1
EXHIBIT 10.26
AMENDMENT, WAIVER AND CONSENT
AMENDMENT, WAIVER AND CONSENT, dated as of December 23, 1996
(this "Amendment"), to the Second Amended and Restated Credit Agreement, dated
as of December 19, 1995 (as heretofore amended and as the same may be further
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among HANOVER COMPRESSOR COMPANY, a Delaware corporation ("HCC"),
the several banks and other financial institutions from time to time parties
thereto (the "Banks") and THE CHASE MANHATTAN BANK (formerly known as Chemical
Bank), a New York banking corporation, as the agent for the Lenders (in such
capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Agent are parties to
the Credit Agreement;
WHEREAS, the Borrower has requested that the Agent, with the
consent of the Required Banks, (i) amend Subsections 1.1, 8.1(b), 8.2(h),
8.10(f) and 8.11 of the Credit Agreement, (ii) waive compliance with
Subsections 6.1(m), 7.4, 7.7(a), 8.2 and 8.8 of the Credit Agreement, (iii)
waive compliance with Subsection 5(j) of the Hanover Acquisition Security
Agreement, (iv) waive compliance with Subsection 5(b)(ii) of the Hanover
Acquisition Pledge Agreement, (v) amend Schedule I to the Hanover Acquisition
Pledge Agreement, (vi) amend Schedule I and Subsection 4(a) of the HCC Pledge
Agreement, (vii) amend the HCC Security Agreement, (viii) amend the Hanover
Acquisition Security Agreement and (ix) consent to HCC entering into the
Shareholder Subordinated Loan Agreement (as defined below); and
WHEREAS, the Agent, with the consent of the Required Banks, is
agreeable to the requested amendments, waivers and consent, but only on the
terms and subject to the conditions set forth herein;
NOW THEREFORE, in consideration of the premises herein
contained and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein,
capitalized terms used herein which are defined in the Credit Agreement, are
used herein as therein defined.
2. Amendment to Subsection 1.1. Subsection 1.1 of the
Credit Agreement is hereby amended by (a) adding thereto the following new
defined terms in the appropriate alphabetical order:
2
"'Consolidated U.S. EBITDA': for any period, with respect to the U.S.
EBITDA Companies, the sum of (a) Consolidated Earnings Before Interest
and Taxes for the U.S. EBITDA Companies 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 Net Income of the U.S. EBITDA Companies for
such period) plus, (c) all other non-cash expenses for such period (to
the extent such amounts have been deducted in determining Consolidated
Net Income of the U.S. EBITDA Companies for such period) minus, (d)
all other non-cash income for such period (to the extent such amounts
have been included in determining Consolidated Net Income of the U.S.
EBITDA Companies for such period)."
"'Shareholder Subordinated Debt': shall mean all Subordinated Debt of
HCC under the Shareholder Subordinated Loan Agreement."
"Shareholder Subordinated Loan Agreement": shall mean the Exchange and
Subordinated Loan Agreement, dated as of December 23, 1996, between
HCC and the lenders parties thereto, as amended, supplemented or
otherwise modified from time to time."
"'U.S. EBITDA Companies': shall mean HCC and each of its wholly-owned
Subsidiaries which (i) is organized under a jurisdiction of the United
States and (ii) has at least 90% of its assets located in the United
States or which derives at least 90% of its revenues from the United
States, in each case, at the time the applicable calculation is being
made for purposes of subsection 8.1(b).";
(b) (i) deleting the existing paragraphs (c) and (d) from the defined term
"Applicable Margin" in their entireties and substituting in lieu thereof the
following new paragraphs (c) and (d):
"(c) if the Applicable Margin Certificate required pursuant to
subsection 7.2(g) for any fiscal quarter of HCC shows that the
Consolidated Indebtedness Ratio on the last day of such fiscal quarter
was greater than 2.0 to I and less than or equal to 3.0 to 1, then the
Applicable Margin for the fiscal quarter of HCC immediately succeeding
the date such certificate is delivered shall be (i) with respect to
ABR Loans, 0% and (ii) with respect to Eurodollar Loans, 1.00%;
(d) if the Applicable Margin Certificate required pursuant to
subsection 7.2(g) for any fiscal quarter of HCC shows that the
Consolidated Indebtedness Ratio on the last day of such fiscal quarter
was greater than 3.0 to I and less than or equal to 4.0 to 1, then the
Applicable Margin for the
2
3
fiscal quarter of HCC immediately succeeding the date such certificate
is delivered shall be (i) with respect to ABR Loans, 0% and (ii) with
respect to Eurodollar Loans, 1.250%; and"; and
(ii) adding the following new paragraph (e) to the defined term of
"Applicable Margin":
"(e) if the Applicable Margin Certificate required pursuant to
subsection 7.2(g) for any fiscal quarter of HCC shows that the
Consolidated Indebtedness Ratio on the last day of such fiscal quarter
was greater than 4.0 to 1, then the Applicable Margin for the fiscal
quarter of HCC immediately succeeding the date such certificate is
delivered shall be (i) with respect to ABR Loans, 0.250% and (ii) with
respect to Eurodollar Loans, 1.500%;"
and (c) deleting the word "any" from the beginning of the second line of the
defined term "Subordinated Debt" and inserting in lieu thereof the words "the
Shareholder Subordinated Debt and any other".
3. Amendment to Subsection 8.1(b). Subsection 8.1(b) of
the Credit Agreement is hereby amended by deleting the existing subsection
8.1(b) in its entirety and inserting in lieu thereof the following new
subsection 8.1(b):
"(b) Consolidated U.S. EBITDA to Consolidated Indebtedness.
Permit the ratio of Consolidated U.S. EBITDA to Consolidated
Indebtedness for the four consecutive fiscal quarters of HCC most
recently ended to be less than 1.0 to 4.5."
4. Amendment to Subsection 8.2(h). Subsection 8.2(h) of
the Credit Agreement is hereby amended by deleting the words "Up to $35,000,000
of outstanding" at the beginning of the first line thereof.
5. Amendment to Subsection 8.10(f). Subsection 8.10(f)
of the Credit Agreement is hereby amended by deleting the existing Subsection
8.10(fl in its entirety and inserting in lieu thereof the following new
Subsection 8.10(f):
"(f) Investments in Unqualified Subsidiaries of HCC;".
6. Amendment to Subsection 8.11. Subsection 8.11 of the
Credit Agreement is hereby amended by inserting at the beginning thereof the
words "(i) Make any optional payment or prepayment on or redemption of any
portion of the Shareholder Subordinated Debt or (ii) with respect to any
Indebtedness other than the Shareholder Subordinated Debt,".
3
4
7. Waiver of Subsection 8.2. The Agent, with the
consent of the Required Banks, hereby waives (a) the Default with respect to,
and compliance with, the provisions of Subsection 8.2 of the Credit Agreement
solely in connection with the posting by HCC of that certain irrevocable
documentary letter of credit P-266843 dated November 20, 1996 issued by The
Chase Manhattan Bank for the benefit of Banco Comercial Antioqueno S.A., as
Fiduciary in the face amount of U.S. $816,000.00, and (b) the Default with
respect to Section 7.7(a) for failure to notify the Agent and each Bank of the
Default described in this Section 7.
8. Waiver of Subsection 8.8. The Agent, with the
consent of the Required Banks, hereby waives compliance with the provisions of
Subsection 8.8 of the Credit Agreement solely with respect to (a) the
transactions contemplated by the Exchange Agreement (the "Exchange Agreement"),
dated December 23, 1996, by and between HCC and JEDI, a copy of which is
attached hereto as Exhibit A and (b) the transactions contemplated by the
Shareholder Subordinated Loan Agreement, a copy of which is attached hereto as
Exhibit B.
9. Waiver of Subsection 5(i) of Hanover Acquisition
Security Agreement. The Agent, with the consent of the Required Banks hereby
waives compliance with the provisions of Subsection 50) of the Hanover
Acquisition Security Agreement solely to the extent required to allow Hanover
Acquisition to transfer all of its assets (including, without limitation,
Hanover Acquisition's shares of stock in Astra) to HCC, other than Hanover
Acquisition's interest in real property located in East Xxxxxxx, Texas.
10. Waiver of Subsection 5(b)(ii) of the Hanover
Acquisition Pledge Agreement. In order to permit the consummation of the
transaction contemplated by Section 9 hereof, the Agent with the consent of the
Required Banks hereby waives compliance with the provisions of Subsection
5(b)(ii) of the Hanover Acquisition Pledge Agreement solely to the extent
necessary to allow Hanover Acquisition to transfer its shares of stock in Astra
(the "ARI Shares") to HCC; provided, that the waiver described in this Section
10 is condition upon the delivery by HCC to the Collateral Trustee of the stock
certificates evidencing the ARI Shares together with undated stock powers for
each such stock certificate, duly executed in blank (which delivery is hereby
deemed to have been effected upon the full execution and delivery of this
Amendment) pursuant to the HCC Pledge Agreement.
11. Amendment to the Hanover Acquisition Pledge
Agreement. Schedule I of the Hanover Acquisition Pledge Agreement is hereby
amended by deleting therefrom the reference to the ARI Shares.
12. Waiver of Subsections 7.4 and 8.5. The Agent, with
the consent of the Required Banks hereby waives compliance with
4
5
Subsections 7.4 and 8.5 of the Credit Agreement solely to the extent necessary
to allow HCC to cause the dissolution of Astra; provided, however, that the
effectiveness of this waiver is conditioned upon the completion by HCC and
Hanover Acquisition of the transaction contemplated by Section 9 hereof.
13. Waiver of Subsections 7.4 and 7.9. The Agent, with
the consent of the Required Banks, hereby waives (a) the Default with respect
to, and compliance with, the provisions of Subsection 7.9 of the Credit
Agreement solely in connection with the failure by HCC to cause Hanover
Compressor Colombia, Inc. ("HCC Colombia") to execute a Security Agreement and
a Guarantee; provided, that HCC covenants and agrees that immediately upon HCC
Colombia becoming the direct or indirect owner of any assets, HCC shall cause
HCC Colombia to execute a Security Agreement and a Guarantee in the forms
required by Subsection 7.9 of the Credit Agreement and (b) the Default with
respect to Section 7.7(a) of the Credit Agreement for failure to notify the
Agent and each Bank of the Default described in this Section 13.
14. Amendment to Schedule I of the HCC Pledge Agreement.
Schedule I of the HCC Pledge Agreement is hereby amended by deleting existing
Schedule I in its entirety and substituting in lieu thereof the modified
Schedule I attached hereto as Exhibit C and in connection therewith, HCC shall
deliver to the Collateral Trustee within 30 days following the date hereof the
certificates representing the shares of HCC Colombia, Hanover Cayman, Limited
and Contract Compression International Argentina, S.A. listed on Exhibit C
attached hereto, together with undated stock powers for each such certificate,
duly executed in blank.
15. Amendment to Subsection 4(a) of the HCC Pledge
Agreement. Subsection 4(a) of the HCC Pledge Agreement is hereby amended by
deleting the words "H.C.C. Compressor de Venezuela, C.A." from the fourth line
of such Subsection and inserting in lieu thereof the words "any Unqualified
Subsidiary (as defined in the Bank Agreement) listed on Schedule I."
16. Amendment to Hanover Acquisition Security Agreement.
Upon the consummation of the transaction contemplated by Section 9 hereof,
Schedule III to the Hanover Acquisition Security Agreement shall be amended by
deleting all of the counties and states listed under the heading COUNTY/STATE
thereon and in lieu thereof substituting the word "None."
17. Amendment to HCC Security Agreement. Upon the
consummation of the transaction contemplated by Section 9 hereof, Schedule III
to the HCC Security Agreement shall be amended by adding the following entries
thereto in the appropriate alphabetized locations:
5
6
Beaurgard Parish, Louisiana
Cass, Texas
East Xxxxxxx, Texas
El Campo, Texas
Emery, Utah
Fayette, Texas
Xxxxx, Texas
LaSalle Parish, Louisiana
Longview, Texas
Xxxxxx, Texas
Midland, Texas
Monroe, Texas
Montezuma, Colorado
Orange, Texas
Trinity, Texas
Tyler, Texas
18. Waiver Relating to Hanover/Xxxxx Texas Leasehold
Mortgage. The Agent, with the consent of the Required Banks, hereby waives (a)
any Default in respect of and compliance with Subsection 6.1(m) of the Credit
Agreement solely to the extent necessary to postpone the requirement that
Hanover/Xxxxx execute and deliver the Hanover/Xxxxx Texas Leasehold Mortgage
until the earlier of (i) six months from the date hereof or (ii) the
acquisition by Hanover/Xxxxx of the real property and improvements which are
the subject of the Hanover/Xxxxx Texas Leasehold Mortgage and (b) the Default
with respect to Section 7.7(a) of the Credit Agreement for failure to notify
the Agent and each Bank of the Default described in this Section 18.
19. Consent to Shareholder Subordinated Debt. The Agent,
with the consent of the Required Banks, hereby consents to HCC entering into
the Shareholder Subordinated Loan Agreement in the form attached hereto as
Exhibit B and incurring Shareholder Subordinated Debt thereunder.
20. Waiver of Subsection 8.11(b) of the Credit Agreement.
The Agent, with the consent of the Required Banks, hereby waives compliance
with Subsection 8.11(b) of the Credit Agreement solely to the extent necessary
to allow for the amendments, modifications and waivers of the JEDI Loan
Agreement contemplated by the Amendment, Waiver and Consent to the JEDI Loan
Agreement in substantially the form attached hereto as Exhibit D.
21. Effectiveness. This Amendment shall become effective
on the condition that (a) the Borrower shall have delivered to the Agent duly
executed copies of this Amendment, (b) the Borrower shall have delivered to the
Agent true and correct copies of the Exchange Agreement and the Shareholder
Subordinated Loan Agreement, c) no Default or Event of Default shall have
occurred and be continuing on the date hereof after giving effect
6
7
to this Amendment, and (d) the Agent with the written consent of the Required
Banks shall have executed this Amendment; provided that the amendment set forth
in Section 2(b) hereof shall not become effective until the Agent shall have
received the written consent of all of the Banks.
22. Representations and Warranties. The Borrower hereby
represents and warrants that except as set forth on Exhibit E attached hereto,
the representations and warranties contained in the Credit Agreement (except
those which expressly speak as of a certain date) will be, after giving effect
to this Amendment, true and correct in all material respects, as if made on and
as of the date hereof.
23. Continuing Effect of Credit Agreement. This
Amendment shall not constitute an amendment or waiver of any other provision of
the Credit Agreement not expressly referred to herein and shall not be
construed as a waiver or consent to any further or future action on the part of
the Borrower that would require a waiver or consent of the Agent and/or the
Banks. Except as expressly amended hereby, the provisions of the Credit
Agreement are and shall remain in full force and effect.
24. Counterparts. This Amendment may be executed in
counterparts and all of the said counterparts taken together shall be deemed to
constitute one and the same instrument.
25. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
26. Expenses. The Borrower agrees to pay or reimburse
the Agent for all of their out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of this Amendment,
including, without limitation, the fees and disbursements of counsel to the
Agent.
7
8
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to he executed and delivered by their duly authorized officers as of
the date first written above.
HANOVER COMPRESSOR COMPANY
BY:________________________________
Name:
Title:
THE CHASE MANHATTAN BANK (formerly
known as Chemical Bank), as Agent
BY:________________________________
Name:
Title:
Acknowledged and agreed to as
of the date hereof:
MAINTECH ENTERPRISES, INC.
By___________________________
Name:
Title:
HANOVER/XXXXX, INC.
By___________________________
Name:
Title:
HANOVER ACQUISITION CORP.
By___________________________
Name:
Title:
HANOVER LAND COMPANY
By___________________________
Name:
Title:
8
9
THE CHASE MANHATTAN BANK
(formerly known as Chemical
Bank), as Collateral Trustee
By___________________________
Name:
Title:
9
10
CONSENT
The Chase Manhattan Bank
(formerly known as Chemical Bank), as Agent
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Natural Resources Department
We refer to the Second Amended and Restated Credit Agreement,
dated as of December 19, 1996 (as heretofore amended, the "Credit Agreement"),
among Hanover Compressor Company (the "Borrower"), the several banks and other
financial institutions from time to time parties thereto (the "Banks") and The
Chase Manhattan Bank (successor by merger to Chemical Bank), as agent for the
Banks (the "Agent").
We hereby consent to the execution and delivery by the Agent
of the Amendment, Waiver and Consent to the Credit Agreement, substantially in
the form attached hereto as Exhibit A.
NAME OF LENDER: __________________________
By:_____________________________
Title:
Date:_____________________________
