FIRST AMENDED AND RESTATED OMNIBUS AGREEMENT AMONG EXTERRAN HOLDINGS, INC. EXTERRAN, INC. EXTERRAN ENERGY SOLUTIONS, L.P. UCO GP, LLC UCO GENERAL PARTNER, LP EXTERRAN PARTNERS, L.P. AND EXLP OPERATING LLC
Exhibit
10.3
FIRST AMENDED AND RESTATED
AMONG
EXTERRAN HOLDINGS, INC.
EXTERRAN, INC.
EXTERRAN ENERGY SOLUTIONS, L.P.
UCO GP, LLC
UCO GENERAL PARTNER, LP
AND
EXLP OPERATING LLC
TABLE OF CONTENTS
ARTICLE I DEFINITIONS | 2 | |||||
1.1 |
Definitions | 2 | ||||
ARTICLE II NON-COMPETITION AND BUSINESS OPPORTUNITIES | 10 | |||||
2.1 |
Restricted Business | 10 | ||||
2.2 |
Overlapping Customers | 11 | ||||
2.3 |
Permitted Exceptions | 11 | ||||
2.4 |
Restricted Business Procedures | 13 | ||||
2.5 |
Scope of the Prohibition | 15 | ||||
2.6 |
New Customers | 16 | ||||
2.7 |
Enforcement | 16 | ||||
2.8 |
Termination | 16 | ||||
ARTICLE III SERVICES | 16 | |||||
3.1 |
Provision, Allocation and Reimbursement for Services | 16 | ||||
3.2 |
Limitations on Reimbursement | 18 | ||||
ARTICLE IV COMPRESSION EQUIPMENT TRANSFERS | 18 | |||||
4.1 |
Transfer Mechanics | 18 | ||||
4.2 |
Settlement; Appraised Value | 21 | ||||
4.3 |
Appraisal | 22 | ||||
4.4 |
Like-Kind Exchange Treatment | 22 | ||||
4.5 |
Other Sales Permitted | 22 | ||||
4.6 |
Termination | 22 | ||||
4.7 |
Proration of Ad Valorem Taxes | 22 | ||||
ARTICLE V NEWLY FABRICATED COMPRESSION EQUIPMENT PURCHASES | 23 | |||||
ARTICLE VI LICENSE | 23 | |||||
6.1 |
Grant of License | 23 | ||||
6.2 |
Restrictions on Marks | 23 | ||||
6.3 |
Ownership | 24 | ||||
6.4 |
Confidentiality | 24 | ||||
6.5 |
Estoppel | 24 | ||||
6.6 |
Warranties; Disclaimers | 24 | ||||
6.7 |
In the Event of Termination | 25 | ||||
ARTICLE VII INDEMNIFICATION | 25 | |||||
7.1 |
Environmental Indemnification | 25 | ||||
7.2 |
Additional Indemnification | 26 | ||||
7.3 |
Limitations Regarding Indemnification | 27 | ||||
7.4 |
Indemnification Procedures | 27 | ||||
ARTICLE VIII MISCELLANEOUS | 28 | |||||
8.1 |
Choice of Law; Submission to Jurisdiction | 28 | ||||
8.2 |
Notice | 28 |
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8.3 |
Entire Agreement | 29 | ||||
8.4 |
Termination | 29 | ||||
8.5 |
Effect of Waiver or Consent | 29 | ||||
8.6 |
Amendment or Modification | 29 | ||||
8.7 |
Assignment; Third Party Beneficiaries | 29 | ||||
8.8 |
Counterparts | 30 | ||||
8.9 |
Severability | 30 | ||||
8.10 |
Gender, Parts, Articles and Sections | 30 | ||||
8.11 |
Further Assurances | 30 | ||||
8.12 |
Withholding or Granting of Consent | 30 | ||||
8.13 |
Laws and Regulations | 30 | ||||
8.14 |
Negation of Rights of Limited Partners, Assignees and Third Parties | 30 | ||||
8.15 |
No Recourse Against Officers or Directors | 30 |
EXHIBITS AND SCHEDULES
Exhibit A — Form Xxxx of Sale
Exhibit B — Form Compression Equipment Lease Agreement
Exhibit B — Form Compression Equipment Lease Agreement
Schedule 1.1 — Fixed Margin Percentage
Schedule 3.1(a) — Services
Schedule 3.1(b) — Excluded Services
Schedule 6.1 — Marks
Schedule 3.1(a) — Services
Schedule 3.1(b) — Excluded Services
Schedule 6.1 — Marks
Schedule A — Certain Exterran Customers
Schedule B — Exterran Overlapping Customers
Schedule C — Certain Partnership Customers
Schedule D — Partnership Overlapping Customers
Schedule B — Exterran Overlapping Customers
Schedule C — Certain Partnership Customers
Schedule D — Partnership Overlapping Customers
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FIRST AMENDED AND RESTATED
OMNIBUS AGREEMENT
OMNIBUS AGREEMENT
THIS FIRST AMENDED AND RESTATED OMNIBUS AGREEMENT is entered into on, and effective as of,
August 20, 2007 (the “Effective Date”), and is by and among Exterran Holdings, Inc., a Delaware
corporation (“Exterran”), Exterran, Inc., a
Texas corporation (“EI”), Exterran Energy Solutions,
L.P., a Delaware limited partnership (“EES”), UCO GP, LLC, a Delaware limited liability company
(“UCO LLC”), UCO General Partner, L.P., a Delaware limited partnership (the “General Partner”),
Exterran Partners, L.P., a Delaware limited partnership (the “Partnership”) and EXLP Operating LLC
(the “Operating Company”). The above-named entities are sometimes referred to in this Agreement
each as a “Party” and collectively as the “Parties.”
RECITALS:
Certain of the Parties or their predecessors, together with UCLP OLP GP LLC, a Delaware
limited liability company (“OLP GP”), and Universal Compression Holdings, Inc., a Delaware
corporation (“UCH”), entered into that certain Omnibus Agreement dated as of October 20, 2006 (the
“Omnibus Agreement”).
As a result of a reorganization that occurred on June 29, 2007 (the “Reorganization”), UC
Operating Partnership, L.P., a Delaware limited partnership, was merged with and into the Operating
Company, and the OLP GP was dissolved.
The Parties, together with UCH but excluding Exterran, entered into that certain First
Amendment to Omnibus Agreement dated as of July 9, 2007 (the “First Amendment”) in connection with
the transfer of certain assets pursuant to that certain Amended and Restated Contribution,
Conveyance and Assumption Agreement, dated as of July 6, 2007
(the “2007 Contribution Agreement”).
On August 20, 2007, UCH and Hanover Compressor Company (“Hanover”) consummated the business
combination contemplated by that certain Agreement and Plan of Merger, dated as of February 5,
2007, by and among UCH, Hanover, Exterran, Xxxxxxx Sub, Inc. and Xxxxxx Sub, Inc., following which
UCH was merged with and into Exterran.
The Parties desire to amend and restate in its entirety the Omnibus Agreement as amended by
the First Amendment and to add Exterran and EES as parties to this Agreement, to eliminate UCH as a
party to this Agreement, to reflect name changes of certain other parties and to evidence the
agreement among the parties as to the matters contained herein.
In consideration of the premises and the covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
1.1 Definitions
(a) Capitalized terms used herein but not defined shall have the meanings given them in the
Partnership Agreement.
(b) As used in this Agreement, the following terms shall have the respective meanings set
forth below:
“2007 Contribution Agreement” has the meaning given such term in the introduction of
this Agreement.
“Acquired Partnership Restricted Business” has the meaning given such term in Section
2.3(h).
“Acquired Exterran Restricted Business” has the meaning given such term in Section
2.3(g).
“Acquiring Party” has the meaning given such term in Section 2.4(a).
“Affiliate” has the meaning given to such term in the Partnership Agreement.
“Agreement” means this First Amended and Restated Omnibus Agreement, as it may be
amended, modified or supplemented from time to time in accordance with the terms hereof.
“Appraiser” means any of Standard & Poor’s Corporate Value Consulting, Valuation
Research Corporation and Xxxxxxxx and Xxxxxxx as selected by Exterran, with the consent of
the General Partner, which consent shall not be unreasonably withheld, or any other
appraiser that is independent with respect to the Exterran Entities and the Partnership
Entities and their respective affiliates within the meaning of the code of professional
ethics of the American Society of Appraisers as selected by mutual consent of Exterran and
the General Partner.
“Appraisal” means an appraisal of Compression Equipment prepared by an Appraiser in
conformity with, and subject to, the requirements of the code of professional ethics and
standards of professional conduct of the American Society of Appraisers. The Appraisal
shall specify value based upon the cost or income approach or a combination thereof for the
Compression Equipment appraised.
“Appraised Value” means an amount equal to (A) either (i) the most recent Appraisal
with respect to a particular piece of Compression Equipment owned by the USCSB or the
Partnership Group at the time of the Appraisal or (ii) with respect to a particular piece
of Compression Equipment for which an Appraisal has not been conducted, the Appraised Value
of substantially similar Compression Equipment, plus (B) any costs incurred by the
Transferor pursuant to Section 4.1(a)(iv) to the extent such
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costs include overhauls, modifications or retrofittings that are not reflected in the
value assigned to the Compression Equipment pursuant to clause (A) above.
“Average Horsepower” means, with respect to a particular fiscal quarter, the quotient
of (i) the sum of the aggregate amount of Compression Equipment horsepower owned or leased
by the Partnership Group (excluding units owned by the Partnership Group but leased to
USCSB) that was working and not idle on the last day of the month immediately preceding such
quarter and on the last day of each of the three months during such quarter, divided by
(ii) four.
“Billed Party” has the meaning set forth in Section 4.7.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banking
institutions in Houston, Texas are authorized or are obligated by law, executive order or
governmental decree to be closed.
“CCSB” means the USCSB and the non-U.S. contract compression services business of any
of the Exterran Entities, collectively.
“Change of Control” means, with respect to any Person (the “Applicable Person”), any of
the following events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the Applicable Person’s
assets to any other Person, unless immediately following such sale, lease, exchange or other
transfer such assets are owned, directly or indirectly, by the Applicable Person; (ii) the
dissolution or liquidation of the Applicable Person; (iii) the consolidation or merger of
the Applicable Person with or into another Person, other than any such transaction where (a)
the outstanding Voting Securities of the Applicable Person are changed into or exchanged for
Voting Securities of the surviving Person or its parent and (b) the holders of the Voting
Securities of the Applicable Person immediately prior to such transaction own, directly or
indirectly, not less than a majority of the outstanding Voting Securities of the surviving
Person or its parent immediately after such transaction; and (iv) a “person” or “group”
(within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) being or becoming the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than
50% of all of the then outstanding Voting Securities of the Applicable Person, except in a
merger or consolidation which would not constitute a Change of Control under clause (iii)
above.
“Closing Date” means October 20, 2006.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Unit” has the meaning given such term in the Partnership Agreement.
“Compression Equipment” means natural gas compressor units, together with any tangible
components thereof, all related appliances, parts, accessories, appurtenances, accessions,
additions, improvements and replacements thereto, all other equipment or components of any
nature from time to time incorporated or installed therein and all substitutions for any of
the foregoing.
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“Competitive Services” means the provision by a Person of natural gas contract
compression services to a third-party customer, whether pursuant to the Form Compression
Services Agreement or any other compression services agreement, a lease arrangement pursuant
to which such Person leases Compression Equipment to a third-party customer and is required
to provide other compression services to such customer (whether as part of one agreement or
pursuant to a lease agreement and related services agreement) or otherwise; provided,
however, that, for the avoidance of doubt, Competitive Services do not include the
fabrication of Compression Equipment by such Person, the sale by such Person of Compression
Equipment to a third-party customer, the sale by such Person of materials, parts or
equipment that are components of or used in the operation of Compression Equipment, the
leasing by such Person of Compression Equipment without the provision of any related
services or the operation, maintenance, service, repair or overhaul by such Person of
Compression Equipment owned by a third party customer.
“Conflicts Committee” has the meaning given such term in the Partnership Agreement.
“Contribution Agreement” means that certain Contribution, Conveyance and Assumption
Agreement, dated as of the Closing Date, among Universal Compression, Inc. (now known as
EI), UCO LLC, the General Partner, the Partnership and the other parties named thereto,
together with the additional conveyance documents and instruments contemplated or referenced
thereunder, as such may be amended, supplemented or restated from time to time.
“Conversion Condition” has the meaning given such term in Section 2.4(b).
“Cost of Sales” means any costs incurred of the type included in the “Cost of sales
(excluding depreciation expense)” line item in the consolidated statement of operations of
the Partnership prepared in accordance with GAAP, as presently applied.
“Cost of Sales Limit” has the meaning given such term in Section 3.2(a).
“Covered Environmental Losses” is defined in Section 7.1.
“Direct Compression Equipment Costs and Expenses” means those costs and expenses
directly attributable to the transportation, operation, maintenance or repair of any
Compression Equipment owned by the Partnership Group.
“Effective Date” has the meaning given such term in the introduction of this Agreement.
“Effective Time” has the meaning given such term in Section 4.1(b).
“EES” has the meaning given such term in the introduction to this Agreement.
“EI” has the meaning given such term in the introduction to this Agreement.
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“Environmental Laws” means all federal, state, and local laws, statutes, rules,
regulations, orders and ordinances, legally enforceable requirements and rules of common law
relating to protection of the environment including, without limitation, the federal
Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund
Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil
Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act and
other environmental conservation and protection laws, each as amended through the Closing
Date.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exterran” has the meaning given such term in the introduction of this Agreement.
“Exterran Customers” means (a) the Persons set forth on Schedule A and any of their
respective Affiliates, (b) any Exterran Overlapping Customer once the Partnership Entities
no longer provide any Compression Services to such Exterran Overlapping Customer and (c) any
New Customer that enters into an agreement with an Exterran Entity in accordance with
Section 2.6 pursuant to which such Exterran Entity agrees to provide Competitive Services to
such New Customer. Exterran Customers shall not include any Released Exterran Customers.
“Exterran Entities” means Exterran and any Person (other than the Partnership Entities)
controlled, directly or indirectly, by Exterran; and “Exterran Entity” means any of the
Exterran Entities.
“Exterran Overlapping Customers” means the Persons set forth on Schedule B and any of
their respective Affiliates other than any such Person that becomes an Exterran Customer
pursuant to clause (b) of the definition of Exterran Customers.
“Exterran Restricted Business” has the meaning given such term in Section 2.1(a).
“Exterran Site” has the meaning given such term in Section 2.2(a).
“Fabricated Cost” means the total costs (other than any allocations of general and
administrative expenses) incurred in fabricating a particular item of Compression Equipment,
as determined by the books and records of Exterran, prepared in accordance with GAAP.
“Fixed Margin Amount” means the amount resulting from the product of (i) the Fabricated
Cost and (ii) the percentage, expressed as a decimal, set forth on Schedule 1.1 to
this Agreement, which Schedule may be amended from time to time with the approval of the
Conflicts Committee.
“Form Xxxx of Sale” means the form of Xxxx of Sale attached hereto as Exhibit A.
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“Form Compression Services Agreement” means the standard form of agreement pursuant to
which members of the Partnership Group provide Competitive Services to Partnership Customers
as of the Effective Date.
“Form Lease Agreement” means the form of Compression Equipment Lease Agreement attached
hereto as Exhibit B, which Exhibit may be amended or replaced with a new form of Compression
Equipment Lease Agreement from time to time with the approval of Exterran and the Conflicts
Committee.
“GAAP” means generally accepted accounting principles in the United States,
consistently applied
“General Partner” has the meaning given such term in the introduction to this
Agreement.
“Hazardous Substance” means (a) any substance that is designated, defined or classified
as a hazardous waste, hazardous material, pollutant, contaminant or toxic or hazardous
substance, or that is otherwise regulated under any Environmental Law, including, without
limitation, any hazardous substance as such term is defined under the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, and (b) petroleum,
petroleum products, crude oil, gasoline, fuel oil, motor oil, waste oil, diesel fuel, jet
fuel and other petroleum hydrocarbons whether refined or unrefined and (c) asbestos, whether
in a friable or a non-friable condition, and polychlorinated biphenyls.
“Indemnified Party” means either the Partnership Group or Exterran, as the case may be,
each in its capacity as a party entitled to indemnification in accordance with Article VII.
“Indemnifying Party” means either the Partnership Group or Exterran, as the case may
be, each in its capacity as a party from whom indemnification may be required in accordance
with Article VII.
“Licensees” means, for purposes of Article VI hereof, the Partnership Entities.
“Licensor” means, for purposes of Article VI hereof, Exterran.
“Liens” means any mortgages, pledges, security interests, liens, charges, claims,
restrictions, easements or other encumbrances of any nature.
“Limit Period” means the period commencing on July 1, 2007 and ending on the last day
of the fiscal quarter in which the second anniversary of the Closing Date occurs.
“Marks” means all trademarks, trade names, logos and/or service marks identified on
Schedule 6.1 attached hereto, which Schedule may be amended from time to time with
the approval of Exterran and the Conflicts Committee.
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“New Customer” means any Person that is not an Exterran Customer, a Partnership
Customer or an Overlapping Customer and that informs any of the Parties hereto of a need for
Competitive Services.
“Non-Qualifying Business” has the meaning given to such term in Section 2.4(b).
“Offer” has the meaning given such term in Section 2.4(a).
“Offer Period” has the meaning given such term in Section 2.4(b)(ii)(A).
“Offered Assets” has the meaning given such term in Section 2.4(a).
“Offeree” has the meaning given such term in Section 2.4(a).
“Operating Company” has the meaning given such term in the introduction to this
Agreement.
“Organizational Documents” means certificates or articles of incorporation, by-laws,
certificates of formation, limited liability company operating agreements, certificates of
limited partnership or limited partnership agreements or other formation or governing
documents of a particular entity.
“Other Losses” is defined in 7.2(a).
“Overlapping Customer” means an Exterran Overlapping Customer or a Partnership
Overlapping Customer.
“Partnership” has the meaning given such term in the introduction to this Agreement.
“Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of the Closing Date, as such agreement is in effect
on the Closing Date, to which reference is hereby made for all purposes of this Agreement.
An amendment or modification to the Partnership Agreement subsequent to the Closing Date
shall be given effect for the purposes of this Agreement only if it has received the
approval of the Conflicts Committee that would be required, if any, pursuant to Section 8.6
hereof if such amendment or modification were an amendment or modification of this
Agreement.
“Partnership Assets” means the compression services contracts, compression services
customer relationships and Compression Equipment, directly or indirectly conveyed,
contributed or otherwise transferred to the Partnership Group as of the Closing Date
pursuant to the Contribution Agreement.
“Partnership Customers” means (a) the Persons set forth on Schedule C and any of their
respective Affiliates, (b) any Partnership Overlapping Customer once the Exterran Entities
no longer provide any Compression Services to such Partnership Overlapping Customer and (c)
any New Customer that enters into an agreement with a
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member of the Partnership Group in accordance with Section 2.6 pursuant to which such
member of the Partnership Group agrees to provide Competitive Services to such New Customer.
Partnership Customers shall not include any Released Partnership Customers.
“Partnership Entities” means UCO LLC, the General Partner and each member of the
Partnership Group; and “Partnership Entity” means any of the Partnership Entities.
“Partnership Group” means the Partnership, the Operating Company and any Subsidiary of
the Partnership or the Operating Company.
“Partnership Horsepower” means, with respect to a particular month, the quotient of
(i) the sum of the aggregate amount of Compression Equipment horsepower owned or leased by
the Partnership Group (excluding units owned by the Partnership Group but leased to USCSB),
regardless of whether such Compression Equipment is working or idle, on the last day of the
month immediately preceding such month and on the last day of each of such month, divided by
(ii) two.
“Partnership Overlapping Customer” means the Persons listed on Schedule D and any of
their respective Affiliates other than any such Person that becomes a Partnership Customer
pursuant to clause (b) of the definition of Partnership Customers.
“Partnership Restricted Business” has the meaning given such term in Section 2.1.(b).
“Partnership Site” has the meaning given such term in Section 2.2(a).
“Party” or “Parties” have the meaning given such terms in the introduction to this
Agreement.
“Percentage Interest” means, with respect to a particular month, the value (expressed
as a percentage) obtained by multiplying (i) 100 by (ii) the quotient of (x) the Partnership
Horsepower divided by (y) the Total Domestic Horsepower.
“Person” has the meaning given such term in the Partnership Agreement.
“Purchase Agreement” has the meaning given such term in Section 2.4(a).
“Qualifying Business” has the meaning given such term in Section 2.4(b).
“Released Exterran Customers” means those customers of the Exterran Entities that are
designated as “Released Exterran Customers” pursuant to Section 2.3(h).
“Released Partnership Customers” means those customers of the Partnership Group that
are designated as “Released Partnership Customers” pursuant to Section 2.3(g).
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“Retained Assets” means the assets and investments owned by Exterran or any of its
Affiliates that were not conveyed, contributed or otherwise transferred to the Partnership
Group pursuant to the Contribution Agreement.
“Services” has the meaning given such term in Section 3.1(a).
“Site” means the specific geographic site at which a particular item of Compression
Equipment engaged in Competitive Services is fixed, as further specified by the customer
contract, or any schedule thereto, pursuant to which such Competitive Services are being
provided.
“Subsidiary” has the meaning given such term in the Partnership Agreement.
“Total Domestic Horsepower” means, with respect to a particular month, the sum of the
USCSB Horsepower and the Partnership Horsepower.
“Transferee” means a transferee of Compression Equipment pursuant to Article IV.
“Transferor” means a transferor of Compression Equipment pursuant to Article IV.
“UCH” has the meaning given such term in the recitals to this Agreement.
“UCO LLC” has the meaning given such term in the introduction to this Agreement.
“USCSB” means the U.S. contract compression services business of any of the Exterran
Entities conducted through Exterran’s U.S. Contract Compression Segment, excluding the
business of the Partnership Entities.
“USCSB Horsepower” means, with respect to a particular month, the quotient of (i) the
sum of the aggregate amount of Compression Equipment horsepower owned or leased by USCSB
(excluding units designated “for sale only” by the Exterran Entities or units owned by USCSB
but leased to the Partnership Group), regardless of whether such Compression Equipment is
working or idle, on the last day of the month immediately preceding such month and on the
last day of such month, divided by (ii) two.
“Voluntary Cleanup Program” means a program of the United States or a state of the
United States enacted pursuant to Environmental Laws which provides for a mechanism for the
written approval of, or authorization to conduct, voluntary remedial action for the
clean-up, removal or remediation of contamination that exceeds actionable levels established
pursuant to Environmental Laws.
“Voting Securities” of a Person means securities of any class of such Person entitling
the holders thereof to vote in the election of, or to appoint, members of the board of
directors or other similar governing body of the Person; provided, that if such Person is
9
a limited partnership, Voting Securities of such Person shall be the general partner
interest in such Person.
ARTICLE II
NON-COMPETITION AND BUSINESS OPPORTUNITIES
NON-COMPETITION AND BUSINESS OPPORTUNITIES
2.1 Restricted Business.
(a) Subject to Section 2.8 and except as permitted by Section 2.3, each of the Exterran
Entities shall be prohibited from providing (whether directly or through the acquisition of
or investment in equity or debt securities in any Person) Competitive Services to any
Partnership Customer, in any state or territory of the United States (other than on behalf
of a member of the Partnership Group) (the “Exterran Restricted Business”).
(b) Subject to Section 2.8 and except as permitted by Section 2.3, each of the
Partnership Entities shall be prohibited from providing (whether directly or through the
acquisition of or investment in equity or debt securities in any Person) Competitive
Services to any Exterran Customer, in any state or territory of the United States (other
than on behalf of any Exterran Entity) (the “Partnership Restricted Business”).
2.2 Overlapping Customers.
(a) Except as otherwise provided in this Section 2.2 and except as permitted by Section
2.3, (i) the Exterran Entities shall be prohibited from providing (whether directly or
through the acquisition of or investment in equity or debt securities of any Person)
Competitive Services to a particular Overlapping Customer at the particular Site at which
any member of the Partnership Group was providing Competitive Services to such Overlapping
Customer on the Effective Date (each, a “Partnership Site”) and (ii) the Partnership
Entities shall be prohibited from providing (whether directly or through the acquisition of
or investment in equity or debt securities of any Person) Competitive Services to a
particular Overlapping Customer at the particular Site at which any of the Exterran Entities
was providing Competitive Services to such Overlapping Customer on the Effective Date (each,
an “Exterran Site”).
(b) Notwithstanding the foregoing, the Parties agree that in the event that, after the
date of this Agreement, an Overlapping Customer requests Competitive Services involving the
provision of additional Compression Equipment at a Partnership Site or an Exterran Site,
whether in addition to or in replacement of Compression Equipment existing at such Site as
of the Effective Date, (i) any member of the Partnership Group shall be entitled to provide
such Competitive Services if such Overlapping Customer is a Partnership Overlapping Customer
and (ii) any Exterran Entity shall be entitled to provide such Competitive Services if such
Overlapping Customer is an Exterran Overlapping Customer.
(c) Except as expressly provided by Sections 2.2(a) or (b), the Parties agree that any
offer by any of the Parties hereto to provide Competitive Services to (i) a Partnership
Overlapping Customer in any state or territory of the United States shall be
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made solely on
behalf of the Partnership Entities and (b) an Exterran Overlapping
Customer in any state or territory of the United States shall be made solely on behalf
of the Exterran Entities.
2.3 Permitted Exceptions. Notwithstanding any provision of Sections 2.1 or 2.2 to the
contrary, the Parties may engage in any of the following activities to the extent permitted below:
(a) The Exterran Entities may engage in any Exterran Restricted Business to any Person
with the prior written approval of the Conflicts Committee.
(b) The Exterran Entities may own securities of any class of any member of the
Partnership Group.
(c) The Partnership Entities may engage in any Partnership Restricted Business to any
Person with the prior written approval of Exterran.
(d) The Exterran Entities may purchase and own in the aggregate not more than five
percent of any class of securities of any entity engaged in any Exterran Restricted Business
(but without otherwise participating in, managing or directing the activities of such
entity).
(e) The Partnership Entities may purchase and own in the aggregate not more than five
percent of any class of securities of any entity engaged in any Partnership Restricted
Business (but without otherwise participating, managing or directing the activities of such
entity).
(f) If a Partnership Customer (or that customer’s applicable business), on the one
hand, and a Exterran Customer (or that customer’s applicable business), on the other hand,
merge, consolidate, amalgamate or are otherwise combined, each of the Partnership Entities
and the Exterran Entities may continue to provide Competitive Services to the applicable
combined entity or business. Upon such an occurrence, Exterran and the Conflicts Committee
shall negotiate in good faith, if and to the extent determined in the good faith of Exterran
and the Conflicts Committee to be necessary, to implement procedures or such other
arrangements to protect the value to each of the Partnership Entities, on the one hand, and
the Exterran Entities, on the other hand, of their respective businesses of providing
Competitive Services to each such customer or its applicable business, as applicable.
(g) The Exterran Entities may purchase and own (i) any class of securities in any
entity engaged (in whole or in part) in any Exterran Restricted Business or (ii) any
business or assets otherwise engaged or deployed in any Exterran Restricted Business;
provided, (x) in the good faith judgment of the Board of Directors of Exterran, the
aggregate value of the Exterran Restricted Business owned by such entity or otherwise to be
acquired by the Exterran Entities shall be less than 50% of the aggregate value of the
business and assets owned by such entity or otherwise to be acquired by the Exterran
Entities
and (y) the Partnership Group is offered the opportunity to acquire the
Exterran Restricted Business owned by such entity or otherwise acquired by the Exterran
Entities
11
(in each case, the “Acquired Exterran Restricted Business”)
in accordance with
Section 2.4. During the pendency of the procedures described in Section 2.4, the Exterran
Entities shall be entitled to own and operate the Acquired Exterran Restricted Business. In
the event that the General Partner (with the approval of the Conflicts Committee) elects not
to purchase such Acquired Exterran Restricted Business whether pursuant to Section 2.4(b)(i)
or Section 2.4(b)(ii)(B)(2), the Exterran Entities shall be entitled to continue to own and
operate the Acquired Exterran Restricted Business and the Competitive Services customers of
the Acquired Exterran Restricted Business at the time of the consummation of such
acquisition shall no longer be Partnership Customers for purposes of this Agreement, but
rather shall be designated “Released Partnership Customers.” Without the prior written
approval of the Conflicts Committee, subject to Section 2.8, the Exterran Entities shall be
prohibited from providing (whether directly or through the acquisition of or investment in
equity or debt securities of any Person) Competitive Services to a particular Released
Partnership Customer at the particular Site at which the Partnership Group was providing
Competitive Services to such Released Partnership Customer on the date of the acquisition by
the Exterran Entities of the applicable Exterran Restricted Business pursuant to which such
customer was designated a Released Partnership Customer.
(h) The Partnership Entities may purchase and own (i) any class of securities in any
entity engaged (in whole or in part) in any Partnership Restricted Business or (ii) any
business or assets otherwise engaged or deployed in any Partnership Restricted Business;
provided, (i) in the good faith judgment of the Conflicts Committee, the aggregate value of
the Partnership Restricted Business owned by such entity or otherwise to be acquired by the
Partnership Entities shall be less than 50% of the aggregate value of the business and
assets owned by such entity or otherwise to be acquired by the Partnership Entities and (ii)
Exterran is offered the opportunity to acquire the Partnership Restricted Business owned by
such entity or otherwise acquired by the Partnership Entities (in each case, the “Acquired
Partnership Restricted Business”) in accordance with Section 2.4. During the pendency of
the procedures described in Section 2.4, the Partnership Entities shall be entitled to own
and operate the Acquired Partnership Restricted Business. In the event that Exterran elects
not to purchase such Acquired Partnership Restricted Businesses whether pursuant to Section
2.4(b)(i) or Section 2.4(b)(ii)(B)(2), the Partnership Entities shall be entitled to
continue to own and operate the Acquired Partnership Restricted Business and the Competitive
Services customers of the Acquired Partnership Restricted Business at the time of the
consummation of such acquisition shall no longer be Exterran Customers for purposes of this
Agreement, but rather shall be designated “Released Exterran Customers.” Without the prior
written approval of Exterran, subject to Section 2.8, the members of the Partnership Group
shall be prohibited from providing (whether directly or through the acquisition of or
investment in equity or debt securities of any Person) Competitive Services to a particular
Released Exterran Customer at the particular Site at which Exterran Entities were providing
Competitive Services to such Released Exterran Customer on the date of the acquisition by
the Partnership Group of the applicable Partnership Restricted Business pursuant to which
such customer was designated a Released Exterran Customer.
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(i) If a Partnership Overlapping Customer (or that customer’s applicable business), on
the one hand, and an Exterran Overlapping Customer (or that customer’s applicable business),
on the other hand, merge, consolidate, amalgamate or are otherwise combined, then, following
consummation of such transaction, solely for purposes of providing Competitive Services
involving additional Compression Equipment under Section 2.2(b) and offering to provide
Competitive Services under Section 2.2(c) and for the purposes of the definition of
Partnership Customer and Exterran Customer, the combined entity shall be deemed to be (a) a
Partnership Overlapping Customer for continuing and future new business if as of the date of
the announcement of such transaction the Partnership Entities provide more Competitive
Services (as measured by the total amount of horsepower of Compression Equipment utilized in
the provision of such Competitive Services on that date of announcement) to such combined
entity than are provided by the Exterran Entities and (b) an Exterran Overlapping Customer
for continuing and future new business if as of the date of the announcement of such
transaction the Exterran Entities provide more Competitive Services (as measured by the
total amount of horsepower of Compression Equipment utilized in the provision of such
Competitive Services on that date of announcement) to such combined entity than are provided
by the Partnership Entities; provided, however, that the provisions of Section 2.2(a) shall
continue to apply to any Partnership Site or Exterran Site relating to such newly combined
Overlapping Customer on the date of closing of such transaction.
2.4 Restricted Business Procedures.
(a) Within 30 days following the consummation of the acquisition of an Acquired
Exterran Restricted Business or an Acquired Partnership Restricted Business by an Exterran
Entity or a Partnership Entity, as the case may be (in each such case such acquiring Person
shall be referred to as an “Acquiring Party”), the Acquiring Party shall notify in writing
(x) the Partnership, if the Acquiring Party is a Exterran Entity or (y) Exterran, if the
Acquiring Party is a Partnership Entity, of such acquisition. The Person that is so
notified shall be referred to herein as the “Offeree.” Such notice shall include an offer
(the “Offer”) by the Acquiring Party to sell the Acquired Exterran Restricted Business or
the Acquired Partnership Restricted Business, as the case may be (the “Offered Assets”), to
the Offeree, together with a proposed definitive agreement to effectuate the purchase and
sale of the Offered Assets (the “Purchase Agreement”). The Offer shall set forth the
Acquiring Party’s proposed terms relating to the sale of the Offered Assets to the Offeree,
including the purchase price, any liabilities to be assumed by the Offeree as part of the
Offer and the other terms of the Offer; provided, that the representations and warranties
regarding the Offered Assets and the indemnification provision contained in the Purchase
Agreement shall be substantially consistent with the terms contained in the definitive
purchase agreement pursuant to which the Acquiring Party acquired the Offered Assets or the
entity that owned the Offered Assets, subject to such adjustments that the Acquiring Party
reasonably determines are necessary to reflect the differences in the transaction.
(b) As soon as practicable after the Offer is made, the Acquiring Party will deliver to
the Offeree all information prepared by or on behalf of or in the possession of such
Acquiring Party relating to the Offered Assets and reasonably requested by the
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Offeree. As soon as practicable, but in any event, within 60 days after receipt of the
notification called for in Section 2.4(a), the Offeree shall notify the Acquiring Party in
writing that either:
(i) the Offeree (with the concurrence of the Conflicts Committee if the Offeree
is the Partnership) has elected not to purchase (or not to cause any of its
Subsidiaries to purchase) any of such Offered Assets; or
(ii) the Offeree (with the concurrence of the Conflicts Committee if the
Offeree is the Partnership) has elected to purchase (or to cause any of its
Subsidiaries to purchase) all of such Offered Assets; provided, that if the Offeree
is the Partnership, and in the opinion of outside counsel to the Partnership
Entities, less than 90% of the gross income from the operations of such Offered
Assets consists of “qualifying income” under Section 7704 of the Code (such portion
of such Offered Assets that does not so qualify being referred to herein as the
“Non-Qualifying Business”), then the Partnership (with the concurrence of the
Conflicts Committee) may condition its obligation to purchase the Non-Qualifying
Business (but not the portion of the Offered Assets that do not constitute the
Non-Qualifying Business (the “Qualifying Business”)) on the conversion of the
agreements pursuant to which the Non-Qualifying Business provides Competitive
Services to its customers to agreements substantively similar to the Form
Compression Services Agreement from a federal income tax treatment perspective (from
the Partnership’s perspective) and otherwise having substantially the same economic
terms as the agreements being converted (the “Conversion Condition”); provided
further, that in such event, each of the Exterran Entities and the Partnership
Entities shall use commercially reasonable efforts to satisfy the Conversion
Condition as soon as commercially practicable. If the Offeree elects to purchase
the Offered Assets, the following procedures shall be followed:
A. After the receipt of the Offer by the Offeree, the Acquiring Party
and the Offeree shall negotiate in good faith the fair market value of the
Offered Assets that are subject to the Offer (including the specific fair
market value of any Offered Assets that constitute a Non-Qualifying
Business) and the other terms of the Offer on which the Offered Assets will
be sold to the Offeree. If the Acquiring Party and the Offeree agree (with
the concurrence of the Conflicts Committee) on the fair market value of the
Offered Assets that are subject to the Offer and the other terms of the
Offer during the 30-day period (the “Offer Period”) after receipt by the
Acquiring Party of the Offeree’s election to purchase (or to cause any
Subsidiary of the Offeree to purchase) the Offered Assets, the Offeree shall
purchase (or cause any of its Subsidiaries to purchase) and the Acquiring
Party shall sell the Offered Assets on such terms as soon as commercially
practicable after such agreement has been reached, which obligation may
require such parties to consummate the purchase and sale of the Qualifying
Business prior to satisfaction of the Conversion Condition.
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B. If the Acquiring Party and the Offeree are unable to agree on the
fair market value of the Offered Assets that are subject to the Offer or on
any other terms of the Offer during the Offer Period, the Acquiring Party
and the Offeree will engage an independent investment banking firm prior to
the end of the Offer Period to determine the fair market value of the
Offered Assets (including the specific fair market value of any Offered
Assets that constitute a Non-Qualifying Business) and/or the other terms on
which the Acquiring Party and the Offeree are unable to agree. In
determining the fair market value and other terms on which the Offered
Assets are to be sold, the investment banking firm will have access to the
proposed sale and purchase values and terms for the Offer submitted by the
Acquiring Party and the Offeree, respectively, and to all information
prepared by or on behalf of the Acquiring Party relating to the Offered
Assets and reasonably requested by the investment banking firm. In
determining the terms on which the Offered Assets are to be sold (other than
the fair market value of the Offered Assets), the investment banking firm
shall give substantial weight to the terms contained in the definitive
purchase agreement pursuant to which the Acquiring Party acquired the
Offered Assets or the entity that owned the Offered Assets. Such investment
banking firm will determine the fair market value of the Offered Assets
and/or the other terms on which the Acquiring Party and the Offeree are
unable to agree within 60 days of its engagement and furnish the Acquiring
Party and the Offeree its determination. The fees and expenses of the
investment banking firm will be divided equally between the Acquiring Party
and the Offeree. Upon receipt of such determination, the Offeree will have
the option, but not the obligation, to (with the concurrence of the
Conflicts Committee if the Offeree is the Partnership):
1. purchase the Offered Assets on such terms as determined
above; or
2. elect not to purchase such Offered Assets.
If the Offeree elects to so purchase the Offered Assets, the Offeree shall
purchase (or cause any of its Subsidiaries to purchase) and the Acquiring
Party shall sell the Offered Assets on such terms as soon as commercially
practicable after such agreement has been reached, which obligation may
require such parties to consummate the purchase and sale of the Qualifying
Business prior to satisfaction of the Conversion Condition.
2.5 Scope of the Prohibition. Except as provided in this Article II, each of the Parties
shall be free to engage (whether directly or through the acquisition of or investment in equity or
debt interests in any Person) in any business activity whatsoever, including those that may be in
direct competition with any of the other Parties.
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2.6 New Customers. The Parties agree that any offer by any of the Parties hereto to provide
Competitive Services to New Customers in any state or territory of the United States shall be first
made on behalf of the Partnership Entities and shall include an offer to provide such Competitive
Services under an agreement substantially in the form of the Form Compression Services Agreement.
If the New Customer is unwilling to enter into an agreement with a Partnership Entity that is
substantively similar to the Form Compression Services Agreement from a federal income tax
treatment perspective (from the Partnership’s perspective), an Exterran Entity may enter into an
agreement to provide Competitive Services to such New Customer for its own account provided that
any agreement between such Exterran Entity and such New Customer is not substantively similar to
the Form Compression Services Agreement from a federal income tax treatment perspective (from the
Partnership’s perspective). If a New Customer enters into an agreement with a member of the
Partnership Group for Competitive Services, then such New Customer will then constitute a
Partnership Customer for the purposes of this Agreement and if, in accordance with this Section
2.6, a New Customer enters into an agreement with an Exterran Entity for Competitive Services, then
such New Customer will then constitute an Exterran Customer for the purposes of this Agreement.
2.7 Enforcement. Each Party agrees and acknowledges that the other Parties hereto do not have
an adequate remedy at law for the breach by such Party of the covenants and agreements set forth in
this Article II, and that any breach by such Party of the covenants and agreements set forth in
this Article II would result in irreparable harm to the other Parties hereto. Each Party further
agrees and acknowledges that the other Parties hereto may, in addition to the other remedies that
may be available to the other Parties hereto, file a suit in equity to enjoin such Party from such
breach, and consents to the issuance of injunctive relief under this Agreement.
2.8 Termination. Unless this Agreement has otherwise terminated pursuant to Section 8.4, this
Article II shall terminate on the third anniversary of the Effective Date. In addition, unless
this Agreement has otherwise been terminated pursuant to Section 8.4 or this Article II has
otherwise been terminated pursuant to the first sentence of this Section 2.8, Sections 2.1, 2.2,
2.3, 2.4 and 2.6 shall terminate upon a Change of Control of Exterran. Unless this Agreement has
otherwise terminated pursuant to Section 8.4 or this Article II has terminated pursuant to the
first sentence of this Section 2.8, and in the event that Sections 2.1, 2.2, 2.3, 2.4 and 2.6
terminate pursuant to the immediately preceding sentence, without the prior written approval of the
Conflicts Committee, the Exterran Entities shall be prohibited from providing (whether directly or
through the acquisition of or investment in equity or debt securities of any Person) Competitive
Services to a particular Partnership Customer at the particular Site at which the Partnership Group
was providing Competitive Services to such Partnership Customer on the date of the Change of
Control of Exterran.
ARTICLE III
SERVICES
SERVICES
3.1 Provision, Allocation and Reimbursement for Services
(a) Subject to Article V, the Exterran Entities shall, upon the reasonable request of
the General Partner, provide the Partnership Group with all personnel and
16
services
reasonably necessary to run the business of the Partnership Group, which services may
include, without limitation, those services set forth on Schedule 3.1(a)
(collectively, the “Services”). For the avoidance of doubt, the Services shall not include
the services described on Schedule 3.1(b). These Services shall be substantially
similar in nature to the services of such type previously provided by the Exterran Entities
in connection with their management and operation of the Partnership Assets and any other
assets of a similar nature directly or indirectly conveyed, contributed or otherwise
transferred to the Partnership Group, in each case during the 12-month period prior to such
transfer.
(b) The Exterran Entities shall provide the Services to the Partnership Group in a
manner that is in the good faith judgment of Exterran commercially reasonable; provided,
that for so long as the Exterran Entities exercise at least the same degree of care, skill
and prudence in providing the Services as customarily exercised by it for its own operation
of the USCSB, then Exterran will be deemed to have provided such Services in a commercially
reasonable manner. EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE, THE EXTERRAN ENTITIES
MAKE NO (AND HEREBY DISCLAIM AND NEGATE ANY AND ALL) WARRANTIES OR REPRESENTATIONS
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES. IN NO EVENT SHALL ANY EXTERRAN
ENTITY OR ANY OF THEIR AFFILIATES BE LIABLE TO ANY MEMBER OF THE PARTNERSHIP GROUP OR TO ANY
OTHER PERSON FOR ANY EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR SPECIAL
DAMAGES RESULTING FROM ANY ERROR IN THE PERFORMANCE OF THE SERVICES, REGARDLESS OF WHETHER
THE PERSON PROVIDING SUCH SERVICES, ITS AFFILIATES, OR OTHERS MAY BE WHOLLY, CONCURRENTLY,
PARTIALLY, OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT.
(c) Any Direct Compression Equipment Costs and Expenses that are incurred by any
Exterran Entity in connection with providing the Services shall be allocated to the
Partnership at the actual cost to the applicable Exterran Entity providing such Services.
(d) The General Partner shall be entitled to allocate to the Partnership any costs and
expenses (other than Direct Compression Equipment Costs and Expenses) incurred by any
Exterran Entity in connection with providing the Services on any reasonable basis determined
by the General Partner. In the event that such Services are associated with Exterran’s
operation of both of the businesses of the USCSB and the Partnership Group, including,
without limitation, general and administrative functions, such reasonable basis may include,
at the election of the General Partner, allocating a
portion of such costs and expenses incurred during a particular period to the
Partnership on a pro rata basis based on the Partnership Group’s Percentage Interest.
(e) Subject to Section 3.2, the Partnership Group hereby agrees to reimburse the
Exterran Entities for all costs and expenses allocated to the Partnership Group in
accordance with the manners set forth in Sections 3.1(c) and (d).
3.2 Limitations on Reimbursement.
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(a) Notwithstanding Section 3.1, the amount that the Exterran Entities are entitled to
receive from the Partnership Group pursuant to Section 3.1 for selling, general and
administrative costs during any particular quarter commencing with the quarter ending
September 30, 2007 during the Limit Period shall not exceed $4.75 million (the “SG&A
Limit”); provided, that with respect to the quarter ending September 30, 2007, it means
$2.12 million. The SG&A Limit shall be reduced by any cash selling, general and
administrative costs incurred directly by the Partnership Group during the applicable
period. In the event that during the Limit Period the Partnership Group makes any additional
acquisitions of assets or businesses or the businesses or the business of the Partnership
Group otherwise expands after the date hereof, then the Parties shall negotiate in good
faith any appropriate increase in the SG&A Limit in order to account for any adjustments in
the nature and extent of the selling, general and administrative services provided by the
Exterran Entities to the Partnership Group, with any such increase in the SG&A Limit subject
to the approval of the Conflicts Committee
(b) Notwithstanding Section 3.1, the amount that the Exterran Entities are entitled to
receive from the Partnership Group pursuant to Section 3.1 for Cost of Sales during any
particular quarter during the Limit Period shall not exceed $18.00 times the Average
Horsepower of the Partnership Group during such quarter (the “Cost of Sales Limit”). The
Cost of Sales Limit shall be reduced by any Cost of Sales incurred directly by the
Partnership Group during the applicable period. In the event that during the Limit Period
the Partnership Group makes any additional acquisitions of assets or businesses or the
business of the Partnership Group otherwise expands after the date hereof, then the Parties
shall negotiate in good faith any appropriate increase in the Cost of Sales Limit in order
to account for any adjustments in the Cost of Sales of the Partnership Group (on a per
horsepower basis) as a result of such acquisition or expansion, with any such increase in
the Cost of Sales Limit subject to the approval of the Conflicts Committee.
ARTICLE IV
COMPRESSION EQUIPMENT TRANSFERS
COMPRESSION EQUIPMENT TRANSFERS
4.1 Transfer Mechanics
(a) In the event that Exterran determines in good faith that there exists a need on the
part of the CCSB or on the part of the Partnership Group to transfer Compression Equipment
between the Exterran Entities, on the one hand, and the Partnership Group, on the other
hand, to meet the compression services obligations of either of the CCSB or the Partnership
Group, such Compression Equipment shall be so transferred (or, to the extent
provided in Section 4.2, leased), at the election of Exterran, from a member of the
Exterran Entities to a member of the Partnership Group, or from a member of the Partnership
Group to a member of the Exterran Entities, as the case may be; provided, that all of the
following conditions are satisfied with respect to such transfer or lease (each such
transfer or lease for the purposes of this Article IV, unless set forth otherwise, a
“transfer”) at the Effective Time (as defined below) of such transfer:
(i) Except as provided in Section 4.2 in respect of Compression Equipment that
is leased, such transfer
will constitute a valid and absolute transfer
18
(each such
transfer, as the case may be, constituting a “true sale” for bankruptcy law
purposes) of all right, title and interest of the Transferor in, to and under the
transferred Compression Equipment, free and clear of any Liens except for any Liens
created by the Transferee;
(ii) Such transfer will not conflict with any of the terms and provisions of,
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, the organizational
documents of the Transferor or the Transferee, or any material term of any
indenture, agreement, mortgage, deed of trust, derivative instrument or other
instrument to which the Transferor or Transferee or any of their respective
subsidiaries is a party or by which either of them is bound, or result in the
creation or imposition of any Lien upon any of their respective properties pursuant
to the terms of any such indenture, agreement, mortgage, deed of trust, derivative
instrument or other instrument, or violate any law or any order, rule, or regulation
applicable to the Transferor or Transferee or any of their respective subsidiaries
of any court or of any federal or state regulatory body, administrative agency, or
other governmental authority having jurisdiction over either of them or any of their
respective properties;
(iii) Except as otherwise provided in this Article IV, such transfer will not
cause any member of the Partnership Group to suffer a loss of revenue under any
existing customer contract for Competitive Services or to incur any material
liabilities not reimbursed by the Exterran Entities; and
(iv) The Compression Equipment will be transferred in a condition appropriate
for the Transferee’s anticipated commercial use of such Compression Equipment;
provided, that such anticipated commercial use shall be consistent with such
equipment’s historical use; provided further, that (A) any repairs or modifications,
or any costs associated therewith, required to make such Compression Equipment
appropriate for the Transferee’s anticipated commercial use of such Compression
Equipment shall be the obligation of the Transferor and (B) the Transferee shall
have communicated its anticipated commercial use of such Compression Equipment to
the Transferor at least ten (10) Business Days prior to the anticipated date of such
transfer, failing which, the Transferor may transfer the Compression Equipment in
its then current condition.
In connection with each proposed transfer, each of the Transferee and the Transferor will
use their respective commercially reasonable efforts to cause the conditions set forth above
to be satisfied as of the Effective Time (as defined below).
(b) All transfers of Compression Equipment pursuant to this Section 4.1 shall be deemed
to take place at 12:01 a.m. on the date of transfer (the “Effective Time”) and shall include
all of the following assets, rights and properties of the Transferor with respect to such
transferred Compression Equipment; provided, that with respect to transfers that are
effected under a lease pursuant to Section 4.2, the following assets,
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rights and properties
shall be so transferred to the extent provided for in, and not inconsistent with, the
relevant lease agreement, and except as provided below:
(i) All Transferor-owned appliances, parts, instruments, machinery, accessories
and other equipment attached or installed thereto;
(ii) The rights of the Transferor under all permits relating exclusively to
such Compression Equipment, to the extent that such permits are transferable and the
transfer of which is authorized or consented to by any third parties required to
make such transfer effective as to third parties;
(iii) Except in the case of a lease, all warranties and guarantees, if any,
express or implied, existing for the benefit of the Transferor in connection with
such Compression Equipment to the extent assignable;
(iv) Except in the case of a lease, any fuels, lubricants and maintenance
supplies exclusively related to such Compression Equipment;
(v) Except in the case of a lease, all vendor information, catalogs, technical
information, specifications, designs, drawings and maintenance records related to
such Compression Equipment and to which the Transferor has ready access without
undue effort; and
(vi) Except in the case of a lease, all rights, claims or choses in action of
the Transferor against any Person relating exclusively to such Compression
Equipment.
(c) Except as provided in Section 4.2 in respect of Compression Equipment that is
leased, on the date of any transfer of Compression Equipment, the Transferor shall deliver
or cause to be delivered to the Transferee the following:
(i) A general conveyance or xxxx of sale in the form of the Form Xxxx of Sale
transferring to Transferee, as of the Effective Time, good, marketable and
indefeasible title to all of the tangible personal property contemplated by Section
4.2(b) and included in the transferred Compression Equipment, free and clear of any
Liens, except for any Liens created by the Transferee;
(ii) All appropriate documents for the assignment as of the Effective Time of
the Transferor’s rights under the permits referred to in Section 4.1(b)(ii),
together with all consents of third parties required to make such assignments
effective as to such third parties; and
(iii) Such other instruments of transfer and assignment in respect of the
transferred Compression Equipment as the Transferee shall reasonably require and as
shall be consistent with the terms and provisions of this Agreement.
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4.2 Settlement; Appraised Value
(a) Prior to the Effective Time of any transfer pursuant to Section 4.1, the
Partnership Group and Exterran will determine the aggregate Appraised Value of the
Compression Equipment to be so transferred.
(b) In consideration for such transfer, the Transferee, at its discretion (subject to
the provisos of Sections 4.2(b)(ii) and (ii) and subject to Sections 4.2(b) and (c)), shall
take any one or more of the following actions prior to or contemporaneously with the
Effective Time of such transfer:
(i) Transfer Compression Equipment to the Transferor of equal or greater
Appraised Value than the Appraised Value of the Compression Equipment to be
transferred to the Transferee pursuant to Section 4.1 (provided, that if such
Compression Equipment is of greater Appraised Value than the Appraised Value of the
Compression Equipment to be transferred to the Transferee pursuant to Section 4.1,
such excess Appraised Value shall be deemed to be a transfer of Compression
Equipment with a value equal to such excess Appraised Value and Transferor shall be
required to take one or more of the actions contemplated by this Section 4.2(b) in
consideration for such excess Appraised Value) in accordance with this Article IV;
(ii) Execute and deliver a lease agreement substantially in the form of the
Form Lease Agreement pursuant to which the Transferee agrees to lease from the
Transferor the Compression Equipment to be transferred to the Transferee pursuant to
Section 4.1, which lease agreement shall be counter-signed by the Transferor
(provided, however, that the ability of the Transferee to execute and deliver such a
lease may be limited in the sole discretion of Exterran, to the extent that an
Exterran Entity is the Transferor, or in the sole discretion of the Conflicts
Committee, to the extent that a member of the Partnership Group is the Transferor);
or
(iii) Deliver to the Transferor cash (or an obligation to make payment in cash
no later than the end of the fiscal quarter in which the transfer is effected) in
the amount of the aggregate Appraised Value of the Compression Equipment to be
transferred to the Transferee pursuant to Section 4.1 (provided, however, that the
ability of the Transferee to make such a payment may be limited in the sole
discretion of Exterran, to the extent that an Exterran Entity is the Transferor, or
in the sole discretion of the Conflicts Committee, to the extent that a member of
the Partnership Group is the Transferor).
(c) In the event that the Transferee cannot through the use of its commercially
reasonable efforts provide adequate consideration to the Transferor for Compression
Equipment to be transferred in any of the manners set forth in Section 4.2(b), then no such
transfer pursuant to the terms of this Article IV shall occur.
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(d) Notwithstanding Section 4.2(b), if the Transferor is a member of the Partnership
Group, the Transferee shall not be entitled to take the actions contemplated by Section
4.2(b)(ii) if such action would cause the Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal income tax
purposes. In such event, if compliance by Exterran with Sections 4.2(i) or (iii) is not
commercially practicable, the Partnership and Exterran shall negotiate in good faith to
reach agreement on another manner in which to reimburse the Partnership for such Compression
Equipment; provided, that the final terms of such reimbursement shall be approved by the
Conflicts Committee.
4.3 Appraisal. Exterran shall, at its sole cost and expense, cause an Appraisal of all
Compression Equipment then owned by the CCSB and the Partnership Group to be conducted and prepared
(i) no later than the end of the fiscal quarter in which the second anniversary of the Closing Date
occurs and (ii) no less frequently than every two years thereafter.
4.4 Like-Kind Exchange Treatment. Each Party agrees to cooperate to the extent reasonably
necessary to allow the other, if the other so desires, to treat the transactions contemplated by
Section 4.1(b) as a like-kind exchange under Section 1031 of the Code, and relevant Treasury
regulations and/or under relevant state law provisions, if any. Any Party seeking such treatment
acknowledges that it has consulted or will consult with independent tax counsel regarding the
applicability and benefits/detriments of such treatment and in no way has relied upon any
representations of the other party regarding the same.
4.5 Other Sales Permitted. Nothing otherwise set forth in this Article IV shall be deemed to
preclude any of the Exterran Entities and any member of the Partnership Group from negotiating or
consummating at any time the purchase and sale of newly fabricated Compression Equipment, existing
Compression Equipment or all or any part of the USCSB; provided, however, that such negotiations or
purchase and sale shall be conducted pursuant to the terms and procedures then mutually agreed upon
by Exterran and the General Partner or the Conflicts Committee, as applicable.
4.6 Termination. Unless this Agreement has otherwise terminated pursuant to Section 8.4, this
Article IV shall terminate on the third anniversary of the Effective Date.
4.7 Proration of Ad Valorem Taxes. Ad valorem taxes relating to the ownership of Compression Equipment transferred pursuant to
Section 4.1 shall be prorated on a daily basis between the Exterran Entities and the Partnership
Group with the Exterran Entities and the Partnership Group responsible for the prorated portion of
such taxes for the period of their respective ownership of such transferred Compression Equipment.
As between the Exterran Entities and the Partnership Group, the party that receives the ad valorem
tax billing (the “Billed Party”) shall provide a copy of such billing to the other party together
with a calculation of the prorated ad valorem taxes owed by each party. The party that did not
receive the ad valorem tax billing shall pay its prorated portion of the ad valorem taxes to the
Billed Party prior to the due date of such taxes and the Billed Party shall be responsible for the
timely payment of the ad valorem taxes to the taxing authorities.
22
ARTICLE V
NEWLY FABRICATED COMPRESSION EQUIPMENT PURCHASES
NEWLY FABRICATED COMPRESSION EQUIPMENT PURCHASES
The Parties hereby acknowledge that none of the Exterran Entities is under any obligation to
offer or sell to any member of the Partnership Group newly fabricated Compression Equipment and no
member of the Partnership Group is under any obligation to purchase from any of the Exterran
Entities newly fabricated Compression Equipment; provided, that in the event that the General
Partner and Exterran mutually agree to enter into, or cause their respective Affiliates to enter
into, a purchase and sale agreement for the purchase and sale of newly fabricated Compression
Equipment, (i) such purchase and sale shall be subject to the standard terms and conditions then
utilized by the Exterran Entities for purchases and sales of newly fabricated Compression Equipment
and (ii) any member of the Partnership Group shall be permitted to purchase such Compression
Equipment for a price that is not more than the Fabricated Cost of such Compression Equipment plus
the Fixed Margin Amount.
ARTICLE VI
LICENSE
LICENSE
6.1 Grant of License. Subject to the terms and conditions herein, Licensor hereby grants to
Licensees the right and license to use the Marks solely in connection with the Licensees’
businesses and the services performed therewith within the United States during the term of this
Agreement.
6.2 Restrictions on Marks. In order to ensure the quality of uses under the Marks, and to
protect the goodwill of the Marks, Licensees agree as follows:
(a) Licensees will use the Marks only in accordance with such quality standards and
specifications as may be established by Licensor and communicated to Licensees from time to
time, it being understood that Licensor has evaluated Licensees’ businesses and services and
determined that they are of a quality that justifies this grant
of a license. Licensees recognize the substantial goodwill associated with the Marks
and will not permit the quality of the businesses or services with which Licensees use the
Marks to deteriorate so as to affect adversely the goodwill associated with the Marks.
Licensees will not cause any action, or permit or fail to prevent any action by Licensees’
affiliates or any other party under Licensees’ control, that is deemed to injure, harm or
dilute the distinctiveness or goodwill of the Marks.
(b) Licensees will only use the Marks in formats approved by Licensor and only in
strict association with Licensees’ businesses and the services performed therewith;
(c) Prior to publishing any new format or appearance of the Marks or any new
advertising or promotional materials that incorporate the Marks, Licensees shall first
provide such format, appearance or materials to Licensor for its approval. If Licensor does
not inform Licensees in writing within fourteen (14) days from the date of the receipt of
such new format, appearance, or materials that such new format, appearance, or materials is
unacceptable, then such new format, appearance or materials shall be deemed
23
to be acceptable
and approved by Licensor. Licensor may withhold approval of any proposed changes to the
format, appearance or materials which Licensees propose to use in Licensor’s sole
discretion; and
(d) Licensees shall not use any other trademarks, service marks, trade names or logos
in connection with the Marks.
6.3 Ownership. Licensor shall own all right, title and interest, including all goodwill
relating thereto, in and to the Marks, and all trademark rights embodied therein shall at all times
be solely vested in Licensor. Licensees have no right, title, interest or claim of ownership in the
Marks, except for the licenses granted in this Agreement. All use of the Marks shall inure to the
benefit of Licensor. Licensees agree that they will not attack the title of Licensor in and to the
Marks.
6.4 Confidentiality. The Licensees shall maintain in strictest confidence all confidential or
nonpublic information or material disclosed by Licensor and in the materials supplied hereunder in
connection with the license of the Marks, whether in writing or orally and whether or not marked as
confidential. Such confidential information includes, but is not limited to, algorithms,
inventions, ideas, processes, computer system architecture and design, operator interfaces,
operational systems, technical information, technical specifications, training and instruction
manuals, and the like. In furtherance of the foregoing confidentiality obligation, Licensees shall
limit disclosure of such confidential information to those of their employees, contractors or
agents having a need to access the confidential information for the purpose of exercising rights
granted hereunder.
6.5 Estoppel. Nothing in this Agreement shall be construed as conferring by implication, estoppel, or
otherwise upon Licensees (a) any license or other right under the intellectual property rights of
Licensor other than the license granted herein to the Marks as set forth expressly herein or
(b) any license rights other than those expressly granted herein.
6.6 Warranties; Disclaimers.
(a) The Licensor represents and warrants that (i) it owns and has the right to license
the Marks licensed under this Agreement and (ii) the Marks do not infringe upon the rights
of any third parties.
(b) EXCEPT FOR THE WARRANTIES AND REPRESENTATIONS DESCRIBED IN SECTION 6.6(a), LICENSOR
DISCLAIMS ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR
WRITTEN) WITH RESPECT TO THE SUBJECT MATTER HEREOF, OR ANY PART THEREOF, INCLUDING ANY AND
ALL IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS OR SUITABILITY FOR
ANY PURPOSE (WHETHER ANY LICENSEE KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS
OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF
CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF DEALING.
24
6.7 In the Event of Termination. In the event of termination of this Agreement pursuant to
Section 8.4 or otherwise, the Licensees’ right to utilize or possess the Marks licensed under this
Agreement shall automatically cease, and concurrently with such termination of this Agreement, the
Licensees shall (i) cease all use of the Marks and shall adopt new trademarks, service marks, and
trade names that are not confusingly similar to the Marks and (ii) no later than ninety (90) days
following the termination of this Agreement, the General Partner shall have caused each of the
Partnership Entities to change its legal name so that there is no longer any reference therein to
the name “Universal Compression,” “Exterran,” “Hanover,” any name or d/b/a then used by any
Exterran Entity or any variation, derivation or abbreviation thereof, and in connection therewith,
the General Partner shall cause each such Partnership Entity to make all necessary filings of
certificates with the Secretary of State of the State of Delaware and to otherwise amend its
Organizational Documents by such date.
ARTICLE VII
INDEMNIFICATION
INDEMNIFICATION
7.1 Environmental Indemnification.
(a) Subject to Section 7.3, Exterran shall indemnify, defend and hold harmless the
Partnership Group from and against any environmental claims, losses and expenses (including,
without limitation, court costs and reasonable attorney’s and expert’s fees) of any and
every kind or character, known or unknown, fixed or contingent, suffered or incurred by the
Partnership Group by reason of or arising out of:
(i) any violation of Environmental Laws associated with the ownership or
operation of the Partnership Assets; or
(ii) any event or condition associated with ownership or operation of the
Partnership Assets (including, without limitation, the presence of Hazardous
Substances on, under, about or migrating to or from the Partnership Assets or the
disposal or release of Hazardous Substances generated by operation of the
Partnership Assets) including, without limitation, (A) the cost and expense of any
investigation, assessment, evaluation, monitoring, containment, cleanup, repair,
restoration, remediation, or other corrective action required or necessary under
Environmental Laws or to satisfy any applicable Voluntary Cleanup Program, (B) the
cost or expense of the preparation and implementation of any closure, remedial,
corrective action or other plans required or necessary under Environmental Laws or
to satisfy any applicable Voluntary Cleanup Program and (C) the cost and expense for
any environmental pre-trial, trial, or appellate legal or litigation support work;
provided, in the case of clauses (A) and (B) such cost and expense shall not
included the costs of and associated with project management and soil and ground
water monitoring;
but only to the extent that such violation complained of under Section 7.1(a)(i) or such
events or conditions included under Section 7.1(a)(ii) occurred before the Closing Date
(collectively, “Covered Environmental Losses”).
25
(b) The Partnership Group shall indemnify, defend and hold harmless Exterran and its
Affiliates from and against any Covered Environmental Losses suffered or incurred by
Exterran and its Affiliates relating to the Partnership Assets occurring on or after the
Closing Date, except to the extent that the Partnership Group is indemnified with respect to
any of such Covered Environmental Losses under Section 7.1(a), and unless such
indemnification would not be permitted under the Partnership Agreement by reason of one of
the provisos contained in Section 7.7(a) of the Partnership Agreement.
(c) Except for claims for Covered Environmental Losses made before the third
anniversary of the Closing Date, which shall not terminate, all indemnification obligations
in this Section 7.1 shall terminate on the third anniversary of the Closing Date.
7.2 Additional Indemnification.
(a) In addition to and not in limitation of the indemnification provided under Section
7.1(a), subject to Section 7.3 and except as otherwise set forth in any Exhibit hereto,
Exterran shall indemnify, defend and hold harmless the Partnership Group from and against
any claims, losses and expenses (including, without limitation, court costs and reasonable
attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or
contingent, suffered or incurred by the Partnership Group (“Other Losses”) by reason of or
arising out of:
(i) failure to convey good and defensible title to the Partnership Assets to
one or more members of the Partnership Group, and such failure render the
Partnership Group unable to use or operate the Partnership Assets in substantially
the same manner as they were operated by the Exterran Entities immediately prior to
the Closing Date;
(ii) events and conditions associated with the Retained Assets whether
occurring before or after the Closing Date; and
(iii) all federal, state and local income tax liabilities attributable to the
operation of the Partnership Assets prior to the Closing Date, including any such
income tax liabilities of Exterran that may result from the consummation of the
formation transactions for the Partnership Entities;
provided, however, that in the case of clauses (i) and (ii) above, such indemnification
obligations shall terminate on the third anniversary of the Closing Date; and that in the
case of clause (iii) above, such indemnification obligations shall survive until sixty (60)
days after the termination of any applicable statute of limitations.
(b) In addition to and not in limitation of the indemnification provided under Section
7.1(b) and the Partnership Agreement and except as otherwise set forth in any Exhibit
hereto, the Partnership Group shall indemnify, defend and hold harmless Exterran and its
Affiliates from and against any claims, losses and expenses (including, without limitation,
court costs and reasonable attorney’s and expert’s fees) of any and every kind or character,
known or unknown, fixed or contingent, suffered or incurred by Exterran
26
and its Affiliates
by reason of or arising out of events and conditions associated with the operation of the
Partnership Assets and occurring on or after the Closing Date unless such indemnification
would not be permitted under the Partnership Agreement by reason of one of the provisos
contained in Section 7.7(a) of the Partnership Agreement.
7.3 Limitations Regarding Indemnification. (a) The aggregate liability of Exterran
under Section 7.1(a) shall not exceed $5.0 million.
(b) No claims may be made against Exterran for indemnification pursuant to Sections
7.1(a) or 7.2(a) unless the aggregate dollar amount of the Losses suffered or incurred by
the Partnership Group or the Partnership Indemnitees exceed $250,000, after such time
Exterran shall be liable for the full amount of such claims, subject to the limitations of
Section 7.3(a).
(c) Notwithstanding anything herein to the contrary, in no event shall Exterran have
any indemnification obligations under Section 7.1(a) for claims made as a result of
additions to or modifications of Environmental Laws promulgated after the Closing Date.
7.4 Indemnification Procedures
(a) The Indemnified Party agrees that promptly after it becomes aware of facts giving
rise to a claim for indemnification under this Article VII, it will provide notice thereof
in writing to the Indemnifying Party, specifying the nature of and specific basis for such
claim; provided, however, that the Indemnified Party shall not submit claims more frequently
than once a calendar quarter (or twice in the case of the last calendar quarter prior to the
expiration of the applicable indemnity coverage under this Agreement).
(b) The Indemnifying Party shall have the right to control all aspects of the defense
of (and any counterclaims with respect to) any claims brought against the Indemnified Party
that are covered by the indemnification under this Article VII, including, without
limitation, the selection of counsel, determination of whether to appeal any decision of any
court and the settling of any such matter or any issues relating thereto; provided, however,
that no such settlement shall be entered into without the consent of the Indemnified Party
(with the concurrence of the Conflicts Committee in the case of the Partnership Group)
unless it includes a full release of the Indemnified Party from such matter or issues, as
the case may be, and does not include the admission of fault, culpability or a failure to
act, by or on behalf of such Indemnified Party.
(c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with
respect to all aspects of the defense of any claims covered by the indemnification under
this Article VII, including, without limitation, the prompt furnishing to the Indemnifying
Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized in connection with such
defense, the making available to the Indemnifying Party of any files, records or other
information of the Indemnified Party
27
that the Indemnifying Party considers relevant to such
defense and the making available to the Indemnifying Party, at no cost to the Indemnifying
Party, of any employees of the Indemnified Party; provided, however, that in connection
therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact
thereof on the operations of the Indemnified Party and further agrees to endeavor to
maintain the confidentiality of all files, records and other information furnished by the
Indemnified Party pursuant to this Section 7.4. In no event shall the obligation of the
Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately
preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire
and pay for counsel in connection with the defense of any claims covered by the
indemnification set forth in this Article VII; provided, however, that the Indemnified Party
may, at its own option, cost and expense, hire and pay for counsel in connection with any
such defense. The Indemnifying Party agrees to keep any such counsel hired by the
Indemnified Party informed as to the status of any such defense, but the Indemnifying Party
shall have the right to retain sole control over such defense.
(d) In determining the amount of any loss, cost, damage or expense for which the
Indemnified Party is entitled to indemnification under this Agreement, the gross amount of
the indemnification will be reduced by (i) any insurance proceeds realized by the
Indemnified Party and (ii) all amounts recovered by the Indemnified Party under contractual
indemnities from third Persons. The Partnership hereby agrees to use
commercially reasonable efforts to realize any applicable insurance proceeds or amounts
recoverable under such contractual indemnities.
(e) The date on which the Indemnifying Party receives notification of a claim for
indemnification shall determine whether such claim is timely made.
ARTICLE VIII
MISCELLANEOUS
MISCELLANEOUS
8.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and governed
by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might
refer the construction or interpretation of this Agreement to the laws of another state. Each Party
hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to
venue in Texas.
8.2 Notice. All notices, requests or consents provided for or permitted to be given pursuant
to this Agreement must be in writing and must be given by depositing same in the United States
mail, addressed to the Person to be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice
given by telegram or telecopier shall be effective upon actual receipt if received during the
recipient’s normal business hours, or at the beginning of the recipient’s next business day after
receipt if not received during the recipient’s normal business hours. All notices to be sent to a
Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such
other address as such Party may stipulate to the other Parties in the manner provided in this
Section 8.2.
28
For notices to any of the Exterran Entities:
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000-0000
Phone: (000) 000-0000
Fax: 000-000-0000
Attention: Executive Vice President and Chief Operating Officer
Xxxxxxx, Xxxxx 00000-0000
Phone: (000) 000-0000
Fax: 000-000-0000
Attention: Executive Vice President and Chief Operating Officer
For notices to any of the Partnership Entities:
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000-0000
Phone: (000) 000-0000
Fax: 000-000-0000
Attention: Executive Vice President
Xxxxxxx, Xxxxx 00000-0000
Phone: (000) 000-0000
Fax: 000-000-0000
Attention: Executive Vice President
8.3 Entire Agreement. This Agreement constitutes the entire agreement of the Parties relating to the matters
contained herein, superseding all prior contracts or agreements, whether oral or written, relating
to the matters contained herein, other than the 2007 Contribution Agreement.
8.4 Termination. This Agreement, other than the provisions set forth in Articles VII and VIII
hereof, shall terminate upon a Change of Control of UCO LLC, the General Partner or the
Partnership, other than any Change of Control of UCO LLC, the General Partner or the Partnership
deemed to have occurred pursuant to clause (iv) of the definition of Change of Control solely as a
result of a Change of Control of Exterran.
8.5 Effect of Waiver or Consent. No waiver or consent, express or implied, by any Party to or
of any breach or default by any Person in the performance by such Person of its obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such Person of the same or any other obligations of such Person
hereunder. Failure on the part of a Party to complain of any act of any Person or to declare any
Person in default, irrespective of how long such failure continues, shall not constitute a waiver
by such Party of its rights hereunder until the applicable statute of limitations period has run.
8.6 Amendment or Modification. This Agreement may be amended or modified from time to time
only by the written agreement of all the Parties; provided, however, that the Partnership and the
Operating Company may not, without the prior approval of the Conflicts Committee, agree to any
amendment or modification of this Agreement that the General Partner determines will adversely
affect the holders of Common Units. Each such instrument shall be reduced to writing and shall be
designated on its face an “Amendment” or an “Addendum” to this Agreement.
8.7 Assignment; Third Party Beneficiaries. Any Party shall have the right to assign its
rights under this Agreement without the consent of any other Party, but no Party shall have the right to assign its obligations under this Agreement without the consent of the other
29
Parties.
Subject to the limitations set forth in Section 8.14, each of the Parties hereto specifically
intends that each entity comprising the Exterran Entities and each entity comprising the
Partnership Entities, as applicable, whether or not a Party to this Agreement, shall be entitled to
assert rights and remedies hereunder as third-party beneficiaries hereto with respect to those
provisions of this Agreement affording a right, benefit or privilege to any such entity.
8.8 Counterparts. This Agreement may be executed in any number of counterparts (including
facsimile counterparts) with the same effect as if all signatory Parties had signed the same
document. All counterparts shall be construed together and shall constitute one and the same
instrument.
8.9 Severability. If any provision of this Agreement or the application thereof to any Person
or circumstance shall be held invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such provision to other Persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
8.10 Gender, Parts, Articles and Sections. Whenever the context requires, the gender of all
words used in this Agreement shall include the masculine, feminine and neuter, and the number of
all words shall include the singular and plural. All references to Article numbers and Section
numbers refer to Articles and Sections of this Agreement.
8.11 Further Assurances. In connection with this Agreement and all transactions contemplated
by this Agreement, each Party agrees to execute and deliver such additional documents and
instruments and to perform such additional acts as may be necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions and conditions of this Agreement and all such
transactions.
8.12 Withholding or Granting of Consent. Except as otherwise expressly provided in this
Agreement, each Party may, with respect to any consent or approval that it is entitled to grant
pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall deem appropriate.
8.13 Laws and Regulations. Notwithstanding any provision of this Agreement to the contrary, no
Party shall be required to take any act, or fail to take any act, under this Agreement if the
effect thereof would be to cause such Party to be in violation of any applicable law, statute, rule
or regulation.
8.14 Negation of Rights of Limited Partners, Assignees and Third Parties. The provisions of
this Agreement are enforceable solely by the Parties, and no shareholder, limited partner, member,
or assignee of Exterran, EI, UCO LLC, the General Partner, the Partnership or the Operating Company
or other Person shall have the right, separate and apart from Exterran, EI, UCO LLC, the General
Partner, the Partnership or the Operating Company, to enforce any provision of this Agreement or to
compel any Party to comply with the terms of this Agreement.
8.15 No Recourse Against Officers or Directors. For the avoidance of doubt, the provisions of
this Agreement shall not give rise to any right of recourse against any officer or director of any
Exterran Entity or any Partnership Entity.
30
[Signature pages follow.]
31
IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the
Effective Date.
EXTERRAN HOLDINGS, INC. | ||||||
By: | /s/ J. XXXXXXX XXXXXXXX | |||||
Name: | J. Xxxxxxx Xxxxxxxx | |||||
Title: | Senior Vice President | |||||
EXTERRAN, INC. | ||||||
By: | /s/ J. XXXXXXX XXXXXXXX | |||||
Name: | J. Xxxxxxx Xxxxxxxx | |||||
Title: | Senior Vice President | |||||
UCO GP, LLC | ||||||
By: | /s/ J. XXXXXXX XXXXXXXX | |||||
Name: | J. Xxxxxxx Xxxxxxxx | |||||
Title: | Senior Vice President | |||||
UCO GENERAL PARTNER, LP | ||||||
By: UCO GP, LLC, its general partner | ||||||
By: | /s/ J. XXXXXXX XXXXXXXX | |||||
Name: | J. Xxxxxxx Xxxxxxxx | |||||
Title: | Senior Vice President |
Signature Page — Omnibus Agreement
EXTERRAN PARTNERS, L.P. | ||||||
By: UCO GENERAL PARTNER, LP, its general partner | ||||||
By: UCO GP, LLC, its general partner | ||||||
By: | /s/ J. Xxxxxxx Xxxxxxxx | |||||
Name: | J. Xxxxxxx Xxxxxxxx | |||||
Title: | Senior Vice President | |||||
EXLP OPERATING LLC | ||||||
By: EXTERRAN PARTNERS, L.P., its sole member | ||||||
By: UCO GENERAL PARTNER, LP, its general partner | ||||||
By: UCO GP, LLC, its general partner | ||||||
By: | /s/ J. Xxxxxxx Xxxxxxxx | |||||
Name: | J. Xxxxxxx Xxxxxxxx | |||||
Title: | Senior Vice President |
Signature Page — Omnibus Agreement
Schedule 1.1
Fixed Margin Percentage
11.1%
Schedule 1.1
Schedule 3.1(a)
Services
1) | operations, | |
2) | marketing, | |
3) | maintenance and repair of Compression Equipment, | |
4) | periodic overhauls of Compression Equipment, | |
5) | inventory management, | |
6) | legal, | |
7) | accounting, | |
8) | treasury, | |
9) | insurance administration and claims processing, | |
10) | risk management, | |
11) | health, safety and environmental, | |
12) | information technology, | |
13) | human resources, | |
14) | credit, | |
15) | payroll, | |
16) | internal audit, | |
17) | taxes, | |
18) | engineering, | |
19) | facilities management, | |
20) | investor relations, | |
21) | ERP, | |
22) | training, | |
23) | executive, | |
24) | sales, and | |
25) | business development. |
Schedule 3.1(a)
Schedule 3.1(b)
Excluded Services
1. | Fabrication and sale of new Compression Equipment. |
Schedule 3.1(b)
Schedule 6.1
Marks
![(EXTERRAN LOGO)](https://www.sec.gov/Archives/edgar/data/1367064/000095013407022869/h51025h5102800.gif)
![(EXTERRAN LOGO)](https://www.sec.gov/Archives/edgar/data/1367064/000095013407022869/h51025h5102801.gif)
![(UNIVERSAL LOGO)](https://www.sec.gov/Archives/edgar/data/1367064/000095013407022869/h51025h5102802.gif)
![(LOGO)](https://www.sec.gov/Archives/edgar/data/1367064/000095013407022869/h51025h5102803.gif)
![(UNIVERSAL LOGO)](https://www.sec.gov/Archives/edgar/data/1367064/000095013407022869/h51025h5102804.gif)
Schedule 6.1
![(HANOVER LOGO)](https://www.sec.gov/Archives/edgar/data/1367064/000095013407022869/h51025h5102805.gif)
![(HANOVER LOGO)](https://www.sec.gov/Archives/edgar/data/1367064/000095013407022869/h51025h5102806.gif)
Signature Page – Omnibus Agreement
Exhibit
A
FORM ASSIGNMENT AND XXXX OF SALE
For valuable consideration, the receipt of which is hereby acknowledged,
, a [place of formation] [entity type] (“Seller”) hereby SELLS, GRANTS,
ASSIGNS and TRANSFERS to , a [place of formation] [entity type]
(“Purchaser”), effective as of , 200___, good, marketable and indefeasible title to
all of Seller’s right, title and interest in, to and under the Compression Equipment described on
Exhibit A attached hereto and made a part hereof for all purposes, together with all
assets, rights and properties related to such Compression Equipment of the sort described in
Section 4.2(b) of the Omnibus Agreement (as defined below) (collectively, the “Assets”):
The Seller, in its name and in the name of its successors and assigns, hereby represents that
it has the power and authority to sell or otherwise transfer the Assets in the manner provided in
this Assignment and Xxxx of Sale and that the Assets are free and clear of all Liens, except for
any Liens created by Purchaser. THE ASSETS ARE BEING SOLD WITHOUT ANY WARRANTIES, WHETHER EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF FITNESS FOR USE OR MERCHANTIBILITY.
Seller does hereby bind itself, its successors and assigns, to forever warrant and defend the
title to the Assets unto Purchaser, its successors and assigns against the lawful claim or claims
of any person whomsoever claiming an interest in the Assets. Purchaser hereby assumes and agrees to
indemnify, protect, defend and hold Seller harmless from and against all of the liabilities and
obligations of every kind and nature, arising out of, in connection with or related to, the
ownership, operation, use, repair, transfer, transportation or any other activity whatsoever in
respect of the Assets on and after the date hereof.
Seller covenants and agrees to execute and deliver to Purchaser all such other additional
instruments and other documents and will do all such other acts and things as may be necessary to
fully assign to Purchaser, or its successors and assigns, all of the Assets.
All of the provisions hereof shall inure to the benefit of and be binding upon the respective
heirs, successors and assigns of Seller and Purchaser.
Terms used herein but not defined herein shall have the meanings assigned to such terms in the
First Amended and Restated Omnibus Agreement dated as of August 20, 2007 by and among Exterran
Holdings, Inc., a Delaware corporation, Exterran, Inc., a Texas corporation, UCO GP, LLC, a
Delaware limited liability company, UCO General Partner, L.P., a Delaware limited partnership,
Exterran Partners, L.P., a Delaware limited partnership, and EXLP Operating LLC, a Delaware limited
liability company (the “Omnibus Agreement”).
Exhibit A-1
IN WITNESS WHEREOF, Seller has caused this Assignment and Xxxx of Sale to be executed on
, ___200___.
“SELLER” [ ] |
||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
“BUYER” [ ] |
||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
Exhibit A-2
Exhibit B
FORM COMPRESSION LEASE AGREEMENT
GAS
COMPRESSOR EQUIPMENT MASTER RENTAL AGREEMENT
This Gas Compressor Equipment Master Rental Agreement with all Schedule(s), hereinafter referred to
as the (“Agreement”), is made between (“Lessor”) and (“Lessee”).
Lessor and Lessee Agree as follows:
1. Lease. Subject to and on the terms and conditions set forth in Article IV of the First Amended
and Restated Omnibus Agreement entered August 20, 2007 by and among Exterran Holdings, Inc.,
Exterran, Inc., Exterran Energy Solutions, L.P., UCO GP, LLC, UCO General Partner, L.P., Exterran
Partners, L.P. and EXLP Operating LLC (the “Omnibus Agreement”) and herein, Lessor hereby agrees to
lease to Lessee, and Lessee hereby agrees to lease from Lessor, the personal property described as
the “Equipment” on the respective Equipment Lease schedule(s) (each a “Schedule”) executed by
Lessee and Lessor from time to time hereunder upon agreement of Lessor and Lessee. Each Schedule
shall, upon execution, be deemed to incorporate all of the provisions of this Agreement except as
otherwise set forth therein.
2. Term and Rent. Except as otherwise provided herein, this Agreement shall terminate on the later
to occur of (i) termination of the Omnibus Agreement and (ii) termination of the last existing
Schedule issued hereunder. Each Schedule shall set forth the term of the lease (“Minimum Term”)
and the number and amount of rental payments for the Equipment listed thereon, which Lessee shall
pay as set forth. If Lessee fails to pay any rental or other sum when due, Lessee also shall pay
to Lessor interest thereon from the due date thereof to the date of payment at a rate equal to the
lesser of 18% per annum or the maximum rate permitted by applicable law (“Applicable Rate”). All
payments by Lessee hereunder shall be payable at the office of Lessor set forth below, or at such
other place as Lessor from time to time may designate in writing. It is the intent of the parties
that each Schedule shall have a Minimum Term that is no greater than a whole or fractional month
less than 75% of the useful life of the Equipment subject to said Schedule. Notwithstanding
anything in this Agreement to the contrary, a Schedule may be terminated prior to the expiration of
its Minimum Term upon the purchase and sale or exchange between Lessor and Lessee of the Equipment
subject to said Schedule in accordance with the term of the Omnibus Agreement.
3. Taxes. Lessee agrees to reimburse, promptly when due, all license fees and assessments and all
sales, use, property, excise and other taxes or charges (including any interest and penalties), now
or hereafter imposed by any governmental body or agency upon the Equipment or the purchase,
ownership, possession, leasing, operation, use, or disposition thereof hereunder, or the rentals or
other payments hereunder (excluding taxes on or measured by the net income of Lessor) and prepare
and file promptly with the appropriate offices any and all tax and other similar returns required
to be filed with respect thereto (sending copies thereof to Lessor) or, if requested by Lessor,
notify Lessor of such requirement and furnish Lessor with all information required by Lessor so
that it may effect such filing.
4. Inspection and Acceptance. Within 48 hours after delivery of the Equipment to be leased to
Lessee under each Schedule, Lessee shall inspect the Equipment. Unless within said 48 hour period
Lessee notifies Lessor in writing to the contrary stating the details of any defects, Lessee shall
be
Exhibit B-1
conclusively presumed to have accepted the Equipment in its then condition. If within said 48 hour
period Lessee notifies Lessor in writing of the unacceptability of the Equipment, Lessor’s
obligations to lease the Equipment shall cease forthwith. Upon acceptance of delivery, Lessee
assumes the care, custody, supervision and control of the Equipment and of any and all persons or
property in the vicinity of the Equipment during the time of delivery, operation and return.
Lessee acknowledges that all Equipment rented hereunder and specified in the Schedule(s) is of the
size, design and capacity selected for the operating conditions furnished to Lessor by Lessee and
is suitable for Lessee’s purposes. Lessee acknowledges that that Lessor is not the manufacturer or
supplier of the Equipment and any quotations or recommendations made by Lessor are based on
information supplied by Lessee and the manufacturer or supplier of the Equipment.
5. Freight. Lessee agrees to bear all of the cost of connecting the Equipment and of disconnecting
the Equipment prior to returning the Equipment to Lessor. Except as otherwise provided in the
Schedule, all costs of transporting the Equipment from Lessor’s yard to Lessee’s Site described on
the Schedule and of transporting the Equipment from such Site back to Lessor’s yard will be at the
expense of Lessee.
6. Insurance. Lessee shall, at Lessee’s sole cost and expense, maintain insurance or
Lessor-approved self-insurance in such amounts, against such risks (including, without limitation,
all risk and public liability insurance with respect to the Equipment), with such carriers and in
such form as shall be satisfactory to Lessor naming Lessee as an insured and Lessor as an
additional insured. Lessee shall provide Lessor with evidence of such insurance. The policies for
such insurance shall provide that Lessor receive thirty (30) days notice of any termination,
cancellation or alteration of the terms of such insurance, shall provide that the coverage afforded
to Lessor shall not be rescinded, impaired or invalidated by any act or neglect of lessee and shall
provide for waiver of subrogation and contribution by Lessee and Lessee’s insured against Lessor
and Lessor’s employees and agents.
7. Use / Lessee’s Responsibilities. Lessee agrees to use the Equipment in a careful and prudent
manner with competent agents, employees or subcontractors only for the compression of gas in
accordance with the specifications of the manufacturer of the Equipment. Lessee agrees to pay for
damages to the Equipment resulting from free water, excessive condensate or foreign solids, or
impurities contained in the gas stream. Lessee further agrees to pay for all damages to the
Equipment resulting from abusive use, failure to maintain the Equipment in accordance with this
agreement or from any negligence on the part of Lessee, its agents, employees or subcontractors.
In addition to any Lessee obligations contained elsewhere in this Agreement and within any
Schedules hereto, Lessee agrees to and shall:
a. Provide Lessor with authorized ingress and egress to and from the site designated in the
Schedule for installation of the Equipment (the “Site”). Should Lessor be denied access to the
Site for any reason not reasonably within Lessor’s control, any time lost by Lessor shall be paid
for by Lessee at the applicable rate. Recognizing that Lessee has superior knowledge of the Site
and access routes to the Site, Lessee must advise Lessor of any conditions or obstructions which
Lessor might encounter while en route to the Site. Lessee agrees to maintain the road and Site in
such a condition that will allow free access and movement to and from the Site in an ordinarily
equipped highway type vehicle. If because of an attribute of Lessee’s operations, Lessor is
required to use any specialized transportation equipment, cranes or other services and supplies,
Lessee shall furnish the same at its expense and without cost to Lessor;
b. Prepare a sound location at the Site adequate in size and capable of properly supporting
the Equipment; and
Exhibit B-2
c. Immediately mitigate and repair any stoppage, malfunction or leaks of oil or coolant from
the Equipment.
8. No Maintenance / Bare Rental. Lessee acknowledges that Lessor is providing the Equipment as a
“bare rental” and, therefore, Lessor will have no maintenance or inspection obligations with
respect to the Equipment.
9. Inspection. Lessor shall have the right at all reasonable times to enter upon the premises
where the Equipment may be located for the purpose of inspecting it or observing its use.
10. Title; Personal Property; Encumbrances; Location. Lessee covenants that:
a. The Equipment is and shall remain personal property and shall not be attached to or become
part of any realty;
b. The Equipment will be installed and used at the location specified in the Schedule
pertaining thereto and that it shall not be removed therefrom without the permission of Lessor;
c. That Lessee will not, except as expressly authorized in this Agreement, sell, secrete,
mortgage, assign, transfer, lease, sublet, loan part with possession of, or encumber the Equipment
or permit any liens or charges to become effective thereon or permit or attempt to do any of the
acts aforesaid. Lessee agrees, at Lessee’s own expense, to take such action as may be necessary to
remove any such encumbrance, lien or charge and to prevent any third party from acquiring any other
interest in the Equipment (including, without limitation, by reason of such Equipment being deemed
to be a fixture or a part of any realty); and
d. Lessee will not change or remove any insignia, serial number or lettering of the Equipment.
11. Licenses, Permits and Compliance. Lessee, at its sole expense, shall;
a. Comply with all applicable rules and regulations of any Federal, Provincial, State, County,
City, local, municipal or regulatory agency (hereinafter referred to as “Governing Bodies”)
relating to the construction or operation of the Equipment in the Location, or environmental
requirements associated therewith (including but not limited to air emission, noise and
environmental discharges); and
b. Obtain and maintain throughout the Minimum Term, or any extension thereof, any and all
licenses and/or permit fees assessed as a result of this Agreement or against said Equipment.
Lessee further agrees to defend, protect, indemnify and hold harmless Lessor from any and all
liability associated with its failure to comply with the foregoing provision.
12. Waste Disposal. Lessee bears responsibility for disposal of liquids, solid, and hazardous waste
discharged by the Equipment at the location in accordance with federal, state and local
environmental rules and regulations.
13. Events of Default; Remedies; Expenses. In the event that:
a. Lessee shall default in the payment of any installment of rent or other sum payable under
this Agreement or default in the observance or performance of any other covenant or agreement in
this Agreement and the failure to cure said default within ten (10) days after notice by Lessor; or
b. Lessee shall dissolve, or become insolvent (however evidenced) or bankrupt, commit any
act of bankruptcy, make an assignment for the benefit of creditors, suspend the transaction of its
usual
Exhibit B-3
business or consent to the appointment of a trustee or receiver, or a trustee or a receiver
shall be appointed for Lessee or for a substantial part of its property, or bankruptcy,
reorganization, insolvency, or similar proceedings shall be instituted by or against Lessee; or
c. an order, judgment, or decree shall be entered against Lessee by a court of competent
jurisdiction and such order, judgment or decree shall continue unpaid or unsatisfied and in effect
for any period of sixty (60) consecutive days without a stay of execution, or any execution or writ
or process shall be issues in connection with any action or proceeding against Lessee or its
property whereby the Equipment or any substantial part of Lessee’s property may be taken or
restrained; or
d. any indebtedness of Lessee for borrowed money shall become due and payable by acceleration
of maturity thereof;
x. Xxxxxx shall in good faith believe that the prospect of payment or performance by Lessee is
impaired,
then and in any such event, Lessor may, by written notice to Lessee:
(1) Immediately terminate this Agreement as to any or all Schedules, at its option, and
Lessee’s rights thereunder; and/or
(2) Declare immediately due, and payable all rental installments and other sums hereunder
forthwith due and payable whereupon the same shall forthwith become due and payable as liquidated
damages and not as a penalty; and/or
(3) Proceed by appropriate court action or actions either at law or in equity, to enforce
performance by Lessee of the applicable covenants of this Agreement or to recover damages for the
breach thereof; and/or
(4) Without necessity of process or other legal action, enter onto the premises of Lessee or
such other premises as the Equipment may then be located and stop the operation of the Equipment
and/or take possession of the Equipment, disconnecting and separating the Equipment from any other
property and using all force necessary or permitted by applicable law, without Lessor incurring any
liability to Lessee or any other person arising out of the taking of any such action. Lessee
agrees to and shall indemnify and hold harmless Lessor from any and all claims, losses, damages,
causes of action, suits and liabilities of any kind arising in favor of Lessee, or any interest
owner that Lessee represents or serves as operator and arising out of or in connection with the
stopping of the operation of the Equipment and/or the removal of the Equipment as aforesaid,
whether same result from the forfeiture of any oil, gas or mineral lease, damage to a producing
reservoir or lease operations, lost production or other event or condition. In addition, Lessee
shall continue to be liable for all other indemnities under this Agreement and for all legal fees
and other costs and expenses resulting from the foregoing defaults or the exercise of Lessor’s
remedies. Lessor shall be entitled to take or retain, by way of offset against any or all amounts
due and owing under this Agreement, any assets, tangible or intangible, of Lessee which may then be
in the possession of Lessor, its correspondents or agents, wheresoever situated.
14. Holding Over. Unless a party gives the other party thirty (30) days advance written notice of
termination prior to the expiration of the Minimum Term specified in a Schedule, that Schedule will
continue to bind the parties on a month-to-month basis as to the Equipment, subject thereafter to
termination by either party with thirty (30) days advance written notice.. Notwithstanding the
foregoing, after the expiration of the Minimum Term, Lessor may modify the rental fees and other
charges assessed under this Agreement.
Exhibit B-4
15. Indemnity of Lessor.
a. Lessee is responsible and liable for loss of or damage to Equipment arising between the
time of delivery and redelivery of the Equipment and Lessee shall protect, defend, indemnify and
hold Lessor harmless from and against any such loss or damage, however arising, including but not
limited to, improper operation, improper maintenance (unless Lessor performs maintenance),
negligent acts of Lessee, compression of dirty or wet gas, fire, freezing, theft, windstorm,
hailstorm, flood, riot, insurrection or explosion, except to the extent such loss or damage arises
directly as a result of the negligence of Lessor.
b. Lessee shall protect, defend, indemnify and hold Lessor harmless from and against any loss,
damage, liability, suit, expense, cost or claim, however occurring as the result of loss of or
damage to property (other than the Equipment), arising between the time of delivery and redelivery
of the Equipment, whether such property is owned by Lessee or third party, and for injury to or
death of persons, whether Lessee or its employees or third parties.
16. Savings Clause. The parties agree that the indemnities in this Agreement are limited to the
extent necessary to comply with applicable state or federal law and that this Agreement shall be
deemed to be amended to comply with those laws to the extent their requirements are at variance
with any indemnification provisions set forth in this Agreement.
17. Limitation of Liability. In no event shall Lessor, its agents and employees (for purposes of
this Paragraph 17, such persons shall collectively be referred to as “Lessor”) be liable to Lessee,
for any general, compensatory, special indirect, incidental or consequential damages related to or
in connection with the use and operation of the Equipment and/or the performance of this Agreement,
including but not limited to any injury, loss or damage to any property, any loss of profits or
business opportunity, and any loss of use of the Equipment, irrespective of the reason or cause of
such damages, whether any of such damages occur during or after the period of this Agreement, or
that the claim for such damages is based on warranty, contract, tort or other theory of any nature
whatsoever.
18. Assignment By Lessor. Lessor may assign its rights and delegate its duties under this
Agreement. Lessor covenants to Lessee that Lessor is empowered to execute this Agreement.
Conditioned upon Lessee’s performing the conditions hereof, Lessee shall peaceably and quietly
hold, possess and use the Equipment during the Minimum Term and any extensions thereof without
hindrance. If Lessor assigns the rents reserved herein or all or any of Lessor’s rights hereunder,
such assignee’s rights shall be independent of any claim of Lessee against Lessor. Lessee on
receiving notice of any such assignment shall abide thereby and make payment as may therein be
directed. Following such assignment, the term “Lessor’ shall be deemed to include or refer to
Lessor’s assignee, except such assignee’s rights shall be independent of any claim of Lessee
against Lessor as hereinabove provided.
19. Assignment and Subleasing by Lessee. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS PARAGRAPH
19, LESSEE SHALL NOT, WITHOUT THE PRIOR CONSENT OF LESSOR, ASSIGN, TRANSFER OR ENCUMBER ITS RIGHTS,
INTERESTS OR OBLIGATIONS UNDER THIS AGREEMENT. ANY ATTEMPTED ASSIGNMENT, TRANSFER OR ENCUMBRANCE
BY LESSEE OF ITS RIGHTS, INTERESTS OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE NULL AND VOID. So
long as no material event of default shall have occurred and be continuing, Lessee may, without the
consent of Lessor, sublease one or more of the Equipment to any third party (each third part a
“User” and each such lease a “User Lease”), provided that all of the following requirements shall
be satisfied with respect to each such User Lease entered into pursuant to this Paragraph 19:
Exhibit B-5
a. the Equipment is and will remain physically located within the United States;
b. such User Lease shall be in writing, shall identify the Equipment by unit number, engine,
frame and number of cylinders and shall expressly prohibit any further sublease or transfer by User
of any rights or interests in the Equipment without Lessee’s permission;
c. such User Lease shall prohibit the User from making any alterations or modifications to the
Compressors that would violate the provisions of Paragraph 23 of this Agreement; and
d. such User Lease shall require the User (and/or Lessee) (i) to maintain the Equipment in
accordance with Paragraph 7 and the relevant Schedule and (ii) to engage in activities with the
Equipment in a manner consistent with the Equipment’s intended purpose and in accordance with the
Equipment’s specifications.
No such subleasing by Lessee will reduce or affect any of the obligations of Lessee hereunder
or the rights of Lessor under this Agreement, and all of the obligations of Lessee hereunder shall
be and remain primary and shall continue in full force and effect as the obligations of a principal
and not of a guarantor or surety.
20. No Lessor Equipment Warranties. LESSOR LEASES THE EQUIPMENT TO LESSEE AS-IS AND EXPRESSLY
DISCLAIMS AND MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION, DESIGN, QUALITY,
CAPACITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF, OR ANY OTHER MATTER, CONCERNING
THE EQUIPMENT. LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT) IT MAY HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR
CONSEQUENTIAL DAMAGE) OR EXPENSES CAUSED BY OR RELATING TO THE EQUIPMENT.
21. Enforceability. If any part hereof is contrary to, prohibited by or deemed invalid under
applicable laws or regulations of any jurisdiction, such provision shall be inapplicable and deemed
omitted but shall not invalidate the remaining provisions hereof.
22. No Conditional Sale. It is the intention of the parties hereto to hereby create a lease on the
Equipment described herein, and not a conditional sale. To provide solely for the eventuality that
a court might hold this to be a conditional sale, Lessor hereby retains a purchase money security
interest to secure payment of the sales price of the Equipment as determined by such court, and
Lessee grants to Lessor all rights given to a secured party under the Uniform Commercial Code in
addition to Lessor’s other rights hereunder. It is the intention of the parties that the Equipment
shall be deemed personal property and that it not be deemed a fixture, even though it may be
attached in some manner to realty. To provide solely for the eventuality that a court might also
hold the Equipment to be a fixture, the parties state for the purpose of complying with the legal
requirements for a financing statement that collateral is or includes fixtures and the Equipment is
affixed or is to be affixed to the lands described in the Schedule(s).
23. Alterations.
a. Except as required or permitted by this Agreement, and subject to this Xxxxxxxxx 00, Xxxxxx
shall not modify or alter the Equipment without the prior approval of Lessor.
b. Lessee may make any optional renovation, improvement, addition, or alteration to the
Equipment (“Optional Alteration”) provided that such Optional Alteration does not impair the value,
use or remaining useful life of such Equipment. In the event an Optional Alteration is readily
removable
Exhibit B-6
without impairing the value, use or remaining useful life of the Equipment, and is not a part
or appliance which replaces any part or appliance originally incorporated or installed in or
attached to such Equipment on the effective date of the relevant Schedule, Lessee may (or, if
requested by Lessor shall) remove such Optional Alteration whereupon such Optional Alteration will
remain the property of Lessee. To the extent such Optional Alteration is not readily removable
without impairing the value, use or remaining useful life of the Equipment to which such Optional
Alteration has been made, or is a part or appliance which replaces any part or appliance originally
incorporated or installed in or attached to such Equipment on the effective date of the relevant
Schedule, such Optional Alteration shall, without further act, immediately be and become the
property of, and title shall vest in, Lessor, free and clear of all liens and shall be subject to
the terms of this Agreement. Any parts installed or replacements made by Lessee upon the Equipment
pursuant to its obligation to maintain and keep the Equipments in the condition required pursuant
to the terms of this Agreement shall be considered accessions to such Equipment and ownership
thereof shall be immediately vested in Lessor.
24. Miscellaneous.
a. No covenant or condition of this Agreement can be waived or changed except by the written
consent of both parties. Forbearance or indulgence by Lessor in any regard whatsoever shall not
constitute a waiver or change of the covenant or condition to be performed by Lessee to which the
same may apply, and until complete performance by Lessee of said covenant or condition, Lessor
shall be entitled to invoke any remedy available to Lessor under this Agreement or by law or equity
despite said forbearance or indulgence. Waiver of any defaults shall not waive any other default.
b. Service of all notices under this Agreement shall be sufficient if mailed to the party
involved at its respective address set forth below, or at such address as such party may provide in
writing. Any such notices mailed to such address shall be effective when deposited in the United
States mail, duly addressed and with postage prepaid.
c. “Lessor” and “Lessee” as used in this Agreement shall include the heirs, executors,
administrators, successors, sub-lessees and/or assigns of such parties.
d. If more than one Lessee executes this Agreement, their obligations under this Agreement
shall be joint and several.
e. Lessee will, if requested by Lessor, join with Lessor in executing one or more financing
statements, as may be desired by Lessor, in form satisfactory to Lessor.
f. In case of conflict between provisions found in this Agreement and those listed in the
Schedule(s) hereto, the provisions on the Schedule(s) shall prevail.
g. The law governing this Agreement shall be that of the State of Texas in force at the date
of this Agreement, excepting any conflict of laws provisions that provide for the application of
the laws of another jurisdiction.
x. Xxxxxx and Lessee agree that venue of any lawsuit arising from or in connection with the
terms of this Agreement shall be in Houston, Xxxxxx County, Texas.
i. This Agreement contains the full agreement between the parties. No representation or
promise has been made by either party to the other as an inducement to enter into this Agreement.
Lessor does not in any way or for any purpose become partner of Lessee, or a joint venture, or a
member of a joint enterprise with Lessee.
Exhibit B-7
j. Lessee hereby waives its right to receive a copy of any financing statement or financing
change statement registered by Lessor in connection with this Agreement.
x. Xxxxxx and Lessee hereby agree that no rights or remedies referred to in Article 2A of the
Uniform Commercial Code shall be conferred upon either Lessor or Lessee unless expressly granted in
this Agreement..
l. If Lessee at any time shall fail to pay any sum which Lessee is required by this Agreement
to pay or shall fail to do or perform any other act Lessee is required by this Agreement to do or
perform, Lessor at its option may pay such sum or do or perform such act (or have it performed by a
third party), and Lessee shall reimburse Lessor on demand for the amount of such payment and for
the cost and expenses which may be incurred by Lessor for such acts or performance, together with
interest thereon at the Applicable Rate from the date of demand until paid.
m. This Agreement is based on the applicable laws existing at the time of its execution. Any
changes, including changes in governmental enforcement practices, revisions or new applicable laws,
including without limitation those related to taxes, permits, fees and duties, that have the effect
of increasing Lessor’s burden, including but not limited to cost, time-consumption and risk
exposure, shall entitle Lessor to fair and equitable Agreement modifications, which modifications
the parties agree to work toward in good faith and in a timely fashion, failing which Lessor may
terminate this Agreement or any Schedule(s) hereunder immediately upon written notice to Lessee.
Exhibit B-8
Executed this _____ day of , 20___.
LESSOR:
BY: | ||||||
NAME: | ||||||
TITLE: | ||||||
LESSEE: | ||||||
BY: | ||||||
NAME: | ||||||
TITLE: | ||||||
Exhibit B-9
SCHEDULE ‘A’ TO GAS COMPRESSOR EQUIPMENT MASTER RENTAL
AGREEMENT
AGREEMENT
(BARE RENTAL)
Lessee:
|
Date: | |
Attention:
|
Quote # |
In accordance with your request, we are pleased to offer the herein described compression equipment
for your application on the lease in (detail, to the extent
available, section, township, range, county/parish, state and country) (“Site”). This unit is
capable of the following estimated performance. Actual field operating conditions can cause actual
compressor capacities to vary.
Unit #
|
Engine | |
Frame
|
Cylinders |
SUCTION PRESSURE
|
PSIG | |||||||||
DISCHARGE PRESSURE
|
PSIG | |||||||||
COMPRESSOR
|
BHP | |||||||||
OPERATING
|
RPM | |||||||||
INTAKE TEMPERATURE
|
°F | |||||||||
SPECIFIC | GRAVITY | |||||||||
ALTITUDE | FT | |||||||||
H2S
|
Process Gas | (PPM) | * | |||||||
H2S
|
Fuel Gas | (PPM) | ** | |||||||
AMBIENT
|
TEMP. | °F | ||||||||
* | H2S process gas content equal to or greater than 100 PPM triggers the applicability of Lessor’s “High H2S Process Gas Content Schedule.” | |
** | H2S fuel gas content limits are addressed on Page 2 of this Schedule. |
Delivery
can be made to Site in
weeks from date of execution of this
Schedule but is subject to prior sale or rental and credit approval.
Exhibit B-10
RENTAL
RATE is
[The Rental Rate will be determined based on the Appraised
Value (as defined in the Omnibus Agreement) of the Equipment in accordance with
the following formula: ] per month, plus taxes, for a minimum of
months guaranteed (“Minimum Term”). (This quote is valid for a period of 30
days. Please check with Lessor prior to ordering after 30 days has expired.)
[The Minimum Term will match the term of the underlying customer contract under
which the Equipment will be employed.]
The rental
rate shall be payable monthly in advance at ’s (“Lessor”)
Houston office, commencing from the date of shipment or 15 days after unit is
ready, whichever occurs first. Upon expiration of the Minimum Term, the rental
shall continue from month to month. Either party may terminate this agreement
at the expiration of the Minimum Term or thereafter upon thirty (30) days
advanced written notice. Lessor’s obligation to provide the Equipment shall
cease upon the effective date of termination, but the Rental Rate shall
continue to be assessed until the later of expiration of such thirty (30) days
or return of the Equipment to designated terminal, in good condition, normal
wear and tear excepted.
When executed by Lessor and Lessee, this Schedule A shall apply to the GAS COMPRESSOR EQUIPMENT
MASTER RENTAL AGREEMENT (or equivalent master agreement) executed by Lessee and Lessor (or their
respective predecessors or affiliates) and dated as shown below (the “Master Agreement”) whether or
not attached hereto, and shall be deemed an individual agreement between the parties hereto for the
Equipment described herein, upon the terms and conditions stated herein and in the Master
Agreement. Unless otherwise defined herein, terms have the meanings set forth in the Master
Agreement.
Master Agreement Date: |
Exceptions or adders to the terms and conditions in this agreement are as follows:
Freight Charges To Site From
|
Paid for by | ||||||
Freight Charges From Site To
|
Paid for by | ||||||
Exhibit B-11
Quote #:
LESSOR’S AND LESSEE’S RESPONSIBILITIES
Lessor –
In addition to the responsibilities detailed in the Master Agreement, Lessor shall furnish the
following:
Equipment described on Page 1 of this Schedule A.
Periodic preventative maintenance and major repairs to all engines, compressors and
accessory parts forming the Equipment (both labor and necessary parts), including without
limitation:
o | Major overhauls of the engine, including without limitation the cylinder heads; and | ||
o | Major overhauls on the compressor, including without limitation repair or replacement of major castings on the compressor frame and cylinders. |
Lessee –
In addition to the responsibilities detailed in the Master Agreement, Lessee shall furnish the
following:
Daily maintenance and inspections of all engines, compressors and accessory parts forming
the Equipment (both labor and necessary parts), including without limitation:
o | Monthly adjustments on the engine and compressor per Lessor’s guidelines; | ||
o | Anti-freeze in accordance with Lessor’s requirements; | ||
o | Lubricants and related filters in accordance with Lessor’s requirements; and | ||
o | Daily inspections/monitoring. |
Competent and prudent Equipment operator for normal operations.
All fees, assessments and taxes (including ad valorem, which will not be prorated)
applicable to Equipment.
Provide an inlet separator for the Equipment to remove solids (such as sand) and all
entrained liquids from the gas stream; Lessee hereby acknowledging that the scrubber
provided by Lessor with the Equipment is only an emergency scrubber.
Site preparation, including suitable sand or gravel pad or concrete base as required.
Valves and piping to suction and discharge flanges, and fuel gas inlet(s) of compressor(s).
Suction to discharge bypass piping and suction pressure control valve (if required).
All installation expenses.
Suitable, sweet, dry natural gas fuel for engine use with 900 to 1100 BTU/ft3 and no more
than 10 ppm H2S.
Air/gas pressure of with sufficient pressure and volume for engine starting.
Provide, connect and maintain a properly functioning waste discharge system downstream of
the Equipment, including an outlet connection from the skid drain and all pipes,
connections, the blow casing and tank downstream of the skid drain; and remove and dispose
of all fluids
Exhibit B-12
discharged by the discharge tank, the blow casing and any pipes or connections
to the skid plus collection and disposal of such liquids from the Equipment’s skid and any
other liquids incidental to Equipment operations.
Equipment Site with ingress and egress satisfactory to Lessor.
Disconnection of Equipment and Site restoration expenses.
Site fencing, if requested by Lessor.
Any and all necessary equipment, supplies and services not specifically listed as Lessor’s
responsibility, above.
The following responsibilities apply when Site is offshore or in inland waterways:
Suitable platform or barge capable of supporting the Equipment.
All transporation (including air and water) and cranes necessary for delivery, installation,
maintenance, repair and removal of the Equipment.
All transportation (including air and water) for Lessor personnel, parts, tools and supplies.
Cost for any standby time in excess of 4 hours that is beyond the direct control of Lessor
(including due to inclement weather that, in the sole but reasonable discretion of Lessor
impedes safe travel).
Exhibit B-13
Quote #:
Third party services or materials not listed above as Lessor’s responsibility that are
furnished by Lessor at Lessee’s request will be charged to Lessee at Lessor’s actual cost plus 20%.
Lessor’s services or materials not listed above as Lessor’s responsibility that are furnished
by Lessor at Lessee’s request will be charged to Lessee at Lessor’s then-prevailing standard rates.
ACKNOWLEDGED and ACCEPTED by the undersigned, duly-authorized representatives of the parties
as of the date first shown above.
LESSOR:
Submitted by
Return original and all correspondence to:
LESSEE:
By: |
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Title: |
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Exhibit B-14
*** | indicates material has been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission. A complete copy of this agreement has been filed separately with the Securities and Exchange Commission. |
Fourteen pages of Schedule A have been omitted pursuant to the request.
Schedule A
Exterran Customers
***
Schedule B
Exterran Overlapping Customers
***
*** in the following counties:
***
Schedule C
Partnership Customers
***
Schedule D
Partnership Overlapping Customers
***
*** in the following counties:
***