, all property of every description now or hereafter in the possession or custody of or in transit to the Secured Party or any other party for any purpose, including,
without limitation, safekeeping, collection or pledge, for the account of Grantor, or as to which Grantor may have any right or power;
	
 	
 	

 	

 

2

 

	

 	
 	

(xxi)	

all insurance policies covering any or all of the Head Lessee Collateral (regardless of whether the Grantor, the Secured Party or the Indenture Trustee is the loss payee in respect thereof) and all insurance proceeds of the Head Lessee Collateral and
all proceeds of the voluntary or involuntary disposition of the Head Lessee Collateral;
	

 	
 	

(xxii)	

any and all payments made or due to Grantor in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Head Lessee Collateral by any Governmental Authority and any other cash or non-cash receipts
from the sale, exchange, collection or other disposition of the Head Lessee Collateral; and
	

 	
 	

(xxiii)	

all income, payments and Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.

All
of the property described in this Section 2(a) is herein collectively referred to as the "Head Lessee Collateral". 

        For
avoidance of doubt it is expressly understood and agreed that, to the extent the UCC is revised subsequent to the date hereof such that the definition of any of the foregoing terms
included in the description of Head Lessee Collateral is changed, the parties hereto desire that any property which is included in such changed definitions which would not otherwise be included in the
foregoing grant on the date hereof be included in such grant immediately upon the effective date of such revision, it being the intention of the Grantor that the description of Head Lessee Collateral
set forth above be construed to include the broadest possible range of assets. Notwithstanding the immediately preceding sentence, the foregoing grant is intended to apply immediately on the date
hereof to all Head Lessee Collateral to the fullest extent permitted by Applicable Law regardless of whether any particular item of Head Lessee Collateral is currently subject to the UCC. 

        (b)  The
Grantor understands that the Secured Party intends to collaterally assign its rights under this Agreement to the Indenture Trustee under the Indenture for the
benefit of the Series Enhancer, the Noteholders, the Certificateholders, the Letter of Credit Bank, the Interest Rate Hedge Providers and the other persons provided therein, and hereby consents to the
assignment of all or any portion of this Agreement by the Secured Party to the Indenture Trustee. The Grantor agrees that upon such assignment the Indenture Trustee, and its successors and assigns,
may exercise all of the rights and remedies of the Secured Party hereunder and shall, to the extent of its interest therein, be entitled to all of the benefits of the Secured Party hereunder. 

        (c)  The
Grantor hereby irrevocably authorizes the Secured Party, the Indenture Trustee or the Series Enhancer at any time, and from time to time, to file, without the
signature of the Grantor, in any filing office in any Uniform Commercial Code jurisdiction (necessary or desirable to protect the security interest and Liens granted herein or in any other Related
Document) any initial financing statements, continuation statements and amendments thereto (including any such financing statement or amendment to identify the Head Lessee Collateral as any or all
assets of the Grantor) that (i) indicate or describe the Head Lessee Collateral regardless of whether any particular asset comprised in the Head Lessee Collateral falls within the scope of Article 9
of the Uniform Commercial Code in the same manner as described herein or in any other manner as the Secured Party, the Indenture Trustee
or the Series Enhancer may determine in its sole discretion is necessary or desirable to ensure perfection of the security interests and Liens granted herein, or (ii) provide any other information
required by Article 9 of the Uniform Commercial Code for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including whether the Grantor is
an organization, the type of organization and any organization identification number issued to the Grantor. The Grantor agrees to furnish the information described in clause (ii) of the preceding
sentence to the Secured Party, the Indenture Trustee or the Series Enhancer promptly upon the Secured Party's, the Indenture Trustee's or the 

3

 

Series Enhancer's request. The Grantor also ratifies its authorization for the Secured Party, the Indenture Trustee or the Series Enhancer to have filed in any Uniform Commercial Code jurisdiction
any like initial financing statements, continuation statements or amendments thereto if filed prior to the date hereof. Nothing in the foregoing shall be deemed to create an obligation of the
Indenture Trustee to file any financing statement, continuation statements or amendment thereto. 

        (d)    Overcollateralization Event and/or Net Revenue Event.    Without limiting the generality of Section 2(a)
above, each of the Grantor and the Secured Party agrees that any Compressors acquired by the Grantor, including, without limitation, after the occurrence and during the continuance of an
Overcollateralization Event or a Net Revenue Event shall automatically and without further action by any party become subject to the security interest and the Lien granted by the Grantor under
Section 2(a) above. 

        (e)    Release of Head Lessee Collateral.    The Secured Party, upon receipt of written notice from the Manager (a
copy of which notice shall be delivered to the Indenture Trustee, the Deal Agent, and the Control Party at least three (3) Business Days prior to the effective date of such release), may, and is
hereby authorized to, release from the security interest and the Lien of this Agreement any Compressor and Related Assets; provided, however, that no
Head Lessee Collateral shall be released by the Secured Party pursuant to this Section 2(e) unless the disposition of any Head Lessee Collateral that is the subject of such release request
complies with the provisions of Section 5.8(b) hereof. 

        (f)    Acquisition of Additional Head Lessee Collateral.    

        The
Grantor hereby agrees that immediately, but in no event later than three (3) Business Days after the acquisition of any additional Compressors or any other Head Lessee Collateral,
whether pursuant to Section 3.04 of the Contribution Agreement, Section 3.04 of the Sale Agreement, Section 13.2 or 21 of the Head Lease or in connection with any
Overcollateralization Event or Net Revenue Event or otherwise, the Grantor shall deliver to the Secured Party a description of any such Head Lessee Collateral so acquired, together with, if requested
by the Secured Party or the Control Party in writing, one or more financing statements in appropriate form for filing with the appropriate UCC filing office or offices, as the case may be, covering
such Head Lessee Collateral and any other document or instrument that the Secured Party or the Control Party deems necessary or desirable to ensure perfection of the security interests and the Liens
granted herein. 

        3.    Collateral Management.    

        (a)  Notwithstanding
anything contained in this Agreement to the contrary, the Grantor expressly agrees that it shall remain liable under the User Leases and each other
agreement and contract included in the Head Lessee Collateral to observe and perform all the conditions and obligations to be observed and performed by the Grantor thereunder and that the Grantor
shall perform all of its duties and obligations thereunder, all in accordance with and pursuant to the terms and provisions of each such contract and agreement. However, each of the Grantor and the
Secured Party acknowledge that the security interest of the Secured Party in each User Lease is subject to the User's right of quiet enjoyment at the times and subject to the conditions set forth in
Section 11 of the Head Lease. 

        (b)  The
Indenture Trustee hereby acknowledges the appointment by the Grantor of the Manager to service and administer the Head Lessee Collateral in accordance with the
provisions of the Management Agreement and, so long as such Management Agreement shall not have been terminated in accordance with its terms, the Secured Party hereby agrees to provide the Manager
with such documentation, and to take all such actions with respect to the Head Lessee Collateral 

4

 

as the Manager may reasonably request in writing in accordance with the express provisions of the Management Agreement and the other Related Documents. Until such time as the Management Agreement has
been terminated in accordance with its terms, the Manager, on behalf of the Grantor, shall continue to collect all Accounts and payments on the User Leases in accordance with the provisions of the
Management Agreement and the other Related Documents. 

        (c)  The
Secured Party or the Control Party (or any other Person (including the Back-up Manager or the Manager) designated by the Secured Party or the Control Party) may at
any time, upon the occurrence of (i) any Head Lease Event of Default, after first notifying the Grantor of its intention to do so, or (ii) a Universal Event, notify Users and any other Account Debtors
of the Grantor, including, without limitation, any Person obligated to make payments pursuant to any User Lease, parties to the Contracts of the Grantor and obligors in respect of Instruments of the
Grantor, that (x) the User Leases and Accounts, and the right, title and interest of the Grantor in and under such User Leases, Accounts, Contracts and Instruments, have been assigned to the Indenture
Trustee for the benefit of the Noteholders, the Certificateholders, any Series Enhancer and any Interest Rate Hedge Provider and (y) payments in respect of such User Leases, Accounts, Contracts and
Instruments shall be made directly to the ABS Lockbox Account, and the Secured Party and/or the Control Party (and/or any such designee) 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 Secured Party's and Control Party's satisfaction, the existence, amount and terms of such User
Leases, Accounts, Contracts and Instruments. The Secured Party hereby agrees that it will cause amounts on deposit from time to time in the ABS Lockbox Account to be deposited into the Head Lessee
Collection Account. 

        4.    Representations and Warranties of the Grantor.    The Grantor
hereby represents and warrants (as of the Closing Date and as of each date on which an "advance" under any Supplement is made (unless otherwise indicated)) for the benefit of the Secured Party and
each Entitled Party, which
representations and warranties shall survive until the Head Lessee Secured Obligations have been paid in full, that: 

        4.1.    Existence.    The Grantor is a Delaware limited liability
company duly formed and validly existing and in good standing and is duly qualified to do business in each jurisdiction where the nature of its business requires it to so qualify, except where the
failure to do so would not have a material adverse effect upon the Grantor, the Head Lessee Collateral or the ability of the Grantor to perform its obligations under the Related Documents to which it
is a party. Since the date of formation of the Grantor, the Grantor has not conducted business under any other name and does not have any trade names, or "doing business under" or "doing business as"
names. The Grantor has not reorganized in any jurisdiction (whether the United States, any state therein, the District of Columbia, Puerto Rico, Guam or any possession or territory of the United
States, or any foreign country or state) other than the State of Delaware. 

        4.2.    Authorization.    The Grantor has the limited liability
company power and is duly authorized to execute and deliver this Agreement and the other Related Documents to which it is a party; and the Grantor is and will continue to be authorized to perform its
obligations under this Agreement and under the other Related Documents. The execution, delivery and performance by the Grantor of this Agreement and the other Related Documents to which it is a party
and the borrowings hereunder do not and will not require any consent or approval of any Governmental Authority, partner or any other Person which has not already been obtained. 

        4.3.    Due Qualification.    The Grantor is qualified as a foreign
limited liability company 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 the ability of the Grantor to perform its 

5

 

obligations under and comply with the terms of this Agreement or any other Related Document to which it is a party. 

        4.4.    No Conflict; Legal Compliance.    The execution, delivery and
performance of this Agreement and each of the other Related Documents by the Grantor will not: (a) contravene any provision of its Organizational Documents; (b) contravene, conflict with
or violate any Applicable Law or regulation, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority that could result in a Material Adverse Change; or
(c) violate or result in the breach of, or constitute (with or without notice or lapse of time or both) a default under this Agreement, the Related Documents, any other indenture or other loan
or credit agreement, or other agreement or instrument to which the Grantor is a party or by which the Grantor, or its property and assets may be bound or affected that could result in a Material
Adverse Change or result in a Lien on the Head Lessee Collateral other than Permitted Encumbrances. The Grantor is not in violation or breach of or default under any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any contract, agreement, lease, license, indenture or other instrument to which it is a party that could result in a Material Adverse
Change. 

        4.5.    Validity and Binding Effect.    This Agreement is, and each
Related Document to which the Grantor is a party, when duly executed and delivered, will be, legal, valid and binding obligations of the Grantor, enforceable against the Grantor in accordance with
their respective terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies. 

        4.6.    Financial Statements.    Since March 31, 2002, there
has been no Material Adverse Change in the financial condition of any Universal Party. 

        4.7.    Executive Offices.    The current location of the Grantor's
chief executive office and principal place of business is 4444 Brittmoore Road, Houston, Texas 77041. 

        4.8.    No Agreements or Contracts.    The Grantor is not now and has
not been a party to any contract or agreement (whether written or oral) other than the Related Documents. 

        4.9.    Consents and Approvals.    No approval, authorization, order,
action or consent of any trustee or holder of any Indebtedness or obligation of the Grantor or of any other Person under any agreement, contract, lease or license or similar document or instrument to
which the Grantor is a party or by which the Grantor (or, except as permitted in the definition of Eligible Lease, any of its property or assets) is bound, is required to be obtained by the Grantor in
order to make or consummate the transactions contemplated under the Related Documents, except for those approvals, authorizations and consents that have been obtained on or prior to the Closing Date.
All consents, orders and approvals of, filings and registrations with, and other actions in respect of, all Governmental Authorities required to be obtained by the Grantor in order to make or
consummate the transactions contemplated under the Related Documents have been, or prior to the time when required will have been, obtained, given, filed or taken and are or will be in full force and
effect, or due provision has been made therefor reasonably acceptable to the Secured Party. 

        4.10.    Taxes.    All federal, state, local and foreign tax returns,
reports and statements required to be filed by the Grantor have been filed with the appropriate Governmental Authorities, and all Taxes, Other Taxes and other impositions shown thereon to be due and
payable by the Grantor have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof, or any such fine, penalty, interest, late
charge or loss has been paid, or the Grantor is contesting its liability therefor in good faith and has fully reserved all such amounts according to GAAP in the financial statements provided to the
Secured Party pursuant to 

6

 

Section 5.27 hereof. The Grantor has paid when due and payable all material charges upon the books of the Grantor and no Governmental Authority has asserted any Lien against the Grantor with
respect to unpaid Taxes or Other Taxes. Proper and accurate amounts have been withheld by the Grantor from
its employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective Governmental Authorities. 

        4.11.    Other Regulations.    The Grantor is not: (a) a
"public utility company" or a "holding company," or an "affiliate" or a "Subsidiary company" of a "holding company," or an "affiliate" of such a "Subsidiary company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or (b) an "investment company," or an "affiliated person" of, or a "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended. The granting of the security interest and Liens hereunder and the performance of the transactions contemplated by this
Agreement and the other Related Documents will not violate any provision of the Investment Company Act or the Public Utility Holding Company Act, or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder. 

        4.12.    Solvency and Separateness.    

        (a)  The
capital of the Grantor is adequate for the business and undertakings of the Grantor; 

        (b)  Other
than with respect to the transactions contemplated by the Related Documents, the Grantor is not engaged in any business transactions with any Universal Party; 

        (c)  The
Grantor is a wholly-owned Subsidiary of Universal Compression, Inc. and UCO Member 2002 Corp. is the sole noneconomic member of the Grantor. 

        (d)  A
majority of the directors of Universal Compression Member 2002 Corp. are Independent Directors; 

        (e)  The
Grantor's funds and assets are not, and will not be, commingled with those of any Universal Party, except as permitted by the Management Agreement and the
Intercreditor Agreement; 

        (f)    The
Organizational Documents of the Grantor require it to maintain correct and complete books and records of account; and 

        (g)  The
Grantor is not insolvent under the Insolvency Law and will not be rendered insolvent by the transactions contemplated by the Related Documents and after giving
effect to such transactions, the Grantor will not be left with an unreasonably small amount of capital with which to engage in its
business nor will the Grantor have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. The Grantor does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, trustee or similar official in respect of the Grantor or any of its assets. 

        4.13.    Insolvency; Fraudulent Conveyance.    The Grantor is paying
its debts as they become due and is not "insolvent" within the meaning of any applicable Insolvency Law in that: 

        (a)  both
immediately before and after giving effect to the pledge of the Head Lessee Collateral set forth herein, the present value of the Grantor's assets will be in excess
of the amount that will be required to pay the Grantor's probable liabilities as they then exist and as they become absolute and matured; and 

        (b)  both
immediately before and after giving effect to the sum of the Grantor's assets will be greater than the sum of the Grantor's debts, valuing the Grantor's assets at a
fair market value. 

7

 

        Each
sale of Sold Assets by the Grantor has been made for "reasonably equivalent value" (as such term is used in Section 548 of the Bankruptcy Code) and not on account of
"antecedent debt" (as such term is used in Section 547 of the Bankruptcy Code). 

        4.14.    No Default.    No Event of Default, Head Lease Event of
Default, Manager Default, Trigger Event or Universal Event has occurred and is continuing and no event has occurred that with the passage of time would become an Event of Default, Head Lease Event of
Default, Manager Default, Trigger Event or Universal Event. 

        4.15.    No Proceedings or Injunctions.    There are (i) no
litigations, Proceedings or investigations pending, or, to the knowledge of the Grantor, threatened, before any court, regulatory body, administrative agency, or other tribunal or Governmental
Authority (A) asserting the invalidity of this Agreement or any other Related Document to which the Grantor is a party, (B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any other Related Document to which the Grantor is a party, or (C) seeking any determination or ruling that could reasonably be expected to result in a
Material Adverse Change and (ii) no injunctions, writs, restraining orders or other orders in effect that could reasonably be expected to result in a Material Adverse Change. 

        4.16.    Compliance with Law.    The Grantor: 

        (a)  is
not in violation of (i) any laws, ordinances, governmental rules or regulations, or (ii) court orders to which it is subject, the violation of either of
which could reasonably be expected to materially and adversely affect the ability of the Grantor to perform its obligations under and comply with the terms of this Agreement or any other Related
Document to which it is a party; 

        (b)  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 (including the Head Lessee Collateral) or the conduct of its business (including the leasing of Compressors under the Head Lease) including, without limitation,
with respect to transactions contemplated by this Agreement and the other Related Documents to which it is a party; and 

        (c)  is
not in violation in any respect of any term of any agreement (including any User Lease), Organizational Document or other instrument to which it is a party or by
which it may be bound, which violation could reasonably be expected to materially and adversely affect the business or condition (financial or otherwise) of the Grantor, or materially and adversely
affect the Grantor's rights or remedies under any User Lease or the interest of the Secured Party in any Head Lessee Collateral. 

        4.17.    Title; Liens.    The Grantor has good, legal and marketable
title to each of its respective assets, and none of such assets is subject to any Lien except for the Lien under this Agreement and other Permitted Encumbrances. 

        4.18.    Subsidiaries.    The Grantor has had no subsidiaries. 

        4.19.    No Partnership.    The Grantor is not a partner or joint
venturer in any partnership or joint venture. 

        4.20.    UCC Information.    The information set forth in Schedule 1
hereto is true, complete and correct in all material respects. 

        4.21.    Security Interest Representations.    (a)    This
Agreement creates a valid and continuing security interest (as defined in the UCC) and Lien in the Head Lessee Collateral in favor of the Secured Party, which security interest, upon (x) the
completion of the filings referred to in 

8

 

Section 4.21(d) being duly made and (y) the execution and delivery of the Intercreditor Agreement and the Control Agreement, is a perfected first priority security interest prior to all
other Liens, and is enforceable as such as against creditors of and purchasers from the Grantor. 

        (b)  The
Head Lessee Compressors constitute "equipment" or "inventory" within the meaning of the UCC. The User Leases constitute "tangible chattel paper" or "Accounts" within
the meaning of the UCC and the rights under such User Leases constitute "general intangibles." Each of the Transaction Accounts constitutes a "securities account" or a "deposit account" within the
meaning of the UCC. 

        (c)  The
Grantor owns and has good and marketable title to the Head Lessee Collateral, free and clear of any Lien, claim or encumbrance of any Person, except for the Liens
created or permitted pursuant hereto or the Related Documents. 

        (d)  The
Grantor has caused all appropriate financing statements or documents of similar import to be duly filed in the proper filing office in the appropriate jurisdictions
under Applicable Law in order to perfect the security interest in the Head Lessee Collateral granted to the Secured Party in this Agreement and such security interest constitutes a perfected first
priority security interest in favor of the Secured Party. All financing statements filed against the Grantor in favor of the Secured Party in connection herewith describing the Head Lessee Collateral
contain a statement to the following effect: "A purchase of or security interest in or a Lien on any collateral described in this financing statement will violate the rights of the Secured Party." 

        (e)  Other
than the security interest granted to the Secured Party pursuant to this Agreement or granted in any of the Related Documents, the Grantor has not pledged,
assigned, sold, granted a security interest in or a Lien (except for Permitted Encumbrances) on or otherwise conveyed any of the Head Lessee Collateral, except as permitted pursuant hereto or in the
Related Documents. The Grantor has not authorized the filing of and is not aware of any financing statements against the Grantor that include a description of collateral covering the Head Lessee
Collateral other than any financing statement or document of similar import (i) relating to the security interest granted to the Secured Party in this Agreement, (ii) that has been terminated, or
(iii) that names Wells Fargo Bank Minnesota, National Association, as Indenture Trustee, as assignee of BRL Universal Compression Funding I 2002, L.P., as Secured Party. The Grantor is not
aware of any judgment or tax lien filings against the Grantor. 

        (f)    The
Grantor has received all necessary consents and approvals required by the terms of the Head Lessee Collateral to pledge to the Secured Party its interest and rights
in such Head Lessee Collateral hereunder. 

        (g)  The
Grantor has taken all steps necessary to cause the Securities Intermediary (in its capacity as securities intermediary) to identify in its records the Indenture
Trustee as the Person having a security entitlement in each of the Lease Accounts. 

        (h)  The
Lease Accounts are not in the name of any Person other than the Indenture Trustee or the Securities Intermediary, as the case may be. The Grantor has not consented
to the Securities Intermediary to comply with entitlement orders of any Person other than the Indenture Trustee. 

        The
representations and warranties set forth in this Section 4.21 shall survive until this Agreement is terminated in accordance with its terms. Breaches of the representations
and warranties set forth in this Section 4.21 may not be waived by the Secured Party, except with the consent of the Control Party and each Rating Agency. 

        4.22.    Ordinary Course.    The transactions contemplated by this
Agreement and the other Related Documents are being consummated by the Grantor in furtherance of the Grantor's ordinary business 

9

 

purposes and constitute a practical and reasonable course of action by the Grantor designed to improve the financial position of the Grantor, with no contemplation of insolvency and with no intent to
hinder, delay or defraud any of its present or future creditors. 

        4.23.    Stamping and Storage of User Leases.    Within
thirty (30) days of the Closing Date, the Grantor will cause the Manager to stamp each User Lease owned by the Grantor with the following legend: 

"Certain
proceeds of this Lease are subject to a security interest in favor of Wells Fargo Bank Minnesota, National Association, as Indenture Trustee." 

        In
addition, such User Lease is stored at the Manager's offices in Houston, Texas in a locked, fireproof cabinet. 

        4.24.    Identification Marks.    The Grantor has used or has caused
the Manager to use its best efforts to keep and maintain or to cause to be kept and maintained, prominently displayed, a sticker with (i) in the case of Compressors owned by the Secured Party
and leased to Head Lessee the phrase "Owned by BRL Universal Compression Funding I 2002, L.P. and subject to a security interest in favor of Wells Fargo Bank Minnesota, National Association, as
Indenture Trustee" and (ii) in the case of Compressors owned by the Grantor and not leased from Head Lessor, "Owned by UCO Compression 2002 LLC and subject to a security interest in
favor of Wells Fargo Bank Minnesota, National Association, as Indenture Trustee, as assignee of BRL Universal Compression Funding I 2002, L.P., as Secured Party" or in each case other
appropriate words designated by the Secured Party, with appropriate changes thereof and additions thereto as from time to time may be required by law in order to protect the Secured Party's and the
Indenture Trustee's interests in such Compressors. 

        4.25.    Intellectual Property.    The Grantor has no Intellectual
Property. 

So
long as the Head Lease shall be in full force and effect and until payment and performance in full of the Head Lessee Secured Obligations, the representations and warranties contained herein shall
have a continuing effect as having been true when made. 

        5.    Covenants.    The Grantor hereby covenants and agrees for the
benefit of the Secured Party and each Entitled Party that from and after the date of this Agreement, until the Head Lessee Secured Obligations have been performed and paid in full, the Grantor shall
observe each of the following covenants: 

        5.1.    Payment of Head Lessee Secured Obligations; Payment of
Taxes.    

        (a)  The
Grantor will duly and punctually pay the Head Lessee Secured Obligations in accordance with the terms of the Head Lease; 

        (b)  The
Grantor will take all actions as are necessary to insure that all taxes and governmental claims, if any, in respect of the Grantor's activities and assets (including
the Head Lessee Collateral) are promptly paid; and 

        (c)  The
Grantor will not claim any credit on, make any deduction in respect of the Head Lessee Secured Obligations (other than amounts properly withheld from such payments
under any Applicable Law) or assert any claim against the Secured Party by reason of the payment of any taxes levied or assessed upon any of the Head Lessee Collateral. 

10

  

        5.2.    Preservation of Name; Maintenance of Office; Jurisdiction of
Formation.    The name on the Grantor's certificate of formation and limited liability company agreement is "UCO Compression 2002 LLC." The chief executive office of
the Grantor is located 4444 Brittmoore Road, Houston, Texas 77041. The Grantor shall not establish a new chief executive office or jurisdiction of organization outside the United States of America.
The Grantor is formed under the laws of the State of Delaware and no other location. The Grantor shall not change its name, establish a new location for its chief executive office or its jurisdiction
of organization unless (i) the Grantor shall provide the Secured Party not less than sixty (60) days' prior written notice of its intention so to do, clearly describing such new location or
jurisdiction and providing such other information in connection therewith as the Secured Party may reasonably request, and (ii) not less than fifteen (15) days' prior to the effective date of such
change or relocation, the Grantor shall have taken, at its own cost, all action necessary so that such change of location does not impair the security interest of the Secured Party in the Head Lessee
Collateral, or the perfection of the sale or contribution of the Compressors to the Grantor or the Secured Party, and shall have delivered to the Secured Party copies of all filings required in
connection therewith together with an Opinion of Counsel, satisfactory to the Secured Party, to the effect that such change of location or jurisdiction does not impair either the perfection or
priority of the Secured Party's security interest in the Head Lessee Collateral. 

        5.3.    Limited Liability Company Existence.    The Grantor will keep
in full effect its existence, rights and franchises as a limited liability company organized under the laws of the State of Delaware, and will obtain and preserve its qualification in each
jurisdiction in which such qualification is necessary to protect the validity and enforceability of this Agreement. 

        5.4.    Compliance with Law.    The Grantor will comply, in all
material respects, with all acts, rules, regulations, orders, decrees and directions of any Governmental Authority applicable to the Grantor or the Head Lessee Collateral or any part thereof;  provided, however, that the Grantor may contest any act, regulation, order, decree or direction in any reasonable manner which shall not materially and
adversely affect the rights and remedies of the Secured Party in the Head Lessee Collateral. 

        5.5.    Protection of Head Lessee Collateral.    The Grantor will from
time to time execute and deliver all amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, documents or filings as
required by Applicable Law, including, inter alia, any such filings in connection with Intellectual Property, and will, upon the reasonable request of
the Secured Party, take such other action reasonably necessary or advisable to: 

        (a)  grant
more effectively the security interest in all or any portion of the Head Lessee Collateral; 

        (b)  maintain
or preserve the Lien of this Agreement (and the priority thereof) or carry out more effectively the purposes hereof; 

        (c)  perfect,
publish notice of, or protect the validity of the security interest in the Head Lessee Collateral created pursuant to this Agreement; 

        (d)  enforce
any of the items of the Head Lessee Collateral; 

        (e)  preserve
and defend its right, title and interest to the Head Lessee Collateral and the rights of the Secured Party in such Head Lessee Collateral against the claims of
all Persons, including any claims that any Compressor is a fixture; or 

        (f)    pay
any and all taxes levied or assessed upon all or any part of the Head Lessee Collateral. 

11

 

        5.6.    Defend Title to Head Lessee Collateral.    The Grantor shall
defend the right, title, and interest of the Secured Party in, to, and under the Head Lessee Collateral, against all claims of third parties claiming through or under the Grantor. 

        5.7.    Enforce User Lease Rights.    Except as otherwise expressly
permitted by the terms of the Related Documents, the Grantor will promptly enforce all of its rights under, and with respect to, the User Leases and the Head Lessee Collateral. 

        5.8.    Negative Covenants Regarding Head Lessee Collateral (including Related
Documents).    The Grantor will not, without the prior written consent of the Secured Party and the Control Party: 

        (a)  (i)
except as otherwise permitted by this Agreement, Section 5.5(b) of the Management Agreement or the other Related Documents, take, or fail to take, any action, and
will use its reasonable efforts not to permit any action to be taken by others, which would release any Person from any of such Person's covenants or obligations under any agreement or instrument
included in the Head Lessee Collateral, or which would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such
agreement or instrument; or 

	(i)
	amend,
modify or terminate this Agreement, the Head Lease, the Contribution Agreement, the Sale Agreement, the Intercreditor Agreement, the Management Agreement or any other Related
Document, or grant any waiver or consent from compliance with the express terms of any of the foregoing. 

        (b)  at
any time sell, transfer, exchange, lease or otherwise dispose of any of the Head Lessee Collateral, or consent to the sale, transfer, exchange or other disposition of
any of the Head Lessee Collateral, except, in each case, as follows: 

	(i)
	in
connection with a sale pursuant to Sections 5.14 (relating to Consolidation, Merger and Sale of Assets) or 8.1 (relating to Sale of Head Lessee Collateral following a Head Lease
Event of Default) hereof;

	(ii)
	substitutions
of Head Lessor Compressors in accordance with Section 21(b) of the Head Lease;

	(iii)
	sales
of Head Lessor Compressors to the Head Lessee or its designee in accordance with Sections 13.2, 21(a) and/or 23 of the Head Lease;

	(iv)
	sales,
transfers and other dispositions of Head Lessee Compressors for Net Sales Proceeds payable in cash to the Head Lessee of not less than an amount equal to the sum of (A) the
sum of the then current Depreciated Value(s) of such Head Lessee Compressor(s) and (B) any unpaid termination payments resulting from any Issuer Swap Default and other costs associated with the
partial termination of the related Interest Rate Swap Agreements in connection with the prepayment of the Notes or Certificates; provided, that, so long
as (x) a Trigger Event is not then continuing or would result from such sale of Owner Compressors, (y) the Weighted Average Age of the Owner Compressors, after giving effect to such disposition, is
equal to or greater than the length of the period from the date of such sale through the 21st anniversary of the Closing Date and (z) the sale does not increase any Excluded Depreciated Value then in
existence immediately prior to such sale, transfer or other disposition;

	(v)
	in
connection with (x) subleases of Head Lessor Compressors meeting the requirements set forth in Section 11 of the Head Lease and (y) leases of Head Lessee Compressors pursuant to
User Leases; and 

12

 

	(vi)
	substitutions
of Head Lessee Compressors in accordance with Section 3.04 of the Contribution Agreement. 

        (c)  (i)
permit the validity or effectiveness of this Agreement to be impaired, or (ii) permit the Lien of this Agreement with respect to the Head Lessee Collateral to be
subordinated, terminated or discharged, except as permitted in accordance with Section 2(e) hereof, or (iii) permit any Person to be released from any covenants or obligations with respect to such
Head Lessee Collateral, except as may be expressly permitted by the Management Agreement. 

        (d)  at
any time grant or suffer to exist any Lien on, or security interest in, any Head Lessee Collateral (or permit any such Lien or security interest to exist), except for
Permitted Encumbrances. 

        5.9.    Non-Consolidation of the Grantor.    (a) The Grantor shall be
operated in such a manner that it shall not be substantively consolidated with the trust estate of any other Person in the event of the bankruptcy or insolvency of the Grantor or such other person.
Without limiting the foregoing the Grantor shall (1) conduct its business in its own name, (2) maintain its books, records and cash management accounts separate from those of any other person, (3)
maintain its bank accounts separate from those of any other person, (4) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other person,
(5) pay its own liabilities and expenses only out of its own funds, (6) enter into a transaction with an Affiliate only if such transaction is commercially reasonable and on the same terms as would be
available in an arm's length transaction with a person or entity that is not an Affiliate, (7) allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, (8) hold itself
out as a separate entity, (9) maintain adequate capital in light of its contemplated business operations and (10) observe all other appropriate limited liability company and other organizational
formalities, including, inter alia, remaining in good standing and qualified as a foreign limited liability company in each jurisdiction and obtaining
all necessary licenses and approvals as required under Applicable Law. 

        (b)  Notwithstanding
any provision of law which otherwise empowers the Grantor, the Grantor shall not (1) hold itself out as being liable for the debts of any other person,
(2) act other than in its limited liability company name and through its managing member or its duly authorized managers, officers or agents, (3) engage in any joint activity or transaction of any
kind with or for the benefit of any Affiliate including any loan to or from or guarantee of the indebtedness of any Affiliate, except payment of lawful distributions to its members, (4) commingle its
funds or other assets with those of any other person, (5) create, incur, assume, guarantee or in any manner become liable in respect of any indebtedness (except pursuant to this Agreement) other than
trade payables and expense accruals incurred in the ordinary course of its business or (6) take any other action that would be inconsistent with maintaining the separate legal identity of the Grantor. 

        5.10.    No Bankruptcy Petition.    The Grantor shall not (1) commence
any Insolvency Proceeding seeking to have an order for relief entered with respect to it, or seeking reorganization, arrangement, adjustment, wind-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, (2) seek appointment of a receiver, trustee, custodian or other similar official for it or any part of its assets, (3)
make a general assignment for the benefit of creditors, or (4) take any action in furtherance of, or consenting or acquiescing in, any of the foregoing. 

        5.11.    Liens; Fixtures.    The Grantor shall not permit (i) any Lien
(except any Permitted Encumbrance) to be created on or extend to or otherwise arise upon or burden the Head Lessee Collateral or any part thereof or any interest therein or the Proceeds thereof, (ii)
the Lien of this Agreement not to constitute a valid first priority perfected security interest in the Head Lessee Collateral or (iii) any Compressor to be considered a fixture under applicable local
law. 

13

 

        5.12.    Other Debt.    The Grantor shall not contract for, create,
incur, assume or suffer to exist any Indebtedness other than (i) obligations under the Head Lease, (ii) any Management Fees and all other amounts payable pursuant to the provisions of the Management
Agreement and (iii) trade payables and expense accruals incurred in the ordinary course and which are incidental to the purposes permitted pursuant to the Grantor's Organizational Documents. 

        5.13.    Guarantees, Loans, Advances and Other Liabilities.    The
Grantor will not make any loan, advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse (except for the endorsement of checks for collection or deposit) or otherwise become contingently liable, directly or indirectly, in connection with or
for the obligations, stock or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other Person. 

        5.14.    Consolidation, Merger and Sale of Assets.     a) The Grantor
shall not consolidate with or merge with or into any other Person or sell, convey, transfer or lease all or substantially all of its assets, whether in a single transaction or a series of
transactions, to any Person substantially all of its assets, except for (i) any such sale, conveyance or transfer contemplated in this Agreement, (ii) any lease of Compressors to Users in accordance
with the terms of the Head Lease and (iii) the sale of Compressors to the Head Lessor pursuant to the Sale Agreement. 

        (b)  The
obligations of the Grantor hereunder shall not be assignable nor shall any Person succeed to the obligations of the Grantor hereunder except in each case in
accordance with the provisions of this Agreement. 

        (c)  The
Grantor shall give prior written notice to the Secured Party of any action pursuant to this Section 5.14. 

        5.15.    Other Agreements.    The Grantor will not after the date
hereof enter into, or become a party to, any agreements or instruments other than this Agreement, the Sale Agreement, the Head Lease, the Management Agreement, the Back-up Management Agreement, the
Intercreditor Agreement and the other Related Documents and the other agreement(s) expressly contemplated thereby (it being understood that the Grantor may enter into (i) any agreement(s) for
disposition of the Head Lessee Collateral permitted by Sections 5.8, 5.14 or 8.1, hereof and (ii) any agreement(s) for the sale or re-lease of an Owner Compressor made in accordance with the
provisions of the Head Lease or the Management Agreement). 

        5.16.    Organizational Documents.    The Grantor will not amend or
modify its Organizational Documents without the prior written consent of the Secured Party. 

        5.17.    Capital Expenditures.    The Grantor will not make any
expenditure (by long-term or operating lease or otherwise) for capital assets (both realty and personalty), except for (a) acquisitions of additional Compressors (i) from the Contributor pursuant to
Section 3.04 of the Contribution Agreement, (ii) from the Head Lessor pursuant to Section 13.2, 21 or 23 of the Head Lease or (iii) in connection with any Overcollateralization Event or Net Revenue
Event and (b) overhaul expenses or capital improvements to the Compressors made in the ordinary course of its business and in accordance with the terms of the Management Agreement. 

        5.18.    Permitted Activities; Compliance with Organizational
Documents.    The Grantor will not engage in any activity or enter into any transaction except as permitted under its Organizational Documents as in effect on the
date on which this Agreement is executed. The Grantor will observe all limited liability company, organizational and managerial procedures required by its Organizational Documents and the limited
liability company laws of the State of Delaware. 

14

 

        5.19.    Investment Company Act.    The Grantor will conduct its
operations, and will cause the Manager to conduct the Grantor's operations, in a manner which will not subject it to registration as an "investment company' under the Investment Company Act of 1940,
as amended. 

        5.20.    Payments of Head Lessee Collateral.    If the Grantor shall
receive from any Person payments with respect to the Head Lessee Collateral (to the extent such Head Lessee Collateral has not been released from the Lien of this Agreement in accordance with Section
2(e) hereof), the Grantor shall receive such payment in trust for the Secured Party, as secured party hereunder, and subject to the Secured Party's security interest and shall immediately deposit such
payment in the Head Lessee Collection Account; provided, that this provision shall not apply to payments distributed to the Grantor under Section 7.2,
7.3 or 7.4. 

        5.21.    Notices.    The Grantor shall notify the Indenture Trustee
and the Control Party in writing of any of the following immediately upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken by the Person(s) affected
with respect thereto: 

        (a)    Default.    The occurrence of an Event of Default; 

        (b)    Litigation.    The institution of any litigation, arbitration proceeding or Proceeding before any Governmental
Authority which, if adversely resolved, would result in a Material Adverse Change; 

        (c)    Material Adverse Change.    The occurrence of a Material Adverse Change with respect to the Grantor; 

        (d)    Liens.    The existence of any Lien on the Head Lessee Collateral other than Permitted Encumbrances. 

        (e)    Other Events.    The occurrence of a Trigger Event. 

        5.22.    Books and Records.    The Grantor shall, and shall cause the
Manager to, maintain complete and accurate books and records in which full and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to its business and
activities. The Grantor shall report, or cause to be reported, on its financial records the transfer of the Sold Assets as a sale under GAAP. The Grantor will ensure that no financial statement, nor
any consolidated financial statements of the Grantor, suggests that the assets of the Grantor are available to pay the debts of either the Contributor or the Manager. The Grantor shall (i) keep
complete minutes of the meetings and other proceedings of the Grantor, (ii) continuously maintain the resolutions, agreements and other instruments underlying the sale and transfer of the Sold Assets
as official records of the Grantor. 

        5.23.    Taxes.    The Grantor shall, or shall cause the Manager to,
pay when due, all of its taxes, unless, and only to the extent that, the Grantor is contesting such taxes in good faith and by appropriate proceedings and the Grantor has set aside on its books such
reserves or other appropriate provisions therefor as may be required by GAAP. 

        The
Grantor shall remit (or cause to be remitted) to each Governmental Authority, all Excluded Payments actually by, or on behalf of, the Grantor and shall promptly remit to the Secured
Party evidence that all such payments have been made. 

        5.24.    Subsidiaries.    The Grantor shall not create any
Subsidiaries. 

        5.25.    Investments.    The Grantor shall not make or permit to exist
any Investment in any Person except for Investments in Eligible Investments made in accordance with the terms of this Agreement. 

15

 

        5.26.    Intentionally Omitted.    

        5.27.    Financial Statements.    The Grantor shall prepare and
deliver to the Indenture Trustee, with sufficient copies for the Secured Party, each Interest Rate Hedge Provider, each Series Enhancer, each Rating Agency and the Deal Agent, or shall cause the
Manager to prepare and deliver pursuant to the Management Agreement, (i) quarterly financial statements of the Grantor within sixty (60) days of the end of each fiscal quarter and (ii) annual
financial statements of the Grantor and Manager, audited by its regular Independent Accountants, within one hundred twenty (120) days of the end of each fiscal year. All financial statements shall be
prepared in accordance with GAAP. Delivery of such reports, information and documents to the Secured Party is for informational purposes only and the Secured Party's receipt of such shall not
constitute constructive notice of any information contained therein or determinable from information contained therein, including the Grantor's compliance with any of its covenants hereunder (as to
which the Secured Party is entitled to rely exclusively on Officer's Certificates). 

        5.28.    Independent Directors of Universal Compression Member 2002
Corp.    Universal Compression Member 2002 Corp. shall at all times be a corporation with two or more Independent Directors. 

        5.29.    Separate Identity.    The Grantor makes herein by this
reference each of the representations and warranties made by it to Gardere Wynne Sewell, LLP in support of their opinions respecting the consolidation of the Grantor and certain other parties issued
and delivered in connection with the grant of the security interest or Lien herein, as if specifically made herein and agrees to comply with each of the factual assumptions contained in such opinions. 

        5.30.    Annual Perfection Opinion.    Within 90 days after each
anniversary of the date hereof, beginning with the calendar year 2004, the Grantor shall furnish to the Indenture Trustee, the Deal Agent, the Control Party, and Secured Party an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Agreement and any other requisite documents,
and with respect to the execution and filing of any financing statements and continuation statements, as are necessary to maintain the Lien created by this Agreement and reciting the details of such
action or stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien. 

        5.31.    Identification Marks.    Grantor shall use its best efforts
to keep and maintain or cause to be kept and maintained, prominently displayed on each Compressor, a sticker with the phrase "Owned by either (i) BRL Universal Compression Funding I 2002, L.P. or (ii)
UCO Compression 2002 LLC, as the case may be, and subject to a security interest in favor of Wells Fargo Bank Minnesota, National Association, as Indenture Trustee, as assignee of BRL Universal
Compression Funding I 2002, L.P., as Secured Party" or other appropriate words designated by the Indenture Trustee or the Secured Party, with appropriate changes thereof and additions thereto as from
time to time may be required by law in order to protect the Secured Party's interests in such Compressors. Grantor shall not allow the name of any Person to be placed upon any 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 Secured Party or the Grantor. 

        5.32.    Inspection.    The Secured Party and the Control Party (and
their agents), have the right to inspect the Owner Compressors, the receivables aging system and all books, records, reports, User Leases, insurance policies, and other documents relating to the Owner
Compressors (including those involving any refinancing of the Series Enhancer), all in the format which the Manager uses for the UCI Compressors. 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 Manger's customary security procedures and the execution of reasonable and customary
confidentiality agreements and (c) not unreasonably disrupt the Manager's business. The 

16

 

Secured Party and the Control Party acknowledges that the Manger for purposes of any such inspection shall grant the Secured Party and Control Party and their agents access to the Manger's computer
systems (including the receivables aging system) and data relating solely to the Owner Compressors contained therein. The Secured Party and the Control Party (and their agents) have the right to (i)
one such inspection per calendar year (and an additional inspection by the Series Enhancer in connection with any refinancing involving the Series Enhancer), at the cost and expense (including the
legal and accounting fees incurred by the Secured Party and the Control Party) of the Manager and (ii) one additional inspection at their own cost and expense, unless a Trigger Event shall have
occurred and be continuing, in which case, the Secured Party and the Control Party (and their agents) shall have the right to such inspection any number of times and each time the costs and expenses
shall be borne by the Manger. The Secured Party and the Control Party and the Owners (and their agents) shall also have the right to inspect the receivables aging system within ninety (90) days of the
Closing Date, at the cost and expense of the Manager. 

        5.33.    Storage of Lease Files.    The Grantor shall at all times
cause the Manager to maintain at its Houston, Texas office, all Lease Files in a locked, fire-proof cabinet. All User Leases shall be stamped with the following legend: 

"Certain
proceeds of this Lease are subject to a security interest in favor of Wells Fargo Bank Minnesota, National Association, as Indenture Trustee." 

        5.34.    Intellectual Property Filings.    The Grantor shall make all
filings necessary or desirable to ensure that the Secured Party has a validly perfected first priority security interest in any and all Intellectual Property, if any. 

        6.    Secured Party's Appointment as Attorney-in-Fact.    

        (a)  Grantor
hereby irrevocably constitutes and appoints Secured Party, such appointment being coupled with an interest, and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Grantor and in the name of Grantor or in its own name, from time to time at
Secured Party's discretion, for the purpose of carrying out the terms and purposes of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and
instruments which the Secured Party deems necessary or desirable to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives Secured Party the
power and right, on behalf of Grantor, without notice to or assent by Grantor, to do the following: 

	(i)
	to
ask, demand, collect, recover, compound, sue for, receive and give acquittances and receipts for any and all monies due or to become due under the Head Lessee Collateral and, in
the name of Grantor, in its own name or otherwise, to take possession of, endorse, receive and collect any checks, drafts, note, acceptances or other Instruments for the payment of monies due under
the Head Lessee Collateral and to file any claim or to take or commence any other action or Proceeding in any court of law or equity or otherwise deemed appropriate by Secured Party for the purpose of
collecting any and all such monies due under or with respect to the Head Lessee Collateral whenever payable;

	(ii)
	to
pay or discharge any Liens, including, without limitation, any tax lien, levied or placed on or threatened against the Head Lessee Collateral, to effect any repairs or any
insurance called for by the terms of this Agreement and to pay all or any part of the premiums therefor and the costs thereof; and

	(iii)
	to
(1) direct any Person liable for any payment under or in respect of any of the Head Lessee Collateral (including, without limitation, any User Leases) to make payment of any and
all monies due or to become due thereunder directly to Secured Party or as Secured Party shall direct, (2) receive payment of any and all monies, claims and other 

17

 

amounts
due or to become due at any time arising out of or in respect of the Head Lessee Collateral, (3) sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against Grantor, assignments, verifications and notices in connection with Accounts and other Instruments and Documents constituting or relating to the Head Lessee Collateral, (4)
commence and prosecute any suits, actions or Proceedings at law or in equity in any court of competent jurisdiction to collect the Head Lessee Collateral or any part thereof and to enforce any other
right in respect of the Head Lessee Collateral, (5) defend any suit, action or proceeding brought against Grantor with respect to the Head Lessee Collateral, (6) settle, compromise or adjust any suit,
action or proceeding described above and, in connection therewith, give such discharges or releases as Secured Party may deem appropriate, (7) obtain or adjust insurance required to be maintained by
the Grantor pursuant to any
Related Document upon the failure by Grantor to maintain such insurance, (8) prepare and file any UCC financing statements in the name of the Grantor as debtor, (9) to the extent that there is any
Intellectual Property, prepare, sign and file for recordation in any intellectual property registry appropriate evidence of the security interest and Lien granted herein in the Intellectual Property
in the name of Grantor as assignor, (10) pay or discharge taxes or Liens levied or placed upon or threatened against the Head Lessee Collateral, (11) sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Head Lessee Collateral as fully and completely as though Secured Party were the absolute owner thereof for all purposes, and (12) to do, at Secured Party's
option and Grantor's expense, at any time, or from time to time, all acts and things which Secured Party may reasonably deem necessary to protect, preserve or realize upon the Head Lessee Collateral
and Secured Party's Lien therein in order to effect the intent of this Agreement, all as fully and effectively as Grantor might do. 

        (b)  Secured
Party agrees that, except upon the occurrence of a Head Lease Event of Default, it shall not exercise the power of attorney or any rights granted to Secured
Party pursuant to this Section 6 other than those contained in clauses (8), (9) and (12) of Section 6(a)(iii). Grantor hereby ratifies, to the extent permitted by law, all that said attorney shall
lawfully do or cause to be done by virtue hereof. The power of attorney granted pursuant to this Section 6 is a power coupled with an interest and shall be irrevocable until the Head Lessee Secured
Obligations are paid and performed in full. 

        (c)  The
powers conferred on Secured Party hereunder are solely to protect Secured Party's interests in the Head Lessee Collateral and shall not impose any duty upon it to
exercise any such powers. Secured Party shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and neither it nor any of its officers, directors,
employees, agents or representatives shall be responsible to Grantor for any act or failure to act, except for its own gross negligence or willful misconduct. 

        (d)  Grantor
also authorizes Secured Party, at any time and from time to time upon the occurrence of any Head Lease Event of Default, to (i) communicate in its own name with
any party to any Contract with regard to the assignment of the right, title and interest of Grantor in and under the Contracts hereunder and other matters relating thereto and (ii) execute, in
connection with the sale of Head Lessee Collateral provided for in Section 8 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Head Lessee
Collateral. 

        (e)  If
Grantor fails to perform or comply with any of its agreements contained herein and Secured Party shall perform or comply, or otherwise cause performance or
compliance, with such agreement, the reasonable expenses, including attorneys' fees, of Secured Party, Indenture Trustee or other Entitled Party incurred in connection with such performance or
compliance together with 

18

 

interest thereon at the Average Hedged Rate shall be payable by Grantor to Secured Party on demand and shall constitute Head Lessee Secured Obligations secured hereby. 

        7.    Head Lessee Collection Account, Collateral Account, Rent Reserve Account and Letter of
Credit.    

        7.1.    Establishment of Accounts.    

        (a)  On
or before the Effective Date, the Indenture Trustee (as assignee of the Secured Party's rights hereunder) shall establish in the name of the Indenture Trustee, for
the benefit of the Noteholders and the other Entitled Parties specified in the Indenture, each of the Head Lessee Collection Account, the Collateral Account and the Rent Reserve Account (all of the
foregoing collectively, the "Lease Accounts"). Each of the Lease Accounts shall be established and maintained as (i) an Eligible Account, (ii) in the name of the Indenture Trustee, and (iii) subject
to a Control Agreement substantially in the form of Exhibit C to the Indenture. Neither Grantor nor Secured Party shall establish any additional Lease Accounts without the prior written consent of the
Indenture Trustee and the Series Enhancer. Subject to the further provisions of this Section 7.1, the Indenture Trustee shall upon receipt in immediately available funds, deposit into such Lease
Accounts all amounts received by it which are required to be deposited therein in accordance with the provisions of this Agreement and the Indenture. All such amounts and all investments made with
such amounts, including all income and other gain from such investments, shall be held by the Indenture Trustee in such Lease Accounts as part of the Head Lessee Collateral as herein provided, subject
to withdrawal by the Indenture Trustee in accordance with, and for the purposes specified in this Agreement and the Indenture. 

        (b)  The
Indenture Trustee shall hold in trust, but shall not be required to deposit in the Lease Accounts, any payment received by it until such time as the Indenture
Trustee shall have identified to its reasonable satisfaction the nature of such payment and, on the basis thereof, the proper Lease Accounts into which such payment is to be deposited;  provided, however,
 the Indenture Trustee shall engage in all reasonable efforts to expeditiously make such determinations;  provided, further, that if such payment is not allocated within two (2) Business Days, such
payment will be deemed Gross Compressor Lease Revenues and
deposited into the Head Lessee Collection Account. The Indenture Trustee may establish in writing from time to time such deadline or deadlines as it shall determine are reasonable or necessary in the
administration of the Head Lessee Collateral after which all amounts received or collected by the Indenture Trustee on any day shall not be deemed to have been received or collected until the next
succeeding Business Day; provided, however, that such deadline shall not be prior to 1:00 p.m. New York time. 

        (c)  Neither
the Secured Party nor the Indenture Trustee shall have any right of set-off with respect to the Lease Accounts or any investment therein, whether or not
commingled. 

19

  

        (d)  So
long as no Head Lease Event of Default, Manager Default or Universal Event shall have occurred and be continuing, the funds on deposit in the Lease Accounts shall be
invested and reinvested by the Indenture Trustee in one or more Eligible Investments which shall be specified by Grantor or by Manager; provided,
however, in the event the Indenture Trustee shall receive orders from the Grantor and Manager directing the Indenture Trustee to take action with respect to a Lease Account,
which in the Indenture Trustee's opinion conflict with each other or any provision of this Agreement, the Indenture Trustee shall give written notice thereof to the Grantor, the Manager and the
Control Party and shall be entitled to refrain from acting hereunder and its sole obligation with respect to such action shall be to keep safe funds held in the Lease Accounts until receipt of a
written order signed by both the Grantor, the Manager and the Control Party. Subject to the foregoing, and the restrictions on the maturity of investments set forth in Section 7.1(f) hereof, the
Grantor or Manager may authorize the Indenture Trustee to make the specific Eligible Investments set forth therein, to make Eligible Investments from time to time consistent with the general
instructions set forth therein, or to make specific Eligible Investments pursuant to instructions received in writing or by facsimile transmission. During the continuance of any Head Lease Event of
Default, Manager Default or Universal Event, the funds on deposit in the Lease Accounts shall be invested and reinvested by the Indenture Trustee in one or more Eligible Investments in accordance with
Section 303 of the Indenture. 

        (e)  In
the event that either the Grantor or the Manager, as applicable, shall have failed to give investment directions to the Indenture Trustee by 12:00 p.m. New York time
on any Business Day on which there may be uninvested cash, the Indenture Trustee shall invest and reinvest the funds then in the Lease Accounts to the fullest extent practicable in its sole discretion
in those obligations or securities described in clause (iv) of the definition of Eligible Investments. All investments made by the Indenture Trustee shall mature no later than the maturity date
therefor permitted by Section 7.1(f) hereof. 

        (f)    No
investment of any amount held in the Head Lessee Collection Account and the Rent Reserve Account shall mature later than the Business Day prior to the next succeeding
Rent Payment Date. No Investment of any amount held in the Collateral Account shall mature no later than the Business Day prior to the Termination Date. All income or other gains from the investment
of moneys deposited in the Lease Accounts shall be deposited by the Indenture Trustee in such Lease Account immediately upon receipt thereof. 

        (g)  Any
investment of any funds in the Lease Accounts and any sale of any investment held in such accounts, shall be made under the following terms and conditions: 

	(i)
	each
such investment shall be made in the name of the Indenture Trustee (in its capacity as such) or in the name of a nominee of the Indenture Trustee;

	(ii)
	the
investment earnings of any investment shall be credited to the account for which such investment was made;

	(iii)
	any
certificate or other instrument evidencing such investment shall be delivered directly to the Indenture Trustee or its agent and the Indenture Trustee shall have sole possession
of such instrument, and all income on such instrument, and all income on such investment; and

	(iv)
	the
proceeds of any sale of an investment shall be remitted by the purchaser thereof directly to the Indenture Trustee for deposit in the account in which such investment was held. 

        (h)  The
Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Lease Accounts resulting from losses on investments made in accordance
with the provisions of this Section 7.1, except to the extent that the institution then serving as Indenture Trustee is the 

20

 

obligor on such Eligible Investment. The Indenture Trustee shall not be liable for any investment made by it in accordance with this Section 7.1 on the grounds that it could have made a more
favorable investment. 

        7.2.    Head Lessee Collection Account.    

        (a)    Deposits to Head Lessee Collection Account.    The Grantor shall cause the Lockbox Bank to deposit into the
Head Lessee Collection Account promptly, but in any event no later than the Business Day after the allocation of such amounts in accordance with Section 7(a), 7(c) or 8(a) of the Intercreditor
Agreement, all Gross Compressor Lease Revenues and other amounts allocable to the "Securitization Collateral" (as defined in the Intercreditor Agreement) received in the Lockbox Account, together with
all amounts distributable from the Lockbox Account in respect of Securitization Collateral in accordance with the provisions of the Intercreditor Agreement. In addition, the Grantor shall cause all
(v) amounts on deposit from time to time in the ABS Lockbox Account, (w) Net Sales Proceeds, (x) Casualty Proceeds, (y) payments or Proceeds in respect of Liability Insurance policies required to be
maintained pursuant to Section 5.7 of the Management Agreement and (z) payments made by the Contributor in connection with repurchases of Compressors pursuant to the Contribution Agreement, to be
deposited into the Head Lessee Collection Account. In furtherance of the foregoing, to the extent that the Secured Party receives directly any Casualty Proceeds or payment or Proceeds in respect of
Liability Insurance policies required to be maintained pursuant to Section 5.7 of the Management Agreement, the Secured Party will deposit, or will cause such amounts to be deposited, into the Head
Lessee Collection Account. 

        (b)    Interim Distributions.    The Head Lessor shall, and hereby does, direct and authorize the Indenture Trustee,
upon the Indenture Trustee's receipt of any written request from the Manager pursuant to Section 7.3 of the Management Agreement, to distribute to the Manager from the Head Lessee Collection Account
(x) an estimate of the Operations Fee and S&A Fee expected to be paid on the immediately succeeding Rent Payment Date and (y) so long as (1) the amount on deposit in the Rent Reserve Account is equal
to or greater than the Rent Reserve Amount, (2) the Scheduled Deposit for the immediately preceding Collection Period has been made in full and (3) there are sufficient funds in the Head Lessee
Collection Account so that, on the immediately succeeding Rent Payment Date, the Letter of Credit Fees will be paid in full in accordance with  Section 7.2(c), the Overhaul Fee expected to be paid
on the immediately succeeding Rent Payment Date; provided,
however, that notwithstanding any right of the Manager pursuant hereto or pursuant to the Management Agreement to request such distributions with respect to the Operations Fee,
S&A Fee and Overhaul Fee, such distributions shall be made only so long as (i) no Head Lease Event of Default or Manager Default shall have occurred and be continuing, and (ii) unless the Indenture
Trustee (as directed by the Control Party) shall have consented to such interim distribution(s), the Management Termination Date shall not have occurred. Such estimate shall be based on the actual
accrued Operations Fee, S&A Fee and Overhaul Fee incurred. Any excess or deficiency in such estimate shall be adjusted on the immediately succeeding Rent Payment Date. So long as no Head Lease Event
of Default shall have occurred and be continuing, on each Business Day, at the request of the Manager, the Head Lessor shall, and hereby does, direct and authorize the Indenture Trustee, upon the
Indenture Trustee's receipt of any such written request from Manager, to distribute to the Manager from the Head Lessee Collection Account an amount equal to the sum of (x) all Excluded Payments and
(y) so long as the Scheduled Deposit for the immediately preceding Collection Period has been made in full, all Ineligible Collections then on deposit in the Head Lessee Collection Account, with such
distribution to be made on the same day such request of the Manager is received, unless such request is received after 10:00 a.m. New York City time, in which case such amount shall be distributed on
the immediately succeeding Business Day. The Indenture Trustee is under no 

21

 

obligation to verify that the conditions to any interim distributions set forth in this Section 7.2(b) have been satisfied before making such distributions. 

        (c)    Disbursements from Head Lessee Collection Account on Rent Payment Dates and after Head Lease Event of
Default.    

        On
(x) each Rent Payment Date and (y) after the occurrence of a Head Lease Event of Default, each additional Business Day on which the Control Party (in its sole discretion) directs the
Head Lessor to make such distributions, the Head Lessor will direct the Indenture Trustee (in accordance with the Manager Report) to distribute (or cause to be distributed) by wire transfer of
immediately available funds all Available Head Lessee Collections then on deposit in the Head Lessee Collection Account to the following Persons and in the following order of priority: 

	(1)
	first, to the Manager or Back-Up Manager for payment to the relevant taxing authority any Excluded Amounts;  second, to the
Manager, reimbursement for Manager Advances;

	(2)
	to
the Manager, any S&A Fee and Operations Fee then due and payable (increased or decreased to reflect any shortage or excess in the estimates of such amounts withheld by Manager
pursuant to Section 7.2(b) during the immediately preceding Collection Period);

	(3)
	first, to the Back-up Manager, the Back-up Manager Fee, to the extent not paid by the Manager;  second, to
the extent the Back-up Manager Fee shall have been paid by the Manager, to the Manager an amount equal to such payment made by it;

	(4)
	to
Universal, or, if Universal is not the Manager, to the Head Lessor for deposit into the Trust Account or to the Person to whom such amounts are payable, an amount equal to any
premiums then due (or previously paid by Universal, the Head Lessor or the Control Party) in respect of Property Insurance and Liability Insurance, to the extent not paid by Universal;

	(5)
	to
the Letter of Credit Bank, the Letter of Credit Fees than due and payable;

	(6)
	to
the Head Lessor for deposit into the Trust Account, the Monthly Lease Payment (exclusive of any Additional Payment) then due and payable;

	(7)
	to
the Rent Reserve Account until the amount on deposit therein equals the Rent Reserve Amount;

	(8)
	to
the Letter of Credit Bank, the amount of all "Claims" (as defined in the Reimbursement Agreement), if any, until such Claims have been reduced to zero;

	(9)
	to
the Manager, the Overhaul Fee then due and payable (increased or decreased to reflect any shortage or excess in the estimate of such amount withheld by the Manager during the
immediately preceding Collection Period);

	(10)
	(A)
to the Manager, the charge for or costs associated with any Reimbursable Services then due and payable and (B) if Universal is not the Manager, to the Issuer or the Control
Party, as applicable, or directly to the Person to whom any Management Related Expenses are payable, the amount of any Management Related Expenses paid or payable by the Issuer or the Control Party
(or, in the case of payment directly to any Person to whom any Management Related Expenses are payable, the amount of Management Related Expenses due and owing to such person). If sufficient funds do
not exist to pay all the amounts described in clauses (A) and (B) above in full, the remaining Available Head Lessee Collections shall be allocated among the Persons described in clauses (A) and (B)
above in the
same proportion as the ratio of (x) the amount owing to such Person bears to (y) the amount owing to all such Persons; 

22

 

	(11)
	to
the Head Lessor for deposit into the Trust Account, an amount equal to the amounts received by the Head Lessor in connection with the Head Lessee's purchase of Head Lessor
Compressors pursuant to Section 13.2 and/or 21 of the Head Lease, provided that such amount does not exceed the Scheduled Deposit for such Rent Payment Date;

	(12)
	to
the Head Lessor for deposit into the Trust Account, such amount of any Purchase Option Amount that the Head Lessee shall elect to pay or Maximum Lease Payment Adjustment (to the
extent not disbursed from the Collateral Account);

	(13)
	to
the Collateral Account, the Scheduled Deposit for such Rent Payment Date, if any, after taking account payments under (11) above;

	(14)
	to
the Manager, any Excess Operation Expenses and any Excess S&A Expenses then due and payable;

	(15)
	to
the Manager, any Incentive Management Fee then due and payable;

	(16)
	following
a Trigger Event, to the Head Lessor for deposit into the Trust Account, all remaining Available Head Lessee Collections after application of items (1) through (15) above;

	(17)
	to
the Head Lessor for deposit into the Trust Account, to the extent not previously paid by the Head Lessee to the Head Lessor for deposit into the Trust Account, any Supplemental
Rent then due and payable (without duplication of any amount previously paid);

	(18)
	to
the Head Lessor for deposit into the Trust Account, an amount equal to any remaining amounts (after application of item (11) above) received by the Head Lessor in connection with
the Head Lessee's purchase of Head Lessor Compressors pursuant to Section 13.2 and/or 21 of the Head Lease;

	(19)
	to
the Head Lessor for deposit into the Trust Account, any Additional Payment then due and payable (without duplication of any amount previously paid); and

	(20)
	to
the Head Lessee any remaining amount. 

        (d)    Final Release.    Following the payment in full of all Head Lessee Secured Obligations, any remaining amounts
on deposit in the Head Lessee Collection Account shall be released to the Grantor. 

        7.3.    Collateral Account.    

        (a)    Deposits to the Collateral Account.    On each Rent Payment Date, the Grantor shall direct the Head Lessee to
deposit an amount equal to the amount to be paid under Section 7.2(c)(13) above into the Collateral Account; provided, however, that the amounts on
deposit in the Collateral Account shall not, at any time, exceed the Maximum Lease Payment Adjustment. 

        (b)    Disbursements from the Collateral Account.    Amounts on deposit from time to time in the Collateral Account
shall be distributed as follows: 

	(i)
	on
each Rent Payment Date on or prior to the Commitment Termination Date, any amounts on deposit in the Collateral Account shall be distributed to Head Lessor (for deposit into the
Trust Account) in the amounts necessary to, and to be applied to, (w) cure any Overcollateralization Event, (x) cure any Net Revenue Event, (y) remedy any deficiency in the amount by which the
Aggregate Outstanding Amounts exceeds the Asset Base and (z) to pay any unpaid termination payments resulting from any Issuer Swap Default and any other unpaid termination payments then due and
payable pursuant to the terms of any Interest Rate Swap Agreement then in effect; 

23

 

	(ii)
	on
each Rent Payment Date after the Commitment Termination Date, amounts on deposit in the Collateral Account shall be distributed to the Head Lessor (for deposit into the Trust
Account) in the amount necessary to, and such amount shall be applied to, pay any unpaid termination payments resulting from any Issuer Swap Default and any other unpaid termination payments then due
and payable pursuant to the terms of any Interest Rate Swap Agreement then in effect;

	(iii)
	on
the Termination Date, all amounts on deposit in the Collateral Account shall be distributed to the Head Lessor (for deposit into the Trust Account) (x) in payment of the Purchase
Option Amount or (y) in payment of the Maximum Lease Payment Adjustment, as the case may be;

	(iv)
	after
the occurrence and during the continuance of a Head Lease Event of Default, on each Business Day specified by the Control Party (in its sole discretion) to the Head Lessor, the
amount specified by the Control Party (in its sole discretion) shall be distributed to the Head Lessor for deposit into the Trust Account; and

	(v)
	on
any Business Day, to the Head Lessor (for deposit into the Trust Account) in the amount specified by the Head Lessee in connection with a purchase of Head Lessor Compressors under
Section 21 of the Head Lease (provided that all amounts disbursed pursuant to this clause shall be deemed to have been paid to the Head Lessor by the Head Lessee). 

        (c)    Final Distribution.    Following the payment in full of all Head Lessee Secured Obligations, any remaining
amount on deposit in the Collateral Account shall be released to the Grantor. 

        7.4.    Rent Reserve Account.    

        (a)    Deposits to Rent Reserve Account.    On the Closing Date, Grantor shall deposit the Rent Reserve Amount in the
Rent Reserve Account. On each Rent Payment Date following the Closing Date, amounts shall be deposited in the Rent Reserve Account in the amounts and at the times provided in Section 7.2(c) hereof. 

        (b)    Disbursements from the Rent Reserve Account.    On each Rent Payment Date, the Indenture Trustee shall, in
accordance with the Manager Report, withdraw from the Rent Reserve Account and deposit into the Head Lessee Collection Account an amount equal to the excess, if any, of (A) the sum of (i) the
Permitted Payment Date Withdrawals and (ii) the Operations Fee, subject to the Maintenance Limit Amount over (B) amounts then on deposit in the Head Lessee Collection Account (determined after giving
effect to all other deposits to the Head Lessee Collection Account (other than funds transferred from the Rent Reserve Account) on or prior to such Rent Payment Date) that pursuant to the priority of
payments set forth in Section 7.2(c) hereof, are then available to pay the Monthly Lease Payment and the Operations Fee (subject to the Maintenance Limit Amount) and, if a Head Lease Event of Default
has occurred and is then continuing, the Aggregate Outstanding Amounts and all amounts payable under any Interest Rate Swap Agreement. Amounts transferred to the Head Lessee Collection Account
pursuant to the provisions of this Section 7.4(b) may only be used to pay Monthly Lease Payments at the times and in the amounts specified in the definition of "Permitted Payment Date Withdrawals",
and, if a Head Lease Event of Default has occurred and is then continuing, in payment of such Aggregate Outstanding Amounts and all amounts payable under any Interest Rate Swap Agreement as the
Requisite Global Majority and each Interest Rate Hedge Provider shall direct, but in accordance with the priorities set forth in Section 7.2(c). 

        On
each Rent Payment Date, the Indenture Trustee shall, in accordance with the Manager Report, deposit in the Head Lessee Collection Account the excess, if any, of (a) amounts then on 

24

 

deposit in the Rent Reserve Account (after giving effect to any withdrawals therefrom on such Rent Payment Date) over (b) the Rent Reserve Amount. 

        (c)    Final Release.    Following the payment in full of all Head Lessee Secured Obligations, any remaining amount on
deposit in the Rent Reserve Account shall be distributed to the Head Lessor for deposit into the Reserve Account in accordance with Section 314 of the Indenture. 

        7.5.    Letters of Credit    

        (a)  The
Head Lessee shall provide on or before the Closing Date and maintain so long as any Head Lessee Secured Obligations remain Outstanding, one or more Eligible Letters
of Credit, for the benefit of the Indenture Trustee (as assignee of the Head Lessor) on behalf of the Noteholders and the other Entitled Parties, in an aggregate amount available thereunder on any
date not less than the amount applicable to such date on Schedule 10). 

        (b)  If
the amounts on deposit in the Rent Reserve Account on a Determination Date are less than the Aggregate Reserve Amount on such date, then the Indenture Trustee shall,
in accordance with the Manager Report (or, if the Manager fails to deliver the Manager Report, pursuant to written instructions from the Control Party), submit to the Letter of Credit Bank a completed
Drawing Certificate (as defined in the Letter of Credit) requesting a drawing under the Letter of Credit in an amount equal to the Available Drawing Amount (a "Letter of Credit Drawing");  provided, however, that in no event shall the amount of any Letter of Credit Drawing exceed the Available Drawing Amount under such Letter of Credit.
 

        (c)  The
Indenture Trustee shall receive Letter-of-Credit Drawings as attorney-in-fact of each for the Entitled Parties and upon receipt thereof shall immediately deposit
such Letter-of-Credit Drawings into the Rent Reserve Account and any such Letter-of-Credit Drawings shall be used only for the purpose for which it was drawn to fund the Rent Reserve Account, to make
Monthly Lease Payments and to pay the Operations Fee. The making of a Letter-of-Credit Drawing does not relieve the Head Lessee of any obligation under the Head Lease or any other Related Documents. 

        (d)  If
at any time while the Head Lessee Secured Obligations remain unpaid the Letter of Credit Bank shall not be an Eligible Bank, the Head Lessee shall (unless the Control
Party shall otherwise consent) within the time period required by Section 15 of the Reimbursement Agreement, replace the then existing Letter of Credit with a substitute Eligible Letter of Credit. If
the Head Lessee shall fail to deliver a replacement Eligible Letter of Credit within the time period required under Section 15 of the Reimbursement Agreement, the Indenture Trustee shall submit to the
Letter of Credit Bank a completed Drawing Certificate for the remaining Available Drawing Amount under such Letter of Credit. Any amounts received by the Indenture Trustee as a result of any such
drawing shall be deposited into the Rent Reserve Account and disbursed in accordance with the provisions of Section
7.4 hereof. Upon receipt by the Indenture Trustee of a replacement Eligible Letter of Credit in accordance with the provisions of this Section 7.5(d), the Indenture Trustee shall surrender the
original of the replaced Letter of Credit to the issuer thereof. 

        7.6.    ABS Lockbox Account.    After the Management Replacement Date,
the Grantor agrees to enter into any lockbox agreement and/or control agreement in connection with the ABS Lockbox Account as may be required by the Control Party. 

        8.    Remedies.    

        8.1.    Remedies on Default.    (a) If a Head Lease Event of Default
shall have occurred, the Secured Party may (and shall, at the direction of the Control Party), in addition to any other rights and remedies it may have hereunder and under the Related Documents or in
accordance with 

25

 

Applicable Law, take any one or more (separately, successively or simultaneously) of the following remedial steps: 

	(1)
	The
Secured Party may declare any or all of the Head Lessee Secured Obligations to be immediately due and payable without presentment, demand, protest, or notice of any kind, all of
which are expressly waived, notwithstanding anything to the contrary contained in any instrument evidencing any of the Head Lessee Secured Obligations.

	(2)
	The
Secured Party shall have the right, without notice to the Grantor, to enter upon and into the Grantor's premises or any property where any Head Lessee Collateral is located
without liability for trespass and to remove all of the Head Lessee Collateral and all books, records, invoices and other documentation relating thereto. The Secured Party may require the Grantor, at
Grantor's expense, to assemble or package the Head Lessee Collateral and make it available to the Secured Party at a place to be designated by the Secured Party reasonably convenient to the parties,
and in such event the Grantor agrees to make available to the Secured Party all of the Grantor's facilities for the purposes of removing or taking possession of the Head Lessee Collateral or putting
it in a saleable form. If the Head Lessee Collateral requires preparation, repair, maintenance or further work in order to be in a saleable form, the Secured Party shall have the right, but not the
obligation, to complete the work for such purpose, and the cost of such preparation, repair, maintenance or further work shall be payable in accordance with Section 19 of the Head Lease. The
completion of any such work shall not be a condition to the right of the Secured Party to sell or otherwise dispose of the Head Lessee Collateral in accordance with the terms hereof.

	(3)
	The
Secured Party, at its sole option and discretion, may sell, assign, lease or otherwise dispose of the Head Lessee Collateral in whole or in part at public or private sale upon
terms and conditions established by the Secured Party. Any notice required to be given in connection with such disposition
shall be given in accordance with Section 11.2 hereof at least ten (10) days prior to the proposed sale or other disposition, which amount of time the parties hereto agree shall be reasonable. The
Secured Party need not give such notice, however, with respect to Head Lessee Collateral which is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized market. At any public sale or disposition of the Head Lessee Collateral, the Secured Party shall have the right to bid and become the purchaser, and to
have at its discretion all or any part of the Head Lessee Secured Obligations credited against the purchase price bid by the Secured Party for the Head Lessee Collateral. The proceeds from any sale or
disposition of the Head Lessee Collateral shall be applied first to all expenses (including, without limitation, reasonable attorneys' fees) of retaking, holding, storing, processing, preparing for
sale, selling, collecting and liquidating the Head Lessee Collateral, and second to the satisfaction of the Head Lessee Secured Obligations (including, without limitation, all amounts due under the
Indenture and the Partnership Agreement). In the event such remaining proceeds are insufficient to satisfy all of the Head Lessee Secured Obligations, the Secured Party shall have the right to
determine the particular Head Lessee Secured Obligations against which the proceeds shall be applied, and the Grantor shall remain liable for and shall pay the Secured Party on demand the remaining
deficiency at the lesser of (x) 18% per annum (computed on the basis of the actual number of days elapsed over a 360-day year) and (y) the highest rate permitted by Applicable Law. In the event any
such remaining proceeds are sufficient to pay the Head Lessee Secured Obligations, any surplus shall be remitted to the Grantor.

	(4)
	The
Secured Party may take any or all actions permitted under Section 3(c) hereof. 

26

 

        (b)  To
facilitate the exercise by the Secured Party of the rights and remedies set forth in this Section 8.1, the Grantor hereby constitutes the Secured Party or its agents,
or any other person whom the Secured Party may designate, as attorney-in-fact for the Grantor, at the Grantor's own cost and expense, to exercise all or any of the following powers, which being
coupled with an interest, shall be irrevocable, shall continue until all Head Lessee Secured Obligations have been paid in full and shall be in addition to any other rights and remedies that the
Secured Party may have: (a) to remove from any premises where they may be located any and all documents, instruments, files and records relating to the Head Lessee Collateral and any receptacles and
cabinets containing the same, and at the Grantor's cost and expense, to use such of the personnel, supplies and space of the Grantor at its place of business as may be necessary to properly administer
and control the Head Lessee Collateral or the collections and realizations thereon; (b) to receive, open and dispose of all mail addressed to the Grantor and to notify postal authorities to change the
address for delivery thereof to such address as that Secured Party may designate; (c) to take or bring, in the Secured Party's name or in the name of the Grantor, all steps, actions, suits or
proceedings deemed by the Secured Party necessary or desirable to effect collection of or to realize upon the Head Lessee Collateral; and (d) to collect or withdraw all sums of money or other solvent
credits the Grantor may have to its credit with any banking institution. 

        8.2.    Waivers.    (a) THE GRANTOR ACKNOWLEDGES THAT THE TRANSACTION
OF WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ITS RIGHTS TO NOTICE AND HEARING AS ALLOWED UNDER NEW YORK LAW, OR OTHERWISE UNDER ANY STATE
OR FEDERAL
LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE SECURED PARTY MAY DESIRE TO USE. 

        (b)  The
Secured Party shall not, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the
liquidation of or realization upon any of the Head Lessee Collateral, including any instrument received in payment thereof, or any damage resulting therefrom. The Grantor shall indemnify and hold
harmless the Secured Party, the Indenture Trustee and the Series Enhancer against any claim, loss or damage arising out of the liquidation of or realization upon any of the Head Lessee Collateral,
including any instrument received in payment thereof. 

        8.3.    Remedies Cumulative.    (a) No remedy conferred upon or
reserved to the Secured Party hereunder is or shall be deemed to be exclusive of any other available remedy or remedies. Each such remedy shall be distinct, separate and cumulative, shall not be
deemed to be inconsistent with or in exclusion of any other available remedy, may be exercised in the discretion of the Secured Party at any time, in any manner, and in any order, and shall be in
addition to and separate and distinct from every other remedy given the Secured Party under the Related Documents, any other security interest given to the Secured Party by the Grantor or any other
mortgage or security agreement securing the Head Lessee Collateral, or now or hereafter existing in favor of the Secured Party at law or in equity or by statute. Without limiting the generality of the
foregoing, the Secured Party shall have the right to exercise any available remedy to recover any amount due and payable hereunder without regard to whether any other amount is due and payable, and
without prejudice to the Secured Party to exercise any available remedy under the Related Document or otherwise, for other events of default existing at the time the earlier action was commenced. 

        (b)  Any
delay, omission or failure by the Secured Party to insist upon the strict performance by the Grantor of any of the covenants, conditions and agreements herein set
forth or to exercise any right or remedy available to it upon the occurrence of a Head Lease Event of Default or otherwise, shall not impair any such right or remedy or be considered or taken as a
waiver or relinquishment for the future right to insist upon and to enforce, by injunction or other 

27

 

appropriate legal or equitable remedy, strict compliance by the Grantor with all of the covenants, conditions and agreements herein, under the Related Document or otherwise, or of the right to
exercise any such rights or remedies if such default by the Grantor be continued or repeated. 

        9.    Limitation on Secured Party's Duty in Respect of Head Lessee
Collateral.    Secured Party shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Head Lessee Collateral if it takes
such action as Grantor requests in writing, but failure of Secured Party to comply with any such request shall not in itself be deemed a failure to act reasonably, and no failure of Secured Party to
do any act not so requested shall be deemed a failure to act reasonably. 

        10.    Reinstatement.    This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against Grantor for liquidation or reorganization, should Grantor become insolvent or make an assignment for the benefit of
creditors or should a receiver or Secured Party be appointed for all or any significant part of Grantor's property and assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Head Lessee Secured Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Head Lessee Secured Obligations, whether as an avoidable preference, "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made.
In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Head Lessee Secured Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned. 

        11.    Miscellaneous.    

        11.1.    Severability.    If any provision of this Agreement is held
to be in conflict with any applicable statute or rule of law or is otherwise held to be unenforceable for any reason whatsoever, such circumstances shall not have the effect of rendering the provision
in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent
whatsoever. 

        The
invalidity of any one or more phrases, sentences, clauses or Sections of this Agreement shall not affect the remaining portions of this Agreement, or any part thereof. 

        11.2.    Notices.    All demands, notices and communications hereunder
shall be in writing, personally delivered, or by facsimile (with subsequent telephone confirmation of receipt thereof), or sent by internationally recognized overnight courier service, (a) in the case
of the Indenture Trustee, at the following address: MAC N9311-161 Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services-Asset-Backed Administration (b)
in the case of the Grantor, at the following address: 4444 Brittmoore Road, Houston, Texas 77041, (c) in the case of the Secured Party, at the following address: 2911 Turtle Creek Blvd., Suite 1240,
Dallas, Texas 75215, Attention: General Counsel and (d) in the case of each Rating Agency, at its address set forth in the related Supplement, (e) in the case of any Series Enhancer, at
its address set forth in the related Enhancement Agreement, and (f) in the case of any Interest Rate Hedge Provider, at its address set forth in the related Interest Rate Swap Agreement or at other
such address as shall be designated by such party in a written notice to the other parties. Notice shall be effective and deemed received (a) two days after being 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. 

        11.3.    Consent to Jurisdiction.    ANY LEGAL SUIT, ACTION OR
PROCEEDING AGAINST THE GRANTOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY, MAY BE INSTITUTED IN ANY 

28

 

FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, STATE OF NEW YORK AND THE GRANTOR HEREBY WAIVES 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, THE GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
THE GRANTOR HEREBY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL, FEDERAL EXPRESS OR SIMILAR COURIER SERVICE AT THE ADDRESS AT WHICH NOTICES ARE TO BE GIVEN, IT BEING AGREED THAT SERVICE IN SUCH
MANNER SHALL CONSTITUTE VALID SERVICE UPON SUCH PARTY AND ITS SUCCESSORS AND ASSIGNS IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING; PROVIDED,  HOWEVER,
THAT NOTHING IN THIS SECTION 11.3 SHALL AFFECT THE RIGHT OF ANY SUCH PARTY OR ITS SUCCESSORS AND ASSIGNS TO SERVICE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. 

        11.4.    Captions.    The captions or headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. 

        11.5.    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. 

        11.6.    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. 

        11.7.    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 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. 

        11.8.    Statutory References.    References in this Agreement to any
section of the Uniform Commercial Code or the UCC shall mean, on or after the effective date of adoption of any revision to the Uniform Commercial Code or the UCC in the applicable jurisdiction, such
revised or successor section thereto. 

        11.9.    Termination of this Security Agreement.    Subject to the
provisions of Section 10 hereof, the Lien created by this Security Agreement shall terminate upon the payment and 

29

 

performance in full of the Head Lessee Secured Obligations. The Secured Party agrees that it shall, upon or after the termination of the Lien created hereunder pursuant to the preceding sentence,
execute and deliver at the sole cost and expense of the Grantor such termination statements and instruments prepared by the Grantor as may be reasonably requested by the Grantor to evidence such
termination. 

        11.10.    Successor and Assigns.    This Agreement and all obligations
of Grantor hereunder shall be binding upon the successors and assigns of Grantor. This Agreement may not be assigned by the Grantor without the prior written consent of the Secured Party, the Control
Party and each Interest Rate Hedge Provider. 

        11.11.    Counterparts.    This Agreement may be executed in any
number of counterparts, each of which when so delivered shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. Each such agreement shall become
effective upon the execution of a counterpart hereof or thereof by each of the parties hereto. 

        11.12.    Amendments and Waivers.    No term or provision of this
Agreement may be changed, amended, altered, waived, discharged, terminated or otherwise modified except by an instrument in writing signed by the parties to this Agreement, each Interest Rate Hedge
Counterparty, the Indenture Trustee (at the written direction of the Control Party), and such other party against which the enforcement of the change, amendment, alteration, waiver, discharge,
termination or other modification is sought. 

        11.13.    Assignment of Rights of Series Enhancer.    During the
continuation of a Series Enhancer Default, all of the rights and privileges (but none of the duties or obligations) of the Series Enhancer hereunder and under the Related Documents shall vest in the
Indenture Trustee (acting at the direction of the Requisite Global Majority). 

30

 

        IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer on
the date first set forth above. 

	GRANTOR	 	UCO COMPRESSION 2002 LLC
	

 	

 	
 	

By:	

/s/  RICHARD W. FITZGERALD      

	 	 	 	Name: Richard W. FitzGerald
	 	 	 	Title: Senior Vice President
	

SECURED PARTY	
 	

BRL UNIVERSAL COMPRESSION FUNDING I 2002, L.P.
	

 	

 	
 	

By:	

BRL Universal Compression Management 2002, Inc., its general partner
	

 	

 	
 	

By:	

/s/  GREGORY C. GREENE      

	 	 	 	Name: Gregory C. Greene
	 	 	 	Title: President
	

For the limited purposes set forth herein,
 Accepted and Agreed:	
 	

 	

 
	

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

not in its individual capacity but solely as indenture trustee	
 	

 	

 
	

By:	

/s/  EDNA BARBER      
	
 	

 	

 
	Name: Edna Barber	 	 	 
	Title: Assistant Vice President

	 	 	 

31

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EXHIBIT 10.8    
  

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT 

dated
as of December 31, 2002 

among

UNIVERSAL
COMPRESSION, INC.,

in its individual capacity and as the initial Manager 

UCO
COMPRESSION 2002 LLC and

BRL UNIVERSAL COMPRESSION FUNDING I 2002, L.P.,

as Owners 

WELLS
FARGO BANK MINNESOTA,

NATIONAL ASSOCIATION,

as Indenture Trustee 

WACHOVIA
BANK, NATIONAL ASSOCIATION,

as Bank Agent 

THE
VARIOUS FINANCIAL INSTITUTIONS that may from time to time

become parties hereto as Universal Lenders 

and 

BANK
ONE, N.A.,

in its individual capacity and as Intercreditor Collateral Agent 

	SECTION 1.	 	Definitions	 	1
	

SECTION 2.	
 	

Securitization Collections	
 	

6
	

SECTION 3.	
 	

Acknowledgments Regarding Securitization Collateral	
 	

7
	

SECTION 4.	
 	

Acknowledgment Regarding Non-Securitization Collateral	
 	

7
	

SECTION 5.	
 	

Intercreditor Collateral Agent	
 	

8
	

SECTION 6.	
 	

Establishment of Accounts; Deposit of Collections	
 	

9
	

SECTION 7.	
 	

Allocation of Collections; Disbursements of Collections	
 	

11
	

SECTION 8.	
 	

Monitoring of Allocation Process; Effect of a Securitization Default; Effect of a Bank Default	
 	

14
	

SECTION 9.	
 	

Compensation and Indemnity of Intercreditor Collateral Agent; Waiver of Right of Set-off	
 	

15
	

SECTION 10.	
 	

Resignation by or Removal of Intercreditor Collateral Agent	
 	

16
	

SECTION 11.	
 	

No Implied Waivers, etc.	
 	

17
	

SECTION 12.	
 	

Amendments	
 	

17
	

SECTION 13.	
 	

Benefit of Agreement; Joinder	
 	

17
	

SECTION 14.	
 	

Severability	
 	

18
	

SECTION 15.	
 	

Counterparts	
 	

18
	

SECTION 16.	
 	

Notices	
 	

18
	

SECTION 17.	
 	

Headings	
 	

18
	

SECTION 18.	
 	

Governing Law	
 	

18
	

SECTION 19.	
 	

No Petition	
 	

18
	

SECTION 20.	
 	

Insolvency	
 	

18
	

SECTION 21.	
 	

Termination	
 	

19
	

SECTION 22.	
 	

Entire Agreement	
 	

19
	

SECTION 23.	
 	

Rules of Usage	
 	

19

 
 

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT    
  

        This INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT dated as of December 31, 2002 (as amended, supplemented, amended and restated or otherwise modified from
time to time in accordance with the provisions hereof, this "Agreement") is among: 

        (i)    Universal
Compression, Inc., a Texas corporation, (in its individual capacity, together with its successors and permitted assigns,
"Universal"), and as the initial Manager under the Management Agreement (in such capacity, the
"Manager"); 

        (ii)  UCO
Compression 2002, LLC, a Delaware limited liability company (together with its successors and permitted assigns, "UCO
2002"); 

        (iii)  BRL
Universal Compression Funding I 2002, L.P., a Delaware limited partnership (together with its successors and permitted assigns,
"BRL 2002"); 

        (iv)  Wells
Fargo Bank Minnesota, National Association, as indenture trustee under the hereinafter defined Securitization Indenture for the benefit of the Noteholders and the
other Persons set forth therein (in such capacity, together with its successors and permitted assigns, the "Indenture Trustee"); 

        (v)  Wachovia
Bank, National Association (as successor by merger to First Union National Bank), as administrative agent on behalf of the financial institutions named in the
hereinafter defined Bank Credit Agreement (in such capacity, together with its successors and permitted assigns, the "Bank Agent"); 

        (vi)  Bank
One, N.A., as collateral agent for the Securitization Secured Parties (as defined herein), the Universal Lenders (as defined herein) and Universal (in such
capacity, together with its successors and permitted assigns, the "Intercreditor Collateral Agent"); and 

        (vii) The
Additional Universal Lenders that from time to time become a party hereto in accordance with Section 13
hereof. 

RECITALS  

        (1)  WHEREAS,
Universal, in its individual capacity and as Manager, will receive from time to time Collections relating to the Domestic Contract Compression Business of
(a) Universal and its subsidiaries and (b) UCO 2002 and BRL 2002; and 

        (2)  WHEREAS,
the parties hereto desire to execute and deliver this Agreement to set forth certain agreements among them with respect to such Collections as provided below. 

        NOW
THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 

        SECTION 1. Definitions.    The following terms (whether or not underscored) when used in this Agreement, including its preamble
and recitals, shall, except where the content otherwise requires, have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): 

        "Additional Universal Lenders" means any Person that is a Universal Lender and executes and delivers a "Supplemental Agreement"
substantially in the form of Exhibit B hereto pursuant to and in accordance with the terms of  Section 13 hereof. 

        "Agreement" has the meaning specified in the preamble hereto. 

        "Allocated Collections" means all or any portion of the Collections as of any date of determination that have been allocated pursuant to
the provisions of Sections 7 and 8 of this Agreement. 

        "Allocation Accounting Firm" has the meaning specified in Section 7(a)(ii) hereof. 

        "Ambac" means Ambac Assurance Corporation, a stock insurance corporation organized and existing under the laws of the state of Wisconsin,
together with it successors and permitted assigns. 

 

        "Bank Agent" has the meaning specified in clause (v) of the preamble hereto. 

        "Bank Collateral" means that certain Collateral (as defined in the Bank Collateral Agreement) in which the Bank Agent has been granted a
security interest by Universal to secure Universal's obligations under the Bank Credit Agreement. 

        "Bank Collateral Agreement" means that certain Guarantee and Collateral Agreement, dated as of February 9, 2001, by Universal and
Universal Compression Holdings, Inc. in favor of the Bank Agent, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms. 

        "Bank Credit Agreement" means that certain Senior Secured Revolving Credit Agreement, dated as of February 9, 2001, with the Bank
Agent, Bank One, N.A., as Syndication Agent, and the Bank Lenders, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms. 

        "Bank Default" means an Event of Default (as defined in the Bank Credit Agreement) that has occurred and is continuing under the Bank
Credit Agreement. 

        "Bank Documents" means the Bank Credit Agreement, the Bank Collateral Agreement and each other agreement, document or instrument executed
in connection with the Bank Credit Agreement or the Bank Collateral Agreement. 

        "Bank Lenders" means the lenders from time to time party to the Bank Credit Agreement. 

        "Bank One Agreements" has the meaning specified in Section 22 hereof. 

        "Bankruptcy Code" means the Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq., as
amended from time to time. 

        "BRL 2002" has the meaning specified in clause (iii) of the  preamble hereto. 

        "BRL 2002 Compressors" means, as of any date of determination, all Compressors owned by BRL 2002 on such date. 

        "BRL Partnership Agreement" means that certain Amended and Restated Agreement of Limited Partnership of BRL 2002, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with its terms. 

        "Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in New York, New York,
Minneapolis, Minnesota or Houston, Texas are authorized or obligated by law, executive order or governmental decree to be closed. 

        "Certificateholder" means any Person in whose name a Certificate is registered in accordance with the terms of the BRL Partnership
Agreement. 

        "Certificates" means the Certificates or other evidence of ownership in BRL 2002 held by the limited partners of BRL 2002. 

        "Collateral" means the Securitization Collateral and the Non-Securitization Collateral. 

        "Collection Parties" means the Securitization Secured Parties and the Universal Lenders. 

        "Collections" means cash, checks and other instruments or any other method of payment and all other amounts whatsoever owned by, owing to
or paid to (a) Universal or its subsidiaries, (b) Universal in its capacity as Manager, (c) UCO 2002 or (d) BRL 2002, in each case from time to time. 

        "Compressor" means a natural gas or coal methane compressor equipment unit, together with any tangible components thereof, all related
appliances, parts, accessories, appurtenances, accessions, 

2

 

additions, improvements, replacements thereto, all other equipment or components of any nature from time to time incorporated or installed therein and all substitutions for any of the foregoing. 

        "Control Party" means (i) Ambac for so long as no Series Enhancer Default is continuing and (ii) at all other times, a
Majority of Holders of the Notes then outstanding. 

        "Disputed Allocations" has the meaning specified in Section 7(c) hereof. 

        "Domestic Contract Compression Business" means (i) with respect to Universal, the natural gas compression rental business of
Universal and its subsidiaries in the United States of America and (ii) with respect to UCO 2002 and BRL 2002, the natural gas compression rental business of UCO 2002 and BRL 2002. 

        "Enhancement Agreement" means collectively, the Insurance Agreement and any other agreement, instrument or document entered into by a
Series Enhancer. 

        "Head Lease" means that certain Master Equipment Lease Agreement, dated as of December 31, 2002, by and between BRL 2002, as
lessor, and UCO 2002, as lessee, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms. 

        "Head Lessee Secured Obligations" has the meaning given to such term in the Head Lessee Security Agreement. 

        "Head Lessee Security Agreement" means that certain lessee security agreement, dated as of December 31, 2002, between UCO 2002, as
grantor, and BRL 2002, as secured party, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms. 

        "High Yield Documents" means, collectively, (i) that certain Amended and Restated Participation Agreement, dated October 15,
2001, by and between Universal, Universal Compression Holdings, Inc., BRL Universal Equipment 2001 A, L.P., The Bank of New York, as indenture trustee (the "High
Yield Indenture Trustee"), and the other parties named therein (as amended, modified or supplemented from time to time) and (ii) that certain operating lease between
Universal and BRL Universal Equipment 2001 A, L.P. (the "High Yield Obligor"), in connection with the High Yield Obligor's issuance of its
8 7/8% Senior Secured Notes due 2008. 

        "High Yield Indenture Trustee" has the meaning specified in the definition of High Yield Documents. 

        "High Yield Noteholder" means any holder of the 8 7/8% Senior Secured Notes due 2008 issued by the High Yield Obligor. 

        "High Yield Obligor" has the meaning specified in the definition of High Yield Documents. 

        "Indenture Trustee" has the meaning specified in clause (iv) the  preamble hereto. 

        "Insurance Agreement" means the Insurance and Indemnity Agreement, dated as of December 31, 2002, among the Series Enhancer, BRL
2002, the Indenture Trustee, the Manager and UCO 2002, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms. 

        "Intercreditor Collateral Agent" has the meaning specified in clause (vi) of the  preamble hereto. 

        "Interest Rate Hedge Provider" means any counterparty to a cap, collar or other hedging instrument permitted to be entered into pursuant
to the Securitization Indenture, which initially shall be Wachovia Bank, National Association. 

        "Letter Agreement" means that certain letter agreement, dated December 31, 2002, between Universal, in its individual capacity and
as Manager, Ambac and the other parties party thereto, as 

3

 

amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof. 

        "Lien" means any security interest, lien (statutory or other), charge, pledge, equity, mortgage, hypothecation, assignment for security or
encumbrance of any kind or nature whatsoever. 

        "Lockbox Account" means the lockbox account number 972641, and the separate bank account, account number 636283392
maintained in the name of the Intercreditor Collateral Agent for the benefit of the Collection Parties and Universal with Bank One, N.A. 

        "Majority of Holders" means, with respect to the Notes, (i) so long as no Event of Default under and as defined in the
Securitization Indenture has occurred and is then continuing, Noteholders representing more than fifty percent (50%) of the then aggregate Note principal balance or (ii) at all times not
covered by clause (i), Noteholders representing more than sixty-six and two-thirds percent (66 2/3%) of the then aggregate Note
principal balance. 

        "Management Agreement" means that certain Management Agreement, dated as of December 31, 2002, among the Manager, UCO 2002 and BRL
2002, as such agreement may be amended, modified or supplemented from time to time. 

        "Manager" has the meaning specified in clause (i) of the  preamble hereto. 

        "Misallocation" has the meaning specified in Section 7(b)(iii) hereof. 

        "Non-Securitization Collateral" means all Compressors, Collections and other assets received by Universal or the Manager that do not
constitute Securitization Collateral. 

        "Non-Securitization Collections" means all Collections received by Universal and/or the Manager that do not constitute Securitization
Collections. 

        "Noteholder" means a Person in whose name a Note is registered in accordance with the terms of the Securitization Indenture. 

        "Notes" means any of the promissory notes executed by BRL 2002 and authenticated by or on behalf of the Indenture Trustee pursuant to and
issued under the Securitization Indenture. 

        "Owners" means UCO 2002 and BRL 2002, collectively. 

        "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership or
other entity. 

        "Related Document" is defined in Appendix A to the Securitization Indenture. 

        "Returned Items" has the meaning specified in Section 9(b) hereof. 

        "Securitization Account" has the meaning specified in Section 7(b)(ii). 

        "Securitization Accountants" has the meaning specified in Section 7(a)(ii) hereof. 

        "Securitization Collateral" means, collectively, (a) all right, title and interest of UCO 2002 in the property and rights subject
to the security interest granted by UCO 2002 under the Head Lessee Security Agreement (including, without limitation, the UCO 2002 Compressors, the BRL 2002 Compressors and the User Leases) and
(b) all right, title and interest of BRL 2002 in the property and rights subject to the security interest granted by BRL 2002 under the Securitization Indenture (including, without limitation,
the UCO 2002 Compressors, the BRL 2002 Compressors, the Head Lease, the Head Lessee Security Agreement, the User Leases and all rights of BRL 2002 under the Head Lease and Head Lessee Security
Agreement). 

        "Securitization Collections" has the meaning specified in Section 2 hereof. 

4

 

        "Securitization Compressors" means the UCO 2002 Compressors and BRL 2002 Compressors, collectively. 

        "Securitization Default" means a Manager Default (as defined in Appendix A to the Securitization Indenture), an Event of Default
(as defined in Appendix A to the Securitization Indenture) or a Universal Event (as defined in Appendix A to the Securitization Indenture). 

        "Securitization Documents" means the Securitization Indenture, the Head Lease, the Head Lessee Security Agreement, the Enhancement
Agreements, the Management Agreement, each Related Document (as defined in Appendix A to the Securitization Indenture), the Letter Agreement and each other agreement, document or instrument
executed in connection with the Securitization Indenture or the Head Lessee Security Agreement. 

        "Securitization Indenture" means that certain Indenture, dated as of December 31, 2002, between BRL 2002 and the Indenture Trustee,
as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms. 

        "Securitization Obligations" means, collectively, (a) any and all sums owing (i) to the Noteholders under the Securitization
Indenture, (ii) to the Certificateholders under the BRL Partnership Agreement, (iii) to the Series Enhancers, including under any Enhancement Agreement, (iv) to the Indenture
Trustee under the Securitization Indenture or any other Securitization Document and (v) to the Interest Rate Hedge Providers and (b) without duplication of amounts described in  clause (a),
 all amounts owing by UCO 2002 under the Head Lease, and all other obligations, direct or contingent, joint, several or independent of
UCO 2002, BRL 2002 or any other obligor under the Securitization Documents now or hereafter existing, due or to become due, including any interest accruing subsequent to the filing of a petition in
bankruptcy, whether or not such interest is an allowed claim under applicable law and including, without limitation, all Head Lessee Secured Obligations. 

        "Securitization Secured Parties" means, collectively, the Indenture Trustee, UCO 2002, BRL 2002, each Series Enhancer, each Interest Rate
Hedge Provider, the Noteholders, and the Certificateholders. 

        "Series Enhancer Default" means the occurrence and continuance beyond any applicable notice and cure period of any of the following
events: 

        (a)  the
Series Enhancer shall have failed to pay an insured amount required under the Policy (as defined in Appendix A to the Securitization Indenture) in accordance
with its terms; 

        (b)  the
Series Enhancer shall have (i) filed a petition or commenced any case or proceeding under any provision or chapter of the Bankruptcy Code or any other similar
federal or state law relating to solvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made a general assignment for the benefit of its creditors, or (iii) had an
order for relief entered against it under the Bankruptcy Code or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is final
and nonappealable; or 

        (c)  a
court of competent jurisdiction, the Wisconsin Department of Insurance or other competent regulatory authority shall have entered a final and nonappealable order,
judgment or decree (i) appointing a custodian, trustee, agent or receiver for the Series Enhancer or for all or any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Series Enhancer (or the taking of possession of all or any material portion of the property of the Series Enhancer. 

        "Series Enhancers" means Ambac and/or any other Person that may from time to time enter into any other agreement, instrument or document
(including any letter of credit, surety bond, financial guaranty
insurance policy, insurance agreement or other similar arrangement) providing rights and benefits to holders of Notes and/or holders of Certificates. 

5

 

        "Repetitive Wire Instructions" means a notice substantially in the form of  Exhibit A attached hereto. 

        "UCC" means the Uniform Commercial Code (or any successor statute) of the State of New York as in effect from time to time or of any other
state or jurisdiction the laws of which are required by Section 9-301 thereof to be applied in connection with the issue of perfection of security interests. 

        "UCO 2002" has the meaning specified in the preamble hereto. 

        "UCO 2002 Compressors" means, as of any date of determination, all Compressors owned by UCO 2002 as of such date. 

        "Unallocated Collections" has the meaning specified in Section 7(a)(ii) hereof. 

        "Universal" has the meaning specified in the preamble hereto. 

        "Universal Account" means account no. 636283384 maintained at Bank One, N.A. (or any successor thereto) on behalf of and in the
name of Universal. 

        "Universal Accountants" has the meaning specified in Section 7(a)(ii). 

        "Universal Compressors" means the Compressors that are part of the Securitization Collateral, together with that part of the Bank
Collateral constituting Compressors, and the Compressors in which the High Yield Indenture Trustee has been granted a security interest by the High Yield Obligor under the High Yield Documents. 

        "Universal Lender Documents" means the credit agreements, lease agreements, indentures, including, without limitation, the Bank Documents
and the High Yield Documents, that Universal has entered
into, or may enter into in the future, with various Universal Lenders, pursuant to which Universal has granted or may in the future grant to any or all such Universal Lenders, a security interest in
and Liens on any Non-Securitization Collateral. 

        "Universal Lenders" means the various lenders, lessors and/or owners, including, without limitation, the Bank Agent, the High Yield
Noteholders, the Bank Lenders and each Additional Universal Lender with which Universal has entered into, or may enter into in the future, any Universal Lender Document. 

        "Universal Obligations" means any and all sums owing under the Universal Lender Documents and all other obligations, direct or contingent,
joint, several or independent of Universal or any other obligor under the Universal Lender Documents now or hereafter existing, due or to become due, including any interest accruing subsequent to the
filing of a petition in bankruptcy, whether or not such interest is an allowed claim under applicable law. 

        "User" means any Person (other than UCO 2002) that leases or subleases any Securitization Compressor. 

        "User Lease" means any lease of one or more Securitization Compressors entered into with a User, as lessee, together with all schedules,
exhibits, riders, amendments, modifications and supplements thereto. 

        SECTION 2. Securitization Collections.    The following shall constitute the "Securitization
Collections": 

        (a)  all
Collections in respect of UCO 2002's and BRL 2002's Domestic Contract Compression Business, including, without limitation, any and all rental payments under User
Leases of the Securitization Compressors; 

        (b)  all
Collections in respect of the sale, transfer or disposition of any Securitization Collateral and all Collections in respect of any casualty or other event of loss
affecting any Securitization Collateral; and 

6

 

        (c)  all
proceeds and products of any and all of the foregoing. 

        SECTION 3. Acknowledgments Regarding Securitization Collateral.    Each Universal Lender party hereto hereby acknowledges and
agrees that, until all Securitization Obligations shall have been paid in full in cash: 

        (a)  In
the event that any Liens on or security interest in all or any portion of the Securitization Collateral at any time exists in favor of any Universal Lenders, each
such Universal Lender will, immediately upon the request of the Indenture Trustee, release or otherwise terminate such security interest in and Lien upon such Securitization Collateral and such
Universal Lender will immediately deliver such release documents as the Indenture Trustee may require in connection therewith. 

        (b)  Without
limiting the agreements contained in paragraph (a) above, all security interests in or Liens on the
Securitization Collateral now or at any time hereafter granted (x) by UCO 2002 to BRL 2002, (y) by BRL 2002 to the Indenture Trustee or (z) by Universal to UCO 2002, in each case, pursuant to the
Securitization Documents, secure the Securitization Obligations and shall be prior, paramount, and superior to any and all Liens and security interests, if any, on or in such Securitization Collateral
heretofore, now or at any time hereafter granted by Universal to any Universal Lender, either pursuant to the Universal Lender Documents or otherwise (and, as such, any interest of any Universal
Lender in the Securitization Collections and the Securitization Collateral shall be at all times subordinated to the interest of BRL 2002, Indenture Trustee or UCO 2002 (as applicable) therein),
regardless of the date of execution of any such Lien documents or the order of filing of any of them for record in any public office. The Lien priorities provided in this  Section 3(b) shall not be
altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement or
refinancing of either the Securitization Obligations or the Securitization Documents, on the one hand, or the Universal Obligations or the Universal Lender Documents, on the other hand, nor by any
action or inaction which the Indenture Trustee, or any other beneficiary under the Securitization Indenture may take or fail to take in respect of the Securitization Collections and the Securitization
Collateral. 

        (c)  Each
Universal Lender hereby fully, unconditionally and irrevocably disclaims, waives, relinquishes and releases any and all rights it may have, now or in the future, to
the Securitization Collateral, including, without limitation, to (i) foreclose or otherwise realize upon, or attempt to foreclose or otherwise realize upon any of the Securitization Collateral,
including, without limitation, the Securitization Collections, or assert any claims or interests therein, or (ii) seek to obtain possession of or issue or cause to be issued any levies,
garnishments, attachments, or other legal process of any kind or nature against any of the Securitization Collateral, including, without limitation, the Securitization Collections, or (iii) to
the extent such contact relates to any User Lease or other Securitization Collateral, contact any Users or other Persons that are account debtors or lessees with respect to any Securitization
Collateral. 

        SECTION 4. Acknowledgment Regarding Non-Securitization Collateral.    The Indenture Trustee hereby acknowledges and agrees that,
so long as any Universal Obligations are outstanding: 

        (a)  In
the event that any Liens on or security interest in all or any portion of the Non-Securitization Collateral at any time exists in favor of the Indenture Trustee, the
Indenture Trustee will, immediately upon the request of Universal or the Bank Agent, release or otherwise terminate such security interest
in and Lien upon such Non-Securitization Collateral and the Indenture Trustee will immediately deliver such release documents as Universal or the Bank Agent may require in connection therewith. 

        (b)  Without
limiting the agreements contained in paragraph (a) above, all security interests in or Liens on the
Non-Securitization Collateral now or at any time hereafter granted by Universal to 

7

 

any Universal Lender pursuant to the Universal Lender Documents, secure the Universal Obligations and shall be prior, paramount, and superior to any and all Liens and security interests, if any, on
or in such Non-Securitization Collateral heretofore, now or at any time hereafter granted to the Indenture Trustee, either pursuant to the Securitization Documents or otherwise (and, as such, any
interest of the Indenture Trustee in the Non-Securitization Collections and the Non-Securitization Collateral shall be at all times subordinated to the interest of any such Universal Lender),
regardless of the date of execution of any such Lien documents or the order of filing of any of them for record in any public office. The Lien priorities provided in this  Section 4(b) shall not be
altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement or
refinancing of either the Universal Obligations or the Universal Lender Documents, on the one hand, or the Securitization Obligations or the Securitization Documents, on the other hand, nor by any
action or inaction which the Universal Lenders may take or fail to take in respect of the Non-Securitization Collateral. 

        (c)  The
Indenture Trustee hereby fully, unconditionally and irrevocably disclaims, waives, relinquishes and releases any and all rights it may have, now or in the future, to
the Non-Securitization Collateral, including, without limitation, to (i) foreclose or otherwise realize upon, or attempt to foreclose or otherwise realize upon any of the Non-Securitization
Collateral, or assert any claims or interests therein, or (ii) seek to obtain possession of or issue or cause to be issued any levies, garnishments, attachments, or other legal process of any
kind or nature against any of the Non-Securitization Collateral, or (iii) contact any parties who are account debtors or lessees with respect to Non-Securitization Compressors to the extent
such contact relates to the Non-Securitization Collateral. 

        SECTION 5. Intercreditor Collateral Agent.    

        (a)    Appointment.    Each of the Collection Parties and Universal hereby designates the Intercreditor Collateral
Agent to act, and the Intercreditor Collateral Agent hereby accepts such designation to act, as specified herein and as such Collection Party's nominee and agent under the Universal Lender Documents
and under the Securitization Indenture, as the case may be, and, in the case of Universal, to act as Universal's nominee and agent under the Universal Lender Documents, the Securitization Documents
and otherwise for Universal in its own capacity, to hold for the such Collection Party's and Universal's respective benefit all Collections from the Collateral that may from time to time be in the
possession or control of the Intercreditor Collateral Agent in the Lockbox Account. Without prejudice to the rights of the Collection Parties to enforce the Securitization Documents and the Universal
Lender Documents, as the case may be, each of the Collection Parties and Universal hereby irrevocably authorizes the Intercreditor Collateral Agent to take such action to exercise such powers and
remedies and to perform such duties hereunder as are specifically provided or delegated to or required of the Intercreditor Collateral Agent by the terms hereof and such other powers as are reasonably
incidental
thereto. The Intercreditor Collateral Agent may perform any of its duties hereunder by or through its agents or employees. 

        (b)    Duties of Intercreditor Collateral Agent.    

        (i)    The
Intercreditor Collateral Agent shall not be deemed to have any knowledge (imputed or otherwise) of: (A) any of the terms or conditions of the Universal Lender
Documents, the Securitization Documents or any documents referred to therein or relating to any financing arrangement between or among any of the Collection Parties and/or Universal, or any other
party, or any breach thereof, or (B) any occurrence or existence of a default thereunder. The Intercreditor Collateral Agent has no obligation to inform any Person of any breach thereunder or
take any action in connection with any of the foregoing, except such actions as are specified in this Agreement. 

8

 

        (ii)  The
Intercreditor Collateral Agent is not responsible for the enforceability or validity of the security interest in the Collateral and the Lockbox Account. 

        (iii)  The
Intercreditor Agreement shall have no duties or responsibilities to the Collection Parties or Universal except those expressly set forth or described herein and
the duty to exercise "ordinary care" with respect to the Collateral in its possession or under its control and as required by applicable law. With respect to the immediately preceding sentence, the
Intercreditor Collateral Agent shall be deemed to have exercised "ordinary care" if its action or failure to act is in conformity with general banking usages or is otherwise in accordance with
commercially reasonable practices of the banking industry. Except as set forth above with respect to the Intercreditor Collateral Agent's duties with respect to the Collateral in its possession or
under its control, neither the Intercreditor Collateral Agent nor any of its officers, directors, employees or agents shall be liable to the Collection Parties or Universal for any action taken or
omitted by it as such hereunder, or in connection herewith, unless caused by its or their gross negligence or willful misconduct. 

        (iv)  The
duties of the Intercreditor Collateral Agent as agent of the Collection Parties and Universal shall be mechanical and administrative in nature. The Intercreditor
Collateral Agent shall not have, by reason of this Agreement or any Securitization Document or Universal Lender Document, a fiduciary relationship in respect of the Collection Parties and Universal
and nothing herein expressed or implied, is intended to or shall be so construed as to impose upon the Intercreditor Collateral Agent any obligations in respect of any Securitization Document or
Universal Lender Document except as expressly set forth herein. The Intercreditor Collateral Agent shall not be liable for consequential, incidental or special damages even if it has been advised of
the possibility of same. The Intercreditor Collateral Agent shall not be liable for failure to perform its obligations when the failure arises out of causes beyond its control, including, without
limitation, an act of a governmental or regulatory authority, an act of God, accident, equipment failure, labor disputes or system failure, provided it has exercised commercially reasonable diligence
with respect thereto. 

        (c)    Reliance of the Intercreditor Collateral Agent.    The Intercreditor Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document
or telephone message that the Intercreditor Collateral Agent reasonably believes in good faith to be signed, sent or made by any apparently authorized person or entity, with respect to all matters
pertaining to the Collateral and its duties hereunder. Neither any Collection Party nor Universal shall have any right of action whatsoever against the Intercreditor Collateral Agent as a result of
the Intercreditor Collateral Agent acting or refraining from acting based upon instructions given to the Intercreditor Collateral Agent pursuant to and consistent with this Agreement to so act or
refrain from acting, provided that such action or refraining from acting is in accordance with this Agreement. Unless expressly provided herein, the Intercreditor Collateral Agent shall have a
reasonable opportunity to act after the receipt of any notice or instruction as described herein. 

        SECTION 6. Establishment of Accounts; Deposit of Collections.    

        (a)  Universal
shall cause the Lockbox Account to be maintained with the Intercreditor Collateral Agent and in the name of, and under the exclusive dominion and control of,
the Intercreditor Collateral Agent for the benefit of the Collection Parties and Universal, at the expense of Universal, and Universal shall not, and shall have no right to, make withdrawals therefrom
or have access thereto, except with respect to Non-Securitization Collections to the extent provided in Section 7(b)(i) hereof. The Collection
Parties hereby agree that the Lockbox Account shall be under the exclusive dominion and control of the Intercreditor Collateral Agent 

9

 

and the Collection Parties shall not, and shall have no right to, make withdrawals therefrom or have access thereto. Each of Universal and the Intercreditor Collateral Agent agrees that it shall not
transfer any funds from the Lockbox Account to the Securitization Account or the Universal Account or to any other account unless such transfer is in accordance with  Section 7 or Section 8 hereof. 

        (b)  Without
limiting the effectiveness of the security interest granted under the Head Lessee Security Agreement, UCO 2002 hereby assigns, conveys, mortgages and
hypothecates to the Intercreditor Collateral Agent, for the benefit of BRL 2002 and its assigns, and hereby pledges and grants to the Intercreditor Collateral Agent, for the benefit of BRL 2002 and
its assigns, a security interest in and a continuing Lien on, all of UCO 2002's right, title and interest, whether now owned or existing or hereafter created or acquired in, to and under Lockbox
Account, including, without limitation, any and all deposits, monies, securities or other property (including any investment property) from time to time in or constituting the Lockbox Account,
including any Collections in respect of any Securitization Collateral, as security for its obligations under the Securitization Documents. 

        (c)  Without
limiting the effectiveness of the security interest granted under the Securitization Indenture, BRL 2002 hereby assigns, conveys, mortgages and hypothecates to
the Intercreditor Collateral Agent, for the benefit of the Indenture Trustee, and hereby pledges and grants to the Intercreditor Collateral Agent, for the benefit of the Indenture Trustee, a security
interest in and a continuing Lien on, (i) all
of BRL 2002's right, title and interest, whether now owned or existing or hereafter created or acquired in, to and under Lockbox Account, including, without limitation, any and all deposits, monies,
securities or other property (including any investment property) from time to time in or constituting the Lockbox Account, including any Collections in respect of any Securitization Collateral and
(ii) all of BRL 2002's right, title and interest, whether now owned or existing or hereafter created or acquired in, to or under the security interest and Lien granted by UCO 2002 to the Intercreditor
Collateral Agent for the benefit of BRL 2002 pursuant to Section 6(b) above, in each case, as security for its obligations under the
Securitization Documents. 

        (d)  Universal
in its own capacity, as Manager under the Securitization Documents and as manager and/or collection agent from time to time for various third parties, hereby
assigns, conveys, mortgages and hypothecates to the Intercreditor Collateral Agent, for the benefit of the Universal Lenders and the Securitization Secured Parties, and hereby pledges and grants to
the Intercreditor Collateral Agent, for the benefit of the Universal Lenders and the Securitization Secured Parties, as their interests may appear, a security interest in and a continuing Lien on, all
of Universal's right, title and interest, whether now owned or existing or hereafter created or acquired in, to and under Lockbox Account, including, without limitation, any and all deposits, monies,
securities or other property (including any investment property) from time to time in or constituting the Lockbox Account, including any Collections from the Domestic Contract Compression Business in
respect of any Collateral, as security for its obligations under the Securitization Documents and the Universal Lender Documents. 

        (e)  The
parties hereto each agree and acknowledge that (i) the security interests and Liens granted pursuant to this  Section 6 constitute "control" under and for purposes of Section 9-104(a)(1) of the UCC
for the benefit of the various parties named herein and
(ii) Bank One, N.A. individually, and as the Intercreditor Collateral Agent will, for purposes of Section 9-104(a)(2) and Sections 8-106 and 8-501 of the UCC, for the benefit of BRL 2002 and the
Indenture Trustee, comply with instructions originated by the Indenture Trustee (as directed by the Control Party) directing the disposition of the funds in the Lockbox Account that are properly
allocable to the Securitization Collateral without further notice by or to any party. Notwithstanding the foregoing, the Intercreditor Collateral Agent and each of the Collection Parties agree that
Universal shall have the right to allocate Collections in the Lockbox Account to the extent 

10

 

provided in Section 7(a)(i), 7(a)(ii), 7(c) or 8(a) hereof and disburse any Non-Securitization
Collections to the extent so permitted in accordance with Section 7(b)(i) hereof. 

        (f)    Universal
shall (i) cause all Collections with respect to the Domestic Contract Compression Business, including, without limitation, all rental payments made by
Users, account debtors, lessees, or sublessees of Securitization Compressors or by lessees or sublessees of any Universal Compressors, all casualty proceeds from Securitization Compressors, all other
payments from the Domestic Contract Compression Business in respect of the Securitization Collateral paid by account debtors, lessees and other obligors in respect thereof, to be deposited directly
in, or credited directly to, the Lockbox Account and (ii) notify all persons and entities obligated to Universal, or making payments to Universal for the benefit of any other Person, in respect
of the Domestic Contract Compression Business to make all such payments directly into the Lockbox Account. 

SECTION 7. Allocation of Collections; Disbursements of Collections.  

        (a)    Allocations.    

        (i)    On
each Business Day, Universal shall allocate all Collections then on deposit in or constituting the Lockbox Account between Securitization Collections and
Non-Securitization Collections and provide written notice thereof (which notice may be made by facsimile or electronic mail) to the Indenture Trustee and the Bank Agent prior to the close of business
on the day on which such allocations are made. 

        (ii)  In
the event the Bank Agent at any time or for any reason questions any Allocated Collection, Universal agrees to promptly cooperate and direct the Universal
Accountants (as defined below) to work with the Bank Agent and its representatives to explain such Allocated Collection and provide such other information regarding same as reasonably requested from
time to time by the Bank Agent. The Indenture Trustee (at the direction of the Control Party) may, at such times as set forth in the Letter Agreement and with reasonable prior notice to Universal,
appoint an independent accounting firm (the "Securitization Accountants") to examine the books and records of Universal that would constitute the basis
for properly allocating any Collections then on deposit in the Lockbox Account that have theretofore not been allocated (collectively, the "Unallocated
Collections"), including, without limitation, all User Leases and related invoices in respect thereof, and such Securitization Accountants shall cooperate with Universal's
in-house accountants (the "Universal Accountants") (and Universal hereby agrees that it shall direct the Universal Accountants to cooperate with the
Securitization Accountants so appointed by the Indenture Trustee) to determine the allocation of such Unallocated Collections and the Bank Agent shall have the right to have its representatives
present during all such calls and meetings and Universal shall cause the Bank Agent to be contemporaneously copied on all written information regarding the determination of such allocations in each
case; provided, however, that if the Universal Accountants and the Securitization Accountants are not able to agree on the allocation of such
Unallocated Collections within five (5) Business Days, then Universal (with the written approval of the Bank Agent, which approval shall not be unreasonably withheld or delayed) and the
Indenture Trustee (at the direction of the Control Party), within one (1) Business Day after such five (5) Business Day period expires, shall select another nationally recognized
accounting firm (the "Allocation Accounting Firm") which is reasonably acceptable to Universal and the Indenture Trustee to determine the proper
allocation of such Unallocated Collections. The determination of such Allocation Accounting Firm shall be final and binding upon Universal, the Universal Lenders, the Indenture Trustee and the Control
Party, and Universal shall promptly provide notice of such appointment to the Bank Agent. Universal agrees that it shall make the Bank 

11

  

Agent
privy to all communications involving the Allocation Accounting Firm relating to the proper allocation of such Unallocated Collections and the Bank Agent shall be entitled to communicate with
Universal and the Allocation Accounting Firm regarding the same. Universal shall allocate all Unallocated Collections (a) as mutually agreed by the Universal Accountants and the Securitization
Accountants or (b) as determined by the Allocation Accounting Firm pursuant to this Section 7(a)(ii), as applicable, and in each case
provide written notice thereof (which notice may be made by facsimile or electronic mail) to the Indenture Trustee and the Bank Agent prior to the close of business on the day on which such
allocations are made. All fees, costs and expenses of the Securitization Accountants and the Allocation Accounting Firm under this  Section 7(a)(ii) shall be paid in accordance with the Letter
Agreement. 

        (iii)  In
the event that Universal is replaced as Manager, then allocations of Collections pursuant to Section 7(a)(i)
or 7(a)(ii) above shall be made in good faith based upon the information provided by the then current Manager. 

        (iv)  Notwithstanding
anything contained herein to the contrary, each of the parties hereto agrees that the provisions of Sections
3 and 4 above constitute a "subordination agreement" for purposes of Section 510(a) of the Bankruptcy Code. 

        (v)  Each
party hereto agrees that it will abide by allocations of Collections made in accordance with this  Section 7(a). 

        (b)    Disbursements.    

        (i)    So
long as no Securitization Default or Bank Default has occurred and is continuing, on any Business Day, Universal may use electronic banking methods acceptable to the
Intercreditor Collateral Agent and consistent with past practice to direct the Intercreditor Collateral Agent to transfer funds from the Lockbox Account to the Universal Account in an amount in the
aggregate equal to the Allocated Collections constituting Non-Securitization Collections, prior to the close of business on such day. After the occurrence of a Securitization Default or a Bank
Default, Allocated Collections constituting Non-Securitization Collections shall be disbursed in accordance with Section 8(b) or  Section 8(c), as
the case may be. 

        (ii)  On
the same Business Day as Universal makes any allocation of Collections pursuant to Section 7(a)(i), 7(a)(ii),
7(c) or 8(a) hereof, prior to the close of business on such day, Universal will use electronic banking methods acceptable to the
Intercreditor Collateral Agent and consistent with past practice to direct the Intercreditor Collateral Agent to transfer funds from the Lockbox Account to the account specified by the Indenture
Trustee (at the direction of the Control Party) in the then current Repetitive Wire Instructions delivered to the Intercreditor Collateral Agent (such account, or any other account that may be
specified by the Indenture Trustee in a subsequent delivery of Repetitive Wire Instructions, the "Securitization Account") in an amount equal to the
Allocated Collections constituting Securitization Collections. 

        (iii)  In
the event that an allocation of Collections under Section 7(a) or disbursement of Allocated Collections
pursuant to Section 7(b) is made to (A) the Universal Account in excess of the Non-Securitization Collections or (B) the Securitization Account,
in excess of the Securitization Collections (any such event in clauses (A) and (B) above, a
"Misallocation"), then Universal shall immediately notify the Indenture Trustee and the Bank Agent thereof, and (x) in the case of a
Misallocation described in clause (A) above, Universal and the Universal Lenders and (y) in the case of a Misallocation described in  clause (B) above, the Indenture Trustee, shall, upon receipt of such written notice from Universal, hold such amount 

12

 

and remit and payover any and all such amounts received to the Intercreditor Collateral Agent for proper allocation in accordance with the provisions of  Section 7(a) above or Section 7(c) or 8(a)
below (as applicable), to the extent that such amounts are still held by such Person. In the event that any Misallocation occurs, Universal covenants and agrees to deposit into the Lockbox Account an
amount in cash equal to such Misallocation (net of any portion thereof that has been paid over by the Universal Lenders or the Indenture Trustee pursuant to the preceding sentence) for proper
allocation and disbursement in accordance with the provisions hereof within three (3) Business Days after the earlier of the date on which Universal shall have knowledge thereof and the date on which
Universal receives notice from any other Person (including pursuant to the procedures described in Section 7(c) hereof) of such Misallocation. 

        (c)    Disputed Allocations.    

        (i)    In
the event that the Indenture Trustee (acting at the direction of the Control Party) disputes the allocation of any Allocated Collections in good faith (any such
disputed allocation of Collections, collectively, the "Disputed Allocations"), then in such event the Indenture Trustee (at the direction of the Control
Party) may, at such times as set forth in the Letter Agreement and with reasonable prior notice to Universal, appoint the Securitization Accountants to examine the books and records of Universal which
constitute the basis for properly allocating such Disputed Allocations, including, without limitation, all User Leases and related invoices in respect thereof, and such Securitization Accountants
shall cooperate with the Universal Accountants (and Universal hereby agrees that it shall direct the Universal Accountants to cooperate with the Securitization Accountants so appointed by the
Indenture Trustee) to determine the allocation of such Disputed Allocations and the Bank Agent shall have the right to have its representatives present during all such calls and meetings and Universal
shall cause the Bank Agent to be contemporaneously copied on all written information regarding the determination of such Disputed Allocations in each case; provided,
however, that if the Universal
Accountants and the Securitization Accountants are not able to agree on the allocation of such Disputed Allocations within five (5) Business Days, then Universal (with the written approval of
the Bank Agent, which approval shall not be unreasonably withheld or delayed) and the Indenture Trustee (at the direction of the Control Party), within one (1) Business Day after such
five (5) Business Day period expires, shall appoint the Allocation Accounting Firm to determine the proper allocation of such Disputed Allocations. The determination of such Allocation
Accounting Firm shall be final and binding upon Universal, the Bank Agent, the Indenture Trustee and the Control Party. Universal shall allocate all Disputed Allocations (i) as mutually agreed by the
Universal Accountants and the Securitization Accountants or (ii) as determined by the Allocation Accounting Firm pursuant to this  Section 7(c), as applicable, and in each case provide written
notice thereof (which notice may be made by facsimile or electronic mail) to the
Indenture Trustee and the Bank Agent prior to the close of business on the day on which such allocations are made. All fees, costs and expenses of the Securitization Accountants and the Allocation
Accounting Firm under this Section 7(c) shall be paid in accordance with the Letter Agreement. 

        (ii)  In
the event the Bank Agent at any time or for any reason questions any Allocated Collection, Universal agrees to promptly cooperate and direct the Universal
Accountants to work with the Bank Agent and its representatives to explain such Allocated Collection and provide such other information regarding same as reasonably requested from time to time by the
Bank Agent. 

13

 

        SECTION 8.    Monitoring of Allocation Process; Effect of a Securitization Default; Effect of a Bank Default.    

        (a)    Monitoring of Allocation Process.    The Indenture Trustee (acting at the direction of the Control Party) may,
at such times as set forth in the Letter Agreement, appoint the Securitization Accountants to examine the books and records of Universal that would constitute the basis for properly allocating the
Collections, including, without limitation, any lease agreements and invoices in respect thereof, and such Securitization Accountants shall (i) cooperate with the Universal Accountants (and
Universal hereby agrees that it shall direct the Universal Accountants to cooperate with the Securitization Accountants so appointed by the Indenture Trustee) to determine the allocation of all
Collections from time to time on deposit in the Lockbox Account and (ii) have access to such books and records that would constitute the basis for properly allocating the Collections,
including, without limitation, any lease agreements and invoices in respect thereof, and any other resources of Universal reasonably necessary to monitor the allocation process on a day-to-day basis
with respect to all current or future allocations of Collections received by or in the Lockbox Account as set forth in this Agreement; provided,
however, that if the Universal Accountants and the Securitization Accountants are not able to agree on the allocation of any such Collections, then Universal (with the written
approval of the Bank Agent, which approval shall not be unreasonably withheld or delayed) and the Indenture Trustee (at the direction of the Control Party) shall appoint the Allocation Accounting Firm
to determine the proper allocation of all such Collections and all future Collection from such date. The Indenture Trustee shall have no duty to monitor the allocation process pursuant to  Section 7
or 8 hereof, and shall take action only upon the receipt of direction from the Control
Party. Upon and after the exercise by the Indenture Trustee's rights under this Section 8(a), the Universal shall allocate all Collections then
on deposit in the Lockbox Account and all future Collections deposited in the Lockbox Account (x) as
mutually agreed by the Universal Accountants and the Securitization Accountants or (y) as determined by the Allocation Accounting Firm pursuant to this  Section 8(a), and in each case provide
written notice thereof (which notice may be made by facsimile or electronic mail) to the Indenture Trustee
and the Bank Agent prior to the close of business on the day on which such allocations are made. All fees, costs and expenses of the Securitization Accountants and the Allocation Accounting Firm under
this Section 8(a) shall be paid in accordance with the Letter Agreement. 

        (b)    Effect of a Securitization Default.    After the occurrence of a Securitization Default, then, subject to the
other provisions of this Agreement and to the terms of the Securitization Documents, (i) the Intercreditor Collateral Agent shall take such steps as may be instructed in writing by the
Indenture Trustee (as directed by the Control Party) to receive, hold and distribute all or any portion of the Securitization Collateral and proceeds thereof and to comply with its other obligations
set forth in this Agreement and (ii) the Indenture Trustee (at the direction of the Control Party) may take such steps as it is entitled to take under the Securitization Documents with respect
to enforcement of any Securitization Document and collection and realization of the Securitization Collateral (or any portion thereof) and the proceeds thereof. 

        (c)    Effect of a Bank Default.    After the occurrence of a Bank Default, then, subject to the other provisions of
this Agreement and to the terms of the Bank Documents, (i) the Intercreditor Collateral Agent shall take such steps as may be instructed in writing by the Bank Agent to receive, hold and
distribute all or any portion of the Bank Collateral and proceeds thereof and to comply with its other obligations set forth in this Agreement and (ii) the Bank Agent may take such steps as it
is entitled to take under the Bank Documents with respect to enforcement of any Bank Document and collection and realization of the Bank Collateral (or any portion thereof) and the proceeds thereof. 

14

 

        (d)    Conflicting Instruction.    Notwithstanding the foregoing, the Intercreditor Collateral Agent shall have no
duty or responsibility to exercise any discretion with respect to determining the nature of, receiving, holding and/or distributing all or any portion of the Collateral or any other collateral or
funds held by the Intercreditor Collateral Agent pursuant to the terms of this Agreement. In the event the Intercreditor Collateral Agent receives conflicting notices or instructions or in the event
it is unable in good faith to determine what action it should take, or is unsure as to the application, intent, interpretation or meaning of any provision therein or hereof, the Intercreditor
Collateral Agent may give notice (in such form as shall be appropriate under the circumstances) to Universal and the Indenture Trustee, requesting written instructions as to the course of action to be
adopted, and, to the extent the Intercreditor Collateral Agent acts in good faith in accordance with any such appropriate instruction received from Universal and the Indenture Trustee (as directed by
the Control Party), the Intercreditor Collateral Agent shall not be liable on account of such action or inaction to any Person. Except with respect to any instructions received from the Indenture
Trustee (as directed by the Control Party) directing the disposition of the funds on the Lockbox Account that are properly allocated to the Securitization Collateral, if the Intercreditor Collateral
Agent shall not have received appropriate instructions within ten (10) days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary
under the circumstances), it may, but shall be under no duty to, take or refrain from taking such action which is consistent, in its view, with this
Agreement, and the Intercreditor Collateral Agent shall have no liability to any Person for any such action or inaction. 

        SECTION 9.    Compensation and Indemnity of Intercreditor Collateral Agent; Waiver of Right of Set-off.    

        (a)  Universal
shall be liable to pay to the Intercreditor Collateral Agent from time to time reasonable compensation for its services. Universal shall be liable to reimburse
the Intercreditor Collateral Agent upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Intercreditor Collateral Agent's agents and counsel and, subject to the limitations set forth in Section 4 of the Letter Agreement, all fees, costs and expenses of any
Securitization Accountants and/or Allocation Accounting Firm engaged pursuant to the terms hereof. Universal shall indemnify the Intercreditor Collateral Agent for, and hold it harmless against, any
claim, demand, expense (including but not limited to reasonable attorney's fees and expenses), loss or liability incurred by it without gross negligence or bad faith on its part, arising out of or in
connection with the performance of its rights or duties hereunder, the Lockbox Account and the services provided in conjunction therewith. The Intercreditor Collateral Agent shall notify Universal
promptly of any claim asserted against the Intercreditor Collateral Agent for which it may seek indemnity. However, failure by the Intercreditor Collateral Agent to notify Universal shall not relieve
Universal of its obligations hereunder. Upon the Intercreditor Collateral Agent's request, Universal shall defend the claim and the Intercreditor Collateral Agent shall provide reasonable cooperation
at Universal's expense in the defense. The Intercreditor Collateral Agent may have separate counsel and Universal shall be liable to pay the reasonable fees and expenses of such counsel. Universal
need not pay for any settlement made without its written consent, which consent shall not be unreasonably withheld or delayed. Universal need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Intercreditor Collateral Agent through the Intercreditor Collateral Agent's gross negligence or bad faith. Any amount due under this  Section 9(a) that
remains unpaid for thirty (30) days after notice thereof shall bear interest at the federal funds rate from the date of notice
to the date of payment. 

        (b)  (i)
Except as provided below, the Intercreditor Collateral Agent and Bank One, N.A., in its individual capacity, hereby subordinate all Liens, encumbrances, claims and
rights of setoff it 

15

 

may have, now or in the future, against the Lockbox Account or any Collateral or Collections or any other property in such Lockbox Account to the prior payment in full in cash of all Securitization
Obligations and Universal Obligations and agree that the Liens and security interests securing such Securitization Obligations and Universal Obligations are superior to any such Liens, encumbrances,
claims and rights of setoff which the Intercreditor Collateral Agent might have or obtain in the Lockbox Account or any Collateral or Collections or any other property in such Lockbox Account. 

        (ii)  Notwithstanding
the foregoing, the Intercreditor Collateral Agent and Bank One, N.A., in its individual capacity, may debit the Lockbox Account from time to time, for
(a) checks and other items, including, without limitation, any automated clearinghouse transactions, which are returned for any reason ("Returned
Items"), (b) necessary account adjustments, and (c) overdrafts; provided, however, no
such offset shall be made unless the Intercreditor Collateral Agent advises Universal of the amount thereof in accordance with the Intercreditor Collateral Agent's current practice. 

        (iii)  In
the event that any charges or fees then due from Universal or any other party to the Intercreditor Collateral Agent under this Agreement or related to the Returned
Items, the Lockbox Account or the services provided hereunder, Universal agrees to pay such amounts to the Intercreditor Collateral Agent within thirty (30) days of Universal's receipt by the
Intercreditor Collateral Agent of a written invoice therefor. In the event that Universal fails to pay the amounts described in the preceding sentence within the time period set forth above, then the
Intercreditor Collateral Agent shall have the right to debit the Lockbox Account for such amounts (and, upon payment by Universal of such amounts to the Intercreditor Collateral Agent, the
Intercreditor Collateral Agent shall deposit such amounts into the Lockbox Account). 

        (iv)  In
the event there are insufficient funds in the Lockbox Account to reimburse the Intercreditor Collateral Agent for the amount of any Returned Items or unpaid charges
or fees for which the Intercreditor Collateral Agent is entitled to debit the Lockbox Account in accordance with clause (ii) or  (iii) above, then
Universal shall (x) reimburse the Intercreditor Collateral Agent immediately upon demand and (y) to the extent
Collections in respect of Returned Items have been disbursed to any Collection Party in accordance with the terms of this Agreement, may debit an amount equal to such disbursement from future
allocations to such Collection Party. 

        SECTION 10.    Resignation by or Removal of Intercreditor Collateral Agent.    

        (a)  The
Intercreditor Collateral Agent may resign from the performance of all its functions and duties hereunder at any time by giving at least 60 days' prior written notice
to each of Universal, the Indenture Trustee and each Universal Lender then party thereto. Universal (with the consent of the Control Party which consent shall not be unreasonably withheld) may, at any
time, for or without cause, remove the Intercreditor Collateral Agent by giving at least 20 days prior written notice to the Intercreditor Collateral Agent, the Indenture Trustee and each Universal
Lender then party thereto. 

        (b)  Upon
the effectiveness of any such notice of resignation or removal given pursuant to Section 10(a) above,
Universal shall appoint a successor Intercreditor Collateral Agent hereunder (with the consent and approval of the Control Party (such consent and approval not to be unreasonably withheld)) which
shall be an incorporated bank or trust company and which shall execute counterparts hereof. 

        (c)  If
a successor Intercreditor Collateral Agent shall not have been so appointed within the applicable notice period, the Control Party shall then appoint a successor
Intercreditor Collateral 

16

 

Agent which shall be a bank or trust company with a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and which shall execute
counterparts hereof and which shall serve as Intercreditor Collateral Agent hereunder or thereunder until such time, if any, as Universal appoints a successor Intercreditor Collateral Agent as
provided above. 

        (d)  After
the resignation or removal of any Intercreditor Collateral Agent pursuant to this Section 10, the provisions
of Section 5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Intercreditor Collateral Agent
hereunder, and Section 9(a) above shall continue to inure to its benefit. 

        SECTION 11.    No Implied Waivers, etc.    Except as expressly provided herein, nothing in this Agreement shall be
deemed to constitute a waiver of or shall otherwise affect any of the interests, rights or remedies which either the Universal Lenders or the Indenture Trustee may have under the Universal Lender
Documents or the Securitization Documents, respectively, or under applicable law. 

        SECTION 12.    Amendments.    No term or provision of this Agreement may be amended, modified, waived, discharged or
terminated orally and any such term or provision may only be amended, modified, waived, discharged or terminated by an instrument in writing signed by the Indenture Trustee (at the direction of the
Control Party), Universal and the Intercreditor Collateral Agent; provided, however, that no such instrument or agreement shall amend, modify or waive
any provision of this Agreement relating to the allocation of Collections hereunder or otherwise affect the rights of any Collection Party or Universal to receive distributions and/or payments of
Collections allocated hereunder or under any other Related Document, without the written consent of such Collection Party or Universal, as the case may be, then party to this Agreement (in addition to
the other Parties required to consent thereto). Universal hereby agrees that it shall give the Bank Agent copies of all amendments executed, including those to which the Bank Agent's consent is not
required pursuant to this Agreement. 

        SECTION 13.    Benefit of Agreement; Joinder.    

        (a)  This
Agreement is intended solely for the benefit of the Collection Parties and Universal and their respective successors and assigns and no other Person shall have any
right, power, benefit, privilege, priority or interest under or through this Agreement. Each party hereto agrees that, if the Indenture Trustee shall fail to act as directed by the Control Party at
any time at which it is so required hereunder or under any Related Document, then the Control Party 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. 

        (b)  Universal
Lenders not initially party to this Agreement shall be entitled to participate in this Agreement, as it may from time to time be amended or supplemented, by
executing a "Supplemental Agreement," substantially in the form of Exhibit B hereto, accepting the terms of this Agreement, as amended and supplemented
to the date of such execution. Upon execution and delivery of such "Supplemental Agreement," such party shall become a Universal Lender hereunder with the same force and effect as if originally named
as a Universal Lender herein. Such participation shall require
the written approval of Universal and the Intercreditor Collateral Agent but shall not require the further authorization or approval of any of the other parties hereto, provided that the participation
in this Agreement by such additional party does not conflict with the Universal Lender Documents or the Securitization Documents, and provided further that Universal shall have given five (5) days'
prior written notice of the participation in this Agreement by such additional party to each of the Indenture Trustee and the Series Enhancer then party to this Agreement. Universal shall promptly
furnish each of the Indenture Trustee, the Series Enhancer and the Intercreditor Collateral Agent then party to this Agreement with a copy of the executed Supplemental Agreement with such additional
party. The rights and obligations of each 

17

 

party hereunder shall remain in full force and effect notwithstanding the addition of any new Universal Lender as a party to this Agreement. 

        SECTION 14.    Severability.    Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction the substantive laws of which are held to be applicable hereto shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any such jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction. 

        SECTION 15.    Counterparts.    This Agreement may be executed in counterparts, each of which shall be deemed to be an
original but all of which together shall constitute a single agreement. 

        SECTION 16.    Notices.    All notices and other communications provided to any party hereto under this Agreement
shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address or facsimile number set forth on the signature pages hereof or at such other address or
facsimile number as may be designated by such party from time to time in a notice complying as to delivery with the terms of this section to the other parties. Any notice, if mailed or sent by courier
or hand delivery, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when such notice is transmitted and receipt is confirmed by telephone or
electronic means. 

        SECTION 17.    Headings.    The various headings of this Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or any provisions hereof. 

        SECTION 18.    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the
State of New York, including without limitation, Section 5-1401 of the New York General Obligations Law, except that matters relating solely to the operations of the Lockbox Account and the
payment of checks and other items governed by Articles 3 and 4 of the Uniform Commercial Code shall be governed by and construed in accordance with the laws of the State of Texas. 

        SECTION 19.    No Petition.    (a) Each of the Universal Lenders hereby covenants and agrees that (i) prior to
the date which is one year and one day after the payment in full of all Securitization Obligations, it will not institute against or join any other Person in instituting against UCO 2002 or BRL 2002
any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of the United States, including, without limitation, the Bankruptcy Code,
or any state of the United States, (ii) it will not seek to challenge or contest, in any proceeding, suit or action of any nature whatsoever or otherwise, any transfer, disposition or "true
sale" of any Securitization Collateral or other assets pursuant to any of the Securitization Documents and (iii) it will not seek, through any proceeding, suit or action of any nature
whatsoever or otherwise, the consolidation, financial or otherwise, of BRL 2002 or UCO 2002 with any other Person. 

        (b)  The
provisions of this Section 19 shall be continuing and shall survive any termination of this Agreement. 

        SECTION 20.    Insolvency.    This Agreement shall be applicable both before and after the filing of any petition by
or against Universal under the Bankruptcy Code and all converted or succeeding cases in respect thereof, and all references herein to Universal shall be deemed to apply to a trustee for Universal, as
the case may be, and Universal, as debtor-in-possession. The relative rights of the Universal Lenders and the Indenture Trustee in or to any allocation of or distributions or disbursements from or in
respect of any Non-Securitization Collections or proceeds of Non-Securitization Collections, or Securitization Collections or proceeds of Securitization Collections, respectively, shall continue after
the filing thereof on the same basis as prior to the date of the petition, notwithstanding any court order approving the financing of or use of cash collateral by Universal as debtor-in-possession or
by any trustee appointed in its case. 

18

 

        SECTION 21.    Termination.    This Agreement shall terminate upon the indefeasible payment in full in cash of all
Securitization Obligations and the satisfaction and discharge of the Securitization Indenture. 

        SECTION 22.    Entire Agreement.    The provisions of Bank One, N.A.'s "Commercial Account Agreement" or other
treasury management agreement and related service terms governing the relationship between Universal and Bank One, N.A. with respect to the Lockbox Account and any other applicable account
("Bank One Agreements") are incorporated by reference to the extent not inconsistent with this Agreement. In the event of conflict among the provisions
of this Agreement and the Bank One Agreements, the provisions of this Agreement shall control. This Intercreditor Agreement, the Letter Agreement and the other Related Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect thereto. 

        SECTION 23.    Rules of Usage.    The following rules of usage shall apply to this Agreement (and each appendix,
schedule, exhibit and annex to the foregoing) unless otherwise required by the context or unless otherwise defined therein. 

        (a)  The
defined terms in this Agreement shall include the plural as well as the singular, and the use of any gender herein shall be deemed to include any other gender. 

        (b)  Accounting
terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of
this Agreement. 

        (c)  Except
as otherwise expressly provided, any definition defined or in any other document shall be equally applicable to the singular and plural forms of the terms
defined. 

        (d)  Except
as otherwise expressly provided, references in this Agreement to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits are
references to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits in or to this Agreement. 

        (e)  References
to any Person shall include such Person, its successors and permitted assigns and transferees. 

        (f)    Except
as otherwise expressly provided, reference to any agreement means such agreement as amended, restated, modified, extended or supplemented from time to time in
accordance with the applicable provisions thereof. 

        (g)  Except
as otherwise expressly provided, references to any law includes any amendment or modification to such law and any rules or regulations issued thereunder or any
law enacted in substitution or replacement thereof, or restatement thereof. 

        (h)  When
used in this Agreement, words such as "hereunder," "hereto," "hereof" and "herein" and other words of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of this Agreement (including any other document to the extent incorporated or referred to herein (whether or not actually attached hereto)) and not to any particular
article, section, subsection, paragraph or clause hereof. 

        (i)    References
to "including" means including without limiting the generality of any description preceding such term and for purposes hereof the rule of  ejusdem generis shall not be applicable to limit
a general statement, followed by or referable to any enumeration of specific matters, to matters similar to those specifically mentioned. 

[SIGNATURE PAGES COMMENCE ON THE FOLLOWING PAGE]  

19

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first written above. 

	 	 	UNIVERSAL COMPRESSION, INC.,

in its individual capacity and as Manager
	

 	
 	

By:	

/s/  RICHARD W. FITZGERALD      

	 	 	 	Name:	Richard W. FitzGerald
	 	 	 	Title:	Senior Vice President
	

 	
 	

Address:	

4444 Brittmoore Road

Houston, TX 77041
	

 	
 	

Facsimile No.: 713-466-6720

Telephone No.: 713-335-7295

 

Attn.: Richard W. FitzGerald

	 	 	UCO COMPRESSION 2002 LLC
	

 	
 	

By:	

/s/  RICHARD W. FITZGERALD      

	 	 	 	Name:	Richard W. FitzGerald
	 	 	 	Title:	Senior Vice President
	

 	
 	

Address:	

4444 Brittmoore Road

Houston, TX 77041
	

 	
 	

Facsimile No.: 713-466-6720

Telephone No.: 713-335-7295

  

Attn.: Richard W. FitzGerald

	 	 	BRL UNIVERSAL COMPRESSION FUNDING I 2002, L.P.
	

 	
 	

By: BRL Universal Compression Management 2002, Inc., a Delaware bankruptcy remote special purpose corporation, its general partner
	

 	
 	

By:	

/s/  GREGORY C. GREENE      

	 	 	 	Name:	Gregory C. Greene
	 	 	 	Title:	President
	

 	
 	

Address:	

2911 Turtle Creek Blvd., Suite 1240

Dallas, TX 75215
	

 	
 	

Facsimile No.: 214-522-7296

Telephone No.: 214-520-2009

  

Attn.: Gregory C. Greene

	 	 	WELLS FARGO BANK MINNESOTA,

NATIONAL ASSOCIATION,

as Indenture Trustee
	

 	
 	

By:	

/s/  EDNA BARBER      

	 	 	 	Name:	Edna Barber
	 	 	 	Title:	Assistant Vice President
	

 	
 	

Address:	

6th and Marquette

MAC N9311-161

Minneapolis, MN 55479
	

 	
 	

Facsimile No.: (612) 667-3464

Telephone No.: (612) 667-8058

 

Attn.: Asset Backed Securities—Corporate Trust

Services

	 	 	WACHOVIA BANK, NA,

as Bank Agent,
	

 	
 	

By:	

/s/  DAVID E. HUMPHREYS      

	 	 	 	Name:	David E. Humphreys
	 	 	 	Title:	Vice President
	

 	
 	

Address:	

1001 Fannin

Suite 2255

Houston, Texas 77002
	

 	
 	

Facsimile No.: 713-650-6354

Telephone No.: 713-346-2717

  

Attn.: Davide E. Humphreys

	 	 	BANK ONE, N.A.,

as Intercreditor Collateral Agent,
	

 	
 	

By:	

/s/  DIANNE L. RUSSELL      

	 	 	 	Name:	Dianne L. Russell
	 	 	 	Title:	Director
	

 	
 	

Address:	

910 Travis

6th Floor

Houston, Texas 77002
	

 	
 	

Facsimile No.: 713-751-3982

Telephone No.: 713-751-3679

 

Attn.:

QuickLinks

EXHIBIT 10.8

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

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