Document:

Exhibit 10.1

 

FIRST AMENDMENT TO

 

SENIOR SECURED CREDIT AGREEMENT

 

 

Dated as of September 22, 2005

 

 

Among

 

UNIVERSAL COMPRESSION, INC.,
as Co-US Borrower and Guarantor,

 

UNIVERSAL COMPRESSION HOLDINGS, INC.,
as Co-US Borrower and Guarantor,

 

UC CANADIAN PARTNERSHIP HOLDINGS COMPANY,
as Canadian Borrower,

 

WACHOVIA BANK, NATIONAL ASSOCIATION,
as US Administrative Agent,

 

CONGRESS FINANCIAL CORPORATION (CANADA),
as Canadian Administrative Agent,

 

JPMORGAN CHASE BANK, N.A.,
as Syndication Agent,

 

DEUTSCHE BANK SECURITIES INC., THE BANK OF
NOVA SCOTIA AND

THE ROYAL BANK OF SCOTLAND PLC

as Co-Documentation Agents

 

AND

 

THE LENDERS PARTY HERETO

 

Arranged by:

 

WACHOVIA CAPITAL MARKETS, LLC 
as Sole Lead Arranger and Sole Book Runner

 

$75,000,000 Senior Secured Additional Term B Loan

 

 

EXECUTION COPY

 

THIS
FIRST AMENDMENT TO SENIOR SECURED CREDIT AGREEMENT dated as
of September 22, 2005 (this “First Amendment”), is among:  UNIVERSAL COMPRESSION, INC., a corporation
formed under the laws of the State of Texas (a “US Borrower” and
sometimes referred to herein as “UCI”, and in its capacity as guarantor
of the Canadian Tranche Loans, a “Guarantor”); UNIVERSAL COMPRESSION
HOLDINGS, INC., a corporation formed under the laws of the State of Delaware (a
“US Borrower” and sometimes referred to herein as “Holdings”, and
in its capacity as guarantor of the Canadian Tranche Loans, a “Guarantor”,
together with UCI, the “US Borrowers”); UC CANADIAN PARTNERSHIP HOLDINGS
COMPANY, a Nova Scotia ULC (the “Canadian Borrower”); WACHOVIA BANK,
NATIONAL ASSOCIATION, individually and as US administrative agent for the
Lenders (herein, together with its successors in such capacity, the “US
Administrative Agent”); CONGRESS FINANCIAL CORPORATION (CANADA),
individually and as Canadian administrative agent for the Lenders (herein,
together with its successors in such capacity, the “Canadian Administrative
Agent”); WACHOVIA CAPITAL MARKETS, LLC (“Wachovia Securities” and
its successor in such capacity, the “Sole Lead Arranger” and “Sole
Book Runner”); and the lenders party to the Credit Agreement defined below
(the “Lenders”) pursuant to the authorization (in the form attached
hereto as Appendix I, the “Authorization”).  Capitalized terms used and not otherwise
defined herein are used as defined in the Credit Agreement (as defined below).

 

R E C I T A L
S

 

A.            On
January 14, 2005, the Borrowers, the Administrative Agents, and the
Lenders entered into that certain Senior Secured Credit Agreement (as amended,
modified or restated from time to time, the “Credit Agreement”).

 

B.            The
Borrowers have requested that the Administrative Agents and the Majority
Lenders amend certain provisions of the Credit Agreement to, among other
things, transfer $75,000,000 of the Aggregate Revolving Commitments under the Revolving
Credit Facility to the Term Loan B Facility.

 

C.            Subject
to satisfaction of the conditions set forth herein, the Administrative Agents
and the Majority Lenders are willing to amend the Credit Agreement and to such
other actions as provided herein;

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained and of
the loans, extensions of credit and commitments hereinafter referred to, the
parties hereto agree as follows:

 

ARTICLE 1

Amendments to the Credit Agreement

 

1.1           The
definitions of “Additional Term Loan Funding Date”, “Additional Term Loan
Lender”, “Additional Term Loans”, “CI Lender”, “Commitment Increase”, “Commitment
Increase Effective Date”, “Joinder Agreement”, “New Funds Amount”, “Notice of
Commitment Increase”, “Reducing Percentage Lender” and “Reduction Amount” are
hereby added in alphabetical order to Section 1.02 of the Credit Agreement
to read as follows:

 

 

“‘Additional Term Loan Funding Date’ shall mean
October 3, 2005.”

 

“‘Additional Term Loan Lender’ shall mean any
Lender with an outstanding Additional Term Loan.”

 

“‘Additional Term Loans’ shall have the meaning
assigned such term in Section 2.01(a)(v).”

 

“‘CI Lender’ shall have the meaning assigned
such term in Section 2.03(f)(i).”

 

“‘Commitment Increase’ shall have the meaning
assigned such term in Section 2.03(f)(i).”

 

“‘Commitment Increase Effective Date’ shall
have the meaning assigned such term in Section 2.03(f)(ii).”

 

“‘Joinder Agreement’ shall have the meaning
assigned such term in Section 2.03(f)(i).”

 

“‘New Funds Amount’ shall have the meaning
assigned such term in Section 2.03(f)(iv).”

 

“‘Notice of Commitment Increase’ shall have the
meaning assigned such term in Section 2.03(f)(ii).”

 

“‘Reducing Percentage Lender’ shall have the
meaning assigned such term in Section 2.03(f)(iv).”

 

“‘Reduction Amount’ shall have the meaning
assigned such term in Section 2.03(f)(iv).”

 

1.2           The
last sentence of the definition of “Aggregate Revolving Commitments” in Section 1.02
of the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:

 

“As of the
Additional Term Loan Funding Date, the Aggregate Revolving Commitments are
$175,000,000.”

 

1.3           The
definition of “Aggregate US Tranche Commitments” in Section 1.02 of the
Credit Agreement is hereby amended by deleting it in its entirety and inserting
the following in lieu thereof:

 

“‘Aggregate
US Tranche Commitments’ at any time shall equal the sum of the US Tranche
Commitments of all US Tranche Revolving Lenders, as the same may be reduced
pursuant to Sections 2.03(b) and (c) or increased
pursuant to Section 2.03(f). 
As of the Additional Term Loan Funding Date, the Aggregate US Tranche
Commitments are $150,000,000.”

 

2

 

1.4           Subsection (a) of
the definition of “Applicable Margin” in Section 1.02 of the Credit
Agreement is hereby amended by deleting it in its entirety and inserting the
following in lieu thereof:

 

“In respect of the Term Loan B Facility, a percentage
per annum equal to 1.50% for US Dollar LIBOR Loans and 0.50% for US Dollar Base
Rate Loans.”

 

1.5           The
definition of “Term Loan” in Section 1.02 of the Credit Agreement is
hereby amended by deleting it in its entirety and inserting the following in lieu
thereof:

 

“‘Terms
Loan’ shall mean each senior secured amortizing term loan made pursuant to Section 2.01(a)(v).”

 

1.6           The
definition of “Term Loan Lender” in Section 1.02 of the Credit Agreement
is hereby amended by deleting the second sentence it in its entirety.

 

1.7           The
definition of “Term Loan Percentages” in Section 1.02 of the Credit
Agreement is hereby amended by deleting it in its entirety and inserting the
following in lieu thereof:

 

“‘Terms
Loan Percentages’ shall mean with respect to any Term Loan Lender, a
fraction (expressed as a percentage, carried out to the sixth decimal place),
the numerator of which is such Term Loan Lender’s outstanding Term
Loans, and the denominator of which is the total outstanding Term Loans
of all Term Loan Lenders.”

 

1.8           The
definition of “US Lender” in Section 1.02 of the Credit Agreement is
hereby amended by deleting it in its entirety and inserting the following in
lieu thereof:

 

“‘US Lender’ shall mean a Lender who is either
a US Tranche Revolving Lender or a Term Loan Lender.”

 

1.9           Section 2.01(a)(v) of
the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:

 

“Each Term
Loan Lender severally agrees, subject to the terms and conditions set forth
herein, to make a senior secured amortizing term loan to the US Borrowers on
the Term Loan Funding Date in the principal amount of such Term Loan Lender’s
Term Commitment.  Each Additional Term
Loan Lender severally agrees, subject to the terms and conditions set forth
herein, to make a senior secured amortizing term loan to the US Borrowers on
the Additional Term Loan Funding Date in the aggregate principal amount of
$75,000,000.00 (collectively, the “Additional Term Loans”).  Once repaid or prepaid, Term Loans may not be
reborrowed.”

 

1.10         Section 2.03
of the Credit Agreement is hereby amended by adding the following new subsection (f):

 

 

3

 

“(f)          Commitment
Increase.

 

(i)            Subject
to the terms and conditions set forth herein, the US Borrowers shall have the
right, without the consent of the Lenders but with the prior approval of the US
Administrative Agent, to cause from time to time an increase in the Aggregate
US Tranche Commitments of the US
Tranche Revolving Lenders (a “Commitment
Increase”) by adding to this Agreement one or more additional financial
institutions that is not already a Lender hereunder and that is reasonably
satisfactory to the US Administrative Agent or by allowing one or more existing
US Tranche Revolving Lenders to increase their respective US Tranche
Commitments (each a “CI Lender”); provided, however that (A) no
Event of Default shall have occurred which is continuing, (B) the
Principal Amount outstanding on the date of such increase of all Term Loans
shall not exceed $399,000,000, (C) the amount of such Commitment Increase
shall be a multiple of $25,000,000, (D) no such Commitment Increase shall
cause the Aggregate Revolving Commitments under this Agreement to exceed
$250,000,000, (E) each CI Lender shall execute a joinder agreement (a “Joinder
Agreement”) in the form of Exhibit H attached hereto, (F) no
US Tranche Revolving Lender’s US Tranche Commitment shall be increased without such Lender’s prior written
consent and (G) if, on the effective date of such increase, any US Tranche
Loans have been funded, then the
US Borrowers shall be obligated to pay any breakage fees or costs in connection
with the reallocation of such outstanding Revolving Loans.

 

(ii)           Any
Commitment Increase shall be requested by written notice from the US Borrowers
to the US Administrative Agent (a “Notice of Commitment Increase”) in
the form of Exhibit I attached hereto and shall be subject to the
approval of the US Administrative Agent, such consent to not be unreasonably
withheld.  Each such Notice of Commitment
Increase shall specify (A) the proposed effective date of such Commitment
Increase, which date shall be no earlier than five (5) Business Days after
receipt by the US Administrative Agent of such Notice of Commitment Increase, (B) the
amount of the requested Commitment Increase (provided that after giving
effect to such requested Commitment Increase, the aggregate amount of the
Commitments does not exceed the amount set forth in subsection (i)(D) above),
(C) the identity of each CI Lender hereunder, and (D) the amount of
the respective US Tranche Commitment of
the then existing US Tranche Revolving Lenders and the CI Lenders from and
after the Commitment Increase Effective Date (as defined below).  The US Administrative Agent shall review each
Notice of Commitment Increase and shall notify the US Borrowers whether or not
the US Administrative Agent consents to the proposed Commitment Increase.  If the US Administrative Agent consents to
such Commitment Increase (such consent not to be unreasonably withheld), the US
Administrative Agent shall execute a counterpart of the Notice of Commitment
Increase and such Commitment Increase shall be effective on the proposed
effective date set forth in the Notice of Commitment Increase (if the
Administrative Agent consented to such Commitment Increase prior to such
proposed date) or on another date agreed to by the US Administrative Agent and
the US Borrowers (such date referred to as the “Commitment Increase
Effective Date”).

 

(iii)          On
each Commitment Increase Effective Date, to the extent that there are US
Tranche Loans outstanding as of
such date, (A) each CI Lender shall, by wire transfer of immediately
available funds, deliver to the US Administrative Agent such CI Lender’s New
Funds Amount, which amount, for each such CI Lender, shall constitute the 

 

4

 

US Tranche Loans made by
such CI Lender to the US Borrowers pursuant to this Agreement on such
Commitment Increase Effective Date, (B) the US Administrative Agent shall,
by wire transfer of immediately available funds, pay to each then Reducing
Percentage Lender its Reduction Amount, which amount, for each such Reducing
Percentage Lender, shall constitute a prepayment by the US Borrowers pursuant
to Section 2.07, ratably in accordance with the respective
principal amounts thereof, of the principal amounts of all then outstanding US Tranche Loans of such Reducing Percentage Lender, and (C) the US
Borrowers shall be responsible to pay to each US Tranche Revolving Lender any
breakage fees or costs in connection with the reallocation of any outstanding
US Tranche Loans.

 

(iv)          For
purposes of this Section 2.03(f) and Exhibit I,
the following defined terms shall have the following meanings:  (A) ”New Funds Amount” means the
amount equal to the product of (y) the difference of a CI Lender’s US Tranche
Commitment after giving effect to
the Commitment Increase minus such CI Lender’s US Tranche Commitment
immediately prior to giving effect to the Commitment Increase, if any,
represented as a percentage of the Aggregate US Tranche Commitments, times (z)
the aggregate principal amount of the outstanding US Tranche Loans immediately prior to giving effect to the
Commitment Increase, if any, as of a Commitment Increase Effective Date
(without regard to any increase in the aggregate principal amount of US Tranche
Loans as a result of borrowings
made after giving effect to the Commitment Increase on such Commitment Increase
Effective Date); (B) ”Reducing Percentage Lender” means each then
existing US Tranche Revolving Lender immediately prior to giving effect to the
Commitment Increase that does not increase its respective US Tranche Commitment as a result of the Commitment Increase and
whose relative percentage of the Aggregate US Tranche Commitments shall be
reduced after giving effect to such Commitment Increase; and (C) ”Reduction
Amount” means the amount by which a Reducing Percentage Lender’s
outstanding US Tranche Loans decrease
as of a Commitment Increase Effective Date (without regard to the effect of any
borrowings made on such Commitment Increase Effective Date after giving effect
to the Commitment Increase).

 

(v)           Each
Commitment Increase shall become effective on its Commitment Increase Effective
Date and upon such effectiveness (A) the US Administrative Agent shall
record in the Register each then CI Lender’s information as provided in the
Notice of Commitment Increase, (B) Annex I shall be amended and restated to set forth
all US Tranche Revolving Lenders (including any CI Lenders) that will be
Lenders hereunder after giving effect to such Commitment Increase (which
amended and restated Annex I shall be set forth in Annex I to the
applicable Notice of Commitment Increase) and the US Administrative Agent shall
distribute to each US Tranche Revolving Lender (including each CI Lender) and
the Canadian Administrative Agent a copy of such amended and restated Annex
I, and (C) each CI Lender identified on the Notice of Commitment
Increase for such Commitment Increase shall be a “US Tranche Revolving Lender”
for all purposes under this Agreement.

 

1.11         Section 3.01(b) of
the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:

 

5

 

“The US Borrowers shall pay to the US Administrative
Agent, for the account of each Applicable Lender, the Term Loans in consecutive
quarterly installments on or before each Quarterly Date, as set forth below
($1,000,000.00 was paid on June 30, 2005):

 

	
  Payment Date

  	
   

  	
  Principal Installment

  	
   

  
	
  September 30, 2005

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  1,187,500.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  111,718,750.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  111,718,750.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  111,718,750.00

  	
   

  
	
  Term Loan Maturity Date

  	
   

  	
  $

  	
  111,718,750.00

  	
   

  
	
  Total

  	
   

  	
  $

  	
  474,000,000.00

  	
   

  

 

; provided that upon any partial prepayment pursuant
to Section 2.07, such prepayment shall be applied inversely to the
remaining installments in accordance with Section 2.07.

 

If not sooner paid, the US Borrowers promise to repay
in full the Term Loans on the Term Loan Maturity Date.”

 

1.12         Section 7.07(b) of
the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:

 

“The US Borrowers will use the proceeds of the Term
Loans for (a) the repayment of the Term Loan B Existing Indebtedness and (b) for
general corporate purposes not in contravention of any Governmental Requirement
or of any Loan Document.”

 

6

 

1.13         Section 9.01(h) of
the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:

 

“The US Borrowers, within ten (10) Business Days
of any deemed delivery of any annual report or quarterly report pursuant to
paragraph (a) above, will furnish to the US Administrative Agent (i) a
certificate substantially in the form of Exhibit C-2 executed by a
Responsible Officer of one of the US Borrowers (A) certifying as to the
matters set forth therein and stating that no Default has occurred and is
continuing (or, if any Default has occurred and is continuing, describing the
same in reasonable detail) and (B) setting forth in reasonable detail the
computations necessary to determine whether the US Borrowers are in compliance
with Section 10.13(a), (b) and (c) as of
the end of the respective fiscal quarter or fiscal year; and (ii) a
report, in form and substance satisfactory to the US Administrative Agent,
setting forth as of such Quarterly Date a true and complete list of all Hedging
Agreements (including commodity price swap agreements, forward agreements or
contracts of sale which provide for prepayment for deferred shipment or
delivery of oil, gas or other commodities) of it, each of its Subsidiaries or
pursuant to the ABS Facility, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the
net mark to market value therefor, any new credit support agreements relating
thereto not listed on Schedule 7.20, any margin required or
supplied under any credit support document, and the counter party to each such
agreement.”

 

1.14         Section 10.01(f) of
the Credit Agreement is hereby amended by replacing “$125,000,000” with “$200,000,000”.

 

1.15         Section 10.04(c) of
the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:

 

“Holdings may purchase common stock of Holdings held
by any stockholder or stockholders not to exceed $100,000,000 in the aggregate
during the term of this Agreement (not including any purchases permitted by Section 10.04(b))
if the Total Leverage Ratio is less than 4.0 to 1.0 for the most recent Testing
Period at the time of such purchase.”

 

1.16         Section 10.13(c) of
the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:

 

“The US Borrowers will not permit the ratio of (i) the
Market Value of Compression Collateral to (ii) Aggregate Credit Exposure
to be less than 1.15 to 1.0 at any time. 
As used herein, “Market Value” of the Compression Collateral
shall be determined by the most recent Appraisal or update as required in Section 9.11;
provided, however, in the period between the effective date of
Appraisals or updates, “Market Value” will also include the cost of any newly
added Compression Collateral during such period and will not include the Market
Value of any Property that is not Compression Collateral.”

 

7

 

1.17         Annex
I of the Credit Agreement is hereby deleted in its entirety and is replaced
by Annex I attached to this First Amendment.

 

1.18         Exhibit H
attached to this First Amendment is hereby added to the Credit Agreement as Exhibit H
thereto.

 

1.19         Exhibit I
attached to this First Amendment is hereby added to the Credit Agreement as Exhibit I
thereto.

 

ARTICLE 2

Conditions Precedent

 

2.1           Conditions
Precedent.  This First Amendment
shall be subject to the satisfaction of the following conditions precedent or
concurrent, and after giving effect to this First Amendment:

 

(a)           the
representations and warranties contained herein and in all other Loan Documents
shall be true and correct in all material respects as of the date hereof,
except for such representations and warranties limited to an earlier date;

 

(b)           no
Default shall have occurred and be continuing;

 

(c)           no
Material Adverse Effect shall have occurred and be continuing;

 

(d)           a
certificate of the Secretary or an Assistant Secretary (or the equivalent) of
each Borrower and each Pledgor party to the Ratification and Affirmation of
Pledgors attached hereto shall have been delivered to the US Administrative
Agent setting forth (i) resolutions of its board of directors (or the
equivalent) with respect to the authorization of it to execute and deliver this
First Amendment and the other Loan Documents to which it is a party and to
enter into the transactions contemplated in those documents, (ii) its
officers (or the equivalent) (A) who are authorized to sign this First
Amendment and the other Loan Documents to which it is a party and (B) who
will, until replaced by another officer or officers (or the equivalent) duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with this First Amendment and the transactions contemplated hereby;

 

(e)           a
compliance certificate shall have been delivered to the US Administrative
Agent, in form and substance satisfactory to the US Administrative Agent, duly
and properly executed by a Responsible Officer of each US Borrower and dated as
of the date hereof;

 

(f)            the
Borrowers shall have delivered to the US Administrative Agent an executed
original copy of this First Amendment in form and substance satisfactory to the
US Administrative Agent;

 

(g)           the
US Administrative Agent shall have received counterparts hereof duly executed
by the Borrowers and the Majority Lenders and the Additional Term Lenders;

 

(h)           Notes
duly completed and executed shall have been delivered to the US Administrative
Agent, if requested;

 

8

 

(i)            an
opinion of Gardere Wynne Sewell LLP, counsel to the US Borrowers and the
Subsidiaries party to a Loan Document, shall have been delivered to the US
Administrative Agent in form and substance satisfactory to the US
Administrative Agent, as to such matters incident to the transactions herein
contemplated and as the US Administrative Agent may reasonably request; and

 

(j)            all
costs, fees, expenses (including, without limitation, reasonable legal fees and
expenses and recording taxes and fees) and other compensation contemplated by
this First Amendment and the other Loan Documents, and for which statements or
invoices have been submitted to the US Borrowers shall have been paid.

 

ARTICLE 3

Miscellaneous

 

3.1           Credit
Agreement in Full Force and Effect as Amended.  Except as specifically amended hereby, the
Credit Agreement and other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed as so amended.  Except as expressly set forth herein, this
First Amendment shall not be deemed to be a waiver, amendment or modification
of any provisions of the Credit Agreement or any other Loan Document or any
right, power or remedy of the Administrative Agents or Lenders, or constitute a
waiver of any provision of the Credit Agreement or any other Loan Document, or
any other document, instrument and/or agreement executed or delivered in
connection therewith or of any Default or Event of Default under any of the
foregoing, in each case whether arising before or after the date hereof or as a
result of performance hereunder or thereunder. 
This First Amendment also shall not preclude the future exercise of any
right, remedy, power, or privilege available to the Administrative Agents
and/or Lenders whether under the Credit Agreement, the other Loan Documents, at
law or otherwise.  All references to the
Credit Agreement shall be deemed to mean the Credit Agreement as modified
hereby.  This First Amendment shall not
constitute a novation or satisfaction and accord of the Credit Agreement and/or
other Loan Documents, but shall constitute an amendment thereof.  The parties hereto agree to be bound by the
terms and conditions of the Credit Agreement and Loan Documents as amended by
this First Amendment, as though such terms and conditions were set forth
herein.  Each reference in the Credit
Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of
similar import shall mean and be a reference to the Credit Agreement as amended
by this First Amendment, and each reference herein or in any other Loan
Documents to the “Credit Agreement” shall mean and be a reference to the Credit
Agreement as amended and modified by this First Amendment.

 

3.2           Representations.  Each Borrower hereby represents and warrants
to each Lender that:

 

(a)           each
of the representations and warranties made by the Borrower under the Credit
Agreement and each other Loan Document is true and correct in all material
respects on and as of the date hereof, as if made on and as of such date,
except for any representations and warranties made as of a specified date,
which are true and correct in all material respects as of such specified date;

 

(b)           The
execution, delivery and performance by each Borrower of this First Amendment
have been duly authorized by each Borrower;

 

9

 

(c)           This
First Amendment constitutes the legal, valid and binding obligation of each
Borrower, enforceable against each Borrower in accordance with its terms.

 

(d)           The
execution, delivery and performance by each Borrower of this First Amendment (i) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority or any other third Person
(including shareholders or any class of directors, whether interested or
disinterested, of each Borrower or any other Person), nor is any such consent,
approval, registration, filing or other action necessary for the validity or
enforceability of this First Amendment or any Loan Document or the consummation
of the transactions contemplated thereby, except such as have been obtained or
made and are in full force and effect other than (A) the recording and
filing of the Security Instruments as required by this First Amendment of the
Credit Agreement and (B) those third party approvals or consents which, if
not made or obtained, would not cause a Default hereunder, could not reasonably
be expected to have a Material Adverse Effect or do not have an adverse effect
on the enforceability of the Loan Documents, (ii) will not violate any
applicable law or regulation or the charter, by-laws or the organizational
documents of any Borrower or any Subsidiary or any order of any Governmental
Authority, (iii) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Borrower or any
Subsidiary or its Properties, or give rise to a right thereunder to require any
payment to be made by any Borrower or such Subsidiary and (iv) will not
result in the creation or imposition of any Lien on any Property of any
Borrower or any Property (other than the Liens created by this First Amendment
or the Loan Documents).

 

3.3           Counterparts.  This First Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this First
Amendment by signing any such counterpart.

 

3.4          NO
ORAL AGREEMENTS.  THIS FIRST AMENDMENT
AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING
BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS
BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF.  THIS FIRST AMENDMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

3.5          GOVERNING
LAW.  THIS FIRST AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

[Signatures begin on the following page]

 

10

 

The
parties hereto have caused this First Amendment to be duly executed as of the
day and year first above written.

 

	
  US BORROWER
  AND GUARANTOR:

  	
  UNIVERSAL COMPRESSION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
  J. Michael
  Anderson

  
	
   

  	
  Title:

  	
  Senior Vice
  President and

  Chief Financial Officer

  
	
  Address for
  Notices:

  	
   

  	
   

  
	
   

  	
  4444
  Brittmoore Road

  
	
   

  	
  Houston,
  Texas 77041

  
	
   

  	
   

  
	
   

  	
  Attention:
  President

  
	
   

  	
   

  
	
   

  	
  Copy to:
  General Counsel

  
	
   

  	
   

  
	
   

  	
  Copy to:

  
	
   

  	
   

  
	
   

  	
  Carol M.
  Burke

  
	
   

  	
  Gardere
  Wynne Sewell LLP

  
	
   

  	
  1000
  Louisiana, Suite 3400

  
	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  Telecopier
  No.: (713) 276-6561

  
	
   

  	
  Telephone No.: (713) 276-5561

  
					

 

Signature Page to
First Amendment to Senior Secured Credit Agreement

 

 

	
  US BORROWER
  AND GUARANTOR:

  	
  UNIVERSAL COMPRESSION

  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
  J. Michael
  Anderson

  
	
   

  	
  Title:

  	
  Senior Vice
  President and

  Chief Financial Officer

  
	
  Address for Notices:

  	
   

  
	
   

  	
  4444
  Brittmoore Road

  
	
   

  	
  Houston,
  Texas 77041

  
	
   

  	
   

  
	
   

  	
  Attention:
  President

  
	
   

  	
   

  
	
   

  	
  Copy to:
  General Counsel

  
	
   

  	
   

  
	
   

  	
  Copy to:

  
	
   

  	
   

  
	
   

  	
  Carol M.
  Burke

  
	
   

  	
  Gardere
  Wynne Sewell LLP

  
	
   

  	
  1000
  Louisiana, Suite 3400

  
	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  Telecopier
  No.: (713) 276-6561

  
	
   

  	
  Telephone
  No.: (713) 276-5561

  

 

 

	
  CANADIAN
  BORROWER:

  	
  UC CANADIAN PARTNERSHIP

  HOLDINGS COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
  J. Michael
  Anderson

  
	
   

  	
  Title:

  	
  Senior Vice
  President and

  Chief Financial Officer

  
	
  Address for Notices:

  	
   

  
	
   

  	
  1959 Upper
  Water Street

  
	
   

  	
  Suite 1100

  
	
   

  	
  Halifax,
  Nova Scotia B3J3E5

  
	
   

  	
   

  
	
   

  	
  Attention:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  Copy to:
  General Counsel

  
	
   

  	
   

  
	
   

  	
  Copy to:

  
	
   

  	
   

  
	
   

  	
  Carol M.
  Burke

  
	
   

  	
  Gardere
  Wynne Sewell LLP

  
	
   

  	
  1000 Louisiana,
  Suite 3400

  
	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  Telecopier
  No.: (713) 276-6561

  
	
   

  	
  Telephone No.: (713) 276-5561

  

 

 

	
  AGENTS AND
  LENDERS:

  	
  WACHOVIA BANK, NATIONAL

  
	
   

  	
  ASSOCIATION, in its capacity as US

  Administrative Agent and in its capacity as a

  Lender, on behalf of itself and the other

  Lenders pursuant to the Authorization

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Shawn Young

  	
   

  
	
   

  	
  Name:

  	
  Shawn Young

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  Lending
  Office for US Dollar Base Rate

  Loans and LIBOR Loans:

  
	
   

  	
   

  
	
   

  	
  301 South
  College Street

  
	
   

  	
  23rd Floor
  NC 0680

  
	
   

  	
  Charlotte,
  North Carolina 28288

  
	
   

  	
  Telecopier
  No.: (704) 383-0288

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  301 South
  College Street

  
	
   

  	
  23rd Floor
  NC 0680

  
	
   

  	
  Charlotte,
  North Carolina 28288

  
	
   

  	
  Attention:
  Syndication Agency Services

  
	
   

  	
  Telecopier
  No.: (704) 383-0288

  
	
   

  	
   

  
	
   

  	
  With copy
  to:

  
	
   

  	
   

  
	
   

  	
  Wachovia
  Capital Markets, LLC

  
	
   

  	
  1001 Fannin,
  Suite 2255

  
	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
  Attention:
  David Humphreys

  
	
   

  	
  Telecopier No.: 713-605-6354

  
					

 

 

Ratification and Affirmation of Pledgors

 

Each of the
undersigned Pledgors hereby expressly (a) acknowledges the terms of this
First Amendment, (b) ratifies and affirms its obligations under that
certain Pledge and Security Agreement dated as of January 14, 2005, as
amended, to which it is a party, (c) acknowledges, renews and extends its
continued liability under said Pledge and Security Agreement and agrees that
said Pledge and Security Agreement remains in full force and effect
notwithstanding the matters contained herein, and (d) represents and
warrants to the Lenders that as of the date hereof, after giving effect to the
terms of this First Amendment, all of the representations and warranties
contained in each Loan Document to which it is a party are true and correct in
all material respects, except to the extent any such representations and warranties
are expressly limited to an earlier date, in which case, such representations
and warranties shall continue to be true and correct in all material respects
as of such specified earlier date.

 

	
  PLEDGORS:

  	
  UNIVERAL
  COMPRESSION INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
   J.
  Michael Anderson

  
	
   

  	
  Title:

  	
   Senior
  Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNIVERSAL
  COMPRESSION CANADIAN HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
   J.
  Michael Anderson

  
	
   

  	
  Title:

  	
   Senior
  Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENTERRA
  COMPRESSION INVESTMENT COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
   J.
  Michael Anderson

  
	
   

  	
  Title:

  	
   Senior
  Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNIVERSAL
  COMPRESSION SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ J.
  Michael Anderson

  	
   

  
	
   

  	
  Name:

  	
   J.
  Michael Anderson

  
	
   

  	
  Title:

  	
   Senior
  Vice President and Chief Financial Officer

  

 

RATIFICATION Page to First Amendment to Senior Secured Credit
Agreement

 

 

ANNEX I

US TRANCHE COMMITMENTS 

AND PERCENTAGE SHARE

 

	
  US Tranche Revolving

  Lender

  	
   

  	
  US Tranche

  Commitment

  Amount (in $)

  	
   

  	
  US Tranche

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  12,908,602.15

  	
   

  	
  8.605735

  	
  %

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  12,908,602.15

  	
   

  	
  8.605735

  	
  %

  
	
  Deutsche Bank Trust Company Americas

  	
   

  	
  12,695,340.50

  	
   

  	
  8.463560

  	
  %

  
	
  The Bank of Nova Scotia

  	
   

  	
  10,964,157.71

  	
   

  	
  7.309438

  	
  %

  
	
  The Royal Bank of Scotland plc

  	
   

  	
  12,666,666.67

  	
   

  	
  8.444444

  	
  %

  
	
  Bank of America, N.A.

  	
   

  	
  10,387,096.77

  	
   

  	
  6.924731

  	
  %

  
	
  Comerica Bank

  	
   

  	
  9,810,035.84

  	
   

  	
  6.540024

  	
  %

  
	
  Union Bank of California, N.A.

  	
   

  	
  9,810,035.84

  	
   

  	
  6.540024

  	
  %

  
	
  Wells Fargo Bank, NA

  	
   

  	
  11,333,333.33

  	
   

  	
  7.555556

  	
  %

  
	
  BNP Paribas

  	
   

  	
  6,924,731.18

  	
   

  	
  4.616487

  	
  %

  
	
  SunTrust Bank

  	
   

  	
  8,000,000.02

  	
   

  	
  5.333333

  	
  %

  
	
  National City Bank

  	
   

  	
  6,924,731.18

  	
   

  	
  4.616487

  	
  %

  
	
  Natexis Banques Populares

  	
   

  	
  6,666,666.67

  	
   

  	
  4.444444

  	
  %

  
	
  Guaranty Bank

  	
   

  	
  6,000,000.00

  	
   

  	
  4.000000

  	
  %

  
	
  Allied Irish Banks, p.l.c.

  	
   

  	
  6,000,000.00

  	
   

  	
  4.000000

  	
  %

  
	
  Amegy

  	
   

  	
  6,000,000.00

  	
   

  	
  4.000000

  	
  %

  
	
  TOTAL

  	
   

  	
  $

  	
  150,000,000.00

  	
   

  	
  100.000000

  	
  %

  
							

 

* US Tranche Percentages have been rounded
to nearest 6th decimal point.

 

ANNEX I TO FIRST AMENDMENT TO
SENIOR SECURED CREDIT AGREEMENT

 

 

EXHIBIT H

FORM OF JOINDER AGREEMENT

 

This Joinder Agreement (the “Joinder”)
is dated as of                                 ,       (the
“Effective Date”) and is entered into by and between [Insert name of Lender] (the “Lender”) and Wachovia
Bank, National Association (the “US Administrative Agent”).  Capitalized terms used but not defined herein
shall have the meanings given to them in the Senior Secured Credit Agreement
dated as of January 14, 2005, among Universal Compression, Inc. and
Universal Compression Holdings, Inc., as the US Borrowers, UC Canadian
Partnership Holdings Company, a Nova Scotia ULC, as the Canadian Borrower, the
US Administrative Agent, Congress Financial Corporation (Canada), as the
Canadian Administrative Agent and the Lenders which are or become parties
thereto (as the same may be amended or supplemented from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the
Lender.

 

The Lender represents and
warrants as follows:

 

(a)           it has all requisite
power and authority, and has taken all action necessary to execute and deliver
this Joinder and to fulfill its obligations under, and consummate the
transactions contemplated by, this Joinder;

 

(b)           the execution, delivery
and compliance with the terms hereof by Lender and the delivery of all
instruments required to be delivered by it hereunder do not and will not
violate any Governmental Requirement applicable to it;

 

(c)           this Joinder has been
duly executed and delivered by it and constitutes the legal, valid and binding
obligation of the Lender, enforceable against it in accordance with its terms;

 

(d)           all approvals and
authorizations of, all filings with and all actions by any Governmental
Authority necessary for the validity or enforceability of its obligations under
this Joinder have been obtained;

 

(e)           the Lender is not a
competitor of Holdings or any of its Subsidiaries;

 

(f)            the Lender has fully
reviewed the terms of the Credit Agreement and the other Security Instruments
and has independently and without reliance upon the Assignor, and based on such
information as the Lender has deemed appropriate, made its own credit analysis
and decision to enter into this Joinder; and

 

(g)           the Lender hereby
affirms that the representations contained in Section 4.06(d)[(i)] [(vi)]
of the Credit Agreement are true and accurate as to it [IF (i) IS SELECTED
ADD:  and, the Lender has
contemporaneously herewith delivered to the US Administrative Agent and the US
Borrower such certifications as are required thereby to avoid the withholding
taxes referred to in Section 4.06 of the Credit Agreement].

 

This Joinder shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
assigns.  This Joinder may be executed in
any number of counterparts, which together shall constitute one
instrument.  Delivery of an executed
counterpart of a signature page of this Joinder by telecopy shall be
effective as delivery of a manually executed counterpart of this 

 

eXHIBIT h to First Amendment to Senior Secured Credit Agreement

 

 

Joinder.  This Joinder shall be
governed by, and construed in accordance with, the law of the State of Texas.

 

 

	
   

  	
  LENDER

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF LENDER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

	
   

  	
  US ADMINISTRATIVE AGENT

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Approved and
  Consented to by:

  	
   

  
	
   

  	
   

  
	
  UNIVERSAL
  COMPRESSION, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  UNIVERSAL
  COMPRESSION

  HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

EXHIBIT I

FORM OF NOTICE OF COMMITMENT INCREASE

 

[Date]

 

Wachovia Bank, National Association

301 South College Street

23rd Floor NC 0680

Charlotte, NC 28288

Attention:  Syndication Agency
Services

 

Ladies and Gentlemen:

 

The undersigned, Universal Compression, Inc.
and Universal Compression Holdings, Inc. (the “US Borrowers”),
refer to the Senior Secured Credit Agreement dated as of January 14, 2005,
among the US Borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia
ULC, as the Canadian Borrower, the US Administrative Agent, Congress Financial
Corporation (Canada), as the Canadian Administrative Agent and the Lenders
which are or become parties thereto (as the same may be amended or supplemented
from time to time, the “Credit Agreement”, with terms defined in the
Credit Agreement and not otherwise defined herein being used herein as therein
defined).  The US Borrowers hereby notify
you, pursuant to Section 2.03(f)(ii) of the Credit Agreement,
that the US Borrowers hereby request that the Aggregate US Tranche Commitments
under the Credit Agreement be increased and the CI Lenders agree to provide US
Tranche Commitments under the Credit Agreement, and in that connection sets forth
below the information relating to such proposed Commitment Increase as required
by Section 2.03(f)(ii) of the Credit Agreement:

 

(a)           the effective date of
such increase of aggregate amount of the Lenders’ Aggregate US Tranche
Commitments is                             ;

 

(b)           the amount of the
requested increase of the Aggregate US Tranche Commitments is $                                ;

 

(c)           the CI Lenders that
have agreed with the Borrowers to provide or increase their respective US
Tranche Commitments, are                                                                   [INSERT
NAMES OF THE CI LENDERS]; and

 

(d)           set forth on Annex I
attached hereto is the amount of the respective US Tranche Commitments of all
Reducing Percentage Lenders and all CI Lenders as of effective date of such
Commitment Increase, and such Annex I shall amend and replace Annex I
to the Credit Agreement.

 

Delivery of an executed counterpart of this Notice of Commitment
Increase by telecopier shall be effective as delivery of an original executed
counterpart of this Notice of Commitment Increase.

 

eXHIBIT I to First Amendment to Senior Secured Credit Agreement

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  UNIVERSAL COMPRESSION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNIVERSAL COMPRESSION HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Approved and
  Consented to by:

  	
   

  
	
   

  	
   

  
	
  WACHOVIA
  BANK, NATIONAL

  ASSOCIATION, as US Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
						

 

 

ANNEX I

US TRANCHE
COMMITMENTS

AND PERCENTAGE
SHARE

 

[Attach updated Annex I]

 

 

APPENDIX I

 

FORM OF

 

AUTHORIZATION

 

                         ,
2005

 

Wachovia Bank, National Association,

as Administrative Agent

Charlotte Plaza, CP-8

201 South College Street

Charlotte, North Carolina 28288-0608

Attention:  Syndication Agency
Services

 

Re:          First
Amendment to Senior Secured Credit Agreement dated as of September 22,
2005 (the “Amendment”) to that certain Senior Secured Credit Agreement
dated as of January 14, 2005 (as the same may be amended or supplemented
from time to time, the “Credit Agreement”) by and among Universal
Compression, Inc. and Universal Compression Holdings, Inc., as the US
Borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia ULC, as the
Canadian Borrower, Wachovia Bank, National Association, as the US
Administrative Agent, Congress Financial Corporation (Canada), as the Canadian
Administrative Agent and the Lenders which are or become parties thereto.

 

This letter acknowledges our receipt and
review of the Amendment in the form posted to SyndTrak Online.  By
executing this letter, we hereby approve the Amendment and authorize the US
Administrative Agent to execute and deliver the Amendment on our behalf.

 

Each financial institution executing this
Authorization agrees or reaffirms that it shall be a party to the Credit
Agreement and the other Loan Documents to which Lenders are parties and shall
have the rights and obligations of a Lender under each such agreement.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  [Insert name of applicable financial institution]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

aPPENDIX I to First
Amendment to Senior Secured Credit AgreementExhibit 10.2

 

CHANGE
OF CONTROL AGREEMENT

 

This Change of
Control Agreement (this “Agreement”) is entered into and effective as of                      ,          by
and between Universal Compression Holdings, Inc., a Delaware corporation,
(the “Company”), and                                   (the
“Employee”).

 

W I T N E S S E T H:

 

WHEREAS, the
Company and Employee wish to enter an agreement regarding their respective
rights and obligations in connection with a Change of Control (as defined
below) within three (3) years from the date of this Agreement;

 

NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree as follows:

 

1.             Certain Definitions.

 

(a)           “Cause”
shall mean:

 

(i)            the
willful and continued failure of the Employee to perform substantially the
Employee’s duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Employee by the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Employee has not substantially performed the Employee’s duties, or

 

(ii)           the
willful engaging by the Employee in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.

 

No act, or failure to act, on
the part of the Employee shall be considered “willful” unless it is done, or
omitted to be done, by the Employee in bad faith or without reasonable belief
that the Employee’s action or omission was in the best interests of the
Company.  Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer or of a senior officer
of the Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Employee in
good faith and in the best interests of the Company.  The cessation of employment of the Employee
shall not be deemed to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Employee, and the Employee is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the 

 

1

 

Employee is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying
the particulars thereof in detail.

 

(b)           “Change
of Control” shall mean:

 

(i)            The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35 percent or more of either (A) the
then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control:

 

(A)          any
acquisition directly from the Company,

 

(B)           any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or

 

(C)           any
acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) of this Section 1(b);
or

 

(ii)           Individuals,
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual was a member of
the Incumbent Board; or

 

(iii)          Consummation
of a reorganization, merger or consolidation or sale or other disposition,
directly or indirectly, of all or substantially all of the assets of the
Company (a “Corporate Transaction”) in each case, unless, following such
Corporate Transaction, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Corporate Transaction beneficially own, directly or indirectly,
more than 50 percent of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of

 

2

 

the corporation resulting from
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries), (B) no
individual or entity (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, 35 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (C) at least a majority of
the members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Corporate Transaction; or

 

(c)           “Good
Reason” shall mean the occurrence of any of the following:

 

(i)            the
assignment to the Employee of any duties inconsistent in any material respect
with the Employee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities during the ninety (90) day
period prior to a Change of Control, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Employee;

 

(ii)           the
Company’s requiring the Employee to be based at any other office or location
than required during the ninety (90) day period prior to a Change of Control,
or the Company’s requiring the Employee to travel on Company business to a
substantially greater extent than required during the ninety (90) day period
prior to a Change of Control;

 

(iii)          any
purported termination by the Company of the Employee’s employment otherwise
than as expressly permitted by this Agreement; or

 

(iv)          in
the event of a Change of Control or merger, consolidation or other business
combination of the Company in which the Company’s securities cease to be
publicly traded, the assignment to the Employee of any position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities that are not (A) at or with the ultimate parent company
of the entity surviving or resulting from such merger, consolidation or other
business combination and 

 

3

 

(B) substantially similar
to the Employee’s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities during the ninety (90)
day period prior to the Change of Control.

 

For purposes of this Agreement,
any good faith determination of “Good Reason” made by the Employee shall be
conclusive.

 

(d)           “Board”
shall mean the Board of Directors of the Company.

 

2.             Termination for Good
Reason or Other than Cause, Death or Disability following a Change of Control.  If during the one (1) year
period following a Change of Control, the Company terminates the Employee’s
employment other than for Cause, death or disability, or the Employee
terminates employment for Good Reason:

 

(a)           The
Company shall pay to the Employee in a lump sum in cash within thirty (30) days
after the date of termination the aggregate of the following amounts:

 

(i)            the
sum of (1) the Employee’s annual base salary through the date of
termination to the extent not theretofore paid, (2) the product of
(x) the higher of (I) the highest annual bonus received by the
Employee over the preceding three-year period and (II) the annual bonus
that would be payable in respect of the current fiscal year (and annualized for
any fiscal year consisting of less than 12 months) (such higher amount being
referred to as the “Highest Annual Bonus”) and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
date of termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Employee under a plan sponsored by the
Company or any of its affiliated companies (together with any accrued interest
or earnings thereon), and any accrued vacation pay, in each case to the extent
not theretofore paid;

 

(ii)           an
amount equal to two times the sum of (i) the then current annual base
salary of the Employee and (ii) the Highest Annual Bonus; and

 

(iii)          an
amount equal to the total of the employer basic and matching contributions
credited to the Employee under the Company’s (or any of its affiliated
companies’) 401(k) Retirement and Savings Plan (the “401(k) Plan”) and any
other deferred compensation plan during the 12-month period immediately
preceding the month of the Employee’s date of termination multiplied by two,
such amount to be grossed up so that the amount the Employee actually receives
after payment of any federal or state taxes payable thereon equals the amount
first described above.

 

4

 

(b)           For
a period of two years from the Employee’s date of termination, or such longer
period as may be provided by the terms of the appropriate medical and/or
welfare benefit plan, program, practice or policy, the Company shall provide
benefits to the Employee and/or the Employee’s family equal to those which
would have been provided to them in accordance with the plans, programs, practices
and policies if the Employee’s employment had not been terminated; provided,
however, that with respect to any of such plans, programs, practices or
policies requiring an employee contribution, the Employee shall continue to pay
the monthly employee contribution for same, and provided further, that if the
Employee becomes employed by another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility.

 

(c)           The
Company shall pay to the Employee an amount equal to the forfeiture of the
Employee, if any, under the Company’s (or any of its affiliated companies’)
deferred compensation plan and/or the 401(k) Plan and any other similar
plans.  Such payment shall be made in
each case within 15 days after the forfeiture occurs under the applicable plan.  If a forfeiture under a plan has not occurred
by March 1st of the calendar year after the year of termination
(the “Determination Date”), but the Employee is less than 100 percent vested in
his account in such plan as of the date of the Employee’s termination of
employment for which benefits are payable pursuant to this Agreement, then the
benefit payable pursuant to this Section 2(c) shall be calculated as
if such forfeiture occurred as of the Determination Date and the benefit due
under this section shall be paid on or before 15 days after the
Determination Date.  The payment provided
in the preceding sentence shall be in full satisfaction of the Company’s
obligation to make a payment pursuant to this Section 2(c).

 

(d)           All
stock options, restricted stock, restricted stock units, or other stock-based
awards held by the Employee, not already vested shall be 100% vested.  Notwithstanding the terms of any Company (or
affiliate) plan or agreement between the Company (or affiliate) and Employee to
the contrary, the accelerated vesting of all stock options, restricted stock,
restricted stock units, or other awards required pursuant to the terms of this Section 2(c) shall
supercede and govern.

 

(e)           To
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Employee any other amounts or benefits required to be paid or
provided or which the Employee is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies.

 

(f)            The
Company and the Employee agree that to the extent that the Company determines
in good faith (which determination shall include, at a minimum, an opinion of
outside legal counsel supporting the same) that the provisions of Section 409A
of the Code require a delay in payment of any benefits 

 

5

 

(which as of the date of this
Agreement, would not exceed 6 months) to which the Employee is entitled
pursuant to this Agreement in order to avoid the penalties and additional taxes
provided under such section, such payment or provision of benefit shall be
delayed until the earliest date on which payment can be made without penalty
pursuant to Section 409A of the Code. 
If the Employee disagrees with the Company’s determination that Section 409A
requires a delay in payment, the payment can be made prior to the payment date
determined by the Company if the Employee agrees that should the Internal
Revenue Service subsequently assert that some or all of the payments made
pursuant to this Agreement do not comply with the requirements of Section 409A
of the Code, (A) the Employee agrees that he is solely responsible for
excise taxes, penalties and interest resulting from such determination, and
that he will not seek contribution, reimbursement or any other recovery from
the Company or any of its affiliates, officers, employees or directors for any
excise tax, interest or penalty paid or due or any costs he incurs in
challenging such position of the Internal Revenue Service, and (B) the
Employee will reimburse, and hold the Company harmless for, any costs,
including attorneys fees and costs of court, penalties or fees, that it may
incur in connection with a later determination that the payments made pursuant
to this Agreement are covered by Section 409A of the Code and were not
properly reported as such.

 

3.             Other Rights.  Except as provided herein,
nothing in this Agreement shall prevent or limit the Employee’s continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Employee may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Employee may have under any contract or agreement with the Company or any of
its affiliated companies.  Except as
provided hereinafter, amounts which are vested benefits or which the Employee
is otherwise entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the date of termination shall be payable in
accordance with such plan, policy, practice or program or contract or
agreement.  It is expressly agreed by the
Employee that the Employee shall have no right to receive, and hereby waives
any entitlement to, any severance pay or similar benefit under any other plan,
policy, practice or program of the Company; provided, however, that this Section 3
shall not affect the Company’s obligations, if any, relating to post-retirement
health coverage for the Employee and/or the Employee’s spouse.  The Employee also agrees that to the extent
he may be eligible for any severance pay or similar benefit under any laws
providing for severance or termination benefits, such other severance pay or
similar benefit shall be coordinated with the benefits owed hereunder, such
that the Employee shall not receive duplicate benefits.

 

4.             Full Settlement.

 

(a)           No Rights of Offset.  The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense 

 

6

 

or other claim, right or action
which the Company may have against the Employee or others.

 

(b)           No Mitigation Required.  In no event shall the Employee be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Employee obtains other
employment.

 

(c)           Legal Fees.  The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses which the Employee
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company or the Employee of the validity or enforceability of,
or liability under, any provision of Sections 1, 2, 3, 4, 5, 7 or 8 of this
Agreement or any guarantee of performance thereto (including as a result of any
contest by the Employee about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment (including any
payment delayed as provided in Section 2(f)), at the applicable Federal
rate provided for in Section 7872(f)(2)(A) of the Internal Revenue
Code of 1986, as amended (the “Code”).

 

5.             Certain Additional Payments by the Company.

 

(a)           Anything
in this Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any payment or distribution by
the Company to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Employee shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by the Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  Notwithstanding the foregoing provisions of
this Section 5(a), if it shall be determined that the Employee is entitled
to a Gross-Up Payment, but that the Employee, after taking into account the
Payments and the Gross-Up Payment, would not receive a net after-tax benefit of
at least $1,000 (taking into account both income taxes and any Excise Tax) as
compared to the net after-tax proceeds to the Employee resulting from an
elimination of the Gross-Up Payment and a reduction of the Payments, in the
aggregate, to an amount (the “Reduced Amount”) such that the receipt of
Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Employee and the Payments, in the aggregate, shall be reduced to
the Reduced Amount.

 

7

 

(b)           Subject
to the provisions of Section 5(c), all determinations required to be made
under this Section 5, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination shall be made by Deloitte &
Touche LLP or, as provided below, such other certified public accounting firm
as may be designated by the Employee (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and the Employee
within 15 business days after the receipt of notice from the Employee that
there has been a Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Employee shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Section 5,
shall be paid by the Company to the Employee within five days after the receipt
of the Accounting Firm’s determination. 
Any determination by the Accounting Firm shall be binding upon the
Company and the Employee.  As a result of
the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have
been made (“Underpayment”), consistent with the calculations required to be
made hereunder.  In the event that the
Company exhausts its remedies pursuant to Section 5(c) and the
Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Employee.

 

(c)           The
Employee shall notify the Company in writing of any claim by the Internal
Revenue Service (the “IRS”) that, if successful, would require the payment by
the Company of the Gross-Up Payment (or an additional Gross-Up Payment) in the
event the IRS seeks higher payment.  Such
notification shall be given as soon as practicable, but no later than ten
business days after the Employee is informed in writing of such claim, and
shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid.  The
Employee shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due).  If the Company
notifies the Employee in writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:

 

(i)            give
the Company any information reasonably requested by the Company relating to
such claim,

 

(ii)           take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, 

 

8

 

including without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

 

(iii)          cooperate
with the Company in good faith in order to effectively contest such claim, and

 

(iv)          permit
the Company to participate in any proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such costs and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.  Without
limitation on the foregoing provisions of this Section 5(c), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Employee to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Employee agrees to prosecute such contest to determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if
the Company directs the Employee to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Employee, on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issues raised by the IRS or any other
taxing authority.

 

(d)           If,
after the receipt by the Employee of an amount advanced by the Company pursuant
to Section 5(c), the Employee becomes entitled to receive any refund with
respect to such claim, the Employee shall (subject to the Company’s complying
with the requirements of Section 5(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).  If,
after the receipt by the Employee of an amount advanced by the Company pursuant
to Section 5(c), a determination is made that the Employee shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Employee in writing of its intent to contest such 

 

9

 

denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

 

6.             Restrictions and Obligations of the Employee.

 

(a)           Consideration for Restrictions and Covenants.  The Company and Employee agree that the
principal consideration for the agreement to make the payments provided in this
Agreement by the Company to Employee is the Employee’s compliance with the
undertakings set forth in this Section 6. 
Notwithstanding any other provision of this Agreement to the contrary,
the Employee agrees to comply with the provisions of this Section 6 only
if the Employee actually receives any such payments from the Company pursuant
to this Agreement.

 

(b)           Confidentiality.  The confidential and proprietary information
and, in any material respect, trade secrets of the Company are among its most
valuable assets, including but not limited to, its customer and vendor lists,
database, engineering, computer programs, frameworks, models, its marketing
programs, its sales, financial, marketing, training and technical information,
and any other information, whether communicated orally, electronically, in
writing or in other tangible forms concerning how the Company creates, develops,
acquires or maintains its products and marketing plans, targets its potential
customers and operates its retail and other businesses.  The Company invested, and continues to
invest, considerable amounts of time and money in its process, technology,
know-how, obtaining and developing the goodwill of its customers, its other
external relationships, its data systems and data bases, and all the
information described above (hereinafter collectively referred to as “Confidential
Information”), and any misappropriation or unauthorized disclosure of
Confidential Information in any form would irreparably harm the Company.  The Employee shall hold in a fiduciary
capacity for the benefit of the Company all Confidential Information relating
to the Company and its business, which shall have been obtained by the Employee
during the Employee’s employment by the Company and which shall not be or
become public knowledge (other than by acts by the Employee or representatives
of the Employee in violation of this Agreement).  After termination of the Employee’s
employment with the Company, the Employee shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate, divulge or use any such information, knowledge or data to anyone
other than the Company and those designated by it.

 

(c)           Non-Solicitation or Hire.  During the term of Employee’s employment with
the Company, or any affiliate thereof and for a two-year period following the
termination of the Employee’s employment for any reason, the Employee shall
not, directly or indirectly (i) employ or seek to employ any person who is
at the date of termination, or was at any time within the six-month period 

 

10

 

preceding the date of
termination, an officer, general manager or director or equivalent or more
senior level employee of the Company or any of its subsidiaries or otherwise
solicit, encourage, cause or induce any such employee of the Company or any of
its subsidiaries to terminate such employee’s employment with the Company or
such subsidiary for the employment of another company (including for this
purpose the contracting with any person who was an independent contractor
(excluding consultant) of the Company during such period) or (ii) take any
action that would interfere with the relationship of the Company or its
subsidiaries with their suppliers or customers without, in either case, the
prior written consent of the Company’s Board of Directors, or engage in any
other action or business that would have a material adverse effect on the
Company.

 

(d)           Non-Competition.  (i) During the term of Employee’s
employment with the Company, or any affiliate thereof and for a one-year period
following the termination of the Employee’s employment for any reason, the
Employee shall not, directly or indirectly:

 

(i)            engage
in any managerial, administrative, advisory, consulting, operational or sales
activities in Restricted Business anywhere in the Restricted Area, including,
without limitation, as a director or partner of such Restricted Business,
and/or

 

(ii)           organize,
establish, operate, own, manage, control or have a direct or indirect
investment: or ownership interest in a Restricted Business or in any
corporation, partnership (limited or general), limited liability company
enterprise or other business entity that engages in a Restricted Business
anywhere in the Restricted Area; and

 

Nothing
contained in this Section 6 shall prohibit or otherwise restrict the
Employee from acquiring or owning, directly or indirectly, for passive
investment purposes not intended to circumvent this Agreement, securities of
any entity engaged, directly or indirectly, in a Restricted Business if either (i) such
entity is a public entity and the Employee (A) is not a controlling Person
of, or a member of a group that controls, such entity and (B) owns,
directly or indirectly, no more than 3% of any class of equity securities of
such entity or (ii) such entity is not a public entity and the Employee (A) is
not a controlling Person of, or a member of a group that controls, such entity
and (B) does not own, directly or indirectly, more than 1% of any class of
equity securities of such entity.

 

(e)           Definitions.  For purposes of this Section 6:

 

(i)            “Restricted
Business” means the business of designing, manufacturing, servicing, operating,
marketing, assembling, renting or leasing of air or gas compressors or devices
using comparable technologies or other business in which the Company or its
subsidiaries may be engaged during the term of Employee’s employment with the 

 

11

 

Company.  To the extent that any entity is primarily
engaged in a business other than a Restricted Business, the term “Restricted
Business” shall mean the operations, division, segment or subsidiary of such
entity that is engaged in any Restricted Business.

 

(ii)           “Restricted
Area” means any state in the United States, or any country in which the Company
or its subsidiaries engages in any Restricted Business at any time during the
term of Employee’s employment with the Company.

 

(f)            The
Employee acknowledges that monetary damages for any breach of Paragraphs 6(b),
(c), and (d) above will not be an adequate remedy and that irreparable
injury will result to the Company, its business and property, in the event of
such a breach.  For that reason, the
Employee agrees that in the event of a breach in addition to recovering legal
damages, the Company is entitled to proceed in equity for specific performance
or to enjoin the Employee from violating such provisions.

 

7.             Successors.

 

(a)           This
Agreement is personal to the Employee and shall not be assignable by the
Employee otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of
and be enforceable by the Employee’s legal representatives.

 

(b)           This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

 

(c)           The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.

 

8.             Miscellaneous.

 

(a)           THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives that specifically refers to
this Agreement.

 

12

 

(b)           All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows: 

 

	
  If to the

  Employee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to the

  Company:

  	
   

  	
  Universal Compression

  Holdings, Inc.

  4444 Brittmoore Road

  Houston, Texas 77041

  Attention: General Counsel

  

 

or to such other address as either party
shall have furnished to the other in writing in accordance herewith.  Notices and communications shall be effective
when actually received by the addressee.

 

(c)           The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

 

(d)           The
Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

(e)           The
Employee’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Employee or
the Company may have hereunder, including without limitation, the right of the
Employee to terminate employment for Good Reason shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.

 

(f)            This
Agreement constitutes the entire agreement and understanding between the parties
relating to the subject matter hereof and supersedes all prior agreements
between the parties relating to the subject matter hereof.

 

13

 

IN WITNESS
WHEREOF, the Employee has hereunto set the Employee’s hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these
presents to be executed in its name and on its behalf, all as of the day and
year first above written. 

 

 

	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  UNIVERSAL COMPRESSION

  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Stephen A. Snider

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
				

 

14

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