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MANAGEMENT SUBSCRIPTION AGREEMENT
among
UNIVERSAL COMPRESSION HOLDINGS, INC.,
and
EACH OF THE SIGNATORIES HERETO NAMED ON THE SIGNATURE PAGE HERETO
UNDER THE CAPTION "PURCHASERS"
Dated as of February 20, 1998.
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MANAGEMENT SUBSCRIPTION AGREEMENT
MANAGEMENT SUBSCRIPTION AGREEMENT, dated as of February 20,
1998 (the "Agreement"), by and among Universal Compression Holdings, Inc., a
Delaware corporation ("Holdings"), and the persons listed on the signature page
hereto under the heading "Purchasers" (such persons collectively referred to as
the "Purchasers").
WHEREAS, TW Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of Holdings ("TW"), proposes to acquire (the
"Acquisition") all of the issued and outstanding shares of common stock of
Tidewater Compression Service, Inc., a Texas corporation ("Compression"),
pursuant to a Stock Purchase Agreement, dated December 18, 1997, by and between
TW (which, after acquiring the stock of, and being merged into, Compression will
change its name to Universal Compression Inc. (the "Company")) and Tidewater
Inc., a Delaware corporation;
WHEREAS, in connection with the Acquisition, Holdings is
providing certain equity financing at the closing of the Acquisition (the
"Equity Financing") to the Company to fund a portion of the purchase price of
the Acquisition;
WHEREAS, Xxxxxx Xxxxxx Partners III, L.P., a Delaware limited
partnership, and related parties will provide Holdings with at least 51% of the
Equity Financing in return for Common Stock of Holdings, par value $.01 per
share (the "Common Stock") and Series A Preferred Stock of Holdings, par value
$.01 per share (the "Preferred Stock") in an amount equal to such percentage
contribution;
WHEREAS, in connection with the Equity Financing, each
Purchaser desires to purchase from Holdings, and Holdings desires to issue and
sell to each Purchaser, the number of shares of Common Stock and the number of
shares of Preferred Stock, each as set forth opposite the name of each Purchaser
on Annex I hereto for a purchase price set forth opposite the name of each
Purchaser on Annex I (the "Purchase Price").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
meanings ascribed to them below:
"Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which commercial banks are required or authorized by
law or regulation to be closed in New York, New York.
"Closing" shall have the meaning set forth in Section 2.
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"Closing Date" shall have the meaning set forth in Section 2.
"Common Stock" shall have the meaning set forth in the recital
hereto.
"Company" shall have the meaning set forth in the first
recital hereto.
"Conditional Purchasers" shall mean Xxxxxxx Xxxxxx and Xxxxxx
Xxxxxxxx.
"Conditional Shares" shall mean the number of shares of Common
Stock and Preferred Stock (on the basis of one share of Common Stock for every
four shares of Preferred Stock) that each Conditional Purchaser is obligated to
purchase from Holdings in accordance with Section 2(a)(2); provided, however,
that such Purchaser shall in no event be required to purchase a greater number
of shares than set forth opposite such Purchaser's name on Annex II.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
"Holdings" shall have the meaning set forth in the first
paragraph hereof.
"Holdings Securities" shall have the meaning set forth in
Section 2.
"Preferred Stock" shall have the meaning set forth in the
recitals hereto.
"Purchase Price" shall have the meaning set forth in the
recitals hereto.
"Purchasers" shall have the meaning set forth in the first
paragraph hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended and all rules and regulations promulgated thereunder.
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2. Purchase.
(a) Purchase; Conditional Purchase; Option to Purchase. (1)
Upon the consummation of the Acquisition and on the terms set forth in this
Agreement, each Purchaser hereby agrees to purchase, and Holdings hereby agrees
to issue and sell to such Purchaser, no later than April 20, 1998, the shares of
the Common Stock and the shares of the Preferred Stock set forth opposite his
name on Annex I for the Purchase Price set forth opposite his name thereon;
provided, that, Xxxxxx Xxxxx hereby agrees to consummate the purchase of the
shares of Common Stock and Preferred Stock set forth opposite his name on Annex
I on the date hereof.
(2) In the event and to the extent a Conditional Purchaser
exercises his options to purchase Tidewater Inc. common stock, such Conditional
Purchaser hereby agrees to immediately sell such common stock and apply the
proceeds thereof, after deducting any federal, state and local income tax
payments due or paid with respect to the exercise of related options and the
sale of such shares, to acquire the Conditional Shares.
(3) Holdings hereby further agrees to issue and sell to each
of the following Purchasers, at the option of such Purchaser and at any time on
or before (i) in the case of Xxxxx Xxxxxx, April 20, 1998 and (ii) in the case
of Xxxxxxx Xxxxxx and Xxxxxx Xxxxxxxx, February 20, 1999, the shares of Common
Stock and Preferred Stock set forth opposite his name on Annex III for the
Purchase Price. Notwithstanding the prior sentence, the number of shares
available for purchase by a Conditional Purchaser pursuant to the option granted
under this Section 2(a)(3) shall be reduced share-for-share by the number of
shares such Purchaser acquires pursuant to Section 2(a)(2).
(4) All purchases of Common Stock and Preferred Stock
hereunder shall be made on a tandem basis of four shares of Preferred Stock for
each share of Common Stock. The Common Stock and Preferred Stock purchased
pursuant to this Agreement are sometimes collectively referred to herein as the
"Holdings Securities."
(b) The Closing. The closing (the "Closing") of any purchase
of Holdings Securities by the Purchasers pursuant Section 2(a) shall take place
at the offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, on the Business Day (the "Closing Date") set forth in a notice to each
applicable Purchaser at least one Business Day in advance.
At the Closing, (i) Holdings shall issue and deliver to each
Purchaser, against payment of the Purchase Price therefor, certificates
representing Holdings Securities to be sold by it pursuant to Section 2(a)
hereof, (ii) each Purchaser shall deliver to Holdings against delivery of the
certificate or certificates representing Holdings Securities, by wire transfer
to such account as Holdings shall designate in writing at least two Business
Days prior to the Closing Date, the Purchase Price payable in immediately
available funds, and (iii) each party to this Agreement shall deliver to the
other such other documents, instruments and writings as may be required to be
delivered in accordance with this Agreement or as may be reasonably requested by
such other party.
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3. Representations and Warranties of the Purchasers.
(a) Each Purchaser represents and warrants that such Purchaser
is acquiring Holdings Securities for investment for its own account and not with
a view to, or for resale in connection with, the distribution or other
disposition thereof in violation of the Securities Act. Each Purchaser agrees
that such Purchaser will not, directly or indirectly, offer, transfer, sell,
pledge, hypothecate or otherwise dispose of any Holdings Securities (or solicit
any offers to buy, purchase, or otherwise acquire or take a pledge of any
Holdings Securities), except in compliance with the Securities Act, the rules
and regulations promulgated thereunder, applicable state securities laws and the
provisions of this Agreement. Each Purchaser represents and warrants that no
other person or entity will have any interest, beneficial or otherwise, in
Holdings Securities acquired by such Purchaser hereby.
(b) Each Purchaser acknowledges that such Purchaser has been
advised that (i) Holdings Securities are not registered under the Securities
Act, and Holdings has no obligation to effectuate any such registration, (ii)
Holdings Securities must be held indefinitely and such Purchaser must continue
to bear the economic risk of the investment in Holdings Securities unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available, (iii) Rule 144 promulgated under the Securities Act
is not presently available with respect to the sale of any securities of
Holdings, and Holdings has no obligation nor any intention to make such Rule
available, (iv) when and if any Holdings Securities may be disposed of without
registration in reliance on Rule 144, the amounts that may be disposed of may be
limited in accordance with the terms and conditions of such Rule, (v) if the
Rule 144 exemption is not available, public sale without registration will
require compliance with Regulation D or some other exemption under the
Securities Act, (vi) restrictive legends will be placed on the certificates
representing Holdings Securities and (vii) a notation will be made in the
appropriate records of Holdings indicating that Holdings Securities are subject
to restrictions on transfer and, if Holdings should at some time in the future
engage the services of a stock transfer agent, appropriate stop-transfer
restrictions will be issued to such transfer agent with respect to Holdings
Securities.
(c) Each Purchaser hereby covenants that if any Holdings
Securities are disposed of by such Purchaser (i) in reliance upon Rule 144 under
the Securities Act, such Purchaser shall deliver to Holdings at or prior to the
time of such disposition an executed copy of Form 144 (if required by Rule 144)
and such other documentation as Holdings may reasonably require in connection
with such disposition or (ii) in reliance on Rule 144 or pursuant to another
exemption from registration under the Securities Act, such Purchaser shall
deliver to Holdings a legal opinion, reasonably satisfactory to Holdings, as to
the availability of and compliance with such exemption.
(d) Each Purchaser represents and warrants that (i) such
Purchaser can afford to hold Holdings Securities for an indefinite period and to
suffer the complete loss of its investment in Holdings Securities, (ii) it
understands and has taken cognizance of all the risk factors related to its
acquisition of Holdings Securities and (iii) such Purchaser's knowledge and
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experience in financial and business matters is such that it is capable of
evaluating the merits and risks of acquiring Holdings Securities.
4. Representations and Warranties of Holdings.
Holdings represents and warrants to the Purchasers as follows:
(a) The authorized capitalization of Holdings currently
consists of (i) 1,000,000 shares of Common Stock, of which 325,000 shares are
issued and outstanding and (ii) 5,000,000 shares of Preferred Stock, of which
2,000,000 shares designated as Series A Preferred Stock are issued and
outstanding.
(b) Holdings Securities being issued and sold hereunder by
Holdings have been duly authorized and will, upon consummation of the
transactions contemplated herein, be validly issued, fully-paid and
non-assessable
5. Further Action. Each party hereto agrees to execute and deliver any
instrument and take any action that may reasonably be requested by any other
party for the purpose of effectuating the provisions of this Agreement.
6. Miscellaneous Provisions.
(a) Assignability; Binding Effect. Except as otherwise
provided in this Section, no right under this Agreement shall be assignable and
any attempted assignment in violation of this provision shall be void. Holdings
shall have the right to assign its rights and obligations hereunder to any
successor entity (including any entity acquiring substantially all of the assets
of Holdings), whereupon references herein to Holdings shall be deemed to be to
such successor. Holdings shall also have the right to assign this Agreement in
whole or in part to CHPIII in consideration for CHPIII's Equity Financing so
that the Holdings Securities are sold by CHPIII to the Purchasers hereunder.
Holdings hereby assigns its rights and obligations under Section 2(a) to CHPIII.
This Agreement, and the rights and obligations of the parties hereunder, shall
be binding upon and inure to the benefit of any and all successors, permitted
assigns, personal representatives and all other legal representatives, in
whatsoever capacity, by operation of law or otherwise, of the parties hereto, in
each case with the same force and effect as if the foregoing persons were named
herein as parties hereto.
(b) Notices. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, telecopied with confirmed receipt, sent by certified, registered, or
express mail, postage prepaid, or sent by a national next-day delivery service
to the parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice, and shall be deemed given when so
delivered personally or telecopied, or if mailed, 2 days after the date of
mailing, or, if by national next-day delivery service, on the day after delivery
to such service as follows:
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(i) if to Holdings, to it at:
c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: 000-000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
(ii) If to the Purchasers, to them at their respective
addresses set forth next to their names on Annex IV hereto
(c) Applicable Law; Consent. This Agreement and the validity
and performance of the terms hereof shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law or choice of law. The parties hereto hereby agree that all
actions or proceedings arising directly or indirectly from or in connection with
this Agreement shall be litigated only in the Supreme Court of the State of New
York or the United States District Court for the Southern District of New York
located in New York County, New York. To the extent permitted by applicable law,
the parties hereto consent to the jurisdiction and venue of the foregoing courts
and consent that any process or notice of motion or other application to either
of said courts or a judge thereof may be served inside or outside the State of
New York or the Southern District of New York by registered mail, return receipt
requested, directed to such party at its address set forth in this Agreement
(and service so made shall be deemed complete five days after the same has been
posted as aforesaid) or by personal service or in such other manner as may be
permissible under the rules of said courts.
(d) Entire Agreement; Amendments and Waivers. This Agreement
sets forth the entire understanding of the parties with respect to the subject
matter hereof. The failure of any party to seek redress for the violation of or
to insist upon the strict performance of any term of this Agreement shall not
constitute a waiver of such term and such party shall be entitled to enforce
such term without regard to such forbearance. This Agreement may be amended only
by the written consent of each party hereto, and each party hereto may take any
action herein prohibited or omit to take action herein required to be performed
by it, and any breach of or compliance with any covenant, agreement, warranty or
representation may be waived only by the written waiver of the party against
whom such action or inaction may negatively affect, but, in any case, such
consent or waiver shall only be effective in the specific instance and for the
specific purpose for which given.
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(e) Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretations of
the Agreement.
(f) Severability. If any term, provision, covenant or
restriction of this Agreement, or any part thereof, is held by a court of
competent jurisdiction or any foreign federal, state, county or local government
or any other governmental, regulatory or administrative agency or authority to
be invalid, void, unenforceable or against public policy for any reason, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
(h) Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto shall and do
hereby waive the defense in any action for specific performance that a remedy at
law would be adequate and that the parties hereto, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
compel specific performance of this Agreement in any action instituted in the
Supreme Court of the State of New York or the United States District Court for
the Southern District of New York, or, in the event such courts shall not have
jurisdiction of such action, in any court of the United States or any state
thereof having subject matter jurisdiction of such action.
(i) Survival of Covenants. All covenants, agreements,
representations and warranties made herein or in any other document referred to
herein or delivered to a party pursuant hereto or in connection herewith shall
survive the execution and delivery to such party of this Agreement and of
Holdings Securities.
(j) Brokers Fees, etc. Each party hereto represents and
warrants to each other party that no broker's, finder's or placement fee or
commission will be payable to any Person alleged to have been retained by such
representing and warranting party with respect to the transaction contemplated
by this Agreement. Each party hereto hereby indemnifies each other party against
and agrees that it will hold each other party and each of such party's
affiliates (and each of the trustee, employees and other fiduciaries or agents
of such party) harmless from any claim, demand or liability for any broker's,
finder's or placement fee or commission alleged to have been incurred by such
indemnifying party, including without limitation reasonable attorneys' fees.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.
UNIVERSAL COMPRESSION
HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
/s/ Xxxxxx Xxxxx
-------------------------------
XXXXXX XXXXX
/s/ Xxxxx Xxxxxx
-------------------------------
XXXXX XXXXXX
/s/ Xxxxxxx Xxxxxx
-------------------------------
XXXXXXX XXXXXX
/s/ Xxxxxx Xxxxxxxx
-------------------------------
XXXXXX XXXXXXXX
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ANNEX I
Purchaser Number of Shares Purchase Price
---------- ------------------------------- ----------------------------
Common Preferred Common Preferred
Stock Stock Stock Stock
----- ----- ----- -----
Xxxxxx Xxxxx 4,400 17,600 $220,000 $880,000
Xxxxx Xxxxxx -- -- -- --
Xxxxxxx Xxxxxx 2,000 8,000 $100,000 $400,000
Xxxxxx Xxxxxxxx 960 3,840 $48,000 $192,000
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ANNEX II
Purchaser Number of Shares Purchase Price
---------- ------------------------------- ------------------------------
Common Preferred Common Preferred
Stock Stock Stock Stock
------ ----- ----- -----
Xxxxxx Xxxxx -- -- -- --
Xxxxx Xxxxxx -- -- -- --
Xxxxxxx Xxxxxx 2,000 8,000 $100,000 $400,000
Xxxxxx Xxxxxxxx 960 3,840 $48,000 $192,000
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ANNEX III
Purchaser Number of Shares Purchase Price
---------- ------------------------------- -----------------------------
Common Preferred Common Preferred
Stock Stock Stock Stock
----- ------ ----- -----
Xxxxxx Xxxxx -- -- -- --
Xxxxx Xxxxxx 2,000 8,000 $100,000 $400,000
Xxxxxxx Xxxxxx 2,000 8,000 $100,000 $400,000
Xxxxxx Xxxxxxxx 960 3,840 $48,000 $192,000
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ANNEX IV
Purchaser Address
--------- -------
Xxxxxx Xxxxx 0000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Xxxxx Xxxxxx c/o Universal Compression, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxx c/o Universal Compression, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxx c/o Universal Compression, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, XX 00000
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