STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of February 20, 1998 (the
"Agreement"), among Universal Compression Holdings, Inc. ("Holdings"), Xxxxxx
Xxxxxx Partners III, L.P. ("CHPIII," and together with related accounts or funds
managed by Xxxxxx Xxxxxx, Inc. ("CHI") or an Affiliate of CHI, referred to
herein collectively as "CHP"), and such persons whose names appear on the
signature page hereto respectively under the headings "Co-Investors," "Castle
Affiliated Parties" and "Management Stockholders" (CHP, and such persons
together with future holders of Holdings Securities that become parties hereto
by executing and delivering to Holdings (with the approval of Holdings, an
Instrument of Accession in the form of Exhibit B in the case of new issuances of
Holdings Securities) are sometimes herein referred to collectively as the
"Stockholders" and individually as a "Stockholder").
WHEREAS, TW Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Holdings ("TW"), acquired on the date hereof (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,
changed its name to Universal Compression Inc. (the "Company")) and Tidewater
Inc., a Delaware corporation;
WHEREAS, in connection with the Acquisition, Holdings provided
the Company with equity financing (the "Equity Financing") to fund a portion of
the purchase price of the Acquisition;
WHEREAS, each of the Stockholders have heretofore purchased from
Holdings shares of Common Stock (the "Common Stock"), par value $.01 per share,
of Holdings and shares of Series A Preferred Stock (the "Preferred Stock"), par
value $.01 per share, of Holdings as set forth next to each such Stockholder's
name on Exhibit A attached hereto; and
WHEREAS, the parties hereto desire to enter into this Agreement
to place certain restrictions on the sale, assignment, transfer or other
disposition of the shares of Common Stock and Preferred Stock and to provide for
certain rights and obligations in respect thereto as hereinafter provided.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. Definitions. (a) As used in this Agreement, the following
terms shall have the meanings ascribed to them below:
"Affiliate" shall, as to Holdings or any other specified Person,
mean (i) any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with Holdings (or other specified Person),
(ii) any Person, directly or indirectly, having Beneficially Ownership of at
least 10% of any class of outstanding capital stock or other
evidence of Beneficial Ownership in Holdings or such other Person; provided,
however, that no holder of Holdings Securities shall by reason of such holding
be an Affiliate of Holdings or any of its Subsidiaries for purposes of this
Agreement, and (iii) any employee of CHI or Affiliates of Xxxxxx Xxxxxx Inc.
"Beneficial Ownership" shall have the same meaning as set forth
in Section 13(d) of the Exchange Act.
"Benefit Plan Investor" shall mean a "benefit plan investor"
within the meaning of Department of Labor Regulation Section 2510.3-101(f)(2) or
successor rule or regulation, as from time to time amended and in effect.
"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.
"CHI" shall have the meaning set forth in the first paragraph
hereof.
"CHP" shall have the meaning set forth in the first paragraph
hereof.
"CHPIII" shall have the meaning set forth in the first paragraph
hereof.
"CHP Stock" means Common Stock (or Common Stock equivalents)
and/or Preferred Stock held by CHP or its Affiliates.
"Co-Investors" shall mean the Stockholders named under the
caption "Co-Investors" on the signature page hereto and all transferees thereof
pursuant to Section 7(b).
"Common Stock" shall have the meaning set forth in the recitals
hereto.
"Company" shall have the meaning set forth in the recitals
hereto.
"Compelled Sale Notice" shall have the meaning set forth in
Section 5(b).
"Compelled Sale Notice Date" shall have the meaning set forth in
Section 5(c).
"Compelled Sale Offer" shall have the meaning set forth in
Section 5(a).
"Compelled Sale Offer Price" shall have the meaning set forth in
Section 5(a).
"Compelled Sale Purchaser" shall have the meaning set forth in
Section 5(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"Fully-Diluted Basis" shall mean giving effect, without
duplication, to (i) all shares of Holdings Securities outstanding at the time of
determination plus (ii) all shares of
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Holdings Securities issuable upon conversion of any convertible securities or
the exercise of any option, warrant or similar right, whether or not then
presently exercisable.
"Governmental Authority" shall mean any federal, state or local
governmental, administrative, or regulatory authority or agency.
"Holdings" shall have the meaning set forth in the first
paragraph hereof.
"Holdings Securities" means, collectively, Common Stock and/or
Preferred Stock.
"Investment Units" shall have the meaning set forth in Section
5(a).
"Issuance Notice" shall have the meaning set forth in Section
4(b).
"Management Stockholders" shall mean the Stockholders named under
the caption "Management Stockholders" on the signature page hereto and all other
Stockholders who are employees of Holdings or any of its Subsidiaries.
"Notice of Intention" shall have the meaning set forth in Section
6(a).
"Notice of Exercise" shall have the meaning set forth in Section
6(b).
"Offer Price" shall have the meaning set forth in Section 6(a).
"Offered Shares" shall have the meaning set forth in Section
6(a).
"Operating Company" shall mean an "operating company" within the
meaning of Department of Labor Regulation ss.2510.3-101(c) or successor rule or
regulation, as from time to time amended and in effect.
"Person" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or
government or department or agency thereof.
"Plan Assets" shall mean "plan assets" within the meaning of
Department of Labor Regulation ss.2510.3-101 or successor rule or regulation, as
from time to time amended and in effect.
"Preferred Stock" shall have the meaning set forth in the
recitals hereto.
"Preemptive Right" shall have the meaning set forth in Section 4.
"Public Sale" means a sale pursuant to an effective registration
statement under the Securities Act or a sale to the public pursuant to Rule 144.
"Purchased Employee Shares" means any shares of Common Stock or
Preferred Stock purchased by any employee or director of Holdings, or Xxxxx
Xxxxxxx and Xxxx Xxxxxxx, in
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any case within one year of the date hereof at $50 per share, which may be
increased at a rate not to exceed 9% per annum from the date hereof until the
date of purchase by such employee or director.
"Qualified IPO" means one or more public offerings of Common
Stock, the aggregate proceeds of which (after underwriting discounts or
commissions but before the expenses of the offering) are at least $50 million
pursuant to a registration statement filed with, and declared effective by, the
Securities Exchange Commission ("SEC"), upon the consummation of which the
common stock is listed on a United States securities exchange or included in the
NASDAQ Stock Market System, other than a registration on Form S-4 or S-8 (or its
equivalent).
"Regulatory Requirement" shall have the meaning set forth in
Section 10.9
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"Stockholders" shall have the meaning set forth in the first
paragraph hereof.
"Subsidiary" shall mean any Person of which Holdings or other
specified Person now or hereafter shall at the time own directly or indirectly
at least a majority of the outstanding capital stock (or other evidence of
Beneficial Ownership) entitled to vote generally or at least a majority of the
partnership, joint venture or similar interests, or in which Holdings or other
specified Person is a general partner or joint venturer without limited
liability.
"Voting Agreement" shall mean the Voting Agreement, dated the
date hereof, among Holdings, Xxxxxx Xxxxxx Partners III, L.P. and the
Co-Investors.
"Voting Securities" means capital stock of Holdings as generally
vote on all matters brought before holders of Common Stock for approval or other
vote.
"Voting Trust Agreement" shall mean the Voting Trust Agreement,
dated the date hereof, among Holdings, certain Stockholders and Xxxx X. Xxxxxx,
as voting trustee.
"Wholly-Owned Subsidiary" shall mean with respect to any Person,
any Subsidiary all of whose outstanding capital stock (or other evidence of
Beneficial Ownership) entitled to vote generally other than directors'
qualifying shares is owned by such Person, directly or indirectly.
(b) All references herein to Common Stock and Preferred
Stock, whether used in the definition of Holdings Securities, CHP Stock or
otherwise shall include any other Voting Securities to the extent issued and
outstanding.
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2. Representations and Warranties of the Stockholders.
Each of the Stockholders represents and warrants as follows:
2.1 Authorization. Such Stockholder has full power and authority
to execute and deliver this Agreement and to perform such Stockholder's
obligations hereunder and this Agreement has been duly authorized, executed and
delivered by such Stockholder and is valid, binding and enforceable in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting the rights and remedies of creditors.
2.2 Compliance with Laws and Other Instruments. The execution and
delivery of this Agreement will not (a) conflict with (i) any provision of any
governing instrument applicable to such Stockholder or (ii) any material permit,
franchise, judgment, decree, statute, rule or regulation applicable to such
Stockholder or its business or property, or (b) result in any material breach of
any terms or provisions of, or constitute a material default under, any material
contract, or instrument to which such Stockholder is a party or by which it is
bound.
2.3 Consents. No filing, consent, approval or authorization of or
action with any Governmental Authority, is required to be made or obtained by or
with respect to such Stockholder in connection with the execution and delivery
of this Agreement by such Stockholder, other than such filings, consents,
approvals, authorizations or actions, the failure of which to make or obtain,
individually or in the aggregate, would not materially affect such Stockholder's
obligations hereunder.
3. Tag Along Rights.
(a) Each Stockholder shall have the right (the "Tag Along
Right") to participate on the terms set forth below in any sale by CHP and its
Affiliates of CHP Stock that would, if consummated, result in CHP and its
Affiliates owning on an economic basis less than an aggregate of 180,640 shares
of Common Stock (in the event of sales of Common Stock) or 722,560 shares of
Preferred Stock (in the event of sales of Preferred Stock) (each being a
"Trigger Amount"), in each case less Purchased Employee Shares; provided, that,
any Stockholder electing to exercise its Tag Along Right hereunder shall, to the
extent such sale by CHP and its Affiliates includes both Common Stock and
Preferred Stock, be required to exercise such rights as to both Common Stock and
Preferred Stock in the manner set forth in Section 3(b). At least 20 days prior
to any such transfer of CHP Stock, CHPIII will deliver a sale notice to the
Stockholders specifying the identity of the prospective transferee(s) and
disclosing in reasonable detail the price and other terms and conditions of the
proposed transfer, including, without limitation, the expected aggregate
holdings (in terms of dollars and percentage) by CHP and its Affiliates of the
Common Stock and the Preferred Stock immediately after consummation of such
proposed sale. The Stockholders may elect to participate in the proposed
transfer by delivering written notice to CHPIII prior to the expiration of such
20-day period.
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(b) If one or more of the Stockholders elect to
participate in such transfer, each such participating Stockholder will be
entitled to sell in such proposed transfer, at the same price and on the same
terms as CHP and its Affiliates as follows:
(i) a number of shares of Common Stock equal to the
product of (x) the quotient determined by dividing the number of shares of
Common Stock then held by such Stockholder (including shares of Common Stock
issuable upon the exercise of any warrants or options held by such Stockholder)
by the aggregate number of shares of Common Stock then held by CHP and its
Affiliates and all participating Stockholders (including shares of Common Stock
issuable upon the exercise of any warrants or options held by all such
participating Stockholders) multiplied by (y) the number of shares of Common
Stock (or Common Stock equivalents) to be sold in such proposed transfer.
(ii) a number of shares of Preferred Stock equal to the
product of (x) the quotient determined by dividing the number of shares of
Preferred Stock then held by such Stockholder by the aggregate number of shares
of Preferred Stock then held by CHP and its Affiliates and all participating
Stockholders multiplied by (y) the number of shares of Preferred Stock to be
sold in such proposed transfer.
(c) The provisions of this Section 3 shall not apply to
transfers by any entity or person constituted within CHP (i) to each other or to
Affiliates of any such entity at a price not in excess of such entity's original
cost, (ii) to the partners of such entities as part of a distribution by such
entities or (iii) of Common Stock and Preferred Stock in amounts that would not
result in CHP and its Affiliates owning less than the Trigger Amount, provided
each such transferee agrees to be bound by the provisions of this Agreement.
(d) No Stockholder shall be required to make any
representation or warranty in connection with the exercise of its participation
rights under this Section 3 other than as to such Stockholder's ownership and
authority to transfer, free of liens, claims and encumbrances, the shares of
Common Stock and/or Preferred Stock proposed to be transferred by such
Stockholder and any other representation or warranty reasonably requested by the
purchaser thereof as related solely to such Stockholder or its regulatory
status.
4. Preemptive Rights.
(a) If after the date hereof Holdings proposes to issue
any shares of Common Stock or Preferred Stock or any other Voting Security (or
obligations of any kind convertible into or exchangeable or exercisable for any
shares of Common Stock or Preferred Stock or such other Voting Security), each
Stockholder shall have the right (the "Preemptive Right") to purchase a portion
of such securities sufficient to enable such holder to maintain its voting
percentage interest in the Voting Securities (on a Fully-Diluted Basis)
immediately prior to such issuance; provided, that, any Stockholder electing to
exercise its Preemptive Right hereunder shall, to the extent Holdings issues
both Common Stock and Preferred Stock, be required to exercise such right as to
both the Common Stock and the Preferred Stock in the same proportion as such
classes are issued.
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(b) Holdings shall give each Stockholder at least 30 days'
prior written notice of any such proposed issuance setting forth in reasonable
detail the proposed terms and conditions thereof, including without limitation
the identity of the proposed recipient (the "Issuance Notice"), and shall offer
to each such Stockholder the opportunity to purchase such securities at the same
price, on the same terms, and at the same time as the securities are proposed to
be issued by Holdings. A Stockholder may exercise its right of first refusal by
delivery of a written notice to Holdings within 15 days after delivery of the
Issuance Notice, which exercise shall be irrevocable.
(c) The Preemptive Rights shall not apply to the following
issuances: (i) issuances of securities of a type that could not be acquired by
all the Stockholders pursuant to this Section 4 if such acquisition is at such
time prohibited because it would result in a violation of Holdings or its
Subsidiaries covenants under its credit facilities or instruments; (ii)
issuances of Holdings Securities in connection with a transaction (other than a
transaction with any entity constituted within CHP or any of their Affiliates)
that the Board of Directors of Holdings deems to be a strategic transaction,
including, without limitation, any acquisition of any business or assets used in
the business of Holdings or its Subsidiaries; (iii) issuances where Holdings
Securities are issued as a unit with securities of Holdings that are not
Holdings Securities; (iv) issuances where Stockholders (other than CHP) holding
a majority of the Holdings Securities (excluding those held by CHP) determine
that such issuance should be exempt from the provisions of this Section 4; (v)
issuances in any underwritten public offering; (vi) issuances in connection with
mergers, consolidations or acquisitions of assets or businesses; and (vii)
issuances to directors and employees of Holdings and any Subsidiary thereof.
5. Drag Along Rights.
(a) CHPIII shall have the right in connection with a bona
fide offer (a "Compelled Sale Offer") by a Person not an Affiliate of CHP (a
"Compelled Sale Purchaser") to purchase at least 80% of the shares of Common
Stock, Preferred Stock and any other equity securities (including, without
limitation, warrants, options and preferred stock) of Holdings (each, an
"Investment Unit" and collectively, "Investment Units") held by CHPIII (for
either cash, securities of a class registered under Section 12 of the Exchange
Act (or convertible into such a class of securities) or any combination thereof)
to require each (but not less than each, other than the Management Stockholders
to the extent of any Investment Units acquired by such Stockholders within 12
months after the Closing Date, other than Common Stock acquired pursuant to the
Company's Incentive Stock Option plan) of the other Stockholders to sell the
same percentage or all of the Investment Units then held by such Stockholders,
to the Compelled Sale Purchaser, for the equivalent consideration per Investment
Unit (a "Compelled Sale Offer Price(s)") and otherwise on the same terms and
conditions upon which CHP sells its Investment Units.
(b) If CHP elects to exercise its right to compel sale
pursuant to this Section 5, CHPIII shall deliver a written notice (a "Compelled
Sale Notice") of the Compelled Sale Offer to each Stockholder and Holdings at
least 20 days prior to the consummation of any such sale, setting forth the
Compelled Sale Offer Price(s), the identity of the Compelled Sale
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Purchaser and the other terms and conditions thereof. Each Stockholder shall
deliver to CHPIII in escrow, not less than five Business Days before the
proposed date of consummation of the Compelled Sale Offer, the duly endorsed
certificate or certificates representing the requisite number of the Investment
Units owned by such Stockholder, together with a limited power-of-attorney
authorizing CHPIII to transfer such Investment Units to the Compelled Sale
Purchaser pursuant to the terms of the Compelled Sale Offer at the Compelled
Sale Offer Price(s), and in accordance with the provisions hereof.
(c) CHPIII shall have 60 days from the date the Compelled
Sale Notice is received by the Stockholders (the "Compelled Sale Notice Date")
to sell, and to cause the other entities constituting CHP to sell, to the
Compelled Sale Purchaser at the Compelled Sale Offer Price(s) all of the
Investment Units subject to the Compelled Sale Offer. Immediately after
completion of any such sale pursuant to this Section 5, CHPIII shall notify
Holdings and each Stockholder of such completion and shall furnish such evidence
of such sale (including time of completion) and the terms thereof as Holdings or
any Stockholder may reasonably request. CHPIII shall substantially concurrently
with such closing also remit to each Stockholder the proceeds of such sale
attributable to the sale of such Stockholder's Investment Units immediately upon
receipt thereof. If any sale to a Compelled Sale Purchaser is not completed by
the expiration of the 60-day period referred to in this Section 5(c), then,
without prejudice to CHPIII's right to seek to compel a sale under this Section
5 in the future, CHPIII shall return to each Stockholder all certificates
representing the Investment Units of such Stockholder.
(d) No Stockholder required to sell Investment Units
pursuant to a Compelled Sale Offer shall be required to make any representation
or warranty in connection with such Compelled Sale Offer other than as to such
Stockholder's ownership and authority to transfer, free of liens, claims and
encumbrances, the Investment Units proposed to be sold by it.
6. Right of First Offer.
(a) If after February 20, 2000 hereof any Stockholder
(other than a Stockholder of the type described in the last sentence of this
Section 6(a)) wishes to transfer any Common Stock and/or Preferred Stock held by
it to an unaffiliated third party pursuant to the second paragraph of Section 7,
then such Stockholder shall deliver a written notice of its desire to so
transfer (a "Notice of Intention"), accompanied by a copy of a proposal relating
to such transfer, to CHPIII and Holdings, setting forth such Stockholder's
desire to make such transfer, the number of shares of Common Stock and/or
Preferred Stock proposed to be transferred (the "Offered Shares") and the price
(the "Offer Price") at which such Stockholder proposes to transfer such stock.
For purposes of this Section 6, references to "Stockholder" exclude all
Management Stockholders.
(b) Upon receipt of the Notice of Intention, CHP shall
have the right to purchase at the price specified in the Notice of Intention,
all or, subject to Section 6(d), any portion of the Offered Shares, exercisable
by the delivery of notice to such Stockholder (the "Notice of Exercise"), with a
copy to Holdings, within 20 days from the date of receipt of the Notice of
Intention. In the event CHP elects not to exercise its right to purchase the
Offered
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Shares (or if CHP fails to provide the Notice of Exercise within such 20-day
period), Holdings may exercise the right set forth in this Section 6 to purchase
the Offered Shares by providing a Notice of Exercise within 30 days after the
date of its receipt of the Notice of Intention. The right of CHP and Holdings
pursuant to this Section 6 shall terminate if not exercised within 20 days, in
the case of CHP, or 30 days, in the case of Holdings, after receipt of the
Notice of Intention.
(c) In the event CHP or Holdings exercises its rights to
purchase all or, subject to Section 6(d), a portion of the Offered Shares, then
such Stockholder must sell the Offered Shares to CHP or Holdings, as applicable,
after not less than 30 days and not more than 60 days from the date of the
delivery of the Notice of Exercise received by such Stockholder.
(d) Notwithstanding the foregoing provisions of this
Section 6, unless such Stockholder shall have consented to the purchase of less
than all of the Offered Shares, neither CHP nor Holdings may purchase any
Offered Shares unless all of the Offered Shares are to be purchased.
(e) If the Notice of Intention has been duly given and CHP
and Holdings elect not to exercise their rights or wish to exercise their rights
only as to a portion of the Offered Shares (without the consent of such
Stockholder), then such Stockholder shall have the right for a period of up to
180 days from the expiration of the 30 day period commencing on the date of
delivery of the Notice of Intention (unless such Stockholder is notified prior
to such date by both CHP and Holdings that neither intends to exercise its
rights under this Section 6) to sell the Offered Shares to any such third party
for a price not less than the Offer Price and on the same terms and conditions
as provided in the Notice of Intention; provided, that upon consummation of such
sale, such third party is required to exercise (i) an Instrument of Accession in
the form of Exhibit B hereto and thereby become a party to, and be bound by the
terms and provisions of, this Agreement and (ii) an appropriate supplement to
the Voting Agreement or the Voting Trust Agreement, as applicable, and thereby
become a party to, and be bound by the terms and provisions of, the Voting
Agreement or the Voting Trust Agreement, as applicable.
(f) In the event CHP and Holdings do not exercise their
rights under this Section 6 to purchase the Offered Shares and such Stockholder
shall not have sold the Offered Shares to such third party within such 180-day
period, then such Stockholder shall not be permitted to give another Notice of
Intention for a period of 90 days from the last day of such 180-day period.
7. Restrictions on Transfer.
(a) Except as provided in Sections 3, 4, 5, 6 and this
Section 7 hereof, the Stockholders shall not transfer or otherwise dispose of
any Investment Units owned by such Stockholders, or any interest therein, and
any attempt by such Stockholders to effect a transfer or disposition in
violation of this Section 7 or Sections 3, 4, 5 and 6 hereof shall be void and
ineffective for all purposes. The words "transfer" and "dispose" include the
making of any sale, exchange, assignment, gift, security interest, pledge or
other encumbrance, or any contract
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therefor (other than a voting trust or other agreement or arrangement with
respect to the transfer of voting rights or any other beneficial interest in the
Investment Units to an Affiliate of CHP), the creation of any other claim
thereto or any other transfer or disposition whatsoever, whether voluntary or
involuntary, affecting the right, title, interest or possession in or to the
Investment Units.
(b) Nothing in this Section 7 or any other Section hereof
shall restrict the transfer or other disposition of the Investment Units: (i) to
a personal representative or to one or more members of any Stockholder's family
or to trusts or similar entities established for their benefit or to any other
charitable or non-profit organization, (ii) to any other Stockholder or to any
Affiliate of any Stockholder, (iii) upon any liquidation or any other
distribution to the partners or any other holders of a beneficial interest in
any Stockholder; (iv) between or among the entities or persons constituting CHP
and/or any of its Affiliates; (v) to any entity that is a successor trustee to
the trustee for such Stockholder or nominee for, or successor by reorganization
of, a qualified pension trust acting as trustee for such Stockholder; or (vi) to
Holdings or any Subsidiary of Holdings (but not including Common Stock held by
CHP or any of its Affiliates); provided, however, that such transferee(s) shall
take such Investment Units subject to and be fully bound by this Agreement with
the same effect as if he, she or it were a party hereto and shall execute and
deliver to Holdings an Instrument of Accession in the form of Exhibit B hereto
and references herein to Common Stock or Preferred Stock held or owned by any
Stockholder shall be deemed to include Common Stock or Preferred Stock held or
owned by any such transferee(s) (and the transferee shall be deemed a
Stockholder for purposes of this Agreement). As used in this Agreement, the term
"personal representative" shall mean the executor or executors of the will or
administrator or administrators of the estate, the heirs, legatees or other
beneficiaries thereunder and all other legal representatives (by operation of
law or otherwise) of a holder of Investment Units.
(c) The Stockholders agree that each stock certificate
representing Common Stock or Preferred Stock issued to any holder bound by the
terms hereof shall bear the following legend:
SHARES OF UNIVERSAL COMPRESSION HOLDINGS, INC.
("HOLDINGS") REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A STOCKHOLDERS AGREEMENT, DATED AS OF
FEBRUARY 20, 1998, WHICH CONTAINS PROVISIONS
REGARDING THE RESTRICTIONS ON THE TRANSFER OF SUCH
SHARES AND OTHER MATTERS. A COPY OF SUCH AGREEMENT
IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL
OFFICE OF HOLDINGS. THE SHARES REPRESENTED BY THIS
CERTIFICATE WERE NOT REGISTERED UNDER, AND ARE
SUBJECT TO, THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT
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OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AS DETERMINED BY HOLDINGS.
(d) In the event any Stockholder sells all or any portion
of its Investment Units pursuant to any Section of this Agreement, such
Stockholder shall, upon the reasonable request of Holdings, provide prompt
written notice to Holdings setting forth the net proceeds such Stockholder
received upon such sale or transfer. The obligation of such Stockholder under
this Section 7(d) shall apply each time such Stockholder sells Investment Units
hereunder.
8. Holdings Covenants.
Holdings covenants and agrees as follows, with such covenants to
be effective so long as Holdings Securities are outstanding (or such shorter
period as may be indicated below):
8.1 Plan Assets. So long as any Stockholder that is a Benefit
Plan Investor holds any equity securities of Holdings, Holdings shall take all
actions necessary to allow it to continue to constitute an Operating Company, or
otherwise not to cause any of the underlying assets of Holdings or any of its
Subsidiaries to be deemed "Plan Assets" with respect to such Stockholder.
8.2 Annual Reports; Quarterly Reports; Monthly Reports. (a)
Holdings will furnish to all Stockholders, as soon as practicable, and in any
event within 120 days after the end of each fiscal year, audited consolidated
statements of income and cash flows of Holdings and its Subsidiaries for such
fiscal year, and consolidated balance sheets of Holdings and its Subsidiaries as
of the end of such fiscal year, setting forth in each case comparisons to the
preceding fiscal year.
(b) Holdings will furnish to all Stockholders, as soon as
practicable, and in any event within 60 days after the end of each of the first
three fiscal quarters in each fiscal year, unaudited consolidated statements of
income and cash flows of Holdings and its Subsidiaries for such quarterly fiscal
period, and consolidated balance sheets of Holdings and its Subsidiaries as of
the end of such quarterly fiscal period, setting forth in each case comparisons
to the corresponding period in the preceding fiscal year.
(c) Each of the financial statements referred to in paragraphs
(a) and (b) will be prepared in accordance with generally accepted accounting
principles.
8.3 Corporate Existence. Holdings will, and will cause each of
its Subsidiaries to, preserve and keep in full force and effect its corporate
existence, rights and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section shall prohibit (i) the merger of
any Subsidiary into Holdings or the merger or consolidation of any Subsidiary
with or into another entity if the corporation surviving such consolidation or
merger is a Subsidiary of Holdings and (ii) the termination of the corporate
11
existence of any Subsidiary if Holdings in good faith determines that such
termination is in its best interest.
8.4 Insurance. Holdings will maintain, and will cause its
Subsidiaries to maintain, with financially sound and reputable insurance
companies, funds or underwriters insurance of the kinds and in accordance with
the general practices of businesses engaged in similar activities.
8.5 Compliance with Laws. Holdings will comply, and will cause
each of its Subsidiaries to comply, in all material respects with all applicable
laws and regulations wherever its business is conducted, and all applicable
decrees, orders and judgments, the non-compliance with which could reasonably be
expected to have a materially adverse effect on the business, operations or
condition, financial or otherwise, of Holdings and its Subsidiaries, taken as a
whole.
8.6 Transaction with Affiliates. Holdings will not, and will not
permit any of its Subsidiaries to, enter into or permit to exist any transaction
or series of related transactions with, or for the benefit of, an Affiliate
unless such transaction is on terms no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's length basis from a Person that is not an Affiliate of Holdings or such
Subsidiaries (it being agreed that (i) the Management Agreement, dated as of the
date hereof, between Holdings, the Company and CHI, and (ii) the Finders and
Consulting Services Agreement, between Holdings and Xxxxxx Xxxxx, dated as of
the date hereof, shall each be deemed to comply with this covenant).
8.7 Rules 144 and 144A. So long as Holdings shall not have filed
a registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act,
Holdings shall, at any time and from time to time, upon the request of a
Stockholder, furnish in writing to such Stockholder a statement as of a date not
earlier than 12 months prior to the date of such request of the nature of the
business of Holdings and the products and services it offers and copies of
Holdings' most recent balance sheet and profit and loss and retained earnings
statements, together with similar financial statements for such part of the two
preceding fiscal years as Holdings shall have been in operation, all such
financial statements to be audited to the extent audited statements are
reasonably available, provided that, in any event the most recent financial
statements so furnished shall include a balance sheet as of a date less than 16
months prior to the date of such request, statements of profit and loss and
retained earnings for the 12 months preceding the date of such balance sheet,
and, if such balance sheet is not as of a date less than 6 months prior to the
date of such request, additional statements of profit and loss and retained
earnings for the period from the date of such balance sheet to a date less than
6 months prior to the date of such request. If Holdings shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, Holdings shall file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the Securities and Exchange Commission thereunder (or, if Holdings is not
required to file such reports, will, upon the request of such
12
Stockholder, make publicly available other information) and will take such
further action as such Stockholder may reasonably request, all to the extent
required from time to time to enable such Stockholder to sell securities of
Holdings without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission. Upon the request of
a Stockholder, Holdings will deliver to such Stockholder a written statement as
to whether it has complied with the requirements of this Section. Holdings, upon
written request, will cooperate with and assist a Stockholder or any member of
the National Association of Securities Dealers, Inc. system for Private Offering
Resales and Trading through Automated Linkages ("PORTAL") in applying to
designate and thereafter maintaining the eligibility of Common Stock and
Preferred Stock for trading through PORTAL.
8.8 Board Observer. Each of (i) Mellon Bank, N.A., as Trustee for
the Xxxx Atlantic Master Trust, (ii) BT Capital Partners, Inc., (iii) First
Union Capital Partners, Inc., and (iv) Wilmington Trust, as Trustee for Du Pont
Pension Trust, may select a representative to attend as an observer all
meetings, including telephonic meetings, of Holdings' Board of Directors. In
such event, Holdings will give each such Stockholder as designates such a
representative written notice of each meeting of its Board of Directors at the
same time and in the same manner as notice is given to the directors. Such
representative shall also be provided with all written materials and other
information (including minutes of meetings) given to directors in connection
with such meetings at the same time such materials and information are given to
the directors. If Holdings proposes to take any action by written consent in
lieu of a meeting of its Board of Directors, Holdings shall give written notice
thereof to each such Stockholder promptly following the effective date of such
consent describing in reasonable detail the nature and substance of such action.
In the event Holdings establishes separate committees of the Board of Directors,
the right to a representative granted hereunder shall extend to all meetings,
including telephone meetings, of the Compensation and Audit Committees, but
shall in no event extend to meetings of Holdings' Executive Committee. The Board
of Director observer rights granted under this Section 8.8 are exclusive to each
such entity and are thereby not assignable by any such Stockholder under any
circumstances.
13
9. Termination.
(a) The obligations and restrictions set forth under Sections 3
through 8 of this Agreement shall terminate upon the earlier of (i) completion
of a Qualified IPO; provided that if the Qualified IPO is completed within two
years after the date hereof, such termination shall occur on the two year
anniversary after the date hereof; (ii) the date upon which CHP's economic
ownership of the capital stock of Holdings represents less than 10% of the
outstanding capital stock of Holdings and (iii) the tenth anniversary date of
the date hereof.
(b) Upon such termination, the Stockholders shall be entitled
upon written request to Holdings to exchange their certificates representing the
Common Stock and Preferred Stock for certificates that do not contain the
legends required by this Agreement (other than last sentence of the legend
provided for in Section 7(b)).
10. Miscellaneous.
10.1 Assignability; Binding Effect. Except as otherwise provided
in this Agreement, no right under this Agreement shall be assignable and any
attempted assignment in violation of this provision shall be void. 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.
10.2 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:
(a) If to Holdings, to it at the following address:
c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
with copies to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
14
(b) If to CHPIII, to it at the following address:
Xxxxxx Xxxxxx Partners III, L.P.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
(c) If to the other Stockholders, at their addresses as
set forth on Annex I
or at such other address or addresses as the parties hereto shall have specified
by notice in writing to the other parties (provided, that such notice of change
of address shall be deemed to have been duly given only when actually received).
10.3 Applicable Law; Consents. 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, except to the extent that the laws of
Delaware regulate corporate governance or the issuance of Holdings' securities.
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.
10.4 Amendment and Waivers; Entire Agreement. This Agreement may
be amended or provisions hereof waived only by a written instrument signed by
Holdings, CHP and the Stockholders (other than CHP) then owning at least 51% of
the Common Stock and Preferred Stock then owned by all of the Stockholders
(other than CHP), and then such amendment or waiver shall be effective only in
the specific instance and for the specific purpose for which approved; provided,
however, that the admission of a holder of Holdings Securities as a Stockholder
shall not be considered an amendment hereto. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof, and
there are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to this subject matter,
except for the various stock purchase agreements entered into by each of the
Stockholders prior to entering into this Agreement.
10.5 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning of terms
contained herein.
15
10.6 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.
10.7 Specific Performance; Stockholders' Remedies. 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.
Any party hereto may also seek legal or equitable remedies,
including an injunction or specific performance, for any default or breach
hereunder by each of the other parties hereto of such other party's
representations and warranties, covenants and agreements herein.
10.8 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.
10.9 Regulatory Compliance by Certain Stockholders. In the event
that any Stockholder determines that, by reason of any future federal or state
rule, regulation, guideline, order, interpretive release, ruling, request or
directive (having the force of law and where the failure to comply therewith
would be unlawful) (collectively, a "Regulatory Requirement"), it is effectively
restricted or prohibited from holding its capital stock (or any equity
securities distributable to such Stockholder in any merger, reorganization,
readjustment or other reclassification or exchange with respect to Holdings) or
otherwise realizing upon or receiving the benefits intended hereunder, and
following such Stockholder's exercise of its reasonable best efforts to overcome
such Regulatory Requirement, Holdings and the other Stockholders shall make all
reasonable efforts to take such action as such Stockholder may deem to be
reasonably necessary to permit such Stockholder to comply with such Regulatory
Requirement. Such action to be taken may include Holdings' authorization or
creation as may be reasonably necessary of one or more new classes of capital
stock and the modification or amendment of Holdings' Certificate of
Incorporation, this Agreement or other documents or instruments executed in
connection with the capital stock held by such Stockholder. Such Stockholder
shall give written notice to Holdings and the Stockholders of any such
determination and the action or actions reasonably necessary to comply with such
Regulatory Requirement, and Holdings, and the Stockholders shall take all steps
reasonably necessary to comply with such determination as
16
expeditiously as possible. Such Stockholder shall be responsible for the costs
and expenses associated with complying with such Regulatory Requirements.
17
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
UNIVERSAL COMPRESSION HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxx
________________________________
Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
XXXXXX XXXXXX PARTNERS III, L.P.
By: Xxxxxx Xxxxxx, Inc.
Investment Manager
By: /s/ Xxxxxx Xxxxx
________________________________
Name: Xxxxxx Xxxxx
Title:
/s/ Xxxxxx Xxxxx
____________________________________
XXXXXX XXXXX
CASTLE AFFILIATED PARTIES:
BRANFORD CASTLE HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
________________________________
Name: Xxxx X. Xxxxxx
Title:
XXXXXX XXXXXX OFFSHORE PARTNERS III, L.P.
By: /s/ Xxxxxx Xxxxx
________________________________
Name: Xxxxxx Xxxxx
Title:
XXXXXX XXXXXX AFFILIATES III, L.P.
By: /s/ Xxxxxx Xxxxx
________________________________
Name: Xxxxxx Xxxxx
Title:
18
FROGMORE FORUM FAMILY FUND L.L.C.
By: /s/ Xxxxxx Xxxxx
________________________________
Name: Xxxxxx Xxxxx
Title:
/s/ Xxxxxxx X. Xxxxxx
____________________________________
XXXXXXX X. XXXXXX
19
CO-INVESTORS:
MELLON BANK, N.A., AS TRUSTEE FOR THE XXXX
ATLANTIC MASTER TRUST, AS DIRECTED BY
XXXX ATLANTIC CORPORATION
By: /s/ Xxxxxxxxxx Xxxx
________________________________
Name: Xxxxxxxxxx Xxxx
Title: Authorized Signature
FIRST UNION CAPITAL PARTNERS, INC.
By: /s/ Xxxxx X. Xxxx
________________________________
Name: Xxxxx X. Xxxx
Title: Senior Vice President
BT CAPITAL PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxx III
________________________________
Name: Xxxxxxx X. Xxxxx III
Title: Managing Director
WILMINGTON TRUST, AS TRUSTEE OF DU PONT
PENSION TRUST
By: /s/ Xxxx Xxxxx Xxxxxx
________________________________
Name: Xxxx Xxxxx Xxxxxx
Title: Vice President
XXXXX UNIVERSITY THIRD CENTURY FUND
By: /s/ Xxxxxx Xxxxxx
________________________________
Name: Xxxxxx Xxxxxx
Title: Vice Chairman
20
MANAGEMENT STOCKHOLDERS:
/s/ Xxxxxx Xxxxxx
____________________________________
XXXXXX XXXXXX
/s/ Xxxxx Xxxxxx
____________________________________
XXXXX XXXXXX
/s/ Xxxxxx Xxxxxxxx
____________________________________
XXXXXX XXXXXXXX
21
Exhibit A
Number of Number of
Shares of Shares of
Name of Stockholder Common Stock Preferred Stock
------------------- ------------ ---------------
Xxxxxx Xxxxxx Partners III, L.P. 178,287 713,148
Xxxxxx Xxxxx 4,400 17,600
Castle Affiliated Parties:
--------------------------
Branford Castle Holdings, Inc. 1,181 4,724
Xxxxxx Xxxxxx Offshore Partners 2,923 11,692
III, L.P.
Xxxxxx Xxxxxx Affiliates III, L.P. 2,980 11,920
Frogmore Forum Family Fund, L.L.C. 679 2,716
Xxxxxxx X. Xxxxxx 590 2,360
Co-Investors:
-------------
Mellon Bank, N.A., as Trustee 32,000 128,000
for the Xxxx Atlantic Master
Trust
First Union Capital Partners, Inc. 32,000 128,000
BT Capital Partners, Inc. 32,000 128,000
Wilmington Trust, as Trustee 32,000 128,000
of Du Pont Pension Trust
Xxxxx University Third 2,000 8,000
Century Fund
Management Stockholders:
------------------------
Xxxxxxx Xxxxxx 2,000 8,000
Xxxxx Xxxxxx 1,000 4,000
Xxxxxx Xxxxxxxx 960 3,840
EXHIBIT B
INSTRUMENT OF ACCESSION
The undersigned, __________________________, as a condition
precedent to becoming the owner or holder of record of ____ ( ) shares of Common
Stock, par value $0.01 per share ("Common Stock"), of Universal Compression
Holdings, Inc., a Delaware corporation ("Holdings"), and __________ (________)
shares of Preferred Stock, par value $.01 per share, of Holdings, hereby agrees
to become a stockholder, party to and bound by that certain Stockholders
Agreement, dated as of ________ __, 1998, by and among Holdings and certain
stockholders of Holdings. This Instrument of Accession shall take effect and
shall become an integral part of the said Stockholders Agreement immediately
upon execution and delivery to Holdings of this Instrument.
IN WITNESS WHEREOF, this INSTRUMENT OF ACCESSION has been duly
executed by or on behalf of the undersigned as of the date below written.
Signature: ______________________________
Address: ______________________________
______________________________
______________________________
Date: ___________________________________
Accepted:
By: ___________________________
Date: _________________________
ANNEX I
Stockholder Name Address
---------------- -------
Xxxxxx Xxxxxx Partners III, L.P. 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Branford Castle Holdings, Inc. c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxx Offshore Partners III, L.P. c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxx Affiliates III, L.P. c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Frogmore Forum Family Fund L.L.C. c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx c/o Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Mellon Bank, N.A., as Trustee for the Xxxx One Mellon Bank Center
Atlantic Master Trust Room 3346
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx
with a copy to:
Xxxx Atlantic Management Company
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: A. Xxx Xxxxxxx, Xxxxxx X. Xxxxxxx
and Xxxxx Xxxxxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
First Union Capital Partners, Inc. One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
BT Capital Partners, Inc. Mail Stop 2255
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Wilmington Trust, as Trustee of Du Pont Du Pont Pension Fund Investments
Pension Trust Delaware Corporate Center
0 Xxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxxxx University Third Century Fund 000 Xxxxxx Xxxxxx
Xxx X
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Xxxxxxx Xxxxxx c/o Universal Compression, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxxx c/o Universal Compression, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxx c/o Universal Compression, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, XX 00000
