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EXHIBIT 10.11
GUARANTY
THIS GUARANTY, dated as of February 9, 2001 (as amended, modified or
supplemented from time to time in accordance with its terms, this "Guaranty"),
is issued by UNIVERSAL COMPRESSION HOLDINGS, INC., a Delaware corporation
(together with its successors and permitted assigns, the "Guarantor"), for the
benefit of UCO COMPRESSION LLC, a Delaware limited liability company (together
with its successors and permitted assigns, the "Head Lessee"), BRL UNIVERSAL
COMPRESSION FUNDING I, L.P., a Delaware limited partnership (together with its
successors and permitted assigns, the "Issuer" or the "Head Lessor"), and their
respective successors and assigns, including, but not limited to XXXXX FARGO
BANK, NATIONAL ASSOCIATION, a national banking association, as indenture trustee
(the "Indenture Trustee"; each of the Head Lessee, the Head Lessor and the
Indenture Trustee, a "Beneficiary" and collectively, the "Beneficiaries").
PRELIMINARY STATEMENTS:
(1) The Head Lessee and the Head Lessor are entering into that certain
Master Equipment Lease Agreement, dated as of February 9, 2001 (as amended,
modified or supplemented from time to time in accordance with its terms, the
"Head Lease") pursuant to which the Head Lessor will lease certain Compressors
to the Head Lessee;
(2) The Head Lessee, the Head Lessor and Universal Compression, Inc.
("UCI") will enter into a management agreement, dated as of February 9, 2001 (as
amended, modified or supplemented from time to time in accordance with its
terms, the "Management Agreement") pursuant to which UCI will agree to manage
certain Compressors on behalf of the Head Lessor or the Head Lessee, as the case
may be;
(3) The Issuer is issuing one or more classes of notes (collectively,
the "Notes") pursuant to an indenture (as amended, modified or supplemented from
time to time in accordance with its terms, the "Indenture"), dated as of
February 9, 2001, between the Issuer and the Indenture Trustee, which Notes will
be collateralized by, inter alia, all of the Issuer's right, title and interest
in and to the Head Lease and the Management Agreement;
(4) UCI is a wholly-owned subsidiary of the Guarantor;
(5) Issuer requires that the Guarantor guarantee the payment and
performance by UCI under the Management Agreement as a condition to leasing
Compressors to Head Lessee under the Head Lease;
(6) Guarantor will obtain substantial direct and indirect benefit from
the lease of the Compressors to the Head Lessee and the management thereof by
UCI, and is willing to provide this guaranty on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and other
consideration, the receipt and sufficiency of which is hereby acknowledged by
the Guarantor, the Guarantor hereby agrees as follows:
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SECTION 1. Definitions. Capitalized terms used in this Guaranty, unless
otherwise defined herein, shall have the meaning set forth in the Indenture or,
if not defined therein, as defined in the Management Agreement.
SECTION 2. Guaranty. Guarantor hereby unconditionally guarantees the
full and prompt payment when due, whether by acceleration or otherwise, and at
all times thereafter, and the full and prompt performance, of the obligations of
UCI as the initial Manager under the Management Agreement (UCI in this capacity,
the "Guaranteed Party"), whether monetary or otherwise, howsoever created,
arising or evidenced, whether direct or indirect, primary or secondary, absolute
or contingent, joint or several, now or hereafter existing or due or to become
due, which arise out of or in connection with the Management Agreement (all of
such obligations being hereinafter collectively called the "Liabilities");
provided that nothing contained herein shall be deemed to constitute credit
recourse to the Guarantor for payment of (A) losses arising solely from the
financial inability of a User to make rental or other payments under a User
Lease, (B) losses arising solely from the failure of the remarketing proceeds of
a Compressor to equal or exceed the Appraised Value thereof for reasons other
than the Manager's failure to comply with the Services Standard, or (C) the
Notes. Guarantor further agrees to pay all expenses (including reasonable
attorneys' fees and legal expenses) paid or incurred by any Beneficiary in
endeavoring to collect the Liabilities, or any part thereof, and in enforcing
this Guaranty.
SECTION 3. Continuing Guaranty. This Guaranty shall in all respects be
a continuing, absolute and unconditional guaranty, and shall remain in full
force and effect (notwithstanding, without limitation, that at any time or from
time to time all Liabilities may have been paid in full), subject to
discontinuance only upon payment and performance in full of: (i) all Liabilities
and (ii) any and all expenses paid or incurred by a Beneficiary in endeavoring
to collect the Liabilities and in enforcing this Guaranty; and all of the
agreements and obligations under this Guaranty shall remain fully in effect
until all such obligations and expenses finally shall have been paid in full.
SECTION 4. Rescission. Guarantor further agrees that, if at any time
all or any part of any payment theretofore applied by Beneficiary to any of the
Liabilities is or must be rescinded or returned by Beneficiary for any reason
whatsoever, such Liabilities shall, for the purposes of this Guaranty, to the
extent that such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application by Beneficiary, and
this Guaranty shall continue to be effective or be reinstated, as the case may
be, as to such Liabilities, all as though such application by Beneficiary had
not been made.
SECTION 5. Certain Actions. Each Beneficiary may, from time to time at
its sole discretion and without notice to Guarantor, take any or all of the
following actions without affecting the obligations of Guarantor hereunder: (a)
retain or obtain a lien upon or a security interest in any property to secure
any of the Liabilities or any obligation hereunder; (b) retain or obtain the
primary or secondary obligation of any obligor or obligors, in addition to
Guarantor, with respect to any of the Liabilities or any obligation hereunder;
(c) extend or renew for one or more periods (regardless of whether longer than
the original period), alter or exchange any of the Liabilities, or release or
compromise any obligation of Guarantor hereunder or any obligation of any nature
of any other obligor including UCI with respect to any of the Liabilities; (d)
release or fail to perfect its lien upon or security interest in, or impair,
surrender, release or permit any substitution or exchange for, all or
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any part of any property securing any of the Liabilities or any obligation
hereunder, or extend or renew for one or more periods (regardless of whether
longer than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property; and
(e) resort to Guarantor for payment of any of the Liabilities, regardless of
whether Beneficiary shall have resorted to any property securing any of the
Liabilities or any obligation hereunder or shall have proceeded against any
other obligor primarily or secondarily obligated with respect to any of the
Liabilities.
SECTION 6. Subrogation. Any amounts received by a Beneficiary from
whatsoever source on account of the Liabilities may be applied by it toward the
payment of such of the Liabilities, and in such order of application, as
Beneficiary may from time to time elect. Until one year and one day after
payment of the full amount of all Liabilities and performance of all of
Guarantor's obligations hereunder, no payment made by or for the account of
Guarantor pursuant to this Guaranty shall entitle Guarantor by subrogation,
indemnity or otherwise to any payment by UCI or from or out of any property of
UCI and Guarantor shall not exercise any right or remedy against UCI or any
property of UCI by reason of any performance by Guarantor of this Guaranty.
SECTION 7. Waiver. Guarantor hereby expressly waives: (a) notice of any
Beneficiary's acceptance of this Guaranty; (b) notice of the existence or
creation or non-payment of all or any of the Liabilities; (c) presentment,
demand, notice of dishonor, protest, and all other notices whatsoever (provided
that nothing contained in this clause (c) shall affect any obligations to give
notice or make demand as set forth in the Management Agreement); and (d) all
diligence in collection or protection of or realization upon the Liabilities or
any thereof, any obligation hereunder, or any security for or guaranty of any of
the foregoing.
SECTION 8. Unconditional Nature of Guaranty. This Guaranty shall
constitute a guaranty of payment or of performance and not of collection, and
the Guarantor specifically agrees that it shall not be necessary, and that the
Guarantor shall not be entitled to require, before or as a condition of
enforcing the liability of the Guarantor under this Guaranty or requiring
payment or performance of the Liabilities by the Guarantor hereunder, or at any
time thereafter, that any Person: (a) file suit or proceed to obtain or assert a
claim for personal judgment against UCI or any other Person that may be liable
for any Liabilities; (b) make any other effort to obtain payment or performance
of any Liabilities from UCI or any other Person that may be liable for such
Liabilities; (c) foreclose against or seek to realize upon any security now or
hereafter existing for such Liabilities; (d) exercise or assert any other right
or remedy to which such Person is or may be entitled in connection with any
Liabilities or any security or other guaranty therefor; or (e) assert or file
any claim against the assets of UCI or any other Person liable for any
Liabilities. Notwithstanding anything herein to the contrary, no provision of
this Guaranty shall require the Guarantor to pay, perform or discharge any
Liabilities prior to the time such Liabilities is due and payable. No delay on
any Beneficiary's part in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by any Beneficiary of any
right or remedy shall preclude other or further exercise thereof or the exercise
of any other right or remedy; nor shall any modification or waiver of any of the
provisions of this Guaranty be binding upon Beneficiary except as expressly set
forth in a writing duly signed by each Beneficiary. No action of Beneficiary
permitted hereunder shall in any way affect or impair any Beneficiary's rights
or Guarantor's obligations under this Guaranty. For the purposes of this
Guaranty, Liabilities shall include all of UCI's obligations under the
Management
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Agreement, notwithstanding any right or power of UCI or anyone else to assert
any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the obligations
of Guarantor hereunder. Guarantor's obligations under this Guaranty shall be
absolute and unconditional irrespective of any circumstance whatsoever which
might constitute a legal or equitable discharge or defense of Guarantor.
Guarantor hereby acknowledges that there are no conditions to the effectiveness
of this Guaranty.
SECTION 9. Information. Guarantor has and will continue to have
independent means of obtaining information concerning UCI's affairs, financial
condition and business. Beneficiary shall not have any duty or responsibility to
provide Guarantor with any credit or other information concerning UCI's affairs,
financial condition or business which may come into Beneficiary's possession.
SECTION 10. Representations and Warranties. Guarantor represents and
warrants as follows:
(a) Organization and Good Standing. It has been duly organized and
is validly existing as a corporation in good standing under the laws of
its state of incorporation, with corporate power and authority to own
its properties and to conduct its business as such properties are
presently owned and such business is presently conducted.
(b) Due Qualification. It is duly licensed, qualified and
authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the
conduct of its business requires such licensure or qualification except
for failures to be so qualified which, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Guarantor.
(c) Power and Authority; Due Authorization. It has (i) all
necessary power, authority and legal right to execute, deliver and
perform its obligations under this Guaranty and (ii) duly authorized by
all necessary corporate action such execution, delivery and performance
of this Guaranty.
(d) Binding Obligations. This Guaranty constitutes the legal,
valid and binding obligation of Guarantor, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The execution, delivery and performance of this
Guaranty will not (i) conflict with, or result in any breach of any of
the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under (A) the certificate of
incorporation or by-laws of Guarantor or (B) any indenture, lease, loan
agreement, receivables purchase agreement, mortgage, deed of trust, or
other agreement or instrument to which Guarantor is a party or by which
it or its property is bound, (ii) result in or require the creation or
imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, lease, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or
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other agreement or instrument or (iii) violate any law or any order,
rule, regulation applicable to Guarantor of any court or of any
federal, state or foreign regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over Guarantor
or any of its properties.
(f) Solvency. The execution, delivery and performance by the
Guarantor of this Guaranty will not render the Guarantor insolvent, nor
is it being made in contemplation of the Guarantor's insolvency; the
Guarantor does not, in its reasonable judgment, have an unreasonably
small capital for conducting its business as presently contemplated by
it.
SECTION 11. Successors and Assigns; Amendment. This Guaranty shall be
binding upon Guarantor and upon Guarantor's successors and assigns and all
references herein to Guarantor or UCI shall be deemed to include any successor
or successors whether immediate or remote, to such Person. Guarantor shall not
assign any of its obligations hereunder without the prior written consent of
each Beneficiary.
(a) This Guaranty shall inure to the benefit of each Beneficiary
and respective its successors and assigns and all references herein to
Beneficiary shall be deemed to include any successors and assigns of
Beneficiary (whether or not reference in a particular provision is made
to such successors and assigns). Without limiting the foregoing,
Guarantor acknowledges and agrees that each Beneficiary's rights to
receive payment and exercise rights and pursue remedies under this
Guaranty are being assigned to the Issuer which will further assign
such rights to the Indenture Trustee, for the benefit of the persons
set forth in the Indenture.
(b) No amendment or waiver of any provision of this Guaranty, and
no consent to any departure by the Guarantor herefrom, shall in any
event be effective unless the same shall be in writing and signed by
the Guarantor and each Beneficiary and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 12. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 13. Consent to Jurisdiction; Waiver of Jury Trial. Each
Beneficiary may enforce any claim arising out of this Guaranty in any state or
federal court having subject matter jurisdiction and located in New York, New
York and with respect to any such claim, Guarantor hereby irrevocably submits to
the jurisdiction of such courts. Guarantor irrevocably consents to the service
of process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to Guarantor, and agrees that such service, to the fullest
extent permitted by law, (i) shall be deemed in every respect effective service
of process upon it in any such suit, action or proceeding and (ii)
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shall be taken and held to be valid personal service upon and personal delivery
to it. Nothing herein contained shall preclude Beneficiary from bringing an
action or proceeding in respect hereof in any other country, state or place
having jurisdiction over such action. Guarantor irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in such a court located in New York, New York and any claim that any such suit,
action or proceeding brought in such court has been brought in an inconvenient
forum. GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 14. Notices. All notices, demands or requests given pursuant to
this Agreement shall be in writing, sent by overnight courier service or by
telefax or hand delivery to the following addresses:
To Manager: Universal Compression, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
To Issuer: BRL Universal Compression Management, Inc.
0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
To Lessee: UCO Compression LLC
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
To the Indenture Trustee: Xxxxx Fargo Bank, National Association
Sixth & Marquette Avenue
MAC N9311-161
Xxxxxxxxxxx, XX 00000
Notice shall be effective and deemed received (a) one (1) day after
being delivered to the courier service, if sent by courier, (b) upon receipt of
confirmation of transmission, if sent by telecopy, or (c) when delivered, if
delivered by hand. Copies of each such notice shall be sent to the
Administrative Agent: First Union Securities, Inc., 000 X. Xxxxxxx Xx., XX-0,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxx Xxxxx.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Guaranty has been executed and delivered by
Guarantor's duly authorized officer as of the date first written above.
UNIVERSAL COMPRESSION HOLDINGS, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
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Name: Xxxxxxx X. XxxxXxxxxx
Title: Senior Vice President
GUARANTY
