EXHIBIT 10.79
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CREDIT AGREEMENT
among
HANOVER COMPRESSOR COMPANY,
HANOVER COMPRESSION LIMITED PARTNERSHIP,
JPMORGAN CHASE BANK
as ADMINISTRATIVE AGENT, SOLE BOOKRUNNER AND LEAD ARRANGER
and
THE SEVERAL LENDERS PARTIES HERETO
Dated as of December 15, 1997
as
amended and restated as of December 3, 2001
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS ................................................... 2
1.1 Defined Terms ......................................... 2
1.2 Other Definitional Provisions ......................... 23
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS ............................... 23
2.1 Revolving Credit Commitments .......................... 23
2.2 Procedure for Revolving Credit Borrowing .............. 24
SECTION 3. INTEREST RATE PROVISIONS, FEES, CONVERSIONS AND PAYMENTS ...... 25
3.1 Interest Rates and Payments Dates ..................... 25
3.2 Commitment Fee; Other Fees and Compensation ........... 26
3.3 Termination or Reduction of the Commitments ........... 26
3.4 Optional Prepayments and other Repayments ............. 26
3.5 Conversion and Continuation Options ................... 27
3.6 Minimum Amounts ....................................... 28
3.7 Computation of Interest and Fees ...................... 28
3.8 Inability to Determine Interest Rate .................. 28
3.9 Pro Rata Treatment and Payments ....................... 29
3.10 Illegality ............................................ 30
3.11 Requirements of Law ................................... 30
3.12 Taxes ................................................. 31
3.13 Indemnity ............................................. 32
3.14 Replacement of Lenders ................................ 33
Article Title Page
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SECTION 4. LETTERS OF CREDIT ............................................. 33
4.1 L/C Commitment ........................................ 33
4.2 Procedure for Issuance of Letters of Credit ........... 34
4.3 Fees, Commissions and Other Charges ................... 34
4.4 L/C Participations .................................... 35
4.5 Reimbursement Obligation of HCC ....................... 36
4.6 Obligations Absolute .................................. 36
4.7 Letter of Credit Payments ............................. 37
4.8 Application ........................................... 37
4.9 Letters of Credit Denominated in Available Foreign
Currencies ......................................... 37
SECTION 5. REPRESENTATIONS AND WARRANTIES ................................ 38
5.2 No Change ............................................. 39
5.3 Corporate Existence; Compliance with Law .............. 39
5.4 Corporate Power; Authorization; Enforceable
Obligations ........................................ 39
5.6 No Material Litigation ................................ 40
5.7 No Default ............................................ 40
5.8 Ownership of Property; Liens; Leases of Equipment ..... 40
5.10 Taxes ................................................. 41
5.11 Federal Regulations ................................... 41
5.12 ERISA ................................................. 41
5.13 Investment Company Act; Other Regulations ............. 42
5.14 Subsidiaries .......................................... 42
5.15 Purpose of Loans ...................................... 42
5.16 Environmental Matters ................................. 42
5.17 Accuracy and Completeness of Information .............. 43
ii
Article Title Page
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5.18 Senior Indebtedness ................................... 43
5.19 Representations and Warranties in Existing Credit
Agreement .......................................... 44
SECTION 6. CONDITIONS PRECEDENT .......................................... 44
6.1 Conditions to Each Extension of Credit ................ 44
6.2 Conditions to Amended and Restated Effective Date ..... 45
SECTION 7. AFFIRMATIVE COVENANTS ......................................... 45
7.1 Financial Statements .................................. 45
7.2 Certificates; Other Information ....................... 46
7.3 Payment of Obligations ................................ 47
7.4 Conduct of Business and Maintenance of Existence ...... 48
7.5 Maintenance of Property; Insurance .................... 48
7.6 Inspection of Property; Books and Records; Discussions. 48
7.7 Notices ............................................... 48
7.8 Environmental Laws .................................... 49
7.9 Subsequent Guarantees ................................. 50
SECTION 8. NEGATIVE COVENANTS ............................................ 50
8.1 Financial Condition Covenants ......................... 50
8.2 Limitation on Indebtedness ............................ 51
8.3 Limitation on Liens ................................... 52
8.4 Limitation on Guarantee Obligations ................... 54
8.5 Limitations on Fundamental Changes .................... 55
8.6 Limitation on Sale or Lease of Assets ................. 56
8.7 Limitation on Leases .................................. 57
8.8 Limitation on Dividends ............................... 57
8.9 Limitation on Derivatives ............................. 58
iii
Article Title Page
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8.10 Limitation on Investments, Loans and Advances .............. 58
8.11 Limitation on Optional Payments and Modifications of Debt
Instruments ............................................. 59
8.12 Transactions with Affiliates ............................... 60
8.13 Sale and Leaseback ......................................... 60
8.14 Corporate Documents ........................................ 61
8.15 Fiscal Year ................................................ 61
8.16 Nature of Business ......................................... 61
SECTION 9. EVENTS OF DEFAULT ............................................. 62
SECTION 10. THE ADMINISTRATIVE AGENT ..................................... 65
10.1 Appointment ................................................ 65
10.2 Delegation of Duties ....................................... 65
10.3 Exculpatory Provisions ..................................... 65
10.4 Reliance by Administrative Agent ........................... 65
10.5 Notice of Default .......................................... 66
10.6 Non-Reliance on Administrative Agent and Other Lenders ..... 66
10.7 Indemnification ............................................ 67
10.8 Administrative Agent in Its Individual Capacity ............ 67
10.9 Successor Administrative Agent ............................. 67
SECTION 11. MISCELLANEOUS ................................................ 68
11.1 Amendments and Waivers ..................................... 68
11.2 Notices .................................................... 68
11.3 No Waiver; Cumulative Remedies ............................. 69
11.4 Survival of Representations and Warranties ................. 69
11.5 Payment of Expenses and Taxes .............................. 70
11.6 Successors and Assigns; Participations; Purchasing Lenders . 70
iv
Article Title Page
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11.7 Adjustments; Set-off ................................. 73
11.8 Counterparts ......................................... 74
11.9 Severability ......................................... 74
11.10 Integration .......................................... 74
11.11 GOVERNING LAW ........................................ 75
11.12 Submission To Jurisdiction; Waivers .................. 75
11.13 Acknowledgments ...................................... 75
11.14 WAIVERS OF JURY TRIAL ................................ 76
11.15 Usury ................................................ 76
11.16 Effect of Amendment and Restatement of the Existing
Credit Agreement .................................. 77
11.17 Conflicts ............................................ 77
v
Annexes
A Pricing Grid
Schedules
Schedule 1.1A Lenders and Commitments
Schedule 5.2 Material Changes
Schedule 5.4 Required Consents
Schedule 5.14 Subsidiaries
Schedule 5.16 Environmental
Schedule 8.2(c) Existing Indebtedness
Schedule 8.3(l) Existing Liens
Schedule 8.3(n) Additional Existing Liens
Schedule 8.3(t) Additional Liens
Schedule 8.6(i) Lease of Assets
Schedule 8.4 Guarantee Obligations
Schedule 8.11 Subordination Terms
Schedule 8.12 Affiliate Transactions
Schedule 8.13 Sale and Leaseback Transactions
Exhibits
Exhibit A Form of Revolving Credit Note
Exhibit B Subsidiaries' Guarantee
Exhibit C Form of Assignment and Acceptance
Exhibit D Holdings Guarantee
CREDIT AGREEMENT, dated as of December 15, 1997 (this "Agreement"), as
amended and restated as of December 3, 2001, among Hanover Compressor Company, a
Delaware corporation ("Holdings"), Hanover Compression Limited Partnership
(formerly known as Hanover Compression Inc., "HCC"), The Bank of Nova Scotia
Atlanta Agency and First Union National Bank as co-syndication agents, The Royal
Bank of Scotland plc and Xxxxx Fargo Bank Texas, N.A., as co-documentation
agents, the several banks and other financial institutions from time to time
parties to this Agreement (the "Lenders") and JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank), a New York banking corporation, as agent for
the Lenders hereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings and HCC are parties to the Credit Agreement, dated
as of December 15, 1997 and amended and restated through March 13, 2000 (as
heretofore amended, supplemented or otherwise modified, the "Existing Credit
Agreement"), with the several banks and other financial institutions from time
to time parties thereto and The Chase Manhattan Bank, as agent; and
WHEREAS, Holdings and HCC have requested that the Existing Credit
Agreement be amended and restated as set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree that on the Closing Date,
as provided in subsection 11.16, the Existing Credit Agreement shall be amended
and restated in its entirety as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms
As used in this Agreement, the following terms shall have the
following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by Chase as its prime rate in effect
at its principal office in New York City (the Prime Rate not being intended
to be the lowest rate of interest charged by Chase in connection with
extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a)
the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction,
the numerator of which is one and the denominator of which is one minus the
C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month
Secondary CD Rate" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect on such day
(or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board of Governors of the Federal Reserve System (the "Board")
through the
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public information telephone line of the Federal Reserve Lender of New York
(which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected
by it; and "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Lender
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base
CD Rate or the Federal Funds Effective Rate, or both, for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the ABR shall
be determined without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on
the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Adjustment Date": as defined in the Pricing Grid.
"Adjusted EBITDA Companies": Holdings and each of its wholly-owned
Subsidiaries which (i) is organized under a jurisdiction of the United
States, Canada, the United Kingdom and any other country approved by the
Required Lenders and (ii) has at least 90% of its assets located in any
such jurisdiction or which derives at least 90% of its revenues from such
jurisdiction, in each case, at the time the applicable calculation is being
made for purposes of subsection 8.1(c).
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 30% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
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"Agreement Currency": as defined in subsection 11.15(b).
"Aggregate Outstanding Extensions of Credit": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of
all Loans made by such Lender then outstanding and (b) such Lender's
Commitment Percentage of the L/C Obligations then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Amended and Restated Effective Date": the date on which all the
conditions precedent specified in Section 6.2 shall have been satisfied.
"Applicable Commitment Fee Rate": for each day, the rate per annum
determined pursuant to the Pricing Grid.
"Applicable Margin": for each day, the rate per annum determined
pursuant to the Pricing Grid.
"Applicable Margin Certificate": as defined in subsection 7.2(f).
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter
of Credit.
"Available Commitment": as to any Lender, at any time, an amount
equal to the excess, if any, of (a) such Lender's Commitment over (b) such
Lender's Aggregate Outstanding Extensions of Credit.
"Available Foreign Currencies": Canadian Dollar, euro, Japanese Yen,
Pound Sterling and Italian Lira and such other currency as is acceptable to
the relevant Issuing Lender.
"Benefitted Lender": as defined in subsection 11.7(a).
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.3, as a date on which HCC requests the Lenders to make Loans
hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with
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maturities of one year or less from the date of acquisition and overnight
bank deposits of any Lender or of any commercial bank having capital and
surplus in excess of $500,000,000, (c) repurchase obligations of any Lender
or of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-2 by
Standard and Poor's Rating Group ("S&P") or P-2 by Xxxxx'x Investors
Services, Inc. ("Moody's"), (e) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political
subdivision or taxing authority of any political subdivision or taxing
authority of any such state, commonwealth or territory or any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's, (f) securities with
maturities of one year or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares
of money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"C/D Assessment Rate": for any day the net annual assessment rate
(rounded upwards, if necessary, to the next 1/100 of 1%) determined by
Chase to be payable on such day to the Federal Deposit Insurance
Corporation or any successor ("FDIC") for FDIC's insuring time deposits
made in Dollars at offices of Chase in the United States.
"C/D Reserve Percentage": for any day as applied to any calculation of
the Base CD Rate, that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board for determining the maximum
reserve requirement for a Depositary Institution (as defined in Regulation
D of the Board) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.
"Chase": The Chase Manhattan Bank, a New York banking corporation.
"Closing Date": December 15, 1997.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Commercial Letter of Credit": as defined in subsection 4.1(b)(i)(2).
"Commitment": as to any Lender, the obligation of such Lender to make
Loans to and/or issue or participate in Letters of Credit issued on behalf
of HCC hereunder in an aggregate principal and/or stated amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1A, as such amount may be reduced or increased from time
to time in accordance with the terms of this Agreement; collectively, as to
all of the Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, the percentage
of the aggregate Commitments then constituted by such Lender's Commitment.
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"Commitment Period": the period from and including the date hereof to
but not including the Final Maturity Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with HCC within the meaning of Section
4001(a)(14) of ERISA or is part of a group which includes HCC and which is
treated as a single employer under Section 414 of the Code.
"Consolidated Adjusted EBITDA": for any period, the sum of
Consolidated EBITDA for the Adjusted EBITDA Companies.
"Consolidated Capitalization": at a particular date, as to any
Person, the sum of (a) Consolidated Net Worth and (b) the amount of
Consolidated Indebtedness at such date.
"Consolidated Earnings Before Interest and Taxes": for any period,
with respect to any Person, the sum of (a) Consolidated Net Income for such
period, (b) all amounts attributable to provision for taxes measured by
income (to the extent that such amounts have been deducted in determining
Consolidated Net Income for such period) and (c) Consolidated Interest
Expense for such period (to the extent that such amounts have been deducted
in determining Consolidated Net Income for such period).
"Consolidated EBITDA": for any period, with respect to any Person, the
sum of, without duplication, (a) Consolidated Earnings Before Interest and
Taxes for such Person for such period plus (b) all amounts attributable to
depreciation and amortization, determined in accordance with GAAP (to the
extent such amounts have been deducted in determining Consolidated Earnings
Before Interest and Taxes for such period) plus (c) all amounts classified
as extraordinary charges for such period (to the extent such amounts have
been deducted in determining Consolidated Earnings Before Interest and
Taxes for such period) plus (d) cash dividends received by Holdings or any
Restricted Subsidiary from any Joint Venture or Unrestricted Subsidiary
minus (e) all amounts classified as extraordinary income for such period
(to the extent such amounts have been included in determining Consolidated
Earnings Before Interest and Taxes for such period); provided that, if
during such period such Person shall have made a Material Acquisition,
Consolidated EBITDA for such period shall be calculated after giving pro
forma effect to such Material Acquisition as if such Material Acquisition
had occurred on the first day of such period; provided further that, the
foregoing proviso shall have effect only if the Agent has been furnished
with unaudited, or, if available, audited, consolidated financial
statements of the acquired property for such period, such financial
statements to include the balance sheet and statements of income and cash
flows reflecting the historical performance of the acquired property for
such period to the extent applicable. As used in this definition, "Material
Acquisition" means any acquisition of property or series of related
acquisitions of property that (a) constitutes assets or constitutes all or
substantially all of the equity interests of a Person and (b) involves the
payment of consideration of at least $15,000,000. In calculating
Consolidated EBITDA, the financial performance of
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Joint Ventures and Unrestricted Subsidiaries shall be disregarded except as
provided in clause (d) above.
"Consolidated Indebtedness": at a particular date, as to any Person,
the sum of (without duplication) (a) all Indebtedness of such Person and
its Subsidiaries determined on a consolidated basis in accordance with
GAAP, excluding (i) Indebtedness in respect of Financing Leases, and (ii)
the Seller Note plus the principal amount of any additional notes issued in
payment of interest thereon plus (b)(i) Guarantee Obligations of Holdings
and its Subsidiaries in respect of obligations of Joint Ventures and
Unrestricted Subsidiaries, (ii) the Equipment Lease Tranche A Loans, (iii)
the Tranche A Portion of the 2001A Equipment Lease Transaction and (iv) the
Tranche A Portion of the 2001B Equipment Lease Transaction.
"Consolidated Interest Expense": for any period, with respect to any
Person, the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" or any like caption (including,
without limitation, imputed interest included in Financing Lease payments)
on a consolidated income statement of such Person and its Subsidiaries for
such period, plus, to the extent not so included, payments by such Person
and its Subsidiaries under the Equipment Leases attributable to (i)
interest payments under the Equipment Lease Tranche A Loans and Equipment
Lease Tranche B Loans and (ii) the yield to the Investors in connection
with the Equipment Lease Transactions.
"Consolidated Leverage Ratio": as defined in subsection 8.1(d).
"Consolidated Lease Expense": for any period as to any Person, the
aggregate rental obligations of such Person and its Subsidiaries determined
on a consolidated basis payable in respect of such period under leases of
real and/or personal property (net of income from sub-leases thereof, but
including taxes, insurance, maintenance and similar expenses which the
lessee is obligated to pay under the terms of said leases), whether or not
such obligations are reflected as liabilities or commitments on a
consolidated balance sheet of such Person and its Subsidiaries or in the
notes thereto, and whether or not such leases constitute Financing Leases,
but excluding obligations of such Person and its Subsidiaries with respect
to the Equipment Leases.
"Consolidated Net Income": for any period as to any Person, the
consolidated net income (or loss) of such Person and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, provided that
for purposes of determining Consolidated Net Income, payments under
Equipment Leases attributable to (i) Equipment Lease Tranche A Loans and
Equipment Lease Tranche B Loans and (ii) the yield to the Investors in
connection with the Equipment Lease Transactions shall be considered
interest expense.
"Consolidated Net Worth": at a particular date, as to any Person, the
amount which would be included under stockholders' equity on a consolidated
balance sheet of such Person and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
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"Consolidated Senior Indebtedness": at a particular date, as to any
Person, Consolidated Indebtedness of such Person and its Subsidiaries other
than (i) subordinated guarantees of the 2001A Equipment Lease Securities,
(ii) the subordinated guarantee of the 2001B Equipment Lease Securities,
(iii) any convertible notes of Holdings, (iv) the TIDES Debentures (and any
subordinated debt securities issued in connection with a structured equity
financing similar to the TIDES) and (v) any unsecured subordinated debt or
any subordinated guarantees not included in clauses (i)-(iv) above and
otherwise permitted herein.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Parties": the collective reference to (i) Holdings, HCC and
the Subsidiary Guarantors and (ii) from time to time any other Subsidiary
of Holdings for so long as such Subsidiary guarantees the Loans and other
obligations of HCC hereunder and under the Notes, and which guarantees
shall be under documents substantially similar to the Guarantees executed
on the Closing Date.
"Current Ratio": at a particular date, as to any Person and its
Subsidiaries, the quotient of the consolidated current assets of such
Person and its Subsidiaries at such time, to the consolidated current
liabilities of such Person and its Subsidiaries at such time less the
current portion of long-term debt (all determined in accordance with GAAP
at such time), provided that for purposes of calculating the Current Ratio,
current liabilities of such Person and its Subsidiaries which are then
accrued but unpaid with respect to the Equipment Lease Tranche A Loans
shall be included as current liabilities of such Person.
"Default": any of the events specified in Section 9, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Derivatives": any swap, hedge, cap, collar, or similar arrangement
providing for the exchange of risks related to price changes in any
commodity, including money.
"Disposition": with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof.
The terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollar Equivalent": with respect to an amount denominated in any
currency other than Dollars, the equivalent in Dollars of such amount
determined at the Exchange Rate on the date of determination of such
equivalent. In making any determination of the Dollar Equivalent for
purposes of calculating the amount of Loans to be borrowed from the
respective Lenders on any Borrowing Date, the Administrative Agent shall
use the relevant Exchange Rate in effect on the date on which the interest
rate for such Loans is determined pursuant to the provisions of this
Agreement and the other Loan Documents.
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"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Environmental Laws": any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, relating to or
imposing liability or standards of conduct concerning environmental
protection matters, including without limitation, Hazardous Materials, as
now or may at any time hereafter be in effect.
"Equipment Guarantees": (i) the Guarantee dated as of June 15, 1999
(as amended and restated through March 13, 2000 and as further amended,
supplemented or otherwise modified from time to time), made by Holdings,
HCC, and certain of their subsidiaries listed on the signature pages, in
favor of Hanover Equipment Trust 1999A, The Chase Manhattan Bank, as agent,
and certain lenders and investors, (ii) the Guarantee dated as of March 13,
2000 (as amended, supplemented or otherwise modified from time to time),
made by Holdings, HCC and certain of their subsidiaries listed on the
signature pages thereto, in favor of Hanover Equipment Trust 2000A, The
Chase Manhattan Bank, as agent, and certain lenders and investors, (iii)
the Guarantee dated as of October 27, 2000 (as amended, supplemented or
otherwise modified from time to time), made by Holdings, HCC and certain of
their subsidiaries listed on the signature pages thereto, in favor of
Hanover Equipment Trust 0000X, Xxx Xxxxx Xxxxxxxxx Bank, as agent, and
certain lenders and investors, (iv) the Guarantee dated as of August 31,
2001 (as amended, supplemented or otherwise modified from time to time),
made by Holdings, HCC and certain of their subsidiaries listed on the
signature pages thereto, in favor of Hanover Equipment Trust 2001A, The
Chase Manhattan Bank, as agent, and certain lenders and investors, (v) the
Guarantee dated as of August 31, 2001 (as amended, supplemented or
otherwise modified from time to time), made by Holdings, HCC and certain of
their subsidiaries listed on the signature pages thereto, in favor of
Hanover Equipment Trust 0000X, Xxx Xxxxx Xxxxxxxxx Bank, as agent, and
certain lenders and investors and (vi) any Guarantee in connection with and
dated as of the date of an Additional Participation Agreement (as amended,
supplemented or otherwise modified from time to time), to be made by
Holdings, HCC and certain of their subsidiaries that will be listed on the
signature pages thereto, in favor of a Delaware business trust, the agent
and certain Lenders and investors.
"Equipment Lease Credit Agreements": (i) the Credit Agreement dated as
of June 15, 1999 (as amended, supplemented or otherwise modified from time
to time), among Hanover Equipment Trust 1999A, as borrower, the several
lenders from time to time parties thereto, the managing agents thereto and
The Chase Manhattan Bank, as agent, (ii) the Credit Agreement dated as of
March 13, 2000 (as amended, supplemented or otherwise modified from time to
time), among Hanover Equipment Trust 2000A, as borrower, the several
lenders from time to time parties thereto, Industrial Bank of Japan, LTD.,
as syndication agent, The Bank of Nova Scotia, as documentation agent and
The Chase Manhattan Bank, as agent, (iii) the Credit Agreement dated as of
October 27, 2000 (as amended, supplemented or otherwise modified from time
to time), among Hanover Equipment Trust 2000B, as borrower, the several
lenders from time to time parties thereto, National Westminster Bank PLC,
as managing agent, Citibank, N.A., Credit
9
Suisse First Boston and The Industrial Bank of Japan, Ltd., as co-agents
and The Chase Manhattan Bank, as agent, (iv) the 2001A Equipment Lease
Securities, (v) the 2001B Equipment Lease Securities, (vi) the 2001A
Participation Agreement, (vii) the 2001B Participation Agreement and (viii)
any Credit Agreement, in connection with and dated as of the date of an
Additional Participation Agreement (as amended, supplemented or otherwise
modified from time to time), among a Delaware business trust, as borrower,
the several lenders from time to time parties thereto.
"Equipment Lease Participation Agreements": (i) the Participation
Agreement dated June 15, 1999 (as amended, supplemented or otherwise
modified from time to time), among HCC, Hanover Equipment Trust 1999A,
Societe Generale Financial Corporation and FBTC Leasing Corp., as
investors, the managing agents thereto, The Chase Manhattan Bank, as agent,
and the lenders parties thereto, (ii) the Participation Agreement dated
March 13, 2000 (as amended, supplemented or otherwise modified from time to
time), among HCC, Hanover Equipment Trust 2000A, First Union National Bank
and Scotiabanc Inc., as investors, Industrial Bank of Japan, LTD., as
syndication agent, The Bank of Nova Scotia, as documentation agent, The
Chase Manhattan Bank, as agent, and the lenders parties thereto, (iii) the
Participation Agreement dated as of October 27, 2000 (as amended,
supplemented or otherwise modified from time to time, the "2000B
Participation Agreement"), among HCC, Hanover Equipment Trust 2000B, Bank
Hapoalim B.M. and FBTC Leasing Corp., as investors, The Chase Manhattan
Bank, as agent, and the lenders parties thereto, (iv) the Participation
Agreement dated as of August 31, 2001 (as amended, supplemented or
otherwise modified from time to time, the "2001A Participation Agreement"),
among HCC, Hanover Equipment Trust 2001A, General Electric Capital
Corporation as investor, The Chase Manhattan Bank, as agent, and the
lenders parties thereto, (v) the Participation Agreement dated as of August
31, 2001 (as amended, supplemented or otherwise modified from time to time,
the "2001B Participation Agreement"), among HCC, Hanover Equipment Trust
2001B, General Electric Capital Corporation as investor, The Chase
Manhattan Bank, as agent, and the lenders parties thereto and (vi) any
additional participation agreements that may be entered into, upon notice
to the Agent, by and among HCC, a Delaware business trust, an investor or
investors, one or more agents and the Lenders parties thereto (as amended,
supplemented or otherwise modified from time to time, the "Additional
Participation Agreement"); provided that, any Additional Participation
Agreements shall be considered Equipment Lease Participation Agreements
only so long as (1) such Participation Agreement and any Additional
Participation Agreements provide for transactions reasonably similar to
those provided for in the Participation Agreement described in (i)-(iii)
above and (2) the aggregate value of (a) the equipment leased under any
Additional Participation Agreement and (b) any natural gas compressors
leased by Holdings or HCC as lessee under any other leases ("Equipment True
Leases") other than the Equipment Leases, does not exceed $300,000,000.
"Equipment Lease Tranche A Loans": the collective reference to: (a)
for the 1999 Synthetic Lease, the 2000A Synthetic Lease and the 2000B
Synthetic Lease, the loans to be made pursuant to each Equipment Lease
Credit Agreement and identified as the "Tranche A Loans" in Schedule 1.1 of
each of the Equipment Lease Credit
10
Agreements, (b) for the 2001A Synthetic Lease, the Tranche A Portion of the
2001A Equipment Lease Transaction, (c) for the 2001B Synthetic Lease, the
Tranche A Portion of the 2001B Equipment Lease Transaction and (d) for any
Additional Lease, either (i) the loans to be made pursuant to such
Equipment Lease Credit Agreement and identified as the "Tranche A Loans" in
Schedule 1.1 of such Equipment Lease Credit Agreement or (ii) the "Tranche
A Portion" of such Equipment Lease Transaction.
"Equipment Lease Tranche B Loans": the collective reference to: (a)
for the 1999 Synthetic Lease, the 2000A Synthetic Lease and the 2000B
Synthetic Lease, the loans to be made pursuant to each Equipment Lease
Credit Agreement and identified as the "Tranche B Loans" in Schedule 1.1 of
each of the Equipment Lease Credit Agreements, (b) for the 2001A Synthetic
Lease, the Tranche B portion of the 2001A Equipment Lease Securities, (c)
for the 2001B Synthetic Lease, the Tranche B portion of the 2001B Equipment
Lease Securities and (d) for any Additional Lease, either (i) the loans to
be made pursuant to such Equipment Lease Credit Agreement and identified as
the "Tranche B Loans" in Schedule 1.1 of such Equipment Lease Credit
Agreement or (ii) the "Tranche B Portion" of such Equipment Lease
Transaction.
"Equipment Lease Transactions": the transactions whereby HCC leases
natural gas compressors from the Lessors as described in each of the
Equipment Lease Participation Agreements and any Operative Document (as
defined in such Equipment Lease Participation Agreements).
"Equipment Leases": (i) the Lease dated as of June 15, 1999 (as
amended, supplemented or otherwise modified from time to time), between
Hanover Equipment Trust 1999A, as lessor, and HCC, as lessee (the "1999
Synthetic Lease"), (ii) the Lease dated as of March 13, 2000 (as amended,
supplemented or otherwise modified from time to time), between Hanover
Equipment Trust 2000A, as lessor, and HCC, as lessee (the "2000A Synthetic
Lease"), (iii) the Lease dated as of October 27, 2000 (as amended,
supplemented or otherwise modified from time to time), between Hanover
Equipment Trust 2000B, as lessor, and HCC, as lessee (the "2000B Synthetic
Lease"), (iv) the Lease dated as of August 31, 2001 (as amended,
supplemented or otherwise modified from time to time), between Hanover
Equipment Trust 2001A, as lessor, and HCC, as lessee (the "2001A Synthetic
Lease") and (v) the Lease dated as of August 31, 2001 (as amended,
supplemented or otherwise modified from time to time), between Hanover
Equipment Trust 2001B, as lessor, and HCC, as lessee (the "2001B Synthetic
Lease") and (vi) any Lease in connection with and dated as of the date of
any Additional Participation Agreement (as amended, supplemented or
otherwise modified from time to time), between a Delaware business trust,
as lessor, and HCC, as lessee (the "Additional Lease").
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental,
11
marginal and emergency reserves under any regulations of the Board of
Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of
such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear on Page 3750 of the Telerate
screen (or otherwise on such screen), the "Eurodollar Base Rate" shall be
determined by reference to such other comparable publicly available service
for displaying eurodollar rates as may be selected by the Administrative
Agent or, in the absence of such availability, by reference to the rate at
which the Administrative Agent is offered Dollar deposits at or about 11:00
A.M., New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
---------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 9, provided
that any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
"Exchange Rate": with respect to any non-Dollar currency on any date,
the rate at which such currency may be exchanged into Dollars, as set forth
on such date on the relevant Reuters currency page at or about 11:00 A.M.,
London time, on such date. In the event that such rate does not appear on
any Reuters currency page, the "Exchange Rate" with respect to such
non-Dollar currency shall be determined by reference to such other publicly
available service for displaying exchange rates as may be agreed upon by
the Administrative Agent and the Borrower or, in the absence of such
agreement, such "Exchange Rate" shall instead be the Administrative Agent's
spot rate of exchange in the interbank market where its foreign currency
exchange operations in respect of such non-Dollar currency are then being
conducted, at or about 10:00 A.M., local time, on such date for the
purchase of Dollars with such non-Dollar currency, for delivery two
Business Days later; provided, that if at the time of any such
determination, no such spot rate can
12
reasonably be quoted, the Administrative Agent may use any reasonable
method as it deems applicable to determine such rate, and such
determination shall be conclusive absent manifest error.
"Existing Credit Agreement": as defined in the recitals hereto.
"Final Maturity Date": November 30, 2004.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee, but excluding
all obligations with respect to any Equipment Leases.
"GAAP": generally accepted accounting principles in the United States
of America consistent with those utilized in preparing the audited
financial statements referred to in subsection 6.1.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counter indemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing Person,
whether or not contingent, (a) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
or (d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which
such guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum
13
reasonably anticipated liability in respect thereof as determined by
Holdings, as the case may be, in good faith.
"Guarantees": collectively, the Subsidiaries' Guarantee, the Holdings
Guarantee and any other guarantees of the Loans and the other obligations
of HCC hereunder.
"Guarantor": a Guarantor under any of the Synthetic Guarantees or the
Senior Credit Agreement.
"Hazardous Materials": any hazardous materials, hazardous waste,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such
in or under any Environmental Law, including, without limitation,
polychlorinated biphenyls.
"HMS": Hanover Measurement Services Company, L.P., a Delaware limited
partnership, and its successors and assigns.
"HMS Entities": HMS, Meter Acquisition Company LP, LLLP, a Delaware
limited liability partnership, Hanover Measurement, LLC, a Delaware limited
liability company, HCC Holdings, Inc., a Delaware corporation and Hanover
MAC, LLC, a Delaware limited liability company.
"HMS Transactions": the transactions described in the Common
Agreement, dated as of September 30, 1999, by and among Meter Acquisition
Company LP, LLLP, Hanover Measurement Services Company, L.P., HPL, Hanover
MAC, LLC, HCC Holdings, Inc., Barclays Bank PLC, as agent and arranger,
Credit Lyonnais New York Branch, as syndication agent and the other parties
thereto.
"Holdings": Hanover Compressor Company, a Delaware corporation, the
parent company of HCC.
"Holdings Guarantee": the Holdings Guarantee made by Holdings in favor
of the Administrative Agent for the benefits of the Lenders, substantially
in the form of Exhibit D, as amended, supplemented or otherwise modified
from time to time.
"HPL": Houston Pipe Line Company, a Delaware corporation, and its
successors and assigns.
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Financing Leases, (c)
all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (d) all liabilities secured by any Lien
(other than any lien of a type described in subsection 8.3(a) through (j))
on any property owned by such Person even though it has not assumed or
otherwise become liable for the payment thereof, provided that all
14
obligations of such Person with respect to Equipment Lease Tranche A Loans
shall be considered Indebtedness of such Person and (e) solely for purposes
of subsection 8.2, the aggregate drawable amount of letters of credit
issued for the account of such Person. For purposes of clarification, the
obligations with respect to the Equipment Leases shall not be deemed to
constitute Indebtedness under the preceding clause (d) solely by virtue of
the grant by HCC thereunder of a Lien on its interest in the Equipment
subject to such Equipment Lease to secure HCC's and the Guarantor's
obligations in connection therewith.
"indemnified liabilities": as defined in subsection 11.5.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": as defined in subsection 5.9.
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is
outstanding, (b) as to any Eurodollar Loan having an Interest Period of
three months or less the last day of such Interest Period, and (c) as to
any Eurodollar Loan having an Interest Period longer than three months,
each day which is three months or a whole multiple thereof, after the first
day of such Interest Period and the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by HCC in its notice
of borrowing or notice of conversion, as the case may be, given with
respect thereto; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by HCC by irrevocable
notice to the Administrative Agent not less than three Working Days prior
to the last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to the Interest
Periods are subject to the following:
(i) if an Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Working Day, such Interest Period
shall be extended to the next succeeding Working Day unless the result
of such extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the
immediately preceding Working Day;
15
(ii) any Interest Period that would otherwise extend beyond the
Final Maturity Date shall end on the Final Maturity Date;
(iii) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Working Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Working Day
of a calendar month; and
(iv) HCC shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period
for such Loan.
"Investments": as defined in subsection 8.10.
"Investors": the parties that hold the beneficial interest in the
respective Lessors.
"Issuing Lender": Chase or any other Lender (with such Lender's
consent), in its capacity as issuer of any Letter of Credit.
"Joint Venture": any Person in which Holdings or one or more
Subsidiaries own equity interests representing 1% or more but 50% or less
of the aggregate equity interests of such Person.
"Judgment Currency": as defined in subsection 11.15(b).
"L/C Commitment": $75,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit issued in Dollars, (b) the aggregate then undrawn and unexpired
Dollar Equivalent of the then outstanding Letters of Credit issued in any
Available Foreign Currency and (c) the aggregate amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to
subsection 4.5(a).
"L/C Participants": the collective reference to all the Lenders
other than the Issuing Lender.
"Lessors": the lessors under the Equipment Leases.
"Letters of Credit": as defined in subsection 4.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Financing Lease having
substantially the same economic effect as any of the foregoing, and the
filing of
16
any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Applications and the
Guarantees.
"MAC": Meter Acquisition Company LP, LLLP, a Delaware registered
limited liability limited partnership, and its successors and assigns.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property or condition (financial or otherwise) of
Holdings and its Subsidiaries taken as a whole, (b) the ability of Holdings
or any of the Subsidiaries of Holdings to perform their respective
obligations under this Agreement, the Notes, or the Guarantees, or (c) the
validity or enforceability of this Agreement or any of the Notes or any
Application or the rights or remedies of the Administrative Agent or the
Lenders hereunder or thereunder.
"Material Subsidiary": at any particular date, each Subsidiary of
Holdings for which the aggregate value of all assets owned by such
Subsidiary is greater than $5,000,000.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"New Convertible Notes": convertible notes to be offered and issued by
Holdings in an aggregate principal amount not to exceed $150,000,000 which
will not have any scheduled principal payments prior to 2008 and which will
have terms and conditions either (i) at least as favorable to the Lenders,
Holdings and HCC as are contained in the 2008 Notes or (ii) approved by the
Required Lenders. The proceeds of the New Convertible Notes will be used
first, to repay the Seller Note, second to pay fees and expenses of
issuance of the New Convertible Notes and third, for general corporate
purposes.
"Non-Recourse Indebtedness": Indebtedness (i) as to which neither
Holdings nor any of its Qualified Subsidiaries (a) provides any guarantee
or credit support of any kind (including any undertaking, guarantee,
indemnity, agreement or instrument that would constitute Indebtedness), or
(b) is directly or indirectly liable (as guarantor or otherwise) and (ii)
the explicit terms of which provide that there is no recourse against any
of the assets of Holdings or its Qualified Subsidiaries (other than the
Capital Stock of an Unqualified Subsidiary) or that recourse is limited to
assets which do not include the assets of Holdings or its Qualified
Subsidiaries (other than the Capital Stock of an Unqualified Subsidiary).
"Note": any note made by HCC to any Lender pursuant to this
Agreement; collectively the "Notes".
17
"Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement
Obligations and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to HCC, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans and all
other obligations and liabilities of HCC to the Administrative Agent or to
any Lender, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document, the
Letters of Credit or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.
"Participant": as defined in subsection 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Business Acquisition": the formation of a new Subsidiary or
any acquisition of all or substantially all the assets of, or 50% or more
of the shares of capital stock, partnership interests, joint venture
interests, limited liability company interests or other similar equity
interests in, or the acquisition of any compression and/or oil and gas
production equipment assets of, a Person or division or line of business of
a Person (or any subsequent investment made in a Person previously acquired
in a Permitted Business Acquisition), if immediately after giving effect
thereto: (a) no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (b) all transactions related thereto
shall be consummated in accordance with applicable laws, (c) such acquired
or newly formed corporation, partnership, association or other business
entity shall be a Subsidiary and all actions required to be taken, if any,
with respect to such acquired or newly formed Subsidiary under subsection
7.9 shall have been taken, (d)(i) Holdings shall be in compliance, on a pro
forma basis after giving effect to such acquisition or formation, with the
covenants contained in subsection 8.1 recomputed as at the last day of the
most recently ended fiscal quarter of Holdings as if such acquisition had
occurred on the first day of each relevant period for testing such
compliance, and Holdings shall have delivered to the Administrative Agent
an officers' certificate to such effect, together with all relevant
financial information for such Person or assets and (ii) any acquired or
newly formed Subsidiary shall not be liable for any Indebtedness or
Guarantee Obligations (except for Indebtedness and Guarantee Obligations
permitted by subsections 8.2 and 8.4), and (e) any acquired or newly formed
Subsidiary (including Subsidiaries thereof) shall not have (except for
Indebtedness and Guarantee Obligations permitted by subsections 8.2 and
8.4) any material liabilities (contingent or otherwise), including, without
limitation, liabilities under Environmental Laws and liabilities with
respect to any Plan, and the Borrower shall have delivered to the
Administrative Agent a certificate, signed by a Responsible Officer, that
to the best of such officer's knowledge, no such material liabilities
exist.
18
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which HCC, or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"POC": the collective reference to Production Operators Corporation, a
Delaware corporation, and its direct and indirect subsidiaries and joint
ventures in which it directly or indirectly owns an interest, which are
being acquired by Holdings and its Subsidiaries.
"POC Acquisition": the acquisition by HCC of the capital stock of POC
on August 31, 2001.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Properties": as defined in subsection 5.16.
"Purchasing Lenders": as defined in subsection 11.6(c).
"Qualified Subsidiary": each Subsidiary of Holdings organized under a
jurisdiction of the United States and having assets located primarily in
the United States.
"Register": as defined in subsection 11.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System.
"Reimbursement Obligation": the obligation of HCC to reimburse the
Issuing Lender pursuant to subsection 4.5(a) for amounts drawn under
Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived by the PBGC.
"Required Lenders": at any time, Lenders the Commitment Percentages of
which aggregate more than 50%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
19
"Responsible Officer": the chief executive officer, president, the
executive vice president, treasurer or secretary of the applicable Credit
Party, or, with respect to financial matters, the chief financial officer
or treasurer of the applicable Credit Party.
"Restricted Payment": as defined in subsection 8.8.
"Restructuring": includes both (i) the restructuring of HCC and the
creation of Holdings as the corporate parent of HCC effective on December
9, 1999, pursuant to Section 251(g) of the Delaware General Corporation
Law, and (ii) the merger of HCC into a newly formed limited partnership
which is a Subsidiary of Holdings (such partnership to be the surviving
entity of such merger).
"Revolving Credit Loans": as defined in subsection 2.1.
"Sale and Leaseback Transaction": as defined in subsection 8.13.
"Seller Note": as defined in subsection 8.2(k).
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Standby Letter of Credit": as defined in paragraph 4.1(b)(i)(A).
"Subordinated Debt": as to any Person, any unsecured Indebtedness
(including, with respect to HCC, the Shareholder Subordinated Debt, and,
with respect to Holdings, the TIDES Debentures) the terms of which provide
that such Indebtedness is subordinate and junior in right of payment to the
payment of all obligations and liabilities of such Person to the
Administrative Agent and the Lenders hereunder; provided, that prior to an
Event of Default, Holdings and any Subsidiary may make regularly scheduled
interest payments in respect of such Indebtedness.
"Subordinated Guarantee Obligation": as to any Person, any unsecured
Guarantee Obligation the terms of which provide that such Guarantee
Obligation is subordinate and junior in right to the payment of all the
obligations and liabilities of such Person to the Agent and the Lenders.
"Subsidiaries' Guarantee": the Subsidiaries' Guarantee made certain
Subsidiaries of Holdings in favor of the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit B, as amended,
supplemented or otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more
20
intermediaries, or both, by such Person. Unless otherwise qualified (i) all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of Holdings and (ii) all references
to a "Subsidiary" or to "Subsidiaries" in this Agreement shall exclude
Unrestricted Subsidiaries unless Unrestricted Subsidiaries are expressly
included.
"Subsidiary Guarantor": each Subsidiary which is a party to a
Guarantee.
"Synthetic Guarantee": any of the 2001A Guarantee, the 2001B
Guarantee, the 2000A Guarantee, the 2000B Guarantee and the 1999 Guarantee.
"TIDES": shall mean the Term Income Deferrable Equity Securities
(TIDES)(sm) issued pursuant to the TIDES Declaration of Trust.
"TIDES Declaration of Trust": shall mean the Amended and Restated
Declaration of Trust, dated as of December 15, 1999, by Holdings, the
holders of interests in the Trust from time to time and the trustees
thereof.
"TIDES Debentures": the unsecured debentures junior and subordinate in
right of payment to all the obligations and liabilities of Holdings issued
pursuant to the TIDES Indenture.
"TIDES Guarantees": means (i) the Preferred Securities Guarantee
Agreement, dated as of December 15, 1999, between Holdings and Wilmington
Trust Company, as guarantee trustee, and the Common Securities Guarantee
Agreement, dated as of December 15, 1999, by Holdings.
"TIDES Indenture": shall mean the Indenture, dated as of December 15,
1999, between Holdings and Wilmington Trust Company, as trustee thereunder.
"TIDES Trust": Hanover Compressor Capital Trust, a Delaware business
trust, and its successors and assigns.
"Tranche": the collective reference to Eurodollar Loans the Interest
Periods with respect to all of which begin on the same date and end on the
same later date (whether or not such Loans shall originally have been made
on the same day).
"Tranche A Portion of the 2001A Equipment Lease Transaction" shall
mean the product of (i) 75.01% and (ii) the aggregate outstanding principal
amount of the 2001A Equipment Lease Securities.
"Tranche A Portion of the 2001B Equipment Lease Transaction" shall
mean the product of (i) 67.90% and (ii) the aggregate outstanding principal
amount of the 2001B Equipment Lease Securities.
"Transferee": as defined in subsection 11.6(f).
21
"2008 Notes": the 4.75% Convertible Senior Notes due 2008 issued by
Holdings in an aggregate principal amount of $192,000,000.
"2001A Equipment Lease Securities": as defined in the definition of
"2001A Equipment Lease Transaction".
"2001B Equipment Lease Securities": as defined in the definition of
"2001B Equipment Lease Transaction".
"2001A Equipment Lease Transaction": the synthetic off-balance sheet
lease financing consummated on August 31, 2001 pursuant to the 2001A
Participation Agreement.
"2001B Equipment Lease Transaction": the synthetic off-balance sheet
lease financing consummated on August 31, 2001 pursuant to the 2001B
Participation Agreement.
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended, revised or replaced from time to time.
"Unqualified Subsidiary": any Subsidiary of Holdings other than
Qualified Subsidiaries.
"Unrestricted Subsidiary": (i) any Subsidiary of HCC that exists on
July 27, 2001 and is so designated as an Unrestricted Subsidiary by HCC in
writing to the Administrative Agent, (ii) any Subsidiary of HCC that at the
time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of HCC, as provided below), and (iii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of HCC (including any newly acquired or newly formed Subsidiary)
to be an Unrestricted Subsidiary if all of the following conditions apply
and continue to apply following such designation: (a) neither HCC nor any
of its Subsidiaries (other than another Unrestricted Subsidiary) provides
credit support for Indebtedness or other obligations of such Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing
such Indebtedness or obligations) except as permitted by subsection 8.10
and (b) any Investment by HCC or the Restricted Subsidiaries in such
Unrestricted Subsidiary made as a result of designating such subsidiary an
Unrestricted Subsidiary shall not violate the provisions described under
subsection 8.10 and such Unrestricted Subsidiary is not party to any
agreement, contract, arrangement or understanding at such time with HCC or
any other Subsidiary (other than another Unrestricted Subsidiary) of HCC
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to HCC or such other Subsidiary than
those that might be obtained at the time from Persons who are not
Affiliates of HCC or, in the event such condition is not satisfied, the
value of such agreement, contract, arrangement or understanding to such
Unrestricted Subsidiary shall
22
be deemed an Investment. Any such designation by the Board of Directors
shall be evidenced to the Administrative Agent by filing with the
Administrative Agent a resolution of the Board of Directors of HCC giving
effect to such designation and an officer's certificate certifying that
such designation complies with the foregoing conditions and any Investment
by HCC in such Unrestricted Subsidiary shall be deemed the making of an
Investment on the date of designation in an amount equal to the greater of
(1) the net book value of such Investment or (2) the fair market value of
such Investment as determined in good faith by the Board of Directors (and
evidenced by a resolution of the Board of Directors). The Board of
Directors may designate any Unrestricted Subsidiary as a Subsidiary;
provided (i) that, if such Unrestricted Subsidiary has any Indebtedness,
immediately after giving effect to such designation, no Default or Event of
Default would result, and (ii) that all Indebtedness of such Subsidiary
shall be deemed to be incurred on the date such Unrestricted Subsidiary
becomes a Subsidiary. Unrestricted Subsidiaries shall be deemed to be
Affiliates of Holdings, HCC and their Subsidiaries. Any Subsidiary of an
Unrestricted Subsidiary shall also be deemed to be an Unrestricted
Subsidiary. Any Subsidiary of Holdings that is not an Unrestricted
Subsidiary shall be a "Restricted Subsidiary".
"Working Day": any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London, England.
1.2 Other Definitional Provisions
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to HCC and
its Subsidiaries not defined in subsection 1.1 and accounting terms partly
defined in subsection 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments
(a) Subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans ("Revolving Credit Loans") to HCC from
time to time during the
23
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Commitment Percentage of the then outstanding
L/C Obligations, does not exceed the amount of such Lender's Commitment. During
the Commitment Period, HCC may use the Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by HCC and
notified to the Administrative Agent in accordance with subsections 2.2 and 3.5,
provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Final Maturity Date.
(c) Revolving Credit Loans made under (and as defined in) the Existing
Credit Agreement prior to the Amended and Restated Effective Date and
outstanding on such date shall constitute Revolving Credit Loans hereunder.
2.2 Procedure for Revolving Credit Borrowing
HCC may borrow under the Commitments during the Commitment Period on
any Working Day, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans, or on any Business Day, otherwise, provided
that HCC shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 11:00 A.M., New York City
time, (a) three Working Days prior to the requested Borrowing Date, if all or
any part of the requested Revolving Credit Loans are to be initially Eurodollar
Loans, or (b) on the requested Borrowing Date, otherwise), specifying (i) the
amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, ABR Loans, or a combination thereof and
(iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the
amount of such Type of Loan and the length of the initial Interest Period
therefor. Each borrowing under the Commitments shall be in an amount equal to
(x) in the case of ABR Loans, $200,000 or a whole multiple of $100,000 in excess
thereof (or, if the then Available Commitments are less than $200,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $500,000 or a whole
multiple of $100,000 in excess thereof. Upon receipt of any such notice from
HCC, the Administrative Agent shall promptly notify each Lender thereof. Each
Lender will make the amount of its pro rata share of each borrowing available to
the Administrative Agent for the account of HCC at the office of the
Administrative Agent specified in subsection 11.2 prior to 12:00 noon, New York
City time, on the Borrowing Date requested by HCC in funds immediately available
to the Administrative Agent. Such borrowing will then be made available to HCC
by the Administrative Agent crediting the account of HCC on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Lenders and in like funds as received by the Administrative Agent.
2.3 Increase of Commitments (a) HCC shall have the right to increase
the Commitments from time to time pursuant to this subsection 2.3 (subject to
the restrictions of subsection 2.3(d) below) as long as no Default or Event of
Default has occurred and is continuing. In the event that HCC wishes to increase
the aggregate Commitments at any time, it shall notify the Administrative Agent
in writing of the amount (the "Offered Increase Amount")
24
of such proposed increase (such notice, a "Commitment Increase Notice");
provided that the aggregate amount of any such increase in Commitments shall be
at least $10,000,000. HCC may, at its election, (i) offer one or more of the
Lenders the opportunity to participate in all or a portion of the Offered
Increase Amount pursuant to paragraph (c) below and/or (ii) with the consent of
the Administrative Agent (which consent shall not be unreasonably withheld),
offer one or more additional banks, financial institutions or other entities the
opportunity to participate in all or a portion of the Offered Increase Amount
pursuant to paragraph (b) below. Each Commitment Increase Notice shall specify
which Lenders and/or banks, financial institutions or other entities HCC desires
to participate in such Commitment increase. HCC or, if requested by HCC, the
Administrative Agent, will notify such Lenders and/or banks, financial
institutions or other entities of such offer.
(b) Any additional bank, financial institution or other entity which
HCC selects to offer participation in the increased Commitments and which elects
to become a party to this Agreement and provide a Commitment in an amount so
offered and accepted by it pursuant to subsection 2.3(a)(ii) shall execute a New
Lender Supplement (in the form specified by the Administrative Agent) with HCC
and the Administrative Agent, whereupon such bank, financial institution or
other entity (herein called a "New Lender") shall become a Lender for all
purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits of this Agreement, and Schedule 1.1A shall
be deemed to be amended to add the name and Commitment of such New Lender,
provided that the Commitment of any such new Lender shall be in an amount not
less than $5,000,000, provided further that on the effective date of such New
Lender Supplement, there shall be no outstanding Eurodollar Loans hereunder or,
if any Eurodollar Loans would be outstanding on the effective date of any such
New Lender Supplement, HCC shall either (x) convert such Eurodollar Loans to ABR
Loans, or (y) prepay, in accordance with the provisions of Section 3.4, such
Eurodollar Loans immediately prior to such New Lender Supplement becoming
effective (subject, in either case, to the payment provisions hereof).
(c) Any Lender which accepts an offer to it by HCC to increase its
Commitment pursuant to subsection 2.3(a)(ii) shall, in each case, execute a
Commitment Increase Supplement (in the form specified by the Administrative
Agent) with HCC and the Administrative Agent whereupon such Lender shall be
bound by and entitled to the benefits of this Agreement with respect to the full
amount of its Commitment as so increased, and Schedule 1.1A shall be deemed to
be amended to so increase the Commitment of such Lender.
(d) Notwithstanding anything to the contrary in this subsection 2.3
(i) in no event shall any transaction effected pursuant to this subsection 2.3
cause the aggregate Commitments hereunder to exceed $450,000,000 and (ii) no
Lender shall have any obligation to increase its Commitment unless it agrees to
do so in its sole discretion.
SECTION 3. INTEREST RATE PROVISIONS, FEES,
CONVERSIONS AND PAYMENTS
3.1 Interest Rates and Payments Dates
25
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to ABR
plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any Loan or
(ii) any interest payable thereon shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum which is (x) in the case of overdue principal, 2%
above the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this subsection or (y) in the case of overdue interest,
to the extent permitted by law, 2% above the rate described in paragraph (b) of
this subsection, in each case from the date of such non-payment until such
amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable on demand.
3.2 Commitment Fee; Other Fees and Compensation
(a) HCC agrees to pay to the Administrative Agent for the account of
each Lender a commitment fee for the period from and including the first day of
the Commitment Period to the Final Maturity Date, computed at the rate per annum
equal to the Applicable Commitment Fee Rate on the average daily amount of the
Available Commitment of such Lender during the period for which payment is made.
Such commitment fee shall be payable quarterly in arrears on the last day of
each March, June, September and December and on the Final Maturity Date or such
earlier date as the Commitments shall terminate as provided herein.
(b) HCC agrees to pay to the Administrative Agent the fees and other
compensation, in the amounts and on the dates specified in the fee letter
separately agreed to between HCC and the Administrative Agent.
3.3 Termination or Reduction of the Commitments
HCC shall have the right during the Commitment Period, upon not less
than five Business Days' notice to the Administrative Agent by HCC to terminate
the Commitments or, from time to time, to reduce the amount of the Commitments,
provided that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Credit Loans made
on the effective date thereof, the aggregate principal amount of the Revolving
Credit Loans then outstanding, when added to the then outstanding L/C
Obligations, would exceed the Commitments then in effect. Any such reduction
shall be in an amount equal to $100,000 or a whole multiple thereof and shall
reduce permanently the Commitments then in effect.
3.4 Optional Prepayments and other Repayments
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(a) HCC may at any time and from time to time, prepay the Loans, in
whole or in part, without premium or penalty, upon at least three Working Days'
irrevocable notice, in the case of Eurodollar Loans, and one Business Day's
irrevocable notice, in the case of ABR Loans, by HCC to the Administrative
Agent, specifying the date and amount of prepayment and whether the prepayment
is of Eurodollar Loans, ABR Loans or a combination thereof, and if of a
combination thereof, the amount allocable to each. If any such prepayment with
respect to a Eurodollar Loan is made on a day other than the last day of an
Interest Period, such prepayment shall be accompanied by any amounts required to
be paid pursuant to subsection 3.13. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein. Partial prepayments shall be in an aggregate
principal amount of $200,000 or a whole multiple of $100,000 in excess thereof.
(b) HCC shall repay at any time, and there shall be due and payable at
such time, such principal amount (together with accrued interest thereon), if
any, of outstanding Revolving Credit Loans as may be necessary so that, after
such repayment, the aggregate unpaid principal amount of Revolving Credit Loans
does not exceed the Commitments in effect at such time after giving effect to
any reduction in the Commitments pursuant to subsection 3.3.
(c) (i) If, at any time during the Commitment Period, for any reason
the Aggregate Outstanding Extensions of Credit exceeds the Commitments then in
effect, HCC shall, without notice or demand, immediately prepay the Revolving
Credit Loans, terminate or reduce Letters of Credit and/or repay Reimbursement
Obligations in an amount equal to such excess.
(ii) If, at any time during the Commitment Period, for any reason
the aggregate L/C Obligations of all Lenders exceed 105% of the L/C Commitment
then in effect, HCC shall, without notice or demand, immediately terminate or
reduce Letters of Credit and/or repay Reimbursement Obligations in an amount
equal to such excess.
3.5 Conversion and Continuation Options
(a) HCC may elect from time to time to convert Eurodollar Loans to
ABR Loans by giving the Administrative Agent at least two Business Days' prior
irrevocable notice of such election, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. HCC may elect from time to time to convert ABR Loans to
Eurodollar Loans by giving the Administrative Agent at least three Working Days'
prior irrevocable notice of such election. Any such notice of conversion to
Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof. All or any part of outstanding
Eurodollar Loans and ABR Rate Loans may be converted as provided herein,
provided that (i) no Loan may be converted into a Eurodollar Loan when any Event
of Default has occurred and is continuing and the Administrative Agent has
determined that such a conversion is not appropriate, (ii) any such conversion
may only be made if, after giving effect thereof, subsection 3.6 shall not have
been contravened and (iii) no Loan may be converted into a Eurodollar Loan after
the date that is one month prior to the Final Maturity Date.
27
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by HCC giving notice to
the Administrative Agent, in accordance with the applicable provisions of the
term "Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no Eurodollar Loan
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has determined that such a continuation
is not appropriate, (ii) if, after giving effect thereto, subsection 3.6 would
be contravened or (iii) after the date that is one month prior to the Final
Maturity Date and provided, further, that if HCC shall fail to give any required
notice as described above in this paragraph or if such continuation is not
permitted pursuant to the preceding proviso such Loans shall be automatically
converted to ABR Loans on the last day of such then expiring Interest Period.
3.6 Minimum Amounts
All borrowings, conversions and continuations of Loans hereunder and
all selections of Interest Periods hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of the Loans comprising each Eurodollar Tranche shall
be equal to $500,000 or a whole multiple of $100,000 in excess thereof.
3.7 Computation of Interest and Fees
(a) Commitment fees and interest on ABR Loans shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed, and interest on Eurodollar Loans shall be calculated on the basis of a
360 day year for the actual days elapsed. The Administrative Agent shall as soon
as practicable notify HCC and the Lenders of each determination of a Eurodollar
Rate. Any change in the interest rate on a Loan resulting from a change in the
ABR, the Eurocurrency Reserve Requirements, the C/D Assessment Rate or the C/D
Reserve Percentage shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall as
soon as practicable notify HCC and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
HCC and the Lenders in the absence of manifest error. The Administrative Agent
shall, at the request of the HCC, deliver to HCC a statement showing the
quotations used by the Administrative Agent in determining any interest rate
pursuant to subsection 3.1(a).
3.8 Inability to Determine Interest Rate
In the event that prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon HCC absent manifest
error) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period, or
28
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the costs
to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telex, telecopy or telephonic notice thereof
to HCC and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
converted to or continued as ABR Loans and (z) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to ABR Loans.
Until such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall HCC have the
right to convert Loans to Eurodollar Loans.
3.9 Pro Rata Treatment and Payments
(a) Each borrowing by HCC from the Lenders hereunder, each payment by
HCC on account of any commitment fee hereunder and any reduction of the
Commitments of the Lenders shall be made pro rata according to the respective
Commitment Percentages of the Lenders. Each payment (including each prepayment)
by HCC on account of principal of and interest on the Loans shall be made pro
rata according to the respective outstanding principal amounts of the Loans then
held by the Lenders. All payments (including prepayments) to be made by HCC
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set off or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Administrative Agent's office specified in
subsection 11.2 in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders promptly upon
receipt in like funds as received. If any payment hereunder (other than payments
on the Eurodollar Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. If any payment on a Eurodollar Loan
becomes due and payable on a day other than a Working Day, the maturity thereof
shall be extended to the next succeeding Working Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Working Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a Borrowing Date that such Lender will not make
the amount that would constitute its Commitment Percentage of the borrowing on
such date available to the Administrative Agent, the Administrative Agent may
assume that such Lender has made such amount available to the Administrative
Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon
such assumption, make available to HCC a corresponding amount. If such amount is
made available to the Administrative Agent on a date after such Borrowing Date,
such Lender shall pay to the Administrative Agent on demand an amount equal to
the product of (i) the daily average Federal funds rate during such period as
quoted by the Administrative Agent, times (ii) the amount of such Lender's
Commitment Percentage of such
29
borrowing, times (iii) a fraction the numerator of which is the number of
days that elapse from and including such Borrowing Date to the date on which
such Lender's Commitment Percentage of such borrowing shall have become
immediately available to the Administrative Agent and the denominator of which
is 360. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this subsection shall be conclusive in the
absence of manifest error. If such Lender's Commitment Percentage of such
borrowing is not in fact made available to the Administrative Agent by such
Lender within three Business Days of such Borrowing Date, the Administrative
Agent shall be entitled to recover such amount with interest thereon at the rate
per annum applicable to such Loan, on demand, from HCC and any such payment by
HCC shall not constitute a waiver of any right or remedy HCC may have with
respect to any such Lender.
3.10 Illegality
Notwithstanding any other provision herein, if any change in any
Requirement of Law or in the interpretation or application thereof shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by
this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert ABR Loans to Eurodollar
Loans shall forthwith be canceled and (b) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, HCC shall pay to such Lender
such amounts, if any, as may be required pursuant to subsection 3.13.
3.11 Requirements of Law
(a) In the event that any change in any Requirement of Law as in
existence on the date hereof or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Letter of Credit, any Application
or any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for taxes covered by
subsection 3.12 and changes in the rate of tax on the overall net income of
such Lender or tax imposed in lieu of net income taxes);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
30
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, HCC shall promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable. If any Lender becomes entitled to
claim any additional amounts pursuant to this subsection, it shall promptly
notify HCC, through the Administrative Agent, by delivery of a certificate
setting forth the amounts due and a description of the event by reason of which
it has become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection submitted by such Lender, through the Administrative
Agent, to HCC shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and all other amounts
payable hereunder.
(b) In the event that any Lender shall have determined that any change
in any Requirement of Law as in existence on the date hereof regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof does or shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder or under any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to HCC (with a copy to the Administrative Agent) of a
written request therefore, HCC shall pay to such Lender such additional amount
or amounts as will compensate such Lender for such reduction.
3.12 Taxes
(a) All payments made by HCC under this Agreement shall be made free
and clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding, in the
case of the Administrative Agent and each Lender, net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent
or such Lender, as the case may be, as a result of a present or former
connection between the jurisdiction of the government or taxing authority
imposing such tax and the Administrative Agent or such Lender (excluding a
connection arising solely from the Administrative Agent or such Lender having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement) or any political subdivision or taxing authority
thereof or therein (all such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions and withholdings being hereinafter called "Taxes"). If
any Taxes are required to be withheld from any amounts payable to the
Administrative Agent or any Lender hereunder, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all Taxes)
interest or any such other
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amounts payable hereunder at the rates or in the amounts specified in this
Agreement. Whenever any Taxes are payable by HCC, as promptly as possible
thereafter HCC shall send to the Administrative Agent for its own account or for
the account of such Lender, as the case may be, a certified copy of an original
official receipt received by HCC showing payment thereof. If HCC fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, HCC shall indemnify the Administrative Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
Notwithstanding the foregoing, before making any demand for payment under this
Section 3.12(a) each Lender agrees to use commercially reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different lender office if the making of such a designation would
avoid the need for, or reduce the amount of, such payments required under this
Section 3.12(a).
(b) Each Lender, including, without limitation, each Purchasing
Lender, that is not incorporated under the laws of the United States of America
or a state thereof agrees that prior to the first Interest Payment Date or, in
the case of a Purchasing Lender, the first Interest Payment Date to occur
subsequent to the date it becomes a party hereto it will deliver to HCC and the
Administrative Agent (i) two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor applicable form, as the case may
be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable
form. Each such Lender also agrees to deliver to HCC and the Administrative
Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or other manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to HCC and such extensions or renewals thereof as may
reasonably be requested by HCC or the Administrative Agent, unless in any such
case an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender so advises HCC and the Administrative Agent. Such
Lender shall certify (i) in the case of a Form 1001 or 4224, that it is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes and (ii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup withholding tax.
Each Lender which fails to provide to HCC in a timely manner such forms shall
reimburse HCC upon demand for any penalties paid by HCC as a result of any
failure of HCC to withhold the required amounts, that are caused by such
Lender's failure to provide the required forms in a timely manner.
3.13 Indemnity
HCC agrees to indemnify each Lender and to hold each Lender harmless
from any reasonable loss or expenses which such Lender may sustain or incur as a
consequence of (a) default by HCC in payment when due of the principal amount of
or interest on any Eurodollar
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Loan, (b) default by HCC in making a borrowing of, conversion into or
continuation of Eurodollar Loans after HCC has given a notice requesting the
same in accordance with the provisions of this Agreement, (c) default by HCC in
making any prepayment after HCC has given a notice thereof in accordance with
the provisions of this Agreement or (d) conversion of or the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto, including, without limitation, in each case, any
such loss or expense arising from the reemployment of funds obtained by it or
from fees payable to terminate the deposits from which such funds were obtained.
This covenant shall survive the termination of this Agreement, the Loans and all
other amounts payable hereunder.
3.14 Replacement of Lenders
If any Lender requests compensation under subsection 3.11, or if HCC
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to subsection 3.12, or if any
Lender defaults in its obligation to fund Loans hereunder, then HCC may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 11.6), all
its interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) HCC shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in
Letters of Credit, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or HCC (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under subsection 3.11 or payments required to be made pursuant to
subsection 3.12, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling HCC to require such assignment and
delegation cease to apply.
SECTION 4. LETTERS OF CREDIT
4.1 L/C Commitment
(a) Subject to the terms and conditions hereof, the Issuing Lender,
in reliance on the agreements of the other Lenders set forth in subsection
4.4(a), agrees to issue letters of credit ("Letters of Credit") for the account
of HCC on any Business Day during the Commitment Period in such form as may be
approved from time to time by the Issuing Lender; provided that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, the L/C Obligations would exceed the L/C Commitment or
the Available Commitment.
(b) Each Letter of Credit shall:
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(i) be denominated in Dollars or any Available Foreign Currency and
shall be either (A) a standby letter of credit issued to support
obligations of HCC or its Subsidiaries (a "Standby Letter of Credit"), or
(B) a commercial letter of credit issued in respect of the purchase of
goods or services by HCC and its Subsidiaries in the ordinary course of
business (a "Commercial Letter of Credit") and
(ii) expire at or prior to the close of business on the date that is
five Business Days prior to the Termination Date.
(c) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
(e) Each Issuing Lender shall from time to time provide the
Administrative Agent with information reasonably requested by the Administrative
Agent with respect to each Letter of Credit issued by such Issuing Lender,
including stated amount, currency, beneficiary and expiry date.
4.2 Procedure for Issuance of Letters of Credit
HCC may from time to time request that the Issuing Lender issue a
Letter of Credit by delivering to the Issuing Lender, with a copy to the
Administrative Agent, at their respective addresses for notices specified herein
an Application therefor, completed to the satisfaction of the Issuing Lender,
and such other certificates, documents and other papers and information as the
Issuing Lender may reasonably request. Upon receipt of any Application, the
Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and HCC. The Issuing Lender shall furnish a copy of such Letter
of Credit to HCC and the Administrative Agent promptly following the issuance
thereof.
4.3 Fees, Commissions and Other Charges
(a) HCC shall pay to the Administrative Agent, for the account of the
Issuing Lender and the L/C Participants, a letter of credit commission with
respect to each Letter of Credit, computed for the period from the date such
Letter of Credit is issued to the date upon which the next such payment is due
hereunder at the rate per annum equal to the Applicable Margin in effect from
time to time for Eurodollar Loans, calculated on the basis of a 365 (or 366-, as
the case may be) day year, of the daily aggregate amount available to be drawn
under such Letter of Credit for the period covered by such payment. In addition,
HCC shall pay to the
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Issuer a fronting fee in the amount equal to .10% of the face amount of such
Letter of Credit. Such commissions shall be payable in arrears on each L/C Fee
Payment Date (and the Termination Date) and shall be nonrefundable. Such
commissions with respect to each Letter of Credit denominated in an Available
Foreign Currency shall be paid in Dollars, and for purposes of calculating the
amount of such commissions applicable to each Letter of Credit denominated in an
Available Foreign Currency, the face amount of such Letter of Credit shall be
the Dollar Equivalent of such amount calculated at the Exchange Rate as of the
relevant L/C Fee Payment Date.
(b) In addition to the foregoing fees and commissions, HCC shall pay
or reimburse the Issuing Lender for such reasonable, normal and customary costs
and expenses as are actually incurred or charged by the Issuing Lender in
issuing, effecting payment under, amending or otherwise administering any Letter
of Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
4.4 L/C Participations
(a) The Issuing Lender irrevocably agrees to grant and hereby grants
to each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by HCC in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount in Dollars
equal to such L/C Participant's Commitment Percentage of the amount of the
Dollar Equivalent of such draft (calculated on the date such draft is paid by
the Issuing Lender), or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to paragraph 4.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (1) such amount, times (2) the daily average
Federal funds rate, as quoted by the Issuing Lender, during the period from and
including the date such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (3) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to paragraph 4.4(a) is not in fact made available to the
Issuing Lender by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Lender shall be entitled to recover from such
L/C Participant, on demand,
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such amount with interest thereon calculated from such due date at the rate per
annum applicable to ABR Loans hereunder. A certificate of the Issuing Lender
submitted to any L/C Participant with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 4.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from HCC or otherwise), or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender, such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
4.5 Reimbursement Obligation of HCC
(a) HCC agrees to reimburse the Issuing Lender on each date on which
the Issuing Lender notifies HCC of the date and amount of a draft presented
under any Letter of Credit and paid by the Issuing Lender for the amount of (i)
such draft so paid and (ii) any taxes, fees, charges or other costs or expenses
reasonably incurred by the Issuing Lender in connection with such payment. Each
such payment shall be made to the Issuing Lender at its address for notices
specified herein in Dollars and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by HCC under this subsection from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full at the
rate which would be payable on any outstanding ABR Loans which were then
overdue.
(c) Each drawing under any Letter of Credit shall constitute a request
by HCC to the Administrative Agent for a borrowing pursuant to subsection 2.4
(Procedure for Revolving Credit Borrowing) of ABR Loans in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the date of
such drawing.
4.6 Obligations Absolute
(a) HCC's obligations under this Section 4 shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which HCC may have or have had against the
Issuing Lender or any beneficiary of a Letter of Credit.
(b) HCC also agrees with the Issuing Lender that the Issuing Lender
shall not be responsible for, and HCC's Reimbursement Obligations under
subsection 4.5(a) shall not be affected by, among other things, (i) the validity
or genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any
dispute between or among HCC and any beneficiary of any Letter of Credit or any
other party to which such Letter of Credit may be transferred or (iii) any
claims whatsoever of HCC against any beneficiary of such Letter of Credit or any
such transferee.
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(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct.
(d) HCC agrees that any action taken or omitted by the Issuing Lender
under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Commercial
Code of the State of New York, shall be binding on HCC and shall not result in
any liability of the Issuing Lender to HCC.
4.7 Letter of Credit Payments
If any draft shall be presented for payment under any Letter of
Credit, the Issuing Lender shall promptly notify HCC of the date and amount
thereof. The responsibility of the Issuing Lender to HCC in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.
4.8 Application
To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Section 4, the
provisions of this Section 4 shall apply.
4.9 Letters of Credit Denominated in Available Foreign Currencies
Notwithstanding any other provision of this Section 4, in the event
that any Letter of Credit is denominated in any currency other than Dollars, the
amount of the Reimbursement Obligation of HCC pursuant to Section 4.5 in respect
of such Letter of Credit shall bear interest as provided in Section 4.5 with
respect to amounts owing in Dollars; provided, that (i) the interest rate on
such amounts shall be the rate reasonably determined by the relevant Issuing
Lender to be the equivalent rate, in respect of the relevant non-Dollar
currency, to the applicable rate provided in Section 4.5 with respect to amounts
denominated in Dollars and (ii) if HCC fails to pay any such Reimbursement
Obligation required by Section 4.5 on or prior to the third Business Day
following the date of the drawing to which such Reimbursement Obligation
relates, then, on the fourth Business Day following such date of drawing, the
relevant Issuing Lender, in cooperation with the Administrative Agent, shall
determine the Dollar Equivalent of the amount of such Reimbursement Obligation,
and the Borrower's obligation in respect of such Reimbursement Obligation shall
be converted to such Dollar Equivalent, with interest thereon as provided in
Section 4.5 (provided, that if the Application in respect of such Letter of
Credit provides for conversion of such amount into Dollars on any earlier date
or at any other conversion rate, the provisions of such Application shall
control with respect to such conversion).
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4.10 Change in Law; Availability of Foreign Currencies.
Notwithstanding any other provision of this Agreement, if, after the date
hereof, (a) any change in law shall make it unlawful for any Issuing Lender to
issue Letters of Credit denominated in an Available Foreign Currency, or (b)
there shall have occurred any change in national or international financial,
political or economic conditions (including the imposition of or any change in
exchange controls) or currency exchange rates that would make it impracticable
for any Issuing Lender to issue Letters of Credit denominated in such Available
Foreign Currency for the account of the Borrower, then by prompt written notice
thereof to the Borrower and to the Administrative Agent (which notice shall be
withdrawn whenever such circumstances no longer exist), such Issuing Lender may
declare that Letters of Credit will not thereafter be issued by it in the
affected Available Foreign Currency or Available Foreign Currencies, whereupon
the affected Available Foreign Currency or Available Foreign Currencies shall be
deemed (for the duration of such declaration) not to constitute an Available
Foreign Currency for purposes of the issuance of Letters of Credit by such
Issuing Lender.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make Loans and issue or participate in the Letters of Credit, Holdings and
HCC hereby jointly and severally represent and warrant to the Administrative
Agent and each Lender that:
5.1 Financial Condition
(a) The unaudited pro forma consolidated balance sheet of Holdings and its
consolidated Subsidiaries as at September 30, 2001 (the "Pro Forma Balance
Sheet"), copies of which have heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on such date) to the
consummation of the POC Acquisition. The Pro Forma Balance Sheet has been
prepared based on the best information available to Holdings as of the date of
delivery thereof, and presents fairly in all material respects on a pro forma
basis the estimated financial position of Holdings and its consolidated
Subsidiaries as at September 30, 2001, assuming that the events specified in the
preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of Holdings and its
consolidated Subsidiaries as at December 31, 1999 and December 31, 2000, and the
related consolidated statements of income and of cash flows for the fiscal years
ended on such dates, reported on by and accompanied by an unqualified report
from PricewaterhouseCoopers LLP, present fairly in all material respects the
consolidated financial conditions of Holdings and its consolidated Subsidiaries
as at such date, and the consolidated results of its operations and its
consolidated cash flows for the fiscal years then ended. The unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at
September 30, 2001, and the related unaudited consolidated statements of income
and cash flows for the three-month period ended on such date, present fairly in
all material respects the consolidated financial conditions of Holdings and its
consolidated Subsidiaries, as at such date, and the consolidated results of its
operations and its consolidated cash flows for the three-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto,
38
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). Holdings, HCC and its Subsidiaries do not have any
material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or
other obligation in respect of derivatives, that are not reflected in the most
recent financial statements referred to in this paragraph. During the period
from September 30, 2001 to and including the date hereof there has been no
Disposition by Holdings or any of its Subsidiaries, as applicable, of any
material part of their business or property (other than to Holdings or any of
its Subsidiaries).
5.2 No Change
Since December 31, 2000 (a) there has been no development or event nor
any prospective development or event, which has had or would reasonably be
expected to have a Material Adverse Effect and (b) except as disclosed on
Schedule 5.2 to this Agreement, as of the date of this Agreement, no dividends
or other distributions have been declared, paid or made upon the Capital Stock
of Holdings or HCC nor has any of the Capital Stock of Holdings or HCC (other
than in connection with the Restructuring) been redeemed, retired, purchased or
otherwise acquired for value by Holdings or any of its respective Subsidiaries.
5.3 Corporate Existence; Compliance with Law
Each Credit Party (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not reasonably be expected to have a Material Adverse Effect, and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.4 Corporate Power; Authorization; Enforceable Obligations
Each Credit Party has the corporate power and authority, and the legal
right, to make, deliver and perform the Loan Documents to which it is a party.
HCC has the corporate power and authority, and the legal right, to borrow
hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement, and the Applications.
Each Credit Party has taken all necessary corporate action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party. No consent or authorization of, filing with or other act by or in respect
of, any Governmental Authority or any other Person (other than consents or
authorizations the failure to obtain would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect) is required in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement, the Applications or any of the other Loan
Documents, except consents, authorizations, filings and notices described in
Schedule 5.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect. This Agreement has been, and,
each Application and each other Loan Document will be, duly executed and
delivered on behalf of the Credit Parties party thereto. This Agreement
constitutes,
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and each Note, each Application and each other Loan Document when executed and
delivered will constitute, a legal, valid and binding obligation of the Credit
Parties party thereto enforceable against such Credit Parties in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
5.5 No Legal Bar
The execution, delivery and performance of this Agreement, the
Applications, and the other Loan Documents, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of any Credit Party thereto and will not result in, or require, the
creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation,
except as contemplated hereby or thereby and except to the extent any such
violation or creation or imposition of a Lien would not reasonably be expected
to have a Material Adverse Effect.
5.6 No Material Litigation
Except as set forth in HCC's Form 10-Q, filed with respect to the
period ending September 30, 2001, no litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of Holdings or HCC, threatened by or against any Credit Party or
against any of their respective properties or revenues (a) with respect to this
Agreement, or the other Loan Documents or any of the transactions contemplated
hereby, or (b) which would reasonably be expected to have a Material Adverse
Effect.
5.7 No Default
None of the Credit Parties nor any of their respective Subsidiaries
is in default under or with respect to any of their respective Contractual
Obligations in any respect which if not cured would reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
5.8 Ownership of Property; Liens; Leases of Equipment
Each of the Credit Parties has good record and marketable title in
fee simple (except for exceptions to title as will not in the aggregate
materially interfere with the present or contemplated use of the property
affected thereby) to, or a valid leasehold interest in, all its real property,
and good title to all its other property, and none of such property is subject
to any Lien except as permitted by subsection 8.3. None of the Equipment or
Inventory (as defined in the Uniform Commercial Code) owned by any Credit Party
has been leased by such Credit Party as lessor, except pursuant to operating
leases (which do not constitute Financing Leases). As used herein, Equipment or
Inventory leased by a Credit Party under a Financing Lease shall be deemed
"owned" by such Credit Party.
5.9 Intellectual Property
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Each Credit Party owns, or is licensed to use, all trademarks,
tradenames, trade secrets, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently conducted except for
those the failure to own or license which would not reasonably be expected to
have a Material Adverse Effect (the "Intellectual Property"). To the knowledge
of Holdings or HCC, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does Holdings
or HCC know of any valid basis for any such claim, which would reasonably be
expected to have a Material Adverse Effect. The use of such Intellectual
Property by the Credit Parties does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
5.10 Taxes
Each of the Credit Parties has filed or caused to be filed all tax
returns which, to the knowledge of Holdings and HCC, are required to be filed
and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of any of the Credit
Parties, as the case may be); no tax Lien has been filed against the property of
any Credit Party, and, to the knowledge of Holdings and HCC, no claim is being
asserted, with respect to any such tax, fee or other charge.
5.11 Federal Regulations
No part of the proceeds of any Loans will be used for "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of such Board of Governors. If
requested by any Lender or the Administrative Agent, HCC will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U.
5.12 ERISA
Neither a Reportable Event nor an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred and no lien
in favor of the PBGC or a Plan has arisen during the five-year period prior to
the date as of which this representation is deemed made. The present value of
all accrued benefits under each Single Employer Plan maintained by HCC, or any
Commonly Controlled Entity (based on those assumptions used to fund the Plans)
did not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits. Neither HCC nor any Commonly Controlled
Entity has had a
41
complete or partial withdrawal from any Multiemployer Plan, and neither HCC nor
any Commonly Controlled Entity would become subject to any liability under ERISA
if HCC or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent. The present value (determined using actuarial
and other assumptions which are reasonable in respect of the benefits provided
and the employees participating) of the liability of HCC and each Commonly
Controlled Entity for post retirement benefits to be provided to their current
and former employees under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all
such Plans allocable to such benefits.
5.13 Investment Company Act; Other Regulations
None of the Credit Parties is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. None of the Credit Parties is subject to
regulation under any Federal or State statute or regulation which limits its
ability to incur Indebtedness or change rates or change tariffs. None of the
Credit Parties are "holding companies" or "subsidiary companies" of a "holding
company" or a "subsidiary company" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
5.14 Subsidiaries
As of the Amended and Restated Effective Date, Holdings has no
Subsidiaries other than as set forth on Schedule 5.14. Except if a Credit Party,
other than cash or Cash Equivalents located in bank accounts at Chase, none of
the assets owned by any Unqualified Subsidiary as of the date hereof are located
within the United States of America or any territory thereof.
5.15 Purpose of Loans
The proceeds of the Loans shall be used for the working capital and
general corporate purposes of HCC and its Subsidiaries.
5.16 Environmental Matters
Each of the representations and warranties set forth in paragraphs (a)
through (f) of this subsection is true and correct with respect to each parcel
of real property owned or operated by any of the Credit Parties (the
"Properties"), except to the extent that the facts and circumstances giving rise
to any such failure to be so true and correct would not reasonably be expected
to have a Material Adverse Effect:
(a) Except as set forth on Schedule 5.16, the Properties do not
contain, and have not previously contained, in, on, or under, including,
without limitation, the soil and groundwater thereunder, any Hazardous
Materials in concentrations which violate Environmental Laws.
42
(b) Except as set forth on Schedule 5.16, the Properties and all
operations and facilities at the Properties are in compliance with all
Environmental Laws, and there is no Hazardous Materials contamination or
violation of any Environmental Law which would reasonably be expected to
interfere with the continued operation of any of the Properties or impair
the fair saleable value of any thereof.
(c) Except as set forth on Schedule 5.16, none of the Credit Parties
has received any complaint, notice of violation, alleged violation,
investigation or advisory action or of potential liability or of potential
responsibility regarding environmental protection matters or environmental
permit compliance with regard to the Properties which has not been
resolved, nor is HCC aware that any Governmental Authority is contemplating
delivering to any Credit Party any such notice.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the Properties in concentrations that
violate Environmental Laws, nor have any Hazardous Materials been
transferred to any other location, in violation of any Environmental Laws
from the Properties or as a result of the sale or lease of any equipment or
inventory of any Credit Party.
(e) There are no governmental, administrative actions or judicial
proceedings pending or contemplated under any Environmental Laws to which
any Credit Party is or to HCC's knowledge will be named as a party with
respect to the Properties, nor to HCC's knowledge are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to any of the Properties.
5.17 Accuracy and Completeness of Information
The factual statements contained in the Loan Documents and each other
agreement, instrument, certificate and document related thereto and any other
certificates or documents furnished or to be furnished to the Administrative
Agent or the Lenders by any Credit Party from time to time in connection with
this Agreement (in any case excluding any of the financial statements referred
to in Section 5.1(a) hereof), taken as a whole, and taking into consideration
all corrections or substituted documents, do not and will not, as of the date
when made, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances in which the same were made, all except
as otherwise qualified herein.
5.18 Senior Indebtedness
The obligations of Holdings under the Holdings Guarantee constitute
"Senior Indebtedness" or "Senior Debt" under the (i) if applicable, terms of the
Seller Note, (ii) if applicable, the documentation for the 2001A Equipment Lease
Transaction and (iii) if applicable, the documentation for the 2001B Equipment
Lease Transaction. The Obligations of HCC constitute "Senior Indebtedness" or
"Guarantor Senior Indebtedness" (i) if applicable, under the documentation for
the 2001A Equipment Lease Transaction and (ii) if applicable, under the
documentation for the 2001B Equipment Lease Transaction. The obligations of each
Subsidiary
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under the Guarantees constitute "Guarantor Senior Indebtedness" under the
documentation relating to the 2001A Equipment Lease Transaction (if applicable)
and to the 2001B Equipment Lease Transaction (if applicable).
5.19 Representations and Warranties in Existing Credit Agreement
The representations and warranties contained in Section 5 of the
Existing Credit Agreement and in any amendment, consent or waiver thereto were
true and correct in all material respects on and as of the dates when made
pursuant to the Existing Credit Agreement.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Each Extension of Credit
The agreement of each Lender to make any extension of credit requested
to be made by it on any date is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Credit Parties in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date (unless any such representations and
warranties specifically refer to another date).
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Additional Documents. The Administrative Agent shall have received
each additional document, instrument or item of information reasonably
requested by it to further effect the purposes of this Agreement,
including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which any Credit Party may be a
party.
(d) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other documents in respect of
any aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request to further effect the purposes of
this Agreement.
Each borrowing by and Letter of Credit issued on behalf of HCC hereunder shall
constitute a representation and warranty by HCC as of the date of such Loan that
the conditions contained in this subsection 6.1 have been satisfied.
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6.2 Conditions to Amended and Restated Effective Date
The Amended and Restated Effective Date shall be the date of
satisfaction of the following conditions precedent:
(a) Agreement; Consents. The Administrative Agent shall have executed
this Agreement and shall have received counterparts hereof executed by
Holdings and HCC, and duly acknowledged and agreed to by each of the
Subsidiary Guarantors. The Administrative Agent shall have received a
Subsidiaries' Guarantee executed by each Credit Party other than Holdings
and HCC.
(b) Fees. The Lenders and the Administrative Agent shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including reasonable fees, disbursements and other charges of
counsel to the Agents), on or before the Amended and Restated Effective
Date.
(c) Resolutions. The Administrative Agent shall have received, with a
counterpart for each Lender, a copy of the resolutions, in form and
substance satisfactory to the Administrative Agent, of the Board of
Directors of each Credit Party authorizing the execution of this Agreement
and the performance of HCC's obligations hereunder and any borrowings
hereunder from time to time, certified by the Secretary or an Assistant
Secretary of each such Credit Party, as of the Amended and Restated
Effective Date, which certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the
date of such certificate.
(d) Incumbency Certificate. The Administrative Agent shall have
received, to the extent that it has not previously received, a certificate
of the Secretary or Assistant Secretary of each Credit Party, dated the
Amended and Restated Effective Date, as to the authority, incumbency and
signature of each of the officers signing this Agreement, and any other
instrument or document delivered by such Credit Party in connection
herewith, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(e) Legal Opinions. The Administrative Agent shall have received such
executed legal opinions of HCC and Holdings which the Administrative Agent
shall reasonably request.
SECTION 7. AFFIRMATIVE COVENANTS
Holdings hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Lender or the Administrative Agent hereunder,
Holdings shall and Holdings (except in the case of delivery of financial
information, reports, certificates and notices) shall cause each of its
Subsidiaries to:
7.1 Financial Statements
45
Furnish to each Lender:
(a) as soon as available for distribution to shareholders and
creditors generally, but in any event within 120 days after the end of each
fiscal year of Holdings, a copy of the consolidated balance sheet of
Holdings and its consolidated Subsidiaries, as at the end of such year and
the related consolidated statements of income and retained earnings and of
cash flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on without a "going concern" or
like qualification or exception, or qualification arising out of the scope
of the audit, by PricewaterhouseCoopers or other independent certified
public accountants of nationally recognized standing not unacceptable to
the Required Lenders;
(b) as soon as available for distribution to shareholders and
creditors generally, but in any event within 90 days after the end of each
fiscal year of Holdings, a copy of the unaudited consolidated balance sheet
of Holdings and its consolidated Subsidiaries, as at the end of such year,
and the related unaudited consolidated statements of income and retained
earnings and of cash flows for such year, in each case setting forth in
comparative form the figures for the corresponding period of the previous
year and the figures for such period as shown on the budgets of Holdings
for such year; and
(c) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of Holdings, the unaudited consolidated balance sheet of Holdings and
its consolidated Subsidiaries, as at the end of such quarter, and the
related unaudited consolidated statements of income and retained earnings
and of cash flows of Holdings and its consolidated Subsidiaries, for such
quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding period of the previous year, certified by a Responsible
Officer as being fairly stated in all material respects when considered in
relation to the consolidated financial statements of Holdings and its
consolidated Subsidiaries, (subject to normal year-end audit adjustments),
and in each case setting forth in comparative form the figures for such
periods as shown on the budgets of such Person for such year;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
7.2 Certificates; Other Information
Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default, except as specified in such
certificate;
46
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and 7.1(c), a certificate of a
Responsible Officer stating that, to the best of such Officer's knowledge,
Holdings during such period has observed or performed all of its covenants
and other agreements, and satisfied every material condition, contained in
this Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Officer has obtained
no knowledge of any Default or Event of Default except as specified in such
certificate, such certificate to include the original total dollar amount
of any Equipment True Leases;
(c) not later than 45 days following the end of each fiscal year of
Holdings, a copy of the projections by Holdings of the operating budget and
cash flow budget of Holdings and its Subsidiaries for the succeeding fiscal
year, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the basis
of reasonable assumptions and that such Officer has no reason to believe
they are incorrect or misleading in any material respect;
(d) (i) within five days after the same are sent, copies of all
financial statements and reports which Holdings, if at such time any class
of such Person's securities are held by the public, sends to its
stockholders generally, or, if otherwise, such financial statements and
reports as are made generally available to the public, and (ii) within five
days after the same are filed, copies of all financial statements and
reports which HCC may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(e) concurrently with the delivery of the financial statements
referred to in subsections 7.1(b) and (c), a management summary describing
and analyzing the performance of Holdings and its Subsidiaries during the
periods covered by such financial statements;
(f) within 45 days after the end of each quarter in each fiscal year
of Holdings, a certificate of the principal financial officer of Holdings
showing both the Applicable Margin for the next quarter and the detailed
computations necessary to calculate the Applicable Margin (an "Applicable
Margin Certificate") and setting forth the aggregate drawable amount of
outstanding Letters of Credit issued under this Agreement and the aggregate
drawable amount of other letters of credit issued for the account of HCC or
its Subsidiaries, in each case as of the last day of the immediately
preceding quarter; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
7.3 Payment of Obligations
Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and
47
reserves in conformity with GAAP with respect thereto have been provided on the
books of Holdings or any Subsidiary of Holdings, as the case may be.
7.4 Conduct of Business and Maintenance of Existence
Continue to engage in business of the same general type as now
conducted by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business except as otherwise permitted pursuant to subsection 8.5; comply with
all Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance
(a) Keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and (b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations.
7.6 Inspection of Property; Books and Records; Discussions
Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities; and permit representatives of any Lender to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of
Holdings and Subsidiaries of Holdings with officers and employees of Holdings
and Subsidiaries of Holdings and with its independent certified public
accountants; provided, however, that no such visit, inspection or examination or
discussion shall unreasonably disrupt or interfere with normal operations of
Holdings or any of its Subsidiaries and any such representatives of the
Administrative Agent and the Lenders shall be accompanied by a Responsible
Officer of Holdings. No failure to comply with any request for the exercise of
rights hereunder shall be cause for any Event of Default unless such request is
submitted in writing to Holdings with reference to this Section 7.6.
7.7 Notices
Promptly give notice to the Administrative Agent and each Lender of:
(a) the occurrence of any Default or Event of Default of which
Holdings has actual knowledge;
(b) any (i) default or event of default by Holdings or any of its
Subsidiaries under or with respect to any of their respective Contractual
Obligations in any respect which, if not cured, would reasonably be
expected to have a Material Adverse Effect, or
48
to Holdings' knowledge any default or event of default by any third party
under or with respect to any Contractual Obligation of said third party
with Holdings or any of its Subsidiaries in a respect which, if not cured,
would reasonably be expected to have a Material Adverse Effect (ii)
litigation, investigation or proceeding of which Holdings has actual
knowledge which may exist at any time between Holdings or any Subsidiary of
Holdings and any Governmental Authority, which in either case, if not cured
or if adversely determined, as the case may be, would reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings or any Subsidiary
of Holdings of which Holdings has actual knowledge in which the amount
involved is $5,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought and which if adversely determined
would reasonably be expected to have a Material Adverse Effect;
(d) the following events, as soon as possible and in any event within
30 days after Holdings has actual knowledge thereof: (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, or
any withdrawal from, or the termination, Reorganization or Insolvency of
any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or Holdings, any Commonly Controlled Entity
with respect to the termination of any Single Employer Plan; and
(e) a development or event which has had or would reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings proposes to take with respect thereto.
7.8 Environmental Laws
Comply in all material respects with, and undertake all reasonable
efforts to ensure compliance by all tenants and subtenants, if any, with, all
Environmental Laws and obtain and comply in all material respects with and
maintain, and undertake all reasonable efforts to ensure that all tenants and
subtenants obtain and comply with and maintain, any and all licenses, approvals,
registrations or permits required by Environmental Laws, and upon discovery of
any non-compliance or suspected non-compliance, undertake all reasonable efforts
to attain full compliance;
(a) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities respecting
Environmental Laws, except to the extent that the failure to so conduct,
complete or take such actions, or to comply with such orders and
directives, would not in the aggregate reasonably be expected to have a
Material Adverse Effect;
49
(b) Defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, agents, officers and
directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any
way relating to the violation of or noncompliance with any Environmental
Laws applicable to the real property owned or operated by Holdings or any
Subsidiary of Holdings, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory
fees, court costs and litigation expenses, except to the extent that any of
the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor; and
(c) Maintain a program to identify and promote substantial compliance
with and to minimize prudently any liabilities or potential liabilities
under any Environmental Law that may affect Holdings or any of its
Qualified Subsidiaries.
7.9 Subsequent Guarantees
Holdings shall cause each Qualified Subsidiary (other than HCC, the
TIDES Trust, HMS and MAC) of Holdings for which the aggregate value of all
assets owned by such Qualified Subsidiary is or becomes greater than
$20,000,000, to execute an amendment to the Subsidiaries' Guarantee pursuant to
which it will become a guarantor under the Subsidiaries' Guarantee within one
year after the later of (i) the date on which such Qualified Subsidiary becomes
a Subsidiary of Holdings and (ii) the date on which such Qualified Subsidiary's
assets attain an aggregate value in excess of $20,000,000; provided, however,
that if during such one-year period the aggregate value of such Qualified
Subsidiary's assets is or becomes $20,000,000 or less, such Qualified Subsidiary
shall not be required to become a party to the Subsidiaries' Guarantee.
SECTION 8. NEGATIVE COVENANTS
Holdings hereby agrees that, so long as the Commitments remain
in effect, any Note or any Letter of Credit remains outstanding and unpaid or
any other amount is owing to any Lender or the Administrative Agent hereunder,
Holdings shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
8.1 Financial Condition Covenants
(a) Maintenance of Consolidated Indebtedness to Consolidated
Capitalization. Permit the ratio (expressed as a percentage) of Consolidated
Indebtedness to Consolidated Capitalization of Holdings as at the end of any of
Holdings' fiscal quarters to be greater than .65 to 1.0; provided that for
purposes of calculating the numerator of the foregoing ratio, Consolidated
Indebtedness shall exclude seventy percent (70%) of the Indebtedness in respect
of the TIDES Debentures.
50
(b) Current Ratio. Permit the Current Ratio of Holdings at the end of
any of Holdings' fiscal quarters to be less than 1.0 to 1.0.
(c) Consolidated Senior Indebtedness to Consolidated Adjusted EBITDA.
Permit the ratio of Consolidated Senior Indebtedness of Holdings to Consolidated
Adjusted EBITDA for the four consecutive fiscal quarters of Holdings most
recently ended to be greater than 4.0 to 1.0.
(d) Consolidated Indebtedness to Consolidated EBITDA. Permit the ratio
of Consolidated Indebtedness to Consolidated EBITDA of Holdings for the four
consecutive fiscal quarters of Holdings most recently ended ("Consolidated
Leverage Ratio") to be greater than 4.5 to 1.0; provided that for purposes of
calculating the numerator of the foregoing ratio, Consolidated Indebtedness of
Holdings shall exclude seventy percent (70%) of the Indebtedness in respect of
the TIDES Debentures.
(e) Interest Coverage Ratio. Permit the ratio of Consolidated EBITDA
to Consolidated Interest Expense of Holdings for the period of four consecutive
fiscal quarters of Holdings most recently ended to be less than 2.5 to 1.0.;
provided that for purposes of calculating the foregoing ratio, Consolidated
Interest Expense of Holdings shall exclude any accrued but unpaid interest to
the TIDES or TIDES Debentures.
(f) Consolidated Senior Indebtedness to Consolidated EBITDA. Permit
the ratio of Consolidated Senior Indebtedness to Consolidated EBITDA of Holdings
for the four consecutive fiscal quarters of Holdings most recently ended
("Consolidated Senior Indebtedness Ratio") to be greater than 3.0 to 1.0.
8.2 Limitation on Indebtedness
Create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, and other obligations of the
Credit Parties under this Agreement and the other Loan Documents;
(b) Indebtedness of HCC to any of its Subsidiaries and of any such
Subsidiary which is a Credit Party to HCC or any other Subsidiary of HCC;
(c) Indebtedness outstanding as of August 31, 2001 and listed on
Schedule 8.2(c) and all extensions, renewals, replacements, refinancings
and modifications thereof permitted hereunder;
(d) [INTENTIONALLY OMITTED]
(e) Indebtedness in respect of Financing Leases provided that, after
giving effect thereto, subsection 8.7 is not contravened;
(f) Indebtedness in respect of Subordinated Debt, the terms and
conditions of which have been approved in writing by the Required Lenders
and all extensions, renewals, replacements, refinancings and modifications
thereof permitted hereunder;
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(g) Indebtedness of Unqualified Subsidiaries of Holdings; provided
that any such Indebtedness is Non-Recourse Indebtedness;
(h) Indebtedness of a Person which becomes a Subsidiary after the date
hereof in an aggregate principal amount not exceeding as to Holdings and
its Subsidiaries $10,000,000 at any time outstanding, provided that (i)
such indebtedness existed at the time such Person became a Subsidiary and
was not created in anticipation thereof and (ii) immediately after giving
effect to the acquisition of such Person by Holdings or any of its
Subsidiaries no Default or Event of Default shall have occurred and be
continuing;
(i) Indebtedness in respect of Equipment Lease Tranche A Loans;
(j) Indebtedness in respect of the 2008 Notes;
(k) Indebtedness of Holdings evidenced by the subordinated promissory
note dated as of August 31, 2001 issued by Holdings to Camco International
Inc. in a principal amount of $150,000,000 plus the principal amount of any
additional notes issued in payment of interest thereon (plus, in each case,
the amount of all accrued and unpaid interest thereon which is added to the
principal amount thereof) in connection with the POC Acquisition (all such
notes collectively, as amended, restated, supplemented or otherwise
modified, the "Seller Note");
(l) Indebtedness in respect of New Convertible Notes in an aggregate
amount not to exceed $150,000,000; provided that the proceeds of such
Indebtedness are used first, to repay the Seller Note, second, to pay fees
and expenses of issuance of the New Convertible Notes and third, for
general corporate purposes;
(m) Guarantee Obligations permitted by subsection 8.4; and
(n) unsecured Indebtedness not otherwise permitted by clauses (a)-(m)
above not exceeding $125,000,000 in the aggregate at any time outstanding.
8.3 Limitation on Liens
Create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of Holdings or any Subsidiary
of Holdings, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
52
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of Holdings
or any of its Subsidiaries;
(f) leases or subleases granted to third Persons not interfering in
any material respect with the business of Holdings or any of its
Subsidiaries;
(g) Liens arising from UCC financing statements regarding leases
permitted by this Agreement or the Equipment Leases;
(h) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement or the Equipment Leases;
(i) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods so long as such Liens attach only to the imported
goods;
(j) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by Holdings or any of its Subsidiaries in the
ordinary course of business;
(k) Liens created pursuant to Financing Leases permitted pursuant to
Section 8.2(e);
(l) Liens in existence on the Closing Date listed on Schedule 8.3(l),
securing Indebtedness permitted by subsection 8.2(c), provided that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(m) Liens on (i) natural gas compressors and related equipment, and
usual accessories and improvements and proceeds thereof, and (ii) oil and
gas production equipment, in each case, the acquisition of which were
financed with the proceeds of the Indebtedness permitted by subsection
8.2(e) and which secures only such Indebtedness, provided that any such
Lien is placed upon such natural gas compressor or related equipment or
such oil and gas production equipment at the time of the acquisition of
such natural gas compressors or related equipment or such oil and gas
production equipment by Holdings or any of its Subsidiaries and the Lien
extends to no other property, and
53
provided, further, that no such Lien is spread to cover any additional
property after the date such Lien attaches and that the amount of
Indebtedness secured thereby is not increased;
(n) Liens on assets of Holdings, HMI, Hanover/Xxxxx and the Real
Estate Subsidiary listed on Schedule 8.3(n), provided that no such Lien is
spread to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(o) Liens on the assets of Unqualified Subsidiaries of Holdings
securing Indebtedness of such Unqualified Subsidiaries permitted under
Section 8.2(g);
(p) Liens securing Derivatives entered into by Holdings and its
Subsidiaries which are permitted hereunder;
(q) Liens securing Indebtedness of Holdings or any Subsidiary
permitted under subsection 8.2(d) so long as such Liens attach only to the
assets acquired or financed pursuant to such subsection;
(r) Liens on the property or assets of a Person which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by
subsection 8.2(h), provided that (i) such Liens existed at the time such
Person became a Subsidiary and were not created in anticipation thereof,
(ii) any such Lien is not spread to cover any property or assets of such
Person after the time such Person becomes a Subsidiary, and (iii) the
amount of Indebtedness secured thereby is not increased;
(s) Liens that arise in connection with the Equipment Lease
Transactions;
(t) Liens listed on Schedule 8.3(t);
(u) Liens not otherwise permitted in clauses (a)-(t) above securing
Indebtedness not exceeding $2,500,000 in the aggregate; and
(v) Liens on the property or assets of POC securing Indebtedness
permitted by subsection 8.2 and Guarantee Obligations permitted by
subsection 8.4(j), provided that (i) such Liens existed at the time POC
became a Subsidiary and were not created in anticipation thereof, (ii) any
such Lien is not spread to cover any property or assets of POC after the
time POC becomes a Subsidiary, and (iii) the amount of Indebtedness,
Guarantee Obligations and other obligations secured thereby is not
increased.
8.4 Limitation on Guarantee Obligations
Create, incur, assume or suffer to exist any Guarantee Obligation
except:
(a) the Guarantees and the Equipment Lease Guarantees;
(b) up to $5,000,000 in the aggregate of Guarantee Obligations of HCC
or any of its Subsidiaries in connection with indebtedness incurred by
customers of HCC or any
54
of its Subsidiaries; provided, that the proceeds of any such indebtedness
shall be used by such customers to purchase natural gas compressors or oil
and gas production equipment from HCC or any of its Subsidiaries;
(c) Guarantee Obligations (in respect of obligations not constituting
Indebtedness) arising under agreements entered into by HCC or any of its
Subsidiaries in the ordinary course of business;
(d) guarantees in respect of Indebtedness (other than Subordinated
Debt) permitted under this Agreement;
(e) Guarantee Obligations of Holdings and any of its Subsidiaries
arising pursuant to the Equipment Lease Transactions;
(f) the Guarantor Obligations of HCC in the nature of a guarantee or
indemnification for, in each case, performance obligations (and not
Indebtedness) as contemplated by the HMS Transactions;
(g) the Subordinated Guarantee Obligations of Holdings arising under
the TIDES Guarantees;
(h) up to $70,000,000 in the aggregate of existing Guarantee
Obligations of POC and listed on Schedule 8.4, provided that such Guarantee
Obligations existed at the time POC became a Subsidiary and were not
created in anticipation thereof; and
(i) Guarantee Obligations of HCC and its Subsidiaries in respect of
the obligations of POC listed on Schedule 8.4, provided that the aggregate
principal amount of such obligations for which HCC and its Subsidiaries
shall be liable shall not exceed $70,000,000.
8.5 Limitations on Fundamental Changes
Enter into any merger, consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets, or make any material
change in its present method of conducting business, except:
(a) any Subsidiary may be merged or consolidated with or into any
Qualified Subsidiary; provided, that a Qualified Subsidiary shall be the
continuing or surviving corporation;
(b) Holdings or any Qualified Subsidiary may be merged or consolidated
with any other Person organized under a jurisdiction of the United States
with assets held primarily in the United States; provided, that Holdings or
such Qualified Subsidiary shall be the continuing or surviving corporation,
the Administrative Agent is provided with written notice, and after giving
effect thereto no Default or Event of Default would exist or reasonably be
expected to be caused thereby and provided, further, that Holdings may not
merge with or consolidate into any Subsidiary;
55
(c) any Qualified Subsidiary may sell, lease, assign, transfer or
otherwise dispose of any or all of its assets to any Qualified Subsidiary;
(d) any Unqualified Subsidiary may be merged or consolidated with or
into any other Person other than Holdings and/or may sell, lease, assign,
transfer or otherwise dispose of any of its assets (upon voluntary
liquidation or otherwise) to any other Person other than Holdings provided
that, if merged or consolidated with or into a Qualified Subsidiary, the
Qualified Subsidiary will remain as a `Qualified Subsidiary' after the
merger;
(e) pursuant to the Equipment Lease Transactions;
(f) the TIDES Trust may wind up or dissolve itself (or suffer a
liquidation or dissolution), or convey, assign, transfer or otherwise
dispose of, all or substantially all of its property, business or assets,
as contemplated by the TIDES Declaration of Trust; and
(g) any of the HMS Entities may wind up, dissolve (or suffer a
liquidation or dissolution), or convey, assign, transfer or otherwise
dispose of, all or substantially all of its property, business or assets.
8.6 Limitation on Sale or Lease of Assets
Convey, sell, lease, assign, transfer or otherwise dispose of any of
its property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, except:
(a) obsolete or worn out property disposed of in the ordinary course
of business, provided that the aggregate value of obsolete or worn out
natural gas compressors and oil and gas production equipment disposed of in
the ordinary course of business does not exceed $20,000,000 during any
fiscal year of Holdings;
(b) the sale of inventory in the ordinary course of business, provided
that if such inventory is comprised of natural gas compressors or oil and
gas production equipment, such natural gas compressors or oil and gas
production equipment were never part of the natural gas compressors or oil
and gas production equipment leased or held for lease by HCC or any of its
Subsidiaries;
(c) the lease or sublease by HCC or any of its Subsidiaries as lessor
of natural gas compressors and oil and gas production equipment in the
ordinary course of business under operating leases (which do not constitute
Financing Leases);
(d) the sale or discount without recourse of defaulted accounts
receivable arising in the ordinary course of business in connection with
the compromise or collection thereof;
(e) as permitted by subsection 8.5;
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(f) the sale of natural gas compressors and oil and gas production
equipment, other than disposals and sales covered by clauses (a) and (b)
above, provided that the fair market value of natural gas compressors and
oil and gas production equipment sold during the term of this Agreement
does not exceed ten percent of the aggregate fair market value of all
natural gas compressors and oil and gas production equipment owned by HCC
and its Qualified Subsidiaries; provided further that if the proceeds are
reinvested in natural gas compressors or oil and gas production equipment
to be owned by HCC or its Qualified Subsidiaries within nine months after
the sale of the assets which produced such proceeds, such proceeds shall
not be included for purposes of this covenant;
(g) the lease by the Real Estate Subsidiary or any other Qualified
Subsidiary as lessor of real estate properties to HCC or any Qualified
Subsidiary of HCC for use by HCC or such Qualified Subsidiary as the site
of its offices and facilities;
(h) the sale or exchange of natural gas compressors to the Lessor in
connection with the Equipment Lease Transactions; and
(i) the lease of assets as listed on Schedule 8.6(i).
8.7 Limitation on Leases
Permit Consolidated Lease Expense for any fiscal year of Holdings to
exceed $20,000,000, except to the extent any such excess results from expenses
relating to any Equipment True Leases.
8.8 Limitation on Dividends
Declare or pay any dividend (other than dividends payable solely in common stock
of such Person) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
such Person or any warrants or options to purchase any such Stock, whether now
or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
Holdings or any Subsidiary of Holdings (collectively, "Restricted Payments"),
except that if no Default or Event of Default exists or would reasonably be
expected to be caused thereby (i) Subsidiaries of Holdings may declare and pay
dividends to Holdings (to the extent necessary to pay interest on, or redeem,
the TIDES Debentures or to cover operating expenses of Holdings) and other
shareholders of such Subsidiaries and the TIDES Trust may redeem the TIDES as
contemplated by the TIDES Declaration of Trust, (ii) Holdings may repurchase or
redeem shares of Holdings common stock from its employees and former employees
so long as the aggregate amount of all such repurchases since the Closing Date
does not exceed $7,500,000, (iii) Holdings may make open market repurchases of
shares of Holdings common stock so long as the aggregate amount of all such
repurchases since the Closing Date does not exceed $75,000,000, (iv) Holdings
may declare or pay dividends on and make mandatory stock repurchases (pursuant
to the terms of the applicable certificate of designation) of its preferred
stock, if any, (v) Holdings may declare or pay dividends on shares of Holdings
common stock, provided that the aggregate amount of such
57
purchases, declarations or payments pursuant to this clause (v) does not exceed
25% of the Consolidated Net Income of Holdings for the period (taken as one
accounting period) from the beginning of the first fiscal quarter commencing
after the Amended and Restated Effective Date to the end of Holdings' most
recently ended fiscal quarter for which financial statements have been delivered
to the Administrative Agent and the Lenders pursuant to subsection 7.1 at or
prior to the time of such declaration or payment, (vi) HCC may declare and pay
dividends or make distributions to Holdings to the extent necessary to allow
Holdings to make payments on its promissory notes to be issued in favor of the
sellers of the KCC Group Limited so long as (A) the aggregate amount of such
declarations, payments or distributions pursuant to this clause (vi) does not
exceed (pound)6,000,000 (UK) plus accrued interest thereon and (B) no such
dividend may be paid more than three Business Days prior to the date the
equivalent payment is made on such notes, (vii) Subsidiaries of Holdings may
declare and pay dividends, or make distributions, to Holdings to the extent
necessary to allow Holdings to pay interest on, or redeem, the 2008 Notes,
(viii) Subsidiaries of Holdings may declare and pay dividends, or make
distributions, to Holdings to the extent necessary to allow Holdings to pay
interest when due on the New Convertible Notes (in each case subject to any
applicable subordination provisions) and (ix) any Subsidiary may make Restricted
Payments to Holdings or any Subsidiary.
8.9 Limitation on Derivatives
Enter into or assume any obligations with respect to any Derivatives
except for (i) Derivatives used by Holdings or any of its Subsidiaries in
reducing the interest rate risk exposure or foreign currency risk exposure of
Holdings and its Subsidiaries which have been provided by a lender under this
Agreement or the Equipment Lease Transactions; provided that the aggregate
notional amounts of the Derivatives permitted by this clause (i) shall not
exceed the aggregate amount of loans outstanding under this Agreement and the
Equipment Lease Transactions and (ii) existing Derivatives of POC provided that
such Derivatives exist at the time POC became a Subsidiary and were not created
in anticipation thereof.
8.10 Limitation on Investments, Loans and Advances
Make any advance, loan, extension of credit or capital contribution
to, or purchase any stock, bonds, notes, debentures or other securities of or
any assets constituting a business unit of, or make any other investment in (all
of the foregoing being herein collectively referred to as "Investments"), any
Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) loans and advances to employees of such Person or its Subsidiaries
for travel, entertainment and relocation expenses in the ordinary course of
business in an aggregate amount for Holdings and its Subsidiaries not to
exceed $250,000 at any one time outstanding;
58
(d) Investments by Holdings in its Subsidiaries which are or become
Credit Parties and investments by such Subsidiaries which are or become
Credit Parties in other Subsidiaries of Holdings which are or become Credit
Parties;
(e) Investments by Holdings in the Real Estate Subsidiary in an
aggregate amount not to exceed $5,000,000 plus amounts necessary to
maintain and operate the real property and improvements thereon owned by
the Real Estate Subsidiary;
(f) Investments in Unqualified Subsidiaries of Holdings not to exceed
$50,000,000 (net of returns or repayment of capital or principal thereon
and other returns thereon) in the aggregate;
(g) Investments constituting Permitted Business Acquisitions so long
as, after giving effect to the consummation of the transactions
contemplated by each Permitted Business Acquisition, the Loans to be made
and the Letters of Credit to be issued hereunder and the loans to be made
under the Equipment Lease Credit Agreements in connection therewith, the
sum of (i) the cash and Cash Equivalents then held by Holdings, (ii) the
Available Commitments of all the Lenders hereunder, and (iii) the Available
Commitments and Available Investor Commitments (each as defined in the
Participation Agreements) under the Equipment Lease Participation
Agreements at such time, equals at least $20,000,000;
(h) Investments or acquisitions by Holdings or its Subsidiaries in (i)
up to 50% of the shares of capital stock, partnership interests, joint
venture interests, limited liability company interests or other similar
equity interests in, a Person (other than a Subsidiary), or (ii) loans or
advances to a Person (other than a Subsidiary), provided that the aggregate
amount of all such loans, advances, investments or acquisitions does not
exceed $50,000,000 in any fiscal year;
(i) Loans to employees, officers and directors of Holdings and its
Subsidiaries to acquire shares of capital stock of Holdings not to exceed
$20,000,000;
(j) the purchase by the TIDES Trust of the TIDES Debentures, as
contemplated under the TIDES Declaration of Trust; and
(k) (i) Investments in POC's Joint Ventures existing on the date of
consummation of the POC Acquisition and (ii) Investments in POC's Joint
Ventures pursuant to commitments existing at the time of the POC
Acquisition in an aggregate amount not to exceed $30,000,000.
8.11 Limitation on Optional Payments and Modifications of Debt
Instruments
(i) Make any optional payment or optional prepayment on or optional redemption,
optional purchase or optional defeasance of any portion of the Shareholder
Subordinated Debt, the 2008 Notes (other than scheduled cash interest payments),
New Convertible Notes (other than scheduled cash interest payments), the 2001A
Equipment Lease Securities (other than scheduled cash interest payments, subject
to applicable subordination provisions), the 2001B Equipment
59
Lease Securities (other than scheduled cash interest payments, subject to
applicable subordination provisions), lease and guarantee payments in respect of
the 2001A Equipment Lease Transaction (other than scheduled lease payments,
subject to applicable subordination provisions), and lease and guarantee
payments in respect of the 2001B Equipment Lease Transaction (other than
scheduled lease payments, subject to applicable subordination provisions), (ii)
make any optional payment or optional prepayment in excess of $10,000,000 during
any calendar year on or redemption of any Indebtedness (excluding the Seller
Note for which no optional payments or prepayments are permitted) or Guarantee
Obligations other than (a) as permitted in clause (i) above, (b) redemptions of
any portion of the 2008 Notes pursuant to the terms thereof, including, without
limitation, the terms of any indenture in respect thereof, (c) redemptions of
any portion of the TIDES Debentures pursuant to the TIDES Indenture or
redemptions of any portion of the TIDES pursuant to the TIDES Declaration of
Trust or (d) any optional payment, prepayment or redemption of any Indebtedness
or Guarantee Obligations pursuant to the Corporate Credit Agreement or the
Equipment Lease Transactions (other than the 2001A Equipment Lease Transaction
and the 2001B Equipment Lease Transaction) or (iii) amend, modify or change, or
consent or agree to any amendment, modification or change to any of the terms of
any Indebtedness or Guarantee Obligations other than (a) any Indebtedness or
Guarantee Obligations pursuant to the Corporate Credit Agreement or the
Equipment Lease Transactions (other than the 2001A Equipment Lease Transaction
and the 2001B Equipment Lease Transaction) or (b) any amendment, modification or
change which would extend the maturity or reduce the amount of any payment of
principal thereof or which would reduce the rate or extend the date for payment
of interest thereon, or any amendment or waiver which would render the terms of
such Indebtedness or Guarantee Obligations less restrictive. In addition,
Holdings and its Subsidiaries will not (i) make any optional or voluntary
payment, prepayment, redemption or purchase of the Seller Note or any other
payment or distribution with respect to the Seller Note unless such payment or
distribution is (A) permitted by the subordination provisions of the Seller Note
or (B) financed with the proceeds of subordinated Indebtedness issued by
Holdings having the terms set forth on Schedule 8.11 or (ii) amend, waive,
modify or terminate (or consent to any amendment, waiver, modification or
termination) of the subordination provisions of the Seller Note or if such
amendment, waiver, modification or termination is adverse to the interest of the
Lenders (provided that an amendment to the Seller Note intended to give effect
to the preceding clause (i)(B) shall be permitted).
8.12 Transactions with Affiliates
Except for transactions of a type set forth on Schedule 8.12, enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
unless such transaction is otherwise permitted under this Agreement, is in the
ordinary course of Holdings' or such Subsidiary's business and is upon fair and
reasonable terms no less favorable to Holdings or such Subsidiary, as the case
may be, than it would obtain in a comparable arm's length transaction with a
Person not an Affiliate.
8.13 Sale and Leaseback
Except for the transactions of a type set forth on Schedule 8.13,
enter into any arrangement with any Person where Holdings or any of the
Subsidiaries of Holdings is the lessee
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of real or personal property which has been or is to be sold or transferred by
Holdings or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of Holdings or such Subsidiary (any of such arrangements,
a "Sale and Leaseback Transaction"), except that (i) HCC and its Subsidiaries
may enter into Financing Leases as lessee for natural gas compressors and oil
and gas production equipment if after giving effect thereto subsection 8.2 is
not contravened, (ii) HCC may enter into Sale and Leaseback Transactions as
lessee for natural gas compressors in connection with the Equipment Lease
Transactions and (iii) POC may remain party to and perform Sale and Leaseback
Transactions existing at the time POC became a Subsidiary and which were not
entered into in anticipation thereof.
8.14 Corporate Documents
Amend its Certificate of Incorporation in any way adverse to the
interests of the Administrative Agent and the Lenders.
8.15 Fiscal Year
Permit the fiscal year of Holdings to end on a day other than December
31.
8.16 Nature of Business
(A) In the case of any Subsidiary, engage in any business other than (a) the
leasing, maintenance, purchase, sale and operation of natural gas compressor
units and oil and gas production equipment, (b) the design, engineering and
fabrication of natural gas compressor units, (c) the design, engineering and
fabrication of oil and gas production equipment, (d) the provision of contract
compression and related services, (e) the provision of gas metering services as
contemplated under the HMS Transactions, (f) the provision of gas measurement
and related services, (g) the design, engineering, fabrication, maintenance,
leasing, purchase and sale of 0- to 50-megawatt skid-mounted, engine-driven
generators, together with services related thereto and (h) any activities
related thereto which are consistent with past practice and conducted in the
ordinary course of business; and (B) in the case of Holdings, notwithstanding
anything to the contrary contained herein, engage in any business other than (a)
the direct or indirect ownership of HCC together with any activities related
thereto, (b) the performance of its obligations under the Loan Documents, (c)
the performance of its obligations under the 2008 Notes, (d) the performance of
its obligations in connection with the TIDES, including, without limitation, its
obligations under the TIDES Indenture, the TIDES Guarantees and the TIDES
Declaration of Trust, (e) the formation and ownership of Subsidiaries for the
purpose of making acquisitions to the extent permitted under the Loan Documents
and (f) any actions required by law or the rules of any securities exchange on
which its securities are listed and/or traded.
8.17 Unqualified Subsidiaries
Permit any Unqualified Subsidiary to directly or indirectly own any
assets (other than cash or Cash Equivalents located in bank accounts at Chase)
which are located in the United States of America or any territory thereof.
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SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) HCC shall fail to pay any principal of any Note or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or Holdings shall fail to pay any interest on any Note, or any
other amount payable hereunder, within five days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any Credit
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect on or as of the date
made or deemed made; or
(c) Holdings shall default in the observance or performance of any
agreement contained in Section 8 of this Agreement; or
(d) Holdings shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this Section 9) and such default shall
continue unremedied for a period of 30 days; or
(e) The Subsidiaries' Guarantee or the Holdings Guarantee shall, at
any time, cease to be in full force and effect (unless released by the
Administrative Agent) or shall be declared null and void, or the validity
or enforceability thereof shall be contested by any Credit Party; or
(f) Holdings or any of the Subsidiaries of Holdings shall (i) default
in any payment of principal of or interest of any Indebtedness (including
any Guarantee Obligation, but excluding the Loans) or in the payment of any
Guarantee Obligation, in excess of $5,000,000 in the aggregate, beyond the
period of grace (not to exceed 30 days), if any, provided in the instrument
or agreement under which such Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
Obligation in excess of $5,000,000 or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(g) (i) Holdings or any Material Subsidiary shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of
62
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or any of Holdings or any Material Subsidiary shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against any of Holdings or any Material Subsidiary any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
any of Holdings or any Material Subsidiary any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) any of Holdings or any Material Subsidiary
shall take any action for the purpose of effecting its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) any of Holdings or any Material Subsidiary shall
generally not, or shall admit in writing its inability to, pay its debts as
they become due; or
(h) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any lien shall arise on the assets of HCC or any
Commonly Controlled Entity in favor of PBGC or a Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement
of proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) HCC or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi)
any other event or condition shall occur or exist, with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could
subject HCC or any of its Subsidiaries to any tax, penalty or other
liabilities in the aggregate material in relation to the business,
operations, property or financial or other condition of HCC and its
Subsidiaries taken as a whole;
(i) One or more judgments or decrees shall be entered against Holdings
or any of the Subsidiaries of Holdings involving in the aggregate a
liability (not paid or fully covered by insurance) of $5,000,000 or more
and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof;
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(j) If at any time, Holdings or any of the Subsidiaries of Holdings
shall become liable for remediation and/or environmental compliance
expenses and/or fines, penalties or other charges which, in the aggregate,
are in excess of $5,000,000; or
(k) a "change of control" (however denominated) with respect
to Holdings or HCC shall have occurred under, or for purposes of, the 2001A
Equipment Lease Securities, or the New Subordinated Notes and at least 50%
of the Indebtedness then outstanding under the 2001A Equipment Lease
Securities, the New Subordinated Notes or the New Convertible Notes, as the
case may be, shall be tendered to, or required to be purchased by,
Holdings, HCC or any of their Subsidiaries as a result of such change of
control;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to HCC or Holdings the
Commitments shall immediately terminate automatically and the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) shall immediately become due and payable, and
(B) if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to HCC declare the Commitments to be
terminated forthwith, whereupon the Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by
notice of default to HCC declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding sentence, HCC shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
HCC hereby grants to the Administrative Agent, for the benefit of the Issuing
Lender and the L/C Participants, a security interest in such cash collateral to
secure all obligations of HCC under this Agreement and the other Loan Documents.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent first to the payment of drafts drawn under such Letters of
Credit. HCC shall execute and deliver to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants, such further documents
and instruments as the Administrative Agent may request to evidence the creation
and perfection of the within security interest in such cash collateral account.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived.
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SECTION 10. THE ADMINISTRATIVE AGENT
10.1 Appointment
Each Lender hereby irrevocably designates and appoints Chase as the
Administrative Agent of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes Chase, as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
10.2 Delegation of Duties
The Administrative Agent may execute any of its duties under this
Agreement and the other Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by any Credit Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
any Credit Party to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Credit Party.
10.4 Reliance by Administrative Agent
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or
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conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to any Credit Party),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
10.5 Notice of Default
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
the Administrative Agent has received notice from a Lender or HCC referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders
Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereinafter taken, including any review of the
affairs of any Credit Party shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of HCC and each other Credit Party and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of HCC and each other Credit
Party.
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Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
any Credit Party which may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
10.7 Indemnification
The Lenders agree to indemnify the Administrative Agent in its
capacity as such (to the extent not reimbursed by HCC, or the other Credit
Parties and without limiting the obligation of HCC, and each other Credit Party
to do so), ratably according to the respective amounts of their original
Commitments, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement, any of the other Loan Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Loans and all other amounts payable hereunder.
10.8 Administrative Agent in Its Individual Capacity
The Administrative Agent and its Affiliates may make loans to, accept
deposits from, hold equity securities of, and generally engage in any kind of
business with any Credit Party as though the Administrative Agent were not the
Administrative Agent hereunder and under the other Loan Documents. With respect
to its Loans made or renewed by it and any Note issued to it and with respect to
any Letter of Credit issued or participated in by it, the Administrative Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent
The Administrative Agent may resign as Administrative Agent upon 10
days' notice to the Lenders. If the Administrative Agent shall resign as
Administrative Agent under this Agreement and the other Loan Documents, then the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall be subject to the approval of HCC. Upon
receipt of such approval from HCC, such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon its
appointment, and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be
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terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this subsection shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers
Neither this Agreement, any other Loan Document, nor any terms hereof
or thereof may be amended, supplemented or modified except in accordance with
the provisions of this subsection. With the written consent of the Required
Lenders, the Administrative Agent, HCC and any other Credit Party thereto, may,
from time to time, enter into written amendments, supplements or modifications
hereto and to the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any manner the
rights of the Lenders or of the Credit Parties party thereto hereunder or
thereunder or waiving, on such terms and conditions as the Administrative Agent
may specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (a) reduce the amount or extend the maturity of any Loan or
any installment thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any fee payable to any Lender hereunder, or change
the amount of any Lender's Commitments, in each case without the consent of the
Lender affected thereby, or (b) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by any Credit Party of any of
its rights and obligations under this Agreement and the other Loan Documents, in
each case without the written consent of all the Lenders (except as contemplated
by this Agreement), or (c) amend, modify or waive any provision of Section 10
without the written consent of the then Administrative Agent. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon each of the Credit Parties, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, each of the Credit Parties, the Lenders and the
Administrative Agent shall be restored to their former position and rights
hereunder and under any other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
11.2 Notices
All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy, telegraph or
telex), and, unless otherwise expressly provided herein, shall be deemed to have
been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice or
overnight courier service, when received, or, in the case of telegraphic notice,
when
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delivered to the telegraph company, or, in the case of telex notice, when sent,
answerback received, addressed as follows in the case of Holdings, HCC and the
Administrative Agent, and as set forth in Schedule 1.1A in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
Holdings and HCC: The Chase Manhattan Bank
One Chase Xxxxxxxxx Xxxxx, Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Agency Services
Telecopy: 000-000-0000
The Administrative Agent: Hanover Compressor Company
00000 Xxxxx Xxxxxxx-Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to: The Chase Manhattan Bank
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Global Oil and Gas
Telecopy: 000-000-0000
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.4, 3.3, 3.4, 3.5 or 3.9 shall not be
effective until received. A copy of any notice, request or demand to or upon any
Credit Party pursuant to this Agreement or any other Loan Document (other than
any such requests made in the ordinary course of administering this Agreement
and the other Loan Documents) shall also be delivered to Xxxxxx & Xxxxxxx, Sears
Tower, Suite 5800, 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, attention:
Xxxxxxx X. Xxxxxx, Esq. (telecopy: (000) 000-0000).
11.3 No Waiver; Cumulative Remedies
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
11.4 Survival of Representations and Warranties
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
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11.5 Payment of Expenses and Taxes
HCC agrees (a) to pay or reimburse the Administrative Agent for all
its reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and disbursements of counsel to the Administrative Agent,
(b) to pay or reimburse each Lender and the Administrative Agent for all its
reasonable costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, reasonable fees and
disbursements of counsel to the Administrative Agent and to the several Lenders,
and (c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Administrative Agent and their respective directors, officers, employees and
agents harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Notes, the other Loan Documents and any such other documents or the use or the
proposed use of proceeds thereof (all the foregoing, collectively, the
"indemnified liabilities"), provided, that HCC shall not have any obligation
hereunder to the Administrative Agent or any Lender with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of the
Administrative Agent or any such Lender, (ii) legal proceedings commenced
against the Administrative Agent or any such Lender by any security holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or creditor solely in its capacity as such, or (iii) legal proceedings
commenced against the Administrative Agent or any such Lender by any other
Lender or by any Transferee (as defined in subsection 11.6). The agreements in
this subsection shall survive repayment of the Loans and all other amounts
payable hereunder and under the other Loan Documents.
11.6 Successors and Assigns; Participations; Purchasing Lenders
(a) This Agreement shall be binding upon and inure to the benefit of
Holdings, HCC, the Lenders, the Administrative Agent, all future holders of the
Loans and their respective successors and assigns, except that HCC may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents, provided that each
such sale shall be of Loans and Commitments in an
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aggregate amount of at least $5,000,000, and provided, further, that no Lender
may so sell its Commitments so that less than $5,000,000 of such Commitments are
held by such Lender without participating interests therein, unless such Lender
(excluding Chase) so sells 100% of its Commitments. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Credit
Parties and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. HCC agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that such Participant
shall only be entitled to such right of setoff if it shall have agreed in the
agreement pursuant to which it shall have acquired its participating interest to
share with the Lenders the proceeds thereof as provided in subsection 11.7. HCC
also agrees that each Participant shall be entitled to the benefits of
subsections 3.9, 3.11, 3.12 and 11.5 with respect to its participation in the
Commitments and the Loans outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to such
subsections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time may sell to any
Lender or any Affiliate thereof and, with the consent of HCC and the
Administrative Agent (which in each case shall not be unreasonably withheld), to
one or more additional banks or financial institutions ("Purchasing Lenders")
all or any part of the assigning Lender's rights and obligations under this
Agreement and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit D, executed by such Purchasing Lender, such
assigning Lender (and, in the case of a Purchasing Lender that is not then a
Lender or an Affiliate thereof, by HCC and the Administrative Agent) and
delivered to the Administrative Agent for its acceptance and recording in the
Register, provided that each such sale shall be of Loans and Commitments of an
aggregate amount of at least $5,000,000 and provided, further, that no Lender
party to this Agreement on the date hereof may so sell any of its initial
Commitments hereunder such that such Lender holds directly less than $5,000,000
of such Commitments unless such Lender (excluding Chase) so sells 100% of its
Commitments. Such Assignment and Acceptance shall specify an Effective Date
which is not less than five Business Days after the date of execution thereof.
Upon such execution, delivery, acceptance and recording, from and after the
Effective Date determined pursuant to such Assignment and Acceptance, (x) the
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment and/or Loans as set forth therein, and (y) the
assigning Lender thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in
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the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
assigning Lender shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
assigning Lender under this Agreement.
(d) The Administrative Agent shall, on behalf of HCC, maintain at its
address referred to in subsection 11.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitment of, and the principal amount of
the Loans owing to, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and HCC, each other
Credit Party, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as the owner of the Loans and any Notes
evidencing the Loans recorded therein for all purposes of this Agreement. Any
assignment of any Loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance, and thereupon
one or more new Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by a
transferor Lender and Purchasing Lender (and, in the case of a Purchasing Lender
that is not then a Lender or an affiliate thereof, by HCC and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance (ii) on the Effective Date determined pursuant
thereto record the information contained therein in the Register and give notice
of such acceptance and recordation to the Lenders and HCC.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 11.6 concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law.
(g) HCC, upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender requiring Notes to facilitate transactions
of the type described in paragraph (f) above.
(h) Holdings and HCC authorize each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning any Credit Party and its affiliates which has been delivered to such
Lender by or on behalf of Holdings or HCC pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of Holdings or HCC in
connection with
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such Lender's credit evaluation of the Credit Parties and their affiliates prior
to becoming a party to this Agreement.
(i) If, pursuant to this subsection, any interest in this Agreement or
any Note is transferred to any Transferee which is organized under the laws
of any jurisdiction other than the United States or any state thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Lender
(for the benefit of the transferor Lender, the Administrative Agent and
HCC) that under applicable law and treaties no taxes will be required to be
withheld by the Administrative Agent, HCC or the transferor Lender with
respect to any payments to be made to such Transferee in respect of the
Loans, (ii) to furnish to the transferor Lender (and, in the case of any
Purchasing Lender registered in the Register, the Administrative Agent and
HCC) either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest
payments hereunder) and (iii) to agree (for the benefit of the transferor
Lender, the Administrative Agent and HCC) to provide the transferor Lender
(and, in the case of any Purchasing Lender registered in the Register, the
Administrative Agent and HCC) a new Form 4224 or Form 1001 upon the
expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to comply
from time to time with all applicable U.S. laws and regulations with regard
to such withholding tax exemption.
(j) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Lender in accordance with
applicable law.
11.7 Adjustments; Set-off
(a) If any Lender (a "Benefitted Lender") shall at any time receive
any payment of all or part of its Loans or the Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 9(g), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's
Loans or Reimbursement Obligations, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders such portion of each
such other Lender's Loans or the Reimbursement Obligations owing to it, or
shall provide such other Lenders with the benefits of any such collateral,
or the proceeds thereof, as shall be necessary to cause such benefitted
Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all
or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. HCC agrees that each Lender so purchasing a portion of
another Lender's Loans may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to HCC, any
such notice being expressly waived by HCC to the extent permitted by
applicable law, upon any amount becoming due and
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payable by HCC hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender to or for the credit or the
account of HCC. Each Lender agrees promptly to notify HCC, the Administrative
Agent after any such set-off and application made by such Lender, provided that
the failure to give such notice shall not affect the validity of such set-off
and application.
(c) Upon the occurrence and during the continuance of any Event of
Default, the Company hereby irrevocably authorizes each Lender at any time and
from time to time without notice to the Company, any such notice being expressly
waived by the Company, to set-off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender to or for the credit or the account of the Company,
or any part thereof in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of the Company to such Lender
hereunder and claims of every nature and description of such Lender against the
Company, in any currency, whether arising hereunder, under the Credit Agreement,
any Note, any Letter of Credit or any Loan Document, as such Lender may elect,
whether or not the Administrative Agent or any Lender has made any demand for
payment and although such obligations, liabilities and claims may be contingent
or unmatured. The Administrative Agent and each Lender shall notify the Company
promptly of any such set-off and the application made by the Administrative
Agent or such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the
Administrative Agent and each Lender under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Administrative Agent or such Lender may have.
11.8 Counterparts
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
HCC and the Administrative Agent.
11.9 Severability
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.10 Integration
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This Agreement represents the agreement of Holdings, HCC, the
Administrative Agent and the Lenders with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents and the
fee letter referred to in subsection 3.2.
11.11 GOVERNING LAW
THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.12 Submission To Jurisdiction; Waivers
Each of Holdings and HCC hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Person at its address set forth in subsection 11.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Agreement any special, exemplary, punitive or consequential
damages.
11.13 Acknowledgments
Each of Holdings and HCC hereby acknowledge that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
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(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship to any Credit Party, and the relationship between
Administrative Agent and Lenders, on one hand, and Holdings and HCC, on the
other hand, is solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among any Credit
Party and the Lenders.
11.14 WAIVERS OF JURY TRIAL
EACH OF HOLDINGS, HCC, THE ADMINISTRATIVE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.15 Judgment. (a) If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of HCC in respect of any sum due from it to any
Lender hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by such Lender of any sum adjudged to be so due in the Judgment Currency
such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Lender in the
Agreement Currency, the Borrower agrees notwithstanding any such judgment to
indemnify such Lender against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to any Lender, such Lender
agrees to remit to HCC such excess.
11.16 Usury. It is expressly stipulated and agreed to be the intent of
Holdings, HCC, the Administrative Agent and the Lenders at all times to comply
with the applicable law governing the maximum rate or amount of interest payable
on or in connection with the Loans. If the applicable law is ever judicially
interpreted so as to render usurious any amount or compensation called for under
this Agreement or any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to any of the Loans, or if acceleration
of the maturity of any of the Loans, any prepayment by HCC, or any other
circumstance whatsoever, results in the Lenders, or any of them, having been
paid any interest in excess of that permitted by applicable law, then it is the
express intent of HCC, the Administrative Agent and the Lenders that all excess
amounts theretofore collected by the Lenders be credited on the principal
balances of the Loans (or, if the Loans have been or would
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thereby be paid in full, refunded to HCC), and the other applicable Loan
Documents immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder.
The right to accelerate the maturity of any or all of the Loans does not include
the right to accelerate any interest which has not otherwise accrued on the date
of such acceleration, and the Lenders do not intend to collect any unearned
interest in the event of acceleration. All sums or other compensation paid or
agreed to be paid to the Lenders for the use, forbearance or detention of the
indebtedness evidenced hereby shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread with respect to all of the Loans
throughout the full term of such indebtedness until payment in full of all such
indebtedness so that the rate or amount of interest on account of such
indebtedness under all of the Loans does not exceed the Maximum Lawful Rate or
maximum amount of interest permitted under applicable law. The term "Maximum
Lawful Rate" as used herein as to any Lender means the maximum non-usurious rate
of interest which may be lawfully contracted for, charged, taken, reserved, or
received by such Lender from HCC in connection with the Loans evidenced hereby
under applicable law. The provisions of this Section 11.15 shall control all
agreements between HCC and the Lenders.
11.17 Effect of Amendment and Restatement of the Existing Credit
Agreement
On the Closing Date, the Existing Credit Agreement shall be amended,
restated and superseded in its entirety. The parties hereto acknowledge
and agree that (a) this Agreement and the other Loan Documents, whether executed
and delivered in connection herewith or otherwise, do not constitute a novation,
payment and reborrowing, or termination of the Obligations under the Existing
Credit Agreement as in effect prior to the Closing Date; (b) such Obligations
are in all respects continuing (as amended and restated hereby) with only the
terms thereof being modified as provided in this Agreement; and (c) upon the
effectiveness of this Agreement all Loans of Lenders outstanding under the
Existing Credit Agreement immediately before the effectiveness of this Agreement
will be converted into Loans of such Lenders hereunder on the terms and
conditions set forth in this Agreement.
11.18 Conflicts
In the event that there exists a conflict between provisions in this
Agreement and provisions in any other Loan Document, the provisions of this
Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered by their duly authorized officers as of the date first written
above.
HANOVER COMPRESSOR COMPANY
By:
----------------------------------------
Name:
Title:
HANOVER COMPRESSION LIMITED PARTNERSHIP
(formerly known as Hanover Compression Inc.)
By:
----------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, as Administrative Agent
and as a Lender
By:
----------------------------------------
Name:
Title:
78
Acknowledged and agreed to as of the date hereof:
HANOVER COMPRESSOR LIMITED HOLDINGS, LLC,
as a Guarantor
By:
----------------------------------------
Name:
Title:
HANOVER MAINTECH LIMITED PARTNERSHIP,
as a Guarantor
By:
----------------------------------------
Name:
Title:
HANOVER/XXXXX LIMITED PARTNERSHIP,
as a Guarantor
By:
----------------------------------------
Name:
Title:
79
HANOVER LAND LIMITED PARTNERSHIP,
as a Guarantor
By:
----------------------------------------
Name:
Title:
HANOVER APPLIED PROCESS SOLUTIONS, INC.,
as a Guarantor
By:
----------------------------------------
Name:
Title:
EUREKA ENERGY LIMITED PARTNERSHIP,
as a Guarantor
By:
----------------------------------------
Name:
Title:
HANOVER ACQUISITION LIMITED PARTNERSHIP,
as a Guarantor
By:
----------------------------------------
Name:
Title:
80
HANOVER OEC COMPRESSION CORPORATION,
as a Guarantor
By:
----------------------------------------
Name:
Title:
PRODUCTION OPERATORS CORPORATION,
as a Guarantor
By:
----------------------------------------
Name:
Title:
PRODUCTION OPERATORS, INC.,
as a Guarantor
By:
----------------------------------------
Name:
Title:
81
ANNEX A
PRICING GRID
Revolving Credit Facility
-------------------------
Applicable
Consolidated Applicable Margin- Applicable Margin- Commitment
Leverage Ratio Eurocurrency Loans Base Rate Loans Fee Rate
-------------- ------------------ ------------------ -----------
Greater than
3.0 to 1.0 1.75% .750% .375%
Less than or
equal to
3.0 to 1.0 and 1.50%
greater than
2.0 to 1.0 .500% .300%
Less than or
equal to
2.0 to 1.0 and 1.25%
greater than
1.0 to 1.0 .500% .300%
Less than or
equal to
1.0 to 1.0 1.00% 0% .250%
Changes in the Applicable Margin or in the Applicable Commitment Fee Rate
resulting from changes in the Consolidated Leverage Ratio shall become effective
on each date which is the start of the succeeding fiscal quarter (each, an
"Adjustment Date") for which an Applicable Margin Certificate of Holdings is
delivered to the Lenders pursuant to Section 7.2(f) (but in any event not later
than the 45th day after the end of each of each quarter of each fiscal year) and
shall remain in effect until the next change to be effected pursuant to this
paragraph. If any Applicable Margin Certificate referred to above is not
delivered within the time periods specified above, then the Consolidated
Leverage Ratio as at the end of the fiscal period that would have been covered
thereby shall for the purposes of this definition be deemed to be greater than
4.0 to 1.0. In addition, at all times while an Event of Default shall have
occurred and be continuing, the highest rate set forth in each column of the
Pricing Grid shall apply. Each determination of the Consolidated Leverage Ratio
pursuant to this Pricing Grid shall be made for the periods and in the manner
contemplated by Section 8.1(d).
